ANA A – July 2019 · vancouver property taxes could rise up to 10% to cover recent council motions.....18 property taxes could increase as much as 10% in vancouver next year.....19

International Property Tax Institute

IPTI Xtracts- The items included in IPTI Xtracts have been extracted from published information. IPTI accepts no responsibility for the accuracy of the information or any opinions expressed in the articles.

CANADA – July 2019

Contents

ALBERTA ................................................................................................................................................................ 2

TAX INCENTIVE AMENDMENTS TO THE MUNICIPAL GOVERNMENT ACT ..................................................................................... 2 ALBERTA TO LOWER PROPERTY TAXES FOR SHALLOW GAS WELLS, LINES ...................................................................................... 3 FEAR AND LOATHING IN CALGARY'S BUSINESS TAX ASSESSMENT ................................................................................................ 3 ALBERTA NATURAL GAS PRODUCERS GETTING TAX RELIEF ......................................................................................................... 5 PROVINCE OFFERS ONE-TIME TAX RELIEF FOR NATURAL GAS PRODUCERS WHILE 'BROKEN' ASSESSMENT SYSTEM IS OVERHAULED ........... 5 THE CASE FOR ABOLISHING CALGARY'S ASSESSMENT DEPARTMENT ............................................................................................ 6

BRITISH COLUMBIA ................................................................................................................................................ 8

B.C. SPECULATION TAX FIGURES SHOW FOREIGN OWNERS HARDEST HIT AS EXPECTED TAKE SOARS ................................................... 8 12,000 PROPERTY OWNERS PAYING B.C. SPECULATION TAX SO FAR .......................................................................................... 9 PROPERTY TAX CHANGES POSSIBLE AS VANCOUVER TRIES TO HELP SMALL BUSINESSES ................................................................. 10 VANCOUVER ASKS PROVINCE FOR FAST ACTION ON PROPERTY TAX WOES .................................................................................. 11 WIFE OF CHINESE MULTIMILLIONAIRE SUES OVER $200,000 FINE FOR NOT LIVING IN $20M VANCOUVER MANSION ....................... 14 LOWER PROPERTY ASSESSMENTS SET TO RAISE GREATER VANCOUVER TAXES ............................................................................. 15 VANCOUVER SEEKING PROVINCIAL APPROVAL TO CHANGE THE WAY SOME SMALL BUSINESSES ARE TAXED ....................................... 16 LOWER RESIDENTIAL PROPERTY ASSESSMENTS SET TO RAISE METRO VANCOUVER TAX RATES ........................................................ 17 VANCOUVER PROPERTY TAXES COULD RISE UP TO 10% TO COVER RECENT COUNCIL MOTIONS ...................................................... 18 PROPERTY TAXES COULD INCREASE AS MUCH AS 10% IN VANCOUVER NEXT YEAR....................................................................... 19 HOW BIG PROPERTY OWNERS ARE MANIPULATING B.C. ASSESSMENT'S APPEALS PROCESS ........................................................... 19 CITY OF VANCOUVER FACES MULTIPLE LAWSUITS REGARDING EMPTY HOMES TAX ..................................................................... 21 ‘A HUGE AMOUNT OF STRESS’: VANCOUVER BUSINESSES SAY PROPERTY TAXES HAVE THEM AT THE BRINK ....................................... 22 VICTORIA COUNCIL OFFERS TAX BREAK FOR LEGION’S $104,000 PROPERTY TAX BILL .................................................................. 23 VANCOUVER MAN GETS SURPRISE $17K BILL FOR EMPTY HOMES TAX ON LIVE-WORK TOWNHOUSE ............................................... 24

ONTARIO ............................................................................................................................................................. 25

TAXED TO THE MAX — A SURVEY OF THE CITY’S MOST EXPENSIVE HOUSES................................................................................ 25

SASKATCHEWAN .................................................................................................................................................. 27

TAX-WEARY RESIDENTS MORE WILLING TO CONSIDER SERVICE CUTS ......................................................................................... 27 ________________________________________________________________________________________________________

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ALBERTA

Tax Incentive Amendments To The Municipal Government Act New revisions to the Municipal Government Act (the “MGA“) aim to grant municipalities the ability to offer tax incentives to encourage business investment. Bill 7 the Municipal Government (Property Tax Incentives) Amendment Act (“Bill 7“) received Royal Assent and came into force on June 28, 2019. At its core, Bill 7 aims to help local governments attract more non-residential investment by allowing them to defer or cancel taxes for specific “classes” of businesses, giving the flexibility to tailor tax incentives to local conditions. The previous MGA allowed municipalities to offer similar tax incentives only in circumstances of financial hardship or to encourage the development of brownfield properties (previously developed land that is not currently in use). This was previously done retroactively through cancelling, deferring or refunding property taxes in a specific year. At a high level, the new changes to the MGA include: enabling council, through bylaws, to give full or partial exemptions from taxation to certain industries for a maximum of 15 consecutive taxation years. If considered appropriate, council could provide for subsequent exemption or deferrals of an additional 15 years or less; providing discretion to municipal councils regarding the criteria for the type/size of businesses eligible in order to tailor tax exemptions and deferrals to fit local needs; providing municipalities the power to establish a process for the submission and consideration of exemption applications; and providing a mechanism for judicial review of a decision made under a bylaw in respect of an exemption or deferral. Bill 7 enables the creation of property tax breaks for businesses ranging from small deductions to the annual property tax rate to entirely waiving municipal taxes for a period of time up to 15 years. Each municipal council is now able to pass its own bylaws to set the procedure for how the new tax breaks will be allocated, determine the criteria for the type and size of the businesses eligible to apply for the tax breaks, and set restrictions on how long tax breaks provided will in effect. One of the stated goals of Bill 7, if it achieves its desired effects, is to give flexibility to municipalities to determine how to best attract businesses and investment to their local communities based on their unique priorities and needs. The tabling of Bill 7 has sparked discussion and debate on the potential benefits it may bring to local economies. For example, some commentators have noted that Bill 7 may help the City of Calgary and the City of Edmonton rebound from the current downtown vacancy problem occurring in Edmonton and Calgary. According to the commercial real estate firm CBRE, Calgary’s downtown vacancy rate sits at 26.5 per cent as of the first quarter of 2019, while Edmonton’s sits at 18.4 per cent. The tax deferrals and breaks offered under Bill 7 may help with this ongoing issue by removing financial obstacles associated with occupying downtown real-estate. In addition, other commentators have noted that the ability for municipalities to offer property tax incentives may encourage large corporations, such as Amazon, to continue to expand their presence in the province. Alberta is set to house two of Amazon’s fulfillment centres located in Leduc and Balzac. It is estimated that the Leduc location will create more than 600 full time jobs in its scheduled 2020 opening in addition to the approximately 1500 full-time jobs created by the opening of the Balzac location. Increased tax incentives are likely to attract corporations to local municipalities aiding in both regional and local economic growth. Despite the goals of Bill 7, there is some potential concern for unintended effects. The ability for each individual municipality to create their own bylaws combined with differences in municipal fiscal capacities could create an issue of unequal economic advantage and competition. Municipalities with larger fiscal capacities could out-compete surroundings municipalities through offering more aggressive property tax incentives. Ultimately, legislation that had the intended effect of helping all municipalities attract more economic investment could result in a “race to the bottom” that would negatively impact the fiscal positions of Alberta municipalities.

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Alberta to lower property taxes for shallow gas wells, lines The government of Alberta is reducing municipal property taxes on shallow natural gas wells and pipelines by 35%, in an effort to boost the struggling natural gas industry, Kallanish Energy reports. “Economic mismanagement from the previous administration combined with low commodity prices have left natural gas producers on the brink of bankruptcy,” the Alberta government said, in a statement. “You can’t tax business into bankruptcy, said Kaycee Madu, minister of municipal affairs. Alberta will work with municipalities to reduce 2019 taxes by $23 million in a one-time reduction. The province will provide education property tax credits in return for the lower taxes on the gas operations, so municipalities will not lose any money from their budgets. Alberta said about 65,000 wells would qualify for the tax reduction, with the wells predominantly in 15 municipalities in southeastern Alberta. About 25 companies operate the wells. The provincial government said there have been complaints from shallow well operators the tax assessment model for linear properties such as pipelines is not accurate and needs to be changed. Those assets have been overvalued for tax purposes, the industry said. The model has not been updated since 2005. That tax model is set by the province with the tax money going to municipalities. The province said it will begin a thorough review of the tax model for the 2020 tax year and beyond. That is expected to be completed by December. Last May, Calgary-based Trident Exploration Corp. turned its 4,700 wells over to Alberta regulators, citing low commodity prices and high lease and property tax bills

Fear and loathing in Calgary's business tax assessment A city report found problems within the city's non-residential assessment system. A report ordered by city hall paints an alarming picture of fear, mistrust and conflict at the heart of Calgary’s business tax assessment. “We concluded that the culture within the City’s non-residential assessment system is adversarial; that professional relationships are marked by lack of trust and that, in this culture, it is more common to defend valuations than to explain assessments,” says the independent report by Heuristic Consulting Associates, based in Courtenay, B.C. This is startling — but, really, who’s surprised? Requested by council in 2017, the study was completed last Oct. 30, just as huge tax hikes for non-core businesses were becoming clear. The problem escalated for months and finally exploded in marches on city hall when council failed to reach agreement on tax relief. Some businesses saw their tax triple or quadruple. Council later voted to drop taxes by 10 per cent, and cut city services. It has been a spectacular civic mess. The root cause is the massive loss of assessed value downtown. But all along, this report shows, the city’s assessment unit and the council-appointed Assessment Review Board were a big part of the problem.

