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For some perspective on the #yyc biz PTax challenge. Here's a short thread.
It's all about the drop in property values downtown.
The Bow was worth $1.4b in 2015. Today, it's down to $775m.
At today's rates, that loss means ~$12m/yr lower muni govt revenue. From one building.
It's all about the drop in property values downtown.
The Bow was worth $1.4b in 2015. Today, it's down to $775m.
At today's rates, that loss means ~$12m/yr lower muni govt revenue. From one building.
There's more. Bow Valley Square was worth $900m in 2015. Today, it's down to $236m. That's another $12m in lost muni govt revenue for #yyc.
It goes on and on. Eight Avenue Place was worth nearly $800m in 2015. Today it's worth barely over $390m. That's over $7m in lost muni govt revenue.
Add up the revenue lost from just 50 downtown properties and you get ~$135m in lost muni revenue. Overall, downtown non-residential properties are worth roughly $15 billion less today than in 2015. That's huge, and lost revenue has to come from somewhere else.
Why does this matter for tax rates? Well, council doesn't set tax *rates* they determine how much revenue they need to bring in from the three bases: residential, non-residential, and farms. The tax rate is simply: dollars / property values.
That's the key. When property values downtown collapse, city council still wants a pre-set number of dollars from the non-res base so the tax rate must rise. Simply put: foregone dollars from downtown property are raised from non-res properties elsewhere.
One alternative is for council to no longer determine the dollars it wants to raise from each base, but to *link* the bases so foregone revenue from downtown properties are recouped from all properties everywhere.
The politics is the challenge here: distributing the burden of lost downtown revenue losses across all properties would mean higher residential PTaxes. Roughly $300/year for the median homeowner by my estimate (holding relative res/non-res mill rates at 2014 levels).
Since council is reluctant to raise residential property taxes, they're dipping into reserve funds to provide temporary relief to non-residential property owners. This would be fine if we expected downtown values to rise back up soon. But, that's unlikely.
Another option is, as some have noted, to lower spending. But, this isn't so simple. One would have to reduce #yyc spending by $140m per year *and* pass those savings entirely to the non-residential property base in order to bring the relative non-res tax rate back to 2014.
Council faces a tough decision here. There's no easy fix. I tend to think we should raise residential property taxes to ease the burden on business, but that's just me. It's a complex problem in need of thoughtful solutions. I wish #yyccc luck!
