POLICY REPORT

PROPERTY TAXATION

Date: April 21, 1998

Author/Local: K. Levitt/7251

File No: 1551

TO: Standing Committee on City Services and Budgets

FROM: Director of Finance

SUBJECT: 1998 Taxation Options

RECOMMENDATION

A.THAT Council fully implement the solid waste utility in the 1998 taxation year, removing approximately $8.4 million from the Class 1 levy, reducing funding from the Solid Waste Capital Reserve by approximately $3.8 million, and collecting approximately $12.2 million in solid waste user fees from the appropriate residential properties.

CONSIDERATIONS

The Director of Finance submits B below for CONSIDERATION as an alternate to A.

B.THAT Council implement the solid waste utility in the 1998 taxation year without the recycling fee component, removing approximately $8.4 million from the Class 1 tax levy, and collecting the same amount in solid waste user fees from the appropriate residential properties, with $3.8 million in 1998 recycling costs to be funded from Solid Waste Capital Reserve.

The Director of Finance submits C below for CONSIDERATION. If Council elects to pass C, it would be in addition to A or B.

C.THAT Council approve a $3.5 million shift of the tax burden (approximately one percent of the overall general tax levy), proportionately from Class 2 (Utilities), Class 4 (Major Industry), Class 5 (Light Industry) and Class 6 (Business/Other) to Class 1 (Residential) properties in 1998.

The Citizens’ Advisory Group on Property Taxation submits the following recommendation for CONSIDERATION. The Chair and other members of the group may wish to address Council on this issue.

D.THAT Council proceed with the implementation of BOD/TSS charges no later than 1999, and at that time, blend the Class 5 (light industrial) and Class 6 (business) tax rates to a single rate.

CITY MANAGER’S COMMENTS

The City Manager RECOMMENDS approval of A. While alternative B would reduce costs to residential taxpayers, surpluses generated from the landfill operation cannot support recycling costs on a continuing basis. Deferring incorporating these costs into the tax levy defers the issue to a later period, when tax increases may be at a higher level than in 1998.

The City Manager RECOMMENDS against C. The addition of recycling costs to residential properties increases costs to residential taxpayers and the residential share of the tax burden. Given the 1998 costs to residential taxpayers and Council’s action in 1997 to shift tax burden to residential properties, the City Manager believes that a further shift in tax burden, if desired, should be deferred to a more appropriate opportunity.

COUNCIL POLICY

Tax Increases

Council policy has been to keep property taxes at affordable levels by holding year-over-year tax increases to inflationary levels. In 1997, there was a 4.5% increase to the overall tax levy, applied differentially to the property classes. The Class 1 (residential) general tax levy was increased by 6.6%, and the levies of all other classes were increased by 3.0%. The increase to the tax levy in 1997 was necessitated by sudden provincial cutbacks in revenue-sharing. For 1998, Council has approved a two percent tax increase, reflecting City cost increases of 1.3% and an increase in the regional levy for sewagetreatment of 0.7%.

Three-Year Land Averaging

From 1993 up to and including the current taxation year, Council has opted to use three-year averaged land values in the calculation of residential and business property taxes, as a means of buffering the tax impacts of large year-over-year changes in land values for individual properties.

Solid Waste Utility

(a) Refuse Removal: Council has approved the implementation of a solid waste utility for 1998, which entails funding residential refuse removal costs with user fees rather than with property taxes. The net impact of this action is neutral: the costs of refuse removal ($8.4 million) are moved off the residential property tax levy and substituted with user fees, charged to appropriate properties. However, within the residential class, the move to the solid waste utility creates shifts with respect to who pays for solid waste utility services, resulting in a net increase in costs to some properties and a net decrease to others.

(b) Blue Box Recycling: A separate, but related, charge to be implemented in 1998 is the collection of a fee to offset the costs of the municipal recycling program ($3.8 million), which was previously funded through the Solid Waste Capital Reserve. This charge will be collected as part of the solid waste utility fee. Unlike the recovery of solid waste costs, this represents a new charge to those residential taxpayers that will pay the utility fee, representing an increase of 2.5% over total amounts collected from residential properties in 1997.

