Council considers commercial tax hike on city’s biggest businesses to cover property assessment challenges and property tax refunds

The City of Prince Albert plans to introduce five new commercial property subclasses, and raise taxes on the three largest in a bid to cover court costs and potential property tax refunds.

Roughly a dozen of Prince Albert’s largest businesses are currently appealing their assessed property value in order to have their taxes reduced. City administration says that could potentially cost Prince Albert hundreds of thousands of dollars, and creating new tax subclasses will help recoup those losses.

“We had to create a way to get the revenue,” city manager Jim Toye said during a special city council meeting on April 15. “Just about all of these (companies) are going to have their assessment reviewed at the appeal board. They’re going to see a reduction, and we’re going to see a large reduction in our tax revenues then.”

“It’s not just (happening in) our city. It’s across the country, really,” said Cheryl Tkachuk, Prince Albert’s financial services director. “Some of the larger stores are appealing their assessed value and that’s very costly for us. There’s a risk that we may have to pay back property taxes.”

More than 60 businesses challenged their property assessment in 2017, but since then the number has fallen dramatically. Only 39 did so in 2018, and only 19 in 2019. Although only 12 of those cases are still before the courts, both Toye and Tkachuk said losing them would be expensive.

On Wednesday, city officials began debating a new property tax bylaw which created five new commercial subclasses, and raise taxes on commercial properties valued at more than $5 million.

If approved, businesses that just barely make the $5 million threshold would see their taxes increase by roughly $3,200 annually. At the higher levels, like the $10 million mark, annual taxes would increase by more than $13,000. Companies valued at more than $10 million would see an even steeper increase. Those assessed at $5 million or lower would see no tax increase at all.

There are 21 commercial properties in Prince Albert assessed at more than $5 million, five of which are non-taxable because they belong to other levels of government.

Administration introduced the bylaw for three readings during a special council meeting on April 15. The first two readings passed, but it did not receive unanimous consent on the third, meaning city council will have to meet again for a final vote on Thursday.

Couns. Ted Zurakowski, Evert Botha and Dennis Nowoselsky all voted against the motion on third reading. All three councillors said they supported the bylaw in principle, but wanted more information so they could explain their decision to Prince Albert business owners.

Other councillors, like Ward 3 Coun. Don Cody, acknowledged that there were still a few unanswered questions, but said they had no problem voting in favour of the bylaw as it was.

“There are only 21 (properties) here. They’re (owned by) the very largest corporations in our community, and I would say close to every one has gone to appeals since 2017,” Cody said during the meeting. “They’re taking us to the cleaners.”

Mayor Greg Dionne said it’s natural for businesses to challenge their assessment in court so they can lower their taxes, but argued Prince Albert residents and small businesses would end up paying more if they succeeded. For those reasons, he had no problem supporting the bylaw on all three readings.

“Those big corporations are always thinking about how they can make more profit for their shareholders,” Dionne said during an interview after the meeting. “(Make) more profit, so let’s not pay the city that we’ve benefited from. We’re now proud to say that we draw over 190,000 people to our community to shop. Should we not get a little credit for that (from) stores? And what have (they) done to help us? (They) just want to open the door and rake in the money. It’s about time that everyone steps up.”

The new property tax bylaw isn’t officially on the books yet, and Prince Albert and District Chamber of Commerce CEO Elise Hildebrandt hopes it stays that way for the immediate future.

Hildebrandt said she understood the city’s rational, but disagreed with the timing. Prince Albert businesses are struggling to get through the COVID-19 pandemic, she argued, and hitting them with a property tax increase amounts to a slap in the face.

“I think it’s extremely disrespectful that administration and council would consider the thought of trying to get this passed,” she said on Wednesday. “We have no clue when anybody is allowed to go back to work in order to make money to pay their taxes, and when they do, (the city says,) ‘by the way, you owe us more.’”

Hildebrandt estimates between 10 to 15 Prince Albert businesses will never reopen because of the COVID-19 pandemic. She said residents may not think that’s a large number, but for a city of Prince Albert’s size it’s actually quite substantial.

She added that most businesses are taking a hard look at their books and making tough cuts to stay open. She’d like to see the City do the same thing instead of raising commercial property taxes.

When asked about the Chamber’s concerns, Dionne said only the largest corporations would see a tax increase, and he rejected the idea that they weren’t making money during the pandemic.

“Those big guys are very profitable,” he said. “Most of them are open during the pandemic, and they don’t want to pay. They’ll admit they do well because of their location in Prince Albert, so we are owed some credit for drawing people here to shop and do other business. I believe everyone should pay their share, so I have no issue moving forward on the (bylaw.)”

Prince Albert city council also passed a motion allowing residents and business owners to apply for property tax deferrals this year. The old deadline was scheduled for June 30, but if approved, property owners won’t have to pay until the end of September.

Hildebrandt thanked city council for that gesture, but said deferrals won’t mean much if property taxes are going up anyway.

“Whether it’s June 30 or Sept. 30, businesses are looking at their property taxes increasing,” she said. “That’s like a slap in the face.”

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