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Metropolitan Centre owner Howard Silver doesn’t think the report goes far enough. For one thing, it fails to deal with the accuracy of city information supplied to appeal panels. Silver won a Court of Queen’s Bench judgment against the assessor’s hugely costly decision to reclassify his business as retail. The court ruled this was completely unjustified and scolded two ARB panels for backing the city. Silver and many other business owners also complain that if they appeal to the ARB and win a lower assessment one year, the assessors just slap it back on the next year. The report confirms this. “We found that — for roll years 2016 through 2018 — over 60 per cent of ARB-decreased assessments had been increased on the assessment roll in the following year.” And the city itself, it turns out, also loves to appeal. The report notes the “increasing number of ARB decisions being appealed to (Queen’s Bench), particularly by the City, resulting in assessment uncertainty.” These appeals are very expensive. Silver won $65,000 in court costs from the city after the judge overturned the city assessments. When the city won’t accept the rulings of its own appeal board, taxpayers have good reason to suspect they’re being squeezed for every last penny. Despite Silver’s experience with erroneous ARB decisions, it appears the panels are still too lenient for the taste of value-hunting assessors. “The number of ARB decisions resulting in decreased assessments increased 165 per cent over five years from 2013 to 2017,” says the study. “In 2017, the total assessed value for non-residential properties was reduced by approximately $2.596 billion through the complaint process,” the report notes. The system is so mistrusted, rigid and adversarial that taxpayer resistance is actually shrinking the non-residential assessment base. That is one definition of a truly messed-up city service. “Taxpayers have been complaining for years about the transparency, fairness and equity in the system — or lack of it,” says Coun. Jeromy Farkas. “The report verifies everything we have been told.” There’s also the “culture” problem. A summary of talks with stakeholders cites these words and phrases: “Lack of trust, adversarial, mistrustful, assessment Black Box, unpredictable, confrontational, fear, combative, grandstanding.” The report does find some positives in the assessment department, but recommends massive improvements, including more consultation and negotiated settlements. City administration accepted the results. Last Nov 19, council moved to ask the city manager to appoint a lead to monitor the changes and report back later this year. That, too, does not thrill Silver. “They’re putting the remedy for the culture problem back in the hands of the people who created the culture,” he says. The whole “transformation plan” will happen through “phased implementation over 10 years.”

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That’s your city hall — solving today’s problems in 2029.

Alberta natural gas producers getting tax relief Struggling natural gas producers in rural Alberta will see some property tax relief this year, in an effort to stabilize an industry struggling to make ends meet due to low commodity prices. Municipal tax rates on shallow gas wells and pipelines will be reduced by 35 per cent. The move is expected to save producers more than $23 million. “Our government is committed to protecting Alberta’s natural gas industry, and this measure is a tangible solution,” Associate Minister of Natural Gas Dale Nally said in a government news release. “This initiative will prevent further company failures and job losses in our province, as we saw recently with Trident Exploration, while creating a more viable system for industry and government,” added Minister of Municipal Affairs Kaycee Madu. Calgary-based Trident Exploration shuttered operations earlier this spring, laying off 33 employees and handing over 4,700 wells to the Alberta Energy Regulator. The reclamation cost is estimated to be around $329 million. The head of the Rural Municipalities of Alberta is cautiously endorsing the program. “We recognize that municipal and education property taxes are not the core cause of the industry’s struggle, but are likely the only area in which short-term relief can be found,” Al Kemmere said in a news release. “That said, in the long term, property tax should not be seen as a tool for relief.” Municipalities will be rebated the lost revenue from the provincial government through the education property tax. The government says about 65,000 wells will qualify for tax relief.

Province offers one-time tax relief for natural gas producers while 'broken' assessment system is overhauled The UCP will offer tax relief this year for shallow gas producers suffering from a “broken” assessment system, the government announced Tuesday. The province said it would be reducing municipal taxes on shallow gas wells and pipelines by 35 per cent, effective this tax year. The province would pay for that one-time reduction. “It’s well established that the natural gas industry is in bad shape, particularly when gas is selling at a negative price,” said a government official. “We looked at the situation and said that everyone agrees that the assessment system is inaccurate and so we’re going to act now to bring that down to what we think the true level should be and then we’ll commit to a proper full review of that system for the next municipal tax year.” The problem with the assessment system is that it is valuing assets “higher than they should be,” the official said. To provide relief, the province will ask municipalities to reduce taxes on shallow gas wells and pipelines by 35 per cent — the approximate amount by which the government believes the assessment system overvalues those assets — and cover the resulting municipal revenue loss.

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The government would offset the revenue shortfall by reducing the amount of education tax required to be sent to the province by an equivalent amount. The province said there will be no net loss to municipalities, as it would provide more than $23 million in education property tax credits in return. “It’s an interim measure. The property taxes model should not be the one used for relief year-after-year,” said Al Kemmere, president of Rural Municipalities of Alberta. “This is a one-time thing that the province has decided to take on and it should not become a regular norm to have it happen.” A government official confirmed that in future years, municipalities would tax shallow gas wells and pipelines at a lower rate. That value will be determined by an assessment review, which the government aims to complete by December. “This is mid-year in a tax year for municipalities and we didn’t think it was fair to impose that on them with no notice halfway through a budget,” the official said. “We saw Trident go under a few months ago and we think there might be a couple more coming. But the assessment system for wells and pipelines has been broken for a long time.” In May, junior oil and gas company Trident Exploration Corp. announced it would cease operations and turn over care of its 4,700 wells to the Alberta Energy Regulator. The privately-held Calgary-based company blamed its demise on low natural gas prices and high lease and property tax bills. Natural gas producers in Alberta face intense pressure from volatile prices, infrastructure constraints, shrinking markets in the United States, investor apathy and growing liability concerns about aging wells. Alberta’s new minister in charge of natural gas said last month that a large price differential was hurting Western Canadian producers — with natural gas prices in Alberta measuring less than a tenth of the benchmark American gas sold for — and could lead to more companies failing. “Some days we are almost giving this product away for free,” said associate natural gas minister Dale Nally. Tristan Goodman, president and CEO of the Explorers and Producers Association of Canada, applauded the government’s announcement. He said it “corrects, fairly rapidly, that error around reasonable tax rates” for shallow gas producers. He said the “unique situation” faced by shallow gas producers has led to high tax assessments. “There’s many of these wells but they don’t produce a lot. But they produce for very lengthy periods, so practically, the value of these assets is just not comparable to other assets across this province,” Goodman said. “It’s putting them in an incredibly difficult financial situation and the unreasonable tax rates could actually lead to further bankruptcies.” The province said its move would help prevent further bankruptcies and protect jobs. It added it would be distributing a list of shallow gas wells which qualify for relief this year to affected municipalities and companies. There are about 20 to 30 of those companies, primarily based in southeastern Alberta, totalling upwards of 66,000 wells, according to a government spokesperson.

The case for abolishing Calgary's assessment department Calgary’s assessment department costs $22 million a year to operate. Abolishing it would help plug the downtown tax hole.

