Property taxes: they’ll go
up unless system changes

By DAVE FAIREY

“School taxes jump 130 percent .

in Vancouver,” was the front page
headline in the national edition of
the Globe and Mail June 1, 1981.
What will be the percentage in-
crease in property taxes to hit the
National news and our bank ac-
Counts in 1982? Will there be any
telief from the record rise in local
government taxes for the home-
Owner in 1982?

About 70 percent of total local
government revenues are derived
from the property tax. For school
boards the percentage is consider-
ably higher and in some cases ap-
Proaching 100 percent. For muni-
Cipal general purposes, the prop-
erty tax accounts for about 60 per-
Cent of revenues.

And it’s going up. Indications
are that the tax will be relied on
€ven more heavily in the next few
years and therefore taxes will con-
tinue to escalate at a rate nearly
double the current inflation rate.
Already large municipalities like

by are projecting a 25 per-
Cent increase in 1982.:

There are several major factors
which will contribute to overall cost
and budget increases for munici-
Palities next year. Those munici-
Palities which contract with the
RCMP will assume tremendous
Cost increases due to the withdraw-

‘al of financial support from the

government. The new en-
ergy price formula between Ottawa
and Alberta will also ensure that
8asoline and heating oil costs will
increase by an average of at least 40
Percent in each year for the next
five years. Continuing high interest
Tates will dramatically increase the
cost of borrowing money. On top
Of this the provincial government is
Steadily reducing its contribution
towards the cost of education and
Other social services, and looming
In the background in Greater Van-
Couver is the prospect of using pro-
Perty taxes to pay for public transit.

In the meantime the B.C.
Assessment Authority is busily ga-
thering all the latest record high real
€state sales data that will be used to
Prepare the 1982 assessment rolls.
They will undoubtedly tell us, as
the Royal Trust Survey of Cana-
dian House Price does, that the
typical three bedroom ‘“‘economy”’
detached bungalow increased in
_ Value over the past 12 months by 42
Percent in Vancouver, 53 percent in
Burnaby, 59 percent in Victoria
and Richmond, 64 percent in
North Vancouver and 69 percent in

ey.

Even these figures only tell part
Of the story. Between March, 1980
and March 1981, the peak of the

Current boom in prices, the average
price of all single family
homes in Greater Vancouver in-
creased from $78,710 to $151,836,
a 94 percent increase. The Fraser
Valley , Which to some extent escap-
€d the big increase in taxes in 1981,
18 in for a shock next year. Over the
Same period the average selling
as for a single family homeinthe

What the assessment authority
and municipal councils will not be
00 vocal about is the fact that for
Several years the rate of increase in
the so-called assessed values for

large industrial and commercial

properties has been far less than it
has been for residential properties.
And neither will they complain
about how the owners of large pro-
perties are very successful in reduc-
ing their assessments through as-
sessment appeals.

In Burnaby, for example, the
large Shell Oil refinery on 220 acres
of prime waterfront land was given
an appraised value increase of 20

Rising Property
Values and
Your Assessment

fet
AUR Laat

1980 ‘

percent on the 1981 assessment roll.
Meanwhile the average appraised
value increase for single family
homes in Burnaby was in the order
of 40 percent.

What all of this means is that not
only are property taxes in general
bound to be increased by record
amounts in 1982, but in addition,
the burden of taxation will con-

‘ tinue to shift away from large in-

dustrial and commercial properties
onto the backs of the small resi-
dential and commercial property
owners.

Is this trend inevitable? Is the on-
ly solution a cutback in local gov-
ernment programs and services?
The answer, of course, is no.

At the root of the problem is the
totally bad and outmoded system
of taxation over which local gov-

-ernment has no direct control, ex-

cept to choose one of four bad op-
tions, known as Options A, B, C,
and D. Option A to some extent
compensates for the inflated values
inresidential properties by adding a
weighted assessment base which

taxes industry and commercial pro-

perties at a greater ratethan homes.
Generally speaking, Option A is
the best for the homeowner, while
Option D has no weighting at all

and favors industry and commer-
cial property. It may be hard to be-
lieve, but there are many munici-
palities, like North Vancouver Dis-
trict, for example, which are on
Option D in spite of the distortion
inthe residential land market which

_is forcing a greater tax burden onto

homes even under Option A. In
fact, if a further substantial shift in
the tax burden on to residences is to
be avoided in 1982, Option A must
be significantly improved in favor
of the homeowner.

However it is only the provincial
government which set up the pres-
ent bad system which can amend
the assessment base formula, and
many municipalities and school
boards have come to realize that
the provincial government is the
nub of the problem. Ucluelet,
North Cowichan and Saanich on
Vancouver Island, Nelson in the
Kootenays, Langley and Vancou-
ver in the Lower Mainland, and
Houston in the North are some of
10 municipal councils which sub-
mitted resolutions to the Septem-
ber convention of the Union of
B.C. Municipalities criticizing
every basic aspect of the property
assessment and taxation system.

Langley called for a complete ex-
amination of the present system of
municipal taxation and suggested a
new tax system based on the ability
to pay, using a municipal income
tax coupled with a services to land
tax. °

The suggestion comes close to
the proposal of many progressive
civic activists who, while not sup-
porting a municipal income tax,
propose that residences be taxed
only for direct services, while a
higher mill rate on commercial and
industrial property, and business
taxes and other taxes on industry
make up the rest of the municipal
budget. Increased revenue sharing
from the provincial government is
also important to allow municipal
governments to meet its social re-
sponsibilities.

