SOMBA K’E/YELLOWKNIFE
Many Yellowknifers who own property in the Kam Lake industrial area are facing a massive hike in property taxes thanks to recent property value reassessments, despite what they took to be assurances to the contrary from city hall earlier this year.

Kam Lake property owners and members of the Kam Lake Property Owners Association are concerned that their most recent tax bills are out of touch with reality in Kam Lake. The most recent Kam Lake property value assessments were based partly on recent property sales in new Kam Lake developments. - Walter Strong/NNSL Photo

Speaking on behalf of the Kam Lake Property Owners Association, Eric Sputek said association members and property owners are reporting property tax bills with increases of well over 100 per cent.

“Our membership and a lot of property owners in Kam Lake are very concerned with these recent new tax assessments,” Sputek said.

“I’ve talked to people that have over 300 per cent increases.”

City councillor Niels Konge, who owns property in Kam Lake, was told by city staff that the average tax bill in the Kam Lake industrial park went up 34.63 per cent.

Konge himself saw one of his properties with a tax bill 100 per cent higher than last year. Although he was expecting an increase due to property improvements, he wasn’t expecting that.

“I did not understand that we could see that, that it (this year's general property reassessment) could have that effect,” Konge said. “There’s no way I ever thought I would get a 100 per cent increase on one property.”

Believed city hall

Brian Piro, who owns two joined lots in the Kam Lake industrial park, said he is looking at a 2014 property tax bill of $13,806, up just over 67 per cent from last year’s invoice of $8,197.

Although Piro had concerns when his property value was reassessed earlier this year, he didn’t appeal the appraisal.

Piro said he took city director of corporate services Carl Bird at face value when he told Yellowknifer and other media outlets last January that mill rates would be adjusted to account for property assessment increases.

“There is no tax increase associated with the general assessment increase because (if) the assessment goes up by 40 per cent (for example)… the other aspect of how we calculate taxes, the mill rate, will go down by 40 per cent,” Bird told Yellowknifer in January.

Bird said he stands by what he said back in January, but with qualification.

“First of all, I never specifically addressed Kam Lake itself,” Bird said. “I addressed the general property assessment increase across the city, which at the time we predicted would be close to 40 per cent on average.”

“In Kam Lake itself there was a significant increase in the assessed value of the land because prior to 2006, which was the last general assessment, land was provided there at a much lower cost than recent sales have indicated.”

“Recent sales have established a much higher market value for land in Kam Lake, in industrial areas in general.”

Higher market values

Bird said mill rates were adjusted to reflect the average increase in property values across the Kam Lake industrial area, but he did not have figures on hand to show what the average increase in property value assessments was or how the mill rate was adjusted to reflect that.

The commercial/industrial mill rate, which applies to much of the Kam Lake area, was lowered to 12.78 mills this year from 15.52 mills last year. Assessed property value divided by 1,000 multiplied by the mill rate is the formula used to determine what property owners owe in taxes for the year.

“The commercial/industrial mill rate would have been reduced by the average assessment increase in the industrial classification before applying the three per cent increase (in tax revenue),” said Bird.

“Whatever that number is, which I don’t have right now.”

Back in January, Bird added 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.”

Sputek said many property owners in Kam Lake took this to mean they wouldn’t see a large tax bill increase this year based on the new property assessments. Many choose not to appeal their assessments.

“Many of us contacted the city,” Sputek said. “I’m not going to get into names, (but) many were told the increase in Kam Lake (would) be around three per cent.”

City council approved a 3.1 percent increase in tax revenue for 2014 last December.

“I think what happened was that a lot of people looked at their new assessment and said, three or five per cent, we can deal with that,” Sputek said.

Piro agreed that he and other Kam Lake property owners would likely have appealed the assessment within the 45-day appeal window if they hadn’t felt reassured by Bird’s earlier comments.

“There was no other reason to make that statement except to to quell the unrest,” Piro said.

Konge agrees that the city did not prepare Kam Lake property owners for what the new general assessments could mean for their tax bills.

“I feel the city of Yellowknife misled all residents of Yellowknife, (and) specifically Kam Lake,” Konge said. “It’s not fair or equitable for anyone to be looking at a tax increase of (up to) 333 per cent.”

Huge increase despite lowered assessment

Appealing property value reassessments might not have helped Kam Lake property owners that much anyway.

Jim Pook did appeal his new assessment. Owner of Northern Navigation and Communication Systems,

Pook said his appeal won a 35 per cent reduction but hr still received a 91 per cent tax hike on one of his properties. “A 91 per cent increase for anyone is ridiculous,” Pook said. “I’m not happy.”

Pook said he was misled by comments made earlier this winter from city hall.

“I’m prepared for eight maybe 10 per cent (tax increase) on the outside,” Pook said.

“I know our properties were valued less than they really were (worth), and I was appreciative that things were going to change,” Pook said. “But to think that an average 34 per cent (increase) is acceptable and everybody is supposed to accept that, that’s crazy.”

“You shouldn’t hit people with a huge increase in a single year,” Pook added. “There should be a cap on it.”

Bird said there is nothing property owners can do about their tax bills this year, but they can appeal next year’s assessment.

This leaves property owners like Piro stuck with bill for which he was not prepared.

Piro rents yard space to a commercial tenant, and he has already warned his tenant to expect a rent increase to reflect the slight tax increases he expected. He said he can’t pass the $5,600 increase onto his renter.

“You don’t budget to have an (almost) $6,000 increase,” Piro said. “I can’t give my tenant that, they just won’t rent it.”

Konge said he wants to the city to do something about the large tax bills.

“I don’t feel it’s reasonable,” Konge said. “What do we do? I’m unsure, but we have to do something.”

Bird said the city was preparing a community meeting with Kam Lake property owners for a week tomorrow.