TOWNSHIP OF ESQUIMALT STAFF REPORT
MEETING DATE: January 27, 2025 Report No. FIN-25-001
TO: Council
FROM: Ian Irvine, Director of Financial Services
SUBJECT: Request for Property Tax Write Off - Folio 307-0582.000
RECOMMENDATION:
Recommendation
That Council: (i) approves the write off of uncollectible property taxes, penalties and interest for folio 307-0582.000 and (ii) directs staff to apply to the Minister under Section 781 of the Local Government Act to write off said account receivable.
..Body
EXECUTIVE SUMMARY:
In 2023, the assessment value related to the property located at 464 Head Street was erroneously recorded by BC Assessment. This resulted in property taxes, and subsequent penalties and interest, being levied on this property. While the assessment value was adjusted in 2024, the property taxes remain outstanding on the account.
When local government financial assets are deemed to be uncollectible, Council may, by resolution, request a Minister’s Order to write off the outstanding uncollectible taxes plus any applicable penalties and interest. This requires a Council resolution and a staff report which outlines the situation and total write off amount. Once Ministerial approval is received, all uncollectible amounts can be removed, necessary adjustments and taxing authorities can be advised.
BACKGROUND:
During the review of outstanding property tax amounts, staff identified folio 307-0582.000 which experienced a significant assessment value increase in 2023 which was inconsistent with the historical assessment values and the knowledge of the property. This increased assessment resulted in a significant property tax amount being levied against the folio. After making an inquiry with BC Assessment (“BCA”), they provided the following statement:
• “The subject property at 464 Head Road for the 2023 Roll Year had an improvement value allocated on the property in error. The property was and still remains vacant. As the property was not appealed by the owner during that 2023 Roll Year and the error was not identified until the following year in 2024, there was no framework in place to amend the assessed valuation or classification through a supplementary notice from the Assessor as it had already passed.”
The latter part of this communication is important when considering whether to approve the write off of these amounts. BC Assessment relies on the Assessment Act which does not permit retroactive adjustments to assessment values. As the property owner did not discover this error during 2023 and no appeal was initiated, BC Assessment will not change the erroneous assessment value even though the amount was changed to the correct value for the 2024 taxation year. Without a change to the assessment value, the Township does not have an internal mechanism to rectify this situation without Ministerial approval.
Further, as this outstanding amount pertains to the 2023 taxation year, if it were to remain unpaid as of September 29, 2025, the Township would be required, under legislation, to include the property as part of the 2025 tax sale process. While it could be anticipated that the property owner would challenge this decision and that potential litigation could result, this move would seek to alleviate these possibilities.
OPTIONS:
Council could pass a resolution to write off the outstanding property taxes and related penalties and interest. This move would resolve an error that has been clearly acknowledged but not yet resolved. Following Council’s recommendation, the information would be provided to the Ministry where it is expected that, given the circumstances, the approval would be confirmed.
Council could determine that the property owner should have identified the error and resolved this with BC Assessment during the 2023 taxation year. This decision not to write off the outstanding amount would result in interest continuing to accrue on the account and, if any amount is outstanding at the end of September 2025, the property will be auctioned as part of the tax sale. This decision could also result in litigation initiated by the property owner to address the error or to challenge the tax sale.
COUNCIL PRIORITY:
Good Governance
FINANCIAL IMPACT:
The amount to be written off would be calculated by multiplying the assessment error amount by the mill rate in place during the year of the error was made.
|
|
2023 |
2023 |
|
|
|
Recorded Assessment |
Correct Assessment |
Difference |
|
Class 1 |
$30,993,000 |
$575,000 |
$30,418,000 |
|
Class 6 |
$ 1,767,000 |
$126,000 |
$1,641,000 |
|
Total |
$32,760,000 |
$701,000 |
$32,059,000 |
Based on these values, the write off amount would be $170,403. With the inclusion of penalties and interest, the total amount to be written off is calculated as follows:
Class 1: $30,418,000 * 4.79386 = $145,819
Class 6: $ 1,641,000 * 14.98158 = $ 24,584
Total Taxation $170,403
Penalties (10%) 17,043
Interest (to December 31, 2024) 18,648
Total Write Off Amount $206,094
Within the Township’s annual financial plan, an amount is included to address any accounts receivable considered doubtful or uncollectible. The Township would use these funds to account for any approved property tax write offs.
COMMUNICATIONS/ENGAGEMENT:
While the Township resolution is the initial step in the process, the property owner will be updated on Council’s decision.
TIMELINES & NEXT STEPS:
A package with the required information will be provided to the Province to facilitate their review. Once that review is complete and a decision is made, the Township will notify the property owner of the decision. Staff will then make the necessary adjustments to the tax account and the related payments to the taxing authorities for their portion of the property tax amount.
REPORT REVIEWED BY:
1. Deb Hopkins, Director of Corporate Services, Reviewed
2. Dan Horan, Chief Administrative Officer, Concurrence
LIST OF ATTACHMENTS:
None