Mill rates set for 2018

City Council set its mill rates for 2018 at its regular meeting on Monday, Apr. 23.

The budget that was approved Feb. 20 required a 4.55 per cent tax increase, reminded Fred Schrader, Assistant Director of Finance with the City.

“During the two strategic planning sessions held Mar. 26 and Apr. 16, various taxation philosophies were presented by Administration, including transferring some of the tax burden from Commercial to Residential. At the Strategic Planning Session it was decided each sector would have the same tax increase,” he said.

Among the changes will be an increase in the base tax.

With the 2018 budget approval of a 4.55 per cent taxation increase, Administration recommended that the Fire and Police Base Tax increase from $735.00 to $770.00 for 2018, which represents an approximate increase of 4.55 per cent. The Fire and Police Base Tax is only applied to Residential Class properties. For Commercial Class properties, protective services are incorporated in the Commercial Tax Rate, explained Schrader.

The tax rate on vacant commercial land will decline with the new rates.

“In 2017 the process of applying a vacant land tax rate of two times more than the Commercial taxation rate was implemented. The objective of this policy was to motivate owners to improve the property instead of just holding on to it for speculation. After further analysis and review of this policy, Administration would recommend the reduction of the Commercial Vacant Land rate to 1.5 times the Commercial rate from 2.0 times the Commercial rate. The rationale for the reduction is that Commercial Vacant lands are typically large parcels of land that have long construction periods and limited end user market base. Residential vacant land rates are to remain at two times the Commercial taxation rate since these properties are smaller parcels with shorter construction periods and normally more end user market base,” detailed material circulated at Council.

“By implementing the revised commercial tax rate on the vacant land properties, Administration will achieve two key goals. The first being that these properties will now be paying a more reasonable share of the expenses incurred adjacent to the property. The basic services such a street lights, snow removal, sidewalks, curbs and gutters, etc. cost the same for a vacant property as they do for a property that has a building on it, and therefore vacant land should be fairly contributing to these expenses. Secondly, the City of Yorkton believes this tax rate will encourage property owners to develop on these vacant lots to stimulate growth within the City.”

In addition there will be a new sub-classification for commercial properties.

Administration has been working on setting up multiple sub-classifications for the commercial sector, explained Schrader, adding Administration is proposing a new sub-classification for Large Commercial.

“Large Commercial and Industrial would be defined as a large stand-alone establishments. These types of buildings tend to lack in architectural design and are designed more to suit the business functionality rather than aesthetic appeal. They are typically large open shells with some partitioning for offices and storage areas. These buildings have a minimum assessment of $5,000,000 and a minimum building size of 50,000 square feet.

During this analysis, it was discovered that properties categorized as Large Commercial have a limited market which is reflected in the properties assessment due to the large area of the building. The establishment of the new commercial sub-classification proposed tax rate increase will offset reductions within the commercial sector, namely the reduction in the Commercial Vacant Land rate and the Phase-in of commercial for the those properties that experienced more than a 70 per cent tax increase from 2016 to 2017. The Commercial Phase-in will be discussed later in this report,” detailed the circulated material.

Overall, due to the loss of commercial assessment the percentage of taxes paid by commercial sector decreased to 44 per cent for 2018 from 47 per cent in 2017, said Schrader.

“The loss in commercial assessment was twenty-million ($20,000,000.00) dollars in taxable commercial assessment. This loss was due largely to appeals in assessment.

The City of Yorkton has traditionally had higher commercial to residential ratios than those calculated amongst other cities in provincially and nationally. This means commercial property owners pay a higher rate than residential property owners. The twenty-million dollar reduction in commercial assessment worsens this ratio.”

In some cases, commercial properties will have the tax increases phased in.

Administration has analyzed the Commercial sector business that had significant tax increases in 2017 and would like to propose a two year Commercial Phase-in on Commercial properties that experienced a large municipal tax increase, explained Schrader.

The parameters established for those properties to be included in the phase-in are:
*Minimum Municipal Tax Levy of $2,000.00 and greater.
*Municipal Tax Levy increase 75 per cent and greater.

Forty-two properties would be eligible for the Commercial Phase-in.

The Phase-in would have a reduction of the increased amount only (2017 over 2016) of which a bylaw would be proposed for:
*A 50 per cent reduction in the Municipal Tax Levy in 2018 for the increased amount only, not the entire Tax Levy.
*A 25 per cent reduction in the Municipal Tax Levy in 2019 for the increased amount only, not the entire Tax Levy.
*No reduction in the Municipal Tax Levy in 2020.

The impact to the City’s Municipal Tax levy for 2018 would be a reduction of approximately $70,000.00. This loss of levy would indirectly be offset by the establishment of a new sub-class and the policy established for this sub-class, explained Schrader.

In terms of residential properties, Schrader said on average the tax increase is modest when looked at monthly.

The average value of a residential property for the City of Yorkton is $248,000.00 and based on the average value of a residence in Yorkton the total annual Municipal Tax for 2018 is $1907.63 per year or $158.97 per month. In comparison to 2017, the total annual Municipal Tax was $1,827.00 or $152.25 per month. The average residence increase is $6.72 per month, he explained.

Administration intends to send out tax notices before the end of May 2018 with a payment due date of June 30, 2018 to avoid any penalties. At this meeting, Council was able to all three readings to the bylaw as presented.

The motion to accept the mill rates was passed with only Councillor Ken Chyz opposed.