Editor’s note: We were amazed to hear the details of the taxes the City of Abbotsford gave away when it negotiated a deal with the developer of Highstreet Mall.
The taxes the City gave away and the costs the City absorbed in order to make the development happen are, in the eyes of many critics of the City’s Economic Development Department, a clear example of one of the reasons the City is in such terrible financial shape.
The fact that city councillors who were around while such deals were being made are being publicly quiet about the ramifications of their decision indicates either they are finding out what taxpayers think of the deal, or, as is so often the case with Abbotsford councillors, they may not have been paying attention when the decision was made and can’t answer their constituents when asked ‘Why’?
We asked Councillor Henry Braun what he thinks of the special deal Highstreet received and this is what he told us:
Henry Braun: The tax forgone over the next five years (2014 – 2018), is seven million ($7 million). The property tax forgone in 2014 is $2.2 million. As you may be aware, a “Commercial Revitalization Tax Exemption Bylaw” (Bylaw No. 2023 – 2010), was passed by Council in 2010.
I have no difficulty with a Revitalization Bylaw. More specifically, if an owner wants to demolish an old building and build a new one, or improve an existing building, I have no difficulty in phasing in the property tax increase that results in an owner spending money to increase the value of their investment. In other words, if the assessed value for the property is $200,000 and the new or improved building is assessed at $500,000, the $300,000 lift in assessed value is phased in over 5 years.
That is exactly how the ADBA Revitalization Bylaw works and I think it has contributed to the improvement in the old downtown of Abbotsford. Similarly, this what the Commercial Revitalization Tax Exemption Bylaw was supposed to do with larger projects, i.e., $10 million and up. For example, if a developer owned a old commercial building (along South Fraser Way), demolished the building and built something that was worth more than $10,000,000, they would qualify for a tax exemption under this Bylaw.
In my view, the key word is “revitalization” and I have argued that In the case of Highstreet, we are not dealing with revitalization that is in keeping with the spirit of [the bylaw]. The property in question was heavily treed, hence, there was no revitalization.
Since property taxes are the major component of Common Area Maintenance (CAM), costs that are passed on to the tenants, Highstreet has an unfair advantage relative to other commercial projects. For these reasons, I have raised this on several occasions at the Council table.
Following is the guidance the Province provided in 2008;
REVITALIZATION TAX EXEMPTIONS
Section 226 of the Community Charter provides authority to exempt property from municipal property value taxes. To use this authority, a Council must establish a revitalization program (with defined reasons for and objectives of the program), enter into agreements with property owners, and then exempt their property from taxation once all specified conditions of the program and the agreement have been met. Exemptions may apply to the value of land or improvements, or both. Councils are free to specify, within their revitalization programs, the amounts and extent of tax exemptions available. Revitalization tax exemptions are limited to municipal property value taxes (Section 197(1)(a) of the Community Charter only) and do not extend to school and other property taxes, such as parcel taxes. An exemption may be granted for up to 10 years. The authority to provide a revitalization tax exemption is not subject to section 25 of the Community Charter (prohibition against assistance to business). Section 396E of the Vancouver Charter also provides the City of Vancouver with authority to provide revitalization tax exemptions.
What is the intent?
Revitalization tax exemptions are a tool that Councils may use to encourage various types of revitalization to achieve a range of environmental, economic or social objectives. A revitalization program may apply to a small area or areas, a certain type of property or properties, a particular activity or circumstance related to a property or properties, or an entire municipality. Examples of revitalization objectives that could be encouraged through the use of a revitalization tax exemption scheme include:
• environmental revitalization – encouraging “green” building technology (e.g. a Council could exempt properties that install solar panels to conserve energy); encouraging environmental sustainability (e.g. to revitalize its waterways, a Council could exempt adjacent developments that use “green” approaches to managing storm water drainage, thereby protecting the waterways from pollutants); Revitalization Tax Exemptions: A Primer on the Provisions in the Community Charter Page 3
brownfield redevelopment (e.g. to support the revitalization of a brownfield site, a Council could exempt the property while it is being remediated, thereby hastening its redevelopment);
• economic revitalization – encouraging investment and employment (e.g. to revitalize its economic base, a Council could partially exempt the local pulp mill from disproportionately high industrial taxes, thereby supporting reinvestment into the community and helping to retain jobs);
• social revitalization – encouraging affordable housing (e.g. to increase the supply of affordable housing, a Council could provide exemptions to commercial buildings that convert their upper floors to affordable housing rental units); encouraging the construction and preservation of affordable rental housing (e.g. a Council could provide exemptions to developers who enter into housing agreements, under section 905 of the Local Government Act, to provide or preserve such housing);
• other types of revitalization – redevelopment for community sustainability, conservation of heritage property, residential “intensification”, neighbourhood rejuvenation, or façade improvements and beautification (e.g. to add to the scope of a more traditional downtown revitalization, a Council could exempt aging business properties that are reconstructed or otherwise reinvigorated).