WHEREAS there are numerous brownfieldcontaminated sites within the Province of BC that have reductions in their assessed values and have an operating business on the site; AND WHEREAS these sites benefit from the communities in which they are located and or have a perceived unfair advantage over other businesses in the neighbourhood due to the reduced property taxes they pay: THEREFORE BE IT RESOLVED that the BC Assessment Authority ensure any site with an operating business have its assessment values consistent with other similar properties regardless of actual or perceived contamination.
Ministry of Community, Sport Cultural Development BC Assessment is required to assess properties at their market value. Valuing contaminated sites at their market value takes into account the current state of the property as well as the remediation required to achieve the intended use of the site and the time frame for any redevelopment. The assessed value must reflect the likely cost of remediation and the time frame required for that remediation, as the market will take those factors into consideration in determining market value. In general, the market and assessed values of the properties will increase as remediation progresses. Once remediation is complete to the extent required for its intended use, the market value will reflect the value of a fully remediated property for its proposed use. The assessment for a property is not typically changed to reflect contamination until a site is registered as a contaminated site.
BC Assessment BC Assessment values the majority of properties in BC based on market value. Market value is the amount that a property would have sold for at a specified date in the open market by an informed and willing vendor to an informed and willing purchaser. In establishing value the market looks to the highest and best use of the property i.e., the probable and legally permissible use of a property which is physically possible, financially feasible and appropriately supported and which results in the highest value. The market value is used for assessment purposes as it provides a fair uniform and easily understood methodology for valuing property and consequently for distributing the property tax burden. Section 192 of the Assessment Act establishes that properties must be valued at their market value, in the absence of other direction the Act. Under section 193 of the Act, BC Assessment is given discretion to consider a number of factors in determining market value. These include the present use of the property, any economic or functional obsolescence related to the property and or any other circumstances affecting the value of the land and improvements. The possibility of contamination exists with respect to Brownfield Sites. Contamination is a factor which may affect the value of a property and so must be considered in the assessment process. A site may be contaminated, but if the current used of the site is the highest and best use and the use is approved by Local Government regulation, it may not be appropriate to make any reduction for contamination. For example, if a property is zoned for industrial use, had been used for a sawmill and will be used for a similar industrial purpose, it would not be appropriate to reduce the value of the property assuming that it is is going to be used for residential purposes and must be cleaned to the standards appropriate for residential use. In that case, the contamination factor will have little impact on the assessed value of the property. If, however, the site has been rezoned for residential purposes, residential redevelopment is proposed for the site and residential use is the highest and best use for the property, then significant reductions in value may be appropriate to reflect the cost to remediate the property to residential standards. BC Assessment conducts analyses of the previous, current and likely legal uses of Brownfield Sites, in order to determine the market value of those sites for property taxation purposes. This issue was previously considered by the UBCM in 2005, under resolution B21 2005: ASSESSMENT OF PROPERTIES DEEMED CONTAMINATED WHEREAS the Assessment Act requires the assessor to determine the land and improvements of a contaminated site at actual values and enter these as such in the assessment roll; AND WHEREAS no remedial action is required of properties deemed contaminated where remedial measure exceed the value of the land and improvements, thereby permitting and existing property defined as contaminated to continue as a going concern while paying reduced taxes; THEREFORE BE IT RESOLVED that the assessor under the Assessment Act be required to value a commercial or industrial undertaking as a property of a going concern if a business or activity is carried on at that property; AND BE IT FURTHER RESOLVED that Section 194 of the Assessment Act clearly state that the valuation of the land and improvements of a commercial or industrial undertaking will take into consideration present use and revenue or rental value considerations where it is still a going concern. At that time BC Assessment was under the responsibility of the Ministry of Small Business and Revenue. That Ministry provided the following response to the proposed resolution: Because a site is contaminated, it does not mean that its value will be reduced. Where properties continue to operate a their highest and best use, their assessed value will reflect that no remedial action is required. The Environmental Management Branch EMB of the Ministry of Environment is responsible for issuing orders for site investigating and remediation control and clean-up. If the EMB issues have order for remediation, BC Assessment will consider the remediation cost only if it is cost-effective to remediate the site to a higher use. BC Assessment continues to value properties in accordance with this response to the related 2005 UBCM resolution. This approach reflects the current legislation and case law interpretation of the legislation, with respect to the assessment of contaminated sites. As BC Assessment reports to the Ministry of Community, Sport and Cultural Development and the Ministry of Finance is responsible for property tax policy, you may wish to to contact the Ministers of those ministries to express your concerns or to seek a legislative resolution to those concerns. If you are interested in having a representative of BC Assessment speak to this subject at a future UBCM meeting or conference, we would be pleased to arrange a presentation.