A city of Vancouver resolution
to the UBCM helped point the way
towards some of these objectives
with its call for immediate mea-
sures by the provincial government
that will:

@ Permit local government to

apply different mill rates on differ- .

ent classes of property (without ref-
erence to Options A, B, C, and D.);

@ Include machinery and equip-
ment in the tax base for taxing for
municipal general purposes. (At
present it is only taxable for school
purposes.);

@ Permit the introduction of a
benefiter tax for significantly large
rezonings;

@ Introduce the McMath com-
mission formula for education fi-
nance. (Which would reverse the
present cost sharing, that is 75 per-
cent to be paid by the province and
25 percent by the local taxpayer);

@ Require full public disclosure
of appraisal details by the B.C. As-
sessment Authority on large in-
dustrial and commercial proper-
ties, making it easier for municipal-
ities and individuals to ensure fair
assessments are being made.

Implementation of these mea-
sures deserve the widest support,
both within the UBCM and in in-
dividual municipal and school
board elections over the coming
months. There is no other way, in
the long run, to protect homeown-
ers from ever-rising property taxes.

David Fairey is a labor econo-
mist specializing in public finance
who has challenged the property .
tax assessments of three Burnaby
oil refineries.

Affordable homes
are possible — if
they're non-profit

By FRED WILSON

After months and months of
bleaker and bleaker news about
B.C.’s ongoing housing crisis,
September finally brought a
small package of good news.

It was only an announcement
— and not the opening of new
affordable housing, a higher va-
cancy rate, new and stronger
rent controls, or a lower mort-
gage interest rate.

But at least this announce-
ment pointed in the right direc-
tion and showed that, given the
political will, the housing crisis
can be tackled.

The news was from the
Greater Vancouver Housing
Corporation, one of only two
non-profit housing corpora-
tions in western Canada, which
is the creation of the Greater
Vancouver Regional District’s
housing committee chaired by
Vancouver alderman Harry
Rankin. It reported the ap-
proval of a $50 million program
to purchase 500 units of family
housing which will be rented out
on a non-profit basis at below
market rents to families of mod-
erate income.

They will hardly make a dent
in the GVRD’s housing short-
age. But the Housing Corpora-
tion effort is the only example of
an attempt by any government
to do what the private sector
gave up on years ago, putting
affordable family housing on
the market.

’ In this case the GVHC won’t
be building per se; rather it will
take advantage of the high inter-
est rates and sluggish sales in the
housing market to purchase
townhouse complexes either
finished or in construction.

It would be cheaper and bet-
ter to build new housing, but
that would require either the
province or a municipality to
provide land at a written down
cost of about $12,000 per unit,
less than one-third the current
market price for land.

If it can get the land, the
GVHC can get mortgage money
from Central Housing and
Mortgage at a two percent inter-
est rate. In fact, that is where the
$50 million for the purchased
homes is coming from. CHMC,
is, in effect, paying the banks 20
percent interest on the loan, and
the GVHC is paying two per-
cent.

With land and mortgage
money, the GVHC can then put
new, three bedroom town-
houses on the rental market
which, on a non-profit basis,
will rent for only a little more
than $400.

In September, by compari-
son, a major Lower Mainland
developer, Cressey Develop-
ments, insisted that $800 rents
for three bedroom townhouses

~ at Rufus Park Village in North
Vancouver City were fair mar-
ket rents. The tenants disagreed
that the rents were fair and stag-
ed a demonstration in the Rent-
alsman’s offices.

The message from the GVHC
is simply that affordable hous-
ing can be built even in today’s
distorted and speculative mar-
ket, if it is non-profit, and if it
has cheap land.

Unfortunately, the message
hasn’t got through to either the
province or most municipalities
which remain firmly committed
to the private market policy of
expensive land and profitable

‘housing, which usually means

luxury housing.

Municipalities like North
Vancouver District, Coquitlam
and Port Coquitlam, and the ci-
ty of Vancouver, have all put
building lots on the market in re-
cent months — all for well over
$100,000.

The Socred government isn’t
any more enlightened. It holds
several thousand acres of crown
land in the Coquitlam, River-
view and Burnaby Mountain
areas, and under growing press-
ure to do something about the
housing crisis, it announced
with a flourish in late 1980 that it
would put some lots up for sale
— at 10 percent below market.

That would mean the lots in Co-

quitlam would sell for about
$125,000 instead of $140,000.

acres of serviceable land in the

Surrey and Delta areas and are

methodically feeding the mar-
ket at just the right pace to
satisfy their needs and keep land
prices high.

If the private developers land
bank to keep prices high, why
doesn’t government get into the
act and begin land banking to
bring prices down?

For some municipalities like
Port Alberni, the issue is even
more immediate. Alberni has
sufficient land to meet projected
growth for years to come. The
issue is how the land will be de-
veloped. Will the municipality
the land at reasonable prices to
keep general land prices down,
or will it sell it off to real estate
interests and watch the same

which overran the GVRD and is
now hitting the Fraser Valley?

Under the pressure of record
interest rates and continuing in-
flation in land prices, B.C.’s
housing crisis is getting worse,
not better. For tens of thous-
ands of people the 25 percent ra-
tio of rent to income which pro-
gressives (and even the Liberal
and Socred governments) held

- up as the standard, is a long for-

gotten dream world.
The Greater Vancouver

Housing Corporation, in a very
small way, has demonstrated
that it isn’t necessary to accept
the dictates of the so-called mar-
ket. Government can create an-
other market — a people’s mar-
ket.

The essential ingredients of
that other market are public
land and a vigorous non-profit
housing program.

PACIFIC TRIBUNE—SEPT. 18, 1981—Page 7