BANFF – Residential taxpayers will take a bigger tax hit this year given the dramatic drop in assessment values for hotels in the tourist town during the COVID-19 pandemic.
Banff town council passed second reading of the tax rate bylaw on Monday (May 9) with a proposed mill rate split of 6.3670:1 – the same as last year – but councillor Hugh Pettigrew voted against going to third reading, which forced another meeting on Wednesday (May 11) at 7:30 a.m.
The overall tax levy, including municipal, education and regional housing levies, jumped one per cent from 2021, but this is not indicative of change on individual tax bills as there is an 8.39 per cent increase on the overall residential tax levy and a 2.25 per cent decrease on the overall non-residential tax levy.
“The overall non-residential assessments have seen a significant decrease from the previous year compared to residential assessments as a result of the COVID-19 pandemic,” said Andrea Stuart, manager of finance for the Town of Banff.
“However, there’s quite a big variance within that non-residential assessment. When you look at hotel properties compared to either downtown mixed-use or industrial properties within that non-residential, there are quite a few variances.”
The average municipal property tax bill on the average residential dwelling assessed at $467,100 will be $1,135 in 2022, up $171 from the previous year. The average school tax in 2022 will be $1,240, an increase of $13 from last year.
On hotels, the median property assessed at $9.8 million – which excludes the Banff Springs resort hotel because it skews the average – will see an average municipal tax bill of $152,680 for 2022, a decrease of about $30,800. An average education tax for this median non-resort hotel is $44,340, down $16,700 from last year.
The mill rate determines the relative level of taxation between residential and non-residential properties.
The Municipal Government Act caps the mill rate split at 5:1, however, Parks Canada has not yet signed off on the articles of entrustment document, which would mean the Town of Banff must fall in line with that provincial requirement.
Stuart said the municipality does not have the option to increase the mill rate split based on the cap under the MGA in order to evenly spread out the overall tax increase between the residential and non-resident sectors.
She said the municipality does not have the signed instrument of entrustment document, although it’s expected soon, but administration is also not advising to bring the mill rate split down to the 5:1 split at this time due to the big drop in non-residential assessments driven by hotels.
“Based on the current economic situation, we are expecting to see some recovery,” said Stuart.
“At that point, when the hotel portion of the non-residential assessment starts to recover, would probably be a good time for the movement towards the 5:1 split.”
Councillor Pettigrew was unsuccessful in his attempt to use a portion of the $802,000 unrestricted surplus to ease the tax burden for Banff residents. The unrestricted surplus was put into the budget stabilization reserve last month, which has an undedicated balance of $1.3 million.
“We can use a portion of that money …to reduce the impact so we can be fair and take the bump out of the road for our ratepayers,” he said. “A few months back when budget was passed we weren’t 100 per cent sure; we didn’t know the exact value of the surplus we have.”
Councillor Chip Olver said she was not prepared to reopen the budget, noting this concept was discussed, debated and voted against several times during service review and budget deliberations, which included more than 60 hours of meetings.
She said the majority of council voted to put money into the budget stabilization reserve to deal with ongoing economic uncertainty due to the COVID-19 pandemic, but also because of new or ongoing international matters, including supply chain challenges and weather events.
Believing the existing budget stabilization target to be too low, Coun. Olver said she plans to bring forward information about increasing the target amount when council next deals with the Town of Banff’s financial plan.
“When we started in the pandemic, Banff had about $600,000 in budget stabilization and Canmore had $2.1 million,” she said.
“I was sure wishing that we had that type of fund ourselves in order to deal with very uncertain and challenging and traumatic events that we were in so I can’t support reopening the budget.”
The total 2022 municipal tax requirement is $20.23 million, up 4.81 per cent from 2021 but down 1.78 per cent from 2019 pre-pandemic.
The overall education requisition decreased by $527,217, or 5.23 per cent, to $9.5 million from 2021, however, this is based on an increase on the residential portion and a decrease on non-residential. The Bow Valley Regional Housing levy dropped $102,874, or 16.19 percent, to $532,772 in 2022 from 2021.
For 2022, the Town of Banff has seen a total residential taxable assessment increase of 2.9 per cent from $1.90 billion to $1.95 billion, while non-residential assessments decreased by 11.7 per cent from $1.13 billion to $1 billion.
The total overall taxable assessment for the Town of Banff has decreased by 2.5 per cent from $3.03 billion to $2.95 billion.
Councillor Grant Canning voiced support for the tax rate bylaw, noting he realized there will be some pain for the residential sector in the short-term but believes the hotel sector will bounce back, perhaps beginning as early as this summer.
“This year, the residential sector is covering for the commercial sector, particularly the hotel sector, and when that pendulum swings back, and it will swing back, I think it's completely understandable for the hotel sector to make up for the residential sector at that point,” he said.
Councillor Ted Christensen said council should be looking at cutting the budget.
“I am of the belt-tightening and spending less mode, and you will hear this from me a number of times throughout our council deliberations,” he said.