We’re fortunate to have dozens of nonprofit organizations doing socially important work in our community: health clinics, boys and girls clubs, organizations to help the homeless and forgotten youth, groups providing space for adult day care, teenage drop-in centres, childcare, hospice centres for the dying.
The list is varied, but the one thing they all have in common is a lack of resources. It’s amazing how a scrappy staff and dedicated pool of volunteers can stretch limited funds, but there is inevitably not enough to get the job done. The last thing many of these groups need is to pay a hefty property tax bill. It makes sense, then, that the city extends considerable tax subsidies to the organizations, effectively cutting their taxes, which doubly makes sense considering that many of them are offering services that would otherwise fall to government.
But while cash-strapped nonprofits serving communities of need deserve all the support they can get, the city’s one-size-fits-all tax subsidy program also gives tax breaks to multi-million dollar yacht clubs sitting on prime oceanside property. This ultimately deprives the cash-strapped orgs of further support. There is, after all, a limited pool of money—why are we giving some of it to millionaires?
Royal Nova Scotia Yacht Squadron
Take, for example, the Royal Nova Scotia Yacht Squadron, on the Northwest Arm. The RNSYS exemplifies every stereotype of a high-end yacht club. It is the oldest yacht club in North America, founded in 1837. “It has ties to Britain’s royal family, with Queen Victoria approving the use of the ‘royal’ prefix, and King Edward VII presented the club with its most treasured trophy, the Prince of Wales Cup, in 1860,” explained Steve De Belie, a board member who for some reason felt compelled to author a code of ethics for the club in 2005.
The property is assessed at just under $5 million. “Senior” memberships for people over 35 years old include an “entrance” fee of $1,190, with annual dues of $2,000. Mooring a boat at the club marina cost an upfront fee of $2,660 and seasonal fees of $1,545 for a boat under 45 feet in length, ranging up to an upfront fee of $3,830 and seasonal rental fees of $5,065 for a boat over 60 feet in length.
And yet the club pays a pittance in taxes. With no subsidy, the RNSYS would pay a tax bill of $63,382 this year on the two waterfront parcels it owns. But the subsidies slash those taxes by over $40,000, to just $23,126 this year. The club has been collecting such a tax break for many years. (Most of the tax cut amounts cited in this article come from this document.)
Dartmouth Yacht Club
The Dartmouth Yacht Club, at 697 Windmill Road in Dartmouth, “is nestled in a sheltered recess with high land on both sides (historically known as Wright’s Cove) on the eastern shore of Halifax Harbour,” says its website. The club has such a draw that a high-end condo complex is nearing completion next door, with access to the yacht club used as a selling point.
Members at the DYC are charged stiff fees, including a joining fee of $1,500, with annual member dues of $376. Marina fees are $675 annually, plus $2.10 per square foot for the boat itself and other assorted fees for power, dry dockage and the like.
The club has existed since the 1960s, seemingly without hardship, but only last year thought to ask for the tax break regularly dished out to the RNSYS. In November, the city’s grant committee accepted the request and voted to add Dartmouth Yacht Club to the list of non-profits receiving tax cuts.
Without the tax break, the DYC would pay $25,445 in taxes. But with the newly granted subsidy, the club will pay just $9,454, a subsidy of nearly $16,000.
Bedford and Hubbards
A senior membership for someone over 35 years old at the Bedford Basin Yacht Club is $748 annually, although actually keeping a boat at the club will cost more than $1,000 annually, depending on the boat’s size and services needed. Taxes on the Bedford club’s property would total $31,279, but thanks to the city subsidy, it pays just $11,246, a break of over $20,000 each year.
Simply applying to berth a boat the Hubbards Yacht Club for more than one year running will cost you $2,500, with an annual rental fee of $1,000 on top of that if you’re approved. The club would pay $10,823 in taxes, but after the subsidy it will pay just $4,184.
The importance of political judgment
It’s true that the yacht clubs serve more than the filthy rich. They host low-cost learn-to-sail classes open to anyone, rent out their facilities to other organizations, and serve as something of a community hub in some cases. Moreover, membership costs for young people just getting into the sport are affordable for most working people.
Still, these are not cash-strapped, scrappy non-profits extending basic social services to communities of need. Would anyone at the Royal Nova Scotia Yacht Club even notice if the top-priced membership fee was raised from $2,000 annually to, say, $2,500 annually—more than enough to cover the full tax bill?
And it’s not just yacht clubs. The South End Lawn Tennis Club gets an annual subsidy of over $23,000. The very largest identifiable tax subsidy package goes to the Waegwoltic Club on the Northwest Arm, the “urban social club and recreational facility,” which gets a whopping $153,788 cut to its tax bill, this year alone.
Another city document—a staff presentation given to the grants committee in November—shows that one organization categorized as “Sport, recreation & leisure” owns property assessed at $3,131,000; without relief, the tax bill would be $93,187, but with the tax subsidy, the organization will pay just $2,330 in taxes this year.
Here are some more details:
Unfortunately, the second document does not name the organizations receiving these large subsidies—so we don’t know if the “health/medical, advocacy & international aid” organizations are doing important work the community would broadly support, or if they’re, say, spa-like detox centres for rich people like Rob Ford. When I asked for more detail, I was rebuffed, with the explanation that the numbers given to the committee were “for discussion purposes only.”
To be fair, the grants committee is looking to “rationalize” the tax subsidy program, and so is considering several proposed changes to it at the committee’s meeting next week. But while the proposed changes will tighten up the extreme situations—the organization with $3,131,000 worth of property may see its tax bill increased from $2,330 $12,524—it still sees all non-profits as equally worthy of tax subsidies.