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I’m not kidding here. Cities have no real need of their own property assessors. In Ontario and B.C., assessment is done by a province-wide agency. On Tuesday, I wrote about Metropolitan Centre owner Howard Silver, who won a Court of Queen’s Bench judgment against the city and its assessment review board. Justice M. David Gates found that the assessors had no justification for reclassifying Silver’s business from public assembly to retail. The picture of arbitrary decision-making is alarming. If Silver hadn’t taken the case to court, the assessors would have been the only law. Assessors are supposed to value property for tax purposes, nothing else. It’s council’s job, not the assessors’, to raise money. Today, the functions seem rather confused. Inglewood business owner Kelly Doody, who became an overnight activist when tax bills arrived, told me that assessors are now referring to her space as retail, when in fact it’s a second-floor office. That twist is exactly what Silver heard five years ago when Met Centre taxes rose by 400 per cent. The judge said this was unjustified and unfair. It’s obvious that the city faces a huge tax hole with the loss of downtown value. Council’s decision to provide 10 per cent rebates on business property taxes, after many were absurdly raised, has forced service cuts. Jim Gray and other business leaders made a startling plea Wednesday to shut down the Green Line LRT project for one year because it poses “an unacceptably high risk of becoming an economic catastrophe for the city.” The city needs critical choices from a disunited and often dysfunctional council. But the worst thing to do — absolutely the most damaging and unfair — is to pick one category of taxpayer to carry an unfair burden. They are disproportionately the owners of non-residential property in the ring around the core. There are many more in the suburbs, but the axe seems to fall heaviest in those places. There’s not much by way of compassion from our assessment department. On June 19, after councillors agreed to the rebate, city assessor Nelson Karba sent letters to property owners who qualify. He told them that if they want the rebate immediately, they’ll have to withdraw their appeals of 2019 assessment. Otherwise, they’ll have to wait until all appeals are exhausted. That took five years in the Met Centre case. Either that or accept a 2019 assessment that may be wildly unfair. The fundamental problem is this built-in merging of roles that should be quite separate. The three tax functions — property assessment, setting mill rate and collection — belong to city council. Assessment, especially, should be completely divorced from council and its revenue goals. The province should seriously consider the system in Ontario, where the independent Municipal Property Assessment Corp. assesses all property for every owner in the province. Municipalities fund this provincially mandated body, but cannot interfere with its workings. British Columbia’s system is similar, but there are differences that make Ontario’s better for this boom-and-bust province. For one thing, Ontario assesses properties only once every four years.

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If a property increases in value from one assessment to the next, the owner pays the higher tax in stages, not all at once. So, if a property costs $100,000 and climbs to $200,000 by the next assessment, the owner pays tax on $125,000 the first succeeding year, $150,000 the second, $175,000 the third, and finally on the full $200,000. But if the value drops over the four years between assessments, the owner gets the whole benefit in the first year. (Improvements are assessed as completed.) In today’s Calgary situation, this would protect businesses and homeowners from draconian year-by-year raids. The owners of the downtown towers — the big pensions and real estate interests — would still be paying taxes at earlier, higher rates. Council would have several years between assessments to plan for the inevitable value shift. Best of all, Calgary’s assessment department — being long gone — would have absolutely nothing to do with it.

BRITISH COLUMBIA

B.C. speculation tax figures show foreign owners hardest hit as expected take soars Preliminary data shows far fewer than estimated 32,000 homes have had to pay the tax, but revenue higher than expected due to high value of real estate taxed The B.C. government is earning more money than expected from its new speculation tax, even though fewer B.C. homeowners are getting hit with the fee, new figures show. The tax brought in $115 million from 12,029 homeowners during a 15-month period in the 2018-19 fiscal year that ended March 31. That’s higher than the $87 million projected, and the figure could rise because about 23,000 homeowners did not return declaration or exemption forms by the July 2 deadline. “I’ve said all along it’s important we take a look at the tax and the impact on communities and the impact on affordable housing and housing for people in the province,” Finance Minister Carole James said Thursday. “That’s the reason the tax is there. It’s not put in place to bring in huge resources for government.” James attributed the extra revenue to high real estate values — the speculation tax ranges from 0.5 per cent to 2.0 per cent on the assessed value of the property — and three extra months in the first reporting year of data. Also, the homes hit by the tax were on average 46 per cent more expensive than those exempted, suggesting some expensive luxury homes and mega-mansions were among those taxed. James said she expects the tax to bring in around $200 million a year, which is in line with long-term projections. Government had originally projected 32,000 homes would have to pay the speculation tax, and of that 20,000 would be British Columbians who owned multiple properties, at least one of which sat vacant at least six months of the year. But so far, only 2,410 of the 12,029 homeowners, or 20 per cent, have been B.C. residents with multiple properties. James said she thinks more B.C. homeowners were more likely to rent their properties to avoid the tax.

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“It shows we are getting to what we want to get to,” she said. “It’s a tax where if people aren’t paying the tax that’s a plus, because it means they are renting their places out and it means we have more housing to deal with the crisis.” The speculation tax applies to Greater Victoria, Nanaimo, Lantzville, Kelowna and West Kelowna, Metro Vancouver (excluding Bowen Island, Lions Bay and Electoral A district), Abbotsford, Chilliwack and Mission. Homeowners can claim an exemption for properties rented at least six months of the year. The government introduced the speculation tax in 2018 to crack down on foreign-owned properties left vacant during a rental and affordable housing crisis. The figures show 38 per cent of homeowners paying so far are foreign residents. Another 27 per cent are satellite families, which B.C. defines as a household in which 50 per cent or more of the income comes from outside the country. Another 13 per cent have been Canadian residents of other provinces. And two per cent were properties owned by corporations, trusts or developers. Government will need to release more details before researchers can draw too many conclusions, said Tom Davidoff, director of the University of B.C.’s Centre for Urban Economics and Real Estate. “There was a concern that people will just fake it or the tax is just not feasible or it will cost more to operate than it will raise, and we certainly see from this data that that’s not the case,” said Davidoff. Liberal critic Tracy Redies said the fact government was so mistaken in its estimates reinforces that it overinflated the threat of speculators as a way to target B.C. residents with multiple properties. “This government has a desire to openly penalize people for being successful and having a second home,” said Redies. James also announced Thursday she will meet mayors to discuss changes to the tax on Sept. 12. Langford, West Kelowna and Nanaimo have asked for exemptions because the tax is hurting property development. The village of Belcarra has asked for an exemption because most of its properties are only accessible by boat and are not rentable.

12,000 property owners paying B.C. speculation tax so far Mostly foreign owners, ‘satellite families,’ high-end properties The B.C. government estimates it is owed $115 million for the first year of its speculation and vacancy tax on homes in urban areas. As of July 4, there were 12,029 property owners paying the additional property tax, the finance ministry reported Thursday. Of those, 4,585 are foreign owners and 3,241 are what the province calls “satellite families” who live in B.C. while the main income earner is a foreign resident. There are 2,410 B.C. residents currently assessed for the tax, for secondary homes in the designated cities of Abbotsford, Chilliwack, Mission, Kelowna, West Kelowna, Nanaimo, Lantzville, Metro Vancouver and the Capital Regional District around Victoria. The province sent out 1.6 million tax notices to property owners in affected cities early this year, requiring every owner listed on title to register and either claim an exemption or pay the tax. About 23,000 registrations are still not accounted for, including owners who may be deceased or out of the country. The figures released Thursday are for 2018, where the tax was due by July 2, 2019. All taxes collected for the first year are assessed at 0.5 per cent of property value, but foreign owners will soon pay four times that much unless they can find an exemption. Foreign owners and satellite families pay the highest rate this year, two per cent of property value. The rate for B.C. residents who are not considered satellite families and Canadians living outside B.C. is 0.5 per cent, after the B.C. Green Party refused to support charging a higher rate to people from Alberta and other provinces who have vacation properties in B.C.

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The finance ministry says the first-year revenue is higher than expected, partly because the tax is being paid on higher-value properties. The average assessed value of properties subject to the tax for 2018-19 is $1.62 million, while the average value for the cities where it applies is $1.11 million. The provincial speculation tax is in addition to the empty homes tax assessed by the City of Vancouver. The B.C. version sparked a political battle, first over rural areas with vacation properties that were originally included, and then over the rate and requirement to occupy or rent out properties at least six months of the year to be exempt. Finance Minister Carole James promised to meet with mayors of the affected communities this summer to discuss hardship cases and other exemptions. Those meetings are now scheduled to take place in September.

Property tax changes possible as Vancouver tries to help small businesses Tax relief for small businesses on the way? After years of small businesses shutting down in Vancouver because of soaring property taxes, the city is one step closer to providing some relief. Changes may be coming to property taxes for Vancouver businesses as the city looks at how to best help small business owners struggling with tax bills. A new tax structure could be in place by next year if council opts to approve a split assessment proposal. Many business owners have seen their tax bills double or even triple in just a few years because of triple net leases, in which the business owner agrees to pay all of the landowner’s property tax costs. The leases mean businesses have to pay taxes on the highest and best use of their buildings, including the potential of development, regardless of how much income they're pulling in. For example, the owner of a business located on a property where a high-rise condo tower could be built overhead would have to pay a tax rate based on that possibility. It's a policy that has forced some businesses to close. "Development is good. We need, obviously, more residential and more densification," said Patricia Barnes of the Hastings North Business Improvement Association. "Our small, independent businesses are being charged as though they've got four, five, six stories of residential above them, at a commercial rate, which is basically driving a lot of our businesses out of the city." The proposed split assessment would create a commercial subclass. It would essentially split up a property's existing and potential use. "It gives council the flexibility to adjust the tax rate for the development potential so council can set an appropriate tax rate ranging from 'x' per cent lower than the business tax rate all the way to zero, depending on council policy," the City of Vancouver's Grace Cheng told CTV News Wednesday. A working group was created last year between the province, BC Assessment, Metro Vancouver and several municipalities. The next steps are consultations, getting support from the province and figuring out important details including eligibility requirements and tax rates for potential development. "In principle, this is a great proposal," said Aaron Aerts of the Federation of Independent Business. "The devil's in the details. Staff has assured us they would work to develop policy to make sure unintended consequences are mitigated and it provides proper tax relief for those most impacted."

