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If the Yellow Door Housing Corp. were renting its rooms and apartments to low-income people in Toronto instead of Montreal, it would likely be exempted from property taxes. Same thing if it were in Edmonton, Calgary, Halifax and some communities on Vancouver Island.

Instead, the non-profit corporation that houses vulnerable people in Plateau-Mont-Royal borough is spending what little money it has on lawyers’ fees to fight the City of Montreal in court to lower — not eliminate — its nearly $17,000-a-year property tax bill.

Richard Phaneuf, president of the Yellow Door Housing Corp., says it’s frustrating to see tax relief is available on non-profit affordable housing in other parts of the country but not in Quebec.

Non-profits have told The Gazette that property taxes account for 15 to 35 per cent of building operating costs.

“If we were in Toronto, we wouldn’t be paying taxes,” Phaneuf said.

“The City of Montreal says: ‘We cannot do anything about it because it’s (Quebec’s) Municipal Taxation Act that has to be changed.’ But the City of Toronto has managed it.”

The municipal tax treatment of non-profit housing in Quebec is unlike other provinces, such as Ontario, British Columbia, Nova Scotia and Alberta, an examination by The Gazette has found.

The main difference is that other provinces seem to recognize that non-profit affordable housing serves the public good and thus grant tax relief and tax exemptions.

In Toronto, for example, new affordable developments built through the city’s Open Door Affordable Housing Program are automatically exempt from property tax, along with development and permit fees. The city also offers property tax subsidies or exemptions to existing affordable housing providers.

Calgary explains on its website: “Tax exemption status is generally based on the belief that the use of the property returns a sufficient community benefit to society earning the relief of tax obligations.”

Quebec, however, offers no such possibility. And municipalities in Quebec aren’t permitted under the Act Respecting Municipal Taxation to charge a lower property tax rate on non-profit residential buildings charging below-market rents than on other residences.

Quebec only allows temporary non-profit accommodation, such as homeless shelters and transitional housing, to apply for a tax exemption, along with artist studios and recreation facilities that are open to the public. Even then, a handful of cities — notably Montreal — levy a special “compensation” tax on those tax-exempted shelters and transitional housing.

Another difference between Quebec and the other provinces is that the granting of tax exemptions in other provinces is generally at the discretion of municipalities.

In British Columbia, for example, a local tax exemption is called a “permissive tax exemption” and can be approved by the municipal council for a term of up to 10 years.

In Quebec, the provincial Commission municipale du Québec (CMQ) decides on tax exemption requests for the owners of transitional housing and shelters.

Quebec’s Bill 31, sanctioned in February, will make non-profit post-secondary student housing eligible for property tax exemptions. Requests for those exemptions will also go through the CMQ.

Meanwhile, Bill 39, which was sanctioned in December, opens the possibility for municipalities to offer unquantified “aid” to different types of non-profit housing owners.

The new law allows a municipality to provide aid, including in the form of a tax credit, to assist the “proper functioning of an organization that manages social and affordable housing,” as well as to transitional housing for people in need and student housing. Several housing groups say it’s as yet unclear whether municipalities will apply the tax credit, or how it would work.

Montreal is examining the new powers granted under Bill 31 and Bill 39, city spokesperson Sara-Eve Tremblay said in a recent email. “Our intentions in this direction will be known in the near future.”

There is cynicism, at least at the Yellow Door Housing Corp., about whether Montreal will avail itself of Bill 39 and provide property tax credits to non-profits.

Yellow Door is one of two dozen non-profit housing corporations and co-operatives making up the Milton Park Community housing development.

Phaneuf’s organization is seeking a reduction of its nearly $2-million municipal property assessment on Montreal’s 2020-22 valuation roll and its latest $2.6-million property assessment on the 2023-25 roll so its property tax bill can come down. Because its tenants are low-income, Yellow Door says it can’t pass on its tax increases through rent increases.

Yellow Door won a partial victory in the Court of Quebec in January, but the city has opted to contest the judgment in Quebec Superior Court.

The Court of Quebec judge agreed with Yellow Door’s argument that the unique private law creating the Milton Park Community in 1987 and the co-ownership agreement between Milton Park’s non-profits should affect Yellow Door’s municipal property assessment since they prevent property in the community from being sold for market value and require any buyer to commit to first offering units to low-income people.

“The fact that they (the city) go and appeal the Yellow Door judgment calls into question their real political will to reduce the taxes for non-profit housing,” said Manuel Johnson, a lawyer for the non-profit.

“Why would they go and appeal otherwise?”

Johnson said he believes the city’s dependence on property tax revenue explains its unwillingness to part with any of it. In Montreal, 64 per cent of the city’s $6.99-billion operating budget this year is funded by taxes on property. It’s also a regressive tax since it ignores income and ability to pay, he said.

Cities in a handful of states in the U.S., including Missouri, Maryland, New York and Pennsylvania, collect a local personal income tax. Some cities also collect a local corporate income tax.

“Property tax is going to penalize someone who’s not using their home for speculative purposes,” Johnson said.

“So somebody who saved up and bought a home when prices were reasonable now is also having to pay the price of the spiralling, out-of-control real estate market. The problem for the municipalities is that it’s their main source of revenue.”

How housing non-profits fare in different provinces

British Columbia:

Municipalities can pass a “permissive tax exemption” bylaw to exempt non-profit housing from property taxes for a term not exceeding 10 years. A municipality can also pass a permissive tax exemption for such categories as heritage properties, art galleries and museums owned by charities and philanthropic organizations, and fields and facilities owned by athletic clubs and open to the public.

The district of Saanich, on Vancouver Island, recently adopted the permissive tax exemption on affordable rental housing owned by non-profit affordable housing organizations. The exemption term is five years for new development and four years for existing buildings.

The city of Nanaimo also offers a permissive tax exemption to affordable housing organizations.


Calgary offers a property tax exemption to non-profit affordable housing intended to relieve poverty. The exemption is renewed each year. Starting in 2024, more non-profit affordable housing providers are eligible for tax exemptions, the city says.

Edmonton offers an annual tax grant to non-profit affordable housing to offset property taxes. The non-profit must have an agreement with the province or the city ensuring rents will be no more than 80 per cent of the market rental rate or less than 30 per cent of pre-tax gross household income.

The Alberta government recently introduced Bill 20, which calls for a full property tax exemption for non-profit, subsidized affordable housing in the province. The legislation is controversial, however, because it would also limit certain municipal powers, like the ability of municipalities to require non-statutory studies for building and development permits.


Toronto offers property tax relief and relief of water and solid waste fees to affordable housing providers.

For example, the city provides a tax exemption to housing providers with charitable non-profit status and to non-profit housing providers that were originally financed by Canada Mortgage and Housing Corp. and have signed new operating agreements with Toronto. Other non-profit housing corporations and co-operatives with service agreements with the city and falling under Ontario’s Housing Services Act receive a subsidy from the city in the full amount of their property tax bill.

In 2016, Toronto introduced the Open Door Affordable Housing Program, which makes new affordable housing automatically exempt from property tax.

Other municipalities also provide property tax exemptions to affordable housing providers, including Ottawa, Waterloo Region, Chatham-Kent and Wellington County.

Nova Scotia:

The Halifax Regional Municipality offers a partial tax exemption of 25 to 50 per cent to non-profit and registered charitable organizations that provide affordable rental housing, including co-operatives. The exemption rate depends on whether the organization is included in Nova Scotia’s Capped Assessment Program (CAP), which limits residential assessment increases year to year based on inflation.

Story by: Montreal Gazette