LATE DISTRIBUTION FOR COUNCIL MAY 13, 1997 A6 ADMINISTRATIVE REPORT Date: May 10, 1997 CC File: 1605-1 TO: Vancouver City Council FROM: Director of Finance SUBJECT: Adoption of 1997 Operating Budget, Taxation Resolutions and Bylaws RECOMMENDATIONS A. THAT Council adopt the 1997 Operating Budget estimates which are summarized in Appendix A by approving the budget resolution attached as Appendix B. B. THAT Council approve the 1997 Property Taxation Limitation Bylaw limiting the growth in Class 6, Commercial and Other, property taxes for 1997 as submitted this day. C. THAT Council approve the 1997 rating bylaw for the City s general purposes property taxes as submitted this day. D. THAT Council approve the 1997 rating by-laws for the property tax requisitions of the Greater Vancouver Regional District and the Greater Vancouver Regional Hospital District. E. THAT Council approve the resolutions attached as Appendices C through F, adopting adjusted tax rates for the Provincial Schools, the B.C. Assessment Authority, the Municipal Finance Authority, and the Vancouver Regional Transit Commission levies, pursuant to the Vancouver Charter and the Averaging Bylaw No. 7715 adopted by Council on March 25, 1997. GENERAL MANAGER COMMENTS The General Manager of Corporate Services RECOMMENDS approval of A, B, C, D and E. COUNCIL POLICY The Vancouver Charter requires that Council adopt the final operating budget as submitted by the Director of Finance through a formal resolution, including the approval of the rating by-law which sets out the general purposes tax rates for each class of property and the amount to be raised as the City s general purpose levy for the year. Legislation governing the Greater Vancouver Regional District and the Greater Vancouver Regional Hospital District requires that Council approve rating by-laws establishing the tax rate for each class of property in the City to raise the respective requisitions of these districts in the current tax year. On March 25, 1997, Council approved the averaging of taxable values for Residential (Class 1) properties and commercial (class 6) properties for the 1997 tax year. Under the authority of the Vancouver Charter, Council must extend averaging to the calculation of taxes levied by other taxing authorities through resolutions which alter the tax rates of those authorities to make their tax levies revenue neutral. On April 24, 1997, Council approved the recommendation of the Director of Finance that the general purposes tax increases for 1995 be applied as a 3.0% increase to the non-residential classes (Utilities, Major Industry, Light Industry and Commercial and Other) and 6.6% to the residential classes (Residential, Seasonal and Recreational and Farm). PURPOSE This report recommends the adoption of the City s 1997 Operating Budget and approval of the related rating bylaws and resolutions to give effect to the various 1997 tax levies billed by the City. BACKGROUND On March 25, 1997, through passage of Bylaw #7715, Council approved a program of averaging the assessed value of land for Class 1, Residential, and Class 6, Commercial and Other, over three years for the purpose of calculating 1997 property taxes. On April 24, 1997, Council approved the recommendations of the Director of Finance that the 1997 Operating Budget be adopted in principle subject to submission of a formal resolution. This budget totalling $553,562,200 provides for all of the revenues and expenditures of the City for 1997 and is based on a general purposes tax increase of 4.5%. Moreover, Council approved the application of that increase as a 3.0% increase to the non-residential classes (Utilities, Major Industry, Light Industry and Commercial and Other) and 6.6% to the residential classes (Residential, Seasonal and Recreational and Farm). On April 24, 1997, Council approved the recommendations of the Director of Finance that Council adopt a Property Taxation Limitation Program for Class 6, Commercial, properties for the 1997 taxation year. The program will limit the increase in property taxation from all levies on qualifying Class 6 properties to a maximum of 25% or $5,000 above the 1996 level. DISCUSSION 1997 Operating Budget: Final Resolution On April 24, 1997 Council approved the City s 1997 Operating Budget in principle, subject to the Director of Finance submitting a formal resolution to Council to adopt the budget. The revenue and expenditures estimates of the Operating Budget as set out in Appendix A are the same as those reviewed by Council on April 24, 1997. This report introduces the formal resolution (Appendix B) necessary to complete the budget cycle and the general purposes taxation rating bylaw which sets the tax rates for each class of property necessary to raise the taxes required for the City s general purpose tax levy. To balance the 1997 Operating Budget approved by Council, the general purposes tax levy is set at $348,028,100. The tax rates necessary to raise this amount, incorporating