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Council restores tax exemptions

City reverses course on decision that would tax 10 community organizations

Taxing non-profits shifted into reverse Monday, as Penticton council backtracked on a decision that would drive 10 organizations to pay 2012 property taxes — although one suspects it won’t be the last time the city heads down this road.

Council rescinded third reading of the permissive tax exemptions bylaw passed in mid-September and amended the budget to cover the $238,986.39 in approximate assessments to 10 organizations.

Penticton and District Society for Community Living executive director Tony Laing said he was “relieved” over council’s decision, as his group had received a tax notice for $57,000 from the city, which would have meant cuts to services and programs.

“In 40 years, I haven’t had to pay taxes here on my property at 180 Industrial,” he said, adding that renegotiating tax increases into his contracts with provincial giants like Interior Health and B.C. Housing won’t get far. “I’m in negotiations where they’re questioning $300. I have a $50,000 a month budget, and I’m getting questions of $300 a year. That’s how tight our negotiations are.”

The relief is tempered with frustration over the exercise, he said, and knowing that the issue is bound to resurface.

“I expect that we’ll be going down this road next year, every year, from now on,” Laing said, adding that he is already planning a comprehensive application for next summer that details for city staff the financial demands on his organization in addition to the implications of charging taxes.

“There needs to be a lot more detailed discussion with individual groups rather than having a global policy,” he said. “For us and the city, it’s an exercise in futility. There’s no political will to do this.”

Each year, municipalities can exempt land or improvements from taxation. City policy gives first priority to groups showing a working capital of $100,000 or less, and other organizations can be approved if they demonstrate financial need. All told, 25 applications were denied in September.

Ten appeals, however, came to the city as a result, many from high-profile non-profit organizations in the community: The Army Navy Air Force Veterans, the Salvation Army, the Penticton and District Community Resources Society, the B.C. SPCA, the Penticton Golf Club, Penticton Seniors Drop-In Centre Society, Penticton and District Society for Community Living, Penticton and Wine Country Chamber of Commerce, VQA Wine Information Centre and South Okanagan Similkameen Brain Injury Society.

Angela Campbell, city revenue supervisor, said Monday that the first change to be made was to include the Salvation Army, which had been “mistakenly” left out. The total levied to the Salvation Army governing council was approximated at $5,235.57.

The remaining organizations could alternately be afforded a 25 to 90 per cent allowable exemption, according to the report.

“Part of the problem is that they do not let us know what these funds are going to,” Coun. John Vassilaki said, adding he feels assured the balance is meant to cover the non-profits’ payments.

Campbell said that she did consider organizations that provided statements with caveats that stipulated what contractual obligations were to be paid.

“These are organizations where grants come and go,” Mayor Dan Ashton said, adding that charging organizations tax when they’re about to meet contractual obligations unduly penalizes them.

Ashton said the city has “to be a little more forthcoming” in dealing with organizations, to ensure decisions are communicated clearly and the requirements for tax exemptions are made clear.

“Times are very tough and are very tough right now, and without these organizations, it would be worse. I’m having great misgivings with this at this point in time,” he said, noting in future he’d like to see staff “working in solidarity with these agencies to make it more palatable” to go through the process.

The vote was not unanimous, however, with councillors Mike Pearce and Andrew Jakubeit voting against the motion.

Jakubeit said Tuesday given other Okanagan municipalities don’t offer permissive tax exemptions, he would have preferred to share a portion of the tax burden with non-profits.

“I kind of thought we could have staggered it a bit and given them a 90 per cent exemption. That 10 per cent wouldn’t have been a burden,” he said. “Some of these business operations fund the good work that they do. It’s a delicate question.”

Pearce said Tuesday he was hoping for a compromise in the range of 25 per cent.

“There isn’t a group in the world that isn’t meritorious, and I recognize that,” he said, adding that Kelowna gives less in terms of tax exemptions. “The issue becomes how much the general taxpayer has to give up to these groups.”

Laing, however, said the city shouldn’t compare itself to other communities.

“Two wrongs don’t make a right. Just because the other cities are putting the squeeze on the non-profits, doesn’t mean Penticton should,” he said, adding that budget shortfalls can’t be made up from a half-dozen organizations in town.