Council approves another $45M business subsidy
Calgary withdraws from rainy day fund to offset non-residential property taxes
For the second year in a row, city council has approved relief for business owners across the city with a repeat $45-million subsidy plan, despite concerns about the program’s effectiveness.
Council voted in favour of withdrawing $45 million from the rainy-day fund and using the money to once again cap nonresidential property taxes at five per cent amid a tax redistribution spurred by record-high vacancy rates in the city’s core.
Zoe Addington, director of policy and government relations at the Calgary Chamber of Commerce, praised council’s decision to extend the subsidy program but acknowledged it’s a “Band-Aid” solution to a problem expected to last at least a decade.
“While it’s a great solution for 2018, there does need to be a longterm solution,” Addington said.
“It’s a complicated issue ... We’ve asked the city if we can work with them, if we can put together a group of business advisers to help come up with solutions.”
A motion put forward by Mayor Naheed Nenshi, who campaigned during the recent municipal election on asking council to continue the program, was approved in a 12-3 vote on Thursday, the fourth and final day of budget deliberations.
Only councillors Druh Farrell, Diane Colley-Urquhart and Ward Sutherland voted against setting aside $45 million to extend the socalled “Municipal Non-Residential Phased Tax Program.”
“We protected people (last year) and it’s important for me to protect them again,” Nenshi said after the vote.
The repeat help for business owners comes amid an economic downturn that’s seen thousands of layoffs in Calgary and, in turn, a lot of vacant office space in the core.
Last year, the value of the downtown office towers fell by $3.8 billion to $17.4 billion, creating a big hole in the city’s non-residential property tax revenue.
Under the city’s revenue-neutral annual reassessment process, companies outside the core must pick up the slack from downtown towers paying less in municipal property taxes amid falling values.
Council approved a $45-million relief program in January 2017 as many suburban building owners, and in turn business owners, were bracing for double-digit increases on their bills to make up for the lower property assessments downtown.
On Thursday, some councillors expressed concerns about whether the funds approved earlier this year have reached the people who need help and if there was any better way to directly aid to business owners.
“Out of the $45 million we approved in January, only $15 million of that has flowed through,” said Ward 8 Coun. Evan Woolley.
“I have some concerns around the holdups as people are appealing their assessments.”
Nenshi said only $15 million has been paid out because anyone who chooses to appeal their assessment must wait until the appeal is finished to benefit from the five per cent cap.
“Once those appeals are done, then they will automatically get the benefit of the program,” he told reporters.
Addington said she’s heard from business owners on the hook for big increases while an appeal works its way through the system.
“We have heard instances where the landlord has appealed but, in the meantime, the business is paying the full cost until the landlord can get the rebate and pass it on,” she said.
We’ve asked the city if we can work with them, if we can put together a group of business advisers to help come up with solutions.