Revitalization Tax Exemption Under the Microscope

Monday, May 17, 2010 09:23 PM

Prince George, B.C.- The idea of extending the Revitalization Tax Exemption beyond the allowable ten year limit is not worth pursuing.

That is the number one recommendation in the report from the consultants who examined the existing RTE. "We don't believe it will succeed in attracting new development" says consultant Allan Neilson Welch. He says one unintended impact of an extended tax exemption period would be that Prince George would be perceived as "desperate" for business. There are also concerns about the precedent that would be set in the Province and the cost impact for other taxpayers in the municipality. Allan Neilson-Welch says it is higly unlikely the Province would approve such an extension.

The consultants say rather than extending the existing RTE, the City should look at changing the RTE. The City had hoped to press for changes to the Community Charter to allow for a tax exemption extension to 20 , 30 or possibly 40 years.

The report notes the existing tax exemption plan, which has been in place for 5 years, has done nothing to revitalize downtown. It points out that over the past 5 years there have only been 8 projects with a combined value of $13.5 million dollars step in to take advantage of the tax break. One project, the Chances Gaming Centre ($10.5 million) made up the bulk of that amount, and the balance was in renovations. The report also notes there has been no activity since October of 2008.

The other three recommendations are:

The proposed, new RTE program should not be expected to attract new development, at least under existing market conditions
The proposed, new RTE program should help to encourage changes to existing buildings
The RTE program must be viewed as ONE part of the broader revitalization effort

The consultants say the existing tax exemption bylaw, (which was based on a minimum of $50 thousand dollars worth of upgrades and would offer a break on taxes on the increased amount of assessment) should be changed to offer different rates for different projects accordng to their priority for development:

100% tax break for housing in the downtown,
50% tax break in the Crescents for higher density housing
60% tax break for commercial development
40% break for "green initiatives".

The consultants also advised the City may want to consider "demolition" as one of the types of impprovements which would qualify for a tax break.

They advise the tax break be based on the full assessed value of the property because it is necessary to assure investors they will have a return on their investments.

They also suggest the program be offered for a full ten years.

Councilor Cameron Stolz was not pleased with the report saying it offered no valid comparisons nor did the consultants talk with local, regional, national or international developers for their thoughts. He says the report contains numerous contradictions and wonders why green initiatives would qualify for a tax break " I fail to see how a low flush toilet would have an inpact on our downtown." Councilor Stolz added the report was not meant to be a " race to the bottom to give away the farm" .

Councilor Sherri Green says she too has a problem with the report. "I fundamentally disagree with much of the material in this report." She said the analysis was supposed to look at the impacts of a 20, 30 or 40 year extension of the tax exemption plan " only three pages of this whole report look at that issue." She also says the report is based on data which was widely disputed . "I was just blown away with the statement in the report where it says 'even if the land were free, they would not come' that makes me feel like I should just turn out the lights and go home, it is just so bleak." She favours pushing for an extension of the tax break saying it would be unique and creative, and while it may be expensive, the City cannot afford not to try to have a tool such as this available to it.

Councillor Dave Wilbur says the report itself will hurt any effort to push ahead with seeking an extension further clouding the issue when it comes to getting support from the UBCM and the Province.

Consultant Allan Neilson -Welch says they were hired to provide an independent report on the tax exemption "We were commissioned to provide an independent analysis, an objective analysis. Our job was not to find a way to sell this to the Province, or other municipalities or to get the legislative change you would need. Our job was to look at this in an independent analytical perspective."

The tax exemption plan will now be put forward to the public for input. The Report will be made available on the City’s website, and the public will be invited to provide written submissions to Council regarding the findings presented in the report.

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Posted on Monday, May 17, 2010 09:23 PM in News by 250 News

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Comments

Posted by: Runner46 on May 17 2010 10:29 PM

An interesting report, but even a more interesting response from council. I don`t begin to purport that I understand the complete report and won`t try to.

I was initially shocked by Councillor Stoltz`s response, but after listening to him I now understand his misgivings on the report. Kudos to Cameron Stoltz for leading and calling a spade a spade.

Posted by: Eagleone on May 17 2010 10:49 PM

A common sense report IMO. The politicians wanted it to go along with their ideas of transferring taxation responsibility to home owners for their own plans to subsidize downtown investors. I think the people of PG have had enough of subsidizing 'downtown investors' in a losing battle to try and develop through taxation giveaways.

IMO the response of some council members just goes to show their ideology on taxing homeowners for everything and exempting their own pet projects from their fair share of taxation.

Posted by: gus on May 17 2010 10:59 PM

"Councilor Cameron Stolz was not pleased with the report saying it offered no valid comparisons nor did the consultants talk with local, regional, national or international developers for their thoughts"

Were they asked to talk with those? I doubt it. Who picked them? On what basis? If you want a prescriptive report, then prescribe one. If you want an open proposal, then assess the proposal. You get what you ask for. After the fact is to late to comment. Learn how to select properly and you won't be upset at the results.

Intuitively, think the answer to the cetnral question posed is a no brainer. The consultants provided the right response.

Be more imaginative in how you "subsidize" the type of development you want to promote over those you wish not to promote. A blanket formula will likely not give us the result we want in this city.

Posted by: gus on May 17 2010 11:02 PM

"Councillor Dave Wilbur says the report itself will hurt any effort to push ahead with seeking an extension"

The risk one takes. Maybe this will be a report from which Council will learn the lesson to have staff do more of the reports.

Posted by: gus on May 17 2010 11:04 PM

"Consultant Allan Neilson -Welch" .... I like this person already. Someone with "balls".

Posted by: Resident on May 18 2010 6:34 AM

Wow. A consultant that did not write a report that expressed council's wishes. Keep this dude on the payroll. Enough subsidizing of downtown by residential taxpayers.