Orders of the Day

Hon. M. Farnworth: With that, I call, in this chamber, Committee of the Whole on Bill 10, MAH Statutes Amendment Act. In the Douglas Fir Room, Committee A, I call continued debate on the estimates of the Ministry of Tourism, Arts and Culture.

[2:45 p.m.]

Committee of the Whole House

BILL 10 — MUNICIPAL AFFAIRS AND
HOUSING STATUTES AMENDMENT ACT, 2020

The House in Committee of the Whole (Section B) on Bill 10; R. Chouhan in the chair.

The committee met at 2:46 p.m.

On section 1.

Hon. S. Robinson: I’d like to introduce…. I have a number of staff who will be helping me through this bill. I have right before me, from the community and legislative services division, David Curtis, who is the assistant deputy minister. I have Blair Schumacher from the property assessment services. And right behind me is the capable Jason Sowinski, director of assessment and legal appeals from B.C. Assessment, joining us to help walk through this bill.

T. Stone: I’ll start off also by acknowledging the work of the staff. We certainly also appreciated the offer of a briefing ahead of time. We did have some staff there. That helped clarify a few questions.

With respect to this section, section 1, which pertains to an amendment to the Assessment Authority Act, I’m just wondering if the minister could comment on whether or not this in any way impacts the assessment cycle. I understand this is just moving the year-end of the assessment corporation into line with all other Crown corporations and government generally, which is a good idea, I think. Just wondering if there are any implications whatsoever for the assessment cycle in doing so.

Hon. S. Robinson: The member’s question is a good one. It does not have any impact on the assessment cycle. It is about aligning the Crown’s financial reporting, and that’s all this section is about.

T. Stone: We’re off to a good start. Good question. Good answer. We’re almost there.

I’m just wondering, again, on this section, how will B.C. Assessment’s budget reflect this actual change?

[2:50 p.m.]

Hon. S. Robinson: It’s a 15-month transition year beginning January 1, 2021, and ending March 31, 2022, in order to facilitate this transition. Of course, again, it will allow B.C. Assessment to align its operations and reporting with those of the province and other Crown corps. For the record, this is the last Crown corp. to be on a different cycle. We will be working together with Treasury Board and the office of the comptroller general on the transition, and we don’t expect any additional incremental costs.

Sections 1 to 3 inclusive approved.

On section 4.

T. Stone: Understanding that we’re now into an amendment to the Community Charter, just wondering if the minister could outline….

Do we need a little bit more time? Okay. I’ll just pause for a moment then.

The question that I have, now that we’re talking about an amendment to the Community Charter, would be this: in what cases was the previous bylaw amount deemed to be insufficient?

We’re moving from a $10,000 maximum to a $50,000 maximum insofar as the fines. So I’m just wondering if the minister could outline why it was deemed to be insufficient. And, what types of situations does she envision the application of a much higher fine level to be applicable for?

Hon. S. Robinson: Before we proceed with my answer, I have two new staff. It’s a different section of the bill. I’d like to introduce to the House Tara Faganello. She’s the assistant deputy minister here on my left. On my right is Kara Woodward from policy, research and legislation branch. They know a lot of these details really well.

We’ve had a number of requests over the years, the most recent one from the city of Vancouver, to increase the maximum fine amount — concerned about how the current fine amount does not sufficiently deter serious bylaw infractions. UBCM also supports this direction.

In particular, Vancouver is concerned that the current maximum fine amount is too low to allow for meaningful enforcement of bylaws associated with SROs and their standard of maintenance bylaws — in particular, entries where cutting down of trees would occur but the fines were seen as sort of just the cost of doing business. By increasing these maximum fine amounts for the most challenging and the most egregious of contraventions, this would be a stronger deterrent.

[2:55 p.m.]

T. Stone: Just to clarify, it was determined that the fine level was not deemed to be sufficient enough to act as the intended deterrent. So to respond to local government calls for a stronger fine level to deal with more serious offences like cutting down trees, I think the member said, and also SROs that aren’t doing the standard maintenance or are falling behind on their standard maintenance…. Those are a couple of examples. The minister can just say yes or no to that just to make sure that I’ve got that correct.

Are there any other examples of serious offences that have been communicated to local government, in addition to the two that she has cited, that she could mention further, for the record, as well?

Hon. S. Robinson: The answer is correct. The member has an accurate understanding of how this came about, and those are the two examples that have been identified by staff that we heard from local governments.

Sections 4 to 6 inclusive approved.

On section 7.

Hon. S. Robinson: We are moving on to another section of this bill, so I thought I would just take this time to introduce staff who have worked very diligently and very quickly. I want to just express my gratitude to them for all of the work. It was a significant amount of work that they did in order to help us to get here.

Again, I want to introduce: David Curtis, assistant deputy minister; Marika Glickman; as well as Jason Sowinski, the director of assessment and legal appeals from B.C. Assessment; and Shauna Sundher, assistant director of the tax policy branch from the Ministry of Finance. They’re all here support us through this part of the bill.

T. Stone: This section of the bill — those amendments which amend the Municipalities Enabling and Validating Act…. I think we start on section 12 and go through section 24 of the act in question insofar as amendments. So the vast majority, the lion’s share of the questions that I’m going to pose are contained in this particular section.

I’m going to start off with some general questions, and then I’ll ask some very specific questions that pertain directly to the section of the Municipalities Enabling and Validating Act that’s being amended, just for the minister’s reference.

The first question I have at a very high level…. I think we don’t need to rehash the spirited debate that took place in second reading. I think it was spirited on both sides, insofar as the contrast between the stated goals and objectives of the minister’s solution, as contained in this bill, to essentially address this challenge of skyrocketing property taxes impacting small businesses and other organizations via a taxation solution, a permissive exemption solution, versus the benefits of the solution that was proposed by a broad array of stakeholders — the split assessment classification selection.

[3:00 p.m.]

The split assessment classification proposal was the priority recommendation of the intergovernmental working group, which consisted of a range of municipalities in the Lower Mainland — Vancouver, Burnaby, North Van, Richmond, Surrey, West Van, Coquitlam — in addition to senior officials from the Ministry of Municipal Affairs, the Ministry of Finance, B.C. Assessment, small business organizations like CFIB, arts and culture groups, and so forth.

This concept of split assessment classification was also recommended by…. It was also endorsed in a number of UBCM resolutions over a number of years. It was supported by the business improvement associations — a whole bunch of them in the Lower Mainland, many of which I had the pleasure of meeting and doing sort of a walking tour of their communities that are being impacted — the B.C. Chamber of Commerce, and so forth. So it was with a great deal of surprise — I suppose it’s the best word to use — that the minister referenced in her second reading comments, in speaking to the private member’s bill that was introduced, which I introduced in this House twice, that really just embodied the recommendation from this broad range of stakeholders, what everybody was asking for — split assessment classification.

The minister responded by saying: “This is a poorly, poorly, poorly thought-out idea.” I’m just wondering what aspect of this idea, which, again, wasn’t something that I just dreamt up. I was just trying to breathe some life into and provide a bright, shining light upon an idea that the split assessment classification concept, which had been recommended by a broad range of stakeholders…. I have listed them. It’s not often, by the way — and the minister knows this well; she was in municipal government for a number of years — that you get local governments and small business organizations on the same page on matters involving taxation. Usually that’s a very difficult exercise.

This was an unprecedented coming together of stakeholders. I’m just wondering if the minister could comment on what specific aspects of the split assessment classification concept, the proposal that’s been recommended…. What specific components of that proposal were — again, in her words — “poorly, poorly, poorly thought-out”? I think the stakeholders that worked so hard on that concept would really like the minister to explain her choice of words in describing a proposal they had all worked very, very hard to provide to the province as a priority recommendation, a priority solution to solving this issue of skyrocketing property taxes on the unused air space above the heads of small business owners.

[3:05 p.m.]

Hon. S. Robinson: I, too, don’t want to go back. We’ve already done our second reading debate.

I want to assure the member and all members of the House that we are still considering the intergovernmental working group idea of a split assessment. It’s still under consideration. There’s a lot of work still to be done in order to make it really clear and make it workable. We’re committed to continuing to do that work with this group of representative local governments.

There’s certainly still some more work to be done. We’ve spoken with representatives of the business community who want to be consulted, who want to be involved in finding a solution. We have that work to do. We have to, certainly, engage with the UBCM. We have that work to do. There’s still lots to do in order to find a permanent solution to this, and we’re committed to continuing to do that work.

I also want to point out that given that that work still needs to be done, we realized…. When we received the idea in May and took a look at how we could proceed, it became really clear to us that we would not be able to get this important work done in time for the 2020 tax year.

The choice before us was to do nothing for 2020, which would leave businesses and non-profits still really struggling, or we could do something while we continue to do the important work of determining how to best use a split assessment. We proposed this interim solution, while we continue that important work with our various stakeholders. So we’re going to keep doing that.

In terms of the quote, I was referring to the private member’s bill, which is very different than what the intergovernmental working group was proposing. It was referring to that particular bill. I was expressing concern that it would not work at all, in terms of delivering relief to those who need it most.

T. Stone: One of the major problems that I think we’re all united here in wanting to address is that the small business, the arts and culture group, the non-profit is suffering under the weight of a significant increase in their property taxes related to the air above their heads. That’s the issue that’s driving this concern.

The minister has mentioned, and I have mentioned, that it’s really the coming together of increasing land values and the assessment process that we have, which is an internationally accepted framework for assessment — highest and best use — coupled with the triple-net lease reality that we also have. Those three things have come together, and in some areas, particularly in the Lower Mainland, it’s caused very significant issues with property tax increases. Again, it’s on the unused air space above the heads of the people in the buildings at the properties in question.

[3:10 p.m.]

I’m wondering if the minister could comment…. With that in mind and knowing that this is an issue that has been increasing in severity…. It’s increasing in the locations where it’s becoming a problem. We’re hearing about it now in places like Victoria and Kelowna, though it’s still very, very focused in Metro Vancouver.

Why did the government not attempt to address this challenge with legislation that actually focused on the problem that’s happening, the cause of the problem? That is the skyrocketing property taxes on the unused airspace above the heads of the properties that are affected.

Hon. S. Robinson: That’s exactly the work that we are doing with the Intergovernmental Working Group. We want to make sure that, of course, we get it right and that we provide relief where we need to. So that work continues.

We had debated this at second reading, and we put it to rest with a vote. I look forward to going through this stage, step by step, on this interim solution that will give relief to those who need it most while we continue the important work of addressing the very thing that the member raised.

T. Stone: The member knows full well that second reading is to debate the merits of proposed legislation at a high level. The purpose of the committee stage of this process is to delve into the specifics of the changes that are being proposed. Part of that is understanding the rationale, the thinking, the analysis, the processes that went into the minister and the government arriving on the legislative proposal that is before this House.

