The City of Courtenay is revising its property tax exemption policy — and the proposed recommendations could mean some changes for local non-profit organizations.
Courtenay director of financial services Tillie Manthey said staff focused on developing a more fair and equitable policy for non-profit organizations, plus one that is financially sustainable.
“It’s really, really important to understand that when a property is exempted from taxation, that revenue requirement for the City does not disappear; it shifts onto the remaining taxable properties,” she said as she explained what she meant by financially sustainable.
“What we’ve attempted to do at the staff level is take a look at some of the fairness principles, studied what the City of Victoria had undertaken in terms of process the last couple of years, what seemed to work for societies and what didn’t.”
The five recommendations are:
1. That total exemptions per year be capped at two per cent of the City’s total general municipal and debt levy. (These exemptions have totalled around 1.85 per cent of the levy in recent years.)
2. That a system of reductions be put into place over a period of time — exemptions could be reduced over 10 years by one tenth each year.
3. That non-profit organizations providing regional services have a 40-per-cent exemption limit.
4. That the portion of properties employed in for-profit commercial enterprises or activities be ineligible for exemption from property taxation.
5. That in the case of a leased property there must be proof that the property owner is passing along the exemption benefits to the non-profit organization.
Manthey noted staff found the proposed system of reductions recommendation the hardest to come up with. She also pointed out a number of organizations have had 100 per cent exemptions for years because they were grandfathered in to the current policy, but the cost of those ongoing exemptions makes it difficult to consider exemptions for newer non-profit organizations.
She explained council has time to consider the recommendations before coming to any decisions, though she would like to have the new policy in place by July.
Coun. Jon Ambler said consistent and fair treatment of citizens comes from policy, noting he especially liked the two-per-cent cap recommendation.
Coun. Starr Winchester agreed, adding voting on which tax exemptions to approve is “a tough one every year.”
Couns. Doug Hillian, Ronna-Rae Leonard and Bill Anglin brought up concerns around system of reductions — noting the non-profit organizations rely on the exemptions — and they asked staff to revise this recommendation.
Leonard noted the exemption range from 10 per cent to 100 per cent over 10 years would be unstable.
“I kind of feel like we should have a position and that’s it because, as it’s been said, a non-profit’s a non-profit and if we support that endeavour then we should support it,” she said.
Anglin said the services are needed in the Valley, and suggested that if the organizations have to spend more money on property taxes, they will need to get those extra funds from somewhere else.
“At the end of the day, the people of the Valley are going to pay this bill one way or the other, because the only way that (non-profits) can source those funds would be further donations or fundraising,” he said, adding competition for grants is increasing, and many non-profits struggle to balance their budgets.
Anglin also suggested staff look at the recommendation limiting exemptions to 40 per cent for non-profits offering regional services.
Staff will speak with non-profit organizations more on the issue and revise the recommendations.