The District of Houston is looking for support in its bid to limit the impact to its tax revenues from the permanent closure of major industries.
As provincial legislation stands now, a large company can apply to reduce the assessed value of improvements or facilities on property it owns down to 10 per cent when it closes the facility.
Although the District does not mention Canfor by name in a resolution prepared for other local governments to consider, the coming closure of its mill next month would have a substantial impact on the heavy industrial portion of the District’s tax base.
That’s because municipalities collect tax revenues based on assessed values of buildings, improvements and land.
“Municipalities face significant economic and financial and taxation challenges when major industrial and electrical proponents cease operations in their communities,” the District states in the resolution being sent to the annual meeting this spring of the North Central Local Government Association.
The resolution does not oppose a reduction in assessments but says the lower value should be less than what is permitted now.
Passage at the northern gathering of local governments puts the resolution before the Union of B.C. Municipalities convention this fall. If approved there, the provincial government would be asked to follow through.
The District’s tax revenues this year won’t be put in jeopardy by the Canfor closure. That’s because its sawmill’s assessed value for this tax year was set last year.
Financial information prepared so far for the 2023 tax year indicates Canfor is expected to pay $1.687 million. It is by far the largest single contributor to the District of Houston’s tax revenues which are estimated to be $4.725 million this year.
By comparison, the entire residential tax revenue total is projected to be $1.588 million, approximately $100,000 below Canfor’s payment.
These figures are just for the District and do not include school taxes, hospital taxes or other amounts collected.
For its part, Canfor says that while it is closing its current sawmill as of April, it does want to build a new one, but won’t be making that decision until June.
Constructing a new mill would take at least two years and Canfor says there would not be any tax revenue disruption during that period.
“Assuming a positive decision to proceed with building the new facility, we have committed to the District of Houston to maintain our current property taxes throughout construction,” said Canfor official Michelle Ward.
Even ahead of Canfor’s decision to close the existing mill, the District prepared itself for a financial crunch by creating a reserve of $1.65 million to buffer any sudden loss of tax revenues.
Information from the B.C. Assessment Authority indicates there are two ways a major industry can have the assessed value of improvements or facilities reduced.
The first is if the facility has been closed for three consecutive years and the second is if there is a permanent closure. In the second instance, the permanent closure must have happened before Oct. 31 and the company must apply for a reduction by Nov. 30 for the reduction to be in effect the next year.
The reduction in assessed value applies just to facilities and improvements and not to the land itself.
The District’s resolution also calls for greater transparency in how major industrial assessments are set.