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RFD- 3060 Business Items   Item #   11. b.    
Regular Council Meeting Agenda
Meeting Date: 08/14/2017  
Title:    Tax Deferral - Goodwin
Department: Corporate Services  
Strategic Vision Element: n/a Related Goal: n/a

Information
Request for Decision Summary
This report provides information about a tax deferral agreement with 1921645 Alberta Ltd. for the Tri Village Local Improvement.

Proposed Motion
That Council approve the tax deferral agreement with 1921645 Alberta Ltd., as presented.
Background/Analysis
The Tri Village Local Improvement Bylaw sets out a 15 year term which commenced in 2016. The City has received a request from 1921645 Alberta Ltd. to extend the term of the Tri Village local improvement.

A tax deferral agreement is the recommended legal instrument to extend the payment terms in this situation. The tax deferral agreement allows for a longer term separate from the local improvement bylaw. There is no loss of revenue  and the City maintains a first charge on the property as security for the payments. Interest is charged at the rate established with the local improvement.

A tax deferral agreement for a 30 year local improvement term has been negotiated with 1921645 Alberta Ltd., subject to Council approval.
Options/Alternatives
Council can direct Administration to negotiate a tax deferral agreement with different terms than what has been presented.
Consultation/Engagement
The tax deferral agreement was developed by legal counsels for the company and the City.
Implementation/Communication
The agreement has been signed by the company and City administration. If approved by Council, the agreement takes effect June 30, 2017.

The annual taxes and 2016 local improvement taxes already levied will remain payable and are subject to the applicable penalty rates. The first payment under the tax deferral agreement is June 30, 2019 which provides two years to address the current taxes payable.
Impacts
The tax deferral agreement provides the tax payer with a lesser annual local improvement payment over a longer term. The outstanding balance is charged interest for the extended term at the rate set in the local improvement bylaw.

Other tax payers may request a deferral of taxes. However, only local improvement taxes can be deferred with no loss of revenue because they are already interest bearing.

Fiscal Impact
Financial Implications:
No taxes or penalties are waived under the tax deferral agreement. 

Local improvement payments will be collected over 30 years while the corresponding debt repayment will be made over 15 years. This difference in cash flow is manageable within the normal City operations. The cost incurred by this difference is compensated by the additional interest earned from the 30 year term rather than the 15 year term.
Attachments
No file(s) attached.

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