Again, I would like the minister to please outline for British Columbians, particularly those who have been engaged with her and with her ministry and with others impacted, for the entire time that she’s been in government now, for almost 2½ years, by this issue of skyrocketing property taxes on the unused airspace above their heads…. That’s the problem, yet we don’t see a solution to that problem contained in this legislation.

I’m just wondering if the minister could explain to British Columbians why she didn’t address the airspace and the rising property tax implications on that unused airspace above the heads of small business owners and others who are most impacted?

[3:15 p.m.]

Hon. S. Robinson: One of the things that’s in that proposal that makes it very difficult to act quickly on it…. Again, this is about being responsive to what businesses have been saying, and certainly expressing concern, for well over a decade. When the member opposite was sitting on this side, they were hearing these concerns, and they didn’t take action.

We have. We started in 2018, meeting with the Intergovernmental Working Group. It was determined in May of 2019, when a number of proposals were brought forward, looking at the very interplay that the member opposite mentioned…. It’s the interplay between development potential, land values that are going up and the structure of the triple-net lease with the highest and best use international assessment system. It’s the interactive effect of all of these that’s creating pressure. We heard from small business and acted quickly.

The subclass proposal is an interesting idea and is one worthy of continued work. When the member talks about empty airspace, what he’s talking about is development potential. Development potential is not currently measured and valued in the assessment system. Assigning a value to the development potential, besides taking the time to ensure it’s done correctly, could certainly lead to many appeals and create uncertainty in the tax base.

The other thing that I think is really important…. If the subclass applied to all properties with development potential, then it could have very large tax shifts. In some municipalities, thousands of properties have some sort of development potential. Applying a lower rate to the development potential portion of a property means that the rates on other classes would have to increase to raise the same amount of revenue.

[3:20 p.m.]

In some areas, this could mean a very large tax shift would have serious implications not just across business classes but on residential as well. While it’s absolutely worthy of exploring and determining, it’s really important that we get it right. It’s important that we take the time to get it right.

While we do that important work, no one here is slowing down on that work to get a permanent fix that works better, that looks at this very interesting idea. It was brought forward by just a handful of local governments, but it’s one that would roll out across the province. We need to understand its impact.

Rather than just do that work — which would, for 2020, certainly leave businesses, non-profits and culture groups hanging with a very significant tax burden — we decided to take action and to do both. That is to continue doing the long-term work that needs to be done to make sure we get a really good outcome, which everybody in this House, I think, wants for small businesses, and in the meantime, to deliver an interim strategy, an interim tool for local governments that continue to recognize the pressure that some of their businesses are continuing to struggle under — a tool that can provide relief for this current 2020 tax year.

T. Stone: Well, I would offer that the minister is putting forth a pretty broad definition of development potential there. Again, this is not a concept…. This split assessment classification that would enable a local government at their option to apply, via a new commercial subclass, a lower mill rate on that unused development potential is not something that the municipalities who are asking for it deem to be terribly complicated.

The city of Vancouver doesn’t think this is complicated. Nor does the city of Surrey, nor the city of Coquitlam, nor the city of North Van or the district of West Van. Metro Vancouver itself has weighed in. This concept has been signed off by a wide range of municipal tax and policy experts.

Again, I’m not entirely sure, especially with a couple years to have had to work with here, what the moving mountains and oceans challenge is in coming up with a definition of unused air space in order to facilitate this proposal.

Again, the proposal is broadly supported. It was developed from the ground up within local government. On September 23, 2019, via an open letter to the Premier on this issue that was signed by the Vancouver Business Improvement Association, the B.C. Alliance for Arts and Culture, the Greater Vancouver Board of Trade, the B.C. Chamber of Commerce, Great Northern Way Scene Shop, The Arts Factory Society, the Canadian Federation of Independent Business, the Urban Development Institute, the National Association for Industrial and Office Parks Vancouver and the Building Owners and Managers of British Columbia. They said, in summary, on this issue:

“The policy on the table” — the split assessment classification policy — “that has been endorsed by the municipalities, the business community and the arts community is the creation of a new commercial property subclass. This will allow municipalities to tax the unbuilt development potential above businesses at a rate lower than the current commercial rate.

“We urge the government of B.C. to take the immediate steps needed to provide municipalities this tool, which can provide real, targeted tax relief to those small businesses which are the most impacted, in time for the upcoming tax year.”

I’d like the minister to shed a little bit more light for us on exactly what the complications are, as she’s being advised in her ministry on implementing a split assessment classification solution. They’ve had over two years to do it. They’ve got the goodwill and the support of a broad range of local governments who have all very clearly stated publicly that they’re very hopeful that the government will work with them on this and scrap what they’re doing with this bill, but work with them on split assessment. There are loads of municipal and tax experts that work with those local governments that have all stepped up, many publicly, and have said they are prepared to work.

[3:25 p.m.]

What is so darned complicated about defining the unused air space in the concept of split assessment classification? What does the minister know that the CFOs in all of these major Metro Vancouver municipalities and these business organizations…? What does the minister know that these folks in all these other organizations don’t know, insofar as why it is so darned complicated to move forward with split assessment classification?

[S. Gibson in the chair.]

Hon. S. Robinson: Again, I want to reiterate to the member that we are working on this split assessment idea that’s put forward by, again, a handful of Metro Vancouver local governments. I do want to remind the member that there was certainly significant debate at the UBCM, and there are some municipalities that aren’t interested in it. In a lot of municipalities, it barely got support.

I also want to remind the member that this is a new concept. It’s a brand-new concept. It needs to be defined in a legal way. It needs systems and supports in order to make it work properly. I would hate to introduce something that hadn’t been thought through. The unintended consequences here are very significant. It’s important that we take the time to get it right, and that’s what our government is certainly committed to doing. Again, assigning a value to a development potential just hasn’t been done. It just hasn’t been done before.

[3:30 p.m.]

I want to remind the member that this bill before us, and the whole intent of all of this discussion and debate, is about giving relief to small businesses under a triple-net lease framework. It’s not about giving relief to developers who are holding on to properties for development potential. This is about making sure that we provide relief where it needs to be given.

We’ve certainly heard from small businesses who are not going to benefit at all when the property redevelops. They’re the ones who are completely burdened with it. This tool before the House, this piece of legislation before the House, is again about giving local governments the ability to support those small businesses, those arts and culture groups, that have been struggling for some time. We want to make sure that they can do that for 2020.

Are we committed to looking at the split assessment idea and notion that has come forward out of a working group? Absolutely. It’s worthwhile exploring. It’s worthwhile paying attention to how we would get there. But I want to let the member know that — he might not know — there are 130,000 properties that need to be then considered under a new framework. So that’s a lot of work that needs to be done. We need to make sure that we get it right.

The risk of shifting a tax burden among the classes or within class is very significant. So right now we have small businesses and non-profits that are being unfairly burdened. We want to bring fairness as soon as we can this year. This will help us do that, while we continue the important, long-term work of addressing how to best deliver for small businesses and that split assessment idea and make sure that it works properly.

T. Stone: Any suggestion that the municipalities that have been part of this intergovernmental working group that have brought forward resolutions on this…. Any suggestion that the arts and culture groups and the small business organizations believe that the split assessment classification proposal, as an unintended consequence, would benefit, as the minister put it, would provide relief, potentially, for developers, is patently ridiculous.

The split assessment classification proposal, as it’s been advanced by all of the stakeholders in question, certainly as it was embodied in the private member’s bill that I brought forward, was that this would be an optional tool that would be used by those local governments that want to use it, much like the minister’s much-vaunted rental-only zoning tool. It doesn’t force…. The fact that that tool exists for municipalities in their toolkit of options when they’re looking at housing in their community doesn’t mean that they have to use it. It would be completely optional, just as the proposal that the minister is bringing forward in this legislation.

There is nothing mandatory here. There would, therefore, not have to be anything mandatory in a split assessment classification proposal, insofar as requiring municipalities to actually use the tool. Furthermore, the flexibility would be built into that split assessment classification tool that would enable the local government, at their option, to put it in place on a discrete property, on a neighbourhood, on a street and to be able to apply whatever mill rate they want to that area or to that new commercial property subclass.

Again, I’m not going to allow there to be a suggestion that there was perhaps, as an unintended consequence, the possibility of developers and builders out there to benefit with some big, big tax relief windfall here through the split assessment classification proposal, because local governments would never allow that to happen.

We’re not talking about undeveloped bare land here. We’re talking about a piece of property on West 4th or, in her community in Coquitlam, that might be a pizzeria that’s been there for three generations. It is very good pizza, actually. The minister knows the place I’m referring to.

[3:35 p.m.]

That has been in business for three generations and is suddenly, because of the triple-net lease arrangement that they have and because of the skyrocketing property tax burden, simply struggling to determine whether they can make ends meet and keep their business in operation. That’s not a developer. That’s not even a situation remotely similar to what the minister suggested could have been one of the unintended consequences.

Again, the concern that seems to be coming from the minister and, through her, from the ministry that there are all these unintended consequences from a proposal that has been very well thought-out and well developed over several years just doesn’t seem to make much sense.

Certainly what I’m hearing from local governments…. We read into the record, in second reading, a number of the reactions from everyone — from the mayor of Vancouver to the mayor of the city of North Van to all kinds of other municipal leaders and small business leaders.

I want to ask the minister this question. Can the minister confirm that today there are situations in some jurisdictions where some municipal jurisdictions actually allow for a variation of split assessment, wherein there are some jurisdictions that allow for ground-floor commercial apartments to have their assessments split, thus providing them with some relief on the taxes owing? That is a situation that has been brought to my attention. I’m just wondering if the minister can confirm that she is aware that there is a variation on this split assessment solution that is in existence in some municipalities, provided those municipalities in question have the appropriate bylaws in place.

Hon. S. Robinson: I believe that the member is referring to the split classifying of the Amacon properties. This, however, is based on very specific zoning parameters, which is a completely different process.

In this process, B.C. Assessment does not value development potential but rather splits the classification based on what the zoning prescribes. So it’s a completely different framework, and this methodology would not apply in the case of a subclass.

T. Stone: Well, it is in place. There is a variation of this in place. If the minister says it’s through a different process, fine. Then why, if that was doable, if that is not so complicated…?

[3:40 p.m.]

Why is implementing a solution that enables for a split assessment related to undeveloped airspace…? Why is that so much more complicated than the example of split assessment that’s in place today?

Hon. S. Robinson: I think it’s important to be really clear that the Amacon situation is extremely complicated. There was nothing simple about it. It’s been going on for six or seven years. It created almost 1,000 appeals, something that we wouldn’t want to see again.

That’s exactly the reason why it’s important that we do the proper work that needs to happen to move forward on a split assessment. That’s exactly why we want to continue working with local governments. It’s exactly why we want to work with small businesses. It’s exactly why we want to work with cultural groups and arts groups. It’s exactly why we need to keep working to make sure that we define everything appropriately.

