The DMA Way

BC Industrial and Commercial Construction - Tax Exemption Programs

by DMA Staff | Apr 17, 2017

If you own industrial or commercial property in BC and are in the planning process of a new addition or new site development then there are some tax incentives you should be aware of. The BC Community Charter has created a tool for municipalities to offer tax incentives for properties that can help achieve a range of environmental, economic, or social objectives. This is called a Revitalization Tax Exemption.

Why is this important and what do you need to know?

There is a primer document for the Community Charter to help explain what this exemption entails, but let us outline some key aspects to see how it can help you.

Revitalization Tax Exemptions are a tool that Councils may use to encourage various types of revitalization in their community. For a Council to use this authority, it must establish a revitalization program through a bylaw. The bylaw would define the reasons for and objectives of the program which would be entered into with property owners. The agreement would outline the conditions that need to be met in order to reduce or remove the application of municipal taxes on land, improvements, or both.  Bill 35 – 2007 Miscellaneous Statues Amendment Act provided numerous changes to the charter, which opened up the ability for Councils to make better and more specific use of this incentive. 

What types of incentives can the Council use this for?

A Council can use this tool in various ways such as encouraging “green” building technology, conservation of heritage property, encouraging investment and employment, or a whole list of other possibilities. The main focus we want to discuss is economic revitalization by the means of encouraging investment and employment. For example, if a local saw mill was expanding their site with a power generation facility, the local Council could partially exempt the new addition from taxes for a set number of years to encourage that investment to create new jobs. Similarly, they could also do the same for new commercial buildings creating new jobs in a community. Another scenario is a local mine could be partially exempt from disproportionately high industrial taxes to support reinvestment in the community and help to retain jobs. 

Why does this need to be considered early on in the process of planning your addition or new build?

There are requirements that the Council must meet in order to create this agreement. First off, you need to discuss what incentive you are looking to receive and how it will have a revitalizing effect in the community. The Council must establish a revitalized tax exemption program through a bylaw that outlines the reason and objective of how this program will meet these objectives, what kinds or properties or specific property it will be applying to, the term of the exemption, and what it will entail.  No two revitalization program bylaws need to be the same, nor does there need to be only one in a municipality. It can be different for various areas, property classes, improvements, or activities. 

One of the most important changes from Bill 35 affecting these bylaws is that it took out the requirement to designate an area to provide the revitalization tax exemptions to and broadened the tool in a number of ways. By removing the requirement to apply to a designated area, this allows the Council to be much more flexible in order to meet any type of revitalization need. This was an important change as prior to Bill 35 a Council could not create a program that would apply to a single project and had to apply to a broader range. The reason this change can be useful in new construction is the program does not have to apply to the whole site or tax class and can be created to focus on the addition or the new sites for benefits to the area. The council would outline any activities that need to be met, and then the agreement can go through the prior vetting requirements prior to implementation.

What sort of activities are required to discuss this exemption?

Under the legislation, a Council could choose to utilize this tool based on a certain activity or requirement from the property it would apply to. In each instance this would be different, but there has been one to include a requirement to remediate a brownfield site prior to the program taking effect.  There also may not be any activity required as the revitalization the site is creating is a direct effect to the economic objective, such as job creation or job retention in the area.

The legislation in the Community Charter has created a tool for Councils to use in order to help their town/municipality continue to grow by offering exemptions in certain cases.  The beneficial aspect of this for more rural properties is helping create jobs or providing a company the ability to continue to operate without the burden of disproportionately high tax rates to retain those jobs in the area. If your company is pursuing a project that could provide a benefit to a community then the Revitalization Tax Exemption is defiantly worth a read and a discussion with your local Council. 

Please do not hesitate to contact your local DMA office should you have specific questions or requests.