Council Update: Commercial Taxes, Polygraphs, Art Gallery Funding

Agenda February 15
Agenda February 15 Committee of the Whole
Agenda February 8

February and March are always the busiest times of year at City Hall, with budget deliberations easily tripling the usual workload. As a result, I have been a bit behind on my Council blog. Here’s what happened earlier in February if you missed it

Commercial Tax Reform:
The most significant and potentially far-reaching item on Council’s agenda in February was commercial tax reform. Commercial tax reform is something that Council has been discussing for several years. Council’s intent throughout the various twists and turns of the debate has been to try and find a way to provide more support for small businesses. The problem, however, is HRM doesn’t tax business directly. HRM taxes property and the relationship between property taxes and how big a business is or how profitable it is, is weak at best. The Province recently provided HRM with some additional powers to vary commercial taxation, but HRM can still only tax property, which means the municipality is still working with imprecise tools. We don’t have the power to introduce a small business rate to fully get at the problem we’re trying to solve.

So what can HRM do? We can phase in assessment increases overtime to give businesses time to adapt to sudden increases in property values. That piece isn’t controversial and easily passed Council. The more challenging idea is varying taxes by location. The option that was ultimately advanced by Council is to introduce a tiered system that varies commercial tax rates by location. The intent is to lower taxes in areas, like main streets, where small businesses tend to concentrate and to raise rates in areas where Big Box developments are concentrated.

Varying taxes by location isn’t a perfect solution because some Big Box stores and national chains are located on main streets (the Canadian Tire on Quinpool for example), and, on the flipside, there are small businesses located in the business parks. It’s tempting to conclude that since taxing by location isn’t 100% precise, HRM shouldn’t adopt that approach and that was what staff essentially argued. Staff’s recommended approach was to tier rates by property value but not vary those rates by location.

It’s worth remembering that the current tax system isn’t perfect either. It already creates arbitrary winners and losers. The losing side of the current system has, for decades, been commercial main streets where higher property values mean that small local businesses tend to pay much more on per space basis than their competitors do in the business parks. I crunched the numbers for a few Downtown Dartmouth businesses when this came before Council back in 2019

Value (Com)
(sq. ft.)
$/Sq. ft.
Humble Pie$90,6003600$25.17
New Scotland
2019 Data

On a square foot basis, New Scotland Yard, and TIBS pay way more than the Big Box stores in Dartmouth Crossing. This doesn’t align with our planning goals around transportation, encouraging density in our existing centres, and sends more of our wealth outside of our community. Joe Minicozzi gave an excellent, and surprisingly entertaining talk given the subject matter, on why the status quo approach to commercial taxation is problematic. You can watch it below. I highly recommend it!

Council had a good debate and opted to overrule the staff recommendation to tier rates, but not vary by geography. Council instead opted to proceed with a system of rates that vary by location for the highest value properties. Here’s an idea of what the new system would look like:

As the chart shows, lower value properties would be taxed the same across the municipality at a lower rate than is currently the case. Cutting those rates would be paid for by increasing the rate for higher valued properties in the Business Parks. All of HRM’s Business Improvement Districts came out in support of this approach, while several representatives of the Big Box stores spoke out against the idea. In the end, Council approved the new approach 14-3 with councillors Mancini, Russell and Hendsbee voting against. The new system is expected to come into place for the 2023/2024 fiscal year.

Polygraph Employment Testing:
HRM is scrapping the use of polygraphs in its hiring processes. Polygraphs are used in hiring positions in the police department and not just for police officers, but any employee that has access to the police department’s systems or buildings including custodian and IT staff. HRM’s practice here isn’t unusual. Positions in police departments across the country often require polygraph tests, including the RCMP. It’s a practice that’s been in place for decades, but is now increasingly challenged.

Polygraphs are problematic because they lack scientific credibility. What they produce isn’t reliable. Ontario and New Brunswick have both banned their use in hiring, including hiring in police departments, and while they’re still used by the federal government, recommendations to end the practice have been made by the National Security and Intelligence Review Agency.

From past discussions with staff, the real benefit to the polygraph testing is the in-depth interview that accompanies it, which is something that can be achieved without the need for polygraphs. Setting up alternative screening tools will take some time so discontinuing polygraphs in HRM will take a few months. Staff indicate that polygraphs will be no more by the end of September. Good riddance.

