Dan Fumano: Bad news for small B.C. businesses hoping for property tax relief this year
Credit to Author: Dan Fumano| Date: Wed, 25 Sep 2019 03:10:16 +0000
Several of B.C.’s largest cities and business groups are pitching a solution to a problem that started years ago in Vancouver and has, more recently, spread to other municipalities: soaring year-over-year property tax hikes forcing the closure of mom-and-pop businesses.
Now, with elected officials from across the province in Vancouver this week for the annual Union of B.C. Municipalities convention, representatives of the business and cultural sectors are fighting to get the provincial government’s attention on property tax reform, and push them to act fast enough to provide relief for the 2020 tax year.
But that doesn’t seem likely.
The property tax solution those groups want isn’t on the horizon, the province confirmed Tuesday to The Vancouver Sun. At least not this year.
A resolution on this week’s UBCM agenda seeks to call upon the B.C. government to move quickly toward the solution chosen by an intergovernmental working group — including municipal and provincial government staffers — as the best way to provide relief to small businesses facing unsustainable property tax hikes.
The problem is this: each property is assessed — and taxed — based on “highest and best use,” meaning its most probable use to return the highest value, considering factors like zoning. That means a long-running family business in an older one-storey building on a street filled with highrise development might be paying taxes on several storeys of unbuilt development potential above their heads.
In some cases, long-running businesses have seen property taxes triple within a few years. These increases, far beyond what even a popular, successful business could pay, have already driven some beloved neighbourhood institutions out of business.
A working group met last year to tackle this problem, including senior staff from the Ministries of Municipal Affairs and Finance, B.C. Assessment, and the CFOs of Metro municipalities. Their proposed solution: creating a new commercial property subclass, which would allow municipalities, if they choose, to charge businesses a lower tax rate on unbuilt development potential over their buildings.
Graphic by Nathan Griffiths
The “subclass” proposal was first revealed publicly in July, when Vancouver staff presented it to council. At that time, Stewart said he understood the provincial government could enable the subclass through regulatory change, without needing to wait for the legislature to reconvene in October.
The change, the mayor said in July, “could happen with the stroke of a pen.”
But the Ministry of Municipal Affairs has since clarified it won’t be so simple.
In an email Tuesday, ministry spokeswoman Lisa Leslie wrote: “One of the biggest hurdles to overcome with this approach is the legislative complexity. Though it has been suggested that it would only require a regulatory change, the province has determined it would require legislative amendments to at least three separate pieces of legislation.”
On Monday, the first day of UBCM, a group of business, arts and real estate representatives wrote a letter to B.C. Premier John Horgan, urging his government to take “immediate steps” to create the subclass, and “publicly declare during UBCM that they will provide this much needed tool for municipalities in time for the 2020 tax year.”
“The arts and culture community, the business community, and the municipal community are all calling for this change, so we’re hoping to put a little pressure on the province to show that they’re listening,” said Aaron Aerts, Western Canada economist for the Canadian Federation of Independent Businesses, who signed this week’s letter to Horgan alongside representatives of the B.C. Chamber of Commerce, Vancouver Business Improvement Association, B.C. Alliance for Arts and Culture, Greater Vancouver Board of Trade, Urban Development Institute, and others.
The B.C. legislature reconvenes Oct. 7, and B.C. Assessment makes determinations about properties near the end of October each year. Many municipalities and small business advocates, Aerts said Tuesday, have been hoping to see this change made inside that “really narrow window,” so as to provide relief in the 2020 tax year.
But, the ministry clarified later in the day, that timeline “would not be possible.”
“The subclass proposal presents a number of administrative and legislative challenges, including the need for B.C. Assessment to generate new values for the unbuilt density of thousands of properties,” Leslie’s statement said. “As this would not be possible to achieve for 2020 implementation, government is engaged with various stakeholders in evaluating several alternative actions and strategies to mitigate the impact in the meantime.”
Later in the day, responding to the ministry’s statement the subclass wasn’t possible for 2020, Aerts said the government has had “more than enough time to evaluate the options,” as his group has been pushing on this for months.
Aerts shared an email, from earlier this month, where Municipal Affairs Minister Selina Robinson wrote that her staff was “evaluating the request to implement a commercial subclass for 2020.”
Aerts said: “If there is a will, I believe there’s a way.”