- Our Town
City on hook for taxes on leased property
The city is unexpectedly on the hook for property taxes for leased properties on Ross Street.
Council gave first, second and third readings on Monday to a tax exemption bylaw for properties leased by the city at 621 and 641 Ross St. NE. If approved, the bylaw would exempt the city from paying the property taxes for 2015 and 2016.
“The bylaw is for two years, so 2014’s property taxes will be paid in expense, and in 2015 and 2016, they will essentially be exempted as if they were statutory exemptions, but through the permissive provisions,” city chief financial officer Monica Dalziel explained to council.
In addition, council supported a related financial plan amendment that redirects $8,500 from computer maintenance to taxes.
An agreement was reached last year for the city to enter a 10- year lease for the two privately-owned properties on the north side of the CP railway line at a cost of $33,000 a year.
The lots were to be used for parking and, potentially, as a staging area for the construction of an underpass.
In a memo to council, Dalziel explains how, as part of the lease, the tenant – in this case being the city – is responsible for the property taxes.
She says it was originally envisioned that the city would be statutorily exempt from taxation, similar to other properties the city owns.
However, following discussions with BC Assessment, and pursuant to a court ruling, council must “permissively exempt leased properties through the permissive exemption provisions of the Community Charter by adopting a bylaw…”
The financial plan amendment was required because the city did not lease the property prior to the Oct. 13, 2013 statutory deadline and, as a result, was unable to exempt the properties for 2014.