Appeals result in lowered assessment for 'big box' businesses
By Chad Ingram
Published Aug. 3, 2017
A series of province-wide appeals and settlements have decreased the assessed value of certain kinds of businesses within Ontario, and a settlement with one popular restaurant chain means that renovations at its buildings qualify as “rebranding,” and so don’t result in increased assessments.
During Minden Hills budget discussions earlier this year, it was mentioned that assessments on certain commercial properties were not increasing or, in at least one case, actually dropping substantially.
Since property taxes are based on the assessed value of properties, this means decreased revenue from certain commercial properties for the township.
Mark Lindquist, a manager of valuation and customer relations for the Municipal Property Assessment Corporation (MPAC), visited Minden Hills councillors during a July 26 meeting to explain the changes.
As Lindquist explained, due to some successful province-wide appeals, there have been value changes to some “big box” style businesses.
“Or, in the case of this municipality, lumber yards,” he said.
“A lot of our review and the actions that occurred as part of the 2016 reassessment came out of some provincial appeals in the 2012 and, previously, 2008 valuations,” Lindquist said.
Some 300 properties were involved in those appeals and the result was a decision they would be valued based on cost to provide more consistency among properties. So, a building aging without substantial additions or renovations, for example, can actually result in a decreased assessment.
“On top of the decision to make sure that all of the properties are valued on the cost approach, it was felt as part of the settlement at the assessment review board, that we we’re providing enough of, basically, an obsolescence, of factors surrounding that kind of market and the wear and tear on buildings that occurs,” Lindquist said. “So, there was an additional obsolescence that applied to properties.”
So value reductions occurred for not just the 300 properties involved in the appeal, but other similar properties throughout the province.
In Minden, while the business wasn’t involved in the appeal, the assessed value of the Home Hardware property dropped by approximately $1 million, between the 2012 and 2016 assessments by MPAC.
“So we were struggling to understand why that happened and also trying to compare some similar properties,” said Minden Hills treasurer and chief administrative officer Lorrie Blanchard. “So, it’s unlikely we will ever see that assessment come back up again, unless they do a significant renovation to the property?”
“I would say that’s fairly correct,” Lindquist responded.
Lindquist also talked about “rebranding,” and the special agreement that applies solely to Tim Hortons restaurants.
“There are several of them, obviously around the province and there were a provincial appeal property, back in the 2005 and 2008, which really had to do with the rebranding and the renovations that occur on freestanding Tim Hortons properties,” he said. “The real end result of that provincial appeal was the creation of a depreciation table that is specific to all Tim Hortons properties in the province.”
“And what happens in the implementation of that depreciation table specific to those properties,” Lindquist continued, “is that it takes into account the fact they are rebranded, or renovated, at least once every decade.”
While an addition or physical change to the footprint of a Tim Hortons building would result in an assessment increase, renovations that are considered part of the chain’s “rebranding” activities do not.
“Can you give a couple of examples of what that actually means, in terms of rebranding?” asked Councillor Pam Sayne. “So, my question, I guess, is what’s rebranding and what’s an addition?”
Lindquist said that new facades, interior renovations, “maybe adding a nice fireplace and seating area, things like that, those are deemed to part of the rebranding and so no additional assessment can be added to those properties.”
“So, does that compare to other, small businesses?” Sayne asked. “Would they have additional taxes if they made those kinds of changes?”
“If another commercial property, let’s say it was to undergo a substantial renovation that increased or altered the quality and updated the effective age . . . then yes, there would be a supplementary issue for those renovations, and a value increase.”
That concept didn’t sit well with some members of council.
“We just had a substantial conversation about roads in our community,” Sayne said. “The box stores bring vehicular traffic, they put more on the municipality and the county to take care of roads and we get that money from taxes. And now, we’re lowering the taxes for the big box stores that are bringing in more vehicles, to increase our costs.”
Councillor Jean Neville found the depreciation table that applies solely to Tim Hortons to be unfair.
“Private properties, if you don’t increase your footprint, but you totally renovate, then they’re going to put your taxes up,” she said. “So, it really doesn’t seem quite fair when Tim Hortons is making money hand over fist and they aren’t privy to same tax increase. It just doesn’t seem right.”