Long Term Property Tax Strategy

Property taxes are the key revenue source for the City of North Vancouver. Due to their importance to both residents and local business, it is prudent for the City to periodically evaluate the structure and basis of the tax levy and how the tax structure may be affecting the various taxpayers in the community, both in the residential, business and industrial sectors.

The City of North Vancouver completed two public processes to develop a long term property tax strategy - in 2005 and further refined in 2009. These reviews occurred through the efforts of a Sub-committee made up of City residents, staff and several consultants.

The 2005/2009 long term property strategy review established the following goals for tax strategy change:

  1. To equalize the Light Industry (Class 5) tax rate with the Business (Class 6) tax rate (achieved in 2010).

  2. To adjust the Business (Class 6) tax rate over a ten year period so that the tax ratio to the Residential Class (Class 1) is no higher than the regional median.

In general, these strategies were developed in response to various concerns about property taxes raised by the City's business community and general public. Many of these issues are common to other municipalities throughout Metro Vancouver and British Columbia; however, each municipality has unique issues based on the specific balance and type of properties in their community.

For the City of North Vancouver, the unique challenges we have faced in achieving Goal 2 in the strategy are related to several factors, including:

  1. The Major Industry (Class 4) Port Properties tax rate cap: all but one of the City's Class 4 properties enjoy a legislated exemption from any increases to property taxation. This shifts taxes onto the other tax classes, principally business and residential.

  2. Lack of access to other revenue sources which could serve to reduce the reliance on property tax revenue.

  3. Substantial growth within the residential sector which makes it difficult to lower the ratio of the business rates to the residential rates. In the case of property taxes, as values rise, rates fall. Because the Residential Class has experienced substantial increases in values, tax rates continue to decrease. The Business Class has not increased as dramatically in value; therefore its rates have not decreased to the same level as the Residential Class. Under these circumstances, the ratio between the two rates is difficult to influence.

At this point, in spite of several years of shifting the tax burden from commercial to residential properties, the City has been unable to meet its second goal of making any substantial shift in the tax rate ratio between Residential and Business tax rates. The City is in the process of exploring other ways to maintain equity between the Business and Residential Property Classes, while remaining competitive with other jurisdictions, and continuing to be financially sustainable.

Staff continue to seek options for Council's consideration.

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