stats Making the Business of Life Easier

   Finance globeinvestor   Careers globecareers.workopolis Subscribe to The Globe
The Globe and Mail /
Home | Business | National | Int'l | Sports | Columnists | The Arts | Tech | Travel | TV | Wheels


  This site         Tips

  The Web Google


  Where to Find It

Breaking News
  Home Page

  Report on Business



Subscribe to The Globe

Shop at our Globe Store

Print Edition
  Front Page

  Report on Business




  Arts & Entertainment



   Headline Index

 Other Sections

  Births & Deaths






  Facts & Arguments




  Real Estate









  Food & Dining




  Online Personals

  TV Listings/News

 Specials & Series
  All Reports...


   Where to Find It
 A quick guide to what's available on the site



  Customer Service

  Help & Contact Us



 Web Site

  E-Mail Newsletters

  Free Headlines

  Globe Store New

  Help & Contact Us

  Make Us Home

  Mobile New

  Press Room

  Privacy Policy

  Terms & Conditions


Calgary small businesses hit hard by double-digit property-tax hike
City council scrambles to respond to the sudden outburst of anger, as many plan to protest the surge

Email this article Print this article
Saturday, June 8, 2019 – Page A14

CALGARY -- Kelly Doody is still reeling a week after she learned the property tax bill on the Calgary building where she operates her business is set to increase at the start of July from $1,356 to $6,425 a month.

She isn't alone. Five years after the price of Alberta oil tanked and the provincial economy went into a tailspin, the fallout from waves of layoffs in past years is continuing to reverberate in the capital of Canada's energy industry through a sudden uptick in property taxes.

Ms. Doody and her small business, which teaches digital marketing to entrepreneurs, are among the latest victims of Alberta's oil crash. More than 8,000 businesses are facing double-digit property-tax increases at the end of the month as the city's tax burden shifts from vacant towers to properties in the ring of gentrifying neighbourhoods surrounding downtown. The value of dozens of gleaming towers in Calgary's downtown has undergone a crash with little precedent in Canadian history.

"We survived the flood in 2013, we survived the economy since 2015, we survived significant hikes to the minimum wage, but this is the worst we've experienced and it comes from our own city council," Ms. Doody said. With the hike, her property taxes would be higher than the rent she pays.

"Come hell or high taxes, we are going to make this work, but it isn't okay."

A number of small-business owners are now planning a tax protest as council has scrambled to respond to a sudden outburst of anger from a city exiting one of its worst economic slowdowns in decades. Led by Mayor Naheed Nenshi, council is preparing to vote early Monday morning on whether to spend $71-million to cap non-residential tax increases at 0.55 per cent this year.

The municipal government's last-minute approach to the situation has left business leaders scratching their heads. The city's property assessments were compiled months ago and councillors were warned that plummeting downtown values would require substantial increases elsewhere - the city is legally required to balance its annual budget. Along with a residential tax hike, the small-business increases have largely offset decreases downtown, keeping the city's budget largely stable.

"Frustration isn't the right word. There's a point of incompetence at this stage," said Sandip Lalli, the president of the Calgary Chamber of Commerce. No issue has troubled the city's businesses more during the past half-decade of economic hardship than the sudden hike in tax bills, she said.

A request from the city to Premier Jason Kenney's government for financial aid was bluntly rejected last week. Live within your means, Mr. Kenney told the council.

Ms. Lalli has called on the city to reduce its costs and review its operations as tax revenue shrinks. "We're going to find ourselves in the exact same situation next year. Monday's vote is just a Band-Aid solution. There are proposals in front of city council. This is an issue of leadership," she said.

According to Mr. Nenshi, the city's total tax take from businesses is going down by 3 per cent this year. Along with small businesses reporting large tax increases, Mr.

Nenshi said some partially vacant downtown buildings are seeing their taxes fall by 75 per cent.

"They are outliers, but there are lots of them," he said of people such as Ms. Doody. "That is why it's such a problem. There are roughly 8,000 businesses that are looking at an increase of 10 per cent or above this year. And then a much smaller number is looking at giant increases of 30 per cent or more."

According to Mr. Nenshi, Calgary's problem isn't the level of taxes, which he said is among the lowest for large Canadian cities, but rather it is an issue with how the taxes are distributed.

