City council is split on whether to exempt the Yellowknife Day Care Association (YDCA) from paying property taxes.
At a governance and priorities meeting Monday, four showed support for the idea, and four said they were against it.
City administration had asked council to reject a request from association executive director Marine Voskanyan, who asked for an exemption worth more than $25,000 in municipal taxes in 2020 in a letter dated March 2.
The largest full-time day care in the Northwest Territories, the YDCA is not-for profit and is a registered charitable organization with the Canada Revenue Agency, according to the city memorandum. It provides 104 full-time child care spaces and serves 150 children overall throughout the year with programming.
Simon Whitehouse/NNSL photo
It also provides a fee for service model of business, which is where about two-thirds of its revenue comes from. The remainder is paid by the GNWT and some fundraising efforts.
Sheila Bassi-Kellett, senior administrative officer said that the city is recommending council reject the request because the day care doesn't meet the provisions of tax exemption as laid out in the territorial Property Assessment and Taxation Act.
Likewise, it meets the definition of a taxable body in the city's tax administration bylaw, adopted in 2018.
Specifically, the city doesn't believe that child care services serve a "municipal purpose" because they fall under territorial jurisdiction. The city says that the the association doesn't serve the general public because it only has the ability to serve "5.19 per cent of the community's eight-and-under population (0.63 per cent of total Yellowknife population)."
Sharolynn Woodward, director of corporate services, said the city's rationale is based on the fact that the YDCA both charges fees and has that limited number of spaces available.
"They're not an extension of our existing services and they are services that are clearly the mandate of substantial funding that government provides to the organization," she said.
If granted, the break to the YDCA's tax bill would bring to $321,320 the amount in city revenue forgiven in this way in 2020, a figure representing about 1.02 per cent of the $31.4 million the administration expects to bring in this year.
The city has the ability to provide tax exemptions on a case-by-case basis, but it means adjustments to the bylaw, specifically adding the organization's name to the list, which has grown to include about 10 such groups since 2002.
The bylaw was last updated in 2018 when council allowed for a $12,389 tax exemption to the NWT SPCA. In the same year, two places of worship, the Islamic Centre of Yellowknife and the Yellowknife Seventh Day Adventist Church also received tax exemptions.
Four councillors support the exemption
While council is to vote on the issue at the July 27 regular council meeting, four councillors showed support of granting the exemption on Monday. They included Mayor Rebecca Alty, and councillors Julian Morse, Shauna Morgan, and Rommel Silverio.
All four were less inclined to accept the the city's reasoning that child care services doesn't serve the municipality or the general public, as some pointed out that without child care, many people wouldn't be able go to work.
Some councillors said there may be a need to review how the city provides tax exemptions who is eligible for them.
"We are in a difficult position where on an individual basis we are picking winners and losers in terms of people who gets to be tax exempt and those who don’t," Morse said, noting that he sees some organizations that are less of service to the municipality than child care providers. "There have been churches or religious organization but it has also extended to recreation clubs, community associations, certain community gardens and a heritage society in there.
"I would consider child care to be just as deserving of an exemption as the rest of those. The question becomes at point are we quiet and slowly whittling away at the bottom line of the city by granting these exemptions that may or should not be. "
Councillors Niels Konge, Cynthia Mufandaedza, Steve Payne, and Stacie Smith all agreed with administration and opposed the tax exemption proposal.
"I think we need to look at our (tax exemption) policy because some of the unintended consequence is going to be that if we give a tax exemption, then somebody else has to pay," Konge said. "In Yellowknife today that means residences will have to pay a bit more and business will have to pay twice what residences pay."
Konge agreed with administration that parents have a choice if they want to pay for the service. For that reason, it is a legitimate business and a prescribed, non-essential service to a select amount of people.
Only Robin Williams removed himself from the discussions as he has children attending the day care.
Alty said that if the situation remains at a 4-4 tie in the regular meeting later this month, it will mean the tax exemption won't pass.
Asked if she thought the city was more sensitive to giving up revenue opportunities given the fiscal uncertainties around the Covid-19 pandemic and the shutting down of services this year, she said that is likely.
"I do think when times are a little tougher, we scrutinize each ask that comes," she said. "In years when revenues are bigger, you can be more lenient and open to tax exemptions. This all may mean that we have to review our (tax exemption) policy and may we may need to consider who can be recipients."
