COLD LAKE - Aiming to help families and residents enter the housing market by promoting the construction of small, affordable homes, City of Cold Lake council recently discussed a draft of a new starter home incentive policy, during the Oct. 15 Corporate Priorities meeting.
This policy would focus on creating homes with a price tag of $350,000 or less, along with providing incentives for both builders and potential homeowners.
"Administration has drafted a starter home incentive policy as a jumping-off point to see whether the committee would consider it worthwhile to pursue further," said Andrew Serba the City’s Strategic Initiatives Manager.
Serba said the policy proposes offering rebates for both development and building permits, along with substantial property tax rebates, to help reduce the financial burden on new homeowners.
He elaborated on the current state of the Cold Lake housing market, noting, "Administration's understanding is that locally, builders have a very strong business case for homes with a purchase price in the $500,000 to $600,000 price range, which is why the local real estate market favours this price range for much of the new construction."
However, for more affordable starter homes, builders face challenges. Serba added, "Builders have indicated that they would require more volume in order to shore up the business case for those types of homes."
The draft policy would incentivize the demand for "smaller, no-frills homes," which Serba defined as single detached dwellings or row housing units of up to three dwellings. These homes would have a footprint of up to 700 square feet and no more than 1,400 square feet of total floor space. Notably, to keep costs low, homes would be sold without garages or accessory buildings.
In addition to rebates on building permits, the policy proposes property tax rebates for buyers. "The policy is drafted to provide the purchaser with a rebate worth 100 per cent of the municipal property taxes over the first three years, followed by a 50 per cent rebate in the fourth year and a 25 per cent rebate in the fifth and final year," Serba said.
The draft policy is still in its early stages, with further refinement and discussion to come.
"This policy is very much a draft. We have highlighted certain portions in red where things can be changed or moved around slightly to redefine what a starter home in the Cold Lake context might look like," Serba concluded.
CAO Kevin Nagoya provided additional context regarding how the policy fits within broader governmental initiatives.
"The Government of Canada provides a rebate program for GST and I believe that number is $399 that you can have your GST refunded, and that is for a smaller home incentive program,” he explained.
Nagoya emphasized that Cold Lake's policy aims to complement federal incentives by creating demand for affordable homes, especially for first-time buyers.
He also discussed the economics of home building. "As soon as you start to bring down those sizes, those numbers get squished, and you need to have a little bit of volume," he said, highlighting the importance of finding a balance between affordability and builder profitability.
Mayor Craig Copeland expressed hope that the policy would offer a path into homeownership for residents who are currently renting.
"The housing market can be quite challenging to break into, and so it’s important for a community to have a variety of housing options," he said. "We’re hoping this policy will create some more affordable homes for people who don’t already have equity built up in real estate."
Council made the recommendation to direct administration to bring a draft of the Starter Home Incentive Policy to council for consideration, with amendments that reflect the committee’s discussions.
Homes left in disrepair
The meeting also addressed a second initiative to deal with abandoned properties in Cold Lake, where derelict homes have been left in disrepair.
Council recommended pursuing a policy that would rebate landfill fees, up to $10,000, for approved demolitions of abandoned homes.
"Some buildings can’t be saved, and the cost to remove them is high,” Copeland said, after the meeting. "At least this way we can try and alleviate some of the costs to bring the property back to something that makes sense to develop again.”
