New Brunswick

Saint John, Moncton, Fredericton hotel sale triggers criticism of property assessments

The sale of three New Brunswick hotels in Saint John, Moncton and Fredericton that resulted in Service New Brunswick assessing  the Saint John property as the least valuable, even though it sold for $2 million more than the other two has Mayor Donna Reardon seething about the agency's work once again.

Property valued the lowest by Service New Brunswick, sells for the most.

The Holiday Inn and Suites in Saint John sold for $9.24 million in November. Service New Brunswick assesses it for taxes to be worth 20 per cent of that - $1.93 million. (Holiday Inn)

The sale of individual hotels in Saint John, Moncton and Fredericton that resulted in Service New Brunswick assessing  the Saint John property as the least valuable, even though it sold for $2 million more than the other two, has Saint John's mayor seething about the agency's work once again.

"I'm frustrated," said Donna Reardon, who believes the Saint John hotel is devalued by provincial assessors only because it is in Saint John.

"I looked them up. I looked up the ratings, looked everything up. It doesn't make any sense."

Saint John Mayor Donna Reardon has complained about Service New Brunswick undervaluing assessments in Saint John for several years. In 2020, the agency lifted the valuation of the Saint John courthouse by $6 million following criticism the smaller and older Moncton courthouse was assessed for more. (Robert Jones/CBC)

Property records show that in November the Karwal Group, a hospitality company based in Ontario bought three New Brunswick hotel properties, including the Holiday Inn and Suites in both Saint John and Fredericton and the Fairfield Marriott in Moncton.

The Saint John hotel is the largest of the three with 94 rooms, 12 more than the Moncton property and it has amenities, like an indoor pool, that the Fredericton hotel lacks. 

It has also had significant renovations and upgrades in recent years and on internet booking sites scores equal to or better than the other two properties in customer reviews.

The deals to buy them were worth a combined $23.5 million.  Records show the Saint John hotel sold for $9.24 million, $2 million more than either of the other two.

The Holiday Inn in Saint John has had extensive internal renovations to its rooms, lobby and pool area and scores high in online customer reviews. (Holiday Inn)

However, when assessments were issued on the properties for 2022, Service New Brunswick had that order in reverse.  It ranked the Saint John hotel as the least valuable of the three and put a taxable value on it of $1.93 million. 

In its calculations it assesses the Fredericton hotel to be worth $1.5 million more than the Saint John property and the Moncton hotel to be worth $3.5 million more.

That requires the Karwal Group to pay the city of Moncton $123,787 in municipal property tax on the Fairfield Marriott  this year, more than double the $49,450 Saint John will collect on the Holiday Inn Express.  Fredericton will collect just under $74,000

Reardon has claimed for several years Service New Brunswick routinely undervalues industrial, commercial and residential properties in Saint John. 

That, she argues, hinders city efforts to both raise revenue and lower its tax rate.  She considers the hotel valuations evidence of that ongoing problem and said she plans to raise the issue with Premier Blaine Higgs.

"That's a big loss of revenue for us when our neighbours just next door an hour away are getting that revenue," said Reardon 

"We could use that money, but we're not getting it.  When the story is published, I'm going to take that and I'm going to send that directly to the premier and then say how can you explain this to me? Why is this happening?"

The hotel sales occurred in late 2021 but assessment notices for the properties were issued well after the transactions in January.   In an email, Service New Brunswick's communications director Jennifer Vienneau said despite that, the property sales were not factored into the three hotels assessments for 2022 and will be considered in 2023 instead. 

The Holiday Inn and Suites in Fredericton has fewer rooms than its sister hotel in Saint John and no indoor pool. It also sold for $2.26 million less but is assessed by Service New Brunswick to be worth 82 per cent more. (Ed Hunter/CBC)

"Staff continue to gather information as it pertains to sales and if there are changes it will be reflected in the October 2022 notice," wrote Vienneau.

Whether that changes the assessments next year, Reardon believes the sale of the three hotel properties reveals what their true value relative to each other has always been and asks why Service New Brunswick would not see that on its own, even if the properties hadn't sold.

Bob Singh is the President of the Karwal Group.  In a brief interview he confirmed the properties were purchased by his company but said he was unaware of any controversy around their property assessments.

The Fairfield Marriott in Moncton is assessed by the province to be worth 180 per cent more than the Holiday Inn in Saint John but has 12 fewer rooms and sold in November for $2 million less. (Pierre Fournier/CBC)

ABOUT THE AUTHOR

Robert Jones

Reporter

Robert Jones has been a reporter and producer with CBC New Brunswick since 1990. His investigative reports on petroleum pricing in New Brunswick won several regional and national awards and led to the adoption of price regulation in 2006.

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