the 1997 Land Assessment Averaging Program and the tax capping program for commercial properties are shown below: Class Description 1997 Tax Rates 1 Residential 2 .81166 2 Utilities 30.63183 4 Major Industry 30.99280 5 Light Industry 27.37217 6 Commercial and Other 14.52629 8 Seasonal / Recreational 2 .77924 9 Farm 2 .77924 1997 Assessment Averaging Program This report also introduces formal resolutions necessary to vary the Class 1, Residential, and Class 6, Commercial and Other, property tax rates submitted by the Provincial Government for school purposes (Appendix C), the B.C. Assessment Authority (Appendix D), the Municipal Finance Authority (Appendix E) and the Vancouver Regional Transit Commission (Appendix F) to give effect to the 1997 Assessment Averaging Program. Taxation Limitation Program Bylaw Before Council later this day will be a bylaw submitted by the General Manager of Corporate Services which will give effect to the Property Tax Limitation Program approved by Council on April 24, 1997. Property Taxation Rating Bylaws Before Council later this day will be three property taxation rating bylaws which give effect to the City s general purposes property tax rates and establish rates of taxation on each class of property necessary to raise funds for the tax requisitions submitted to the City by the Greater Vancouver Regional District and Greater Vancouver Regional Hospital District. OTHER TAXING AUTHORITY LEVIES The following summarizes the property tax levies of the other taxing authorities whose levies appear on the City s tax bill. A summary of the tax rates and tax levies for all taxing authorities is attached to this report as Appendix G. In reviewing these levies, Council should be aware of the factors that influence changes from one year to the next. As is the case with the general roll, new construction does provide additional revenue for other taxing authorities. While staff have not done an in-depth analysis of the impact of new construction on each of these levies, it does account for some of the adjustments from 1996. A significant influence on the distribution of the tax levy among the classes, which is especially obvious in the school levy are the changes in the assessment and valuation of railway property and grain elevator property arising from legislative changes and Assessment Appeal Board decisions. Provincial Schools The Provincial Government levies all school taxes in the province. The tax rates submitted by the Surveyor of Taxes generate the following 1997 tax levy (with 1996 comparisons): Class 1997 Levy 1996 Levy Change Class 1 $146,663,610 144,504,301 1 .5% Class 2 6,989,795 7,569,088 (7.6%) Class 4 1,632,391 2,411,215 (32 .4%) Class 5 1,769,549 1,176,966 50.3% Class 6 126,658,074 120,255,057 5 .3% Class 8 486,527 489,084 (0.5% Class 9 255 192 32.8% Total $284,200,200 $276,405,900 2 .8% This levy represents an increase of 1.5% in the residential levy and 4.2% in the non-residential levy for an overall increase of 2.8%. Based on a comparison with the general purposes levy, approximately 1.8% of this increase is related to the addition of new construction value to the roll, suggesting a tax increase of approximately 1.0%. Despite the change in distribution among the classes discussed above, there has been no appreciable shift in the tax levy between the residential and non-residential classes of property from 1996 to 1997, with the distribution being approximately 52% residential and 48% non-residential. Greater Vancouver Regional Districts The Regional Hospital District requisition to the City is $17,729,916 in 1997, a reduction of approximately $157,000 (0.8%) from the 1996 level. The Regional District requisition to the City is $10,067,147 in 1997, an increase of $60,000 over 1996. Bylaws establishing rates of taxation for these levies are on the Council agenda with this report. British Columbia Assessment Authority The Assessment Authority has set tax rates that generate a tax levy of $11,705,100, an increase of approximately $300,000 (2%) over the 1996 level. As with the school and general levies, new construction value would account for much of this increase. BC Transit The BC Transit levy for 1997 is $13,064,800, an increase of $540,000 (4.3%) from 1996. CONCLUSION The 1997 Operating Budget set out in Appendix A reflects the 4.5% general purposes tax increase as approved by Council on April 24, 1997. Approval of the report recommendations, resolutions and rating and capping bylaws referenced in this report will complete the 1997 budget development cycle and provide the necessary authorities for staff to immediately proceed with the City s main tax billing for 1997. * * * * * Appendix B RESOLUTION MOVED BY COUNCILLOR: SECONDED BY COUNCILLOR: THAT WHEREAS, the Vancouver Charter, Section 219 requires that the Director of Finance submit to Council by April 30 each year the detailed estimates of revenue and expenditure of the City for the year; AND WHEREAS, the Vancouver Charter, Section 