Tax exemption fuels push for climate-friendly retrofits in Saanich and Victoria
Case Study
Published: May 28, 2025
Updated: n/a
Relevant Topics: Policy, Transportation
In 2024, the City of Victoria and the District of Saanich launched BC’s first Revitalization Tax Exemption (RTE) designed to encourage electrification of heating and hot water in large commercial, multi-unit residential, and mixed-use buildings. The neighbouring local governments worked together as they developed and launched their respective programs including stakeholder and partner engagement, report writing, data integration, and grant applications.
Published: May 30, 2025
Updated: n/a
Relevant Topics: Incentives, Electrification
Climate Zone: 4
Context
The District of Saanich, located on the southern end of Vancouver Island, lies within the territories of the lək̓ʷəŋən peoples represented by the Songhees and Esquimalt Nations and the W̱SÁNEĆ peoples represented by the Tsartlip, Pauquachin, Tsawout, Tseycum and Malahat Nations. Part of the Greater Victoria area, Saanich is known for its blend of urban and rural lifestyle and diverse geography. The community has a population of over 114,000, making it the largest municipality on the island. Also located on the southern tip of Vancouver Island, within the territories of the Songhees and the Xwsepsum Nations, BC’s Capital City of Victoria is a popular tourist destination with a rich history and vibrant arts and cultural scene. Victoria has a population of over 91,000. Both communities are located within Climate Zone 4, where residents and visitors enjoy a temperate climate with mild winters and moderate summers.
Saanich and Victoria have been leaders within BC when it comes to climate action, with both communities declaring a climate emergency in 2019 and developing climate action plans with ambitious targets. Saanich’s climate plan, 100% Renewable and Resilient Saanich, calls for cutting GHG’s in half by 2030 and to Net Zero by 2050, transitioning to 100% renewable energy by 2050, and preparing for a changing climate through adaptation to climate change. Similarly, Victoria’s Climate Leadership Plan commits to shifting to 100% renewable energy by 2050 and reducing community-wide GHG’s by 80% by 2050. In both these communities, addressing emissions from buildings is a key part of achieving the targets set out in their plans. New building codes and standards, such as the BC Energy Step Code and Zero Carbon Step Code have advanced the energy efficiency of new construction, but retrofitting existing buildings is equally important and even more challenging as policy levers to regulate existing buildings are not as straightforward.
Contributors
Maggie Baynham
Sustainability Project Manager
District of Saanich
Derek de Candole
Community Energy Specialist
City of Victoria
Katherine Pearce
Regional Collaboration Lead
Community Energy Association
Problem
Despite the clear need to incentivize retrofits in existing Part 3 buildings, this is a challenge for local governments because there are no regulatory tools available to compel fuel switching, and there are limited options to support rental apartment buildings and commercial buildings due to the Community Charter’s restriction on assistance to businesses.
As in most communities, Saanich and Victoria must accelerate building retrofits to achieve greenhouse gas (GHG) reduction targets. In Saanich, for example, existing buildings account for 34% of 2020 community-wide GHG emissions. To achieve a 50% reduction in GHG emissions by 2030, as set out in the community climate plan, 40% of natural gas space and hot water heating systems in existing buildings (residential, commercial, and institutional) would need to be replaced by renewable energy such as high efficiency electric heat pumps by the end of the decade. Although Saanich has implemented a variety of programs to support transitioning toward zero-carbon buildings, the municipality is not yet on track to meet GHG reduction milestones. One of the areas identified for targeted support includes retrofitting of Part 3 buildings. “The direction was laid out in Saanich’s 2020 climate plan as well as our housing strategy – both identify a need for providing incentives to encourage energy retrofits in these buildings,” says Maggie Baynham, Senior Sustainability Planner with the District of Saanich. “As well as achieving our climate action goals, an important priority for the community is preserving and renewing existing purpose-build rental housing and supporting affordability.”
Residential buildings intersect with and potentially impact many community priorities including health, equity, and resilience. For this reason, Saanich and Victoria had to ensure any program intended to decarbonize Part 3 buildings does not lead to unintended consequences like renter displacement. Like Saanich, as well as being supported by the Climate Leadership Plan, Victoria’s housing strategy also calls for market rental retrofits to preserve and improve existing rental housing stock, protect tenancies, and prevent renovictions. In Victoria, nearly two-thirds of building-related emissions come from large multi-family, commercial, institutional, and industrial buildings, versus 36% from single-family homes, highlighting the importance of establishing programs to focus on retrofits in these building types.
