With a municipal tax increase of 9.46 per cent approved earlier at the regular meeting of Yorkton Council, the focus changed to look at tax policy and mill rates.
“The 2017 tax policy began with receiving the new values of every property within the City of Yorkton,” explained Shannon Bell, director of finance with the City.
The current year is a re-evaluation year in which all property assessments are updated for market data as at January 1, 2015.
“Through our budgeting process we have determined that the 2017 taxation revenue needs to be increased by 9.46 per cent. So with all things being equal we would just add 9.46 per cent to the new re-evaluation rates calculated above,” said Bell.
“However, all things were not equal in this re-evaluation. We saw the commercial assessments increase dramatically in comparison to the other classifications. Historically Yorkton has been known for a higher commercial to residential ratio.”
The city received more residential taxable assessment than commercial, explained Bell.
“This will allow us to increase the residential tax rates to a manageable level while also bringing the commercial to residential ratio more into the middle range as compared to the other Cities in Saskatchewan,” she said.
Bell said there were also other considerations addressed in formalizing the 2017 tax policy and mill rates.
That process included a look at the base tax and Gallagher Centre Levy.
“After our analysis was completed it was determined that leaving the base tax and Gallagher Centre levy within the commercial tax rates was most beneficial to the commercial sector. This is due to the minimal number of properties within this sector. All properties are still contributing to both the base tax and the Gallagher Centre levy; however the commercial properties will not see a specific line item on the tax notice,” said Bell.
Next was a look at the taxation on vacant land in the city.
“We had suggested to Council that we should be charging vacant land owners more so that there is more incentive to build on the land and therefore be able to levy more taxes to the property with a building on it,” said Bell.
“Council was receptive to this philosophy and even suggested to have a tiered taxation system with a base tax implemented. As our assessment numbers were late this year we did not have the opportunity to do a complete analysis on the vacant land.
“For this year we are suggesting that we increase the vacant land rate to two times the commercial taxation rate. We believe that this would be an incentive to improve the property instead of just holding on to it for speculation. We were looking at separating the “in use” and the “developable” vacant land; however time constraints are not allowing us to do a complete comprehensive review of what is in use and what is developable. We are taking the stand point that all vacant land is developable or saleable. If the owner intends to keep the vacant land they can amalgamate it with their improved property.
“By increasing the tax rate on the vacant land properties we 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, cost the same for a vacant property as they do for a property that has a building on it, therefore vacant land should be contributing to these expenses more.
“Secondly, the City of Yorkton would like to see property owners develop on these vacant lots as this will stimulate growth within the City.”
Bell said they also looked at the sub classifications for commercial properties.
“We have been working on setting up multiple sub-classifications for the commercial sector. As previously explained the main purposes for this would be in the event of taxation losses to a specific commercial sector. Depending upon appeal losses, future year tax policy could see the sector that caused the loss to pay for the loss and not the entire commercial sector or City. Even though we are setting up multiple sub-classifications we are not suggesting multiple commercial rates (other than the halls and malls that are already separate rates),” she explained.
“During this analysis we discover that commercial warehouse’s and industrial properties experienced excessively large increases in their taxable assessments. We believe that there should be separate tax rates for these two classifications. We are recommending that the commercial warehouses tax rate be set at 75 per cent of the commercial rate and the industrial tax rate be set at 85 per cent of the commercial rate.”
And finally there was a review of tax dollars collected from residential properties versus commercial properties.
“Historically the City of Yorkton has generated 52 per cent of its taxation revenue from the residential sector and 48 per cent from the commercial sector. This year we are recommending that 54 per cent of the taxation revenue come from the residential sector and 46 per cent comes from the commercial sector. This is due to the commercial taxable assessments being larger than the residential taxable assessments. This will allow for a more balanced approach to taxation within the entire City,” said Bell.
In the past the City of Yorkton has been criticized for our higher commercial to residential ratio, admitted Bell.
“The City of Yorkton, historically, has been one of the higher ratios, meaning commercial property owners pay at a higher rate in relation to the residential property owners,” she said.
“In 2016 our ratio was 2.93 times. This means that the commercial properties paid 2.93 times what the residential properties paid.
“By generating more revenue from the residential sector we can lessen the gap between commercial and residential.
“In 2017, with the current rates proposed, we see the commercial to residential ratio decrease to 2.37 times. This is a substantial decrease. For comparison the ratio in 2015 was 2.82 times, went to 2.93 times in 2016 and is being proposed here at 2.37 times.”
So what does all the policy translate to for taxpayers?
For a multi-unit residential building of four to seven units, and a value of approximately $125,000, the tax increase will be $421.
A residential property valued at $196,000 will see taxes climb $279.
And, a general commercial property valued at $16 million will climb approximately $118,837.