Is it morally justified to give clubs that service a wealthy clientele such tax cuts? In the logic given to the committee by staff, yes. All the groups are filling some social need, and therefore should be extended a tax subsidy.
This is the perfect example of city government “rationalizing” tax policy out of the political process, leaving no room for sensible judgment. But giving tax subsidies is necessarily a political process. There’s no way around it: Yacht club apples are simply not hospice centre oranges—there is a qualitative difference between the two.
We cannot “rationalize” the politics out of it; they are inherent to the process. It takes discerning people charged with the task of making those value judgments and spelling out those differences. That’s why we elect people.
A note on language. The grants committee calls its tax subsidies “tax relief.” Early on in my coverage of this issue, mayoral assistant Josh Bates sent me a note urging me to not adopt that language, and pointed me to an interview with George Lakoff, a linguistics professor at UC Berkeley. (Bates said he is not writing in his official capacity, but rather because he thought I’d be interested in Lakoff’s position.) Said Lakoff:
The phrase “Tax relief” began coming out of the White House starting on the very day of Bush’s inauguration. It got picked up by the newspapers as if it were a neutral term, which it is not. First, you have the frame for “relief.” For there to be relief, there has to be an affliction, an afflicted party, somebody who administers the relief, and an act in which you are relieved of the affliction. The reliever is the hero, and anybody who tries to stop them is the bad guy intent on keeping the affliction going. So, add “tax” to “relief” and you get a metaphor that taxation is an affliction, and anybody against relieving this affliction is a villain.
Lakoff is right. Moreover, the city has long recognized that tax cuts given to non-profits are in fact subsidies, which is why the cuts are administered by the Grants Committee and are marked as a city expense for accounting purposes.
The $3,131,000 property is Bayside United Baptist Bible Camp in Ketch Harbour.
http://baysidecamp.org/
Dal Dental: A thought keeps popping into my head….what if the FB page was called “Class of Muslim DDS 2015 Gentlemen”.
How would Dalhousie or the public have reacted? Last step first, I would guess….
Tim!
Thanks for shining your light on this complicated issue. It does sound as if HRM has not been very thoughtful in its approach. Speaking of Boston, here’s a pretty good discussion of Payments In Lieu Of Taxes (PILOT).
http://www.urban.org/uploadedpdf/412460-property-tax-exemption-nonprofits.pdf
They may get it right when they get to be world-class.
By the way, Lakoff does a similar analysis for “tax burden” as the one he does for “tax relief”. There is no difference between “taxes” and “the tax burden”, except the latter is a powerful visual image of taxes being something that weighs you down. These phrases – “tax burden”, “tax relief” – are now so common that it’s easy to forget they are a recent and deliberate invention. Let’s all stop using them.
Regarding the yacht clubs, curling clubs etc, you have to remember that the subsidy given is only to reduce the rate from commercial to residential. One of the main justifications for having a much higher commercial rate is that business owners can deduct property tax as an expense for income tax purposes. So since businesses pay almost 50% income tax, they are getting a 50% subsidy anyway that is not available to the non-profits (since they don’t pay income tax). The clubs are getting about a 60% subsidy so I don’t think it’s all that unfair.
Thank you for the exposure of this municipal policy. the Council and its relevant committees should review the grants or subsidies and increase the amount of taxation every year, on an increasing scale, considering everyone including bus riders and home owners have been paying increased amounts to the public coffers. At the very least the entire ” non profit ” needs to be examined for what most people understand it to mean. There is a kind of corruption of the concept and its purpose. They say justice needs to be seen to be done. I think fairness should also be seen. It is definitely “rationalization ” that is making a yacht club deserving of a grant or subsidy like other non profits. Call it what it is – a private club- and work something out in line with its designation.
Infuriating! Your piece needs no further comment. It factually and clearly presents an existing tax policy that is irrational, immoral, elitist, and in conflict with fiduciary responsibility. In suggesting a quid pro quo, are law firms given tax relief — excuse me, “subsidies” — because they do pro bono work? Facilitating access to justice for those who can’t afford it would seem to be equally deserving.
Thank you, Halifax Examiner, for bringing these issues out of obscurity and before the attention of average citizens whose taxes and votes prop up these decisions and policies.
It seems to me knowing what organizations are receiving the subsidies is vitally important so that it is possible to judge the various merits of the programs. Membership numbers count, too – if you are offering a huge subsidy to a yacht club that serves 100 members vs a housing agency that serves 500, that should affect the decision about where to grant subsidy, surely.
But after all, this is Halifax. I’ve long ago given up thinking anything is done in a reasonable way here. I’ve been part of organizations who fund hundreds of programs annually and have NEVER been called upon to evaluate that process. Bizarre.
Yes, this. Those of us paying full and burdensome property taxes have a right to expect to know who is being subsidized by our payments.
While you may be correct, the document specifically refers to the water lot of the RNSYC, not the total property which you have assessed at close to $5million. while the water lot may arguably be considered a prime revenue generator (even with the investment in floating docks) it may be that the “tax relief” is for segment of the club’s property.
Dana, I’m on my phone right now so can’t double check, but my recollection is that the club asked for the subsidy to be extended to the water lot and the committee declined. The amounts I cited referred to the existing subsidy to the land lots. But I’ll double check when I can.
You’re correct. My mistake. The water lot was a new application for “relief” which staff recommended be declined.