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 the tax rate bylaw on Wednesday (May 11) with a proposed mill rate split of 6.3670:1 – the same as last year – after Coun. Hugh Pettigrew delayed third reading on Monday (May 9) over ongoing concerns of the tax burden on residents.
The overall tax levy – which includes municipal, education and regional housing – 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.
The median hotel was assessed at $9.8 million – which excludes the resort hotel of the Fairmont Banff Springs 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 is $44,340, down $16,700 from last year.
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 overall assessment decreased by 2.5 per cent from $3.03 billion to $2.95 billion.
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 administration is also advising against bringing 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.”
On Monday, Coun. Pettigrew was unsuccessful in his attempt to use a portion of the $802,000 unrestricted surplus to ease the tax burden for 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.”
By Wednesday morning, Coun. Pettigrew said he had had a chance to talk further with administration about the budget stabilization fund and said he would support third reading of the tax rate bylaw.
“I now understand that we may be facing some unforeseen expenses, and that it would be more prudent for us to keep the money where it is,” he said.
Councillor Chip Olver said she was not prepared to reopen the budget, noting the concept of using the budget stabilization reserve was debated and voted against several times during more than 60 hours of meetings for service review and budget deliberations.
She said most councillors 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.
Coun. Olver said council worked to keep tax increases down and save where possible while providing services expected in the community.
“We’ve come in very close to the 2019 budget and less than the original 2020 budget before the pandemic reductions that occurred in that year,” she said.
Coun. Olver said council made budget adjustments during the pandemic that affected residents, businesses and Town of Banff staff, including staff layoffs, and delayed capital projects and dipped into reserves.
“For two budget cycles, we’ve made a series of one-time deductions and adjustments that are not sustainable,” she said.
“I hope and believe that this year we are going to start coming back from the devastating impacts of the last few years and I believe this budget contains the services needed to do that.”
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 spending in 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.
