PROPERTY TAX 101

Vancouver Fair Tax Coalition

• Non-partisan group

• Represents 27 organizations (43,000 Vancouver businesses) on property tax issues

• Seeking fair municipal property taxes for businesses and jobs.

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Vancouver is known as a great place to live. We also want it to be known as a great place to do

business.

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Our Purpose

• Encourage livability in our City• Ensure jobs for our residents• Protect the sustainability of our City and

neighbourhoods• Preserve the diversity and unique

character of our City• Ensure that business thrives

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PART 1

Assessment Valuation

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Assessment 101 – Roll Creation

British Columbia employs an “Ad Valorem” system, meaning “based on value”. The roll is created by BC Assessment which produces independent, uniform and efficient property assessments on an annual basis for all property owners in the province.

– July 1 – Valuation

– October 31 – Physical Condition (classification)

– November 30 – Legal Title

– December 31 – Assessment Roll and Notices

– March 31 – Roll Authentication 6

Assessment 101• Value:

– Market Value at Highest and Best Use– Approaches to Value: Income, MCA & Cost

• Value is separated into two components. Land & Improvements

• Value and Class are separate and distinct from one another– Value does not reflect current use in many instances

• Classification is based on the actual use of the property

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Prescribed Classes of Properties Classification 2011 Value % of Roll % of #• Class 01 – Residential ($153 billion) 83.4% 91.8%• Class 02 – Utility ($179 million) 0.1% 0.1%• Class 03 – Supportive Housing ($0) 0.0% 0.0% • Class 04 – Heavy Industry ($195 million) 0.1% 0.0%• Class 05 – Light Industry ($622 million) 0.3% 0.2%• Class 06 – Business/Other ($29 billion) 15.9% 7.3%• Class 08 – Non-Profit/Recreational ($303 million) 0.2% 0.5%• Class 09 – Farm ($122,000) 0.0% 0.0%

• TOTAL un-averaged 2011 Vancouver Roll - $183.6 billion• Total # of Properties – 189,966

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Part 2

Municipal Property Tax

Property Tax 101Municipal tax rate bylaws are required to be adopted before May 15th of each year.

2011 Property Tax Rates (per $1000 Taxable Value

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How Municipal Tax Rate is Calculated?

• City Council determines revenue requirements and sets (approves) the budget. (Total property taxes to be collected)

• Implementation of Tax Deferral by-laws – Land averaging or capping (Vancouver Charter)

• Council sets fixed share of the total tax levy for each property class

• Tax rate for each class is calculated by:

Amount of tax to be collected from the class (City)Total taxable property value of the class (BC Assessment)

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Municipal Taxes Payable vs Total Property Tax        Mill Rate (per $'000)    

Type of Property   Value of Property   General Levy   Taxes Due             

Municipal Property Tax             Residential (2,500 sq.ft.)   $1,000,000   2.12815   $2,128             Retail (2,500 sq.ft.)   $1,000,000   9.19882   $9,199                    

Other Property Tax (School, BCAA, GVRD and Finance)             Residential (2,500 sq.ft.)   $1,000,000   2.05183   $2,052             Retail (2,500 sq.ft.)   $1,000,000   9.46545   $9,465                    

Total Property Taxes             Residential (2,500 sq.ft.)   $1,000,000   4.17998   $4,180             Retail (2,500 sq.ft.)   $1,000,000   18.66427   $18,664       

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Part 3

In 1983, the Province empowered the municipalities to determine property tax allocation for each class of properties.

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Assessment Growth In Vancouver

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Growth in Properties in Vancouver

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Part 4

Hot Issues

Business in Vancouver

Source: Metro Vancouver – Key Facts

  1998 2010   Growth

         

Total Business Licences Issued (New & Renewals) 50,666 ?  ?

in Vancouver       

        

Total Vancouver Housing Starts from 1998-2010      50,973

        

Vancouver Population Growth 550,433 633,700  83,267

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Land Assessment AveragingSince 1993, implemented 3-year land averaging policy to help mitigate the impact of uneven year-over-year assessment changes

Issues:•Land of Strata and non-strata properties determined differently•City of Vancouver statistical analysis of issue is faulty and misleading.•Can result in property taxes being exacerbated rather than mitigated•It overly complicates a rather simple process•There are better ways to deal with market ‘hot spots’

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Tax Topography

Tax Revenue vs Demand on Services

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Cambie CorridorIssues:•From 1990 to 2004, extensive planning and funding of Canada Line by BC Gov’t and Translink•Construction Commences October, 2005 and ends the summer of 2009 putting many street front businesses at risk.•BC Government enables legislation to aid business through tax relief but is not used by the City of Vancouver.•Canada Line Opens August 17, 2009

•To take advantage of this transit investment, the then City embarks on a major planning initiative to develop a land use policy plan for the Cambie Corridor between 16th Avenue and the Fraser. Plan finalized May 9, 2011

–While City plans, land speculation drives up taxes for street retail businesses.

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Consumption of Services2011   Residential Classes   Business Classes

         

Total General Levy Paid   $305,754   $276,594

% Paid of Levy   52.5%   47.5%

         

% Services Consumed   76%   24%Value of Services Consumed   $442,585   $139,764

         

$ Levy Paid Per Consumed   $0.69   $1.9820

Metro Vancouver – 2011 Tax Burden

  Business/Other

Municipality Burden % of Assessment

Vancouver 44% 16%

Richmond 38% 16%

Burnaby 41% 17%

City of Langley 40% 23%

City of North Vancouver 39% 15%

Coquitlam 35% 11%

New Westminster 31% 11%

Delta 25% 12%

Surrey 26% 11%

Average (excluding Vancouver) 34% 15%

     

Source: Ministry of Community and Rural Development: 2011 Local Government Statistics     21

Number of New

Properties

         

  YEAR Residential Business  

    Class 1 Class 6  

  1991 1,751 -39  

  1992 2,097 -140  

  1993 1,787 31  

  1994 3,084 78  

  1995 4,847 338  

  1996 4,273 667  

  1997 2,517 610  

  1998 3,638 356  

  1999 3,753 565  

  2000 3,462 435  

  2001 2,073 992  

  2002 1,822 424  

  2003 1,646 83  

  2004 3,094 61  

  2005 2,213 -152  

  2006 4,833 -269  

  2007 3,533 111  

  2008 3,929 13  

  2009 3,523 311  

  2010 3,423 200  

  2011 2,335 1  

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