'We need to take bold action': Canmore introduces new taxes for tourist homes

Apartments are seen in Canmore, Alta., with mountains in the background on Nov. 5, 2024. (CTV News)

The Town of Canmore is moving forward with its plans to phase out "tourist homes" by implementing a new set of rules for short-term rental properties.

The new rules will require current owners offering short-term vacation rentals to acquire a business licence, increase the fee for the licence and introduce fines for violators of the bylaw.

The change follows the introduction of a vacancy tax approved by council over the summer and stems from recommendations of a Livability Taskforce, which was tasked with tackling the housing crisis in town and increasing vacancy for permanent or long-term residents.

“The message is we need to take bold action to save our community as we know it,” said Mayor Sean Krausert.

“If we continue on the way we have been going or the way most mountain towns have gone, and that’s not doing anything bold or different to address the situation, we will go the way of other mountain towns before us of becoming simply an enclave of the very wealthy, we’ll lose a lot of young families.”

Council voted unanimously Tuesday to amend the Business Registry License Bylaw to require a licence for tourist homes operating as a business, such as offering rentals through AirBnB and Vrbo, but also to allow fines for anyone operating without a license.

The change is expected to add around 650 to 700 licences which will generate $97,500 in revenue for the town annually.

The business licence fee is also being hiked 15 per cent, which is the first time it has been increased since 2015.

Operating a tourist home for short-term rentals without a licence could result in a $2,500 fine for the first violation, $5,000 for a second violation and up to a maximum of $10,000 for a third or subsequent offenses.

A public hearing was held at council’s regular council meeting on Tuesday, with no one in the gallery speaking for or against the change to licensing, which Mayor Krausert said reflects strong support from the community.

“As far as the enforcement against illegal tourist homes that is very much supported in the community because they are popping up outside where tourist homes are allowed and they are popping up in people’s neighbourhoods,” he said.

However, a written submission from the Canadian Federation of Independent Business, which represents 10,500 Alberta businesses and 113 in Canmore, raised concern with the proposed 15 per cent increase in the fee schedule for these business licences.

“This increase arrives at a difficult time when confidence levels among Alberta’s business owners remain low as businesses continue to struggle with the rising cost of doing business and lower consumer demand,” it wrote. “This action by Canmore’s municipal government will only exacerbate this cost burden, adding another unnecessary hurdle that current and prospective business owners must overcome to start or maintain a business in the municipality.”

Mixed reactions to new vacancy tax

The vote Tuesday is part of ongoing recommendations made by the Livability Task Force.

In August, council approved a new vacant home tax for the 2025 property tax year, meaning the owners of tourist homes can no longer declare the property for personal use and will all be taxed at a higher, non-residential rate.

“What the liveability tax program does is ask the second homeowner to make a choice: either live in your property or rent out a portion of your property to a primary resident, or pay higher taxes,” said Krausert.

Vacancy taxes are technically not allowed in Alberta but subclasses can be taxed with different rates under the Municipal Government Act (MGA).

In Canmore, a new residential subclass is being made for primary or full-time residences which will have a separate and lower tax rate from other property types in town.

“It is bold. We don’t have tools to require a need to reside, we don’t have tools to require developers to develop a certain amount of affordable housing. We don’t have any other revenue tools, but we do have the subclassification system allowed by the MGA for taxing purposes,” he said.

“Essentially what it comes down to is we never need every resident in Canmore to be part of the solution, either by housing a primary resident or paying higher taxes in order to fund housing initiatives,” he said.

Twenty-six per cent of all residences in Canmore are not occupied by primary residents and the mayor said if change is not made, that will soon make up the majority of the town.

To be considered a primary or full-time resident, owners must live or have a renter live in their property for a minimum of 183 days of the year and 60 of those days need to be continuous.

“Second homeownership in itself is an existential threat to our community,” he said. “Change is hard, but change is necessary to preserve the authentic mountain community that we are. It’s going to put some owners to tough choices, and I recognize that but it’s absolutely necessary.”

Ralph Young from Edmonton has owned a property in Canmore for the past 27 years and believes he’s been contributing his share through high property taxes.

“Frankly it is quite clearly a punitive tax on part-time residents. It’s an offensive tax, discriminatory, exclusionary, inequitable and has provided for little or no representation for those most effected,” he said.

“It’s clearly not a solution to the housing issue in Canmore, it’s simply a way for the town council to raise additional money at the expense of one group of citizens.”

Canmore resident and homeowner Erinn Drage sympathizes with people feeling pushed out of town but ultimately supports the vacancy tax.

“I’m really happy to see a new tax program that actually directly translates tax revenue to affordability projects and helping the housing crisis in Canmore,” she said.

“When you have folks the most able to afford to live here not actually living here it does create this issue of supply and demand and more people wanting to own in Canmore than can own and feasibly live here.”

There are some exceptions to the vacancy tax, including development plans for Three Sisters Mountain Village Properties.

The town is giving people time to convert their property and is waving the fee to convert a tourist home to residential use until Dec. 31, 2026.

As for what the rates will look for primary and non-primary residents, that will begin to be deliberated by council at a Finance Committee meeting on Nov. 21, with budget approval set for early February.