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ADMINISTRATIVE REPORT
Date: November 26, 1996
TO: Vancouver City Council
FROM: Director of Finance
SUBJECT: 1997 Property Tax Options
RECOMMENDATION
A. THAT, pursuant to legislation requirements, the City Clerk be
instructed to notify the Assessment Commissioner before
January 1, 1997 that the City is considering three-year land
averaging and/or land phasing as property tax calculation
options for 1997. 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
the early new year on the projected taxation impacts of
three-year land averaging and land phasing, based on the
assessment values provided by the B.C. Assessment Authority in
the 1997 Consolidated Roll.
C. THAT the Area Assessor for Vancouver be invited to address
Council in the early new year on the assessment trends
reflected in the 1997 Consolidated Roll.
MANAGER S COMMENTS
The General Manager of Corporate Services RECOMMENDS approval of
recommendations A, B and C.
COUNCIL POLICY
Council policy is to keep property taxes affordable by following a
practice of holding year-over-year tax increases at inflationary levels.
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PURPOSE
This report briefly outlines the assessment trends reflected in the 1997
preview assessment roll supplied by the B.C. Assessment Authority in
advance of the 1997 Consolidated Roll. The report recommends that the
Assessment Commissioner be notified that Council is considering the use
of land averaging/phasing as potential taxation options for 1997. It
should be noted, however, that this notification does not commit Council
to the implementation of either option.
BACKGROUND
Council policy has been to maintain the taxation burden distribution
between property classes at the levels which existed in 1983, but
allowing adjustments to these burden proportions resulting from new
construction and zoning changes. In 1992, however, Council folded the
Residential, Recreational and Farm classes together in order to
establish a common tax rate for billing purposes. This action produced
a very slight shift of tax burden onto the Residential class from the
Recreational and Farm classes.
In 1994, Council approved a $3 million shift of taxation burden from the
Business class onto the Residential class. In 1995, Council approved an
additional $3 million shift from the Business, Utilities, Light Industry
and Major Industry classes onto the Residential class.
Since 1989, Council has taken proactive measures to address the transfer
of taxation burden within a property class resulting from uneven
assessment increases reflected in each new assessment roll. These
measures involved the use of emergency legislation provided in the
Vancouver Charter, and took the form of property tax limitation
programs, which capped year-over-year tax increases at stipulated
percentage levels. Limitation programs have been applied to at least
one property class for every taxation year since and including 1989.
Land averaging, as a taxation option, was approved by the provincial
government in 1992 for use in subsequent taxation years. Council has
approved the use of three-year averaging as a taxation option for
residential (Class 1) and business (Class 6) properties in each of 1993,
1994, 1995 and 1996.
The Property Tax Task Force was created by Council in 1993 and charged
with the task of reviewing the property tax system and recommending
means of improving the year-over-year stability and predictability of
property taxes. The Task Force submitted its report to City Council in
April 1994, which contained fourteen
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recommended actions: two for implementation in 1994 and the remainder to
be addressed by staff. The Director of Finance submitted a progress
report on this work to City Council in June 1994. In March 1995, the
results of the Study of Consumption of Tax-Supported City Services, work
recommended by the Property Tax Task Force and conducted by KPMG
Management Consulting, were reported to City Council.
The Citizens Advisory Group on Property Taxation, formed in early 1996,
is currently continuing work begun in 1993 by the Property Tax Task
Force. This group equally represents business and residential interests,
and will comment and/or report to Council on an ongoing basis regarding
property tax matters that are before Council for consideration.
DISCUSSION
The 1997 preview roll contains information on property value totals by
class, including information on year-over-year changes in values. The
preview roll is supplied in advance of the official Consolidated Roll to
provide municipalities with the opportunity to examine assessment trends
that will be reflected in the new roll.
The 1997 preview roll for Vancouver indicates the following assessment
changes.
- The total taxable value for all property classes is $66.0 billion,
an increase of $0.3 billion over 1996.
- The current year-over-year change in the total taxable assessment
value for the residential class (Class 1) is
0.3%, as compared to a 5.3% change in 1996.
- The current year-over-year change in the total taxable assessment
value for the business class (Class 6) is 0.5%, as compared to a
5.3% change in 1996.
- There are no major assessment shifts for residential properties
among City neighbourhoods.
- Generally speaking, there is little change in the overall value of
commercial strip areas, with the notable exception of Yaletown.
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The foregoing represents a very brief synopsis of the assessment trends
that will be reflected in the 1997 Consolidated Roll. We suggest that
Council invite the Area Assessor for Vancouver to make a fuller
presentation on the 1997 assessment situation, early in the new year.
The Appendix to this report sets out in tabular form the neighbourhood
impacts of the 1997 valuation changes, for residential and business
properties.
CONCLUSION
Our preliminary review of the 1997 assessment figures suggests that the
year-over-year changes in the assessment roll (1997 over 1996) are again
this year not as pronounced as they have been in the recent past. The
decision on whether to use three-year land value averaging and/or land
assessment phasing as taxation options in 1997 need not be made at this
time, but legislation requirements dictate that Council must notify the
Assessment Commissioner before the end of the year with respect to its
possible intent in that regard. Council is also reminded that the
Property Tax Task Force recommended that Council support the ongoing use
of three-year land value averaging as a tool to buffer the impacts of
large assessed value changes.
The Director of Finance will be reporting to Council on the property
taxation impacts of land value averaging and phasing in the early new
year, based on the Consolidated Roll values.
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