After Monday's vote, the mayor said council will need to look at deeper structural changes to the city's tax program, which could require shifting more of the tax burden on homes. Council approved a 3.45-per-cent hike on residential property taxes this year.

The scale of Calgary's problem can be seen three kilometres west of Ms. Doody's business at Fifth Avenue Place downtown. The two-tower complex is an ocean of blue glass and was the headquarters of Imperial Oil until recently.

Its market value, and consequently its property tax bill, has plummeted according to data from the city. In the single year before 2019, the municipal assessment for the complex fell by 46 per cent from $429-million to $231-million.

When oil prices began to slide in 2015, the city pegged the value of Fifth Avenue Place at $916-million.

Fifteen floors in the complex are listed as either fully or partially vacant. Brookfield, the property's owner, did not respond to a request for comment.

Across the street from Fifth Avenue Place, Bow Valley Square saw the second-largest decline in assessment over the past year among the city's 20 most valuable properties. Worth just shy of $900-million in 2015, the building's value has plummeted to $236-million in 2019.

"It's no secret that Calgary is experiencing an extremely challenging office market that has impacted values for owners across the city," said Daniel O'Donnell, a spokesman for building owner Oxford. He said the vacancy rate at Bow Valley Square is currently 10 per cent below the downtown's average vacancy rate.

Stuart Barron, Cushman & Wakefield's national research director, has never observed building values drop by as much as they have in Calgary in recent years. A quarter of Calgary's downtown office space is currently empty, he said. With new buildings under construction, the vacancy rate is expected to stay stubbornly high through the next decade.

"You could put all the available space in downtown Toronto, Montreal, Vancouver and Ottawa inside of Calgary's available space and you'd have space to spare.

That's an incredible story, which highlights the impact of the oil crunch. No one expected the depth and length of this depressed cycle," Mr. Barron said.

The average value of a commercial property in Calgary's core plunged from $50.2-million to $18-million in the five years before 2019, a 64-per-cent fall, according to data analyzed by The Globe and Mail.

With a report from Chen Wang

Associated Graphic

According to data analyzed by The Globe, the average value of a commercial property in Calgary's core fell 64 per cent in the five years before 2019.


Huh? How did I get here?
Return to Main William_Johnson Page
Subscribe to
The Globe and Mail

Email this article Print this article

space  Advertisement

Need CPR for your RSP? Check your portfolio’s pulse and lower yours by improving the overall health of your investments. Click here.


7-Day Site Search

Breaking News

Today's Weather


Rick Salutin
Merrily marching
off to war
Roy MacGregor
Duct tape might hold
when panic strikes

Where Manley is going with his first budget



For a columnist's most recent stories, click on their name below.


Roy MacGregor arrow
This Country
Jeffrey Simpson arrow
The Nation
Margaret Wente arrow
Hugh Winsor  arrow
The Power Game

Rob Carrick arrow
Personal Finance
Drew Fagan arrow
The Big Picture
Mathew Ingram arrow
Brent Jang arrow
Business West
Brian Milner arrow
Taking Stock
Eric Reguly arrow
To The Point
Andrew Willis arrow

Stephen Brunt arrow
The Game
Eric Duhatschek arrow
Allan Maki arrow
William Houston arrow
Truth & Rumours
Lorne Rubenstein arrow
 The Arts

John Doyle arrow
John MacLachlan Gray arrow
Gray's Anatomy
David Macfarlane arrow
Cheap Seats
Johanna Schneller arrow

Murray Campbell arrow
Ontario Politics
Lysiane Gagnon arrow
Inside Quebec
Marcus Gee arrow
The World
William Johnson arrow
Pit Bill
Paul Knox arrow
Heather Mallick arrow
As If
Leah McLaren arrow
Generation Why
Rex Murphy arrow
Japes of Wrath
Rick Salutin arrow
On The Other Hand
Paul Sullivan arrow
The West
William Thorsell arrow

Home | Business | National | Int'l | Sports | Columnists | The Arts | Tech | Travel | TV | Wheels

© 2003 Bell Globemedia Interactive Inc. All Rights Reserved.
Help & Contact Us | Back to the top of this page