Too easy for fake farmers to dodge tax, Metro Vancouver told
More agricultural land in the Lower Mainland might actually be farmed if cities crack down on property owners who abuse the current rules to avoid paying higher property taxes.
That's the advice to Metro Vancouver from consultant Scott Bowden of Colliers International, who studied options to intensify agricultural and industrial land use on behalf of the regional district.
Bowden said too much land is underused because it's too easy to qualify for farm tax status, which reduces the property tax owners pay by as much as 99 per cent from what they'd pay at residential rates.
"We have seen evidence of this being abused," he told a recent Metro Vancouver regional planning committee meeting.
A Chilliwack man saved more than $100,000 by arranging to have a few llamas put on industrial land he owned, Bowden said, while similar cases crop up of land owners adding a few cows or other livestock to achieve the "incredible benefit" of farm rates.
Bowden said one option would be to substantially raise the current threshold for farm status – it only takes $2,500 in annual agricultural revenue for properties that are four hectares or smaller.
Richmond Coun. Harold Steves, who is also a cattle farmer, said the threshold should definitely be raised, adding he's turned down requests to put a few cows on properties to help owners dodge paying tax.
He suspects many owners of giant houses on farmland avoid paying much higher tax bills by leasing out part of their yards to blueberry growers or livestock farmers.
Steves said tax relief should be reserved for "bona fide farmers."
Langley Township Mayor Jack Froese said people with secluded country mansions who have no intention of farming shouldn't be able to get the farm tax break.
"I believe they should be taxed at residential rates," he said. "There are a lot of land owners who take advantage of the agricultural taxation."
Bowden said cities should consider applying much higher residential tax rates in the Agricultural Land Reserve to increase the cost to wealthy residents who don't even attempt to seek farm status.
Different residential tax rates can be applied in different geographic areas, he said, and the ALR could be defined as such.
"We could make it so onerous to be located in the ALR that they would be more inclined to lease their property to a farmer in order to achieve the farm class status."
Meanwhile, Bowden said, legitimate farms should be allowed to average their production revenue over several years so they don't lose farm status if they suffer the occasional money-losing year.
Another reform already enacted last year by the provincial government exempts a larger amount of the assessed value of farm buildings like greenhouses and barns on areas with poor soil.
Bowden said that change means a $1-million greenhouse today pays property tax on a much smaller fraction of the value, adding it's hoped that encourages greater use of greenhouses.
Metro planners intend to discuss Bowden's findings with local cities and provincial officials before recommending any changes.
Map from Metro Vancouver shows ALR farmland in the region. Green parcels represent the half of ALR land that's actively farmed, purple areas aren't farmed but counted as available with potential for farming, while unavailable areas in gold include parks and golf courses. Image: metrovancouver.org
Half of Metro ALR land in Metro is actively farmed
Just half of the 60,893 hectares of Agricultural Land Reserve land in Metro Vancouver is actively farmed, according to a regional district report.
Another 25 per cent isn't farmed but has potential to be, while another quarter is categorized as unavailable for farming because of incompatible uses like parks, golf courses or housing.
Delta has the highest proportion – 79 per cent – of its 9,400 hectares of ALR land actually farmed. It's followed by Pitt Meadows at 60 per cent, Richmond at 59 per cent and Surrey at 58 per cent.
Langley Township's 23,406 hectares of ALR land – the largest amount of any municipality in the region – is only 45 per cent actively farmed. Maple Ridge is worse yet with only 31 per cent of its 3,787 hectares in the ALR actively producing.