372 requires that Council adopt the estimates of revenue and expenditure for the City as soon thereafter as possible; AND WHEREAS, in decisions made on February 4, 1997, February 6, 1997 and February 20, 1997, Council established guidelines within which the 1997 Operating Budget should be brought into balance, including approval of a 4.5% general purposes tax increase; AND WHEREAS Council has reviewed and approved reports on the 1997 estimates prepared by the Director of Finance dated April 2, 1997 and April 15, 1997; AND WHEREAS the total estimated expenditures of the City to pay all debts and obligations of the City falling due in the year 1997, exclusive of the amounts required for school, the Greater Vancouver Regional Hospital District, the Greater Vancouver Regional District, the British Columbia Assessment Authority, the Municipal Finance Authority, and B.C. Transit purposes and not otherwise provided for, as amended by Council, amount to $553,562,200; AND WHEREAS the total estimated expenditures as aforesaid is the sum of the appropriation requests of all departments and boards properly supported by detailed analyses of those expenditures and listings of the salaried staff; AND WHEREAS the total estimated revenue of the City for 1997 from sources other than real property taxes, as amended by Council, amounts to $205,534,100; AND WHEREAS the amount of the General Tax Levy so required is $348,028,100; THEREFORE be it resolved that the said estimates, both as to totals and individual items pertaining thereto, of the Director of Finance as so amended by Council be and the same are hereby adopted by Council. Appendix C RESOLUTION MOVED BY COUNCILLOR: SECONDED BY COUNCILLOR: THAT WHEREAS pursuant to the School Act, the Surveyor of Taxes for the Province of British Columbia in each year levies a tax on the net taxable value of all land and improvements in the City of Vancouver; AND WHEREAS on May 1, 1997, the Lieutenant-Governor in Council levied the following tax rates on Class 1 - Residential and Class 6 - business and other: Class 1 - residential 2.7318 Class 6 - business and other 9.9000 being dollars of tax for each one thousand dollars of taxable value, for the 1997 taxation year, which when applied to the net taxable value of all land and improvements in the respective Classes in the City of Vancouver would raise the following sums: Class 1 - residential $ 146,663,610 Class 6 - business and other $ 126,658,074 AND WHEREAS on March 25, 1997, pursuant to provisions of the Vancouver Charter, Council approved an adjustment of the net taxable value of land in Class 1 - residential and Class 6 - business and other, within the City of Vancouver; AND WHEREAS the net taxable value and the adjusted taxable value pursuant to the Council by-law of March 25, 1997, of land in the above-noted Classes subject to taxation under the School Act for the year 1997 are as follows: Net Taxable Value Adjusted Taxable Value Class 1 - residential $ 53,687,535,548 $ 53,070,491,320 Class 6 - business & other 12,793,744,851 12,689,687,069 AND WHEREAS Council is obliged to vary the rate set by the Lieutenant-Governor in Council in order to produce the same amount of revenue that would have been raised if the net taxable value of the specified land had not been adjusted; NOW THEREFORE BE IT RESOLVED THAT, in the case of Class 1 - residential, the rate of 2.76356 is hereby substituted for the rate of 2.7318; and in the case of Class 6 - business and other, the rate of 9.98118 is substituted for the rate of 9.9000 for taxation pursuant to the School Act within the City of Vancouver for the 1997 taxation year. Appendix D RESOLUTION MOVED BY COUNCILLOR: SECONDED BY COUNCILLOR: THAT WHEREAS pursuant to the British Columbia Assessment Authority Act, the British Columbia Assessment Authority in each year levies a tax on the net taxable value of all land and improvements in the City of Vancouver (excluding property that is taxable for school purposes only by special act); AND WHEREAS on March 15, 1997, the Authority, with the approval of the Lieutenant-Governor in Council, levied the following tax rates on Class 1 - residential and Class 6 - business and other: Class 1 - residential 0.1215 Class 6 - business and other 0.3803 being dollars of tax for each one thousand dollars of taxable value, for the 1997 taxation year, which when applied to the net taxable value of all land and improvements in the respective Classes in the City of Vancouver (excluding property taxable for school purposes only by special act) would raise the following sums: Class 1 - residential $ 6,522,929 Class 6 - business and other $ 4,844,768 AND WHEREAS on March 25, 1997, pursuant to provisions of the Vancouver Charter, Council approved an adjustment of the net taxable value of land in Class 1 - residential and Class 6 - business and other, within the City of Vancouver; AND WHEREAS the net taxable value and the adjusted taxable value pursuant to the Council by-law of March 