City of Regina
Saskatchewan CA

CC City Manager
CM21-22

Supplemental - Community Non-Profit Tax Exemptions – Additional Information

Information

Department:Assessment & Property Revenue ServicesSponsors:
Category:Not Applicable

Report Body

ISSUE

 

At the November 17, 2021 Executive Committee, while considering report EX21-77 - Community Non-Profit Tax Exemptions – 2022, Executive Committee requested Administration bring a supplemental report with the amount of funding provided to exemption applicants through the Community Investment Grants Program (CIGP) and additional information on the third party leases at the properties operated by the Saskatchewan Science Center and the Mackenzie Art Gallery.

 

IMPACTS

 

There are no financial, environmental, policy and/or strategic implications or considerations.

 

OTHER OPTIONS

 

No alternative options are identified for this report.


COMMUNICATIONS

 

The Mackenzie Art Gallery and the Saskatchewan Science Centre were provided copies of this report.

 

DISCUSSION

 

Community Investment Grants Program

The Community Non-Profit Tax Exemption Policy (CNPTEP) and the Community Investment Grants Program (CIGP) are closely aligned to meet the City’s strategic priorities and objectives. The CIGP is designed to fund community non-profit organizations to deliver programs, projects and services. The CNPTEP provides exemptions that are applied directly to the organization’s property tax account, enabling organizations to redirect funds that would have been used for property taxes to programming or services.

 

Through the CIGP, the City funds and partners with community non-profit organizations to deliver programs and services to Regina residents that align with city priorities, have a clear community impact and respond to community needs.

 

Through CIGP funding, organizations provide thousands of hours of programming to our residents, allowing participants to enjoy a variety of events, initiatives, and programs throughout the community. Organizations apply for funding under a stream that is most relevant to their organization’s core operations or initiative. In some cases, organizations may be eligible to apply for more than one grant. Table 1 shows the number of CIGP grants awarded to 2022 CNPTEP applicants in 2021.

 

A list of 2021 CIGP funding provided to the 2022 CNPTEP applicants is attached as Appendix A. Definitions of CIGP funding identified in this report are outlined in Appendix B.

 

CNPTEP and For-Profit Organizations

The CNPTEP states that any portion of a property used by the private sector or an organization not meeting all the criteria of the policy is not eligible for a tax exemption under the policy. The intent of this is to ensure that tax exemptions are used to support non-profit or charitable organizations that further Council’s objectives as set out in the OCP and master plans and that municipal support is not used for commercial or private gain.

 

The purpose of the CNPTEP is to:

·         set the parameters for the City of Regina to consider applications for exemptions;

·         provide fair, consistent treatment for all applicants; and

·         support organizations in financial need that further Council’s priorities as outlined in the OCP and other master plans, and for which the burden resulting from the tax exemption is a justifiable expense to the taxpayers of Regina.

 

In the policy, principle #2 requires that the organization receiving the exemption must be a non-profit or charitable organization. Further, principle #3 (criteria 3.3) requires that any portion of the property used by the private sector or an organization not meeting the terms of the policy is not eligible for a tax exemption. Based on the principles in the policy, the adjudication committee determined the space leased to commercial businesses in the Saskatchewan Science Centre and the Mackenzie Art Gallery should not be eligible for a tax exemption.

 

While the policy aims to guide Administrations recommendations for property tax exemptions for non-profit organizations, Council may grant property tax exemptions for any property or portion of property.

 

At the November 17, 2021 meeting, Executive Committee requested clarification on whether the portions of property leased to third party, for-profit organizations by the Mackenzie Art Gallery and the Saskatchewan Science Centre were leased for a net profit. Further conversation with the Mackenzie Art Gallery and the Saskatchewan Science Centre identified that the leases are an alternate revenue source for the organizations but all revenue generated was used to fund programming and services provided by the organization.

 

Communication Regarding Partial Tax Exemptions for Applicants

In July 2021, after the June 30 deadline for 2022 CNPTEP applications, Administration sent a letter to all applicants acknowledging their application, identifying that the requested funding had exceeded the financial cap in the policy and explaining the next steps for the application. The letter reminded applicants that exemptions may be pro-rated resulting in a partial tax exemption for the property.

 

The July letter also included a reminder that to qualify properties must:

·         be a Non-Profit Organization and occupy the space (3rd party leases are not qualified);

·         be a currently active registered organization with ISC Corporations Branch;

·         conform to all principles within the policy; and

·         demonstrate financial need.

 

In October 2021, after the adjudication committee had completed their review and recommendation process, Administration sent a letter to all applicants outlining the adjudication committees’ recommendations. At this time, the adjudication committees recommendation was to pro-rate all exemptions to stay within the policy cap, and letters

were mailed to applicants outlined a partial tax exemption for their properties. While the partial tax exemption in the letters to the Mackenzie Art Gallery and the Saskatchewan Science Centre reflected a reduced exemption for space leased to for-profit third parties and the reduction due to the cap, the percentage allocated to each of these factors was not clearly explained in the letter.

 

In November, after Administration’s recommendation was finalized in the report, applicants were notified of the Executive Committee report.

 

While the letter in July indicated any portion of a property leased to third party for-profit organization should be taxable there was no specific communication with the Mackenzie Art Gallery or the Science Centre to address the recommend change in their exemption as a result of the leased space.

 

Community Non-Profit Tax Exemption Policy Review

The CNPTEP is scheduled for review in 2022 to ensure the principles in the policy align with existing City plans. Conversations at the Executive Committee have identified the need to review the intent of the language regarding third party leases in the CNPTEP and provide clarification as necessary.

 

Given the review is taking place, Council may choose to provide a full exemption to the Mackenzie Art Gallery and the Saskatchewan Science Centre while the policy is under review and have the exemptions for the leased portions of these properties be revaluated when the review is complete. The additional cost of these exemptions would be $6,350 in municipal tax dollars. This would bring the total of the 2022 CNPTEP to $1,238,955.

 

DECISION HISTORY

 

On November 17, 2021 the Executive Committee considered item EX21-77 Community Non-Profit Tax Exemptions – 2022 and directed Administration to prepare a supplemental report for the November 24, 2021 City Council meeting that identifies the community organizations, outlined in Appendix B of this report, that received funding from the 2021 Community Investment Grant.

 

 

Respectfully Submitted,              Respectfully Submitted,

{Signature}

 

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