Bed and Breakfast Properties Policy

Table of Contents

Purpose ...... 2 Resources ...... 2 Legislation ...... 2 Policy Statements ...... 3 Legal ...... 4 General ...... 4 Bed and Breakfast Class Split ...... 5 Appendix A: Frequently Asked Questions ...... 6 Appendix B: Classification Checklist ...... 7 Appendix C: Case Study ...... 8

Bed and Breakfast Properties Policy pg 1 of 8 BC Assessment

Purpose

This document provides guidance for the consistent classification of the category of short- term overnight commercial accommodation properties (STOCAPs) comprised of bed and breakfast properties. Bed and breakfast (B&B) properties are single family dwellings occupied by the owner or a manager as his or her principal residence, where rooms are rented or offered for rent as short-term overnight accommodation for a specified portion of the year. Depending upon the number of rooms rented or offered for rent as short-term overnight accommodation, B&B properties may be entirely included in Class 1 – residential or split between Class 1 and Class 6 – business and other. The Prescribed Classes of Property Regulation, B.C. Reg. 438/81, was amended on December 8, 2004, to clarify the rules around the classification of B&B properties, which are residential properties used for both residential and short-term overnight commercial accommodation purposes. Resources

Legislation Assessment Act, R.S.B.C. 1996, c.20 Prescribed Classes of Property Regulation, B.C. Reg. 438/81 Tourist Accommodation (Assessment Relief) Act, R.S.B.C. 1996, c. 454 Tourist Accommodation (Assessment Relief) Regulation, B.C. Reg. 405/88

Bed and Breakfast Properties Policy pg 2 of 8 BC Assessment

Policy Statements

1. Where B&B properties have fewer than four rooms rented/offered for rent as short- term overnight accommodation, the land and improvements should be included entirely in Class 1. 2. Where B&B properties have any number of rooms rented/offered for rent only for periods of seven or more days, the land and improvements should be included entirely in Class 1. 3. Where B&B properties have any number of rooms rented/offered for rent for periods of less than seven days for less than 50 percent of the year (six months) ended October 31 prior to completion of the roll, the land and improvements should be included entirely in Class 1. 4. Where B&B properties have four or more rooms rented/offered for rent as short- term overnight accommodation for at least half the year ended October 31 prior to completion of the roll, the land and improvements should be split between Class 1 and 6 according to the guidelines set out in this document. 5. Where B&B properties are under construction, they should be included entirely in Class 1.

Bed and Breakfast Properties Policy pg 3 of 8 BC Assessment

Legal

General B&B properties are treated as coming within Class 1 unless there is a sufficient amount of short-term overnight accommodation use to justify split classifying the property between Class 1 and Class 6. For that reason, while B&B properties are under construction, they should be placed entirely in Class 1. Once complete and operational, the following sets of rules apply: 1. Unless some other use precludes it, the following B&B properties should be placed entirely in Class 1: o those with fewer than four rooms rented or offered for rent as short-term overnight accommodation o those offering any number of rooms for rent, but only for periods of seven or more days o those offering any number of rooms for rent for periods of less than seven days, provided those rooms are only offered for rent for less than 50 percent (six months) of the year ending on October 31 prior to completion of the assessment roll 2. B&B properties with four or more rooms rented or offered for rent as short-term overnight accommodation will have a portion of the land and improvements in Class 6 as follows: o the area of any rooms in excess of three, which are rented or offered for rent as short-term overnight accommodation for at least half the year should be placed in Class 6 o a portion of the common area should be attributed to Class 6 according to the formula below o a proportionate amount of land should be in Class 6. 3. The remainder of the B&B will come within Class 1.1

1 For direction on the classification of vacant development land that contemplates a B&B use, please refer to Mixed-Use Development Land Policy. Bed and Breakfast Properties Policy pg 4 of 8 BC Assessment

Bed and Breakfast Class Split If four or more rooms are rented or offered for rent as short-term overnight accommodation for at least half of the year ending on October 31, follow the steps below to determine the appropriate split between Class 1 and Class 6: 1. Identify any areas used exclusively by the owner/manager. 2. Determine the total area of all rooms rented or offered for rent as overnight B&B accommodation, whether on a short- or long-term basis. 3. Determine the average size of all rooms rented or offered for rent as overnight B&B accommodation (short- or long-term) by dividing the total area determined in step 2 by the total number of rooms rented or offered for rent as overnight B&B accommodation. 4. Calculate the area of three times the average room size as determined in step 3. 5. Determine the total area of any rooms that are rented or offered for rent as short- term overnight accommodation for at least half the year ending October 31. 6. Deduct three times the average room size as determined in step 4 from the total area of the short-term rental rooms determined in step 5. This area will be in Class 6. 7. Determine the total common area of the single family residence (see the definitions) by deducting from the total area of the residence, the areas used exclusively by the owner/manager as determined in step 1 and the total area of all the rooms rented or offered for rent as determined in step 2. For the purpose of this calculation, review the area within the residence, not the area of the land outside of the residence. 8. Calculate the ratio of the area of the Class 6 short-term overnight accommodation rooms to the total area of the residence, and apply this ratio to the common area of the residence to determine the net amount of common area to be classified as Class 6. 9. Deduct the area determined in steps 6 and 8 from the total area of the residence. The remainder of the residence will be in Class 1 (Once this percentage has been determined, the split can also be applied to the land). NOTE The total area of the residence is the total square footage of the residence, whether finished or unfinished space. 10. Refer to the Tourist Accommodation Assessment Relief Act Policy for more information on the appropriate application of Tourist Accommodation (Assessment Relief) Act (TAARA). For a practical example of the application of this formula, see the case study in Appendix C.