Share of Tax Burden Among Property Classes

From 1983 to 1994, Council maintained the relative taxation burden between property classes at the levels which existed in 1983, allowing for adjustments to the burden levels resulting from reclassification, new construction or zoning changes. In 1994, Council altered the burden proportions by shifting approximately one percent of total taxes from the business class to the residential class. In 1995, Council again shifted approximately one percent of the total tax burden, proportionately from the utilities, major industry, light industry and business classes to the residential class. There was no burden shift in 1996, and in 1997 the aforementioned differential tax increase resulted in a shift of approximately 0.8% onto the residential class, from all non-residential classes. In 1997, the residential class paid 43% of the general tax levy, the business class 53%, and the remaining classes 4%.

Since 1992, the residential, recreational and farm classes have been grouped together in order to establish a common tax rate for billing purposes.

PURPOSE

The purpose of this report is recommend taxation policy options to Council for implementation in the 1998 taxation year.

SUMMARY

This report presents Council with several taxation options for the 1998 taxation year. There are three different policy options assessed in this report:

1.Implementation Options for the Solid Waste Utility

·No solid waste utility,

·Full implementation of the solid waste utility, including the recycling charge, and

·Implementation of the solid waste utility, but with a deferral of the recycling charge fee component (affects residential (Class 1) properties only).

2.Tax Burden Shift

·One percent of the total tax levy shifted from non-residential classes to residential class (affects all classes).

3.Normalization of Light Industrial and Business Tax Rates

·Blended tax rate for Class 5 and Class 6 (affects Class 5 & Class 6 properties only).

Based upon impact analyses as set out in this report, the Director of Finance recommends full implementation of the solid waste utility in 1998, but provides the option to phase the cost of implementing the solid waste utility by deferring the recycling fee component. A recommendation to implement a one percent tax burden shift is presented for consideration, but is not supported by the Director of Finance.

BACKGROUND

Council has made a number of decisions which impact on the property tax options open in 1998. The number of options open to Council in 1998 creates a significant level of complexity. Background on each of the issues -- implementation of the solid waste utility, potential deferral of the recycling charge, a potential shift in tax burden, and normalization of Class 5 and Class 6 (light industrial and business) taxes -- is provided in the body of the report in the appropriate section. This background section provides information on last year’s property tax decisions.

The 1997 Taxation Year

In 1997, taxes for residential properties were based on three-year land averaged values (1997 improvement value plus average of 1995, 1996 and 1997 land values). No tax capping was applied to this class. Taxes for business properties (Class 6) were also based on three-year averaged land values, and a 25% cap was applied to year-over-year overall tax increases, under a phase-out methodology. A maximum credit of $5,000 was allowed. The overall tax levy was increased by 4.5%, applied differentially to the property classes. The residential levy was increased by 6.6%, and the non-residential levies by 3.0%.

DISCUSSION

The impacts of the following taxation options are presented in this report. Council has decisions to make in three areas: how to implement the solid waste utility; whether or not to shift tax burden from business to residential properties; and whether or not to blend light industrial and business class taxes. The combination of various options open to Council generates eight distinct options.

The first three options consider implementation of the solid waste utility with no change in burden. The solid waste utility options affect only residential properties.

OPTION #1 - No Solid Waste Utility (Base Case)

OPTION #2 - Full Solid Waste Utility Implementation

OPTION #3 - Solid Waste Utility Implementation with No Recycling Fee

The second three options consider a one percent burden shift, combined with the three solid waste options. The one percent shift affects all properties.

OPTION #4 - One Percent Burden Shift & No Solid Waste Utility

OPTION #5 - One Percent Burden Shift & Full Solid Waste Utility Implementation

OPTION #6 - One Percent Burden Shift & Solid Waste Utility Implementation with No Recycling Fee

The last two options consider blended light industrial and business class property tax, with and without a burden shift. The blended tax rate for the light industrial and business classes affects only properties within these two classes.

OPTION #7 - No One Percent Burden Shift & Blended Light Industrial and Business Tax Rates

OPTION #8 - One Percent Burden Shift & Blended Light Industrial and Business Tax Rates

BASIS FOR THE ANALYSIS

For the analyses in this report, a 2% tax increase over 1997 is assumed. Note that a "Council-directed tax increase" is the amount by which Council increases the tax levy for each class. This is distinct from the "average tax increase" for each class, which is the mean change in year-over-year taxes for all properties in a class. While the former is a decision, the latter is an outcome.

All analyses are done on sub-samples of Class 1 and Class 6 properties, screened to eliminate those that have been transferred into the class in the last year, are exempt from taxation, are vacant, have new construction, and/or did not pay taxes in the previous year. A large proportion of both residential and business properties with the greatest year-over-year tax increases have at least one of these characteristics. For Class 1 and Class 6, three-year averaged land values are used for property tax calculations.

