The City of Penticton has entered into revitalization tax exemption agreements with 12 local property owners due to obligations from a program implemented in 2010.
The economic investment zone (EIZ) program was adopted nine years ago to provide economic incentives for specified uses in key areas within the city, specifically the downtown, industrial zones and waterfront areas. Since the program began, 53 projects totalling $93 million in construction value have been undertaken, with the current 12 projects accounting for $26 million of that.
The EIZ program is finished and nomore projects can apply, but some members of the current city council feel that the program should not have extended this long. The exemptions provided account for about $4 million from the 52 projects, which Coun. Frank Regher said does not account for tax increases throughout the years, and that “close to 75 per cent of the projects were being undertaken in the last 26 months, which was the building boom period for Penticton and for the province.”
READ MORE: Tensions flare at Penticton city council over tax exemption bylaw extension
According to a report from staff, all 12 projects met the eligibility for tax exemption benefits under the program beginning in the 2020 tax year, except one that will be required to be completed before June 2020 to qualify for the 2021 tax year. Blake Laven, planning manager with the city, clarified that these projects would still be subjected to taxation by the city “as if the land were vacant” and all taxes collected on behalf of other agencies, such as the hospital.
“I think I have made my position well-known on the issue of this bylaw. I have difficulty with it and want to express my concerns again. A $2.5 million project needs a $32,000 tax exemption? That’s not the way things worked in the past and that’s why taxes were taken from properties and buildings, etc., to support the cost of local government, and now we’re giving that money away,” said Coun. Jake Kimberley.
“It’s been given away in a time when the economy is booming and things were happening. And I have said many times over that no developer would invest if the economy was not good, they would never get into it no matter what tax exemptions they had. And there are properties that have been approved under this program that are now very successful, and I saw no reason that there was reason enough to do it.”
Mayor John Vassilaki said he would not have been in favour of the extension of the program, which was passed by council in 2017, but that it had “no bearing on the issue at present” so he supported the current agreements.
Coun. Katie Robinson also supported the current agreements but said it’s amazing how clear things are in hindsight.
“We’re here arguing about events in the past when this council wasn’t even in power. We have no jurisdiction over that period, so I say let’s get on with it,” said Coun. Julius Bloomfield.
“I don’t know what the legal position would be if we voted this down. These projects were entered into on the understanding that this would happen. And yes there may be businesses that are doing very well that were built under this program, but there are also businesses not doing that well. And these ones that are doing well are brand new businesses, they didn’t know if they were going to be successful or not. That speculation is what the EIZ was all about, bringing the speculative dollars into the downtown core where there was a significant risk to the investors.”
“I’d like to express my concern that we are continually drawn back into the discussion about matters that have been decided on, and that’s not part of what the motions in front of us today are,” said Coun. Judy Sentes.
“I’d like us to stay focused on the motions at hand and not comment on what happened prior.”
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