THUNDER BAY -- The city may not accept an assessment deal that would see both Canadian Tire properties' values and by extension, their municipal taxes significantly reduced.
As part of an agreement property assessors are bringing to provincial adjudicators for approval, the value of Thunder Bay's Canadian Tire properties stands to decrease 30 per cent.
The change would be retroactive to 2008 meaning on top of losing future tax revenue, the municipality would also need to refund the corporation that portion of taxes it has paid over the last eight years.
Moreover, if the Adjudication Review Board approves the Memorandum Of Understanding that led to the decision, it could affect the property values and municipal tax revenues from every chain commercial property in the province.
"This would be an MOU for the big box stores," said city revenue director Kathleen Cannon.
"We're certainly concerned this will now start to trickle down through the big box stores through the rest of Ontario."
The first-ever "expert working group" made up of Municipal Property Assessment Corporation (MPAC) officials, commercial interests and municipal leaders designed the MOU as a response to a wave of commercial property assessment appeals among businesses with multiple outlets.
Instead of considering individual property values in chain commercial stores, its "central appeal" model considers assessments for a company's Ontario properties in bulk for the sake of efficiency.
The agreement's rationale for reductions in Canadian Tire's assessment includes declining markets and real estate resale limitations, as the company claims its store properties would prove difficult to sell.
Thunder Bay was not represented on the working group.
An MPAC spokesperson issued a written statement expressing municipalities have a right not to sign the MOU and that it would be willing to consider "complex or unique circumstances which may not fit within the parameters of the framework."
Cannon said the city has not committed to signing the proposed agreement.
"We're at the analysis stage," she said. "We want to look at the details and see if we've been painted with the wrong brush. Perhaps you can't use the same brush to paint us as you can all other cities in Ontario."
Nearly every chain commercial franchise has appealed its property assessment and if other cases resemble proposed the Canadian Tire deal, it's going to lead to a structural revenue problem for the city, according to the councilor whose ward includes most local commercial real estate.
McKellar Coun. Paul Pugh takes issue with MPAC and its entire property assessment formula.
"MPAC is essentially a strong-arm squad or thugs, if you like, who go around changing the assessment from profitable corporations to residential households and that's going to present huge problems for the city and for the residents," Pugh said.
Thunder Bay has experienced a shift in the municipal tax burden since the provincial government created MPAC in 1997. Residential property class accounted for 50 per cent of Thunder Bay's tax-supported revenues in 1999. By 2016, that share has risen to 62 per cent.
Falling property values among the city's large industrial class are not yet finalized but their reductions are expected to counter all other growth in all sectors, reducing local economic growth to zero for 2016.
"This is a model that was imported from the U.S. to the best of my knowledge and it works down there for making the rich richer at the expense of everybody else and they're imposing it here," Pugh said.
"One can say these are court decisions and so on and so forth but the court decisions are being made on the basis of the model that was brought in that didn't have to be brought in."