Art Gallery Concept

Art Gallery Funding:
The request by the Art Gallery of Nova Scotia for HRM to contribute towards the cost of the new waterfront gallery was back before Council. The $142,900,000 project is being largely funded by the provincial and federal governments. The Province has allocated $82,900,000 and the feds have committed $30,000,000. The Art Gallery has committed to raising the remaining the $30,000,000 and requested HRM contribute $7,000,000 (5% of the overall project cost). HRM staff reviewed the ask in relation to the public benefit the new gallery will bring and HRM’s past contributions towards major public projects. Staff recommended that HRM provide a contribution of $3,500,000, half what the Gallery requested, to be paid out in installments over the next five years.

Council had a long discussion about whether to contribute. A number of Councillors expressed concern in contributing to a Provincial project when the Province hasn’t firmly committed to some of HRM’s top priorities. For example, HRM has an ambitious Rapid Transit Plan, but the Province has been very slow (reluctant in my opinion) to call for submissions for the transit portion of the joint federal-provincial infrastructure program that might help pay for it. That reluctance isn’t surprising given that our Provincial governments have, historically, not been enthusiastic in funding transit. Provincial support for transit in Nova Scotia typically appears for special one-off projects like electrification and the Bedford ferry. The Province has typically not seen a role for itself in more conventional, but important, transit projects. Do we have money to spend on an art gallery if the Province is going to leave HRM to build the proposed rapid transit network alone?

A number of my colleagues also latched onto the idea that, as a Provincial property, the new Art Gallery will generate new payments in lieu of taxes to HRM. Staff estimated PILT payments of $2,000,000 – $3,000,000 a year. It’s tempting to take that PILT number and then argue that HRM’s contribution is a no brainer because it will pay for itself in just 2-3 years. That line of thinking, however, misses how the property tax system works. No property exists in a vacuum. The taxes collected by each property contributes towards the services that we all enjoy. Valuable properties contribute more, which supports a higher level of services than would otherwise be possible. When we try to make a business case out of the taxes generated by a specific project, we’re essentially letting that property off the hook in terms of its contribution to the broader pot. Projects like the Art Gallery should be judged on their merits, not on what property tax payments may result.

In the end, Councillor Cleary put forward an amendment for HRM to provide the full $7,000,000 requested by the Gallery rather than the $3,500,000 recommended by staff. Cleary’s amendment passed 12-5 and then the amended main motion to fund the gallery was approved 14-3. I supported both. I disliked how the Art Gallery discussion was being framed in terms of the taxes the project will pay, but the overall project still has a lot of merit. It’s a standout design, it will be a draw and an asset to HRM and the municipal ask (5%) is both manageable and absorbable since it can be paid out over time. This is a project worth participating in, and I think will be comparable to the Central Library in what it does for public life in our city.


  • Rejected a request by Armco to speed up phasing for new development at Indigo Shores
  • Approved minor modifications to the Seton Ridge plan
  • Amended the Taxi Bylaw to allow license validity to be based on when each license is issued rather than by the calendar year
  • At their request, replaced Councillor Lovelace on the Community Planning and Economic Development Standing Committee with Councillor Outhit
  • Declared some HRM property in North Preston surplus to allow it to be sold to the North Preston Medical Society
  • Approved the new Halifax Common masterplan in principle and directed additional engagement for the Wanderer’s Block
  • Changed Council meeting procedure to add a land acknowledgement at the beginning of each meeting
  • Initiated the District Boundary Review process
  • Approved implementing protected bike lanes on Almon Street and requested additional info on options to make the section between Robie and Gottingen protected
  • Directed staff to consider a future trail connection between Westmount Plains and the Old Lawrencetown Road Greenway as part of ongoing secondary planning in the area
  • Expanded the Rainbow Crosswalk program to include the Pan-African flag as an option in traditional Black communities (two forthcoming in Cherry Brook)
  • Approved the creation of a Rural Active Transportation Program. Future rural active transportation projects will likely be funded by an area rate
  • Requested staff to consider front yard setback distances in Fairview as part of upcoming plan amendments
  • Set dates for heritage hearings for 2267 Brunswick Street and 1266 Barrington Street
  • Revised the definition of Adult Entertainment in Downtown Halifax to exclude retail
  • Amended the Dartmouth plans to allow commercial and industrial reuse of the Conrad Quarry lands in Montebello
  • Initiated an amendment process for the Centre Plan to fix some housekeeping items
  • Received a presentation from Halifax Water on their annual business plan
  • Requested staff reports on a community boundary review in Hammonds Plains, and on supporting the protection of 27 acres of woodland in French Village