SUPPORTS ITEM NO. 2
CS&B AGENDA
JANUARY 30, 1997
ADMINISTRATIVE REPORT
Date: January 16, 1997
Our File: 1552-1
TO: Standing Committee on City Services & Budgets
FROM: City Treasurer & Collector
SUBJECT: Property Tax Status - Chalmers Foundation
RECOMMENDATION
A. THAT Council advise staff to continue to bill the Chalmers Foundation for all property taxes levied on
the community care facility located at 1450 West 12th Avenue in accordance with current policy.
CONSIDERATION
B. THAT Council approve a grant of $20,671.77 to the Chalmers Foundation equal to the outstanding 1996
School and other taxes levied on the community care facility located at 1450 West 12th Avenue. Approval
of this action requires eight affirmative votes.
C. THAT Council instruct staff to place the community care facility operated by the Chalmers Foundation and
located at 1450 West 12th Avenue on the list of properties to be submitted to Council on an annual basis
for consideration of a permissive property tax exemption pursuant to Section 396(1)(g) of the Charter in
1997 and subsequent taxation years.
GENERAL MANAGER'S COMMENTS
The General Manager of Corporate Services RECOMMENDS approval of A, noting that all community care facilities located in
the City are now taxable under current Council policy. When this issue was last addressed in 1995, staff indicated that
these facilities draw on City services much like any other property in the City and recommended they be taxed in the
normal manner. We also noted that the responsibility for funding the operating subsidies to community care facilities
rested squarely on the shoulders of the Provincial Government and not the City (a tax exemption is essentially an
operating subsidy provided by Vancouver property owners who pay property taxes).
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Since it appears that the Provincial Government is no longer in the position of funding new personal care projects due to
budget constraints, having Council approve a permissive tax exemption in this instance is tantamount to accepting this
down load as a City responsibility. I therefore suggest that no action be taken on B and C above.
COUNCIL POLICY
The Vancouver Charter, Section 396 provides Council the authority to approve limited permissive tax exemptions. Section
396 (1)(c)(i) and (g) read as follows:
"(1) All real property in the city is liable to taxation subject to the following exemptions:
(c) Real property (i) of which an incorporated charitable institution is the registered owner or owner under agreement,
either directly or through trustees therefore, and which is in actual occupation by such institution and is wholly in use
for charitable purposes;
(g) notwithstanding paragraph (c)(i), real property of an incorporated charitable institution which is used for senior
citizens' housing or a community care facility, and which receives or has received grants or assistance pursuant to any
Provincial or federal legislation, shall only be exempt if it is so provided by by-law."
On February 23, 1995, Council approved the following tax exemption policy for seniors' housing and community care
facilities.
- seniors' housing completed before March 31, 1974 continues to receive tax exemption;
- permissive tax exemptions to certain Community Care Facilities to be phased out in 1996 and 1997;
- all other facilities used for senior citizens' housing or a community care facility to be fully taxable.
PURPOSE
The Administrator for the Chalmers Foundation has requested to appear as a delegation regarding the property taxes levied
against the Society's property at 1450 West 12th Avenue (letter attached). This report outlines the history of the
legislation governing property tax exemption for this community care facility, along with a discussion on Council's
policy for permissive exemptions.
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BACKGROUND
Prior to 1974, senors' housing projects that received any form of government assistance were exempted from taxation under
Section 396 (1)(c) of the Vancouver Charter, provided they otherwise qualified for tax exemption.
In 1974, the Provincial Government amended the Vancouver Charter by adding section 396(1)(c)(v), requiring new seniors'
housing projects in receipt of provincial subsidies after March 31, 1974 to either:
- pay property taxes in the normal manner; or,
- obtain a permissive property tax exemption from City Council.
The rationale for this change to make the housing taxable was that provincial subsidies included a component for
municipal property taxes and that the property tax expense was better borne by the senior level of government with the
larger tax base. A number of seniors' housing projects that received assistance before April 1, 1974, remained tax
exempt under a 'grandfather' provision. These projects were not receiving operating subsidies from senior levels of
government and thus were not receiving provincial support for the expense for property taxes.
