ADMINISTRATIVE REPORT
Date: November 14, 1995
TO: Vancouver City Council
FROM: Director of Finance
SUBJECT: 1996 Property Tax Options
RECOMMENDATION
A. THAT, pursuant to legislation requirements, the City Clerk
be instructed to notify the Assessment Commissioner before
January 1, 1996 that the City is considering three-year land
averaging and/or land phasing as property tax calculation
options for 1996. 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 1996 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 1996 Consolidated Roll.
GENERAL 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 follow-ing a
practice of holding year-over-year tax increases at inflationary
levels.
PURPOSE
This report briefly outlines the assessment trends reflected in the
1996 preview assessment roll supplied by the B.C. Assess-ment
Authority in advance of the 1996 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 1996.
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 and 1995.
In 1993, Council approved the formation of the Property Tax Task
Force, to review the property tax situation in Vancouver and recommend
ways and 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, recommending 14 actions for
consideration. Council approved two of the recommendations for
implementation in 1994, and instructed staff to continue work on the
remainder. The Director of Finance submitted a progress report on
this work to City Council in June 1994 and again in October 1995.
Acting on another of the Task Force s recommendations, Council hired
KPMG Management Consulting to undertake a study of consumption of City
services by property class. Council appointed the Property Tax
Advisory Panel, comprised, for the most part, of the same members as
the Property Tax Task Force, to comment upon and have input into the
consultant's work. The results of this study were reported to City
Council in March 1995, in a report entitled Study of Consumption of
Tax-Supported City Services.
In October of this year, Council approved the formation of a Citizen s
Advisory Group on Property Taxation. This standing committee, which
will equally represent business and residential interests, will
comment and/or report on property tax matters that are described in
the Council-approved work plan for the group.
DISCUSSION
The 1996 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 1996 preview roll for Vancouver indicates the following assessment
changes:
- The total taxable value for all property classes is $64.4
billion, an increase of $1.9 billion over 1995.
- The current year-over-year change in the total taxable assessment
value for the residential class (Class 1) is 3.1%, as compared to
a 5.8% change in 1995.
- The current year-over-year change in the total taxable assessment
value for the business class (Class 6) is 1.9%, as compared to a
-1.9% change in 1995.
- There is an assessment shift on single-family residential
properties to west side neighbourhoods, and apartments and
condominiums generally reflect little change in overall value
from 1995.
- Generally speaking, there is little change in the value of
commercial strip areas, with the exceptions of Yaletown and East
Vancouver, notably the Kingsway strip.
The foregoing represents a very brief synopsis of the assessment
trends that will be reflected in the 1996 Consolidated Roll. In that
regard, Council may wish to invite the Area Assessor for Vancouver to
make a fuller presentation on the 1996 assessment situation, early in
the new year.
The Appendix to this report sets out in tabular form the neighbourhood
impacts of the 1996 valuation changes, for residential and business
properties.
CONCLUSION
Our preliminary review of the 1996 assessment figures suggests that
the year-over-year changes in the assessment roll (1996 over 1995) are
again this year not as pronounced as they have been in recent years.
The decision on whether to use three-year land value averaging and/or
land assessment phasing as taxation options in 1996 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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