Bylaw 12.5 - BYLAW NO. 2178 (Background Report Attached)

Staff Report to Council

DATE

Tuesday, April 2, 2024

DEPARTMENT

Finance

SUBJECT

2024 Alternative Municipal Tax Collection Scheme

EXECUTIVE SUMMARY

Under the General Tax Collection Scheme, per section 234 of the Community Charter, property tax payments are due on July 2. On July 3 the municipality applies a 10% penalty on outstanding balances of current year property taxes, as required under the Municipal Tax Regulation under the Community Charter. Prior to the COVID-19 pandemic, the City of Langford always followed the General Tax Collection Scheme.

Beginning in 2020, the City implemented an Alternative Municipal Tax Collection Scheme (AMTCS), which allows the City to adjust the dates and rates applied for the property tax penalty. The legislation outlines that the total must still equal 10%, but it can be split into two penalty dates. While 2020 was a unique year due to the Provincial Government making broader legislative changes to the municipal tax penalty, for the years 2021 through 2023 the City implemented an AMTCS that saw a 5% penalty on July 3 and an additional 5% penalty on September 1. As a trial period these were implemented on a one-year basis each year. Staff are now recommending that Council adopt an AMTCS indefinitely.

BACKGROUND

In 2020, due to the COVID-19 Pandemic, the Provincial Government made a number of legislative changes to municipal tax penalty dates for property classes 4, 5, 6, 7 and 8. In conjunction with these adjustments, the City of Langford also adjusted the penalty dates for all property classes as follows:

• a. Class 1, 2, 3 and Class 9: 5% penalty on August 1, 2020 and an additional 5% penalty on the portion that remained unpaid on October 1, 2020;
• b. Class 4, 5, 6, 7 and 8: 5% penalty on October 1, 2020 and an additional 5% penalty on the portion that remained unpaid on December 1, 2020.

In 2021, as the COVID-19 Pandemic was still having significant impacts, the City of Langford again adjusted the penalty dates for all property classes as follows:

• a. 5% penalty on July 3, 2021 and an additional 5% penalty on the portion that remained unpaid on September 1, 2021.

In 2022, as the COVID-19 Pandemic was still having impacts, the City of Langford again adjusted the penalty dates for all property classes as follows:

• a. 5% penalty on July 5, 2022 and an additional 5% penalty on the portion that remained unpaid on September 1, 2022.

In 2023, the City of Langford again adjusted the penalty dates for all property classes as follows:

• a. 5% penalty on July 4, 2023 and an additional 5% penalty on the portion that remained unpaid on September 1, 2023.

COMMENTARY

The below outlines possible options with regards to the current tax year:

1. Status quo (prior to 2020):
   Property Tax due date is July 2, and on July 3, a 10% penalty is applied to any outstanding current year taxes.

2. Alternative Municipal Tax Collection Scheme:
   Section 235 of the Community Charter, Alternative Municipal Tax Collection Scheme, allows municipalities to, by bylaw, establish one or more dates on which property taxes are due, or when the penalty is applied. It is also worth mentioning that the changes made in 2020 did result in reduced revenue from the property tax penalty.

An advantage to establishing the Alternative Municipal Tax Collection Scheme was in providing additional support to taxpayers during COVID-19. This is essentially what the City and the Province did in 2020 and then the City did again in 2021, 2022 and 2023. It may also provide an extended tax season, thus reducing the traffic to City Hall during the normal tax season.

As outlined in the recommendation below, staff believe that the positives of an Alternative Tax Collection Scheme outweigh the negatives as it related to the 2023 property tax season.

FINANCIAL IMPLICATIONS

Staff are recommending the City move towards implementing an Alternative Municipal Tax Collection Scheme indefinitely, as follows:

• In recognition of the successful collection of taxes in 2020, 2021, 2022, and 2023, staff are recommending that instead of a penalty of 10% on July 3, a similar alternative tax collection scheme as implemented in 2021, 2022 and 2023 be applied, specifically, a 5% penalty on July 3 and a further 5% penalty on September 1.

Staff believe this approach best reflects the financial needs of the City in maintaining cash flow as much as possible, and it also best allows some flexibility for property owners should they need it as the first penalty for these property classes will be 5% rather than the regular 10%, with the remaining 5% applied September 1. The City may collect less penalty revenue as a result of splitting the penalty; however, the impact has not been significant, and the budget reflects the adjusted penalty revenue.

LEGAL IMPLICATIONS

The City is required to approve the Five-Year Financial Plan Bylaw and the Tax Rates Bylaw before May 15 each year.

Should Council choose to adopt an Alternative Municipal Tax Collection Scheme, this must be done by bylaw and must be approved before the tax notices go to property owners with the revised penalty amounts and/or dates.

OPTIONS

Option 1
THAT Council give 1st, 2nd and 3rd reading to Bylaw No. 2178, City of Langford Alternative Municipal Tax Collection Scheme Bylaw, No. 2178, 2024.

OR Option 2
THAT Council does not proceed with an Alternative Municipal Tax Collection Scheme for 2024.

SUBMITTED BY

Michael Dillabaugh, CPA, CA, Director of Finance

Concurrence

• Donna Petrie, Senior Manager of Communications & Economic Development
• Yari Nielsen, Director of Parks, Recreation and Facilities
• Matthew Baldwin, MCIP, RPP, Director of Planning and Subdivision
• Katelyn Balzer, P.Eng., Director of Engineering and Public Works
• Marie Watmough, Deputy Director of Corporate Services
• Braden Hutchins, Director of Corporate Services
• Darren Kiedyk, Chief Administrative Officer

Attachment: DRAFT Bylaw No. 2178

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CITY OF LANGFORD

BYLAW NO. 2178

A BYLAW TO ESTABLISH AN ALTERNATIVE MUNICIPAL TAX COLLECTION SCHEME

WHEREAS section 235 of the Community Charter authorizes the Council of the City of Langford to establish an alternative municipal tax collection scheme;

WHEREAS the Council of the City of Langford may set due dates for property taxes under an alternative municipal tax collection scheme;

NOW THEREFORE, Council of the City of Langford, in open meeting assembled, ENACTS AS FOLLOWS:

1. That this bylaw may be cited as “City of Langford Alternative Municipal Tax Collection Scheme Bylaw, No. 2178, 2024”.

Definitions

2. In this bylaw:

(a) “due date” means the due date for property taxes established in section 4; and

(b) “property taxes” has the same meaning as in the Community Charter.

Establishment

3. The Council hereby establishes an alternative municipal tax collection scheme for the taxpayers of the City of Langford.

Property Tax Due Date

4. Property taxes payable under the alternative municipal tax collection scheme are due on July 2, or the first business day thereafter, of the year in which the property taxes are levied.

Property Tax Penalty

5. For property Class 1 (Residential), Class 2 (Utilities), Class 3 (Supportive Housing), Class 4 (Major Industry), Class 5 (Light Industry), Class 6 (Business and Other), Class 7 (Managed Forest Land), Class 8 (Rec/Non profit), Class 9 (Farm), if all or part of property taxes referred to in Section 4 for a parcel of land and its improvements on the assessment roll remain unpaid the collector must add to the unpaid property taxes for the parcel and improvements for the current year a penalty equal to:

• (a) 5% of the amount unpaid by the due date that remains unpaid at midnight on the day after the due date; plus,
• (b) 5% of the amount unpaid by the due date that remains unpaid at midnight on the first business day in September.