Irving Oil's $88M headquarters building assessed for taxes at $56.8M
New building valued by Service New Brunswick at $179 per square foot, a fraction of other major builds
Irving Oil Ltd.'s new 11-storey headquarter building in Saint John is being assessed for property taxes as being worth $56.8 million, well below the cost to construct it which one estimate puts closer to $88 million.
The $56.8 million assessment requires Irving Oil to pay a property tax bill on the building of $2.9 million this year, about $1.6 million less than if it had been valued for taxes at its full estimated cost to build.
No favours were extended to the company in coming to that valuation, according to Service New Brunswick, the agency in charge of assessing all properties in the province for taxes.
"The $57 million is, we've determined that to be the market value of that property as of Jan. 1, 2020," said Matthew Johnson, Service New Brunswick's director of valuation.
Taxes split between city, province
Property taxes on commercial buildings in Saint John's central business district are split between the province and the city. Every $1 million in assessments is worth about $28,300 in tax revenue to the city and $22,000 to the province.
Service New Brunswick will not disclose what its own records show the new Irving headquarters cost to construct. It also won't say what specific adjustments it made to that amount in reducing it to a lower "market value" estimate it placed on the property for tax purposes.
"We wouldn't be able to share that with you," said Lisa Dionne, Service New Brunswick's executive director of assessment in an interview Wednesday.
Johnson said a number of factors can result in a building's assessed value being less than what it cost to build, but neither he nor Dionne would reveal what those specific adjustments were and how much they lowered the assessment in the case of the Irving building.
"To get into the nitty-gritty of square footage and quality ranking and, you know, our starting point for RCN [replacement cost new] that's really information that's only specific, and can be given to the actual property owner," said Johnson.
Building budgeted for $88M
The Irving Oil headquarters is a new and dominating feature on Saint John's skyline.
It was announced with public fanfare in February 2016 and completed last fall following three years of construction.
Irving Oil has not revealed the value of the project itself and did not respond to an email this week asking about it. But the Ontario-based construction management firm Irving Oil hired to build the structure — EllisDon — reported on its own corporate website it had a budget for the building of $88 million.
At 317,323 square feet, that is a construction cost for the building of $277 per square foot. It's an amount that appears to be in line with projects of that size and quality built in eastern Canada, according to the 2018 construction cost guide issued by the Altus Group, an international property consulting company.
The Irving building was designed by Toronto based B+H Architects and outfitted inside and out with high-end natural materials, one of the elements that normally increases a building's assessed value.
Its exterior is covered in Indiana limestone and the interior features locally sourced building products, including Hampstead, N.B., granite, Quebec limestone and white oak floors and wall panels sourced partially in Lunenburg, N.S.
Building considered 'strongly classical'
The building has more than 500 windows throughout and features a giant central atrium that floods all 11 floors with a column of natural light from enormous roof top skylights.
The building is "strongly classical in appearance to complement the surrounding landscape and buildings, while utilizing all the benefits of modern building design," according to EllisDon.
Yet despite its design, features and cost to construct, Service New Brunswick has assigned the building an overall value for taxes of just $179 per square foot, one of the cheapest in the province for a recently constructed major structure.
The University of New Brunswick's Richard J.Currie Center, Saint John's new courthouse, Fredericton's convention centre and Moncton's recently opened precision medicine building are all new builds in the last decade of between 40,000 and 150,000 square feet that carry assessed values for taxes from Service New Brunswick above $300 per square foot.
Moncton's privately owned courthouse, which was built to less than half the size of the new Irving building at 135,000 square feet and opened nine years ago, is assessed for taxes to be worth $48.3 million, or $358 per square foot.
It's an assessment per square foot 100 per cent higher than the new Irving building.
Johnson said buildings like courthouses or convention centres are not comparable to a private-sector office building and are not valued by Service New Brunswick in a similar way.
"Those are different building types and in our costing system if we are costing an office building, then we have to cost an office building and if we're costing a convention centre, we have to cost a convention centre," he said.
Johnson and Dionne both said Irving Oil was not consulted about and had no say in the value assigned to the building for taxes prior to it being published by Service New Brunswick.