Ottawa's relatively generous tax policy for space-hogging downtown parking lots should be updated to encourage smarter development, an Ottawa city councillor believes.

"We want to invigorate, we want to revitalize downtown, and I think to do that we have to make sure we're sending the right tax signals to do that," Rideau-Rockcliffe Coun. Tobi Nussbaum said Wednesday.

Right now the typical commercial property owner in Ottawa pays 1.9 times the residential property tax rate, while owners of surface parking lots pay only 1.3 times the residential rate.

Nussbaum believes that creates an incentive for parking lot owners, who might otherwise put their property to better use.

"We're actually providing a tax benefit, a tax advantage, to surface parking lots and vacant lots," he said. "I think everyone would agree that a surface parking lot or a vacant lot is not as beneficial as a small business."

Mayor concerned

'We have to make sure we're sending the right tax signals,' said Coun. Tobi Nussbaum. (CBC News) Councillors agreed unanimously Wednesday to ask staff to come back with recommendations to bring the city's commercial tax policy in line with its goal of promoting transit-oriented development.

Nussbaum hopes to have those suggestions before council sets the 2019 tax rates.

Mayor Jim Watson supported Nussbaum's motion, but expressed some concerns about hitting lot owners with higher taxes.

"I hope this is not just about adding a new tax to make it more expensive for people to visit the downtown core," Watson said.

Last year the city brought in a similar change designed to discourage vacant buildings, which Watson described as a "blight" on the city.

Council voted to end tax rebates for owners of vacant property, which some councillors criticized as an incentive to let buildings go to ruin.