Appendix L

Mayor's Downtown Revitalization Task Force

July rTth

L Appendix L

Purpose of Presentation:

o To begin addressing the RAIL items referring to a reduction of business tax rates

o To provide a general overview of tax rate setting procedures

o To identi$' the potential impact of various tax policy changes

o To provide context for potential future recommendations to Council regarding tax rates.

2 Appendix L

RAIL Items:

o Consider lowering business and other class 6 tax rates.

o Lower the Town taxes for business building owners... they just pass that along to the business operators, which means that rental rates Bo up, and businesses struggle even more.

o Financial modelling of adjustments to business tax rates on lease rates & residential tax rates.

3 Appendix L

Tax Rates within CRD - Municipal Only tþm Resilenthl Br¡siness Industrhl Recreatbn s.01920 12.39388 16.64594 491043 Victoria 4.4691,0 T3.44L60 1,3.44160 8.1.8460 Saanidr 3.77190 12.60300 10.61640 7.23790 Colwood 3.49160 13.79610 36.33820 12.59320 Oak Bay 3.35470 6.68660 5,O2770 3.2t8s4 6.01062 5.1,2552 6.93048 SUney 3.13700 7.35233 5.87377 4.62768 2.8s692 6.88802 10.20062 2.8s692 2.66t24 9.18848 8.31.667 9,08049 Iangford 2.27530 6,82590 7.30370 2.74I70 Highlands 1.96550 8.76t70 3.05300 12.ogtto North Saanlch 1.780s0 8.46170 8.46770 3.84820 7.69780 6.30s40 8.56130 4.04130 Average 3.0s379 9.08579 1,1,.16154 6.47428 10.6629s

Sorted accord¡ng to Residential rates

Sidney is right in the middle, just slightly above the average.

4 Appendix L

Tax Rates within CRD - Municipal Only Business Colwood t3.79610 Victoria 13.44160 Saanich L2.60300 Esquimalt 12.39388 View Royal 9.18848 North Saanich 8.46L70 Highlands 8.t6L70 SHmy 7.35233 Sooke 6.88802 Iangford 6.82s90 Oak Bay 6.68660 Metchosin 6.30540 Central Saanich 6.OtO62 Average 9.08579

Same data, sorted by Class 6 rate.

Again, Sidney is near the middle, but below the average.

These rates do NOT include the BIA Levy.

5 Appendix L

Typical Tax Bill for'Average" Commercial Property

Avera ge Commefc¡al Assesrment t o/o 2014 2013 lncreaso lncrcaso

ASSESSED VALUE 776A25 745,760 30,665 4.11o/o

MUNICIPAL TAXES 5,708.53 5,494.03 214.60 3.90e/o

SCHOOL TAXES 4,658.55 4,623.71 34.84 0.76%

OTHER GOVERNMENTS

Reg¡onal District 1J92J1 1,151 .45 40.55 3.52o/o Reg¡onal Hospital 591.08 548.52 42.56 7.760/o B.C. Assessment Authority 136.26 r 35.06 1.21 0.89% Munb¡pal Finence Authority 0.39 0.37 0.o2 4.1'.\o/o Regional Tnansit Levy 990.02 892.30 97.72 10-95% Regional LiÞrary 350.94 331.74 't9.20 5.79o/o Total Other Govêmments 3,260.69 3,059.44 201.26 6.580h

fOTAL 13,627.77 13,177.18 450,59 3.42o/o

An "average" commercial property does not make the same intuitive sense as an average residence; more variab¡lity.

What do the various "Other Gov'ts" represent? - collections the Town has to undertake for various other governments/service providers.

lncrease for "average" is not representative of the true increase; same as for Residential.

6 Appendix L

Where do the tax dollars go for a Commercial property?

For a commercial property, less of the taxes go to municipality.

This is mainly because our multiple is often lower than those of other agencies.

