The District of Port Hardy has refused the Providence Plan Inn’s request for $60,310 in tax debt forgiveness.
At a committee of the whole meeting on June 25, a staff report from the district’s Director of Finance, Lynda Sowerby, was included in the agenda.
According to Sowerby’s report on the issue, property taxation is the main source of revenue for municipalities in British Columbia. Taxes are levied by the municipality to raise revenues for their own needs, and the municipality also levies taxes on behalf of other public authorities (school & police tax, regional district & hospital tax, etc.). Taxation is levied based on the assessed value of the land and improvements, and a tax rate is set for each property class.
“The British Columbia Assessment Authority (BCAA) is responsible for assessing the valuation of all properties in the province,” wrote Sowerby. “BCAA’s primary objective is to produce annual independent and uniform property assessments for all properties and is responsible for determining the market value and classification of all properties. Each property owner receives an assessment notice from BCA annually. The property owner may contact BCAA to discuss how the property valuation was determined and ensure that BCAA has the appropriate information to correctly classify and assess the property. The owner may appeal the assessment decision prior to January 31 each year.”
Sowerby then noted that “General prohibition against assistance and exceptions to a business, it states that a council must not provide a grant, benefit, advantage or other form of assistance to a business, including an exemption from a tax or a fee, unless expressly authorized under the Act. However, the Act does have a provision allowing council the authority to grant a permissive tax exemption providing the subject property meets specific criteria.”
The report then went on to state that properties are automatically granted the property taxation to educational institutions, hospitals, churches, or properties that meet the criteria. The subject property has been granted a statutory exemption for the 8,900 square foot portion of the building and the land on which the building stands, that has been set aside for public worship.
“When taxes, rents or lease payments are no longer collectible, a municipal council may write-off outstanding amounts owed to them,” Sowerby added. “Provincial Approval (Minister’s Order) must first be obtained prior to the municipality writing off the debt. The province will only consider write-offs when the debt is uncollectible because of circumstances such as a mobile home has been removed, the property has been destroyed, or a lessee has declared bankruptcy. If a situation for write-off of taxes was considered, the municipality would need to offer the same consideration for every taxpayer in a similar situation. Request for a write-off based on the inability to pay, or assertion that the property taxes are unjust, would not be considered uncollectible by the province, and therefore are not eligible for write-off.”
BACKGROUND INFORMATION FROM THE REPORT:
At the tax sale held Sept. 24 of last year, there were no bidders on the Providence Place property, therefore, the District of Port Hardy was declared the purchaser of the Providence Place property. The registered owner, or the owner of a registered charge against the parcel, have until Sept. 24, 2019 to redeem the property. Failure to redeem the property will result in transfer of title to the District of Port Hardy.
Due to all of these factors, Sowerby concluded her report by stating that “The district has not overcharged or made an error when the levy for property taxes was calculated on the property. The annual tax levy on Providence Place has been calculated… based on the assessed value of the land and improvements and the tax rate as set for each property class.”
She added that the district cannot consider “the outstanding taxes in question to be uncollectible. The annual tax sale allows municipalities the tool of selling real property, enabling the recovery of unpaid taxes, penalties and interest (the upset price); therefore, the write-off of the taxes cannot be considered.”
According to the report, the $60,310 in tax debt that the Providence Place Inn requested for forgiveness is “comprised of municipal tax levy and taxes that were levied by the district on behalf of other public authorities. The taxes levied on behalf of other public authorities is not ours to forgive. Although the district has not collected all taxes, the portion levied for other public authorities has been forwarded and are not recoverable.”
The criteria does not allow the district “to provide any type of assistance to a business. Debt forgiveness cannot be granted unless the same consideration is granted for all situations that are similar.”
Furthermore, Sowerby noted that it is “the responsibility of the property owner to ensure that BCAA is properly apprised of any changes in actual use of the property. It is also the responsibility of the property owner to question BCAA on valuations that they consider incorrect… The Port Hardy Christian Fellowship should review the policy guidelines and make application for a permissive tax exemption if all or part of the Providence Place building usage meets the eligibility criteria.”
FINANCIAL IMPLICATIONS FROM THE REPORT:
The current taxes outstanding on this property will remain as taxes receivable until paid by the owner; and If the property is not redeemed, staff will provide Council with a report on the financial impact of District ownership. All applications for permissive tax exemptions will be reviewed by Council as per Councils Permissive Tax Exemption Policy.
Sowerby’s report included three options for the committee to choose from, which are listed as follows:
1. That Council direct staff to advise the Port Hardy Christian Fellowship that the District is not able to forgive the $60,310 in tax debt as requested;
2. That Council direct staff to inform Port Hardy Christian Fellowship of the application process for Permissive Tax Exemption;
3. That Council provide further direction to staff.
According to Chief Administrative Officer Allison McCarrick, the committee voted for option one, and also for council to direct staff to inform the Port Hardy Christian Fellowship of the application process for Permissive Tax Exemption.