Gifts, Grants, Exemptions: Who Pays?
Ron Bolin: Sept. 24, 2013
The following is the text of my delegation to Council last night:
Mayor Ruttan and Councillors:
I come before you to speak to item 8(a) re: CA1 – COVENANT AMENDMENT – 3443 AND 3355 MEADOW LANE ROAD AND 3312 HAMMOND Bay Road.
The move to alter long standing practices by changing a beneficiary on a required community contribution from the City and its Parks to other interests; i.e. moving an amount set aside for park amenities to another agency outside the administration of the City poses a number of major difficulties, including, but not limited to:
1. Establishing a new precedent by moving public funds to other agencies by ad hoc methods;
2. Creating a perception of possible favouritism toward some non-public agencies at the expense of the public or other agencies;
3. Having that perception potentially tarnish both Staff and Council when similar suggestions from other developers are affirmed or denied.
Staff should not be placed in the invidious position of making recommendations in such a matter as is before you tonight, but should remove itself entirely from such a request leaving the developer to bring the matter directly to Council. As this is essentially a request for a grant, there is a process in place for obtaining grants from Council which is direct and straight forward.
In addition I must note that the vast discrepancy between the “appraised value” of unit #9 – 327 Prideaux Street given in the Staff report as$275,000 and its assessed value for taxation of $33,300 is troubling. The reported “reduced price” of $215,000 for #9-327 Prideaux which reflects the $60,000 transfer of funds from the existing covenant to the purchase of this property raises significant questions about value which need to be examined. Why is the “appraised value” over 8 times higher than the taxable value of that same property and the $60,000 grant requested in the covenant amendment before you this evening nearly double the assessed property value?
It must further be noted that #9-237 Prideaux carries an automatic exemption from the province of up to $10,000 as is the case for all class 4,5 and 6 properties which has reduced its assessment by $9,200 and created a corresponding city wide deficit for residential ratepayers to make up of an estimated $1,000,000. Accordingly I ask that you:
- not agree to the covenant amendment recommended by Staff;
- that you determine the total cost to Nanaimo taxpayers of the province’s cavalier $10,000 assessment exemption to all holders of class 4, 5 and 6 properties; and
- explain to residential taxpayers the way in which assessment calculations in the various assessment categories affect their taxes.
I would also ask that Council consider a policy whereby monetary contributions such as that of the $60,000 under discussion here be collected when a covenant is granted rather than as an indefinite loan to a developer and the money be placed in an interest bearing reserve account for the purpose required in a covenant.
Thank You for Your Attention.
Of course in the end Council unanimously followed Staff’s recommendation and took the $60,000 owed to the City by the Century Group out of the public purse and gave it to, as best as I can make out, the Century Group as partial payment for the Prideaux Street strata property, thus reducing the amount due from the United Way from $275,000 to $215,000 for a property assessed at $33,300. It is to be noted that at no point did the United Way speak to this matter or its financial implications for that organization.
Of course it must be recognized that the $60,000 removed from the public purse was in the form of a non interest bearing obligation by the developer to the City with no fixed term, i.e. the value of the obligation was being reduced each year by inflation and the issue was stressed by our Mayor. Why the citizens of Nanaimo should accept such arrangements needs careful scrutiny. While our taxes increase each year, the obligations of developers who are the beneficiaries of such loans are diminishing. How many other similar situations exist in the City? When can we expect their beneficiaries to come forward with similar “deals”?
The question was also raised by Robert Fuller and by Fred Taylor of whether such pass throughs would also garner a developer a tax write off. Who will get the credit for this $60,000: The City (if it has tax obligations) or the “donor” corporation? There seemed to be no knowledge of the answer to this question at the meeting.
In short, we entered uncharted waters without an adequate map or plan. To see the Staff report go to page 92 of the the agenda for Sept. 23, 2013:
to see the video go to: https://www.nanaimo.ca/meetings/VideoPlayer/Index/C130923V
Your comments are invited.
I am sure that the Developer will be the beneficiary of a tax write off because the City never had the funds in their grubby little paws.
What is also of concern is those charities with the means to do so could start to approach developers with the idea of donating their community contribution to the charity. As the city now has precedence for such we could see a lot of funds that are to go to the city now being diverted.
I have found a presumably old (it uses the 2012 tax figure of $1,338.17) ad for the sale or lease of this property. I am baffled by the tax rate given that the assessment for #9-327 Prideaux Street is shown on CityMap as $33,300 for both 2012 and 2013. Given the commercial mil rate of .0236667 (2013), this should give a tax of only $788.10. This is a real puzzlement and I will try to find out what has happened.
Here is the ad: http://www.collierscanada.com/7653
Ron, a real estate ad may not be the most accurate record of what the taxes actually are. Also, if it is a strata, there are 2 different taxes, one on the unit itself, and one on the common property. This could account from some of the difference.