Calgary councillors approved a preliminary property tax cap at zero per cent for non-residential properties, funded by the city’s reserve cash.
The item came up at Tuesday’s Priorities and Finance committee, after councillors received an update from administration on the 2021 Phased Tax Program (PTP). That’s the tax relief program put in place annually since 2015, to cushion the blow of rising property tax hikes on Calgary business owners.
Council originally approved a limit of 10 per cent property tax increase on non-residential properties around the city during November budget deliberations. That was pegged at a cost of $21 million. Administration came back Tuesday and said the original recommendation for 10 per cent would only cost $13 million.
Some non-residential properties were set to see an increase of between seven and 25 per cent.
There was talk of reducing it further to around a five- or six per cent cap. Then Coun. Jeromy Farkas introduced a proposal that made $44 million available in the PTP, thus providing businesses with a zero per cent property tax increase.
Money from previously approved PTP and an additional $23 million from the city’s fiscal stability reserve (FSR) will fund it.
“We have to do absolutely everything in our power to help these businesses survive,” said Farkas.
“And with have every single tool at our disposal, regardless of whether you like it or not.”
Committee members voted in favour of the measure, 9-1. It will now go on to a full meeting of council in March for final approval.
The bow wave
Some councillors were concerned this would once again put off until tomorrow a problem that exists today.
“To encourage more of a bow wave is deeply problematic especially because it’s a poison pill that you’re handing to the next Council,” said Coun. Gian-Carlo Carra, the lone dissenting vote.
What is a ‘bow-wave’? If $44 million was supposed to be collected in 2021, that money (plus potentially more) still needs to be collected next year. It effectively compounds the problem annually – unless there’s another PTP.
Mayor Naheed Nenshi also had concerns with supposed bow wave.
“The big increase that you’re supposed to get last year flows through into this year,” he said, noting that the increases to many properties are because they actually had good financial years.
Previously, the mayor has said non-residential properties like warehouses have done extremely well. The shift to online retail and storage during the pandemic has helped that property group.
“At some point you’ve got to let the market do its job,” Mayor Nenshi said.
While he supported it, Coun. Evan Woolley said the city can afford to help struggling businesses, so they should. But, he said they have to get away from being so reactive to these situations.
“While I’m supportive of this, I realize that it’s one time, I realize that we actually have a lot more proactive investments that we really need to think about in the downtown,” he said.