There are “two categories of Iqaluit citizens” when it comes to property taxes: those who live in residential units and pay residential property taxes and those who live in similar units but pay commercial property taxes.
So says Nunastar Properties Inc. president Ed Romanowski, who appeared before the city’s finance committee on Tuesday to ask councilors to consider amending a 2018 bylaw. Mayor’s work on housing claim that this creates injustice among taxpayers and harms developers.
“[Developers in Nunavut] already have the highest cost in Canada to build a residential development, ”said Romanowski. “We want fair taxation.
The Government of Nunavut has comprehensive legislation that exercises some control over how the city collects property taxes.
The Real Estate Assessment and Taxation Act – including Council. Romeyn Stevenson said Tuesday was “extremely problematic and in need of a lot of repair” for a number of different reasons – indicating that buildings should be taxed according to their predominant use.
Nunastar owns building 350, for example, which includes a commercial space on the ground floor and two floors of multi-family residential units above. Under the law of the territorial government, it should be taxed in the residential category because the majority of the building is residential.
But in 2018, the city passed a bylaw that contradicts the law on land assessment, Romanowski said.
The regulation ensures that owners of multi-family buildings who also have a business on the first floor pay 54.2% more in property taxes than owners of multi-family buildings who do not have a business on the first floor, has he declared.
“Explain to me why this inequity makes sense. No one has been able to explain it, ”he said. “Anybody.”
The result: increased expenses for property owners, who are already experiencing inflation in other areas of their operations, such as insurance, construction and water bills, Romanowski said.
Nunastar, which owns three of the 30 mixed-use buildings in Iqaluit, plans to build between 350 and 400 units in the city over the next few years, but the company cannot secure the necessary financing, Romanowski said, due to the increase. costs, which are currently around $ 470 to $ 500 per square foot of residential development.
He said the costs of operating properties increase by about 9.5% each year, but the company only passes those expenses on in the form of rent increases of about 2.6% each year.
“This deficit makes it very difficult to finance new projects,” said Romanowski. “When we go to their place [the banks] and we have a decreasing margin, there aren’t a lot of people who are happy, and how do you then build new houses? “
If council were to make the change proposed by the committee, it would create four new categories of mixed-use property tax that will determine tax amounts based on the percentage of commercial and residential space in a multi-use building.
This option would also result in an overall property tax increase of 5.54%, according to city estimates, to keep the city at current income levels.
But any option that offered a lower tax rate for mixed-use buildings would require an increase in other property tax rates, said Alison Drummond, senior director of business services for Iqaluit.
“On all these [options], it is necessary to increase the tax rate at all levels to maintain the level of income that the city needs to operate and provide these essential services, ”she said.
Com. Kyle Sheppard, the chairman of the finance committee, agrees that a change must happen, but he asked Romanowski how the city could sell what appears to be a tax break for businesses.
Romanowski said the 5.54 percent estimate is rough and that a tax break for the business is simply not the case.
“To suddenly say that the tax increase will just be eaten or gobbled up as profit by us is a very poor statement,” he said, “because we are dealing with costs which have increased far more than n ‘whatever cost we might’ I moved on to tenants.
Mayor Kenny Bell brought forward a motion asking city council to ask city staff to research how much this will cost residents and developers, but that if staff can’t pull the information together by January 2022, the city will go forward with the amendment of the regulations.
It was adopted unanimously.
Another motion was passed asking council to pressure the territorial government to amend the property assessment law for 2023 so that the city can assess property tax per square foot.
David Venn, Local Journalism Initiative reporter, Nunatsiaq News