Diversification failure

Post date: Sep 28, 2013 12:56:55 PM

John sent the following letter to the Rocky View Weekly which has caused some incumbent councillors to cloud the issue by stating that 46% of revenue comes from non-residential. See below the letter for the detailed explanation.

The Rocky View Weekly has highlighted some of the debt and spending issues in RVC over the past several weeks. One key thing that has been missed in the expose is the complete failure of the tax diversification strategy.

Supporters of the urban development of Rocky View have done so in the belief that increasing the proportion of non residential taxes will allow the county to provide more services at the same residential tax rate or allow for a decrease in residential taxes. However, from 2005 to 2011 the non residential component of taxes in Rocky View County has gone DOWN, from 22% to 20%.

Rocky View County has spent over $100 million dollars subsidizing and encouraging commercial development that has entirely failed meet the objective of increasing the percentage of non-residential taxes.

Rocky View's Assessment is shown below as reported to and summarized by the provincial government:

These charts clearly show the non-residential has stayed close to 20% since 2005. Yet some councillors have stated that 46% of our revenue comes from non residential therefore diversification is successful.

Earl Solberg acknowledged this low assessment value in an April posting on his website: Right now it has been reported to me that RVC’s assessment base is 23% Commercial/Industrial, M&E & Linear….. and the balance in all other uses including farm and residential 77% . He also reiterated the diversification goal: The balance of assessment goal is 40% Commercial/Industrial, M&E & Linear and 60% Residential.

In September, only five months later, Earl now states: non-residential (Industrial/commercial) revenue has INCREASED from 26.66% (2006) to 46.80% of budget. Rolly Ashdown also states this percentage in a comment on the Rocky View Weekly site: Percentage wise, the res/non res split went from 71.85/26.66 to 52.23/46.8. They are both missing the goal of diversification was to increase the assessment base. This goal is shared by other municipalities which the reason Alberta tracks it. RVC remains at the bottom of our peer group as shown on the chart despite millions of dollars of debt.

Why is there a difference? Because commercial is taxed at a rate 3 times higher than residential the 20% tax assessment BASE on the chart becomes 43% tax REVENUE.



60/140=43% non-residential

80/140=57% residential

Diversification has failed because the goal was to diversify the assessment BASE. Tripling the commercial tax rate has worked but few of us would agree that governments simply increasing taxes is a “strategy”. The attempt at diversification cost close to $100 million and has proven to be risky with levies far below expectations. If increased revenue was the goal then tripling the tax rate instead of borrowing many millions of dollars could have been done with no investment and no risk.

If diversification worked to get a 40% non-residential base, and non-residential was taxed at 3 times the residential rate then the tax revenue split would actually be:


120/180=67% non-residential

60/180=33% residential