ADMINISTRATIVE REPORT
Date: |
December 07, 2005 | |
Author: |
Ken Bayne | |
Phone No.: |
604.873.7223 | |
RTS No.: |
04754 | |
CC File No.: |
1551 | |
Meeting Date: |
December 14, 2005 |
TO: |
Vancouver City Council |
FROM: |
General Manager of Corporate Services / Director of Finance |
SUBJECT: |
2005 Assessment Averaging Program: Notification to Assessment Commissioner |
RECOMMENDATION
A. THAT, pursuant to legislative requirements in the Assessment Act, the City Clerk be instructed to notify the Assessment Commissioner before January 1, 2005 that the City is considering land assessment phasing and/or three-year land averaging as property tax calculation options for 2005.
It should be noted that this notice of intent is revocable should Council, at a later date, decide not to proceed with either of these taxation options.
B. THAT the Director of Finance be instructed to report back in 2005 on the projected taxation impacts of three-year land averaging, based on the assessment values provided by the BC Assessment Authority in the 2005 Completed Roll.
C. THAT the Area Assessor for Vancouver be invited to address Council in the on the assessment trends reflected in the 2005 Completed Roll.
COUNCIL POLICY
Council policy is to keep property taxes affordable by following a practice of holding tax increases at inflationary levels.
Council has used three-year averaged land values in the calculation of property taxes for Residential (Class 1) and Commercial (Class 6) in each year since 1993.
PURPOSE
This report recommends that the Assessment Commissioner be notified that Council is considering the use of land averaging/phasing as potential taxation options for 2005. This notification does not commit Council to the implementation of either option.
BACKGROUND
Since 1989, Vancouver City Council has taken pro-active measures to address the tax shifts within property classes that have resulted from uneven year-over-year assessment increases. These measures have in various years taken the form of: (i) a cap on each property's year-over-year increase in taxable land value (1989 only), (ii) a cap on each property's year-over-year tax increase (referred to as "tax capping"), and (iii) the use of a three-year average of taxable land value in property tax calculations ("averaging").
All interventions to the market-based taxation system are revenue-neutral within each property class. This means that while the taxes paid by an individual property may differ depending upon whether a mitigation measure is utilized; the overall levy paid by a class of property remains the same, whether or not that mitigation measure is used. When an individual property's tax is lowered in a given year due to an intervention to the market-based system, there are other properties in the same class for which taxes will increase as a result.
Mitigation measures have been applied to the residential and/or business class in every taxation year since 1989. Three-year land averaging was approved by the Provincial Government as a taxation option in 1992 for use in subsequent taxation years. Council has approved the use of three-year land value averaging as a taxation option for residential and business properties in each year since 1993.
Although there are strong arguments for applying land value averaging on an ongoing basis, provincial legislation requires Council to approve averaging on a year-by-year basis, and notify the Assessment Commissioner annually of their intent to consider the use of the averaging option.
DISCUSSION
This report directs staff to notify the Assessment Commissioner that Council will consider the use of land assessment averaging and/or land assessment phasing in 2005. By doing so, Council retains its option to apply land averaging or land phasing in 2005, but does not commit them to doing so in any way.
Once the 2005 Completed Assessment Roll is available, staff will undertake an analysis of the impacts of various 2005 taxation options for report back in early March.
* * * * *
