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Council claws back exemptions

Food bank among groups losing preferred tax status

Places of worship in Penticton don’t have to worry about their tax exemption from the city for the next three years, thanks to changes approved by city council Monday evening.

But a half-dozen community groups, some of which were previously on the tax-exempt list, including the Salvation Army Food Bank, didn’t make the cut this year.

Council will vote whether or not to adopt the tax exemption list as is, or with modifications, at their next meeting at 6 p.m. on Oct. 21.

Mayor Garry Litke said the city is being generous in the tax exemptions, but the tax breaks aren’t guaranteed to be there forever.

“Not only should we be warning that there could, at some point, be a reduction of that generosity, but in the meantime (they should) celebrate how generous this city actually is,” said Litke.

“The receivers of this shouldn’t take it as a given or as a right, it is actually a gift from the city to them.”

Including churches, council has a list of municipal tax exemptions totalling $392,855 for a variety of community groups and non-profit organizations, ranging from the SS Sicamous Restoration Society to the Royal Canadian Legion.

Churches won’t have to reapply for three years — all that is required to maintain their tax exempt status is that someone from the church visits city hall annually to sign a declaration that conditions haven’t changed, and they are still operating as a church.

Coun. Helena Konanz was surprised at some of the groups on the list to be denied tax exemption.

“Their working capital is excessive, over $100,000,” said Deb Clipperton, acting revenue supervisor, confirming that the South Okanagan Brain Injury Society, the Salvation Army’s food bank and thrift stores, along with the Senior’s Drop-in Centre had all been in last year’s approved group.

In 2009, council introduced a new policy to reduce tax exemptions for non-profit organizations with over $50,000 working capital, but ended up backing away from it after the controversial policy drew public concern.

Council also rescinded a similar decision in 2011 after 10 organizations appealed.

Though an additional $15,000 in taxes would make a big difference in their charitable work, Major Dave Sobool of the Salvation Army wasn’t shocked by the denial of their exemption request, and expects the group will appeal.

“Exactly how we are going to approach that, I am going to have to contact our divisional headquarters,” he said. “It’s not an abnormal thing to happen in this world, cities have been doing that all over the place.”

Konanz questioned the arbitrary cut-off, pointing out that even nonprofits need to have working capital. Coun. John Vassilaki took the opposite tack, agreeing with Litke and suggesting Penticton has a higher tax-exempt roll than other Okanagan cities.

“We are probably double or triple of what Kelowna gives out,” said Vassilaki. “We should prepare these folks for the shock that might come or might not come a year or two down the road.”

However, City of Kelowna budgets show $4 million in tax exemptions scheduled for 2014, about 3.9 per cent of the $103.7 million they collected in municipal taxes last year. By comparison, Penticton’s $392,855 is about 1.5 per cent of the city’s $25.92 million 2013 tax roll.

“I think this is a partnership that is an investment in social issues. In that regard, I know these churches all have programs for families in need, families in crisis. They help in numerous ways,” said Coun. Judy Sentes. “While it is an enormous dollar amount we gift, I think the community recognizes there is a huge partnership that gives back to those that are in need.”

Council voted unanimously to endorse the staff recommendations as is, though Coun. Andrew Jakubeit pointed out the organizations that were denied have to lodge their appeal soon.

“They still have our next meeting to ask for reconsideration, because by Oct. 31, we have to send in these exemptions. If they came to us in November, we couldn’t grant them exemption,” said Jakubeit.