Northern tax grab: Part 1: the first of a three-part series taking a look at inequities in property tax assessments in the North.

A North Bay taskforce seeking fair market value tax assessment for commercial and industrial properties is not hopeful of meaningful change with the Municipal Property Assessment Corp. (MPAC) or its method of evaluation anytime soon.

Gord Cardwell, president of C & C Properties Inc. in North Bay, and a member of the taskforce, says his group is fighting a losing battle with MPAC in asking for fairness, and is seeking change at the legislative level when his group reconvenes this fall.

Cardwell says assessment increases have corroded efforts by the city to reduce taxes. Assets have been overvalued, as the bureaucrats stand by their formulas and government manuals for evaluating property in the North at southern Ontario values.

"It is very frustrating" dealing with MPAC bureaucrats, says Cardwell. "Ultimately something will have to happen at a legislative level that there will have to be a mandate for a revolutionary approach to it."

The Harris government attempted to eliminate business occupancy tax (business property tax paid directly to the city), but instead the province opted for market value assessment, Cardwell says.

"The intention was good, but the details got badly messed up."

Cardwell says the re-assessment method designed to harmonize bases across Ontario has only brought southern Ontario property values to the struggling Northern Ontario market.

City by city, the Canadian Federation of Independent Business (CFIB) is finding cases of distortions between business and residential property taxes in Ontario.

In August, they released a report showing many commercial and industrial class businesses in the North were paying substantially higher taxes than residential properties.

In North Bay, commercially zoned businesses were paying three times more than an equally valued residence, and those in the industrial class were paying 2.9 times more.

The CFIB notes that residential properties account for 74 per cent of the total property value, because of the tax rates they enjoy, they only contribute 58 per cent of the city's tax revenue. Commercial properties - offices, retailers, shopping centres - which account for only 16.4 per cent of property values, shoulder more than 25 per cent of the bill.

Cardwell is equally frustrated with the municipality and the finger-pointing exercises that go on as municipal councillors blame the province and MPAC if taxes go up, while MPAC blames the municipality for setting the taxes.

He says there has to be a movement toward equality, but observes over a 30-year period many northern communities have escalated commercial, industrial and multi-residential rates at the expense of residential rates, "because that's where the vote is."

"Politicians tend to be cowards when it comes to (residential) tax rates."

This fall the North Bay taskforce will attempt to appeal to an inactive provincial legislative committee in Queen's Park by gathering a group of northern business people to strong-arm municipal and provincial politicians to deal with regional problems.

"This isn't Barrie," Caldwell says. "You have to realize we have declining populations, we're losing a portion of resources and we need made-in-the-North solutions."

Cardwell says taxes may be a deciding factor for companies looking at relocating a plant to a more favourable tax jurisdiction. As a result, it can hinder economic growth.

The City of North Bay lowered its industrial rate 66 per cent over three years, which was a great incentive to retain larger companies. The northern tax incentive zones are great tools to attract new businesses that are negated in many cases by the overall property tax burden, he says.

"Everybody's suffering under this," says Cardwell, "even sophisticated businessmen don't seem to understand the process of the appeal, they just get this notice and think 'what can I do?'"

Cardwell says what is needed is a system in place that is weighted to reflect appropriate values in Northern Ontario.

"Cardwell finds MPAC does not recognize "soft" commercial property markets in the North, and rejects bankruptcy sales as economic indicators.

By IAN ROSS 

Northern Ontario Business