Commercial property owners near Richmond’s Canada Line who got caught in a “hot zone” of frenetic land speculation will be getting a new tax break.But the same tax break won’t be coming for Vancouver landowners caught in the same situation.The province is proposing new legislation that will only allow Richmond – not other municipalities – to give full or partial exemptions of city taxes to dozens of businesses whose land values soared in a once-commercial area that Richmond has designated as a future downtown residential zone...Councillor Raymond Louie said he doesn’t believe Vancouver needs to give the kind of tax relief that Richmond petitioned the provincial government for.He said the city helps keep commercial taxes reasonable by averaging land values over three years and by discouraging speculation with its system of making developers give back the city some of their profits from land-value increases that are created through rezonings.
Richmond, and the City of Vancouver among others, face the problem of high price distortions due to land speculation. In Richmond this is becoming acute due to a flurry of commercial to residential and mixed-use rezoning application approvals, leading to once-safe commercial-only lots being bid up in anticipation of future rezoning to residential/mixed-use when presale condo developments are going for high prices.
According to the article, Vancouver has experienced similar issues around the new Canada Line stations where re-zoning applications have bid up low-rise commercial land values. But there is another problem "bubbling" under the surface...
Residential property prices in parts of the Vancouver area, notably in parts of Richmond, West Vancouver, and the west side of Vancouver, have been bid up significantly in the past 6 months. As the assessment values for 2011 approach (they typically use sales in mid-year months to ascertain assessment values for the purposes of tax allocation) there will be a stark increase for certain residents with a relatively flat increase for others. When setting the property tax rate in early 2012, the City, and its newly-elected council, will undoubtedly face awe-inspiring sticker shock outcries from those residents in areas where prices have skyrocketed.
Here are the latest benchmark year-over-year changes:
Vancouver West detached : 17.6%
Vancouver East detached : 8.2%
Vancouver West apartment: 2.9%
Vancouver East apartment: 3.6%
So how will the 2011 property tax assessment go down? Well people with detached properties in Dunbar, Kits, Marpole, and pretty much anywhere west of Ontario St. will face a stark increase in assessed values. Condo owners, by all accounts, have not experienced much in the way of increases. Owners of detached properties on the east side of the city will likely see mixed assessments. The long and short is that recent run-ups will produce stark winners and losers in the property tax division race, more so than past years.
Unless the City understands this impending distortion, there will be significant outcry by west side detached residents, and probably a few sad stories of long-time-resident grandmothers who will face significant pain to their bottom lines.* The City can, of course, allow dispensation for the recent pockets of price run-ups but all residents of Vancouver should understand that ameliorating such residents' ironic misfortune due to recent assessed fortunes will be at their expense.
You heard it here first.
*Edit: a commenter "Everyman" on Frances's blog reminded me of the property tax deferment program available to homeowners over the age of 55 and those with children under the age of 18. That will help ease the burden but most west-side denizens are likely to explicitly carry deferments on their books.