Local Government Interests in Land – Property Taxes and Exemptions
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t is common knowledge that municipalities are exempt from taxation under the Community Charter in respect of lands they own in fee simple. But interestingly, the authority for this exemption under section 220(1) (b) of the Community Charter does not use the word “owned”. Instead, it exempts lands that are “vested in or held by” the municipality. What do these words mean? What municipal property interests are covered? Could they include lands leased to a municipality? A case currently on reserve with the BC Court of Appeal (argued on October 21, 2021) may provide new direction. In the BC Supreme Court reasons in Coquitlam (City) v. British Columbia (Assessor of Area #10 – North Fraser Region), 2020 BCSC 440, Mr. Justice Skolrood considered whether the City of Coquitlam should receive a tax exemption under s. 220(1)(b) of the Community Charter for lands it purchased pursuant to an agreement for sale (an “AFS”), on the basis that such lands were “held by or vested in” the City. An AFS (which is distinct from the much more common agreement of purchase and sale) is essentially a vendor financing arrangement, where the purchaser pays the purchase price in installments and typically receives possession of the property at the time of first payment. The vendor remains registered in the land title office as owner of the property, while the AFS is registered as a charge in favour of the purchaser and can only be discharged via foreclosure proceedings following purchaser default under the AFS. On final payment of the purchase price, title to the property is conveyed to the purchaser. In Coquitlam, the City had acquired lands under an AFS and was in the process of developing the lands as
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a public park. At the relevant time, the vendor’s name remained on title and the AFS was registered as a charge and gave the City possession and total control of the lands and the right to eventually become registered owner of the property. The Assessor argued that the exemption at s. 220(1) (b) did not apply, as the lands were not “vested in or held by” the City, and therefore the lands were taxable. The Assessor asserted that the Court was bound by prior legal precedents, including a very complicated Supreme Court of Canada decision from 1944 where lands leased to the Crown were found to be taxable in the name of the private owner. On the basis of that case, the Assessor argued, both in the BC Supreme Court and the Court of Appeal, that even if the City did “hold” the lands pursuant to the AFS, the fact that the vendor’s name was on title made the lands taxable in any event. The BC Supreme Court ultimately came down on the City’s side, finding that the City’s interest was strong enough to engage the exemption provisions in the Community Charter, fully exempting the lands despite the vendor’s name on title.
