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Clive V. Nylander
Re: STOCAPs (Short Term Overnight Commercial Accommodation Properties)
A great deal of attention has been given to the issue of strata hotel taxation in recent weeks. The fact that this issue is still being publicly discussed reinforces the need for a permanent solution to the classification of commercial strata hotels. We would like to clarify some of the issues raised from the municipalitys perspective.
At the outset, it is important to distinguish between changes to the assessed value of existing properties and new construction added to the assessment roll each year. This has not been distinguished in some of the previous letters to the editor and substantially impacts the readers ability to draw an accurate conclusion. Without considering the impacts of new construction in the equation and the reclassification of some of the larger strata hotels, there can be a perceived shift of burden between one class and another that does not in fact exist.
Reference to the "class 6 group of properties being hammered in 2002 by keeping the mil-rate difference between class 1 and class 6 the same, despite the very material shift in assessed values" is not correct. Both classes experienced an 11 per cent change in market value assessment, residential at 11.18 per cent and business/other at 11.06 per cent, as shown in Table 1 below:
Table 1. 2002 Assessment - Market Value Change
This means that if the same tax rate change is applied to the total market value assessment for both class 1 and class 6, the ratio will remain the same.
In setting the 2002 tax rates, council approved a 0 per cent change in property taxes levied for each class of property. Reclassifications distort the market assessment change in class 6 and were removed from the tax calculation to correctly reflect market assessed value changes in the underlying class 1 and class 6 pools. Since the market value assessment increased by approximately 11 per cent in both residential and business classes, this resulted in an 11 per cent decrease in both the class 1 and class 6 tax rates. This means that a property with an 11 per cent assessment increase, irrespective of its total value, will pay the same municipal taxes in 2002 as they did in 2001.