There is a loophole enabling developers not to pay the full cost of property tax on undeveloped property in Vancouver. A developer can purchase a piece of land in the city and instead of immediately establishing a timetable for development can leave the land fallow for temporary community gardens or parks. As Dan Fumano in this article dryly observes, the taxation on these temporary developer owned community gardens have been a “perennial” issue.
This loophole has been flying below the radar for quite some time. In 2017 Kerry Gold in BCBusiness noted that 15 properties were converted from class 6, or commercial, to class 8—community garden or public park use. While developers cite the high value of holding land and the length of time it takes to get development permits as reasons to allow the low tax rate for community gardens, Simon Fraser University’s Duke of Data Andy Yan has another take.
“We are rewarding land hoarding and subsidizing it through these community gardens. We are losing tax money to subsidize this thing that looks good—and all we’re getting in return are really expensive taxpayer-subsidized tomatoes. They are the most expensive tomatoes in North America.”
Today there are over 28 development properties that have been reclassified as community gardens and parks that total $525 million of real estate. Those properties pay about one third the property tax, with reductions from around $9.33 per thousand of assessed value becoming $3.86 per thousand of assessed value. Looking at only five development sites that had been reclassified as temporary community parks or gardens, City staff estimated that taxation collected was $650,100 less. Of course that unpaid tax money is shouldered by other taxpayers in the City. On the 28 properties temporarily classified this year for park or garden uses, developers will save “a combined total of 2.88 million dollars on their property taxes.”
While development pundits argue that this developable land should not be required to pay the full assessed value of the land, should developers be able to leave the land to a lower use to save money? Or would a policy of requiring developers to pay the full tax assessed land value ensure that land is developed more hastily for much needed housing? You can read Dan Fumano’s full story here.
The hell with tomatoes! At Cardero and W. Hastings, where the entire block has been assembled for residential towers, the parking lot at the east end was simply covered with gravel, surrounded by a chain link fence, and signed as a Community Dog Park! I’m there about once a week, and have yet to see a dog (or human) using the “park.”
I’ve not researched whether this choice bit of creative development has received a property tax reduction, but I’m willing to bet my lunch nearby that it has.
At a time when many busienesses are struggling due to skyrocketing triple net leases caused by rezoning, this program is a travesty. Why are developers singled out as deserving of help that others can’t access? At the very least there should be a five year window for this.
Obviously developers do this because there is a financial benefit. They may say that they do it for the good of the community, but the move would not be nearly as popular as it is with developers if they did not receive a tax break.
The question is: is the benefit to the community worth the tax subsidy. I would guess that it is. For the city to create the equivalent amount of community gardens on city lands would surely cost taxpayers much more.
The same method has been used to free up development land for temporary modular housing projects for the homeless.
Dan Fumano quotes Ellen Woodsworth as saying that it is an “enormous” tax break. And he goes on to say that it there were five development parcels converted from residential to recreational between 2007 and 2009, then valued at $88 Million, and now there are 28 properties classed so, and the value has increased to $525 million.
It sounds like a lot. But what is this area of land as a proportion of all the commercially zoned land in Vancouver? And what is the value of this land as a proportion of all the commercially zoned land in Vancouver?
My guess is that in both instances, it is minuscule. A big community benefit for a miniscule tax subsidy.
If the city of Vancouver really wants to obtain this community benefit without relying on the provincial tax assessment system to do so, then they should be transparent about it, and offer the subsidy from general tax revenue budget directly, rather than by cross-subsidy.
Any benefit is outweighed by the hit to affordbale housing. Instead of landbanking, a developer would be far more likely to bring projects to market if they were paying the full tax rate for a vacant lot. Why is a community garden at Oak and 16th still there decades after the apartment building was torn down?