Non-profit housing agencies in B.C. that were facing property-tax increases of tens of thousands of dollars – and the prospect of having to increase rents for some of the province's poorest tenants – have been given a reprieve after a last-minute scramble to recalculate the way their land is valued.
"It is probably one of the largest [property tax] settlements in B.C. history," said Paul Sullivan, a partner with the appraisal firm Burgess Cawley Sullivan who worked on brokering the adjustment with BC Housing and BC Assessment, which does the land assessments for the province.
But some are worried the issue is going to emerge again, unless B.C. creates a permanent new category for non-profit housing to protect their properties from tax changes caused by the province's skyrocketing real estate prices.
"In some ways, it's a short-term win," said Jill Atkey, the acting chief executive officer of BC Non-Profit Housing Association. "We'd like to see a separate classification for non-profit properties."
The recent change means that the property assessment will be discounted for non-profits that have operating agreements or covenants with cities or the province that restrict their rents to below market values.
But the land on which many properties sit is being transferred outright to non-profits as a result of a program the past BC Liberal government initiated to encourage the transfers. Those non-profits will not have the same agreements or covenants in future, and so will not benefit from the changes in the recent settlement.
Ms. Atkey said the housing units in those projects still need to be protected from being assessed as though they are market condos. The short-term win was still a significant triumph.
Housing groups only discovered in early January, when assessment notices were sent out from BC Assessment, that their properties were valued at two to four times what they had been the previous year.
At the non-profit group Affordable Housing Societies, which owns and manages 3,600 apartments in 60 sites throughout the Lower Mainland, the tax hit threatened to be huge.
One of their properties saw a 278-per-cent increase in its assessed value, said CEO Stephen Bennett, and the society was looking at a tax bill of $65,000 for this year, compared with $16,000 last year. Another was going to go to $40,000 a year for taxes from $14,000.
"We operate on incredibly tight budgets, so that means things we do to benefit our tenants wouldn't get done," Mr. Bennett said. "One of the strategies we'd have to contemplate is increasing some rents."
At the much smaller Aunt Leah's Foundation, managing director Marty Frost was looking at a tax bill of $32,000 for one 11-unit property. Since the non-profit's contract stipulates that tenants pay only a certain proportion of their income for rent, the foundation, which provides housing and support for foster kids aging out of the system, would have had little room to manoeuvre. Under the new settlement, he expects the tax bill to go down to about $20,000.
Non-profit housing developer Robert Brown, with Catalyst Community Developments Society, said it would have cost tenants in his company's units an extra $50 to $120 a month in rent to cover the increased tax bills.
BC Housing and BC Assessment, working with Mr. Sullivan, negotiated an adjustment in only six weeks that will see the land value for non-profit housing discounted to factor in the reality that the owners can't sell the land in the private market or even raise rents that much, because of legal agreements with municipalities or BC Housing.
"They do not trade in the marketplace," said Mr. Sullivan, a long-time advocate on municipal-tax issues for small businesses. "This use is a societal good. We don't need to overtax these properties that house the poor." He believes that the new valuation approach will provide stability for the future. BC Assessment had come up with a valuation system five years ago that was meant to protect non-profit housing from huge tax increases.
But when land values for all apartment buildings started to soar a couple of years ago, as buyers realized that rental properties were increasingly in demand because many Vancouver residents couldn't get into the skyrocketing housing market, that meant that non-profit land values also went up.
Social housing that has support staff working on site are exempt from municipal taxes. Developers who build rental housing that is guaranteed to remain as such for 60 years, in exchange for city incentives, don't qualify for exemptions or an adjusted assessment on their properties.