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Vancouver Mayor Kennedy Stewart met with Premier John Horgan about the issue last week because the city needs the province to make regulatory changes before it can implement the new tax category. "We've got to save small business. We have a lot of mom-and-pop and legacy businesses that are totally under stress from the way our tax system works in the province," said Mayor Kennedy Stewart. "This is a complex and important issue and any changes to the assessment system would apply across the province, so it is important that we take the time to get it right," the Ministry of Municipal Affairs and Housing said in a statement. But the city says it needs the province to move as quickly as possible to have the changes in place by the fall so they can be implemented in time for next year's tax assessments – something they say is necessary to prevent more small businesses from leaving the city or closing altogether.

Vancouver asks province for fast action on property tax woes With small businesses across the region struggling with soaring property taxes, many Metro Vancouver municipalities are appealing to the province for quick action. John Horgan is a busy guy, so Vancouver Mayor Kennedy Stewart figured when he had a chance last week to bend the premier’s ear, he should take it. Even if, at the time, the politicians were sitting in little plastic kids’ chairs in a daycare. Horgan was in Vancouver last week to make an announcement about child care spending. Stewart had some time with Horgan afterwards and so brought up a long-standing concern in Vancouver: soaring property taxes killing local independent businesses. “We were sitting on these tiny little plastic chairs, with little plastic cups,” Stewart said Wednesday. “I’m so grateful he had the time because he’s running around.” Stewart laughed a little when describing the setting of last week’s meeting, but the problem, as he and many others at city hall stressed on Wednesday, is a serious one that has already crushed many beloved mom-and-pop businesses and upset residents across Vancouver, and, increasingly, through the region. Horgan was already “very alert to this issue,” Stewart said, and following their talk, the mayor sent the premier a letter clarifying exactly what Vancouver — and, now, other Metro municipalities — want the province to do. In that letter to Horgan, Stewart wrote: “As you are aware, the viability of independent small businesses, and the art, culture and non-profit sectors in Metro Vancouver is under threat, particularly for those in neighbourhoods that are experiencing a fast pace of change and dramatic increase in market valuation.” Stewart’s letter outlined Vancouver’s recommended solution: creating a new commercial property subclass, thus allowing municipalities to charge local businesses a lower tax rate on the unbuilt development potential in the airspace above their existing buildings. The letter cited one highly publicized example of Chocolate Mousse, a long-running West End retailer driven out of business after its property tax jumped 7.6-fold over three years. Stewart closed the letter with: “We urge you to take immediate action on this recommendation so it can be implemented in time for the 2020 tax year.” That sense of urgency was a recurring theme at Vancouver council on Wednesday. Grace Cheng, Vancouver’s director of long-term financial strategy and planning, opened the presentation to council with a combination of adjective and noun rarely heard together: “a very exciting new property tax framework.” Cheng then outlined the proposed subclass solution for council, followed by presentations from representatives of local business groups all speaking in favour of the proposal.

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The approach has the support of other Metro municipalities. After years of study on the issue, the proposal arose from an intergovernmental working group that convened last year with representatives from the provincial government, B.C. Assessment, Vancouver, and other cities like Surrey and Richmond. “Previously, I think the mentality was that it’s not a widespread issue, it’s a Vancouver issue,” Cheng said following her presentation. Vancouver has been at “the forefront” of this issue for years, Cheng said. “But if it’s only the City of Vancouver saying something, it’s not enough to push for some more transformative changes. Right now, if the whole Metro Vancouver is also facing this, it’s a very different story.” In Coquitlam, this problem started really hitting businesses about three years ago, and some commercial properties there had their assessed values soar as much as seven-fold in that time, said Michelle Hunt, Coquitlam’s general manger of finance and technology. “We’re a little bit behind Vancouver, in that we don’t have them going out of business yet, but they are really struggling,” Hunt said. “They’ve been coming to council saying: ‘If this continues, we are going to have to close our doors.’”

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One struggling business pleading their case before Coquitlam’s council was Me-N-Ed’s Pizza, Hunt said. Hunt can vouch for the “excellent pizza” there, she said, but more than that, “those long-standing businesses become such a part of the neighbourhood.”

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Now the municipalities have recommended their preferred solution, Stewart said, the provincial government could handle it through a regulatory change, meaning it wouldn’t need to wait for the legislature to reconvene in October. The change, Stewart said, “could happen with the stroke of a pen.” After the province creates that new subclass, local governments could get started on creating bylaws. It would be up to local governments whether or not they want to use the new subclass, and if so, where and how to use it. For businesses to get relief for next year, the new bylaws would need to be completed by October, Cheng said. Stewart said: “We need the province to make this change now.” In a statement, the Ministry of Municipal Affairs said that creating a new subclass is one option government is exploring: “This is a complex and important issue, so it is important that we take the time to get it right.”

Wife of Chinese multimillionaire sues over $200,000 fine for not living in $20M Vancouver mansion The wife of a Chinese multimillionaire is suing the Vancouver government over a $200,000 tax bill she was served for allegedly leaving a $20.4 million mansion empty, highlighting the staggering wealth Chinese investors have parked in the Canadian city. Vancouver is consistently ranked one of North America's most-expensive housing markets and experts say prices there have skyrocketed in large part due to Chinese investment. He Yiju purchased the ocean-view mansion on Belmont Avenue, one of Vancouver's most exclusive addresses that has been dubbed "Billionaire's Row," in 2015. Her husband Zheng Jianjiang, a top politician in China's rubber-stamp parliament, the National People's Congress, is not named on the property listing. Their family had a combined net worth of $925 million in October 2018, according to Forbes. In 2018, Vancouver's government ruled that He was subject to Vancouver's Empty Homes Tax, which requires owners of unoccupied homes to pay a 1% levy on their properties' value. He denies, however, that the property was empty. In a petition filed last month to the Supreme Court of British Columbia, her legal team argued that the lot was being prepared for renovations pending the city issuing redevelopment permits. His attorney, Joel Nitikman, declined to comment when asked by CNN about the case. Ellie Lambert, a spokeswoman for the city, said authorities do not comment on individual cases, but said there had been four suits received to date regarding the Empty Homes Tax. Vancouver real estate costs The Empty Homes Tax was enacted in 2016 in a bid to cool Vancouver's overheated property market, and to encourage landlords to return under-utilized properties to the rental market. Vancouver's housing prices have shot up significantly in the past 10 years, doubling in some parts of the city, although there are signs the government's attempts to bring down costs are working. The rise in the city's property prices was largely attributed to wealthy foreign investors buying properties in the city. Embattled Huawei executive Meng Wanzhou, for example, owns two homes in Vancouver worth $4.2 million and $12.2 million. Nearly 20% of the city's population are Chinese by ethnic origin, according to Canada's 2016 census.

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Many Chinese nationals moved to Canada through a now-defunct program that sought to attract wealthy foreigners to settle and invest in Canada. Under the scheme, immigrants with a net worth of $1.2 million could get permanent residency in exchange for providing the government an interest-free, five-year loan of $609,000.