Also, no HOG for Commercial

7 Appendix L

Tax Rates within CRD - All "Non-Provincial" Taxes

Lrght Resilentlal Business Industr'nl Recreatbn Esquimalt 5.79595 L4.3L792 20.27714 5.98068 Victoria 4.76250 1,4.32470 15.381-30 9.03290 Central Saanidr 4.58058 8.55423 8.35323 1,0.17475 Colwood 452950 17.89730 48.20450 1.6.64970 Sooke 434209 1,0.46877 16.56032 4.65294 Saanich 4.05890 l-3.56180 12.48060 8,09930 Sldney 3.98489 9.33957 8.51785 6.18159

Oak Bay 3.8 L 540 7.60490 n/a 6.02880 Iangford 3,33910 9.70880 11.88320 4.21980 View Royal 3.24t40 10.60989 1.1..34175 9s7021 Metdrosin 2.76920 9s8420 74,1,1,280 6.1,3820 Highlands 255210 9.59880 6,10330 12.98830 North Saanich 2.46820 Lt.72900 17.78780 5.64180 Average 3.86460 1r-.33025 15.50032 8.13531 15.06606

a lncludes: CRD, Library, Recreation Levy (if any) and Prov. Police Tax (if any) a Purpose is to compare like serv¡ces, as various LG's tax for them differently

. St¡ll does not fully address "basket of goods" or "level of service" issues . Some smaller LG's do not provide certain services, or only to a limited extent . Some also provide higher levels of service compared to others. . North Saanich, Highlands, Metchosin are lowest Residential; reflects their levels of service.

8 Appendix L

Tax Rates within CRD - All "Non-Provincial" Taxes

Business Colwood 17.89730 Victoria 74.32410 Esquimalt t4.3tt92 Saanich 13.56180 North Saanich Ll.72900 Average 11.3302s View Royal L0.60989 Sooke r0.46877 Langford 9.70880 Highlands 9.s9880 Metdrosin 9.58420 Sldney 9.339s7 Central Saanich 8,55423 Oak Bay 7.60490

Sorting according to the "Non-Provincial" rate, Town is 3'd from bottom ! . How much lower can we go? . Also well below average.

a lnterestingto note who is lower: CentralSaanich (Keating) and Oak Bay (BlA)

o Still more evidence that tax rates do not have significant impact on decision of where to locate.

o BIA Levy NOT included . lt should be for proper, full comparison . Some LG's provide similar services (i.e. Economic Development)through basic tax levy . Will be added to final product.

9 Appendix L

Tax Rates within CRD - All "Non-Provincial" Taxes

.,."tf -""-"..-"-' *" ..t:""."r/ ",-* -".a -""'_""""4 *"u*"-"""r."" .n""

Same data as previous table, but in graphic form.

1_0 Appendix L

TaxMultiples within CRD - All "Non-Provincial" Taxes Lrght Business Industrbl Recreation North Saanich 4.752 5.L81 2.286 Colwood 3.951 LO.642 3.676 Highlands 3.76L 2.39L s.o89 Metchosin 3.461 5.O96 2.277 Saanich 3.341, 3.O75 L.995 View Royal 3.273 3.499 3.O76 Victoria 3.O08 3.230 1,.897 Langford 2.908 3.559 1.264 Esquimalt 2.469 3.499 t.o32 Sooke 2.4L1, 3.a14 1,.O72 ney 2.344 2.134 L.551 Oak Bay 1,393 L.580 Central Saanich L.867 r.824 2.221 Average 3.O42 3.996 2.227

What is a Multiple? . Ratio of a Non-residential rate to the Residential . Eg. Business Class rate is 2.344 times the Residential rate.

o Multiples are heavily influenced by the Residential rate . North Saanich Residential rate is qu¡te low; that impacts the multiples.

r. Appendix L

TaxMultiples within CRD - All "Non-Provincial" Taxes

t.{Ðo

{ tfÞ

1.5@

r.5û,

¡"..rd J c Ju*d co rP "t..-"""c ":."..."" "-."""

Same data as previous slide

o Note that we are well below the CRD average

a Our neighbours are top and bottom of scale

t2 Appendix L

Change in Multiples since zooT

3Sm

3m

2 s000

2m Rêçidênr¡âl

-1- - ti8hr Ind6r.y

-s - gu5¡ne$/olhe. 1,5000 -6 - RecEation/Non-protit -8

r 00@

05m

2007 208 2W 2010 2011 2012 2013 2074

o All Non-residential have been decreasing over the last several years. o Decision made by Council prior to 2OO7 to bring them down.

a Light lndustrial being phased-in to match Commercial . Council delayed -year phase in lor 2 years; will now be 6 years.