In 1987, the Provincial Government repealed section 396(1)(c)(v) and added section 396(1)(g) to read as it does today,
thus, expanding on the types of properties that would become taxable, unless they received annual approval of a
permissive tax exemption, with the following results.
- the 'grandfathered' provision in the Vancouver Charter which protected seniors housing projects receiving
assistance before April 1, 1974 was eliminated;
- the types of provincial and federal assistance which made projects ineligible for exemptions was expanded;
- the outright exemption for community care facilities in receipt of senior government assistance was removed.
On a number of occasions since the Charter changes discussed above, Council has been asked to approve permissive
exemptions on seniors' housing projects. To date, Council has maintained a policy of not approving these requests, but
has continued the exempt status of the 'grandfathered' seniors' housing projects. The same policy has been applied to
Community Care Facilities in receipt of tax exemptions before the 1987 Charter change.
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On February 23, 1995, Council considered recommendations of the Director of Finance related to exemptions for seniors'
housing and community care facilities. At that time, Council agreed to continue the tax exempt status of the
'grandfathered' seniors' housing (those facilities completed before March 31, 1974). The reason for this decision was
that removal of their tax exemptions would increase operating costs differentially among the projects, given that these
properties receive no operating subsidies from senior governments. Council also decided to continue to treat seniors'
housing which had not been 'grandfathered' as taxable properties.
Council also agreed to phase-out the permissive tax exemption for Community Care Facilities that had previously received
this exemption. It was proposed that these facilities would not receive a property tax exemption but would receive a
phase-out grant equal to the municipal portion of their 1996 tax bill and become fully taxable in 1997. The reason for
this decision was there was an assumption that these facilities are supported by the Province and could request a top-up
for property taxes when receiving their operating subsidies.
DISCUSSION
The Chalmers Foundation Society was established in 1969 with the purpose of providing seniors' housing. In 1969, the
Society built the low rental, 14 storey housing complex located at 1450 West 12th Avenue and received property tax
exemption under the Vancouver Charter sections which, at that time, allowed seniors' housing or community care facilities
to receive exemption from property taxes.
Currently, the Society is giving personal care to its residents and is licensed as a community care facility with 120
beds under the Community Care Facility Act. It does not receive any ongoing provincial subsidies to run the facility.
However, the society has received some financial assistance from various levels of government in the past. As well as
receiving property tax exemption since 1970 from the City, according to the Society, it received three $25 Provincial
grants in order to qualify for a rebate in federal tax on building materials and a 50 year mortgage from CMHC at a
preferential rate of 6 7/8%. There is 25 years remaining on the mortgage term. The Society also received funding about
1980 from the R.R.A.P. program to upgrade for fire regulations.
Under Council's policy, this community care facility is in the category of having its permissive tax exemption phased
out. Operationally, this phase-out is accomplished by making the property fully taxable for 1996, and then providing a
grant from the City in the amount of its General Purposes taxes. Thus the tax impact was $20,671.77 for 1996
representing School and Other taxes. The Society will be fully taxable in 1997.
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As discussed above, one of Council's reasons for phasing out the permissive tax exemption for these Community Care
Facilities was that these facilities normally receive operating subsidies from the Province. Removal of the tax
exemption on these facilities would increase operating costs, but the facility operators could apply to the Province for
a top-up in the subsidies. If the top-up fell short of offsetting the tax increase, the facilities would likely make up
the difference by charging their clients the added cost or cutting expenditures elsewhere.
In the 1970s, the Society chose not to receive any government funding when the Provincial Government's long term care
program was established. If they decide now to seek funding from the Provincial Government, they would not receive any
assistance since the Provincial Government is no longer funding new personal care projects due to budget constraints.
The Society has expressed that the burden of property taxes will impact the residents severely along with other increases
in expenditures which must be borne by the residents. The Society now wish as a delegation to meet with Council
regarding their 1996 outstanding taxes and subsequent years' exemption status.
If Council were to consider providing a grant to the Society for their outstanding School and Other taxes for 1996
($20,671.77), it would be funded as an additional expenditure in the City's 1997 Operating Budget.
If Council were to provide a permissive tax exemption for 1997, the financial impact for the City would be the foregone
General Purposes taxes of approximately $17,000 based on 1996 rates.
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