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Council should grant tax exemption

By Staff | Aug 13, 2009

The Rugby City Council was put in a challenging position earlier this month.

For the first time, officials had to decide whether to extend property tax exemptions for housing construction. Up until then, tax exemptions had been designated only for new or existing businesses that were not in direct competition with others in the community.

The City Finance Committee wrestled with forming a policy to address abatements for new housing construction but council members’ opinions were still mixed.

And that was evident when it was time to vote Aug. 3 on an application filed by Harley Johnson, a Killarney, Manitoba, property developer, who proposed constructing a $1 million, 14-unit complex suited for senior citizens. The vote was close, but the exemption was defeated by a 4-3 margin.

The outcome was disappointing to some on the council and members of the Rugby Area Job Development Authority, who reviewed Johnson’s project and exemption request and recommended a five-year, 100 percent abatement.

The voted-down exemption was for five years with partial tax relief, and reportedly Johnson would have been OK with that arrangement.

While it’s not a new business being built that will create jobs, nevertheless, this housing complex will impact the community positively, the JDA believes. And those points were outlined before the council voted.

It appears the issue is not yet put to rest, as the council has scheduled to reconsider Johnson’s application at a meeting next month. This time the council should approve the exemption.

This is too good a project to pass up, and there are many benefits to the community that will come out of it.

And granting short-term property tax relief is worth the price for the investment this developer is making in the community.

Some on the council may believe granting the tax break is not fair to those who previously constructed new homes or multi-housing units and didn’t receive an exemption.

However, the council has the ability to create a policy that would enable owners of existing units to apply for and receive tax abatements in the future, if they make significant improvements to their property.

And that appears to be a way to provide fairness to the exemption process.

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