L3 Appendix L

How Tax Rates are set:

¡lunlcip¡l Generel hcrease: 2.81jÉ Target $;21Íll

zo1lRovb.d L'3r; 2013 LilB.s. ApÊy 20ll 2014 lulhþ g¡.rål lþÞtårt t lLt20l4 f¡r f¡¡

2,2U,ü2,514 (12,564,m0) 2,232,098,314 6,823,98ô 3.ffi7207 3 137000 3.137t¡0 7,01r,508 t.$00 t,1$,3m - 1,1$,3m ß,412 16 831078 fl.n1n2 1.109533 tE.t863 2t,199 6.850t 37,345,7m - 57,3/'5,7û 213,780 5.724ffi 5873n2 5.8?iil7 219,360 1.81?/. ß2,n7,954 (5,9t2,000) 376,785,351 2,710,388 7.N378 1.æ7U2 (0.04s2r0) ?.15¿33 2,814,305 26,883,000 (119,m0) 26,761,000 læ,518 4.fi4123 4.ô21601 4.€2168 124,215 1.1t33 115,968 - 115,968 418 3.861151 3,90t927 3.96193 159 t,2030 2,692,930,2$ (18,675,600) 2,674,26'2,630 9,894,5ô3 10,2.1,076

. zotT Class 6 Multiple: 2.4i6+ . Reduction of almost o.r . Town not responsible; purely market . "average" Class r assessment decreased by r47o/o . "average" Class 6 assessment increased by 4.tro/o,

o Good illustration of basic process: ' Take new Assessment and remove NMC; set "base" rate to collect same revenues; apply generaltax increase to set new rate; apply any adjustments.

o Multiples will change "naturally" from year to year, as different property classes change in relative value from year to year . Eg. This year, Class 6 increased by 4.L% on average, while Class L decreased L.47% . This will naturally decrease the Class 6 multiple as tax rates are adjusted to factor in the relative assessment change. . This is now Classes 5 and 6 diverged in the first place! . They were identicalfrom 1997 through 2008. . Without careful attention, and more robust taxation policies, these things can happen.

L4 Appendix L

s

Impacts of Lowering Business Multiple:

. Lowering Class 6 Multiple by factor of o.r = $121,ooo r Just ovetf/ooftaxes o Lowering Class 6 Multiple to zx Residential = $416,ooo

o fust over 4o/o of taxes

o Not even the lower revenue loss can be absorbed within existing budgets by decreasing spending . Potential impacts: . Reduction in services or service levels . Reduction in ability to take care of infrastructure (pass on our problems to future generations)

These deliberate multiple changes will be impacted by "natural" changes described above, unless policy set to prevent.

15 Appendix L

Impacts of Lowering Business Multiple:

. If unable to reduce spending, loss of Commercial tax revenues must be passed on to other property classes . Residential . Light Industrial . Recreational

. Light Industrial Multiple: r.874 . Being standardized with Commercial over a phase-in period o Recreational Multiple: L4733

o 4o/o tax increase for Residential would be about $5olyear o Residents pay in "after tax" dollars o Not-residential pays in "before tax" dollars

. gl,ooo in taxes is only $7oo for business paying a 3oolo income tax rate.

Recreation Class: marinas, golf courses, ski hills . Only Marinas in Sidney. . Seen as an extension of public recreation, though not the most affordable examples! . lmprovements are Class 6.

o ln after tax dollars, Recreational is already at virtually 1:1 with Residential.

L6 Appendix L

zo9 Citizen Satisfaction Survey: E Balanclng Taxation and Service Delivery Levels Norm

lnc.c¡$ tucs - to ênh.nc. or .xp.nd r€ryn., 1r* tax | lncreese Ta¡es 5tv" @ lMr.lrê t.xêi - to ñalntrln ærvlcê9 ât currênt lêv.15 3A% lt%

Cut 5êwl@r - to mâlntaln cufacnt t¡x ldal 22% 26% cut S.rvlc.3 2tt* t7t ( Cû 9lvlcêr - 1o r.duce tqêr 7% tt%

¡\¡oæ 9%

Doñ'tknd 6%

o Respondents preferring to ¡ncrease taxes to maintain or expand serv¡ces is 2:1 ratio over those who'd prefer to cut services to maintain or reduce taxes.

o Slightly different from provincial "norms" at left

a Difficult to ignore this point when setting expenditure and tax levels

T7 Appendix L

Misconception: Business failures lead to loss of tax revenues

. Would take a long time to get to that point

o If business fails, taxes still payable by property owner . Built-in incentive to fìll vacancy (i.e. lower lease rates)

o As some commercial properties decrease in value, others increase . Tends to punish the more successful . But also reflects perceived "ability to pay"

o General "across the board" decrease in Commercial would be "evened out" in tax rate setting . Would need a more robust Tax Rate Policy in order to avoid . i.e. a conscious decision to "do something else" with tax burden. . E.g. Treat Class 6 Non Market Changes as general reduction, not "new" money.

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