It was a wholesome discussion at city council this week as elected officials and staff talked permissive tax exemptions – and why the program is not working.
“Staff is looking for a clear understanding from council on direction, a ways to achieve this and current problems,” said city CFO Teri Vetter.
Last year, 2022 was the first year the City used their new PTE Policy. Quickly it was realized the policy was not working as anticipated.
“The current method for the PTE bylaw doesn’t seem to be working as anticipated; having threshold amounts and trying to calculate percentages for exemptions is proving to be very difficult,” Vetter added.
“When exemptions are done through bylaw, all taxes are exempted, not just the municipal portion; current structure puts the tax burden on remaining tax payers for other government taxes (School Tax, Regional District, Hospital District, Municipal Finance Authority and BC Assessment).”
The sentiment was echoed by mayor Darcy Dober.
"Right now when we exempt (a group), the rest of the taxpayers are bearing the cost."
One of the main issues with the current policy is staff are always working on the prior year assessment which makes it very difficult to accurately determine a percentage of exemption for organizations, and try to achieve what Council set out to achieve when the policy was implemented.
Assessed values of 2023 are different than 2022.
“We are always working on previous years assessment, the city is unable to estimate accurately.”
Another factor is assessments have been increasingly higher than expected over the last two years for both residential and commercial properties, making it very difficult to predict assessments for the next year.
The current policy has a phased-in approach, meaning that over a 4 year period, organizations that had taxes above the thresholds, would begin to pay the variance in increments of 20, 45, 70 percent and by 2025 100 percent of the variance would be borne by the organization.
“For example, if an organization’s municipal taxes were $6,500 and their threshold was $5,000, the variance would be $1,500 and if we were in the 3rd year, they should pay 70 percent of the $1,500 which would be $1,050 of municipal taxes.”
Next steps include determining and defining what council’s objectives are regarding PTE’s, how will the city achieve these objectives, what are council’s concerns regarding PTE’s, and how can the city address them.