We also want to make sure…. I mean, we’re talking about 130,000 properties in the province, and we want to make sure that we don’t wind up in a system with thousands and thousands and thousands of appeals. It’s a lot of work, and it’s unnecessary stress. That’s exactly why we want to keep working, keep doing the diligent work that needs to happen, in order to come up with a permanent solution. And that’s why we have an interim solution here for 2020 so that while we do that important work, small businesses and arts and culture and non-profit groups can get the relief that they need today.

T. Stone: Okay. Well, we’ll continue to move on here, but again, the proposal that the stakeholders we’ve talked about have recommended, which was embodied in a private member’s bill, is very, very simple and straightforward. It would enable a local government, through a new commercial property subclass, to apply a different mill rate to the unused air space above the heads of an existing building. That would address the situation immediately and elegantly and simply. That’s not me saying that. That’s all of the mayors that are standing behind this proposal. That’s all of the small business organizations standing behind that proposal.

In contrast, the bill that we have no choice but to be debating today, because it’s the solution that the minister has opted to bring forward, is going to require local governments to literally go through thousands and thousands of properties, determine whether or not they have triple-net leases in place. Then, based on a percentage increase in year-over-year property tax obligations, the local government will have to offer those small businesses or those properties, through their triple-net leases, some level of a discount on their property taxes.

I am hearing from loads of municipalities that this is going to be cumbersome and administratively challenging, very time-consuming, in contrast to what they were asking for in the first place, which was split assessment classification.

[3:45 p.m.]

But I want to ask the minister this question. She mentioned in her remarks — a few times, actually, in this House — that sure, fine, the intergovernmental working committee, which consists of Lower Mainland municipalities, have had their say. But what about all the other communities around British Columbia? She has referenced the Cariboo, and she has referenced Fort St. John, and she has referenced Kamloops. She has referenced communities around the province in the context of saying that the Lower Mainland has had its say, but the rest of the province hasn’t had its say.

So could the minister tell this House which local governments outside of the Lower Mainland have come to her expressing the need for an urgent solution to address skyrocketing property taxes on the unused development potential or the unused airspace over the heads of small businesses in their communities? Which local governments have actually come forward and said to the minister that we need to address this problem?

I’m not hearing about this, with the exception of Kelowna, where there is a little bit of a rumbling happening, in terms of property taxes on unused development potential, and a little bit here in Victoria. I’m not hearing about this mass cross-province issue with skyrocketing property taxes over the heads of small business owners.

Could the minister please take the opportunity to clarify her previous statements as to what she has meant when she said, actually in her second reading speech: “No one took a look at what it would mean for Kamloops, for Victoria, for Kelowna, for Penticton or, in fact, the majority of the 189 local governments in the province.” In question period last week, she referenced Fort St. John, that she had heard push back on the concept from the Cariboo.

Could the minister clarify those remarks for this House and, indeed, for British Columbians?

Hon. S. Robinson: Well, whenever we change legislation significantly — like a subclass, which is a whole new framework — it’s really important that we consult with various stakeholders.

We certainly heard opposition to the resolution that was proposed at the last UBCM, with delegates from Victoria, Cariboo regional district, Whistler and Lantzville arguing that implementing a new commercial subclass would create challenges around fairness in who’s in and out of the subclass.

The delegate from Grand Forks argued that local governments could adjust tax rate ratios in order to solve the issue. Others expressed our concern that landlords would just increase rents, with the perception that tenants would have more liquidity, and that the assessment regime is not the appropriate way to address the problem.

There were certainly diverse opinions in the room, diverse understandings of the problem, whether it was a problem or wasn’t a problem. Different communities described it differently. So again, we are committed to continuing to work on this notion of the split assessment and what that looks like and making sure that we get it right. And I’m sure that the members opposite want to make sure that we get it right. I can’t imagine anyone in this House suggesting that it would be irresponsible to not get it right.

[3:50 p.m.]

But again, there is still some work that needs to be done. I’m committed to doing that work. We’re committed to working with all of our partners. We’re committed to working with, certainly, small businesses and those representing small businesses, continuing to work with the UBCM, continuing to work with the various communities that are starting to see this percolate in their communities. We recognize how important it is and that we continue do the work. Again, I want to make sure that we get it right and that it works in the right way.

Again, I’m not denying the value that that has, the value that it has to small businesses, because it’s really about them. But I have to also point out that the window that we had in order to get all that work done…. We knew we were not going to be able to get it done. What that meant was that businesses would continue to suffer through 2020. That wasn’t acceptable to me. It’s not acceptable to our government.

So rather than say, “Just wait; we still have work to do….” That is the responsible thing to do in government. Make sure that you get it right, that you’ve consulted with all the right people, that it’s going to work in the diversity of communities we have across this province. We brought together some really great thinkers in various ministries around: is there a way that we can move quickly to provide relief, to provide a tool, where local governments can work with us to give relief to those who need it most while we continue on the split classification idea?

We still have lots of work to do, and I’m really eager to keep my sleeves rolled up and keep making progress on that idea.

T. Stone: Certainly, I think that the statement that the minister has made — that all members of the House would want to get it right in new legislation — is an accurate one, for certain. Certainly, whether you’re in a government or opposition, we’re all here to put our best foot forward and, in the case of being an opposition member, to critically scrutinize legislation. The member has been on this side of the Legislature before as well.

We may have differences of perspective on what is the most viable solution to a problem, but I think we all have the same intent to arrive at solutions to address the challenges that are facing British Columbians.

This particular one, though, the split assessment classification idea — it’s not like it just came off the shelf a year ago or six months ago. It’s been a concept that’s been worked on for a number of years now.

The minister has, several times now, said that it barely squeaked by. It actually was a strong majority of the UBCM. So 56 percent is a strong majority, and 56 percent of the delegates at the UBCM endorsed this concept. It was a resolution, I believe, that was brought forward by Port Moody. It followed on the heels of two resolutions at the UBCM in 2018, which were a little bit different but also were attempts by those communities in question to bring forward solutions to address this issue of skyrocketing property taxes impacting businesses.

The last question I asked was in relation to which communities she has heard from outside of the Lower Mainland that have expressed concerns. The ones that I was able to catch, as she read them off, were Lantzville, the Cariboo regional district and Grand Forks. There may have been a few others — Whistler.

Surely to goodness, the minister doesn’t believe that there’s a challenge of skyrocketing property tax issues and unused development potential in the Cariboo regional district — Williams Lake or Quesnel, in particular. Surely, she doesn’t believe that there’s an issue of skyrocketing property taxes in the undeveloped airspace over the heads of small business owners in Lantzville or in Grand Forks, for that matter.

While I understand the minister is suggesting that there are these municipalities that she has cited that have expressed some concerns…. They’re totally permitted and welcome to push back on ideas.

[3:55 p.m.]

I guess my question for the minister is: does she actually believe that the issue of skyrocketing property taxes impacting small businesses is an issue in Lantzville or an issue in the Cariboo regional district or an issue in Grand Forks? That’s certainly not what we’re hearing from small businesses in those communities and from local governments in those communities.

Deputy Speaker: Excuse me. The member for Vancouver-Langara would like to make some introductions.

M. Lee: Mr. Chair, I’d like to seek leave to make an introduction.

Deputy Speaker: What is the pleasure of the House?

Leave granted.

Introductions by Members

M. Lee: I would like to invite all the grade 5 students here from École Rose-des-vents in my riding of Vancouver-Langara.

I met all you guys on the back steps. Hope you’re having a great tour. Welcome to the House. As you can see, the member for Kamloops–South Thompson and the Minister of Municipal Affairs and Housing are debating a very important bill. This is democracy in action. As I talked to you about on the stairs of the House, in the back, this is what you have when you have different points of view. Hopefully, you’ll enjoy this riveting discussion here at the committee stage.

Debate Continued

Hon. S. Robinson: I just want to correct, for the record, that the UBCM was a…. Fifty-four percent voted for, which means that 46 percent voted against. Victoria voted against it, and Victoria is experiencing some pressure. So I want to make sure to correct the record.

I also want to point out, again…. I know the member knows this. It’s a varied province. There are various communities — some that have significant growth pressures and some that don’t.

I think about, as the member was asking his question around: did I think these communities were under considerable pressure? What I went to were places like Terrace and Kitimat, which are under considerable pressure right now, and other communities that may not have a problem around this particular assessment challenge. But if we were to make a wholesale change to the Assessment Act in any way, it might create a problem that, perhaps, didn’t exist. That’s an example of why it’s really important that we do the due diligence, that we do the work, that we do the proper consultation.

I just want to say to the young people that I know this is absolutely fascinating. We’re talking about how properties are assessed and their values so that they can be taxed appropriately. You’ll know all about that at some point later in your life, but I don’t want you to worry about it right now.

T. Stone: I think it goes without saying, or it should be said again, that the…. Just as this proposal, which is contained in this legislation that we’re here discussing today, the split assessment classification proposal…. It would be optional. It would not….

If Terrace and Kitimat, in their infinite wisdom…. They know how to run their communities. If they had this tool at their disposal and they opted not to use it, that’s their choice. There would be nothing mandatory about requiring municipalities to use the split assessment classification. However, Terrace or Kitimat might decide that in light of an issue of the skyrocketing property tax obligations on the unused development potential above existing small businesses in their communities, this tool makes sense for them. Then they would embrace it and use it.

[4:00 p.m.]

What has been proposed by the opposition and these stakeholders is as optional as what the minister is proposing in this legislation here today.

The mayor of Vancouver had this to say, in reaction to the introduction of the legislation that we’re here discussing today: “This law fails to provide tax relief for small business and non-profits, and it could wind up costing them even more. We need to be able to target development potential and air space, and this does not allow us to tackle skyrocketing property values. These changes won’t do that. What we’d really like is for the province to drop these proposals and work with us on what we’ve proposed. Small businesses and arts organizations are so stressed.” That’s Vancouver Mayor Kennedy Stewart.

My question to the minister is this. If the mayors, like Mayor Stewart, for whom this bill was designed…. And in part, the split assessment classification concept was designed by folks within his city hall. Why would the minister expect that the split assessment classification proposal would fail and wouldn’t work? Whereas, the proposal that she has on the table here today, which Mayor Stewart is saying will not work — what makes her think it will?

[4:05 p.m.]

Hon. S. Robinson: First of all, I want to again reiterate that we are continuing to work with Vancouver and other communities on the split assessment, because it’s a good idea worthy of exploring. I also want to get on the record that the private member’s bill…. The way it’s written is not enabling; it’s actually directive. And it’s broad-based and would make significant changes to the tax system and, as a result, would not be a good direction.

It’s also not up for debate. We’re debating Bill 10 in front of us. But I also want to point out to the member, pointing out his question, a number of us…. Municipal staff have reached out. They’ve been hearing from staff at several local governments, and they’ve also heard from some elected officials who are very interested in learning more about how they could raise this in their council. All the way along, in terms of developing Bill 10, they were fully well aware of what we were doing. We’ve been listening to local governments.