SOLID WASTE UTILITY IMPLEMENTATION OPTIONS

Background

The solid waste utility has been approved by Council for implementation in 1998. Implementation of a sewer utility has been deferred, and its impacts are therefore not considered in the current report.

1998 Proposal – Solid Waste Utility Implementation

While staff do not recommend a reversal of Council’s position to implement the full solid waste utility, the following analysis of options is presented to provide an appreciation of the impacts on single family residences, and to provide options for Council to consider. Three solid waste utility implementation options are assessed here.

·No Solid Waste Utility (Option #1 & Option #4)

This option is presented as a base case comparison.

·Full Solid Waste Utility Implementation (Option #2 & Option #5)

This option entails the removal of the cost of solid waste services ($8.4 million) from the residential tax levy, and recovery of this amount through solid waste utility fees. In addition, the cost of recycling ($3.8 million) -- currently paid for with funds from the Solid Waste Capital Reserve -- would also be recovered through solid waste utility fees. Under this option, the solid waste utility fee for a single family residence would be $145 ($100 solid waste component and $45 recycling component).

·Solid Waste Utility Implementation with No Recycling Fee (Option #3 & Option #6)

This option entails the removal of all solid waste costs ($8.4 million) from the residential tax levy, with recovery of the same amount via solid waste utility fees, and a one-year deferral of the collection of recycling costs ($3.8 million). The 1998 recycling costs would be funded through the Solid Waste Capital Reserve. Under this option, the solid waste utility fee for a single family residence would be $100 ($100 solid waste component and $0 recycling component).

An individual property receiving residential can service may see an increase or a decrease in the total of taxes and solid waste utility charges. Taxes are reduced by the removal of the solid waste costs, and the utility charge is added. The introduction in 1998 of a recycling charge ($45 per single family residence) will increase costs. The net impact will be different for different properties. (Strata properties have incurred the cost of switching to private contractor service for solid waste removal, in February 1998. These costs are not reflected in the modelling.)

ONE PERCENT TAX BURDEN SHIFT TO RESIDENTIAL CLASS

Background

The rationale for the one percent burden shift to the residential class, presented as an option for Council’s consideration, is found in the 1995 report by the KPMG Consulting Group, Consumption of Tax-Supported City Services. That report recommends developing a rate-of-adjustment policy which allows for a shift in the tax burden to the residential class.

There are numerous ways of assessing the relative shares of the tax burden among classes. One commonly used measure is the "tax rate ratio," which indicates the between-class relationship of tax paid per dollar of assessed value. It is not advisable to use this ratio as the sole measure of relative tax burdens, as the tax rates for each class are affected by many factors, such as the total assessed value of each class and any mitigation measures in place, such as tax capping or land averaging. Also, the move of costs from taxes to user fees gives the appearance of changing the tax rate ratio, even though the underlying relative tax burdens remain unchanged.

The recent history of tax rate ratios is provided in Appendix B. Over the past decade, the business-to-residential tax rate ratio has been increasing. This is because the overall assessed value of the residential class has increased more rapidly than that of the business class, while the tax burden paid by each of these classes has remained more or less constant. It is noted that the growth in the number of properties has been relatively even in the two classes, with the residential class accounting for 92% of all properties in Vancouver and the business class accounting for 8% in 1998.

1998 Option – One Percent Shift in Relative Shares of the Tax Burden Shift

Shifting one percent of the tax burden from the non-residential classes to the residential class would add $3.5 million to the Class 1 levy, an increase of 2.3%.

For 1998, the relative share of the overall tax burden will depend on the choices Councilmakes regarding the taxation options presented in this report. The residential share of the tax burden (including Solid Waste Utility fees) may be as high as 44.7% or as low as 43.2% in 1998. The table in Appendix B shows the impact of the various taxation options on the relative share of the 1998 tax burden and the Class 6 to Class 1 tax rate ratio.

It is noted that full implementation of the Solid Waste Utility adds $3.8 million to the total collected from residential class. This is the cost recovery for residential recycling, which has been funded with reserve funds to date. This increase is the equivalent of 1.1% of the overall tax levy (all classes). Full implementation of the Solid Waste Utility combined with a one percent shift to the residential class (Option #5) would add $7.3 million, or 4.8%, to the total collected from the residential class in 1998.

Appendix B also provides a tabulation of the tax burden shift for all taxation options considered in this report.

