Sheila Roote is used to working with numbers as a commercial property owner with holdings across the Lower Mainland. But when the director of North Vancouver-based Westgulf Enterprises Ltd. looked at her companys tax bill for last year at its 20,000-square-foot Richmond location at the southern foot of No. 5 Road, the figures didnt seem to add up.
And they sure didnt match the words Richmond has been touting as its goal to keep tax increase modest and in line with Vancouvers Consumer Price Index, which is around two per cent.
Roote said her firms property tax bill showed a hefty, 21.85 per cent increase over the previous year that added nearly $8,000 to the bottom line.
In a letter to B.C. Premier Christy Clark and Richmond City Council, Roote said the leap is unacceptable and unsustainable.
Allowing increases like this to be imposed on small businesses and their hardworking owners is draconian and punitive, she wrote. If allowed to continue, many of these small businesses will close their doors forever, seriously eroding the long-term financial health of our communities and province.
The Consumer Price Index (CPI), is an indicator of changes in consumer prices and is calculated by comparing, over time, the cost of a fixed basket of goods and services purchased by consumers.
According to Statisics Canada, the CPI for Vancouver showed a 2.3 per cent rise in 2011, and 1.3 per cent hike in 2012.
The highest jump in the last five years occurred in 2008, when the rate rose 2.4 per cent.
So, why the spike in Westgulfs tax bill?
City of Richmond spokesperson Ted Townsend told the News Richmond does have a policy to set the average tax increase at the rate of regional CPI, but with an additional one per cent to fund reserves for long-term infrastructure renewal needs. And that added up to a 2.98 per cent average rise in taxes this year.
However, thats based on taxes for a property whose assessment value has increased in line with the Richmond-wide average assessment increase, Townsend said in an email.
If a propertys assessment increased by more than the average Richmond assessment increase, then they will generally see a greater increase.
In the case of Westgulfs property, the assessed value jumped by 21.16 per cent when the average for similar properties was 13.57 per cent. And that made for a higher than average municipal tax hike.
Townsend added the municipal tax portion of Westgulfs tax bill was less than 10 per cent compared to the double-digit increases from other taxing agencies which includes Metro Vancouver, TransLink, MFA (Municipal Financing Authority,) BC Assessment, and provincial school taxes.
According to the citys website, just 49 per cent of the total tax payable in 2012 was levied by Richmond. School taxes accounted for 40 per cent with the remainder accountable to the other taxing agencies.
While the increased property assessed represented an overall gain for the business, it was cold comfort for Westgulfs Roote.
The assessed value went up, but that value is really only significant on paper, she said. The only time its going to be significant to us is when we choose to sell.
Roote added there has to be a better model for taxation because, Small businesses cannot handle this, she said. Were a landlord and we rent the building out to tenants, and theyve agreed to pay those costs.
Roote said the increase is being split into payments over the last six months of the year.
We need to step back and take a look at the big picture, Roote said, and somehow come up with a model that allows businesses to anticipate that their property taxes arent going to increase much above the cost of living.
Roote added that rate rise is understandable.
Long-time Richmond city councillor Harold Steves said hes all for smoothing out the peaks when it comes to civic taxation, but didnt have an immediate solution.
This is something we have been on the province for the past 20 years or so, to do the assessments more on the property than anticipated changes, Steves said, adding that prior to yearly assessments they were done every four or five years.
But given the volatile nature of the Lower Mainland real estate market, that could, in essence just delay inevitable, and potentially higher tax hikes.
Steves speculated the property owners jump in assessment may have been due to a re-zoning in the area which changed from regular industrial to business industrial, which allows the set up of smaller businesses and office space.
When a change like that happens, there can be provisions made to lessen the tax burden re-zoning may bring, Steves said, referring to a change in the Official Community Plan which changed parts of downtown Richmond from commercial to residential. In that case, Richmond was able to persuade the province to roll back the assessment.
