Nanaimo city council is reviewing its permissive tax exemption policy, a move that will determine if financial need for not-for-profit organizations will remain as evaluation criteria.
Eliminating the practice of providing cash grants for property taxes in the year before a PTE comes into effect, except in unusual circumstances, is also being considered.
Coun. Diana Johnstone, chairwoman of the grants advisory committee, which made the recommendation to council, said the committee has undergone more than 30 hours of discussion to provide recommendations to city council, which has the final say in approving policy guidelines.
“It’s a difficult subject and it incited a lot of conversation within council and I wanted it to,” said Johnstone. “We’re managing the taxpayers’ purse and we need to update who we give exemptions to and who we deny and how do we balance the quality of life and the goodwill of volunteers.”
Johnstone said the financial need aspect of the policy needed to be addressed because it has been inconsistent in the past.
“As our community grows, there is going to be more and more not-for-profits that are going to request this exemption,” she said. “We’re already getting eight to 10 more applications every year.”
Major reviews of permissive tax exemptions are scheduled every three years.
Permissive tax exemptions are provided to not-for-profit organizations that provide community services, often using volunteers.
The committee is also seeking direction from council on whether to continue providing tax exemptions to organizations that primarily provide services to businesses and services that are also available from the private sector.
Johnstone said the committee was unanimous in its support for organizations that apply for PTEs and that it recognizes those organizations are providing “valuable services to members of our community at low cost and with very few resources.”
On the other hand, according to a report from the committee, these same organizations also receive municipal services, and if they don’t pay for them, the cost is carried by the general taxpayer.
Johnstone said the financial need aspect remains tricky and will have to be decided upon, if approved, on a case-by-case basis.
“On occasion we meet with an organization and see that they’ve got quite a bit of money in the bank,” she said. “But quite often they’re saving money to move into new headquarters so their financial statements aren’t always what it seems and we have to consider that.”
For some organizations currently receiving PTEs, paying property taxes would not be a hardship, said the report.
Categories that might see some policy changes include recreation, such as properties owned by the Nature Trust of British Columbia, private schools, and groups such as community services, community associations and arts and culture associations.
Criteria including churches, public hospitals, senior citizens’ housing and community care facilities are expected to remain the same.
Council is expected to make a decision on a new grants policy and guidelines sometime in September.