British Columbia

Building owner tackles 'insane property tax' with pointed rent sign

A giant red sign, hanging from the window of an empty storefront in Vancouver’s South Granville neighbourhood, sends a clear message. In bold white letters, the sign reads “rent reduced to compensate for insane property tax” — both an invitation for potential tenants and a statement to the city.

Vancouver owner slashes rent by a third to attract tenants scared off by high property tax

A reduced rent sign is pictured in the window of a commercial building at 2310 Granville St. in Vancouver on Monday. (Ben Nelms/CBC)

A giant red sign, hanging from the window of an empty storefront in Vancouver's South Granville neighbourhood, sends a clear message.

In bold white letters, the sign reads "rent reduced to compensate for insane property tax" — both an invitation for potential tenants and a statement to the city.

The building in question is a single-storey, 1,900-square-foot commercial space, built in the 1930s.

And it carries an annual property tax of more than $52,000.

The sign was hung by the building's owner Peter Tolliday who is fed up that the property tax continues to scare off would-be tenants.

"I can't get a tenant," said Tolliday, adding as soon as people hear how much the building's property tax is, the conversation abruptly ends.

Right now, property tax assessments are based on the development potential of a zoned lot, not the building in its current form.

And Tolliday says the high property taxes — which are passed on to tenants through commercial leases — are driving away businesses from the neighbourhood.

'This is my retirement'

Tolliday was charging his former tenant close to $60 per square foot in annual rent. Now, he is offering the unit for around $40 per square foot, a loss of more than $37,000 a year. The average for commercial rent in the area is between $50 and $100 per square foot, according to the South Granville Business Improvement Association.

"This is my retirement. And instead of having an income, I've got money going out," said Tolliday.

The unit has been sitting empty since September, all the while Tolliday continues to shell out more than $4,000 a month to cover the tax.

"I had to go back to work. My wife has gone back to work," he said.

"It's been difficult. Stressful."

Before Tolliday bought the building in 2000, he had rented it himself, for his oriental carpet business.

But he says a continuous jump in property taxes have made it unrentable. And developers aren't interested either, Tolliday says, meaning selling isn't an option.

The commercial space has sat empty since its former tenant moved out at the end of the summer. (Ben Nelms/CBC)

Citywide problem, says expert

However, the negative impacts of never-ending property tax hikes on a neighbourhood aren't exclusive to South Granville, says Patricia Barnes, executive director of the Hastings North Business Improvement Association, but something that is happening across the city.

She says it's leading not only to a loss of business but also personality to the community.

"Our major concern is the loss of independent and unique business in the city," said Barnes.

And while she says retail chains are also important to the area, they don't bring the same character.

"We need people to be able to start their own businesses and to bring unique flavours to neighbourhoods. That's what makes them vibrant," she said.

If the property assessment tax doesn't scare a lessee off, Barnes says, they can often be paired with a demolition clause or permit issues in older buildings that add to an uneasy level of instability.

Creating a new sub-class

Barnes says there is one possible solution and it's backed by the City of Vancouver: a split assessment.

It would create a new commercial sub-class within the tax bracket, giving municipalities the power to reduce a property tax for a certain building that meets the requirements.

The City of Vancouver wasn't available for an interview, but in a statement, Grace Cheng, director of long-term financial strategy and planning said she recognizes the importance of small businesses "however, the city is limited in what it can do to offset the impact of property taxes."

The Union of B.C. Municipalities voted on a split assessment resolution in September at its annual conference, passing it by a slim margin of 56 per cent.

Because municipalities outside of Greater Vancouver shared concerns over a new sub-class, the province says it is trying to create a solution that works for all governments.

"We are actively working on an interim solution that will provide relief for small businesses for the 2020 tax year, while we develop a permanent fix," said the Ministry of Municipal Affairs and Housing in a statement.

Corrections

  • An earlier version of this story contained an error in the square footage of the building at 2310 Granville Street. The space is 1,900 square feet.
    Dec 03, 2019 8:31 AM PT
  • In a previous version of this story, a city spokesperson said split assessments would allow municipalities to base taxes on the existing use of a lot, rather than its developmental potential. The city later clarified that split assessments are instead a discretionary tool that municipalities could use to lower the tax on the development potential.
    Dec 03, 2019 1:29 PM PT

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