Lower property assessments set to raise Greater Vancouver taxes With the first half of the year done, the number crunchers will be busy sorting the data for initial insights on the market with a view to figuring out where the second half will take us. With many first-half numbers not due out till September, what’s happened to date will also set the tone for the final push to the end of the year. Part of that push will be the BC Assessment Authority’s work developing the 2020 assessment roll. The initial valuation date for the roll is July 1. On the residential side, at least in Greater Vancouver, the trend promises lower assessment values for residential properties. Real Estate Board of Greater Vancouver statistics showed a cumulative decline in the benchmark price of 9% in June versus a year earlier, to $998,700. This marked the 13th straight monthly decline and the first time since June 2017 that the benchmark dipped below $1 million. (Indeed, it was the exact same as in June 2017.) But the slowdown in sales could make it difficult for owners of more-expensive properties to get an accurate assessment of their properties’ worth, warns Paul Sullivan, a principal with appraisal firm Burgess, Cawley, Sullivan & Associates Ltd. “[This past year] BC Assessment took the position that the fact there were very few sales did not support that there was a significant change in the market value,” he said last week. “There still has not been a sale in the city of Vancouver over $15 million and there are very, very, very few sales over $10 million.… To substantiate the market value of a home in British Columbia over $5 million is still extremely difficult.” It’s not just top-end properties that are affected by the situation. While values on more affordable properties have been more resilient, they’ve not only taken a hit in value but will end up having to shoulder the shortfall in revenue needed to run the city. A decrease in the value of the tax roll means the tax rate will have to increase to cover the city’s rising expenses – expenses boosted by other taxes such as the employer health tax, which became owing last month. The downturn in housing prices led RBC Economics to end June on an optimistic note with respect to housing affordability. “Dreadful” affordability in Vancouver and Victoria means there’s potential for further price decreases in the two cities, but RBC says conditions are improving for buyers. In the first quarter of 2019, it took 82% of monthly household income to afford a home in Vancouver, down five percentage points from a year ago, while a detached home required 112%. Victoria residences require an average of 58.6% of a household’s income, with condos requiring just 38.3% – 2.5 percentage points below the national average of 41.8%. RBC focuses on the resale market, but there are also signs of improvement on the new-home side. Statistics Canada’s latest survey of new-housing prices in Vancouver, Victoria and Kelowna reports a decline in the cost, with a 1.5% drop in Victoria and a 1.3% drop in Vancouver in April versus a year ago. Notwithstanding improved affordability, a Century 21 Canada spring survey of its agents indicated that nearly 70% of its clients across Canada are concerned with the state of real estate markets. “Buyers are significantly more optimistic than sellers, with 57.7% of agents reporting their clients buying property are excited or calm and 28.8% concerned about prices or taxes,” it reported. “In contrast, 38.6% of sellers are excited or calm and 38.7% concerned about prices or taxes.”

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Responses from B.C. were largely consistent with the national findings. The exception was vendors, which ranked second to those on the Prairies in terms of concern. In B.C., 78% of sellers worried that they would be unable to sell in a reasonable time at their desired price.

Vancouver seeking provincial approval to change the way some small businesses are taxed The City of Vancouver is seeking provincial approval to change the way some small businesses are taxed to address increases that some have said threaten their survival. On Wednesday, a staff briefing to council laid out a split-assessment initiative Mayor Kennedy Stewart has personally asked B.C. Premier John Horgan to allow the city to enact. Council endorsed the concept and asked staff to work with stakeholders to move the idea ahead. The plan essentially clears municipalities to reduce the massive property taxes that small businesses, as well as those engaged in the arts, culture and non-profit sectors, can face on potential development. In an interview, the mayor said he understood the proposal would be a Canadian first. Explaining the idea, Mr. Stewart cited the example of a two-storey building with a mom-and-pop business on the first floor. “If that building is rezoned for, say, a 12-storey building, what happens is the value of that building goes up and so does the tax assessment,” he said. The increase is passed on to the small businesses. “That’s where you hear these stories of 200- or 300- or 400-per-cent tax increases without any warning.” The mayor said the split assessment would mean small businesses would maintain their tax at the same level as before the development, with the new tax load redistributed among all businesses across the city. “It’s a minuscule increase on commercial property. It wouldn’t even be noticed,” said Mr. Stewart, who said he raised the idea with Mr. Horgan in a meeting last week. Mr. Stewart also said he raised the idea Tuesday with Surrey Mayor Doug McCallum. In a statement, a spokesman for Mr. McCallum said the mayor of the province’s second-largest city is “receptive to the idea.” Mr. Stewart said there’s an urgency to the concept because it could save the small businesses that bring character to Vancouver neighbourhoods. With prompt provincial approval, the mayor said the concept, available to other interested B.C. municipalities, could be enacted for 2020. “We’re just hoping for the change as soon as possible.” Councillors contacted by The Globe and Mail offered their backing for the proposal, with some qualifications. Pete Fry, of the Green Party, said the measure was long overdue. "It’s exciting to see that we may actually be within striking distance of a deal with provincial authorities to throw a lifeline to small businesses being strangled by high taxes. “The practice of highest-and-best-use assessment has had a crushing effect on small businesses where they are effectively being taxed on the future imagined potential of their land as opposed to the actual use of the land.” Jean Swanson, representing the Coalition of Progressive Electors, said she feared building owners may not pass on savings to tenants, but instead increase rents if taxes are reduced for smaller-business tenants.

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“So I’m hoping that as staff works on this, they will be able to figure out a way to ensure that the actual small businesses who are most in need benefit from this, and not big land owners whose properties are upzoned,” she said in an e-mail exchange. Lisa Dominato of the Non-Partisan Association said she backs the idea. “Independent small businesses are critical to a strong local economy. The creation of a new commercial sub-class will reduce the tax burden on small-business tenants and support their long- term viability," she said in an e-mail. The B.C. municipal affairs and housing ministry said it was mindful of the Vancouver proposal, but is taking the time to properly canvas stakeholders in order to figure out how to proceed. “This is a complex and important issue and any changes to the assessment system would apply across the province, so it is important that we take the time to get it right," said a statement issued by Melanie Kilpatrick, a media relations official for the ministry. Aaron Aerts of the Canadian Federation of Independent Business said the organization supports split assessment, calling it a “big step in the right direction" on which the province should act. “It can provide targeted and significant tax relief to those small business hit hardest by skyrocketing property taxes,” the organization’s western economist said in an e-mail. “Too many [small businesses] have already been forced out of our neighbourhoods as a result of an archaic method of assessing and taxing business owners – something needs to be done.”

Lower residential property assessments set to raise Metro Vancouver tax rates With valuation day behind us and home values clearly down, will property tax rate rise to cover revenue shortfall? With the first half of the year done, the number crunchers will be busy sorting the data for initial insights on the market with a view to figuring out where the second half will take us. With many first-half numbers not due out till September, what’s happened to date will also set the tone for the final push to the end of the year. Part of that push will be the BC Assessment Authority’s work developing the 2020 assessment roll. The initial valuation date for the roll is July 1. On the residential side, at least in Metro Vancouver, the trend promises lower assessment values for residential properties. Real Estate Board of Greater Vancouver statistics showed a cumulative decline in the benchmark price of nine per cent in June versus a year earlier, to $998,700. This marked the 13th straight monthly decline and the first time since June 2017 that the benchmark dipped below $1 million. (Indeed, it was the exact same price as in June 2017.) But the slowdown in home sales could make it difficult for owners of more-expensive properties to get an accurate assessment of their properties’ worth, warns Paul Sullivan, a principal with appraisal firm Burgess, Cawley, Sullivan & Associates Ltd. “[This past year] BC Assessment took the position that the fact there were very few [home] sales did not support that there was a significant change in the market value,” he said last week. “There still has not been a sale in the city of Vancouver over $15 million and there are very, very, very few sales over $10 million.… To substantiate the market value of a home in British Columbia over $5 million is still extremely difficult.” It’s not just top-end properties that are affected by the situation. While values on more affordable properties have been more resilient, they’ve not only taken a hit in value but will end up having to shoulder the shortfall in revenue needed to run the city. A decrease in the value of the tax roll means the tax rate will have to increase to cover the city’s rising expenses – expenses boosted by other taxes such as the employer health tax, which became owing last month.

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Vancouver property taxes could rise up to 10% to cover recent council motions Property taxes in Vancouver could rise by as much as 10 per cent next year in order to pay for a wealth of recent motions approved by city council, according to a preliminary budget report. Staff’s 2020-2024 Budget Outlook, which was approved by council on Wednesday with amendments, suggests those motions have added an additional pressure of $21 million to $24 million for 2020 alone. Those numbers, which staff say are high level estimates, would require a tax increase of at least six to seven per cent annually — higher than last year’s projected annual increase of 4.9 per cent. The current council’s first budget since their election, which was approved in December 2018, lowered the increase to 4.5 per cent for 2019. Staff point to a few key council initiatives for the projected expense pressure, including efforts to confront climate change and a proposed city plan, which is still being debated. Other initiatives that aren’t individually mentioned in the report account for a combined $7 million to $8 million alone in projected expenses for 2020. The version of the report approved by council ultimately did not include any percentages, but did mention a tax increase. Coun. Rebecca Bligh said Wednesday the outlook suggests council may be sending staff too many messages and directives at once. “We’ve had a flurry of motions, and I do worry they’re sending staff in many different directions, all of which cost taxpayer dollars to staff, plan for, come back with a report, actions,” she said. “I have yet to see where we have actually said, ‘Stop doing this and start doing that.'” Bligh suggested it’s been difficult to steer city hall toward this council’s priorities, which are centered around climate change and livability, and could be at odds with those of the previous council. “I can imagine they’re sitting there looking at all of the different directions they’ve gotten over the past two years and saying, ‘OK, where do we go from here?'” Bligh said. The climate change initiatives — which look to prepare the city for the continued threats posed by warming temperatures and rising sea levels — stem from a motion from Coun. Christine Boyle in January that saw council vote to declare a climate emergency. Boyle said Wednesday that public consultation will follow council’s approval of the budget outlook, where taxpayers will be asked how they feel about covering the additional costs. “We know it will cost extra to tackle climate change, and what we’re seeing in other jurisdictions already hit by these impacts is it costs even more not to respond,” she said. “I hope one of the questions will be whether we should pay an extra one-per-cent tax increase to boldly and adequately address the climate crisis we know is here. The Vancouverites I hear from the most have a strong commitment to that and understand it won’t happen for free.” Boyle added staff is working to secure federal and provincial funding to cover a majority of those costs, so the expense shouldered by the city could go down. City council has also voted to ask fossil fuel companies to cover at least some costs associated with climate change.

