Important change coming to property tax assessments
Announced in the BC Legislature on Monday, October 15, the Provincial Government is proposing changes to the Assessment Act that will help protect jobs and support local economies.
This is an issue I have been working on and advocating with the Province for, not just for industrial properties, but other properties that are undergoing change in use that has been triggering assessment increases from BC Assessment.
In our community, one such industrial property is the Flavelle Sawmill, which has an OCP update recently that has resulted in a significant increase in the property value assessment. Faced with such an increase in assessment, and by extension taxes, the property owners may decide to accelerate the decommissioning and/or redevelopment of the site, meaning a loss of the current jobs, before the plans for the future have fully developed. This provides an artificial outside influence on the rates and the timeline for the process that doesn’t help the community and the land owner plan their transition as they should.
A similar concern is with development of affordable housing projects, like the St Andrews United Church, where the taxes could increase during the construction phase – which can be over 2 years – and those costs come straight off the affordability of the units in the project.
The Province hasn’t responded to this concern, but I’m hopeful addressing the industrial properties indicates the government understands and is willing to take action on the issue.
The information bulletin from the Province is below, the legislation is: http://www.bclaws.ca/civix/document/id/bills/billscurrent/3rd41st:gov42-1
My original correspondence with MLA Glumac and Minister Robinson:
Further to my previous conversations with Minister Robinson, I wanted to follow up as promised with some further information on an issue around property taxes and assessments.
This issue was first brought to light by Mr. Robert Brown of Catalyst, during a recent application regarding the property at St Andrews United Church. You will remember this is a project with St Andrews, SHARE Family Services and Kinsight in a partnership to provide a suite of services and affordable housing, along with a modified church facility, on the site on St Johns Street in Port Moody.
In conversation with Mr. Brown, and has been repeated with other developers of late, it was noted that there was an opportunity to further the affordability of the units in the project through the deferment of the tax increase associated with the redevelopment.
Of course, this is a huge conversation, but I am looking only at the one simple example as presented at this point.
It is noted that once the project is approved, with OCP, zoning, and permits, the property is then re-assessed at a higher use than current, although the construction timeline means that occupation is likely over 2 years away. This means the project will incur taxes over the period of construction on their new assessment and classification, which can , over that time, be a significant amount of money. In Mr. Brown’s case, his point was that those taxes, if they needn’t be absorbed in the project, could be directly passed on to the future residents – as Catalyst is a non profit.
This seems like a non-starter from the City’s point of view, as new taxation coming on stream to the City becomes ‘absorbed’ into our budget, and effectively is a tax reduction for all current tax payers.
If we were to delay collecting taxes on this property, it would simply be ‘status quo’ on our tax role until the property was occupied, at which point the residents would be contributing to the taxes and utility payments. In theory an unoccupied building isn’t contributing any costs or overhead to the city through resident services, so there shouldn’t be any loss to the City for this. I won’t go on about this as I know you are aware of the implications, but, as I understand it, the City has no ability to ‘exempt’ or delay taxes once the property is assessed, other than through the permissive tax exemption process which doesn’t fit this situation. I know there are similar situations, one of which was addressed in a UBCM motion about mixed use developments having the commercial components assessed at residential values, and that our neighbours in Coquitlam are wrestling with the changing values in Austin Heights with similar land use driven assessment increases.
I’m told this requires Provincial Government amendment of the process – if that’s wrong and there is something we can do as a City , I would like to hear that and see what we can do to implement. If that is true, I would encourage you and the government to look for the amendments that would solve this issue.
On a somewhat related note, I know also you have been approached by the Flavelle sawmill ownership about the issue with their assessment and tax issue. The details of that, as I understand it, is that the property, on our OCP amendment to allow for ‘general urban/mixed use’ development, has been re-assessed by BCA at ‘highest use’ valuations, which are significantly (exponentially ?) higher than the current use. The planning process for the Flavelle site, we anticipate, could be 10-20 years, and there is no way the current sawmill operation could absorb a massive tax increase – and we fear this may actually motivate the owners to pre-emptively shut down the mill operations. As the mill is not a Port property, their tax RATE is currently one of the highest in BC at around $ 70 / 1000 valuation (municipal), and if that rate is applied at a residential or commercial land valuation, rather than industrial, the taxes would be astronomical. (our current residential tax rate is 2.47 municipal and commercial at 6.92 municipal, so the resulting tax charge would be 10 to 28 times higher).
Again, this property is not changing use (yet) and it would seem proper that the assessment doesn’t reflect a speculative or forward looking value, but would change when the land use already changed.
Perhaps that is too simplistic as I may not be considering a myriad of other possible scenarios, but, in addressing this the Province might be able to have some system whereby the Municipal Council would need to agree to ‘protect’ valuations for a period of time during transitions to prevent these outcomes.
I hope this captures the information behind this issue as we discussed and look forward to hearing your ideas on solutions and how we can move this forward to ensure our tax payers are being treated fairly, and certainly we are not putting additional financial pressures on developments providing below market affordable housing.
Please let me know if more information is needed, and how we can move this forward.
Mike Clay – Mayor
City of Port Moody
e/ firstname.lastname@example.org p/ 604 469 4515