Some delinquent property tax payers will get more time to pay before their properties are auctioned off, thanks to a measure passed by city council on Monday.
Council voted on Monday to postpone the 2020 tax sale for one year, using the special authority granted to municipalities by the province as part of its response to the pandemic.
The city is normally required to hold a public auction to sell properties with unpaid taxes that have been delinquent for two years, city director of finance Kris Dalio said. Property owners with taxes owing from 2017 would see their land up for auction on Sept. 28 this year, he said. With the decision to postpone this year's tax sale, those property owners will have until the 2021 tax sale on the last Monday in September 2021 to clear their tax bill.
"While the approximately 360 parcels currently proceeding to the 2020 tax sale did not become delinquent as a result of the current COVID-19 pandemic, the owners’ ability to pay sufficient delinquent property taxes to avert the tax sale may be further hampered by its effects," Dalio wrote in a report to council.
"In the spirit of that, we wouldn't want to end up with some people losing their property because of COVID," Dalio told council on Monday.
The properties which would have gone to auction in September owe $941,771 in unpaid taxes. The tax sale is an incentive for delinquent taxpayers to pay up, Dalio wrote in his report to council. City staff will continue to encourage those taxpayers to pay, and one year's interest on the outstanding amount will equal roughly $6,000.
However, Dalio said, if the city had proceeded to a tax sale, there would have been significant logistical challenges.
The B.C. Community Charter stipulates the auction must take place inside city council chambers, and makes no allowance for online or telephone bidding. On average 11 properties are sold at the tax sale each year, and currently the city's council chambers are limited to 11 people in the gallery.
"If the number of participants is limited to this capacity, or even if employing additional rooms or electronic bidding were options, there could still be a negative impact on attendance and the fair value of bids," Dalio wrote in his report. "As a result, the delinquent owners may suffer significant financial damage, which could lead to legal challenges to the tax sale process, and possibly the overturning of a sale."
After the tax sale, property owners still have one year to pay the outstanding taxes to retain ownership of the land and cancel the sale, Dalio said. However, it is rare – perhaps only four or five properties per year are redeemed this this way, he added.
"Administration is not in favour of this extension as successful bidders from the 2019 auction expected to either be repaid with interest for a period up to one year or to take possession of the property at the one year point," Dalio wrote in his report. "A one year extension changes the terms of the tax sale for the successful bidder and some may feel they have been forcibly required to wait for a second year before receiving their funds or the property."
Coun. Garth Frizzell said postponing this year's tax sale was the right balance between compassion for hard-hit taxpayers and enforcing the city's rules.