City of Victoria council members voted 8-1 in favour of taking the first step towards implementing a temporary property tax relief pilot program for businesses in the Harris Green neighbourhood.
At a committee of the whole meeting on Thursday, Oct 10, council members discussed and deliberated on a staff report outlining the Development Potential Tax Relief Program and their recommendations on how it can be implemented.
Expected to be implemented in 2025, the program aims to mitigate tax burdens on small businesses caused by properties being assessed at prices higher than they are as a result of being assessed at their "highest and best use" by B.C. Assessment. For example, a single-storey restaurant could be taxed similarly to a nearby mixed-use skyscraper as a result of local zoning regulations.
"While property owners benefit from rising property values, property taxes are commonly passed on to tenants through triple-net-lease agreements," noted the staff report.
The program would allow 20 per cent of the land value of eligible properties zoned as "light industry" and "business and other," up to a maximum of $925,000, be taxed at 50 per cent lower than the established rates for up to five years. The tax burden would then be spread to other Victoria properties in the same zoning class, which was averaged at about $18 per property.
The report outlined about 20 properties in Harris Green that meet eligibility requirements. The median savings for each of the properties was about $2,409.
"I'm going to support this because it's a pilot project, it's an innovative approach. I don't know if it's the right innovative approach but I think there's actually value in trying it out as a pilot," said Coun. Matt Dell. "What are the tools the province has given us? How can we utilize those tools? Is this going to solve everything? Perhaps no, but let's try it and let's see how it works."
He said it would give them the opportunity to go back to the province to tell them what worked, and what didn't so legislation can be adjusted to make the program better.
Coun. Jeremy Caradonna echoed Dell, saying he recognizes that small businesses and tenants in Victoria are struggling, and the city can only do so much to relieve burdens caused by bigger, more complex "macroeconomic conditions" the country is currently facing.
"There's not much we can do about the shift to remote or hybrid work, there's not much we can do about the shift to online shopping, there's really not much we can do about the commercial rents that have been jacked up by 40 per cent a lot of the times because insurance rates are going up and other factors. But property taxes is one area where we do control," said Caradonna.
Coun. Marg Gardiner, who voted against the program, said she didn't support it because it would drive up administration costs, and because it would place a financial burden on other businesses.
"We're going to deep dive into looking at our budget, i.e. the city's budget, within the next few months and I just can't support any more programs, new programs that will add both administrative costs and financial cost to others until we have [looked at the budget]," said Gardiner.
The program follows 2022 provincial legislation that allows municipalities to identify certain commercial and light industrial properties that are eligible for the reduced tax rates. In 2023, the City of Vancouver started its pilot of the program, the only municipality to do so before Victoria.
The legislation will pass through council again before it is adopted.