BLENDED TAX RATES FOR CLASS 5 AND CLASS 6

As reported to Council last year in the Director of Finance’s report, Additional Taxation Policy Considerations for 1997, the majority of the Citizens’ Advisory Group on Property Taxation (CAGPT) felt there is not a good rationale for a discrepancy in the tax rates for light industrial and business properties. The CAGPT recommended that the rates for the two classes be blended to a single rate through a multi-year phasing plan, beginning in 1997. However, the Director of Finance recommended to Council that the normalisation of these two tax rates be deferred until the sewer utility is in place. The CAGPT have now submitted a recommendation that Council implement the BOD/TSS charges no later than 1999, and that at that time, blend Class 5 and Class 6 tax rates to a single rate. The impact of normalising these rates is presented for Council’s information.

TAX CAPPING

Background

The tax capping program was originally introduced in 1989 as a short-term emergency measure intended to alleviate very high year-over-year tax increases for certain properties. These tax increases were the result of extreme year-over-year changes in market value, in certain areas of the city. However, tax capping obscures the effects of a market value based taxation system, and the longer the capping program remains in place the further away the relationship between property taxes and market value becomes. As this happens, the tax capping program becomes more difficult to remove, because individual properties can havevery high tax increases resulting directly from the removal of a tax cap.

In their March 1995 report to Council, KPMG Management Consulting recommended that tax capping be phased out through an approach of systematically increasing the qualifying criteria for receipt of a tax credit, and decreasing the maximum tax credit available for an individual property. Council adopted this recommendation for implementation in the 1995 taxation year, and employed a phase-out program over 1995, 1996 and 1997. No capping has been applied to the residential class since 1994, and last year a very moderate cap was applied to the business class.

1998 Proposal – Tax Capping

No tax capping is proposed for the 1998 taxation year. In the business class, increases to taxable values are relatively stable. Less than 400 properties received a tax credit in 1997. The maximum tax cap was set at 25%, and the maximum tax credit was set at $5,000, which allows for a reasonable end to the phasing out of the capping program in Class 6 in 1998.

In the residential class, increases to taxable value are also moderate for the majority of properties, and no tax capping was in place in 1997. Both the solid waste utility and a burden shift onto the residential class would result in greater increases to the amount paid by residential properties (taxes plus solid waste utility fees). Phasing in these options is more appropriate as a mitigation measure than is tax capping . For these reasons, no tax capping is recommended for 1998.

IMPACT OF TAXATION OPTIONS

As noted above, tax capping is not recommended, while options for implementation of the solid waste utility, a one percent burden shift, and blending of Class 5 and 6 property taxation are presented in this report. The following sections provide the results of the analysis of property tax options. In assessing the various taxation options, it should be noted that an option that is good for the class as a whole will not necessarily benefit an individual property. Any revenue-neutral option, such as tax capping or three-year land value averaging, will necessarily result in increases for certain properties within a class and decreases for others. This is because the total tax levy collected from a class is the same with and without the mitigation measure.

Also, the various taxation options may have opposing impacts on an individual property. For example, blending Class 5 and Class 6 tax rates will result in a higher tax rate for the business class, while a one percent burden shift to residential properties will result in a lower tax rate for the business class.

In 1998, year-over-year changes in taxes paid by an individual property are a function of the net impact of the following factors:

·the change in taxable value of that property (including the impact of averaging land values),

·the change in the amount paid for solid waste services (based upon taxable value in 1997, switched to a user fee in 1998, residential properties only),

·the recycling charge (new cost, not collected prior to 1998, residential properties only),

·the removal of the tax cap, if any, on a property (in 1997, approximately 400 properties received a tax credit in the business class only), and

·the Council-directed tax increase for that property’s class, 2% for all classes in 1998.

Three measures are used to indicate the impacts of each tax option.

·Average Dollar Change is the sample’s mean change in total paid in 1998 versus 1997, taking into account general taxes and solid waste utility fees.

·Average Percent Change is the sample’s mean percent change in total paid in 1998 over 1997, taking into account general taxes and solid waste utility fees.

·Number of Properties With Increases Over 10 Percent is the number of properties in the sample with an increase in the amount paid of over 10% (compared to 1997), taking into account general taxes and solid waste utility fees.

CLASS 1 RESIDENTIAL IMPACTS

Both the implementation of the solid waste utility and a one percent shift in the tax burden to residential properties raise the average increase of Class 1. As shown in Table 1, the combination of full solid waste utility implementation and a one percent burden shift (Option #5) results in the greatest average tax increase, and the greatest number of properties with increases over 10% for Class 1. All the other scenarios produce tax impacts that are somewhere between the Base Case (no solid waste utility, no burden shift) and Option #5. Graphs depicting the distribution of tax increases for Class 1 are found in Appendix E.