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In a statement, the city’s chief financial officer Patrice Impey said the budget outlook process is an early step towards delivering a draft budget in the fall, which will be written with the council’s priorities in mind. “As we do each year, we will look to balance the need to maintain and improve services, facilities and infrastructure — along with accommodating requests for new initiatives including new council motions — with acceptable levels of taxation, utility rates, and fees,” Impey said. Public consultation for the city budget will begin in August.

Property taxes could increase as much as 10% in Vancouver next year A new city staff report states that property taxes in Vancouver next year could increase as much as 10%, to help cover the costs of city council motions that have been put forward “over the past months, some of which will have budget implications over the next few years.” The report said that a preliminary scan of the budget numbers “indicates that expenditure pressures will exceed those estimated in the 2019-2024 Five-Year Financial Plan.” That plan estimated a 4.9% property tax increase to balance the budget. However, “the 2020-2024 outlook indicates that the pressure would require a higher tax increase of 6% to 7% to balance and could be as high as 10% to implement all of the various council motions.” The report said the capital budget will reflect the second year of the four-year capital plan approved in 2018. Initial estimates for 2020 are to bring forward projects of approximately $450 million or 20% of the four year plan, “with higher levels expected in future years as planning and design are completed and construction begins on major projects,” it said. “Following this high level scan, staff will undertake the process of reviewing costs and revenues, including utilities and fees, in developing a proposed budget.” This, the report noted, will include consideration of increased revenues and revenue sources, cost savings through technology, process improvement or service changes, and other opportunities to deliver services and programs. Between now and when the draft budget is presented to council in late fall, the city will embark on its annual public engagement process for the budget. Starting in mid-August, the public will have opportunities — online, in person, in workshops, etc. — to share their thoughts on the budget with city council, “as well as their own priorities for the services and programs we should fund more―or less,” the report added. Last year, Vancouver city council approved a 4.5% property tax increase, as part of the city’s $1.513 million operating budget for 2019 and a $365.8 million capital budget for new projects in 2019.

How big property owners are manipulating B.C. Assessment's appeals process U.S. Congressional testimony has said that Donald Trump “inflated assets when it served his purpose and deflated his assets to reduce his real estate taxes.”

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Why should anyone in B.C. care? This is common practice for B.C.’s big property owners as well. Under-assessed mega-properties are shifting property taxes to smaller commercial and residential taxpayers. The Assessment Act requires of B.C. Assessment that all properties be valued at “market” value, as of July 1, each year. Residences and small commercial properties are easier to value, due to an abundance of market information. The same is not true of large commercial properties. The Assessment Act says it’s an offence to not cooperate with B.C. Assessment when it asks for property information. Unfortunately, because there’s no penalty for violating the Act, large commercial owners often ignore these requests. Consequently, B.C. Assessment lacks standard valuation information, like that provided in appraisals for banks, pension commissions, securities commissions, Canada Revenue Agency, and so on. Commercial assessment appeals have dramatically increased in recent years, compounding an already strained assessment/appeal system. From 2002 to 2016, the number of appeals to the Appeal Board ranged from roughly 1,500 to 2,000 annually. In 2017 and 2018, the appeal volume went up by 50 per cent to around 3,400 appeals annually. In 2019, appeal numbers skyrocketed to almost 5,200 appeals, three times the average number seen between 2002 and 2016. Of these numbers, typically up to two-thirds are very complicated commercial appeals, which require critical information from the property owner. Unfortunately, the Assessment Act is so weak and Appeal Board rules so easily avoided, B.C. Assessment often can’t adequately address the bulk of these appeals. The public perception is that B.C. Assessment and the Appeal Board have unlimited resources. Nothing is further from the truth. Corners are cut in each appeal year to meet budget requirements. Large property owners are well aware of this situation and have been turning up the heat, appealing more and more properties. Cynically, up to 60 per cent of these appeals are eventually resolved when they’re simply withdrawn. These withdrawals occur deep into the process, after exhausting B.C. Assessment resources. At this pressure point, maximum leverage is achieved for the appellant and the horse trading begins. For example, an appeal agent will agree to withdraw, say, three appeals, if the assessor will give a reduction on another appeal. B.C. Assessment regularly capitulates, whether a value reduction is merited or not. This provides rosy appeal resolution statistics for both B.C. Assessment and the Appeal Board — the illusion of a job well done. It happens in the shadows, removed from B.C.’s local governments, and more importantly hidden from taxpayers they represent. The provincial government controls the entire assessment system. They write the legislation, run B.C. Assessment, and appoint members of local Review Panels and the Provincial Appeal Board. Simple solutions are available, such as changing a few minor provisions in the Assessment Act. Perhaps non-compliance with the Assessment Act could result in the forfeiture of the right to appeal an assessment. Other solutions could be stronger Appeal Board penalties for non-compliance with its rules. One very simple solution would be to require a property owner to declare all their existing appraisals done for other purposes, as is required in Washington State. Provincial governments give blanket assurances to local communities about their assessments, but have cut funding behind the scenes. Further, the assessment and appeal system appears to bend over backwards for the high-end commercial real estate class, whether or not they comply with provincial legislation or Appeal Board rules. The system encourages high-value property owners to appeal in ever greater numbers, making the system work for them, not for the average B.C. property taxpayer. Each B.C. community has a responsibility to hold B.C. Assessment to their legislative mandate — for all taxpayers, not just a privileged few. Derek Holloway is retired after 28 years as auditor at B.C. Assessment

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City of Vancouver faces multiple lawsuits regarding Empty Homes Tax A group of lawsuits have been filed against the City of Vancouver alleging mismanagement that is costing homeowners thousands. Vancouver's Empty Homes Tax bylaw is a first of its kind in Canada, and bills for hundreds of thousands of dollars are owed to the city. The tax requires homeowners to pay a one per cent levy based on the assessed value of their home if they live there for less than six months per year. Home and business owners are now filing petitions in B.C. Supreme Court to try to get their bills thrown out. Case One: Accidentally filing wrong year leads to $134,725 bill Sau Po Wong lives in a Shaunessy home that's now on the market, listed for $16.9 million. He's a retired businessman, and according to court documents made a mistake that landed him a hefty empty home tax bill. The case outlined in court documents says he "mistakenly uploaded copies of a utility bill, a notice of assessment, and government correspondence relating to 2018 – not 2017." Because of the mistake, the city claims to have contacted him in the fall for clarification, but he says he was travelling for three months and never received the letter or a phone call. "Because he didn't give them the information they were looking for to support his declaration, the city is then under the bylaw entitled to take the position that it was vacant despite his declaration because he didn't give them the information," said his lawyer Ryan Parsons. "It was unfortunate." Wong was given a $128,310 bill and had a 34 day deadline to pay it or else he'd be subject to an additional five percent penalty. "Mr. Wong arrived home six days after that 34 days expired," said Parsons. So Wong now owes the City of Vancouver $134,725. Parsons is hopeful the court will grant the extension or, "send it back to the review officer to give consideration it the extension request." The lawsuit was filed June 28; the City of Vancouver has 21 days to respond. Case Two: Late building permits lead to $304,336 bill Court documents submitted by Pure West Financial Holdings Group claim the empty homes tax bill the city sent them is "unreasonable and constitutes an error in face and in law." The company had been in the process of redeveloping the area of 5189 and 5289 Cambie street into a 134-unit residential building, which according to the petition started in August 2016. In April 2018, Pure West Financial received an audit determination from the City of Vancouver stating, "the redevelopment was subject to a vacancy tax and that it did not qualify for an exemption for reason that all associated building permits were issued after July 1, 2017." In the petition, however, Pure West Financial claims, "the redevelopment exemption does not require all building permits to have been issued prior to July 1, 2017, nor does it specify which permits must be issued." Including the interest and late fees, CTV News has learned Pure West Financial is facing a $304,336 bill as of May 30, 2018. The petition was filed May 28. On June 18, the City of Vancouver responded and said, "the decision of the Vacancy Tax Review Panel is both reasonable and correct." Lawyers for Pure West Financial are now looking at booking a hearing date in the coming months. Case Three: Apartment was occupied by renter and owner for "more than 6 months"

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Jufen Wang owns an apartment in Kitsilano. That unit was subject to a $3,881 tax bill for 2017, even though Wang provided evidence "that the property was occupied cumulatively in excess of 6 months during 2017." Documents provided include TV and internet bills, bank statements, insurance letters and BC Hydro invoices, all of which "show the variable daily consumption indicating when the property was occupied," according to court documents. But the city had an issue with the hydro bills, stating "some of the utility bills are addressed to a different person." Wang claims her daughter handles the bills with power of attorney so some of the bills are under her name. Wang claims she lived there 6 months of the year in 2017 and that for the rest of the time, "it was successfully rented as furnished accommodation." There is also an affidavit from the building's strata manager providing evidence the unit was rented. They claim to have declared the property as primary residence based on "city staff's guidance." Based on her petition, Wang is asking for an "order to cancel the empty home tax" or to have the city cover the costs. None of these allegations have been tested in court. The city declined an interview saying all of these cases are before the courts. The only case they've responded to is the petition filed by Pure West.

