Government Street Property Tax

I’ve spent a little bit of time working in corporate services departments for two local governments, and I know from experience that nothing is ever as cut and dry, or clean and simple as it may seem. Any issue, however novel, always has a back story and every decision made inevitably has unanticipated consequences. With that in mind, I spent some time today trying to make sense of a newspaper article from yesterday and a news story from today.

Mayor Lisa Helps had an article in the Times Colonist yesterday titled “Victoria mayor seeks tax break for ailing Government Street”. The first line of the article reads as follows:

 “Victoria Mayor Lisa Helps is floating the idea of a property tax exemption for some property owners along Government Street to combat a spate of retail vacancies that have left one of the city’s main streets full of empty store-fronts” (para 1).

From a municipal administrative law context, Helps is referring to a variation of the Permissive tax exemption scheme currently managed by the City of Victoria for public and not for profit buildings, as well as for seismic renovations of heritage buildings. Of note is that compared to revitalization tax exemption idea “floated” by Helps for a certain portion of Government street “from the waterfront to Yates Street” (para 6), public and not-for-profit exemptions are available City wide and heritage exemptions are for all eligible downtown heritage designated buildings.

On the implications of a geographic restriction for revitalization tax exemptions, Helps is quoted twice in the TC article:

  • “my gut tells me, start with Government street” (para 20).
  • “I know people will freak out when they hear that, people will say it will draw businesses from other parts of downtown” (para 8).

Administratively, I was naturally concerned for Victoria staff and what their response may have been to Mayor Helps’s observations on this new potential program. Revitalization tax exemptions are not something that happen over night. Extensive stakeholder consultation, financial planning, and coordination is needed to come up with a workable set of revitalization functions and objectives. An enabling bylaw for any tax exemptions must also be passed for the program to be in compliance with sect. 226 of the BC Community Charter and various application deadlines must also be established and then met before any allowances can occur.

So I had to wonder, why is the Mayor talking about these tax exemptions now? I know Victoria Council is in the beginning stages of their Strategic Planning process, and as was outlined in a recent GPC report, this process consists of two in-camera sessions (today and Monday) and three public discussion days occurring February 2nd, 3rd, and 5th at the Victoria Conference Centre. By going to the media with this idea at the exact time Council is just sitting down to figure out how to work together to come up with a strategic plan, what is Mayor Helps trying to accomplish?

To find some context for her interest in such tax exemptions, I started doing some digging. The first thing I found online was a post on her website called Permissive Tax Exemption Policy where she discusses her support for a past council proposal to tighten up permitted property tax exemptions for regional charities and non profits, and she writes that:

 “I think the non-profit sector needs to become more enterprising, more resilient, not primarily dependent on grants and exemptions but more creative and more collaborative” (para 5).

Ok, I thought, so why then are tax exemptions her first public response on options for businesses?

This then led me to spending some time reviewing other posts from Helps’s website including A Prosperous Downtown and Thriving NeighbourhoodsCreating a City of Opportunities and A City Hall that Works. Found within these pages are a variety of high level proposals including commitments to:

  • Take a leadership role to make downtown prosperous
  • Take a leadership role in economic development
  • Reorganize City Hall so it works betters

For Helps to come forward this week with an idea for a Revitalization tax exemption – on only a small portion of Government Street – almost seems as though she has moved away from the proposals that got her elected. Yes, it could be argued that speaking to the local news media prior to Council deliberations on the issue could be a form of “leadership” (e.g., getting the ball moving) but then from an administrative perspective, it should also be noted that for Helps to simply “float” ideas as she deems fit, there is great potential for her to further complicate the already complex activities of Victoria City Hall. We must not also forgot the possibility for taxpayers – such as Government Street business owners – to end up being disappointed when these new ideas fail to become reality.

To further illustrate my earlier point about administrative interconnections, I want to highlight Helps’s other previously advocated commitment to “Create a positive context for job creation” and a related promise for her first six months in office to “improve City’s processes and reduce processing time” (para 9). This compared to the exclusive property tax exemptions seems to be a more practical, albeit time constrained, proposal because regardless of the cost of your rent – presuming of course your landlord passes down whatever proportional benefits of the tax exemption savings to you –  paying rent is never fun, especially when you are sitting for more than a few months waiting for whatever city permit or process you need so you can open your doors.

Lastly, given the well advertised juggling act that occurs every year when Council deliberates in accordance with their Permissive Tax Exemption policy on who qualifies for what property tax exemption, how fair would it be for the various not-for-profits who have to annually approach city hall with cap in hand just to keep their doors open and provide valued services, to hear that a select group of businesses downtown have been given a five year property tax exemption – as was proposed by Helps (para 6).

In summary, and perhaps in her defense, what was Mayor Helps really trying to communicate when she approached the media? Was she perhaps trying to promote her election campaign commitment for a Prosperous Downtown by speaking publicly of her commitment “economic revitalization”, but the specific example of tax exemptions on a specific street were catchier and that is what got published? Related to this, I also have to wonder what other Councillors have been hearing from their own neighbourhood businesses since this story aired? I’m sure they’ve been hearing from many others who could easily make legitimate cases for their own property tax exemption – business or residential.

All in all, this issue of property tax exemptions issue really highlights for me the need for us Victorian to be able to ask the questions why and how? Why is it that selective property tax exemptions are good for revitalization and how do we want a revitalized downtown to look?  Why is one type of business good to support and the other type bad for downtown? How can we have a good conversation on where we need to go?  Related to this, I encourage you all to join me in observing the public Council strategic planning sessions that are happening next week. It will be interesting to see what they come up with.

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