The Kelowna Community Health Centre is eligible for a ten-year property tax exemption of 100 per cent based on its location.

(JOHN MCDONALD / iNFOnews.ca)

KELOWNA - It's hard to see what Valley First Credit Union in Rutland, the yet-to-be-built luxury Westcorp hotel near Kerry Park and the newly-rebuilt Kelowna Yacht Club might have in common.

But what links them is all are either eligible or have already received a ten-year property tax holiday under Kelowna’s revitalization tax exemption bylaw, designed to encourage devopment in key parts of downtown and the Rutland town centre.

“Urban centres are the vital hearts of successful cities,” long-range planner James Moore says in a report to council on the status of the program. “As its primary urban centre, downtown is recognized as playing a unique and prominent role in Kelowna’s future. Tax incentives continue to play a positive role, helping to ensure that new private investment is happening where it is needed most."

Not everyone agrees. Jordan Batemen, the B.C. director of the Canadian Taxpayers Federation says such incentive programs are not sustainable.

“Eventually they have to end these tax subsidies and what happens is companies move on and taxpayers have put out so much money and it hasn’t resulted in return to the coffers,” he says. “We prefer an even playing field. Why not just reduce taxes across the board… instead of giving certain people sweetheart deals for developing in certain spots. That’s not how free enterprise is supposed to work.”

As it stands, the program has created three tax incentive areas in downtown Kelowna and another in the Rutland town centre. Based on the square footage of the building, property tax exemptions of up to 100 per cent are available for ten-year periods. Area one and two have no floor space limit although area two requires a minimum of 40,000 square feet. Area three is capped at 200,000 sq. ft. of eligible floor space and has been the most successful of the three.

Area three downtown covers both the north part of downtown and a swath south of the highway. At 105,000 sq. ft. the Okanagan Innovation Centre on Doyle Avenue on top of previous exemptions, will almost completely use that up. Moore acknowledges the combined exemptions of 50 per cent of property tax will approach $910,000.

Estimates of foregone tax revenue were not available for the other areas however in area two, the $65-million Westcorp Hotel on the old Willow Inn site, is eligible for a 100 per cent exemption. Moore says the hotel’s owner has yet to apply for the exemption, so he couldn’t estimate its value, but agrees it will be considerable.

“Our main concern over time as our urban centres develop is that we need amenities such as parks upgraded roadways,” he says. “Those amenities require financial means to be realized. It needs to be recognized tax incentive areas have long term cost in revenue over time which may challenge our ability to provide those amenities. They provide some benefit but also do come at a cost."

Despite this, Moore says staff still support their use, regardless of the criticism of the Canadian Taxpayers Federation.

“If you were to speak to the developers of these projects, you would find the tax incentive is a significant part of why they are there,” he says. “If we thought it was no longer needed or no longer valuable, we would say so. I think they are part of of trying to ensure we get the vibrant and active urban centres, I think both staff and residents want.”

To contact the reporter for this story, email John McDonald at jmcdonald@infonews.ca or call 250-808-0143. To contact the editor, email mjones@infonews.ca or call 250-718-2724.

News from © iNFOnews, 2015