Getting tough on taxes
City considering new tax policy
NNSL (May 07/99) - If adopted, a new tax policy will put 20 properties on the brink of being auctioned off for tax arrears.
City staff developed the policy to fill a gap in the city's method of dealing with properties in tax arrears.
Under the new policy, properties with taxes owed for more than four years will be put up for auction if the owner will not or can not enter into a payment plan with the city.
The plan requires, at minimum, monthly payments of three per cent of the total of outstanding and current taxes.
The change comes on the heels of changes to the Property Assessment and Taxation Act which streamline the process of dealing with properties in tax arrears.
"The act specifies we can act after two years (of arrears), but that would affect so many properties in Yellowknife it's not feasible," explained city administrator Max Hall.
A comparison carried out by the city indicated the tax sale process begins after two years of arrears in the municipalities in Alberta, British Columbia and Nova Scotia.
A total of $4 million is owed the city in back taxes, about a third of the amount the city bills each year for taxes.
According to a city memo, each year property owners are notified of the balance of their tax account. Owners have been offered the option of entering into a payment plan.
Outstanding tax bills left unpaid quickly balloon under the city's penalty interest rate of 24 per cent per year.
The main concern during debate of the new policy Tuesday was the city's liability.
"There's at least one property I'm aware of that has a horrendous liability on it," said Mayor Dave Lovell. "What are we doing about that, about avoiding properties we don't want to own?"
City finance director Robert Charpentier said the city is not compelled to bid on any property auctioned off for tax arrears.
Finance manager Glen Jarbeau explained owners are notified by letter 60 days before any property is to be auctioned. They can retain the property by paying the outstanding amount up to 30 days after the auction.
If a property is auctioned off, a minimum of 70 per cent of the assessed value is required to purchase it.
The committee recommended council adopt the new policy. Council will deal with the recommendation at its Monday meeting.