We do understand that it’s a lot of work for their staff. We get it. This will require a fair bit of work. But we’ve also been working with them since mid-January to help them prepare for implementation, and we have a number of supports that are ready to help local governments to get these bylaws in place. When we were drafting this and we talked about a March 31 deadline, they were really clear that that would be too fast. It would be very, very difficult for them to get things in place. So we listened, and we pushed the deadline to April 22 to give them a few more weeks.

Remember, this is about small businesses, who are really, really challenged. I know that local governments want to roll up their sleeves and get to work and help address the businesses and the non-profits that are struggling in their communities. While we fully appreciate the good work that has gone into looking at a split assessment, trying to identify how to best move forward on that, I know that local governments recognize that there is still more work to be done in order to make that work.

We’re committed to continue doing that work. No one here has let up on that. But again, we know that the struggling businesses need something sooner than we’re able to deliver on a permanent fix. So it’s for that reason that we have Bill 10 here before us. It’s to give relief to those who need it most so that they can get relief this year and not have to wait until the important work is done on a permanent fix.

T. Stone: Well, the minister didn’t answer the question. I asked specifically about what her response was to the concerns that have been expressed by the mayor of the city of Vancouver. He has said unequivocally…. And he hasn’t changed his tune since this legislation was first introduced at all. Presumably, there are back channel conversations happening and so forth. He’s not changing his public tune in terms of his concerns with this legislation.

Again, he and mayors across the Lower Mainland, as part of this intergovernmental working group, were looking for a solution that would provide local governments with a tool that they can use to target this issue of skyrocketing property taxes on the undeveloped potential in the air space above small businesses’ heads. That is not in this bill.

In fact, the mayor of Vancouver went on to say: “There’s a huge gap between what we were asking for and what this is. At the core of our ask was for the province to give us the tools to deal with development potential, and that’s not here.” “We’re not happy at all. We straightforwardly asked for something more workable with ample time to get it passed, and they didn’t do it.”

Again, to the minister, how would she like to respond? How is she responding to the concerns that have been expressed by the mayor of Vancouver and that have been echoed by a whole bunch of other mayors and councillors across the Lower Mainland in particular, with respect to what the minister has actually tabled to address this issue?

The committee recessed from 4:10 p.m. to 4:16 p.m.

[S. Gibson in the chair.]

Hon. S. Robinson: Thank you, Mr. Chair, for the bit of a break.

The member asked a question around the status of the mayors vis-à-vis their request to continue doing the good work that we’ve been doing around the split assessment suggestion, recommendation and the work that we’re doing. Certainly, I have heard from them, and we’ve been engaged in ongoing dialogue and are continuing to work with their staff to make sure that they are well supported to take a look at what they can do in the interim while we continue to do that work.

I thought I would just read into the record, for the benefit of the member and for others, my response to the mayors. I’ll just read it, because I think that it captures, quite well, what we’ve done. I thanked them for their communication with me regarding our efforts on property tax reform. Then I go on to say:

“I know that we share a similar concern regarding the risk to small businesses, arts and culture, and non-profit organizations from rising property assessments associated with development potential. While this is an issue that dates back many years and has been raised by business organizations for more than a decade, I know that we all have been working extremely hard on this over the past year. I would like to thank your members for their engagement and work through the Intergovernmental Working Group, made up of government representatives from several Lower Mainland communities.

“I’m also pleased that provincial staff were able to provide assistance to the local government representatives working on the Intergovernmental Working Group, as they sought to explore options to mitigate the challenge of rising property assessment valuations and taxation.

“My father was a small business owner, and I understand how tough things can be for small businesses and other organizations in triple-net lease situations, especially in the face of an out-of-control real estate market. For too long, many business owners and arts and culture groups have been struggling with the impact of rising property taxes on their lease payments because of skyrocketing prices and speculation. My priority in tackling this challenge has always been delivering relief for these small businesses and other organizations as quickly as possible.

“As soon as we received your split assessment proposal in May 2019, specialists from the Ministry of Municipal Affairs and Housing, Ministry of Finance and B.C. Assessment undertook a comprehensive review to determine the proposal’s viability and any opportunity to implement the initiative on a timely basis. By early fall, they determined it was not possible to bring the split assessment proposal in time for the 2020 tax year.

“As we shared with you last fall, adoption of the proposal would represent a fundamental change to our property assessment system, requiring substantial legislative amendments. In addition, B.C. Assessment would also have to develop entirely new valuation methodologies and undertake property-specific assessment across many thousands of individual properties in Metro Vancouver and other areas of the province.

“Such a significant change would also require us to work with representatives from UBCM and from communities across the province to be sure that we have a full understanding of the potential implications for communities that were not involved in the initial assessment of this proposal. None of these steps could be rushed. Staff were also concerned about the potential for the proposal to result in increased appeals and litigation, all of which would present risks to both local government revenues and property tax payers.

“Faced with this, we then had a choice: do nothing for the 2020 tax year and leave businesses to suffer, or develop an interim solution, a temporary measure to provide municipalities with a way to deliver some relief to those hardest hit while we continue to work together urgently on a permanent fix. Passing up the opportunity to deliver help for 2020 was not an option.

[4:20 p.m.]

“I will not suggest that the interim business property tax relief program is a perfect long-term solution. That is why it’s an interim measure. But it’s the only viable option to give small businesses the relief they need for the 2020 tax year.

“Our government remains committed to implementing a permanent fix, and a version of your split assessment proposal is one of the options under consideration.

“My staff and I will continue to work with the intergovernmental working group, other local governments across B.C., small businesses, non-profits and arts and culture organizations to develop a permanent solution to this challenge as quickly as possible.

“That said, I also want to highlight the many ways that your split assessment proposal did inform the design of the interim business property tax relief program under Bill 10. Elements of the legislation have been structured to reflect to the greatest extent possible the intended outcomes and processes advocated by the intergovernmental working group. Notably, both approaches are enabling, not directive, allowing local governments to choose whether to use the legislation and implement it through an annual bylaw at the local government level.

“Use B.C. Assessment’s existing market value property assessment data to identify those properties most impacted by raising property values, use B.C. Assessment’s market value data to select those specific individual properties that would be eligible for relief, and allow local governments to decide whether to forgo the municipal tax revenue or shift the tax revenues to other ratepayers.

“I appreciate that there is significant work ahead for municipalities to implement this for 2020, and I want to reassure you that we will continue to offer support for implementation. Staff are already in contact with a number of municipalities that are looking at options for how to use this tool to provide relief for a number of affected properties. I strongly encourage you to consider doing the same for at least the hardest-hit properties for 2020. We all know the many stories out there that provide clear evidence of how desperately small businesses need relief.

“For those implementing it, my commitment is that we will be there every step of the way. That is why we gave advance notice of the legislation and started working early with your municipal staff to help support implementation.

“It is also why we have a model bylaw, sample notice and user guide available to you, along with the necessary B.C. Assessment data sets to help you narrow your focus on those properties most in need of relief.

“We also extended the deadline to adopt bylaws to April 22, based on feedback from your municipal staff, and have made a number of procedural changes to speed up adoption of the bylaws.

“While this issue has been raised by businesses for a decade, we now have an opportunity to help small businesses and others who need relief this year. I hope you will all work with us to deliver relief where possible for small businesses and organizations in your communities for 2020, as we continue together on a permanent solution that will work for communities throughout British Columbia.”

T. Stone: I certainly appreciate the minister reading into the record her communication to local governments post-announcement of the legislation. I don’t think anything that she has mentioned there provides much comfort to those local governments in question, though, because they aren’t changing their tune. They continue to express significant dissatisfaction with the proposal that is in front of us here today.

I just want, again, to say for the record that it sure seems like this entire issue is being grossly overcomplicated by folks that are advising the minister. The city of Vancouver, the city of Surrey, Richmond and others that we’ve talked to have said that the elegance and the simplicity of the split assessment classification proposal is that you already have the assessed values on an existing building and the unused air space. You’re simply putting in place a tool that can be optionally used to split out the components of a property — the existing building and its existing use — from the future highest and best use, the future potential, that unused development.

The issue is…. It is actually very, very simple and straightforward to put a fence around it. We have small businesses and other organizations all over, particularly Metro Vancouver, who, because they’re being classified at their existing use, which is typically class 6 or commercial….

[4:25 p.m.]

They’re put into class 6 because that’s their current use, but they’re being taxed at a much higher residential — at the value of the highest and best use, which is, in many cases, a future condo tower and whatnot. The tool that they’re asking for is to be allowed to just split those assessments from the existing use, which would continue to be the class 6 commercial, at its current fair market value because it’s a current going concern, and apply a different lower mill rate through this property, a new commercial property subclass — a lower mill rate on that unused development potential.

One individual in the middle of this issue in his community put it to me this way. The assessed value doesn’t just mean that the business is taxed on its value as a future condo tower; it’s also paying more than three times the amount today that they would otherwise pay if they were taxed on the current use. So, to the…. Well, I’ll just turn this into a question.

The mayor of Vancouver had one final thing to say, which I think we all can support. He said: “We’re not happy at all. What scares me is how many businesses will go down before we get this fixed.” Time is of the essence.

Does the minister have any sense of how many small businesses or other organizations are going to be beneficiaries of the proposed solution that’s on the table that’s contained in this legislation? How many small businesses and organizations does she estimate, or has her staff or her ministry estimated, are actually going to realize property tax relief this current year as a result of the proposal that is in front of the House here today?

[4:30 p.m.]

[R. Chouhan in the chair.]

Hon. S. Robinson: Again, I think it’s important to put the current situation in context. It has been growing over a decade. Nothing had been done. We’ve certainly heard stories of the most challenging years, really starting in 2015-2016, and still nothing had been done.

We have looked. Again, we’ve worked closely…. We worked for many months with this working group to identify how to best address the situation. They’ve come up with some reasonably good ideas that we are continuing to work on. The sort of final recommendations came forward to staff in May 2019.

They took a look at what the options were, what amount of work would need to be done, the amount of consultation that would need to be done, the amount of legislation that would need to be done, the amount of changing how B.C. Assessment does their work and the implications that would have, and the fact that there are 130,000 different properties around the province that would need to be looked at.

Taking all of that into consideration, staff’s advice to me as minister was that while this is worthwhile exploring and worthwhile continuing to pursue, they didn’t see a way to actually to get it in place in time for the 2020 tax year. It’s within that framework that we proceeded to say: “Okay, so we can do nothing for 2020, because the work isn’t complete.”

We want to get it right. I know all members of this House want to get legislation right. We’ve certainly learned from the Amacon situation and the almost 1,000 appeals that have happened as a result of that. That’s not the best way forward. So we need to get it right.

