Property owner wants his tax bill reassessed by MPAC after 100% hike
Taxes for one 3-storey building went up from $22K in 2016 to about $42K in 2017.
Anyone who owns property in the city knows their taxes will likely increase each year, but no one expects a property tax hike of 100 per cent.
So you can imagine Jack Prattas's shock when he opened the 2017 property tax bills for a few buildings his family owns on Yonge Street.
"I've never seen anything like this before," said Prattas. "The massive tax increases are unprecedented."
Prattas's father and uncles purchased five buildings around Yonge Street and Wellesley Street in the 60s. Four of the five had their taxes double since 2016.
The three-storey building they own at 574 Yonge Street jumped from almost $22,000 in 2016 to about $42,000. The larger one next door that they also own went up from around $40,000 to $80,000.
"I understand that things are going up, and we love the city and we're going to pay more taxes. But you can't pay 100 per cent more all at once," said Prattas.
Could push small businesses out
The buildings are mostly rented out to small, independent businesses and eventually those tens of thousands of dollars will have to come from the tenants in the form of higher rents.
"How do you pass on a $20,000 or $40,000 tax increase to your tenants? I don't know how anyone can survive. It's just going to drive the little guy out," Prattas told CBC Toronto.
The Downtown Yonge BIA says the soaring tax bills could result in more vacant storefronts.
"The mom-and-pop shops will have to move if they can't sell more goods to cover the costs," said Mark Garner, the the BIA's chief operating officer.
And neighbourhoods will transform, says Garner, as proprietors will opt for larger businesses to offset the expense.
"You'll end up with a lot more banks, Shoppers Drug Marts or Rexalls versus the small independent coffee shop."
Property assessments aren't always equal
Part of the reason property taxes have gone up, is the real estate boom Toronto experienced over the last year, and Garner says that's also complicating the situation for small businesses.
In Toronto, the property tax for a commercial space is determined by the building's current assessed value and then multiplied by about 2.5 per cent.
When nearby homes are selling for tens of thousands of dollars over asking, prices for all types of properties in the area go up. So when the Municipal Property Assessment Corporation (MPAC), the not-for-profit corporation that assesses and classifies all properties in Ontario, comes around to rate a property it bases its value on what buildings sold in the area and for what price.
CBC Toronto asked MPAC about Prattas's Yonge Street buildings and in an email MPAC said it "assesses all properties using industry standard appraisal methods" and that "every property owner has the option to file a Request for Reconsideration with MPAC for free if they do not agree with their assessment."
But Garner says MPAC's method is flawed because the corporation looks at the highest and best use for a property along with what your neighbouring property sold for.
"Obviously, the highest and best use for property in Toronto is tall towers and condos coming in. If a tower can be at Yonge and Gerrard for example, then they automatically assume that the opposite side of the street can be a condo tower as well, and then the taxation is based on that."
'The value of the property isn't going to help us pay the taxes'
That means if the developer paid, say, $700 per square foot for the neighbouring property, MPAC assumes that you can get the same for your property.
That's not always the case, says Garner.
"You might be able to have a condo tower at Yonge and Gerrard but the person who owns the building two doors down, cannot put a tower on there as well because there is various different policies within the city that prevent condos from going up side by side."
The city says that the "properties in question on Yonge Street have all experienced above-average CVA [Current Value Assessment] increases as a result of the re-assessment."
But Prattas says that's cold comfort.
"The value of the property isn't going to help us pay the taxes," he said, explaining that one of his family's buildings has tripled in value.
He says he plans on contacting MPAC to get his property reassessed.