25, 1997, of land in the above-noted Classes subject to taxation under the British Columbia Assessment Authority Act for the year 1997 are as follows: Net Taxable Value Adjusted Taxable Value Class 1 - residential $ 53,686,657,748 $ 53,069,613,520 Class 6 - business & other 12,739,332,251 12,635,274,669 AND WHEREAS Council is obliged to vary the rate set by the British Columbia Assessment Authority in order to produce the same amount of revenue that would have been raised if the net taxable value of the specified land had not been adjusted; NOW THEREFORE BE IT RESOLVED THAT, in the case of Class 1 - residential, the rate of 0.12291 is hereby substituted for the rate of 0.1215; and in the case of Class 6 - business and other, the rate of 0.38343 is substituted for the rate of 0.3803 for taxation pursuant to the British Columbia Assessment Authority within the City of Vancouver for the 1997 taxation year. Appendix E RESOLUTION MOVED BY COUNCILLOR: SECONDED BY COUNCILLOR: THAT WHEREAS pursuant to the Municipal Finance Authority Act, the Municipal Finance Authority in each year levies a tax on the net taxable value of all land and improvements in the City of Vancouver (excluding property that is taxable for school purposes only by special act); AND WHEREAS on March 20, 1997 , the Authority, with the Approval of the Lieutenant-Governor in Council, levied the following tax rates on Class 1 - residential and Class 6 - business and other: Class 1 - residential 0.0002 Class 6 - business and other 0.0008 being dollars of tax for each one thousand dollars of taxable value, for the 1997 taxation year, which when applied to the net taxable value of all land and improvements in the respective Classes in the City of Vancouver (excluding property taxable for school purposes only by special act) would raise the following sums: Class 1 - residential $ 10,737 Class 6 - business and other $ 10,191 AND WHEREAS on March 25, 1997, pursuant to provisions of the Vancouver Charter, Council approved an adjustment of the net taxable value of land in Class 1 - residential and Class 6 - business and other, within the City of Vancouver; AND WHEREAS the net taxable value and the adjusted taxable value pursuant to the Council by-law of March 25, 1997, of land in the above-noted Classes subject to taxation under the Municipal Finance Authority Act for the year 1997 are as follows: Net Taxable Value Adjusted Taxable Value Class 1 - residential $ 53,686,657,748 $ 53,069,613,520 Class 6 - business & other 12,739,332,251 12,635,274,669 AND WHEREAS Council is obliged to vary the rate set by the Municipal Finance Authority in order to produce the same amount of revenue that would have been raised if the net taxable value of the specified land had not been adjusted; NOW THEREFORE BE IT RESOLVED THAT, in the case of Class 1 - residential, the rate of 0.00020 is hereby substituted for the rate of 0.00020; and in the case of Class 6 - business and other, the rate of 0.00081 is substituted for the rate of 0.0008 for taxation pursuant to the Municipal Finance Authority Act within the City of Vancouver for the 1997 taxation year. Appendix F RESOLUTION MOVED BY COUNCILLOR: SECONDED BY COUNCILLOR: THAT WHEREAS pursuant to the British Columbia Transit Act, Section 12 (13), the Vancouver Regional Transit Commission, with the approval of the Lieutenant Governor-in-Council, in each year levies a tax on the net taxable value of certain land and improvements in the City of Vancouver; AND WHEREAS for the 1997 taxation year, the Commission has adopted a tax rate of 0.9627 on the specified land and improvements in Class 6 - business and other, being dollars of tax for each one thousand dollars of taxable value for the 1997 taxation year, which when applied to the net taxable value of the specified land and improvements in Class 6 - business and other, in the City of Vancouver would raise the sum of $12,264,155; AND WHEREAS on March 25, 1997, pursuant to provisions of the Vancouver Charter, Council approved an adjustment of the net taxable value of land in Class 6 - business and other, within the City of Vancouver; AND WHEREAS the net taxable value of the specified land and improvements in the City of Vancouver for the year 1997 is $12,739,332,251 and the adjusted taxable value pursuant to Council by-law of March 25, 1997 is $12,635,274,669; AND WHEREAS Council is obliged to vary the rate set by the Vancouver Regional Transit Commission in order to produce the same amount of revenue that would have been raised if the net taxable value of the specified land had not been adjusted; NOW THEREFORE BE IT RESOLVED THAT the rate of 0.97063 is hereby substituted for the rate of 0.96270 for taxation pursuant to the Vancouver Regional Transit Commission Regulation No. 20-1997 within the City of Vancouver for the 1997 taxation year. City of Vancouver 1997 Property Tax Rates (per $1,000 of taxable value) including: averaging of Class 1 and Class 6 properties capping of tax increases in Class 6