With the choice of doing nothing and not giving relief where it’s needed most or doing something and creating a tool that local governments can use to do something to help those most in need…. To me, that is better than doing nothing, because I want to make sure that we have the ability to provide relief where it’s needed most.

It’s within that context that we have tabled Bill 10, and I look forward to getting into the nuts and bolts of that bill in short order. But it’s also important to recognize that with the work that local governments will do, knowing their communities best, they will be able to give relief to at least some businesses and non-profits, which is better than giving no relief to anybody.

T. Stone: Again, for those folks who are watching at home — I think all the schoolchildren, very smartly, have left us — the issue here is trying to come up with a solution that is simple and elegant and can be put in place quickly to actually provide relief. It’s a tool that would actually be used.

If local governments don’t opt to use the solution — many have suggested they’re not going to even try to use what’s being proposed here in this legislation — then what’s the point? The whole point here is to provide relief to those small business owners or those arts and culture groups that are practically being taxed out of existence in their respective neighbourhoods because of this issue of skyrocketing property taxes on unused air space.

[4:35 p.m.]

Now again, to put a fine point on it, we’re talking about properties that are paying property taxes based on the highest and best use, which is, in many cases, a future condo tower or some other large residential development. So the assessed value that they’re paying taxes on is based on that future fully developed use. But the tax rate, the mill rate, that they have to pay on that highest and best use is the mill rate that applies to the class that they are in today, based on their current use. That’s class 6. That’s the commercial rate.

So the dilemma, the quandary here for these small businesses is they’re paying, in many cases, depending on the community…. It does vary widely around the province. The city of Vancouver, the latest data that I have…. So everyone knows, property taxes are applied for every $1,000 of a property’s highest and best use taxable value. Well, in Vancouver, the tax rate for the residential property class, class 1, is just under a buck thirty-four per $1,000 of value — a buck thirty-four. In Vancouver, the rate for the class 6, the business commercial rate, is $4.27 per $1,000 of value.

These small businesses are paying a tax rate, a mill rate, three times higher than they otherwise would if the building that they were in was actually that residential condo tower at some point in the future. That’s what we’re trying to come up with here.

The minister keeps saying that there wasn’t enough time, that this is a really challenging, complex issue and that hundreds of thousands of properties would have to be looked at. The assessment rolls are already in place. The values are already…. Presumably, that pizza shop that’s paying that ridiculously high property tax on the air space over their head…. There’s already an assessed value in place that’s driving the property taxes that are being paid.

The solution that the local government is looking for is the ability to apply a different tax rate, a different mill rate, to the portion of that property tax bill that represents the air over their head so they’re not being hit with a double whammy here of being taxed on a multi-million-dollar value of some future condo tower at a tax rate that’s three times higher than what the residential rate would be on that future condo tower. It makes no sense.

This is why these stakeholders and organizations have come together and are proposing this concept of split assessment classification. It was embodied in the private member’s bill that we brought forward. The minister has incorrectly stated several times that our approach was not enabling, that rather it was prescriptive. The only aspect of the private member’s bill that was not enabling was subsection 1(c), where it basically prescribes that the rate that’s applied to the commercial subclass, the new commercial subclass, has to be less than the existing commercial rate.

That’s common sense. That’s what these local governments are asking for. Of course you would want to apply…. The whole point here is to be able to apply a lower mill rate onto the commercial property subclass that would be available for use by the local government.

I want to just make sure that we’re really clear in what we’re talking about here. I want to try one more time. The minister keeps saying that hundreds of thousands of properties would have to be looked at in order for a split assessment classification to work. What does she base that assertion on when we’re talking about…?

The assessment rolls are already in place. The assessed values are already in place. We’re simply talking about providing local governments with an additional subclass that they could apply at their discretion, completely optional to them, at whatever mill rate they want to associate that with — apply it to the existing value, which is already established in the assessment rolls.

[4:40 p.m.]

What is so complicated about what is being proposed with respect to the split assessment classification solution?

Hon. S. Robinson: Listening to the member’s — it’s more than a question — discussion points, I would assume, I think we can agree on the problem. I think we agree on it. Again, this is a problem that’s been growing for ten years, and nothing had been done until we looked at it. We started looking and doing the work in 2018, which is rather unfortunate. But we’re here now, and we’ve done some really good work. And I look forward to continuing to do the good work.

I want to just point out…. You know, the member keeps talking about: “It’s simple. It’s simple.” Well, I was sort of working through how you would assign the market components on a split assessment. Well, what’s interesting is that the methodology to do that doesn’t exist — how to separate it out.

[4:45 p.m.]

Remember, this is a market-based system, and there isn’t a definition yet. There aren’t policies yet. There aren’t procedures about how to parse out the current space and how it’s being used and the development potential and how to split that assessment. B.C. Assessment looks at the whole property right now, and that is how the whole assessment system works.

I asked staff. I said: “Even if we were just to do Vancouver, if Vancouver said, ‘Well, we want to do this….’” Just for classes 5 and 6, there are 15,000 properties. They would need to go and sort out that split assessment framework and apply it to thousands of properties.

Again, it’s worthwhile to explore as a policy direction. We’re committed to trying to fix this. This is a good idea that we’re looking at. But there is no way that staff could do the defining of the terms, could do the policy work that needs to happen, could look at the implementation and then get the boots on the ground to actually parse out the split that the member talks about.

The work that needs to happen is critical in order to make the system work the way I think the city of Vancouver and others want it to work. I know that the member doesn’t want to have unintended consequences. We also need to get the legislative components right, we need to get the implementation right, and we need to get the assessment right. If we don’t, then it means that others in the class are going to be unfairly burdened.

Again, we’re continuing to work with local governments. We’re continuing to work with Vancouver. I mean, I do remember the mayor of Vancouver when he first became mayor and talked to me about this as an important issue. I agreed with him. It’s completely important. He said: “Well, you could just do this with the flick of a pen.” I think he knows that that’s not the case now. It needs, certainly, some more work.

I have staff who are working diligently with other staff complements from local governments to keep identifying how to best move forward for a permanent fix. Split assessment is certainly a way to go, but it requires more work. In the meantime, while we do that implementation component, that definition component, that policy component, that active on-the-ground component…. All of that needs to go into implementing a split assessment.

We felt it was important. I felt it was important. I enjoin the member opposite to join with me in making sure that there’s a tool for local governments to use. We have a number of local governments that have expressed interest — staff are reaching out to our staff, and a few elected officials have reached out and want to bring this forward to their councils — in finding a way to bring relief to those who need it most sooner rather than later.

T. Stone: I mean, the whole reason for bringing forward our private member’s bill and for engaging in this debate is because we are committed to trying to be constructive in bringing solutions forward to address the solutions.

The reality is, as we’re increasingly going through this debate, either the minister can’t or she won’t answer why a split assessment classification is so complicated. That was not an answer. That was a nice try, but it was not an answer.

Isn’t the formula as simple as the value of the property when fully developed minus the value of the property in its current use or some variation of that? That’s what the mayors are saying. That’s the people that are actually engaged in local government and deal with this every day. That’s why they’re increasingly feeling frustrated. To them, it doesn’t seem like it should take two to three years to take this concept and make it workable, massage it as required.

There are lots of examples of public policy that’s never been tried anywhere else. You bring it in, and if there are unintended consequences, you deal with them.

[4:50 p.m.]

The minister, as I mentioned earlier, brought in rental-only zoning. The first in the world, she likes to proclaim. Fair enough. We don’t yet know if the tool is going to work as intended or not. We do know that there are some growing concerns about how the tool is maybe being interpreted and potentially used in some municipalities. This issue….

When we hear from the number of local governments that we have and that we’ve read into the record over and over today, which have very smart people in their finance departments and their assessment departments, and the people who do this day to day…. All acknowledge the great work that B.C. Assessment does, by the way. They do not understand and, to varying degrees, don’t buy into the argument that it’s far too complicated and couldn’t have been figured out over the last two years in time for the current tax year.

Hopefully, moving forward, the engagement and the discussions will continue so that this solution…. Most in local government that are affected by this issue feel it is the most appropriate solution to address the challenge.

I do want to go back to a question asked quite a while ago, actually. The minister didn’t answer it. How many small businesses and other types of organizations does she believe, or her staff have told her or the business analysis has pointed to that presumably has been done in her ministry…? How many organizations are actually going to benefit from this proposed legislative solution that we’re here discussing today?

Hon. S. Robinson: I want to, certainly, let the member know that we’ve had a number of inquiries from local governments about moving quickly to get a bylaw implemented for 2020. We have a number, actually, that are saying they don’t know that they’d be able to get it done for 2020, but they’re very interested in doing it for 2021.

This is an interim measure available up to 2024. Given that we have different local governments interested for this year and others for next year and that it’s a bylaw they would bring in every year, it’s difficult to determine how many beneficiaries. That would be up to local governments and which ones use it, which years and for how many years.

T. Stone: So the answer is: you don’t know how many organizations. There isn’t even a projected estimate? There’s not some kind of suggestion that in the city of Vancouver, where this has been a huge issue on West 4th and Marpole — pick a neighbourhood in the community — 300 properties stand to benefit from this if the city implements the tool? Or 150? Or 15? There’s no assessment whatsoever.

We have legislation in front of the House with no stated metrics or targets as to how many organizations that are suffering from this issue will potentially be saved — is that correct? — or will be thrown a lifeline, with the minister’s proposed solution.

[4:55 p.m.]

Hon. S. Robinson: For classes 5 and 6, there are about 120,000 properties. The city of Vancouver has about 15,000. Certainly, it depends on local governments in terms of how they use the various thresholds that are here in this legislation. That will determine the exact number of properties that will see benefit. Of course, only those that operate under a triple-net lease framework can benefit.

There is certainly lots of opportunity here for those businesses that have been struggling. Local governments will be able to make those determinations about who will benefit for 2020, 2021 and going forward into 2024, while we continue the important work of a permanent fix.

T. Stone: I want to note for the minister. I’m certain that she would know this. But Bill 4, which is also before the House — the Budget Measures Implementation Act — actually includes a provision that enables municipalities to split the assessed value of ports off from other class 4 properties, and that’s through differing municipal tax rates or split assessment. Now, of course, this is in relation to the cap on the ports property tax issue. But it’s essentially accomplishing the same thing that local governments have been asking for in relation to the property tax issue that’s impacting small businesses.

My question to the minister would be: if B.C. Assessment and all the staff that work on assessment were able to prepare the materials and do the work in order to move forward with enabling municipalities to split the ports off from other class 4 properties, then why has the ministry not been able to do the same thing with respect to split assessment and the issue that we’re here talking about today with respect to the skyrocketing property taxes on small businesses?

[5:00 p.m.]

Hon. S. Robinson: First of all, this is a completely different example. What the member is raising is about tax rates, not about assessment. But also, there are 38 ports in the province to provide flexibility to municipalities. It’s not at all about assessment. It’s only in five municipalities, so it’s a completely different framework.