‘A huge amount of stress’: Vancouver businesses say property taxes have them at the brink A group of Vancouver businesses is speaking out about what it says is an unfair system as the city’s property tax deadline arrived Wednesday. Sally Traynor owns Commercial Drive’s Manifesto hair salon. She bought the struggling business in 2010, and while it’s now thriving, she told Global News she’s still being pushed to the brink. “I’ve had to take a hard look at my business model, so I reduced the number of hair chairs and decided to diversify my retail,” she said. “It’s a huge amount of stress because your margins are your margins, and if you’re really savvy you do your best to control those margins.” Traynor said for her 750-square-foot business, she’s on the hook for $3,600 in rent and an additional $800 in property taxes — taxes she says have doubled since she opened the business in 2010. Traynor’s story is one of several being highlighted by the Canadian Federation of Independent Business (CFIB), which argues companies across a variety of sectors are facing “skyrocketing overhead” from the combination of taxes and growing lease costs. The organization says companies are being forced to choose between leaving longstanding locations in Vancouver neighbourhoods, holding off on hiring, boosting working hours or even shuttering their businesses. “At one point we didn’t have skyscrapers, right? We didn’t have huge residential developments on top of commercial, so at one point it wasn’t as much of an issue,” said Aaron Aerts, the CFIB’s western economist. Rezonings in several areas of the city to allow for residential towers have resulted in the land value associated with the properties climbing rapidly, amounting to hefty new tax bills and increased lease prices at property turnover. The CFIB said that the city shouldn’t be taxing properties on their so-called “highest and best use,” but rather on the building that currently sits on the site. It wants to see taxes assessed along a split classification. “Why is a business owner paying a commercial rate, which is four times higher, on a residential potential?” asked Aerts.

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The Ministry of Municipal Affairs and Housing said it is meeting with local business owners, and has left the door open to a split classification system. It said local governments also have a variety of tools to defray the impact of property assessments. Back in April, Vancouver city council approved a 2 per cent tax shift from businesses to homeowners in an effort to defray some of those costs. Skyrocketing property values aren’t the only pressure the city’s businesses are currently facing down. Many are also grappling with the province’s new Employer Health Tax, which requires businesses with a payroll of over $500,000 to pay into a fund designed to offset the elimination of MSP premiums. The region’s minimum wage also climbed to $13.85 last month.

Victoria council offers tax break for Legion’s $104,000 property tax bill The city will cover a portion of the taxes after the Legion faced closure The last fully operation Legion in Greater Victoria will stay open another year. On Thursday, city council voted to issue a $36,000 grant to the Trafalgar/ Pro Patria Branch #292 to help alleviate a sudden jump in property taxes. This portion covers the recreational and non-profit aspect of the Legion’s tax bill. In early June the branch was told its annual property tax, usually pegged around $70,000, had jumped up to $104,231.78, a sum the branch simply would not be able to pay. “We’re obviously happy for this year for sure because it was really scary. There’s no way we could come up with $105,000,” said Angus Stanfield, chair of the Victoria Remembrance Committee and Dominion vice president. “We budgeted for $70,000 and are kind of struggling with how we’re going to make it.” The jump came from a 2019 BC Assessment which separately taxed the recreational/non-profit aspect of the Legion at $36,000 and all business/other aspects at more than $67,000. Councillors called into question how other municipalities, such as Langley, Sidney and Burnaby are able to offer full or partial exemptions to the property tax, as there is no legislation in place to do so provincially. “This particular issue is one which is indicative of a very strange and quite unrealistic and inconsistent approach to how Legions are taxed through British Columbia,” said Coun. Marianne Alto. Coun. Geoff Young was concerned about promising future grants if exemptions are an option. “A grant is not equal to an exemption,” Young said. “When we give exemptions, taxes and school taxes are forgiven. When we get a grant we collect half of that $36,000 and the rest goes to provincial government.” This prompted the city to put forward a motion for consideration at the upcoming Union of B.C. Municipalities convention. The motion asks for the province to consider developing policies and legislation for municipalities to apply exemptions to Legions, a conversation that had never been on the table before. “Legion-wise British Columbia has been the furthest, most backwards province in understanding what we do,” Stanfield said. “There’ something now that we can look at and work on, and before we couldn’t do very much because there weren’t any lines of communication.” Coun. Ben Isitt was supportive of this motion, but called into question if all Legions should be treated equally.

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“Personally my preference would be that exemptions do take into consideration if they’re a bonafide organization of veterans or other ex-service members,” Isitt said. “For some communities, in lieu of a pub this becomes the community gathering spot and drinking establishment. “ Stanfield was adamant that regardless of the membership demographic, all Legions follow the same mission statement to serve veterans and the community, and to focus on remembrance. “You don’t have to have served to appreciate the price that has been paid to live in a country like we do,” Stanfield said, adding that he himself has never served in the Canadian Armed Forces. “The world needs more Canada, and Canada needs more Legion.” Presently the Pro Patria branch will continue to pay the remaining $70,000 in taxes for 2019, and are earmarking another $70,000 for 2020. The motion for property tax exemptions for Legions could come up for discussion at the UBCM convention in September.

Vancouver man gets surprise $17K bill for empty homes tax on live-work townhouse The owner of a Vancouver property zoned for both business and residential use was shocked to receive an empty homes tax bill of almost $17,000 — even though it's occupied for most of the year. Shawn Moore's modern three-storey townhouse at the corner of Pacific and Howe streets is one of four in a row that are zoned for use as offices, private residences or a combination of both. When the time came to make his declaration for the city's empty homes tax earlier this year, Shawn Moore said his property was occupied, since his marketing agency was using it as an office for most of the year and, in November, another tenant moved in. When Moore learned he was being audited, he said it didn't bother him, because he was confident he wouldn't have to pay the new tax. But the shock came soon after when he got the bill. Vancouver condo owner accuses city of bullying over empty homes tax "I mean, we certainly never budgeted for that," said Moore, adding that it could damage his business. "That's like an extra $1,200-$1,300 a month in expenses." Moore bought the townhouse several years ago, and has built up his business over that time, ultimately outgrowing the space late last year. Initially he lived there too, but Moore bought another home downtown, which he declared as his primary residence this year. He said he stayed overnight at the Pacific Street property dozens of times in 2018, but its main purpose was to serve as an office. "We had full-time staff in the property every day — it's zoned for that," he said. "It also gave me the opportunity — on the third floor — to live, which I did over the course of the past eight years." Moore said as he tried to fight the tax bill and navigate the audit, city staff were very helpful. But he said the process still took about 30 hours of his time, including calls to lawyers and tax accountants, and in the end, it was the auditors who lacked flexibility. "The auditors acknowledged that it is zoned for live-work-commercial. But they don't care. It's a vacancy tax that applies to all zonings that have any residential component to them," he said.

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'Decision is made by B.C. Assessment' According to a written statement from Melanie Kerr, director of financial services at the City of Vancouver, the question of how live-work properties are taxed rests with B.C. Assessment — even though the empty homes tax is a municipal tax. "This classification decision is made by B.C. Assessment, not by the city," said Kerr. "Live-work units may be classed by B.C. Assessment as residential or business, depending on their use." "If they are classed as residential, then they must file a declaration as per the city's empty homes tax, and if they are not occupied for residential purposes or rented, then they would be required to pay the tax," she said. Moore said the tax may force him to rent his property only to tenants who plan to use it as a home, despite the opportunity provided by the uncommon zoning. "Otherwise I'm going to be forced to pay an extra $16,000-$17,000 a year," he said. "We weren't prepared for that, so I'd have to rethink things." But Moore is still hoping the city comes to appreciate his position, and make an empty homes tax exemption for property owners like him.

