Business leaders concerned over proposal to charge ‘indoor space surcharge’ on Vancouver’s retail, commercial and industrial spaces

VANCOUVER — There are a couple things that city leaders in Vancouver know for sure: As the city continues to grow, so do calls for police services.


“Since the end of the recession, we’ve added about 12,000 people to our population. That’s about a 7 percent increase,” Vancouver City Manager Eric Holmes told the Vancouver City Council on Monday night at the council’s Jan. 9 workshop.


Along with the population increase, the Vancouver Police Department has seen a jump in calls since the end of the economic recession, Holmes said. Calls to police are up 27 percent in Vancouver, and calls to auto collisions — including fatal accidents — are up 30 percent.


The problem, say Vancouver leaders, is that the money to fund the Vancouver Police Department is simply not in the city’s budget. The recession, along with a state-mandated property tax cap that limits the city’s ability to tax property owners, has contributed to what city leaders call Vancouver’s “structural deficit,” or an inability to find a long-term, stable funding source for essential services like the city’s police force.


In an effort to find funding and add officers to the Vancouver Police Department, Vancouver Mayor Tim Leavitt and the City Council decided in 2016 to form a 20-member Community Resource Team. Headed by Mayor Pro Tem Anne McEnerny-Ogle, the team included a diverse cross-section of Vancouver and included representatives from the city’s business, nonprofit, housing and faith-based communities. The team met nine times, from April to November of 2016, and came up with what they believe to be the best two options for increasing funding for Vancouver’s police department.

“The Community Resource Team determined that this plan made a lot of sense,” said Vancouver’s assistant city attorney Brent Boger on Monday night. “They confirmed that it would help build a stronger and firmer foundation for the police department moving into the future.”

Business leaders share concerns over a proposal before the Vancouver City Council to pay for increased police funding by charging retail, commercial and industrial business owners by the square foot. Here is video footage of the Vancouver City Council’s regular meeting on Mon., Jan. 9. Video by

The funding options include seven funding elements — five existing or in-the-works funding mechanisms and two new revenue streams. The five existing sources include the following:


  • Marijuana Sales Tax — This money is already allocated and will provide roughly $500,000 a year to the city of Vancouver for police funding.


  • COPS Grant Funding — Another already-existing funding source, this bridge-funding grant will provide three years’ worth of police funding and provide $400,000 a year in 2017, 2018 and 2019.


  • Proposed Van Mall North annexation tax revenues — This revenue stream is still in the works, but the Community Resource Team estimated that the new tax revenues from the annexation will provide about $1.5 million annually, beginning in 2018.


  • Increase in Business Tax Surcharge — This surcharge already exists, but the increase would provide an estimated $800,000 annually by 2020.


  • Increase in Utility Tax Rate on City-owned Utilities — The city has one of the lowest utility tax rates in the region and the proposed increase would make Vancouver more comparable to utility tax rates in other similarly sized areas and generate about $3.4 million in new revenues by 2020.


The four new revenue streams, which proved more controversial with some business owners and business group representatives at the Vancouver City Council’s Mon., Jan. 9 council meeting, include the following:


  • Annual Surcharge on Multi-family Units — Under the city’s Option A, this surcharge would begin in 2017 and charge owners $20 per unit per year in 2017, 2018 and 2019 and then $30 per unit per year in 2019 for revenues of about $2.3 million by 2020. Under Option B, which provides a two-year gap to help educate property owners and businesses, the surcharge would charge nothing in 2017 and 2018, then charge $90 per unit per year in 2019. Again, the revenues generated would equal $2.3 million by 2020.


This surcharge would apply to all multi-family units that include a kitchen and bathroom and are leased or rented to residential tenants as living quarters. There would be exemptions for multi-family housing that includes more than one unit devoted specifically to low-income housing for people earning less than 60 percent of the area median income, including seniors and disabled people.


  • Annual Square Foot Surcharge on Retail/Commercial/Industrial Spaces — One of the more contentious new surcharges, this revenue stream would depend on owners of retail, commercial and/or industrial space within the city of Vancouver and places a surcharge on indoor space by the square foot. The first 5,000 square feet of space is exempt. Under Option A, the plan would start in 2017 with rates progressively going up for all types of business space through 2020 for a total of $1.4 million in revenue from retail spaces, $1.2 million from commercial spaces and $1.2 million from industrial spaces by 2020. Under Option B, the plan would go into effect in 2019 and come out to the same revenue totals described in Option A.


At Monday night’s council meeting, several business owners and business group representatives spoke against rushing into the new indoor space surcharge and urged the Vancouver City Council to either adopt Option B or forego both Options A and B and seek a longer-term solution that relied less on business owners and more on the city’s overall group of taxpayers.


Robert Schaefer spoke on behalf of the Clark County High Tech Council and told the councilors his group “preferred a broader-based, long-term approach to support public safety and essential services [instead of] a piecemeal [funding strategy].”


Likewise, Tim Schauer, president of the Vancouver-based engineering firm MacKay Sposito, said he believed that a long-term approach to police funding was “essential” to the city moving forward in a sustainable way.


“If you feel you must move forward tonight, I would support Option B,” Schauer said. “But I prefer not moving forward until we have a broader conversation.”



Ben Hoskins, chair of the Greater Vancouver Chamber of Commerce and owner of two Vancouver businesses, also spoke at the Jan. 9 meeting. He said he also represented the views of members of several local economic groups, including the Columbia River Business Council and Identity Clark County — groups that represented more than 10,000 private sector employers who provided jobs to 130,000 people.


Hoskins said the proposal from the Community Resource Team that was before the council would “add greater complexity to city government and place sudden and unexpected burdens on job-creating businesses and multi-family housing” and urged the councilors to have a discussion with voters to find a “more comprehensive, broad-based funding solution.”


John Creedon, president of the Vancouver Auto Group, also approached the council on Jan. 9, saying that the indoor space surcharge could cause massive problems for business owners who have long-term leases already in place.


“I value the council’s commitment to investing in the future before serious problems develop,” Creedon said. “But I would urge you to go for ‘Option C’ although it’s not on here, because Options A and B are both unacceptable as far as I’m concerned.”


In the end, the Vancouver City Council decided to table the first reading of the agenda item until the council’s Mon., Jan. 23 meeting and Mayor Leavitt assured Creedon that he would have at least two more chances to share his views with the councilors.


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