Currently, commercial assessed values are determined using the income approach. If a tenant pays higher rent, the property will pay higher taxes. If the property has vacancy, it will pay lower taxes. As rent is a function of sales, a business’s ability to pay rent is correlated to individuals’ disposable income. Ultimately job creation and growth helps drive this disposable income pool.
For example, Shindico manages a property on Nova Vista Drive & St Anne’s Road. Mac’s convenience store, which comprised approximately 14% of the mall, recently vacated because sales were not meeting their expectations. As a result, the property’s assessment went down by an amount comparable to what a nice home in an established neighborhood pays on an annual basis. Every other property and commercial owner must pay their “share” of the taxes that this building does not.
New growth fees will reduce the amount of building in Winnipeg in the form of new houses, apartments, and commercial buildings. While some of this construction will undoubtedly move outside the city limits, a large number of jobs are at risk. Engineers, trades, labourers and architects will likely all lose some disposable income. This poses a problem for retailers, restaurants and other service providers since Canada is a consumer based economy.
As a community, it is important to take a step back and recognize how property taxes work. Job creation and income appreciation must be a top priority of policy makers. Giving consideration to such will ensure that we protect current assessed values while ensuring that our tax base continues to grow.
Sandy G. Shindleman, CCIM, SIOR, FRICS
President & CEO
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