Multi-unit residential buildings, including rental apartments, and commercial buildings face unique challenges when it comes to energy retrofits. For example, long payback periods for emission reduction upgrades, and incentive splitting (i.e., owners pay for upgrades, but tenants pay utility costs so benefit from energy and cost savings). Although there are some existing grant programs for Part 3 buildings, such as rebates under the Province’s CleanBC Commercial Programs and BC Hydro programs, the incentives available are insufficient to overcome high capital costs barriers in many cases. “Very low uptake within the region pointed to the need for additional support to encourage building owners to undertake energy retrofits,” says Baynham. A 2021 survey of commercial and rental apartment building owners representing over 50 commercial buildings in the District of Saanich found that the largest barriers faced in undertaking energy-related upgrades include capital costs, insufficient return on investment, and available funding.
Part 3 Buildings
Under the BC Building Code, Part 3 buildings refer to those which have a building area 600 square metres or greater or are greater than three storeys, typically apartment buildings, condos, commercial, institutional or industrial uses.
“As well as achieving our climate action goals, an important priority for the community is preserving and renewing existing purpose-build rental housing and supporting affordability.”
Solution
In 2024, the City of Victoria and the District of Saanich launched BC’s first Revitalization Tax Exemption (RTE) designed to encourage electrification of heating and hot water in large commercial, multi-unit residential, and mixed-use buildings. The neighbouring local governments worked together as they developed and launched their respective programs, including stakeholder and partner engagement, council reports, data integration, grant applications, and bylaw development.
External partnerships were also key to the development of the program and to stakeholder engagement efforts. Local government staff worked with the Building Owners and Managers Association of BC (BOMA BC), the 2030 District, LandlordBC, and the Vancouver Island Strata Owner Association.
About RTE
In their 2023 Building Retrofit Strategy, the District of Saanich identified incentivizing electrification of Part 3 buildings through a Revitalization Tax Exemption program as a top ten “high impact” action. While a report by RDH Building Science commissioned by Saanich in 2021 found that the only suitable municipal tool currently available to support Part 3 building owners with a financial incentive towards energy retrofits is a Revitalization Tax Exemption, its application in support of climate action is a novel approach; typically these types of exemptions have been used for other purposes, such as preserving heritage districts, encouraging construction or renewal of multi-family buildings, or supporting downtown revitalization. However, “environmental revitalization” is an allowable use under the Charter. The program essentially offers a “tax holiday” to building owners by exempting properties with qualifying projects from municipal taxes for a period of up to ten years. Victoria’s program targets market rental apartment buildings meeting specific eligibility criteria, while Saanich’s program is broader, including commercial buildings, mixed-use buildings, and strata condominiums as well as rental apartments, with varying incentives available for different building types (see table 1).
| Location | Category of Building | Incentive |
|---|---|---|
| Victoria | Market rental apartment buildings | Up to 100% of eligible project expenses for a maximum of 10 years |
| Saanich | Multi-Unit Residential Buildings (rental apartment or condominium strata | Up to 100% of eligible project expenses for a maximum of 10 years |
| Saanich | Commercial Buildings with no electrical service upgrade and a gas backup | Up to 50% of eligible project expenses for a maximum of 3 years |
| Saanich | Commercial Buildings requiring electrical upgrade or no gas backup | Up to 80% of eligible project expenses for a maximum of 3 years |
| Saanich | Mixed-Use Buildings (non-strata): | Exemption Amount is apportioned based on residential and commercial floor areas. |
Municipal Revitalization Tax Exemption
A municipal revitalization tax exemption is a tool that can be used by local governments to exempt property from municipal property taxes, with authority provided under Section 226 of the Community Charter. They are commonly used to preserve heritage districts and support downtown revitalization. Of note, the authority to provide a revitalization tax exemption is not subject to section 25 of the Community Charter which prohibits assistance to businesses.
Concierge Support
In addition to financial barriers, one of the main challenges facing many property owners and building managers is a lack of knowledge and experience with identifying opportunities for energy efficient upgrades. Many owners have a desire to reduce energy use and GHG emissions but don’t know where to begin, which is where a dedicated program to guide owners through the process can provide invaluable support. “From what we’re seeing so far in the capital region, having a complementary retrofit support service in place to support building owners through the process is critical to the success of any retrofit incentive program,” says Derek de Candole, Community Energy Specialist with the City of Victoria. “Retrofits are much more complex than like for like replacement, especially in these larger buildings and buildings owners need support to navigate their options and fully benefit from available local and provincial incentives.”