Table 1. Impacts of Taxation Options - Class 1 Residential

SCENARIO*	AVERAGE $ CHANGE	AVERAGE % CHANGE	# PROP > 10% CHG
#1 - No SWU & No Shift (Base Case)	$26	1.9%	3,100
#4 - No SWU & 1% Shift	$53	4.3%	5,000
#3 - SWU No Recycling	$26	3.0%	19,100
#6 - SWU No Recycling & 1% Shift	$55	5.4%	33,000
#2 - Full SWU	$57	6.0%	44,800
#5 - Full SWU & 1% Shift	$85	8.4%	57,500

* Shaded row indicates recommended option.

Implementing the full solid waste utility, combined with the base 2% tax increase, results in an average increase of 6% for Class 1 single family properties. Deferring the recycling component would reduce the increase to 3%. However, as Council has been previously advised, revenues from the landfill cannot support the recycling cost in future, particularly with the addition of apartment recycling, and deferring the inclusion of this cost defers the problem to a future time when other pressure on taxes may be higher. The Director of Finance recommends implementation of Option #2, the full solid waste utility.

CLASS 6 BUSINESS IMPACTS

The following table summarises the impacts of the various taxation options, for Class 6 properties.

Table 2. Impacts of Taxation Options - Class 6 Business

SCENARIO	AVERAGE $ CHANGE	AVERAGE % CHANGE	# PROP > 10% CHG
#4 - 1% Shift & No Blended Rate	$131	(1.9%)	425
#8 - 1% Shift & Blended Rate	$361	(0.8%)	465
#2 - No 1% Shift & No Blended Rate (Base Case)	$496	(0.2%)	500
#7 - No 1% Shift & Blended Rate	$730	0.9%	580

* Shaded row indicates recommended option.

A one percent shift to the residential class decreases the average tax increase in Class 6, while blending the light industrial and business tax rates generates a tax increase in this class. The Class 6 levy would be decreased by $3.3 million with a one percent burden shift, and increased by $2.1 million with blended Class 5 & Class 6 tax rates. The net impact of both options (Scenario #8) is therefore a decrease of $1.2 million to Class 6, or 0.6% of the Class 6 levy. Graphs depicting the distribution of tax increases for Class 6 are found in Appendix F.

Given the modest tax increase for business properties with the base option, the Director of Finance does not support a one percent shift of the tax levy from business to residential properties. Further, blending the Class 5 and Class 6 rates would be better addressed when the sewer utility is implemented, and the tax shifts arising from that decision can be fully assessed.

CONCLUSION

This report recommends the full implementation of the solid waste utility in 1998, but provides as an alternative for Council consideration the option of a partial implementation, with the use of reserve funds to offset recycling costs for 1998. Under this alternative, only the solid waste portion of the solid waste utility fee would be charged. Further taxation options included for Council consideration are a one percent shift of the tax burden to the residential class, and a blended tax rate for the light industrial and business class. Neither a shift in the relative share of the tax levy nor a blended tax rate for Class 5 and Class 6 is recommended for the current tax year, but these issues will be presented to Council again for the 1999 tax year.

APPENDIX A

SUMMARY OF MAJOR PROPERTY TAXATION POLICY DECISIONS SINCE1989

CITY OF VANCOUVER

	CLASS 1 RESIDENTIAL	CLASS 6 BUSINESS/OTHER
1989	- capped land value increases at 61%	- capped tax increases at 40%
1990	- no adjustment to taxation methodology	- capped tax increases at 10.1%
1991	- capped tax increases at 5.5% - no limit on tax credit	- capped tax increases at 7.5% - $400,000 limit on tax credit
1992	- capped tax increases at 6.0% - $5,000 limit on tax credit	- capped tax increases at 10.0% - $100,000 limit on tax credit
1993	- implemented three-year land value averaging - tax increases capped at 25% for select properties	- implemented three-year land value averaging - tax increases capped at 25% for select properties
1994	- continued three year land value averaging - tax increases capped at 10% for select properties - $500 limit on tax credit	- continued three year land value averaging - tax increases capped at 10% for select properties - $15,000 limit on tax credit
1995	- continued three year land value averaging - no tax capping	- continued three year land value averaging - tax increases capped at 15% for select properties under a phasing out methodology - $10,000 limit on tax credit
1996	- continued three year land value averaging - no tax capping	- continued three year land value averaging - tax increases capped at 20% for select properties under a phasing out methodology - $7,500 limit on tax credit
1997	- continued three year land value averaging - no tax capping	- continued three year land value averaging - tax increases capped at 25% for select properties under a phasing out methodology - $5,000 limit on tax credit - last year of tax increase capping
1998	- continued three year land value averaging	- continued three year land value averaging

