The best farmland in BC is located in the Fraser Valley and Metro Vancouver. These areas are also the most populated (and fastest growing) places in the province. The Agricultural Land Reserve (ALR) was created in the 1970s to protect this farmland from urbanisation.
The ALR has been successful in protecting farmland even in the face of provincial and local government pressures to develop it. While having land removed from the ALR is hard, people have found other creative ways to exploit the ALR for non-farming purposes.
I did extensive research on how the farming potential of the ALR was reduced between 2000 and 2009. I found that government was responsible for 75% of land removed from the ALR, or land within the ALR being used for transportation purposes. As an example, the South Fraser Perimeter Road removed the potential for 90 hectares of land that is still within the ALR from ever being farmed again.
As I posted about earlier this year, Metro Vancouver commissioned a study called “Farm Tax Class: Income Threshold Investigation.” It found that many people have built large-format estate houses on two to ten acre lots within the ALR. Because of a loophole in our provincial tax regulations, these people only have to produce $2,500 in revenue from “farming” to get a massive break on property tax.
|From Metro Vancouver staff presentation on Encouraging Agricultural Production through Farm Property Tax Reform. Select image to enlarge.|
These people basically get to build luxury estates and get a tax break which really isn’t in the spirit of the ALR.
The Metro Vancouver Regional Planning Committee at their most recent meeting looked at ways to close some of the loopholes in the property tax regulations to encourage agricultural production with the ALR.
Metro Vancouver staff have recommended the following be considered to encourage agricultural production and limit non-farm use within the ALR.
- Eliminate the 50% School Tax exemption for properties classed as residential (Class 1) in the ALR. This change would also apply to regional district, hospitals, Transit and other agency fees.
- Change the income threshold to achieve farm classification to a minimum of $3,500, regardless of farm size for the Metro Vancouver region, and ensure that the threshold is reassessed every five years and adjusted according to the rate of inflation; and
- Develop a two‐tier farm classification benefits system that allocates only some tax benefits to farms with an income threshold of $3,500, while providing the full package of tax benefits to the more productive farms with an income threshold at $10,000. This would create an incentive for farms to reach the higher income threshold. Determining the appropriate allocation of benefits for a two tier system requires consultation with the agricultural community and the agencies providing secondary benefits to properties with farm class.
- Adjust the method for valuing agricultural land not used for farming to discourage further non-farm development in the ALR. The adjustment could consider valuing agricultural land not used for farming as if it was located in the applicable zone within the Urban Containment Boundary. Implementing this recommendation requires additional policy analysis and consultation with local governments and must ensure that any reform stipulates that tax policy is not justification for removing land from the ALR.
- Encourage local governments and the Agricultural Land Commission to develop new protocols to enable BC Assessment to obtain timely information on changes in land use and new commercial business activities in the ALR to ensure an appropriate tax assessment of buildings and improvements.
The provincial government has complete control over the ALR and property tax regulations. While Metro Vancouver staff's recommendations make sense, I’m not confident that the provincial government will take action on these recommendations.