BOMA Presentation to SPC on Finance and Corporate Services
5 October 2011
Business Tax Consolidation
BOMA is the representative association of commercial real estate which includes the owners of office, industrial and retail properties in Calgary. These owners are predominantly pension funds.
By way of NM2011-20, and subsequent discussions with Aldermen and the administration, we took it on good faith that the underlying intent of the Notice of Motion was to “have the discussion”. In fact, the notice of motion stipulates that, “administration prepare a report … which provides information…to consider whether business tax” could be consolidated with property tax.
The materials accompanying this Agenda fall far short of completing that discussion and the actual implementation process has not been articulated. In short, the case for harmonization has not been made.
BOMA’s position of record for this and the previous two attempts to harmonize business and property tax is well known. BOMA would support harmonization subject to satisfactory resolution of a number of matters. The proposal before you to day fails to offer that resolution. In fact, the material before in effect asks us to agree to an open-ended approval. We cannot do that given the arguments put forward.
The outstanding issues have been accurately represented in the report. These are:
• Addressing vacancy rates
• Addressing tenant defaults
• Addressing vacant land
• Addressing properties under construction]
• Addressing linear property
• Addressing gross leases
• Addressing exempt entities
• Addressing machinery and equipment
• Addressing the zero rate increase of the business tax component
In short, the mechanisms have not been addressed and the interests of owners/investors have not been satisfactorily addressed. The devil is in the details and we need to receive this information and have a reasonable opportunity to completely analyze their implications to owners. As the proposal is written there is just too much uncertainty. Details must be provided.
Accordingly BOMA recommends the Committee direct the administration to:
a) Prepare a detailed implementation plan and transition time frame
b) Addresses the customer and implementation issues identified in the report and how these will be resolved, and
c) Articulates a communications plan
BOMA makes these recommendations in good faith recognizing that both industry and Council require complete information to render a good and proper decision. BOMA seeks to be part of a genuine solution to this issue.