T. Stone: Fair enough. But the minister has spent considerable time suggesting that the challenge in moving forward here is that it’s a huge, monumental amount of work to try and come up with a definition or a process or a protocol in order to facilitate split assessment.

It doesn’t matter if there are ten properties or 10,000 properties. Coming up with a standard, a protocol, a process — whatever you want to call it — to address a particular situation is exactly what B.C. Assessment has done in any number of other cases. I think it’s just worth noting.

It’s a bit baffling that in this very session, the government is bringing forward essentially a split assessment solution with respect to ports and the property tax payable there, enabling local governments to split the assessment of port property off of other class 4 properties and to do that through differing municipal tax rates or mill rate. But for some reason, it is ridiculously complicated. It’s a heck of a lot more work that’s going to take a lot more time in order to develop an approach, a framework, a protocol, a process, whatever you want to call it, to do the same thing with respect to the small business challenge that we’re here talking about today.

After the initial five-year period is over…. The minister has actually mentioned several times in her comments that this is an interim solution. I believe in second reading she said: “While we continue to do the collaborative work needed to address this situation with a permanent solution, we’re going to continue to work with local governments and small business representatives to do the collaborative work to come up with a permanent solution.”

That permanent solution may include, and these are her words: “…developing a split assessment framework to” — possibly — “reviewing the Commercial Tenancy Act.” I’m just wondering if the minister could speak in a bit more detail to what options are being considered as part of a permanent solution to this challenge.

Time will tell, on this particular solution that’s in front of us today, whether local governments use it or not. If they don’t use it, there will be no relief forthcoming to small businesses. If they do use it in a spotty manner here and there, then some will benefit and most won’t. At the end of the day, a long-term, durable permanent solution is what’s required. The minister has said that. I agree with that.

What are those permanent solutions that she is working on with local governments and other stakeholders?

[5:05 p.m.]

Hon. S. Robinson: First of all, I just want to correct the record. The member suggests how simple it is, just around the tax rate change for ports, but that’s not a split assessment. He called it a split assessment, and it isn’t. It’s about a tax rate change. I think it’s important for the record to help him and others understand that that’s not at all a split assessment.

In terms of the member’s question, we’ve been gathering ideas from many different sources. People have lots of interesting ideas; some of them are very worthwhile pursuing. We certainly heard about a clarification and standardization of the criteria in the Assessment Act regarding split classification, which is different from what is being referred to as split assessment. We’ve heard about creation of split tax bills for tenants and owners. We’ve heard ideas about introducing a new a tax deferral program. We’ve certainly heard that from business. We’ve also heard about the triple-net lease framework. Is that the right framework?

These are all ideas that are coming forward. There are a lot of invested parties that are recognizing…. I think the member and I agree on the nature of the problem. But there are lots of folks who see and want to offer up potential solutions. While the recommended solution from the Intergovernmental Working Group is a good one and worthwhile exploring…. As a government, we’re always interested in hearing what others have to say about a potential solution. It’s why members opposite put together private members’ bills. I want to encourage them to keep doing that, because we look for ideas, but they have to be workable ideas.

We have to recognize that it is a complex system. The assessment system is a complex system. Very few people…. Certainly in the general public, they don’t quite understand the interplay between all the various component parts. We’ve certainly spent, and I know the staff have spent…. Again, I want to thank them for their work in trying to inform local government staff, as well as electeds, on exactly how the system works — the interactive effect between market and current value, current use and potential value, all of those various interplays, looking at how property is zoned, at the implications that has as soon as you have a zoning change — and how the mill rate plays in. Then, of course, you add in the triple-net-lease framework.

It is a very complex system. I think it’s unfair to suggest that it’s a simple system. I don’t think anyone would say that our property assessment system is simple. Making sure that we understand the interactive parts and how they all interact is absolutely critical. That’s why it’s important that we take the time. That’s why we have a five-year framework. I expect that we’ll get it done sooner than the five years, but people also want stability — to know what’s ahead of them. It’s for that reason that we’ve given it a five-year framework to do an interim relief program, but we’re absolutely committed to delivering on a permanent solution that works better for everyone.

T. Stone: To the minister, what kinds of changes would she be contemplating or is she hearing about that would impact the Commercial Tenancy Act and the triple-net lease framework?

Hon. S. Robinson: Like I said to the member opposite earlier, there are a number of ideas that people are wanting to deliver, to have solutions. It’s just one of the solutions that was presented and that fed into where we should look for the solution to this problem. That was one idea — to look at that. That’s as much as we’ve got at this point.

[5:10 p.m.]

Again, it’s important that we understand the interaction between the various component parts about how assessment works. This was provided as a place to look for a solution. That’s as far as we’ve got.

T. Stone: Does the minister support making changes to the triple-net lease framework or the Commercial Tenancy Act that would in any way hinder or restrict the current allowance for property tax obligations to be covered by a tenant in a triple-lease agreement?

Hon. S. Robinson: While I appreciate the member asking the question, that’s not under consideration in this bill.

T. Stone: I’m wondering if the minister could confirm that regional districts are not provided for in this legislation. I don’t see the same provisions that provide for the solution that the minister has brought forward, as detailed in the Community Charter and the Vancouver Charter. I don’t see those provisions provided for in the form of amendments in this bill with respect to the Local Government Act, which would suggest to me that this would not apply to regional districts.

If that’s indeed the case, could the minister confirm that and indicate why she would not have rolled them into this legislation as well?

Hon. S. Robinson: Yes, I can confirm that they are not included here. It doesn’t apply to them. It’s municipalities with urban areas that have been the ones asking for this relief. It hasn’t been raised as an issue in unincorporated areas.

T. Stone: Thanks for that.

The minister previously brought in some legislative changes that were intended to provide some tax relief to class 4 properties. The trigger for that was a change in the official community plan. So I’m just wondering if the minister could express to this House why there was no consideration of including class 4 properties in this solution that she’s brought forward in the legislation we’re discussing here today.

Hon. S. Robinson: The focus of Bill 10 currently before us, the focus for this bill, is on small businesses in commercial areas that are under a triple-net lease framework, whereas class 4 is major industry, and it wouldn’t apply to that framework.

T. Stone: Moving on to section…. We’re still in section 7 of this bill, but now we’ve got a few questions about the changes that are proposed in this bill, through section 7, to section 13 of the act in question.

Wondering first if the minister could just explain why a permissive exemption model was the model that, ultimately, she and her staff landed on as the preferred solution to addressing this challenge.

[5:15 p.m.]

Hon. S. Robinson: Again, I want to point out that the intergovernmental working group has been incredibly valuable. Certainly, their work has helped really to push forward on how to best proceed for the long term.

Of course, we’re looking at the split assessment. When we realized that we couldn’t work, staff looked at how we can get the same outcome that we want to get with a split assessment but do it in a way that would be more timely. It was based on that that we took some elements of what we heard around the split assessment, going forward, the intended outcomes and the processes that were advocated by the intergovernmental working group. We took from that how to proceed with this interim business property tax relief program.

Again, they’re both enabling, not directive — allowing local governments to choose whether to use the legislation and implement it through an annual bylaw at the local government level, use B.C. Assessment’s existing market value property assessment data to identify those properties most impacted by raising property values, use B.C. Assessment’s market value data to select those specific individual properties that would be eligible for relief and allow local governments to decide whether to forgo the municipal tax revenue or shift the tax revenues to other ratepayers.

These were things that the local governments were looking for, and it was through that lens that we were able to put this interim measure together.

T. Stone: As we have canvassed a little bit here today thus far, one of the main points of concern or frustration that has been expressed by local governments with the approach that is on the table today is that this will create…. This approach, if a local government decided to use it, will require a pretty significant amount of work — new work — on the local government’s end. Many are describing it as a significant administrative burden.

[5:20 p.m.]

Unless the minister can describe otherwise, the process, as it has been described to me by these local government officials, is that this proposal would require them to essentially take a look at thousands of properties in their community, try and determine which ones have triple-net leases in place and then take a look at their property taxes payable in previous years compared to the current year to determine the percentage increase to see if they then qualify for a discount of some amount that would be applied to their property taxes owing. Again, it seems very administratively cumbersome for a local government to be expected or be asked to do that in order to have a shot at putting a tool or a solution on the table that would actually help address the problem that small businesses are facing.

I’m certain she has heard the concern. I’m just wondering if the minister has given that some thought and if she could share with us whether she, too, is concerned that the solution that she’s presenting here today could result in a pretty cumbersome administrative burden for any local government that opts to even look at potentially implementing this to address the challenge that’s in front of them.

Hon. S. Robinson: We recognize that there will certainly be some administration and a fair bit of work on the part of local governments to adopt this bylaw and do the work necessary to provide relief. It’s for that reason that I have to say that we have been working with local governments since pretty much the beginning of the year to help them get ready. We’ve drafted a model bylaw. We’ve done a number of other sort of how-to manuals, I guess we can call them.

We certainly also have B.C. Assessment at the ready. In fact, we are encouraging local governments to work with B.C. Assessment, and they’re committed to provide them with data and analytics to quickly identify those properties subject to the greatest impact on property values and taxes so that they have the data that they need.

They are prepared to run scenarios using the data to quickly narrow the number of potential properties to those that have been most impacted and, at the same time, significantly reduce the administrative review of the leases. B.C. Assessment has already provided this data to several local governments. Again, when we look at the how-tos, the implication component of it, the Vancouver proposal required the same kind of work. Again, this is about understanding that a change in a system requires a fair bit of work.

As a government, we certainly are committed to working together with local governments so that, again, at the end of the day, we get the outcome that we all want, which is to give small businesses and non-profits and arts and culture groups the relief that they’ve been asking for, for well over a decade.

T. Stone: Actually, again, local governments are saying that the split assessment classification solution would not represent the work and the cumbersome administrative burden of the solution the minister is proposing here today, this permissive tax exemption approach.

There is one fundamental difference, though. The work to ensure the success of a split assessment classification proposal would need to be done by B.C. Assessment and by the ministry and the minister and those that are charged with the responsibility for assessment in this province to establish those definitions and establish those protocols. But with the split assessment classification approach, there would be no requirement to go through tens of thousands of properties.

The city of Vancouver, for example, would just decide: “You know what? We’re going to apply this new commercial property subclass that we’re allowed to use as part of split assessment. We’re going to apply that on these designated 22 properties along West Fourth in Vancouver.” There would be no requirement for them to have to go through hundreds, if not thousands, of properties to determine where to apply it. They know where they need to, very surgically and very tactically, apply a subclass to provide a lower tax rate. The contrast to that is the approach that’s being provided for here today in this legislation, which is taking….

[5:25 p.m.]