APPENDIX B

HISTORICAL AND PROJECTED SHARE OF TAX LEVY

Table B1. Share of Tax Levy - Historical

YEAR	% TAX LEVY RESIDENTIAL	% TAX LEVY BUSINESS	TAX RATE RATIO ** CLS 1:CLS 6
1990	39.4%	54.9%	4.1
1991	39.4%	55.3%	4.2
1992	39.4%	55.4%	4.7
1993	39.3%	55.8%	4.5
1994 *	40.0%	54.8%	5.3
1995 *	41.4%	53.4%	5.5
1996	41.9%	53.2%	5.5
1997 *	42.8%	52.7%	5.2

*Council shifted a portion of the tax burden from the non-residential classes to the residential class.

**Note that the Class 1 and Class 6 tax rate have been altered from a pure market rate due to averaging and capping in some of these years.

Table B2. Share of Tax Levy & SWU Fees Combined - 1998 Projected

YEAR	% OF TAX LEVY + SWU RESIDENTIAL	% OF TAX LEVY + SWU BUSINESS	TAX RATE RATIO * CLS 1:CLS 6
#1 - No SWU + No 1% Shift (Base Case)	43.2%	52.5%	5.0
#2 - Full SWU + No 1% Shift	43.8%	52.0%	5.3
#3 - SWU No Recycling Fee + No 1% Shift	43.2%	52.5%	5.3
#4 - No SWU + 1% Shift	44.2%	51.6%	4.8
#5 - Full SWU + 1% Shift	44.7%	51.1%	5.1
#6 - SWU No Recycling Fee + 1% Shift	44.2%	51.6%	5.1
#7 - Blend Class 5 & 6 Rate + No 1% Shift	43.2%	53.1%	5.0
#8 - Blend 5 & 6 Rate + 1% Shift	44.2%	52.2%	4.8

*Shaded row indicates recommended option.

APPENDIX C

DESCRIPTION OF 1998 TAXATION OPTIONS

RESIDENTIAL CLASS

Six taxation options have been assessed for Class 1: three different solid waste utility (SWU) implementation phasing options, both with and without a one percent shift to the residential class. The following table indicates the tax rate, tax levy, solid waste utility fees and total collected from Class 1 properties under each of these six scenarios.

Table C1. Description of Taxation Options - Class 1 Residential

SCENARIO	TAX RATE	TAX LEVY ($M)	SWU FEES ($M)	TOTAL COLLECTED ($M)
#1 - No SWU + No 1% Shift (Base Case)	$2.803	$155.8	$0.0	$155.8
#2 - Full SWU + No 1% Shift	$2.649	$147.3	$12.2	$159.5
#3 - SWU No Recycling Fee + No 1% Shift *	$2.649	$147.3	$8.4	$155.7
#4 - No SWU + 1% Shift **	$2.868	$159.4	$0.0	$159.4
#5 - Full SWU + 1% Shift	$2.712	$150.8	$12.2	$163.0
#6 - SWU No Recycling Fee + 1% Shift *	$2.712	$150.8	$8.4	$159.2

* Under these scenarios, it is assumed that 1998 recycling costs are funded from the Solid Waste Capital Reserve ($3.8 million).

** A one percent shift transfers approximately $3.5 million of taxes the residential class.

BUSINESS CLASS

Four taxation options have been assessed for Class 6: with and without a one percent burden shift to residential, and with and without a blended tax rate for the business and light industrial classes. The following table describes each of these scenarios.

Table C2. Description of Taxation Options - Class 6 Business

SCENARIO	TAX RATE	TAX LEVY ($M)
#2 - No 1% Shift & No Blended Rate (Base Case)	$13.975	$189.2
#4 - 1% Shift & No Blended Rate	$13.729	$185.9
#7 - No 1% Shift & Blended Rate	$14.133	$191.4
#8 - 1% Shift & Blended Rate	$13.884	$188.0

* * * * *

(c) 1998 City of Vancouver