THUNDER BAY – Several major commercial properties in Thunder Bay are appealing their MPAC assessments, moves with potentially significant tax implications for the city.
Gateway Casinos, the owner of the Intercity Shopping Centre, and Lowe's, one of the ISC's biggest tenants, are among 28 local properties with appeals pending before Ontario’s Assessment Review Board (ARB).
Together, the three companies account for over two-thirds of the $19.9 million in municipal taxes under appeal for the 2017 to 2021 period.
Both property owners and tenants can appeal property values determined by the Municipal Property Assessment Corporation (MPAC) to the ARB, and are entitled to refunds in municipal taxes if the assessment is reduced.
Assessment appeals have cost the city millions annually, though staff reported those losses are falling substantially at a city council meeting this week.
Of the $19.9 million in taxes currently under appeal, 91 per cent relates to commercial properties, 7 per cent to multi-residential, and just 2 per cent to the residential class.
The appeal by Gateway Casinos represents 34.9 per cent of the total, the city reported - amounting to roughly $6.9 million - and covers the tax years 2017 to 2021.
Appeals related to the Intercity Shopping Centre accounted for 34.1 per cent of taxes under appeal, roughly $6.8 million, covering the years 2020 and 2021. That includes appeals by both ISC owner Healthcare of Ontario Pension Plan (formerly the Hospitals of Ontario Pension Plan) and Lowe’s, appealing as a tenant.
Another 10.1 per cent of taxes under appeal, around $2 million, related to local hotels.
The extent of reductions sought by the companies aren't yet known in most cases. Kathleen Cannon, director of revenue with the City of Thunder Bay, said appellants often – though not always – seek a relatively small adjustment.
“In most circumstances, property owners are not looking to bring that balance down to zero, they may be looking for a 5 or 10 per cent reduction,” she said.
The casino and shopping centre appeals aren’t necessarily a surprise, she added.
“It's very common to see large property owners or tax agents acting on behalf of property owners file annual assessment appeals,” she said.
Both the casino and shopping centre cases are expected to be resolved through a central appeal, a model that bundles reassessments for chain companies that have multiple outlets across the province, rather than individually assessing properties based on land value.
City leaders have expressed frustration with that approach in the past, after it led to massive property value reductions that forced the city to pay millions in taxes back to chains like Canadian Tire.
The city has been ordered to make tax repayments as large as $13.8 million to Resolute, after the local mill’s property value was slashed nearly in half between 2008 and 2016.
At a Monday council meeting, however, city staff presented figures indicating losses related to assessment appeals are rapidly shrinking.
The city’s average annual tax loss for the 2008 to 2012 assessment period was $3.1 million a year.
The average fell to $2.1 million from 2013 to 2017, and to an estimated $1.8 million from 2018 to 2021 (outstanding appeals for that period mean the figure isn't yet final).
That’s due to positive changes made by the Assessment Review Board, which included mandating a more active role for municipalities, the city said.
In 2019, the city became more actively involved in significant assessment appeals, retaining MTE Paralegal to provide support and represent the municipality in large cases.
“We’re participating in the largest appeals, doing our own reviews, and going to the table for settlement conferences, so that's certainly helping,” said Cannon.
The ARB also tweaked its procedures to tighten timelines, resulting in “more appeals being withdrawn or dismissed,” according to the city.
“Now assessment appeals are going from start to finish a lot sooner, they’re being settled sooner as well,” Cannon said. “There are a number of timelines each interested party must respond by and provide documentation and information. If those timelines aren’t met, the appeals are withdrawn or thrown out.”
The declining cost of assessment appeals led the city to make a positive adjustment to its tax write-off provision in 2021, contributing $5.5 million of the $10.9 million surplus the city recently reported for the year.
The city’s Assessment Appeal Reserve Fund sits at $8.7 million.
The city can’t comment at this time on its position on the casino and shopping centre appeals, but will be involved as a party, Cannon said.
TBnewswatch has reached out to Healthcare of Ontario Pension Plan and Gateway Casinos for comment on this story.
