The City of Charlottetown wants to boost development with one tax plan while it hopes a retired judge's report sees municipal revenue boosted on another.
The city will launch its tax incentive policy on Jan. 1 that aims to boost development in the greater capital area and maybe even see some industrial-type businesses move out of residential areas.
Judge Ralph Thompson, chair of the Commission on Land and Local Governance, is expected to deliver his report on everything from land use planning to taxation and grants and the review of countless legislative acts.
Charlottetown Mayor Clifford Lee says the big key for 2010 in the capital will be whether Thompson thinks the province should return to the tax credit system instead of the grant system.
In terms of the tax incentive, it redefines the types of development that would qualify.
In the past, the city was focused on the downtown core and filling a number of vacant buildings.
That has started to take place so now the city is casting the new policy across the entire municipality.
"I was able to convince council to create an incentive for relocating commercial business out of residential areas," Lee told The Guardian.
"In some parts of our city now we have some industrial uses in the middle of residential areas, which from a planning perspective is not the best thing to have."
The propane tank farm and tractor-trailer businesses on Allen Street and the gravel pit off Kensington Road spring immediately to mind but a lot of industrial businesses that now blend in with residential areas located there before the amalgamated city developed zoning and development bylaws.
"There is an opportunity for incentives for some of these commercial/industrial uses to vacate the residential areas. We're certainly not going to be forcing anybody to relocate but if, for example, Superior Propane on Allen Street decided they would like to move to an industrial park, which would be a more appropriate area for that business to operate, there would be incentives for them to move to a new location."
If a business, such as the one Lee cited were to move, for the first year on any increased assessed value there would be no additional tax on the additional increase in year one.
In the second year, that business would pay 20 per cent of the increased assessment. Year three it goes to 40 per cent and by year five it grows to 100 per cent.
The property which has been vacated by the move of the industrial business would most likely revert to residential use, depending on the zoning council allows.
"Once you qualify under the incentive program then the property can only be redeveloped residentially, assuming the area they
are leaving is a residential area."
That program begins just as the city waits to hear what Thompson writes in his report.
The province collects property taxes for the city. Historically, that money has been returned to the capital in the form of a tax credit.
"The amount returned to the city every year through the tax credit system was based on the assessment of the properties in the city," Lee says. "As the city developed and more development took place that credit increased on an annual basis."
So, if assessments went up five per cent, revenue from the province into the city's coffers went up five per cent.
The Robert Ghiz government chose to move from that system to a grant-based format.
"My concern is that that grant system is based on ... the province's ability to pay ... they can freeze the grant, they can reduce the grant they pay to municipalities."
Lee hopes Thompson's report addresses that issue.
"We're hopeful that the commissioner will see the merits of the arguments that municipalities have put forward in relationship to that."
Tax issues for 2010:
* Tax incentive - Businesses that move out of residential areas will not be taxed on the additional assessment in year one. A sliding scale will see these businesses not pay 100 per cent of the increase in assessed value until year five.
* City is hoping retired judge Ralph Thompson's report on land issues and governance will recommend the province replace its tax grant system with the old tax credit system. Municipalities such as Charlottetown made more revenue under the old system.
