Hodges Hamm

Saint John realtor Hodges Hamm says a tax holiday on developing properties would encourage more construction. (Courtesy Re/Max)

A Saint John realtor says legislation should be changed to give property developers a tax holiday until their units are sold.

Hodges Hamm believes such an incentive would encourage more construction in the city, and could actually generate more tax money in the long run.

"There's really no money lost to the province," he said.

Hamm suggests assessments be kept low on improved building lots and new housing construction until the properties are sold. Under the current system, developers begin to pay full property taxes as soon as they improve a lot or complete a housing unit.

Hamm says it can take several years to sell properties, which becomes a disincentive for developers.

"Even though he hasn't sold the lot he now has this encumbrance on him to pay the taxes that are assessed on that particular property," he said.

Hamm presented the idea in a letter to Saint John common council on Monday, and urged the city to raise the issue with the provincial government.

Local government reforms under discussion

Hamm's proposal isn't allowed under current provincial legislation, and the city can't offer tax holidays on its own, said city manager Pat Woods.

"We don't have the authority to provide tax relief, so that would be problematic," he said.

However, Coun. Shirley McAlary says she likes the idea.

"The developer would win, the new homeowners would win, the city would win, the province would win," McAlary said.

"I think we have to think of new ideas in this day and age in order to make the city and the province more attractive."

Coun. Bill Farren suggested the city introduce other kinds of development incentives instead.

"Let's think outside the box, call it what you want, and let's move on it," Farren said.

Farren says the city can offer grant money, which can be recovered later through increased assessments.

Lisa Harrity, a spokesperson for the Department of Environment and Local Government, says the province is in talks with municipal associations about reforming the Municipalities Act and Community Planning Act.

But the issue of a tax holiday is not currently part of those discussions, according to Raymond Murphy, the executive director of the Union of New Brunswick Municipalities.

Harrity says a draft framework has been prepared, but nothing has been decided and there is no time frame for coming up with a plan.