Although B.C. Assessment has released its property tax assessment roles for 2008, it could be several months before the Resort Municipality of Whistler knows how municipal taxes will be impacted by the province’s decision to change the way condo-hotel properties are assessed.
While budgeting for this year, the RMOW estimated that the change to the assessment could result in $1.8 million to $2.5 million less revenue in 2008. That represents seven to 10 per cent of the municipality’s total tax revenue for the year, and was one of the reasons that property taxes are likely to increase by six per cent this year.
According to Diana Waltmann, the information officer for the RMOW, the municipality won’t know the exact impact of the Class 1/6 changes until April.
“It’s too preliminary now to be able to say anything,” she said. “B.C. Assessment still has to go through the appeal process with homeowners, and we won’t know until the final assessment how this will affect our revenues. We should have a better idea by April.”
The Union of B.C. Municipalities has been lobbying the provincial government for more than a decade to address the strata-hotel issue, and to come up with a fair solution. Under the old formula, properties that were assessed as Class 1 (primarily residential use with nightly rentals permitted), paid three or four times less than properties assessed as Class 6 (primarily business use.) As a result, taxes varied hugely from building to building, even though they were often used the same way.
The way that properties were assessed was also confusing. Any strata hotel with more than 20 units was taxed as Class 6, unless the properties were managed by two or more companies that operated at least 16 per cent of the units each. In that case, the strata hotels would default to Class 1, saving property owners money at tax time.
The system created inequality for property owners, as well as confusion for visitors as units in the same complex may be managed by several property management companies that have no front desk in the building.
The new approach adopted by the province looks at the actual use of the units, and will be applied to all new strata-hotel properties. However, the approach does not change the assessments for properties currently classified as Class 1, while allowing more Class 6 properties to be reassessed at Class 1 after meeting new criteria set by the province. Owners only have to spend seven days a year in their unit for it to be Class 1, or leave it empty seven days a year — unoccupied time is considered to be residential.
The province recognized that the changes could impact municipal revenues, but believes that municipalities will benefit in the long run from keeping properties in rental pools, adding certainty for strata owners, and contributing to more development.
That last benefit won’t help Whistler, which is reaching buildout. Several municipalities, including Whistler, are also concerned that the province’s decision did not resolve the customer service issue by mandating that strata properties have a single front desk.
While property assessments were up for Whistler for the first time in four years, it’s unknown how that will affect municipal revenues. The municipality sets the mil rate for property taxes based on how much the municipality needs to raise to meet its budget targets, and have been known to go down some years when assessments are up. The RMOW will not set the mil rate until April.