Kam Lake taxes large part of revenue increase
Hike caused by property values playing catch-up: city's director of corporate services
Mark Rendell
Northern News Services
Published Wednesday, July 16, 2014
SOMBA K'E/YELLOWKNIFE
Kam Lake's skyrocketing property taxes are expected to account for approximately 40 per cent of the $1,225,000 increase in tax revenue budgeted by the city in 2014.
Rising real estate prices in Kam Lake drove up the assessed value of properties after being kept artificially low for eight years, according to Carl Bird, the city's director of corporate services. - Walter Strong/ NNSL photo |
According to numbers supplied by Coun. Niels Konge and Carl Bird, the city's director of corporate services, Kam Lake is supplying around $475,000 more to the public purse this year.
That's after an average 34.63 per cent property tax increase in the area that has frustrated property owners such as Konge, who said he is paying 100 per cent more taxes on one of his Kam Lake properties.
"I'm disappointed," said Konge, "We were led to believe it would be around a three per cent increase. When you hear those numbers, you don't think you're going up by 30, 40, 100 per cent. That's a long way from three."
However, the reason for the increase, said Bird, is simply to do with the assessed value of Kam Lake properties catching up with the citywide average after being artificially depressed for a number of years.
"When the last general assessment was done in 2007, the sales history for commercial and industrial prior to 2006 had some pretty low cost," he said, "particularly in the Kam Lake area because lots were being sold by the city at very low cost to the individuals."
In the years between 2006 and 2014, sale prices for land in Kam Lake increased substantially. While property assessment for the purpose of taxation isn't based wholly on market values, assessors do take the market value of land into account.
According to Jim Weller, a realtor with Coldwell Banker, "land prices (in Kam Lake) ... doubled in recent years whereas downtown land price increases have been more moderate."
This doubling of Kam Lake real estate prices was taken into consideration when conducting the general assessment, said Bird. The result was an average assessed value increase of just below 65 per cent for Kam Lake properties, compared with a 40 per cent average increase for industrial and commercial properties across the whole of Yellowknife.
"It's seven years of inflation," said Bird, "Prior to 2006, the lots were sold at what would have been considered below market value at the time."
The mill rate for industrial and commercial properties, a number used to calculate the amount of property tax one owes, is based on the average increase in property value taken across the whole city, said Bird.
He added that because most Kam Lake property values increased far more than the city average, the mill rate readjustment didn't save them from paying more.
In places where the reassessed value of property matched the average or fell below it, property taxes stayed the same or increased only slightly.
On Old Airport Road, Gastown owner Roy Ferrier said his property taxes barely changed.
"I sympathize with business owners in Kam Lake, and how it got through, god only knows," he said. "But I didn't notice much of an increase from the last six months to this six months."
Bird said property owners were told back in January that if their property value increased more than the average, they'd see their taxes increase as well.
Indeed, he told Yellowknifer in January that, "If a person's property assessment went up by a factor greater than 40 per cent, or I should say, greater than the percentage of the general assessment increase, then they will have a slight impact on their tax bill."
The problem for people like Konge is the word "slight."
"It was not communicated well by administration," said Konge. Property owners were lulled into a false sense of security by reassurances from Bird and others, he added.
Weller is in agreement with Konge that poor communication is likely at the root of people's frustration.
"The business community wouldn't be as upset as they are today if the increases had been announced in advance and phased in gradually over time," he said.
