The City of Revelstoke wants to develop a revitalization tax exemption policy and bylaw that will give tax breaks to businesses that build new buildings or renovate existing ones.
The proposal was prompted by an Oct. 22 request to council from Mt. Begbie Brewing Co. president Bart Larson, who said building a new $2-million brewery in Revelstoke wouldn’t be possible because of Revelstoke’s high light-industrial taxation rate.
A Nov. 18 staff report prepared by finance director Graham Inglis explains that provincial legislation allows for revitalization tax credits.
RELATED STORY: Mt. Begbie Brewing wants tax break to build new $2-million brewery
The credits allow the city to exempt their portion of property taxes for a set period, usually ranging between a few years to a maximum of 10 years. The provincial rules were originally targeted at district revitalization, but the rules have been changed to allow for case-by-case renovations on an opt-in basis.
Inglis presented the idea in a report discussed at the city finance committee’s Nov. 12 meeting.
The report studied taxation history at the brewer’s 521 First Street West location. The report compares taxation rates for hypothetical new breweries in Revelstoke and Salmon Arm, showing there is concern at city hall that Mt. Begbie Brewing Co. might exercise their option to relocate out of Revelstoke to save on taxes.
It found Mt. Begbie Brewing Co.,’s property taxes jumped from $12,242 in 2007 to $27,292 in 2013, mostly driven by an assessment reclassification from commercial to light-industry.
Revelstoke has a comparatively high light-industry property tax rate, ranking 21 out of 135 municipalities that have light-industry zoning. Our mill rate is $33.71.
Salmon Arm’s mill rate is $19.36. Inglis calculated Mt. Begbie Brewing Co. would pay $28,699 less per year in Salmon Arm on a new, $2-million facility. However, water-metering in Salmon Arm would bite into those savings, although the exact amount is unknown because the City of Revelstoke doesn’t track the thirsty brewery’s usage.
Later that week, the city’s development services committee recommended moving forward with a study of revitalization tax exemptions allowed under the B.C. Community Charter.
The city would need to create rules that applied fairly across the city.
Coun. Linda Nixon said the city needed to be “looking at the whole picture,” not just the local brewery.
City Director of Engineering and Development Services Mike Thomas said the revitalization tax exemptions are one of the only options available to the city.
Five residents also wrote letters to the city asking for some kind of consideration for the brewery.
If council moves ahead with the concept, the earliest it would be ready is January of 2015, as legislation requires a revitalization exemption bylaw to be synched with the taxation schedule.
On Oct. 22, Larson told council he needed an answer soon, as he wanted to get construction started.
The Times Review interviewed the brewing company president on Nov. 20.
“I’m highly motivated to do a project,” Larson said. “I want to go ahead. This building limits our functionality.” (I spoke with Larson in his windowless second-storey office in a building originally designed as a car dealership. Chemistry, brewing and business-related books line the shelves; beers are being formulated in the corner using chemistry equipment.)
He agreed a fair solution was needed: “They can’t give something just to me,” he said.
He added that development cost charges weren’t as much an issue: “One has to pay their fair share for infrastructure.”
Larson said tax rates, including commercial and light-industrial on his split-assessed property, are the issue. “I still think there is work to be done on the long-term tax structure,” Larson said. “I think there is a good case for reducing the rate.”
So, will Larson pull out of Revelstoke, or cancel the project since a short-term solution doesn’t seem to be forthcoming? Larson couldn’t say, adding the decision isn’t entirely up to him. A new brewery requires financing; the bankers will need convincing too.
Revelstoke City Council was scheduled to discuss the proposal at their Nov. 26 regular meeting.
UPDATE:
Council moves forward with exemption bylaw
At their Nov. 26 meeting, council asked city staff to review the revitalization exemption rules and report back to council, which signalled council's intent to move forward.
Coun. Tony Scarcella was upset the matter hadn't been dealt with sooner, but others on council said they had moved the idea forward as soon as they could.
"I think it has to be done correctly," said Coun. Gary Starling. "It is going to take some time unfortunately. If we do it wrong, it is going to have negative [effects]."