THUNDER BAY -- The city's top official says his staff is "concerned" over the future of commercial tax revenues after property assessors confirmed they will expand a new practice of bundling big box store assessments.
A Municipal Property Assessment Corporation statement released on Friday said MPAC is looking to expand the "central appeal" model that produced a landmark agreement with Canadian Tire in December.
The deal city council refused to sign last week would see Thunder Bay repay the company $1 million in taxes it has paid since 2009. The property assessment of Canadian Tire's two local stores declined 27 and 23 per cent over that time, respectively.
The central appeal model parcelled all Canadian Tire outlets across the province rather than appeal judges considering each property's value on its merits. The company successfully claimed markets are declining and its unique stores would have limited resale value.
As of 2015, 76 commercial businesses operating in Thunder Bay were appealing their property assessments.
City manager Norm Gale can't guess how much money the municipality could be asked to pay back its chain commercial stores if central appeal agreements result in similar property assessment reductions.
"I don't want to speculate on numbers. I can tell you, we are concerned. Of that, there is no doubt," Gale said.
"Also, may I add, this is not a Thunder Bay problem. While it is a Thunder Bay problem, this is province-wide. Every municipality that has a big box store or similar enterprise will be, at some point, either is confronting now or will be confronting this soon."
The city sets aside $2.7 million annually into its Appeal Assessment Reserve fund.
Through the fund, the city has paid Resolute back $13.8 million in taxes the company has paid since 2008, as appeals saw the mill's property value tumble from $75 million to $35 million.
The reserve fund has a current balance of $3.1 million. That figure doesn't include the anticipated $1 million payment the city will be forced to pay Canadian Tire despite its protest, $1.1 million more to companies operating local grain elevators, or a draft central appeal agreement with Home Depot that could cost the city $800,000.
"It's one thing when council sets the size of the budget," Gale said. "It's quite another thing when MPAC makes decisions on what the value of certain properties are, so it is impactful on residents."
Gale added the province is introducing restrictions on municipalities' ability to alter their tax ratios, meaning cities won't be able to counter declining commercial, industrial and multi-residential assessments by increasing the share of taxes those property classes pay.
"We have limited ability to move within those ratios so what can we do? We'll deal with it as it comes on a case-by-case basis and it will be at that time that council makes decisions and provides direction on how to respond."
