Another Victim of a Flawed Commercial Property Tax System

Here is his story as told to TABIA

TORONTO, April 29, 2013 /CNW/ -

Excerpted from a letter to the Municipal Property Assessment Corporation (MPAC) and the Minister of Finance   

I purchased this property in April of 2007 for $535k. A few months later I was informed by MPAC that it's new value was $748k - an increase of 47% in 7 months at the height of the recession and at a time when the road I was on was under construction (this lasted three years and the frequent shutdowns of part or all of the street and sometimes even the sidewalks forced me to lay off all of my staff - 15 businesses on the street closed during this period). You can imagine my amusement when customers asked if businesses were being compensated for the loss of traffic during the construction - I told them only if you consider a 50% tax increase "compensation".

I called MPAC - they offered no change to my assessment. I filed an RfR (Request for Reconsideration) they offered to take $50k off. I rejected this and filed an appeal. After paying over a year of taxes my hearing was finally scheduled for late September of 2009. MPAC called me in advance of the hearing and negotiated a new valuation of $605k. Of the $2300 in taxes I overpaid during this period the city returned only $197 dollars saying that "pursuant to the provincial act they accelerated the phase-in of my new valuation" and therefore were keeping over 90% of this overpayment. They told me that the provincial act "required them" to keep the overpayment.

I have received my new valuation and it is now over a million dollars and an increase of 60% from four years ago and almost twice what I paid for the building 5 years ago. By this reasoning my valuation should reach 17 million in twenty years although obviously I'll be forced to close long before that happens. Perhaps you'd like to get in on the ground floor of this excellent investment opportunity...

I have again called MPAC, gotten nowhere and filed an RfR. I expect again to be offered a token adjustment forcing me to file an appeal and pay excessive taxes while waiting for a hearing date. MPAC will again call and negotiate a reduction. The city will again keep 90% of the overpayment. You could prevent some of this hardship by ensuring a more reasonable increase is offered as part of the RfR.

In the process of preparing my RfR I was stunned at the range of valuations on my street. Buildings a block north of me with third floors valued at less than mine (my building only has a partial second floor). Two blocks north and it starts dropping precipitously. The low-rise apartment building ACROSS the street from me with 14 one-bedroom units and a two car garage (I could easily fit six of my stores into this building) is valued at less than $400k more than my building and because of the difference in mill rates the owner will probably clear his tax bill with less than a month of rental income. The movie theatre up the street from me with over four times my frontage is valued at less than $200k more than my property. It's unbelievable.

My own property on your website shows "No valid sales in last five years" though I bought the building in April of 2007 - and the new valuation is supposedly for 2012. I am curious what about my purchase was "not valid" - I have never gotten an answer from you guys about that. Is it that you didn't like entering the purchase price into your system because it would have lowered the increases you could apply to other properties in the area with the software you use?

Is the strategy here to ask for outrageous increases and then to use the act to receive more income faster than if you were simply phasing in to a reasonable increase in the first place? If so why not just stop pretending you're phasing anything in? Or is it your agenda and that of the provincial government to force small independent businesses to close and hand all commerce to chains and big box stores which have the sort of economies of scale to absorb these kind of cost increases? If so it would courteous to let small business owners know now so we can bow out and start looking for jobs at Walmart. If that's not your agenda I ask you - is there anything you could do differently if it was?

TABIA is a non-profit umbrella organization representing the City of Toronto's 74 Business Improvement Areas (BIAs) who in turn represent over 35,000 small businesses and property owners. BIAs are responsible for the development of their commercial neighbourhoods and are a diverse and vibrant collection of ethnic, historic and business locations, combining to make Toronto a veritable City of Neighbourhoods. 

SOURCE: Toronto Association of Business Improvement Areas

Lionel Miskin
Vice President of the Board and Chair of Tax Committee, TABIA
[phone]
[email protected]