Tofino's municipal council is lobbying for split-assessment legislation change that would allow local governments to collect commercial taxes from vacation rentals.

Tofino's municipal council is lobbying for split-assessment legislation change that would allow local governments to collect commercial taxes from vacation rentals.

Tofino wants to tax vacation rentals at commercial rates

“Short term rentals are the largest hotel in Tofino."

Tofino is taking its war on vacation rentals province-wide.

The district plans to lobby for a change in provincial legislation that would see residential properties, that are operating as tourist accommodations, pay commercial taxes rather than residential.

“When the legislation was written, no one ever contemplated that there would be so many short term rentals in some towns,” mayor Josie Osborne told the Westerly News.

“The intention here is not to capture the person who rents from time to time. The intention is much more for those people who really are running a business. If you have a house with a cottage and you are short term rentaling the cottage 365 days of the year, in some people’s view, that is running a business so it should play by the same rules as all other businesses and most businesses are taking place on commercially taxed properties.”

She explained the idea has a long way to go towards becoming reality.

Tofino must first present it to the Association of Vancouver Island Communities Convention in April. If approved by the AVICC’s membership, it would be put on the Union of B.C. Municipalities Convention agenda in September and, if approved by the UBCM, sent to the provincial government’s desk for review.

“This would be a province wide change. This would not be just Tofino, or just the Island. When you’re changing legislation for the B.C. Assessment Authority, that’s the entire province,” Osborne said. “It will take years and the province would have to change legislation. But, it’s an important question to ask and, I think, the province will be interested in the conversation.”

In order to put her motion forward to the AVICC, Osborne needed support from her Tofino council, which she received unanimously during Jan. 30’s Committee of the Whole meeting.

“Over the last few years, many of you here around this table have expressed frustration with our inability to address some of the impacts of tourism accommodations, especially on residential properties,” Osborne said during her pitch.

“We’re addressing short term rentals in many ways, shapes and forms, and this is another tool that we could consider, or that the province could consider, to address what, I think, some people perceive to be the tax inequities between people who are operating businesses out of private homes and hotels and motels and people who are not doing that.”

Coun. Duncan McMaster said he was “fully supportive” of the idea, but questioned how impactful the motion would be, even if it received support from the AVICC and UBCM.

Tofino local and Tourism Tofino chair J.J. Belanger spoke at the meeting and said the initiative Osborne was proposing has a “huge groundswell of support” among various tourism-related boards.

“I think mayor Osborne is on track to getting in a long line of people that are lining up for this to be amended,” he said.

He suggested Tofino’s roughly 116 vacation rental properties have a big impact on the community.

“That’s basically twice the size of any resort that we currently have in Tofino,” he said. “That’s where your tourism issues are coming from and that’s what a lot of communities are having problems with; not only ours.”

Osborne agreed.

“Short term rentals are the largest hotel in Tofino,” she said.

“We’ve enabled that and we’ve done so willingly. We’ve created the conditions for people to be able to do that and to be able to subsidize their mortgages and help them with their cost of living. But, the flip-side of that is, it brings more visitors to town, which we like, but those visitors come with impacts: parking, garbage and recycling, bylaw enforcement, fire protection and all kinds of things and I’ve heard so many times at this council table about, ‘How do we recover some of those costs?’”

Osborne suggested Tofino’s bed and breakfasts would not be affected and that the target would be vacation rentals on residentially zoned land.

“This is more directed to whole-home rentals,” she said.

“In our case in Tofino, we have six residential zones where, if you have two dwellings, you are permitted to vacation rental one of them. Some people have chosen to do that, they have a licence, but that entire use is used as, what I would maintain is, a commercial enterprise.”

She said that, while the split-classification could be seen by some property owners as punitive, it was an important step towards funding the necessary remedies associated with handling Tofino’s tourist season.

“Obviously it’s a contentious issue,” she said. “You talk about assessment values and the impacts it has on taxes and it hits home. It’s not an easy discussion to have but I do think it’s an important one to have.”

Coun. Greg Blanchette wondered if the reclassification’s intent was purely revenue related.

“Just to clarify, is the thrust of this motion more revenue, basically, i.e. getting higher assessments would lead to higher tax revenues which we can then apply to the impacts that these are causing,” he asked.

Osborne responded that, in Tofino’s case, it would increase the district’s revenue because local businesses are taxed roughly 2.86 times more per $1,000 of assessed value than residential properties.

“More important to me is that, if B.C. Assessment did this, it would give municipalities another tool to look at their tax rates and adjust,” she said.

Blanchette suggested the move could receive negative reviews from locals and asked if public input would be part of the process.

Osborne replied the, likely years-long, process needs to start somehow.

“You’re absolutely right; certain residents, especially those who are affected, may feel that this is unfair and, I think, that this is a bigger conversation we’re starting to have at large anyhow: how do we treat everybody as fairly as we can and have people understand what the costs of dealing with the impacts of our tourism economy are?” she said.

“I’m all game for more consultation and engagement, although, I guess at some point, I would say we’re the people that the community’s elected to sit at the table and sometimes we have to push a little bit.”

McMaster noted the deadline to file motions to the AVICC is Feb. 25, leaving council with little time to collect public input beforehand.

Osborne suggested sending the motion to AVICC and talking to the community after it’s sent.

Coun. Ray Thorogood agreed.

“If we approve of it, let’s approve it. Whether or not it passes at the AVICC is a different story,” he said.

District CAO Bob MacPherson said changing provincial legislation would not be an easy, or fast, task.

“In terms of timing, I would concur with what’s been said. This would take years,” he said.

“The fact that we’re not going to get out to the community in the next 21 days, I wouldn’t panic about. The province will have it’s own engagement, if they’re remotely interested in this.”

Council was expected to endorse the motion and send it to the AVICC during Feb. 7’s regular meeting.

Osborne noted commercial properties successfully lobbied for a change to their assessments several years ago, arguing that the staff accommodation portion of their operations should be taxed residentially.

“They were paying commercial property taxes on residences. They felt that was unfair. They asked B.C. Assessment to reclassify and B.C. Assessment did,” she said adding it’s worth exploring whether that reclassification should work in the other direction as well.

“If we take a residence and turn it into a commercial tourism accommodation, should we then expect them to pay the same taxes that a hotel or motel or guesthouse does?”