Robson Street businesses hit with 200% assessment increase
Huge jump in property values mean some business owners will see hundreds of thousands of dollars added to their property tax bill
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Take a good hard look at your favourite coffee shop, the restaurant where you celebrated your anniversary or the corner store you rely on to grab that forgotten carton of milk.
With property values for commercial properties in Business Improvement Areas spiking an average of 40 per cent across Vancouver this year, and in some cases as much as 200 to 300 per cent, their continued survival is very much in jeopardy.
“Typically year by year their increases go up five to 10 per cent,” said Paul Sullivan, a principal of the property appraisal firm Burgess Cawley Sullivan. Business Improvement Areas are the commercial areas that anchor many Vancouver neighbourhoods with shops and services. It’s the highest one-year move in property values Sullivan has ever seen in his 25 year career.
Hotspots include the Broadway Corridor, Railtown, Chinatown and Mount Pleasant. But no area is hotter than the northern end of Robson Street and the western end of Davie Street. There, a relatively new community plan that increased the density allowed for those sections of the streets has pushed assessments into the stratosphere.
“All the little retailers along lower Robson, their property values have gone up 100 to 300 per cent,” Sullivan said. As an example, he said a building that may have been assessed at $12 million in 2016 is now valued at $44 million.
Redevelopment for the area is certainly to be expected with the changes to the community plan, said Stephen Regan, executive director of the West End BIA. But he fears that the pace of property increase means the transition won’t be smooth. Many of those business owners — who often pay property taxes directly through their lease — will now have to come up with hundreds of thousands more in revenue to cover the increased taxes.
The risk is that the number of vacant storefronts could increase as business owners leave early or go out of business and buildings await redevelopment, Regan said. Or the shopping areas will become dominated with “safe” tenants, like chain restaurants and banks.
Increasing property values don’t always translate for hardship for small businesses, according to Grant McDonald, an assessor with the Vancouver office of BC Assessment. He recently told Vancouver city council that Railtown is still attracting independent small businesses, despite lease rates having doubled.
Sullivan is now working with many of the affected businesses to appeal the West End assessments. But ultimately, he believes more policy tools are needed than the ones currently offered to business owners to help them cope with unexpected increases in value. Three year averaging, a system where property owners can spread the increase out over several years, is “a joke” in the face of such extreme increases, he said.
Five-year averaging is something the city has said it will implement, but not until 2019, Regan said. He’d like to see the province allow split assessments, which involves assessing the unbuilt “air space” (the future condos) at the lower residential property tax rate.
But, he observed, the wheels of government never seem to turn very quickly.
“It’s just like in … residential housing,” Regan said. “How long did it take the Liberals to close the barn doors? The horse was way out of the gate.”