Homeowner's grant program and property tax system due for overhaul

I have been both amused, and disturbed, by homeowners’ responses to the 2017 B.C. property assessments. I am sure I am not alone.

I can’t help but wonder what those struggling to afford a one-bedroom apartment must be thinking when they read about homeowners complaining that their homes increased in value by hundreds of thousands of dollars last year.

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Yes, some may be losing their homeowner grants. But when you stop and think about it, given the number of renters who can’t find an affordable home, why is the provincial government still offering $800 million in grants to 91 per cent of BC homeowners?

Many homeowners are concerned because they cannot afford to pay their property taxes. But they refuse to avail themselves of the Property Tax Deferral Program, which was created precisely to help people like them.

Which brings me to another complaint. Why does this program offer extremely low interest rate loans to anyone 55+, regardless of their financial situation? Surely the program should be means-tested, as it is in most other jurisdictions.

The property assessment notices raise some other issues.

Our property taxation system is based on the market value of a property, considering its location, size, zoning, and improvements. Other jurisdictions use different approaches.

In Vietnam, I was surprised to see many tall, skinny buildings, often in the middle of nowhere. I was told this was because property taxes were not based on value, but rather on the quality of a street and the width of the property. Since narrow properties required shorter roads and services, they were taxed less.

I think it is time for our governments to reconsider how they calculate property taxes.

I first thought about this 20 years ago when I owned a suburban house on a large lot and a Coal Harbour condominium apartment assessed at a similar value. My house, on the southern boundary of the city, required significantly longer roads, sewers and water pipes, compared to the downtown apartment.

There were also more children in my single-family neighbourhood compared to Coal Harbour.

However, I paid a similar amount of taxes on each property.

At a time when governments are encouraging us to live more sustainable lifestyles in multi-family housing, why aren’t there separate assessment classes and mill rates for single-family and multi-family properties?

Some of you will respond that most apartments are less valuable than houses, and consequently owners pay lower taxes. This is true.

However, owners of high-density apartments and low-density houses of the same value, pay the same taxes.

Why doesn’t our property tax system better reflect the cost of providing services, and reward apartment owners with lower taxes?

The dramatic increase in some single-family property assessments highlights another issue that needs to be addressed.

These properties increased in value because the neighbourhood Official Community Plan (OCP) or zoning was changed to allow multi-family development.

Some might say, “aren’t these people lucky?” Yes, they are, especially if they are ready to sell to a developer and move away.

However, if they want to remain in their house for the foreseeable future, they will be forced to pay much higher taxes, and many will not be eligible for the Tax Deferral Program.

As a planner who would like to see large swaths of single-family zoned land designated for multi-family development, I am more sympathetic to their plight.

Why? I know that neighbourhood residents will forcefully oppose any density increases if they will result in higher taxes for those who don’t want to move. Consequently, politicians will be less likely to approve OCP and zoning changes.

One solution could be to modify the way properties are assessed and taxed. The goal would be to allow single-family properties designated multi-family in an OCP, or zoned for higher density, to continue to pay lower taxes until a development permit is taken out for a new development.

This would likely result in more land zoned for affordable, multi-family housing, without penalizing those owners who want to remain in their homes.

While this column looks at residential properties, there is another important taxation issue that needs further discussion, namely the unfair taxation of non-residential properties. But that is another topic for another day.



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