Massive property tax hike forces Yonge St. mom-and-pop store out
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For more than 12 years, Donny and Sue Lee’s Roxborough Smoke & Treats has been something of a midtown community hub. People stop by for smokes or chips or simply a friendly chat.
But after the tax assessment on the Yonge St. property, just north of the Rosedale subway station, increased by more than 350 per cent, the Lees are going to have to close their store. The higher taxes are forcing their landlord to raise the rent.
“I can’t afford to pay more,” said Donny, from behind a shelf of chocolate bars. “Now I only have one choice: I have to go out. The only question is when.”
The Lees received a letter from their landlord last month explaining that the plaza on the corner of Yonge St. and Roxborough Ave. had been re-evaluated last year at $16,188,000, from its previous assessment of just $3,577,000.
Their rent was hiked by $600, to more than $3,300 per month, and they were asked to pay more than $5,000 more in a retroactive rent increase to cover the tax hike.
Donny says his rent had risen by only $200 since he first opened the store more than a decade ago.
“This man and his lovely wife have served me with good grace for many years,” said Bryan Beauchamp, as he stopped in for a newspaper. “To displace them via an inexplicably huge tax increase, through the owners, is terrible.”
Tony Law, who represents the owner, M&M Law Investments, wrote in an email to the Star that “this type of increase is not a typical increase.”
In his letter to the tenants, which include a Starbucks, a Rogers store and a Pizza Hut, Law explained he has hired a realty tax consultant to try to get the taxes reduced.
In an attached memo, Rae Buchanan, of Context Realty Advisors, explains that the assessment increase is due to the Municipal Property Assessment Corporation (MPAC) “valuing properties at their so-called Highest and Best Use.”
“This means they are developing assessments based on what they think the potential redevelopment value for a property is, rather than on the basis of its actual use,” Buchanan wrote.
In the past year, two nearby properties on Yonge St. have sold for big markups. The red brick office building immediately across from the plaza sold for more than $14 million only four months after selling for $9 million. A tiny storefront a little farther north sold for more than $2 million.
Greg Martino, MPAC’s director of valuation and customer relations for the Toronto area, says that when the corporation reassesses properties every four years, it looks at several factors, including recent sales of similar properties, to determine current value.
“Our goal is to ensure that we return accurate assessments that reflect local market and key features of the property,” he said.
Martino confirmed that the landlord of the plaza had filed a request for reconsideration of the assessment through an agent. This appeal was evaluated last September and did not result in a readjustment, he said.
The owner then had three months to appeal to the Assessment Review Board. That deadline came and went in December.
Law’s real estate lawyers argue that MPAC’s valuation process forces small businesses to close.
“MPAC does not seem to care about the impacts of their approach on businesses or tenants,” he wrote in an email. Law declined to explain why he waited for a year after finding out about the reassessment to inform his tenants.
Property tax increases are phased in over four years, said Martino, meaning that further tax increases are to come, which could lead to future rent increases. Unable to cope with even this first rent hike, the Lees say they are preparing to close up shop.
Since coming to Canada from Korea in 1990, running convenience stores is all the Lees have known. Without better English, they say, they aren’t able to do anything else.
Karen Elia, who stopped into the Lees’ store on Thursday afternoon, was disappointed to hear the news.
“Everything that gives flavour to the neighbourhood gets washed away,” she said. “I guess everyone will just live in condos and have nowhere to go.”