ONTARIO

Taxed to the Max — a survey of the city’s most expensive houses Many homeowners dread receiving their property tax bill, and almost all grumble about how high it is. But for Ottawa’s most expensive houses, the bills are much higher, topping out at about $650,000 for Rideau Hall, residence of the Queen’s representative in Canada. Fortunately for the occupant — former Canadian astronaut Julie Payette — Canadian taxpayers pick up the tab. In Ottawa, property taxes are calculated at about 1 per cent annually of the estimated value of a house. Anyone is free to look up the assessment on any house. (The Governor General’s residence, with its 79-acre estate, was assessed in 2016 as being worth $65,249,000.) The assessment determines a homeowner’s share of property taxes until 2020, when new assessments will be done. The highest-assessed houses are occupied by the political elite and foreign diplomats. Yes, in addition to paying the property taxes on residences owned by the Canadian government, taxpayers foot the property tax bill on the residences of foreign diplomats. The Vienna Convention on Diplomatic Relations exempts official residences from municipal real estate taxes; Canada and 191 other countries are signatories. And one note about the top of the list. Records at city hall show that in the past four years, some houses increased by millions while others fell by millions. Inexplicably, the biggest change was in the assessment on the rundown and currently uninhabited former residence of prime ministers at 24 Sussex. It was assessed to have increased in value by more than $5 million. We have no idea why. Here, the top 10 highest-assessed houses in Ottawa. Rideau Hall: Regal Grandeur 2012 assessment: $61,924,000 2016 assessment: $65,249,000 The Governor General’s residence reputedly cost $82,000 to build in the 1860s. Today the property known as Rideau Hall is valued at more than three times as much as any other house in Ottawa. Much of the value of the property is in its surrounding woodlands and gardens, which cover 79 acres. Higher land values probably explain the assessment increase in 2016.

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Residence of the U.S. Ambassador 2012 assessment: $19,765,000 2016 assessment: $19,815,000 The expansive residence of the U.S. ambassador on Lisgar Road was built in the early 1900s for Warren Soper, founder of the Ottawa streetcar system, who requested his own streetcar shelter outside the house. The shelter is still there. Little change in assessment suggests stagnation in high-end real estate prices between 2012 and 2016. French Embassy and Residence 2012 assessment: $13,062,000 2016 assessment: $17,406,000 This handsome art deco building at 42 Sussex houses the French embassy and the ambassador’s residence. Its pristine condition contrasts with the dilapidated, currently unoccupied Canadian prime minister’s residence next door. Built of Quebec granite in the late 1930s, its prime location on the Ottawa River probably explains the sharp increase in property assessment from 2012 to 2016. The PM’s Fixer-Upper 2012 assessment: $9,673,000 2016 assessment: $15,369,000 No one of sound mind would buy this property. The historic house at 24 Sussex Drive was formerly home to prime ministers of Canada but is in such bad shape that Prime Minister Justin Trudeau lives in a very large “cottage” nearby on the grounds of Rideau Hall. The federal government is undecided on whether to replace or rebuild the house. (Either way, the cost to taxpayers will probably be more than $30 million, the government estimates.) The Most Dramatic House in Rockcliffe 2012 assessment: $17,720,000 2016 assessment: $14,816,000 The Vatican’s envoy to Canada lives in “undoubtedly the most dramatic house in Rockcliffe.” That’s according to a booklet produced by an architectural conservation advisory committee of the village of Rockcliffe. The booklet was published in 1982, but it may still be true. Eye-Catching Opulence 2012 assessment: $14,263,000 2016 assessment: $12,488,000 Probably no private home in Rockcliffe ever set tongues wagging as much as this one, which mixes glass and copper-coloured materials and defies neighbourhood tradition. Even several decades after it was built, it still contrasts sharply with the heritage architecture of many 19th- and early-20th-century houses in the area. The house has almost two acres of land, which is a good size in Rockcliffe and adds to its value. Still, its assessment fell by more than $1.7 million between 2012 and 2016, indicating weakness in demand for the priciest houses. Modern House, Traditional Style 2012 assessment: $11,078,000 2016 assessment: $9,740,000 Built little more than a decade ago, this is a Rockcliffe house in the traditional style of smaller, older neighbouring houses. Located on Manor Avenue, this house has cathedral ceilings throughout the ground floor and 12,500 square feet of living space. After a house-warming party when the house was built, a guest gushed: “It is like a palace, really. A lot of guests were likening it to an old English manor. But it is a very new English manor.” Converted Historic House 2012 assessment: $9,649,000 2016 assessment: $8,886,000

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Many old houses lack space. Many new ones lack character. This Rockcliffe house on Soper Place combines the best of old and new. The owner knocked down most of an old house but kept parts of it and integrated the old stonework into a state-of-the-art modern mansion. Lots of windows allow light to flood in everywhere. Rothwell Heights Stunner 2012 assessment: $5,348,000 2016 assessment: $5,589,000 Located in Rothwell Heights, this modern stone house would probably be worth at least $2 million more if it were in Rockcliffe. And the neighbourhood is just as tranquil and leafy as Rockcliffe. The house is on a quiet cul-de-sac with views across the Ottawa River to Quebec. Leafy Seclusion in Kanata 2012 assessment: $6,456,000 2016 assessment: $4,457,000 This house in a residential suburb near Earl of March Secondary School has more privacy than any other on our list: 11 acres of land ringed with high evergreen hedges that hide the main house from view. While it’s far from downtown Ottawa, the house is close to the city’s technology hub. It’s difficult for assessors to value such a property, since there are no sales of comparable houses nearby. (Before you shed a tear, note that the assessment drop of almost $2 million saves the owner about $20,000 annually in property tax.)

SASKATCHEWAN

Tax-weary residents more willing to consider service cuts City hall polling shows a growing number of residents willing to look at reducing or eliminating services When it comes to the budget, city hall services seem to somehow survive the process mostly untouched. Politicians regularly justify property tax increases that far outpace inflation by saying the hikes are necessary to maintain services. So Saskatoon residents are staring down potential property tax increases of about four per cent in each of the next two years as part of the city’s first attempt at a two-year budget. And that’s just to maintain services, which range from water to recreation centres, at current levels. The city’s own polling suggests a growing number of residents think it’s time to look at either reducing or eliminating some services that city hall provides. The city’s annual third-party survey of residents, which was conducted by Forum Research Inc. last summer, was intended to provide the basis for the city’s first two-year budget. Forum Research produced telephone and online poll results that found a sizable number of respondents think it’s time to cast a more critical eye at city services. Twelve per cent of respondents to the telephone poll — which had a margin of error of plus or minus 4.36 per cent 19 times out of 20 — backed a reduction of services and another 12 per cent said they wanted to stop some services. Combined, that’s nearly a quarter of respondents. The online poll of randomly selected panellists shows even more support for cuts.

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The online poll, which Forum Research said has a margin of error of plus or minus 3.46 per cent 19 times out of 20, suggests 13 per cent want to look at reducing services and a whopping 23 per cent favour eliminating services. Combined, that’s 36 per cent from the online poll, about the same as the 34 per cent who backed a combination of user fee and property tax increases. The poll questions included options for property tax increases alone, user fee hikes and new user fees, but none of these options got more than 16 per cent in either the telephone or online polls. Reducing or eliminating services represents a municipal minefield for city council and the administration. People with a preference for cuts may only want cuts or elimination of services they don’t personally use. Residents might think the city can get along fine with one fewer pool, for example, so long as the plug isn’t pulled on the pool closest to them. The preference for reduced services likely reflects a city that has been battered by property tax increases that have averaged 4.46 per cent over the last five years. Property taxes are generally regarded as a regressive form of taxation because they rise or fall based on a property’s assessed value, which can be totally distinct from someone’s ability to pay. Property tax increases through a period of steady growth have left many in Saskatoon skeptical. The question “Shouldn’t growth pay for growth?” still reverberates through city hall. The proposed property tax increases for 2020 and 2021 come despite the expectation that millions more dollars will come from the provincial government’s revenue sharing program to split provincial sales tax revenue. The city is expecting $6.5 million more from the province next year. City hall estimates it will find about $4 million in internal savings over the next two years. City water rates have risen by nearly 10 per cent for four straight years. Yet taxes keep rising. Saskatoon boasts a list of advantages other cities don’t have that should provide shelter from reliance on property taxes, such as its land development branch and its own power utility. None of that seems to help, and council has directed the administration to try to lower the tax hikes. About a quarter of the projected tax increase for the next two years is linked to addressing an ongoing shortfall in waste operations and introducing a new organics waste collection service in 2023. City council’s commitment to introducing a new service was tested four years ago when years of increases were approved for a city-wide snow removal program. That vision and the tax hikes fizzled. Organics collection will not necessarily suffer the same fate, but a population sick of tax hits seems more willing than ever to consider cuts.