The plunging value of Calgary’s downtown core has left commercial properties elsewhere to make up the difference.
Calgary’s assessment department costs $22 million a year to operate. Abolishing it would help plug the downtown tax hole.I’m not kidding here. Cities have no real need of their own property assessors. In Ontario and B.C., assessment is done by a provincewide agency.On Tuesday, I wrote about Metropolitan Centre owner Howard Silver, who won a Court of Queen’s Bench judgment against the city and its assessment review board.Justice M. David Gates found that the assessors had no justification for reclassifying Silver’s business from public assembly to retail. The picture of arbitrary decision-making is alarming. If Silver hadn’t taken the case to court, the assessors would have been the only law.Assessors are supposed to value property for tax purposes, nothing else. It’s council’s job, not the assessors’, to raise money.Today, the functions seem rather confused.Inglewood business owner Kelly Doody, who became an overnight activist when tax bills arrived, told me that assessors are now referring to her space as retail, when in fact it’s a second-floor office.
Kelly Doody, owner of The Social School in Inglewood, said she is “shocked and disappointed” after learning her property taxes have soared from $1,500 a month to $6,400 a month as a result of the “tax shift” due to downtown vacancies.
Brendan Miller /
That twist is exactly what Silver heard five years ago when Met Centre taxes rose by 400 per cent. The judge said this was unjustified and unfair.It’s obvious that the city faces a huge tax hole with the loss of downtown value. Council’s decision to provide 10 per cent rebates on business property taxes, after many were absurdly raised, has forced service cuts.Jim Gray and other business leaders made a startling plea Wednesday to shut down the Green Line LRT project for one year because it poses “an unacceptably high risk of becoming an economic catastrophe for the city.”The city needs critical choices from a disunited and often dysfunctional council.But the worst thing to do — absolutely the most damaging and unfair — is to pick one category of taxpayer to carry an unfair burden.They are disproportionately the owners of non-residential property in the ring around the core. There are many more in the suburbs, but the axe seems to fall heaviest in those places.There’s not much by way of compassion from our assessment department.On June 19, after councillors agreed to the rebate, city assessor Nelson Karba sent letters to property owners who qualify.He told them that if they want the rebate immediately, they’ll have to withdraw their appeals of 2019 assessment.Otherwise, they’ll have to wait until all appeals are exhausted. That took five years in the Met Centre case.
Howard Silver at the Metropolitan Conference Centre celebration of its 20th anniversary on May 1, 2015.
Either that or accept a 2019 assessment that may be wildly unfair.The fundamental problem is this built-in merging of roles that should be quite separate.The three tax functions — property assessment, setting mill rate and collection — belong to city council.Assessment, especially, should be completely divorced from council and its revenue goals.The province should seriously consider the system in Ontario, where the independent Municipal Property Assessment Corp. assesses all property for every owner in the province.Municipalities fund this provincially mandated body, but cannot interfere with its workings.British Columbia’s system is similar, but there are differences that make Ontario’s better for this boom-and-bust province.For one thing, Ontario assesses properties only once every four years.Related
If a property increases in value from one assessment to the next, the owner pays the higher tax in stages, not all at once.So, if a property costs $100,000 and climbs to $200,000 by the next assessment, the owner pays tax on $125,000 the first succeeding year, $150,000 the second, $175,000 the third, and finally on the full $200,000.But if the value drops over the four years between assessments, the owner gets the whole benefit in the first year. (Improvements are assessed as completed.)In today’s Calgary situation, this would protect businesses and homeowners from draconian year-by-year raids.The owners of the downtown towers — the big pensions and real estate interests — would still be paying taxes at earlier, higher rates.Council would have several years between assessments to plan for the inevitable value shift.Best of all, Calgary’s assessment department — being long gone — would have absolutely nothing to do with it.Don Braid’s column appears regularly in the Calgary Herald.email@example.comTwitter: @DonBraidFacebook: Don Braid Politics