Along with the tax exemption program itself, Saanich and Victoria collaborated and pooled funding to partner with Landlord BC and BC Hydro to offer the successful Rental Apartment Retrofit Accelerator (RARA) Program, initiated in Vancouver in 2023, in their communities. Under the program, LandlordBC supports rental building owners in exploring electrification upgrades and putting together a business case. Participants are then supported through the retrofit process, including accessing the tax exemptions from Victoria and Saanich. The City of Victoria and District of Saanich also launched a Strata Energy Advisor Program through a partnership with the Zero Emissions Innovation Centre (ZEIC) to support strata owned condos to navigate energy upgrades. Finally, commercial building owners can access support through BOMA BC’s Decarb Accelerator Program.
Research and Engagement
Both Saanich and Victoria conducted an extensive amount of research and industry engagement over a multi-year process. In the City of Victoria, a 2017 Market Rental Revitalization Study provided the basis of their inventory, research, and building owner engagement, while Saanich conducted a series of reports and industry engagement listed in the sidebar. For detailed findings of Saanich’s engagement view their summary of the program development and stakeholder engagement. Throughout the research and engagement process, both communities collaborated in the exchange of information. Overall, the introduction of a tax exemption program was highly supported by building owners, with survey results finding it to be the most preferred incentive and 83% of building owner survey respondents ranking it within the top three preferred tools.
Outcome
Benefits of the program are expected to go beyond GHG emission reduction to provide multiple co-benefits to the community.
Public health impacts related to extreme heat events are a growing concern in the region and retrofit projects that include the installation of heat pumps will provide cooling to buildings, as well as the opportunity for increased air filtration and ventilation during wildfire smoke events.
Cost savings and affordability are known benefits of energy upgrades. Converting to efficient systems like heat pumps and improving energy efficiency reduces energy costs and ultimately improves housing affordability.
Distributing benefits and incentives to renters and lower-income households who have less control over upgrades undertaken in their homes and face additional barriers to retrofits that can improve comfort and lower energy costs. According to Baynham, “Equity was an important part of the framing of the program – there are many incentives available for retrofits of single-family homes but we wanted to ensure that underserved demographics also benefit from climate action.” A consideration as the program was being developed was aligning with municipal housing strategies to retain and renew purpose built rental housing at affordable rates, as well as ensure that permanent tenant displacement will not occur as a result of retrofits.
In the case of the City of Victoria, the program also incorporates provisions for improving the seismic resilience of buildings.
An additional anticipated outcome of the program is developing industry capacity for the electrification of large and complex buildings, which is earlier in the market transition than single family homes. The program will provide the opportunity to demonstrate technologies and methods for electrification, build local capacity, create local case studies to inspire action, and demonstrate the value of both the concierge support service and tax exemptions.
Learnings
Don’t forget about co-solving
The tax exemption program is novel application of an existing regulatory tool and it is expected to reduce GHG emissions from larger more complex buildings while co-solving related community challenges – resilience, equity, affordability, and health. By linking to existing actions outlined in their respective community climate action plans and housing strategies, Victoria and Saanich were able to make a strong case for a program that provides multiple benefits.
Collaborate to increase impact
Collaboration and relationship building were important success factors of this initiative. As staff from Victoria and Saanich shared resources and information throughout the process, each had the knowledge and insights to refine bylaws to meet their needs and context. Furthermore, by combining their capacity and financial resources, they were able to leverage other funding and programs for greater success and more holistic support to building owners. A unified approach also made it easier for stakeholders to support engagement and advance their priorities.
Engage Building Owners with Support from Supportive Organisations
By engaging building owners through surveys and conversations, the local governments have connections that can translate through implementation. Saanich and Victoria leveraged support from partners including Landlord BC and the Building Owners and Managers Association of BC at various stages of the process to share information out and support development of their programs.
Rely on Data to Build Your Case
The road to bylaw implementation for Saanich and Victoria started in 2019 with inventories and modelling to develop an understanding of the existing building stock and energy usage in the communities. “For municipalities interested in implementing a tax exemption program, a good place to start is with mandatory energy and emissions reporting,” says de Candole. “Compliance is not difficult, and the insights gained will lead to a far more nuanced program.”
Integrate Support for Building Owners
We know energy retrofits to single family homes can be complex and location specific. This is more so the case with residential MURBs. Accessing the RARA program allowed the local governments to offer more wraparound support to building owners who do not have the expertise to navigate mechanical system upgrades.
Contributors
Suzanne Therrien
Active Transportation Planner
City of Kelowna
Danielle Wiess
Director of Transportation Initiatives
Community Energy Association
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