Administration has in the past modelled for City Council the impacts that would result from a collapse of the optional classes. When done for the purposes of lowering the tax burden of one or more class(es) Administration has consistently recommended against this course of action due to significant and immediate impacts within the main class. It is likely that Ministerial consent would also be withheld given the very significant shifts. Alternatively, should Council want to provide tax relief to one or more tax class(es) it could be done by way of the tax ratio movement which can be completed over a period of time and therefore lessens the tax shifting impacts. Ministerial consent in this case will still need to be received however can be supported by way of a business case.

In past years, Administration has modelled the impact of both a full collapse and moderate tax ratio movement with regards to optional classes. As of 2017, there is no longer a different rate applied to the optional classes of shopping centre and office building.

Approval for the continued use of the optional classes is required on an annual basis.

THAT the use of Optional Tax Classes of office building, shopping center, parking lot/vacant land, and large industrial CONTINUE to be used in the establishment of annual property tax rates.

Tax Reductions for Certain Sub-Classes of Property

There are two situations in which City Council has, in the past, provided direction in terms of tax reductions. Confirmation as to those reductions is required on an annual basis.

1. Farmland Awaiting Development (FAD)

Farmland property, used for farming operations, is taxes at a rate that is 25% of the residential rate (i.e. a 75% discount is applied). Properties in this noted category recognize that farming operations no longer exist however attract a discount factor to take into consideration that development has not yet occurred. There are two subclasses of farmland awaiting development; those that have a registered plan in place and those that have development occurring but not complete.

Municipalities are required annually to establish a discount rate for the tax treatment of each sub-class. For the first subclass, where a registered plan in place, City Council has previously adopted a discount rate of 65%. This effectively reduces the tax rate for this class to 35% of the residential class rate.

For the second sub-class, where building permits have been registered against the property and development may be in progress in various stages, City Council has previously adopted a discount of 30%. This effectively reduces the occupied tax rate of a property in any class to 70% of the tax rate that would otherwise apply.