Instead of there being a bit of preparatory work done by B.C. Assessment in terms of definitions and protocols, this approach here today would require a significant amount of cumbersome administrative work for a local government to have to go through their existing properties to determine where they would even apply a discounted rate. They would have to go through and figure out who has actually got a triple-net lease. They would then have to pull together the data on what the property taxes paid in previous years were to what they’re owing now and what percentage of increase, or discount, they are prepared to apply on those said properties. We’re talking a huge amount of additional work. That’s what local government officials are telling us. That’s what they’re saying publicly.

Again, in light of the fact that the government is not prepared to put split assessment on the table yet…. I want to say “yet” because, hopefully, it’s still being worked on. It is, the minister says, so that’s good.

But in light of the fact that it’s not here yet, there is a significant amount of additional work that local governments will have. So how is the government going to support local governments with that burdensome process and administrative work that they’re going to have to do to apply the tools that are being provided for in the legislation here today?

[5:30 p.m.]

[S. Gibson in the chair.]

Hon. S. Robinson: First off, I want to point out that we’ve been working very closely with municipal government staff in the development of this current bill that we’re going through right now. They, actually, helped to define which data elements were needed in order to use this tool. That includes running scenarios for the properties most impacted.

B.C. Assessment provides data on land values and, in fact, all the data required. They have this thing called computers. It can generate very quickly, for local governments, whatever framework they want to be working in and can give them the data sets that help them with their decision-making process. It doesn’t take very long. We’ve also developed a user guide and a model bylaw to help local governments be as efficient as possible.

I want to also point out that there is no need for a history of property tax information. I’m not quite sure where the member is getting that information. I will say that…. I actually bumped into a city councillor this last weekend who also had some misinformation about what we’re doing here. I think that there are a few folks that are hearing from other folks who are hearing from other folks who are hearing from other folks. Of course, with any broken telephone, information gets lost, in terms of what’s available here.

I look forward to talking about the facts that are in this bill, as we move forward through committee stage, so that we can get people the information that they need to understand that there is support to do this work and that we can give relief to those businesses and non-profits and art and cultural groups that need it most.

T. Stone: Let me just take a step back here. The concerns that I am expressing are concerns that are being articulated quite publicly by local government officials. This is not stuff that I’m just making up.

I acknowledge fully that I have never served on a municipal council. I know the minister has. I have not been a councillor or a mayor. I have been endeavouring to do my homework and to talk to as many folks in local government as possible. The frustrations that I’m expressing through the questions I’m asking are coming from local government officials, not from any other place.

We’ve talked about a lot of what different people have said. Sarah Kirby-Yung, a Vancouver city councillor, said: “This will require, literally, each municipality to go through thousands of different properties and determine who would be eligible.”

Dennis Marsden, who I know the member knows really well, in Coquitlam, a city councillor there, said: “A disappointing outcome of nearly two years of work by a joint task force. The city is told: ‘There’s not enough time to bring in a proper solution.’ So we’re forced to try and implement this dog’s breakfast in less time and with minimal access to information needed to determine qualifications.”

Craig Cameron, a West Van councillor, said: “It would be a nightmare to administer. How does a council decide which businesses deserve help and how much? The basic point is that lessees shouldn’t have to pay for the unused development potential of the property they are leasing.”

The mayor of North Van city, Linda Buchanan, said: “I’m disappointed the province hasn’t delivered a more community-oriented and workable solution.”

These are not my quotes. These are the quotes of local government officials. I could read a whole bunch more into the record.

[5:35 p.m.]

The feeling amongst local governments is that the solution that the minister is proposing will require a heck of a lot of work on their end that would not be necessary with a split assessment approach. We’re going to agree to disagree on that, clearly. We’ve canvassed this pretty thoroughly to this point today.

I will, for the record, cite one example of one city in the Lower Mainland. They have approximately 1,200 class 5 and class 6 properties, and 40 percent of those properties have assessment increases above the average. This city is really concerned. The minister is going to have to do a better job selling this. This municipality is convinced that they’re going to need more staff and a heck of a lot more time to review about 400 of those properties to determine if they’re tenanted or not, if they have triple lease in place or not, and then to go through all these myriad of calculations to determine what level of discount they can offer those affected properties.

That city is saying that that is going to be very cumbersome and very administratively burdensome and could have been avoided if the split assessment approach was on the table. Again, not my words, not my analysis. The analysis of local government.

I’d like to move on. I think where we’ll go next is the added section 14. Again, we’re still in section 7 of the bill. I’m just wondering if the minister could outline what the function is of not entering these exemptions into the assessment role under subsection 2.

For the purposes of clarity, we’re in section 7 of the bill still. This is section 14 of the act that is being potentially amended: “Effect of tax exemption.” My question is: what is the function of not entering these exemptions into the assessment roll under subsection (2)?

[5:40 p.m.]

Hon. S. Robinson: These are not on the assessment roll. They will be in a separate report, similar to the averaging report that’s used for municipal and school property taxation purposes. The reason for it is about the timing, in terms of when these things happen.

T. Stone: Moving on to section 15 of the act to be amended — eligible properties. I’m just wondering if the minister could explain the rationale for the provisions in this bill only being available in the instance of a triple-net lease.

There are a heck of a lot of small business owner-operators out there who would not in any stretch of the imagination suggest that they are super rich or wealthy or whatnot. They perhaps have a building that has been in the family for a number of generations, or they’ve worked really, really hard to acquire that building. The solution that’s presented in this legislation is not available to an owner-operator who is hit by these skyrocketing property taxes.

Similarly, I know of a few situations where an arts or culture organization was bequeathed a building. Out of the grand gesture of someone’s heart, they gave a building to an organization.

I know of another situation of a non-profit. They’re just really, really good at financial management. They have stretched every dollar as far as they possibly could. They have leveraged every dollar that they could. They have managed their money wisely, and concurrent with making very strategic investments in people and services in their community, they’ve also been able to, over a great deal of time, purchase the building that they’re in. Yet this solution that the minister is proposing in this bill would not be available to that particular organization because only tenants that are in a building via a triple-net lease would be eligible for the property tax relief that’s being proposed here.

[5:45 p.m.]

I’m just wondering if the minister could explain why government opted to go with this restrictive approach to when this solution could be used and when it cannot be used.

Hon. S. Robinson: I want to remind the member that the intent of the legislation is to give targeted relief to tenants of commercial properties who aren’t going to benefit from any increase in value but who are still responsible for paying the property taxes under their commercial lease. That’s the focus, but we also do know that some owner-occupiers are feeling the pressure from increases in property taxes. That’s why it’s an important component of moving forward on a permanent fix about how to best address their concerns as well.

T. Stone: Again, there are many examples of owner-operators that have actually had to shut their businesses down because they can’t afford the skyrocketing property taxes. They’ve had to shut their businesses down as a result and, in some cases, actually sell the building altogether. So sure, they enjoy whatever return they may have earned on the sale of the building, but they’re no longer in business, and their first choice was to remain in business.

I think that frustration should have been dealt with in this legislation. Likewise, whether it’s the owner-operator or whether it’s an arts and council group that, just through good financial management, has managed to purchase a building, or a building was bequeathed to an organization like that, they are paying their property taxes. Whether there’s a triple-net lease in place or not, they’re paying their property taxes because they’re the owner of the building, and they’re increasingly finding it challenging to do so.

While the minister is working on a longer-term, more permanent solution, is the minister open to…? If this is the path that she’s intent on going forward with — it appears that that’s the case — is she open to including, through some amendments, the extension of this solution to any organization, not just an organization that happens to be a tenant in the building via a triple-net lease agreement?

Hon. S. Robinson: Well, again, I want to point out that we have lots of consultations still to do. We wanted to move quickly for the 2020 tax year, so there’s certainly lots of consultation to do, including with owner-operators about how to best address those concerns.

But again, I also want to remind the member that there are people who own commercial properties who are going to be benefiting from a significant land lift when they do their development. So we also want to make sure that we recognize that there is a difference between those who are burdened with a triple-net lease who will not see the benefit of a redevelopment and those who will redevelop and as developers will benefit significantly. We should make sure that there’s an understanding and distinction and that they need to be addressed differently.

T. Stone: Well again, I think it’s cold comfort for that arts organization that owns the building, because they worked very, very hard over many, many years, through good financial management to acquire the building. That was not provided for in this piece of legislation. That’s a missed opportunity. Likewise, an organization that had that building bequeathed to them — they’re left out in the cold on this solution.

A small business owner…. A news flash for the minister: small business owners are not speculators. These are hard-working ma-and-pa shops, for the most part, that are just trying to provide a valuable service and a delicious piece of pizza in their neighbourhood and are finding it increasingly difficult to do so because, through hard work and embracing opportunity and taking risks, God forbid, they managed to actually purchase a building that they operate their business within.

[5:50 p.m.]

I just think it’s a tremendous lost opportunity to support those kinds of organizations, those kinds of small businesses. So let’s make sure that there isn’t any losing of the sight of the importance of extending a solution to address the skyrocketing property taxes for those organizations as well.

I would add, as well, to the minister, that if there was no requirement for the triple-net lease component in this legislation, that would actually remove one of the administrative burdens that local governments will have to engage in as they determine who the solution can be applied to and who it cannot be applied to. We would probably see that the use of this tool…. There would potentially be an uptick in the use of this tool if it wasn’t just restricted to triple-net leaseholders.

That being said, I’m just wondering if the minister has considered what the privacy implications could be here. From what I understand, anyway, from all the mayors and councils I’ve talked to, there’s not a normal expectation that is on the books today that a local government would go to a private owner of a building, let alone the tenant of the building, and request a copy of a tenancy agreement, the triple-net agreement. That’s a private commercial arrangement between landlord and tenant. There would seem to me to be some significant privacy concerns. Certainly, that’s been expressed by local governments.

Has the minister considered the privacy implication of requiring the disclosure of triple-net lease terms that, to this point, are reflective of a private commercial relationship? What are the privacy concerns that the minister might have about this provision?

Hon. S. Robinson: Well, first of all, just to respond to the earlier remarks the member made, I want to say that the lost opportunity here is that this work wasn’t done a decade ago. That’s really the lost opportunity. Here we are continuing to do things that cancelled fall sessions could have certainly addressed if there had been an appetite to address the concerns that were raised for ten years. So here we are.

In terms of the member’s query around privacy and what the impacts are, I want to assure the member that the legislation has undergone a complete legislative privacy impact assessment. There are no provisions that relate to privacy access in the proposed legislation. So accordingly, the legislation has been assessed to be in full compliance with all legislative requirements.

I also want to…. It’s important to note that involvement in the program is entirely voluntary, so under the legislation, any small business, non-profit or arts organization targeted for relief would be given the opportunity to provide commercial lease information to local government for review. But again, they can choose to do so or not. Again, it’s on commercial leases. It’s a voluntary sharing of that information so that they can get the relief that they have been asking for.

T. Stone: Well, we certainly know we’re at a point where a minister is frustrated with the line of questioning when there is an immediate reversion, now, to the “16 long years of the former government” and: “You should have solved this ten years ago.”

