Vancouver city council has approved a pilot program that will reduce taxes paid by small, independent businesses, such as restaurants, cafés or artists' studios.

The pilot, called the Development Potential Relief Program (DPRP), was passed on Wednesday and will benefit close to 1,400 businesses or community organizations struggling under a high tax burden.

"The pilot Development Potential Relief Program is an important first step toward providing tax relief to the community-based businesses and organizations who need it the most," said Vancouver Mayor Ken Sim in a statement from the city.

The DPRP goes into effect for the 2023 tax year and will provide a 50 per cent reduction of the usual general-purpose tax rate for light industry and business properties for a portion of the land value being taxed in relation to development potential.

Neil Wyles with the Mount Pleasant Business Improvement Association said the city's move to reduce property taxes will aid some businesses being squeezed from having to pay taxes based on the development potential of properties rather than their current use.

Quick turn around

Property owners wanting to realize the benefit must apply by the end of March and declare that their properties were occupied on Oct. 31, 2022.

They must also notify their tenants of the tax relief and attest that the primary use of their properties is not one or more of the ineligible uses under the pilot program.

Staff concluded that a number of properties, such as government agencies, banks and big box stores, some 1,700 across the city, should not be included in the program.

"Development potential relief is intended to support independent businesses and community partners residing in under-developed properties, with a focus on neighbourhood retail along high streets," stated a staff report on the program.

The report and a presentation to council profiled some of the businesses that stand to benefit from the tax relief, such as Mount Pleasant's The Beaumont, which opened in 2004 as a space for artists.

The staff presentation to council said that savings under the DPRP for it would be an $8,800 reduction from $62,400 to $53,600.

'Still going to see a net increase'

Luke Summers, the operations director at the Beaumont Studios, said the program is not enough to improve affordability in the city for ventures like the Beaumont.

"Given that the council had increased property tax last week by what looks like 10.7 per cent, and our property taxes are already at over $120,000, we're feeling like potentially we're still going to see a net increase in our property tax."

The pilot DPRP will be revenue-neutral and funded through a one per cent increase to the tax rates for class 5 and 6 properties, which are light industry and business properties as defined by B.C. Assessment.

The DPRP came about in partnership with the province passing tax relief legislation in 2022.

Vancouver says it's the first municipality in B.C. to implement a development tax relief program and recognizes it had a tight implementation timeline and limited engagement and consultation.

The city said it will now contact stakeholders, such as business improvement associations, boards of trade and arts, culture and non-profit organizations, "to assess the efficacy of the pilot DPRP and explore enhancement opportunities for future years," according to the report.

Council also approved the continuation of targeted five-year land assessment averaging for eligible residential, light industry and business properties that address property assessment volatility.