With 90 per cent of Whistlers hotels stratified and many of them finding ways to be taxed at the residential rate, rather than the commercial rate, the municipality faces a potential $1.55 million loss in tax revenue.
The recent reclassification of the Westin Resort and Spa and the Whistler Holiday Inn from Class 6 commercial to Class 1 residential will cost the municipality nearly $600,000 in tax revenue this year. The reclassification of three other properties last year resulted in a "loss" of $280,000 for the municipality.
Strata hotels are capitalizing on the poor wording of the current legislation and being reclassifed under the lower assessment rate, revenue manager Jennifer Beresford told Whistler council Tuesday. The loss in revenue for the municipality could ultimately mean residents have to take on a large share of the tax burden to make up the difference.
One of the definitions of a commercial property, for assessment purposes, is a building where 85 per cent of the units are managed by one property management company. If there is more than one company involved in managing the property, and no one company has 85 per cent of the units, the property is classified as residential and taxed at the lower rate.
In the case of the Westin and Holiday Inn, the parking stalls which are managed by a different company than manages the rooms are counted as "units." Therefore, no company manages 85 per cent of the units and the properties will be taxed at the residential rate for 2001.
The Property Assessment Review Panel rejected Whistlers appeal on the Westin and Holiday Inn classification.
However, an order in council was passed March 30 which deleted parking stalls as "units," so that in 2002 the Westin and Holiday Inn should go back to the commercial rate.
Provincial legislation which would have made the change back to Class 6 retroactive to 2001 was not passed in the most recent legislative session, which wrapped up April 11.
Mayor Hugh OReilly said the municipality met with representatives from the Ministry of Municipal Affairs last month and they recognize the strata-tax issue is starting to emerge in other areas across the province, such as Fernie.
OReilly also pointed out guests are being compromised when multiple property management companies are looking after one building. There have been reports of as many as seven companies involved in one building, which creates confusion for guests when they need service.
West Vancouver-Garibaldi MLA Ted Nebbeling pledged a full review of the issue if the Liberals take power.
"We need to look at the way properties are valued and at their classification," Nebbeling said. "We need to see all the arguments, the municipalities and the condo owners. I understand where both parties are coming from."
Nebbeling noted the B.C. Assessment Authority has looked at the classification issue but not the way properties are assessed.
"Ive talked to the Assessment Authority and theyve said real changes are driven by government.
"It will be an issue for the next government," Nebbeling said.
Ironically, assessment values of residential properties have increased far more dramatically than have assessment values of business properties this year. The average assessed value of residential properties has increased by 19.16 per cent from 2000 to 2001, while business properties have gone up by 3.94 per cent, on average.
However, the most dramatic increases in assessment values have occurred in high-end residential properties, with assessments of some homes in Sunridge, Nicklaus North and Horstman Estates up 70 per cent.
The Chateau Whistler, one of the few non-strata hotels, has also seen a dramatic increase in its assessed value. In 2000 the Chateau was assessed at $81 million. For 2001 it is assessed at $114 million.
While assessed values are up, the actual tax rates for residential and business classes have decreased from 2000, to offset the increase in assessed value. The tax rate for residential properties is 2.7067 per $1,000 for 2001, down from 3.1072 per $1,000 in 2000.
Last fall, while determining its budget for 2001, the municipality determined property taxes would increase 3.8 per cent this year 1 per cent to help offset the RCMP transition costs and a 2.8 per cent increase for inflation, based on the Vancouver Consumer Price Index.
In order to maintain equity between the taxes collected from residential and business properties the municipal tax rates for 2001 have been set to increase the municipal taxes collected from each class of property by 3.8 per cent. This has changed the previously established ratios of municipal tax rates between the residential and other classes of property.