The cold comfort in those words is that we’re talking about small businesses and arts and culture organizations in communities around the province, but predominantly in the Lower Mainland, that are looking for some help. The minister knows, and everyone around her knows, that this was not an issue of the scale and scope three years ago, five years ago, ten years ago as it is today.

The scope of the challenge is much more significant today than it was previously. The minister has had almost three years to do something about it, and she’s come up with a solution that, by all accounts, is unworkable. Again, those are the words of local government — mayors and councillors and others. So we’ll see if anyone actually tries to implement this cumbersome tool that the minister has put on the table.

[5:55 p.m.]

Whose responsibility is it to provide the lease information in accordance with subsection 1(b)? And what happens if they refuse?

Hon. S. Robinson: I want to get on the record. The member was making a case for those non-profits that have worked really hard to save money or have been gifted a piece of land, and they own it fee simple. The member may not know, given his confession that he doesn’t come from local government, that local governments have the ability to give permissive exemptions. I would urge the member to reach out to those that are particularly burdened and see if they can get a permissive exemption from their local government to ease some of their burden. I hope he does that work.

I also want to point out on the record that the property taxes for commercial properties, certainly in Metro Vancouver, really started to feel the pressure before 2010. The 2010 games seemed to really push things. The biggest spikes were 2015-16. This isn’t…. He’s right. It is not new. We are three years in government, and we’ve been working on this for a year. But I also do want to remind him that there was certainly some opportunity to step in when he was in government.

Relating to the query about whose responsibility it is to provide the triple-net lease information, that is up to the business that is seeking the relief on their property tax burden.

T. Stone: Just wondering about the scenario, you know…. What happens if it’s discovered after the fact that a property was actually incorrectly classified as one that has a triple-net lease in place? What would actually happen with that situation, and who is responsible for doing the auditing of that work?

[6:00 p.m.]

Hon. S. Robinson: If an error were made, it would be a similar remedy as a local government would use for the revitalization tax exemption or the permissive tax exemption, and they would correct it for the following year in their bylaw.

T. Stone: So the audit function, then, is a requirement of the local government in, essentially, following up and determining if there was an inaccurate representation made. Would it be up to the local government to conduct that audit and determine if a change needed to be made, moving forward?

Hon. S. Robinson: It is up to the local government to make sure that they have all the accurate information in order to provide any tax exemption. This would be no different than the other tax exemptions that they currently provide.

T. Stone: Again, another question of a potential scenario. What would happen in a situation where, very clearly, a small business or some other organization is just getting hammered with a property tax increase and needs some relief? The landlord or the owner of the building doesn’t want to disclose the terms of the triple-net lease, but the small business does. How is that adjudicated — presumably, again, at the local level?

Hon. S. Robinson: In this case, the tenant just needs to provide their copy of the lease. That’s sufficient.

T. Stone: Just wondering. We talked about privacy moments ago as well. Was a privacy assessment impact done on this legislation, and did that assessment get final sign-off?

Hon. S. Robinson: Yes, I read that into the record — that it got sign-off, completely.

T. Stone: Tax expert Paul Sullivan stated in the Globe and Mail recently, shortly after this legislation was introduced in the House: “This is pass the buck and leaves little time to make this process meaningful. I would be surprised to see municipalities having adequate time to properly impose such a bylaw.” Given that concern — which, again, echoes the similar concerns that have been expressed by a lot of local governments — just how confident is the minister that local governments will take a look at this tool and determine: “Yeah, maybe it will work for us. We’re going to implement it”?

How confident is she that any local government is actually going to be able to do the work, assess thousands of properties, figure out who’s got triple-net leases, get the details of those triple-net leases, figure out what discount the local government wants to apply to the property taxes otherwise owing, and do all of that within the prescribed time frame?

[6:05 p.m.]

Recognizing that the minister added on not quite a full month but just about an additional month of time for those bylaws to be prepared and passed, how confident is she that any local government is actually going to have the time to utilize this tool?

Hon. S. Robinson: It’s still early, as the legislation hasn’t even yet been passed and put into law, but what I can say is that a lot of good work is being done, certainly by my staff from the ministry. Again, I want to lift my hands up to B.C. Assessment, along with a number of local governments, who have been helping local governments to better understand the tool and how to assist their communities and their small businesses and their organizations in their communities.

I’ve also continued to discuss legislation with elected local officials, some of whom are saying that, yes, they’d like to bring this forward to their councils for discussion and debate, understanding that the choice is, again, to wait for a more robust solution — a comprehensive solution, a permanent solution — or do nothing. There are local governments that say that they are interested in moving forward. They want to make sure that they understand the bill, which again, of course, is not yet law.

There are others that are saying: “You know what? We don’t know that we’ll be able to get it done for 2020, but we’re very interested for 2021.” So they’re already starting to do the work looking forward so that it works for them. We’re going to continue, and they’re committed to working with us to develop a permanent solution to a long-standing problem.

T. Stone: Just moving to section 22 of the act to be amended, the school tax exemptions.

I just want to ask the minister to confirm that this section basically means that the exemptions that would be in place, should the municipality pass their bylaw, would apply to both the municipal taxes and the school taxes otherwise owing on that property. Furthermore, the totalled school tax revenue that would otherwise be charged still has to be forwarded to the province from that class.

Meaning the province has to be whole on its school tax revenue, but there would be a shift of that school tax obligation in terms of the discount applied from, potentially, one property owner that gets the exemption to other property owners in the same class that don’t get the exemption.

Hon. S. Robinson: That’s correct.

T. Stone: So the minister is confirming that the requirement is for the province to remain whole on the school tax that would otherwise be owing.

Again, I come back to my earlier question about the triple-net lease requirements. We can debate about whether or not we agree with this, but there are local governments feeling that there’s going to be a tremendous amount of work to figure this out in the first place to utilize this tool, and then it only applies to triple-net leaseholders. So within that class, you’ve got some tenants that have a triple-net lease that, presumably, theoretically would benefit from the exemption or the discount provided. They see they’re property taxes go down.

But because the school tax obligation must remain whole within the class, in terms of what the province expects, what the province is taking, the net effect of this legislation is to essentially transfer that tax burden, the school tax portion, from one property tax holder who is able to take advantage of this provision to others in the class that aren’t. Am I correct in my assessment of the implications of this solution?

[6:10 p.m.]

Hon. S. Robinson: The member has an accurate reading of the legislation. But again, I want to remind him that right now, what we’re seeing is a handful of properties taking on more than their fair share of the burden. This is an opportunity to redistribute so that it is more fair.

Local governments have the opportunity to make choices around how much they want to shift the burden. They could forego the taxes. They could move their portion within class or between classes. They can do all of that in order to redistribute. This is a redistribution exercise. But with school taxes, it needs to remain within class.

T. Stone: Does the minister believe — recognizing, in her words, that this is a redistribution of tax owing possibly within the class, or between classes — that it’s fair that some of the small businesses impacted, and other organizations impacted, essentially have their hands tied behind their backs in not being eligible for relief? It’s because they don’t have a triple-net lease agreement in place, whereas those that do are able to benefit from this solution that’s being proposed.

Does the minister think that that’s fair to those small businesses that aren’t going to see any relief anytime soon?

Hon. S. Robinson: I want to, for the record, point out that those who are impacted the most by OCP changes and zoning changes and market influences that come with that are the people we have heard the most from, who are most burdened by these changes, who won’t see any benefit of a land value lift that comes with these changes.

Also, there is another group, those with a gross lease. They’re on a fixed rate, so again, they’re not going to be impacted in the same way that those on a triple-net lease framework are impacted.

T. Stone: Last question on this section, and then we’re nearing the end, I assure the minister.

I’m just wondering. Does the requirement for triple-net leases need to be arm’s-length — these agreements? It’s often practice where someone will own a building, and then they will have a separate operating company that is a tenant in the building, and there’s a movement, all legal and whatnot.

[6:15 p.m.]

But through tax treatments and whatnot, there is money that moves back and forth. It’s the same owners, the same shareholders. Does that triple-net lease agreement need to be arm’s-length?

Hon. S. Robinson: It’s a good question. It’s not part of this existing framework, but it’s an example of the kinds of questions that we need to be asking around the long-term, permanent solution.

Sections 7 to 10 inclusive approved.

On section 11.

T. Stone: Section 11 here involves nuisances. So I’m just wondering if the minister can outline the purposes of this section and what problems it is intending to correct.

Hon. S. Robinson: Examples are dangers to public health and safety, and noise.

Section 11 approved.

On section 12.

T. Stone: Can the minister outline what guidelines are there for defining “urgent circumstances”? What are the guidelines that would be in place for defining urgent circumstances, as it pertains to this section?

Hon. S. Robinson: I can provide an example to the member. In 2016, a breached aquifer created unsafe conditions in Vancouver, and the property owner would not take the required remedial action to stop the water flow. So Vancouver declared the breached aquifer a nuisance but had to wait 60 days before it could enter the property to perform the required remedial work. And Vancouver could have addressed this public safety issue in a timely manner had the time frame for remedial action requirements been shorter.

Sections 12 and 13 approved.

On section 14.

T. Stone: To the minister, are latecomer charges consistent with the Community Charter?

Hon. S. Robinson: Yes, they’re exactly the same.

T. Stone: What happens if there’s a significant disagreement about the calculation of latecomer charges?

[6:20 p.m.]

Hon. S. Robinson: There is a best practice for former agreements that’s drawn up in all cases to allow both sides to identify and fully understand the various administrative obligations that each has with respect to the collection, disbursements of money.

T. Stone: I will mention to the minister that this is my last question on the bill, and then we’ll be done. I’ll take the opportunity to thank the minister and her staff — from all the different facets of what she’s responsible for — that have come into play in this bill. I want to thank everybody for their hard work.

My last question is this. If a project proponent pays the cost of extended services under this section, is there a means for them to avoid the interest charge, or are they simply out of pocket on the interest collected on any such charge?

Hon. S. Robinson: “A latecomer charge must include interest calculated annually at a rate established by bylaw, payable for the period beginning when the excess or extended services were completed, up to the date that the connection is made or the use begins.”

Sections 14 and 15 approved.

Title approved.

Hon. S. Robinson: I move that the committee rise and report the bill complete without amendment, and I thank my staff.

Motion approved.

The committee rose at 6:22 p.m.

The House resumed; Mr. Speaker in the chair.

Report and
Third Reading of Bills

BILL 10 — MUNICIPAL AFFAIRS AND
HOUSING STATUTES AMENDMENT ACT, 2020

Bill 10, Municipal Affairs and Housing Statutes Amendment Act, 2020, reported complete without amendment, read a third time and passed.

Committee of Supply (Section A), having reported progress, was granted leave to sit again.

Hon. M. Farnworth moved adjournment of the House.

Motion approved.

Mr. Speaker: This House stands adjourned till 10 a.m. tomorrow morning.

The House adjourned at 6:24 p.m.