Bed and Breakfast Properties Policy pg 5 of 8 BC Assessment

Appendix A: Frequently Asked Questions

1. Would an owner- or manager-occupied “purpose–built” B&B meet the requirement for a single family dwelling? For example, small lodges or pensions in resort areas. It depends. It will only qualify for the split classification treatment if the primary purpose of the building when constructed was as a single family dwelling. 2. If the inventory of room counts and room measurements are not available, can an owner’s declaration be accepted? Yes. 3. What about B&B facilities that consist of a residence with some rooms and separate housekeeping cottages that comprise the rest of the operation? The regulation only applies to single family residences, so only rooms in the residence can be considered for split classification purposes. The separate housekeeping cottages will all be in Class 6. 4. How should the actual value of a B&B property be apportioned between Class 1 and Class 6? The actual value should be apportioned according to area split between Class 1 and class 6, using an overall rate per square foot (total property actual value). 5. In some communities, zoning allows up to a certain number of suites as rental accommodation (nightly, weekly, monthly, vacation, seasonal workers, etc.) with no requirement for an owner or family member of the owner to reside on the premises. Would a property with this zoning be considered a commercial accommodation enterprise? Not necessarily. Generally, classification is based on a property’s current use rather than zoning, although there are some exceptions (e.g., s. 1(1)(c) of the Prescribed Classes of Property Regulation). 6. A B&B property may also include a restaurant that is open to the public and generates most of the revenue for the owner. How should the area devoted to the restaurant operation be classified? The correct approach is to split out the area devoted to restaurant use as 100 percent Class 6 since the restaurant is the predominant use of that area. The B&B legal policy should be applied to the remainder of the property. Note that the BCA Glossary definition of the regulatory term “common area” is intended in the context of B&B guests, not the public. Whether the restaurant is open for more or less than six months will not matter (once we have decided to exclude it from Class 1) since we currently do not apply a time criteria to any commercial enterprise that would normally fall into Class 6.

Bed and Breakfast Properties Policy pg 6 of 8 BC Assessment

Appendix B: Classification Checklist

1. Is the property a single family dwelling offering short-term overnight accommodation? o If no, the property remains in Class 1. o If yes, proceed to question 2. 2. Is the single family dwelling occupied by the owner or manager as his or her principal residence? o If no, it is not a B&B property. o If yes, proceed to question 3. 3. Are four or more rooms rented or offered for rent as short-term overnight accommodation (not including owner or manager units)? o If no, the property remains in Class 1. o If yes, proceed to question 4. 4. Were four or more rooms rented or offered for rent as short-term overnight accommodation for at least half of the year ending October 31? o If no, the property remains in Class 1. o If yes, apply the legal policy formula to determine the split classification of land and improvements.

Bed and Breakfast Properties Policy pg 7 of 8 BC Assessment

Appendix C: Case Study

A B&B property with a resident owner, having eight rooms used for overnight B&B accommodation (the eight rooms total 1,260 square feet) but where only five rooms are rented or offered for rent as short-term overnight accommodation for at least six months of the year ending October 31, prior to roll completion. The five, short-term rental rooms are 1,050 square feet in total. A single room is reserved for the owner’s exclusive use (152 square feet). Total size of single family dwelling equals 2,812 square feet (on two floors); total land area of lot equals 12,000 square feet.

Step # Facts Rooms Area (ft2) 1 Owner/manager’s exclusive use area one 152 2 Determine the average room size of eight 1,260/8 = 158 all the rooms within the residence which are rented or offered for rent as overnight B&B accommodation, whether short- or long-term. 3 Calculate the average size of the three 3 x 158 = 474 first three rooms rented or offered for rent as overnight B&B accommodation, whether short- or long-term. 4 Determine the area of the rooms three to five 1,050 – (3 x 158) = 576 that are rented or offered for rent as Class 6 short-term overnight accommodation for at least half the year ending October 31. 5 Determine the common area of the N/A 2812 – (1260 + 152) = entire residence. 1,400 7 Determine the proportion of common N/A 1,400 x (576/2,812) = 287 area to be included in Class 6, by Class 6 dividing the number from step 4 by the total area of the residence. 8 Determine the total improvement Class 6: 576 + 287 = 863 area in Classes 6 and 1. Class 1: 2,812 – 863 = 1,949 9 Determine the total land area in Class 6:12,000 x Classes 6 and 1. (863/2,812) = 3,683 Class 1:12,000 – 3,683 = 8,317

Bed and Breakfast Properties Policy pg 8 of 8 BC Assessment