Calgary property owners will be getting a bit of reprieve for their 2021 taxes if they are late in paying them.
With tax bills due on June 30, the city normally levies a seven per cent fine on July 1. Another seven per cent is added on Oct. 1, and in the following calendar year, one per cent is added at the beginning of each month.
Tuesday afternoon, council approved a capped fine of 3.5 per cent for residential and non-residential property owners alike that will go into effect on July 1, 2021, with no further increases in fines until April 2022.
“At this time, the city anticipates having sufficient liquidity to manage the impacts associated with the delayed collection of property tax,” said Michael Perkins, manager of the city’s tax receivable and payable division.
“The anticipated impact of proposed deferrals does consider the payments made in 2021 will follow a consistent pattern with 2020.
“Given the ongoing impacts of the pandemic on Calgarians, there is risk to this assumption,” Perkins said.
Perkins noted that the city would lose between $1 and $1.5 million in investment revenue and miss out on between $3-4 million in penalty revenues.
For the 2020 assessment year, council waived the July 1 fine and reduced the Oct. 1 fine by half. The city also provided fee relief for those property owners enrolled in the Tax Instalment Payment Plan.
“What administration is proposing today is that we go from 17 per cent to 3.5 per cent for people until April 1 of next year, and then it would start the penalty would start coming in at one per cent per month as normal,” Mayor Naheed Nenshi told council.
CFO Carla Male noted that the city has been able to collect on more than 90 per cent of property taxes.
“That gives people a bit of short-term assistance from now for about a year from now, to help them get through,” the mayor added.
“It doesn’t really solve the problem that was in the letter the Calgary Hotel Association. It helps a little bit but it doesn’t fix it.”
Council received a letter from the Calgary Hotel Association (CHA) on April 1 seeking help for a struggling hotel industry that it says has seen the lowest occupancy rates of any major Canadian market.
“(T)he CBRE Hotels National Market Report – January 2021 … shows downtown Calgary at 6.8 per cent occupancy, almost 50 per cent lower than (even) Edmonton, and significantly lower than Montreal, Toronto and Vancouver,” Sol Zia, CHA’s executive director, wrote.
“The situation for our downtown hotels’ balance sheets is almost impossible to document.”
According to CHA, hotels throughout the city saw an 80 per cent drop in revenues during the pandemic. In 2019, hotels reported more than $300 million in revenues.
The hotel association asked for an “aggressive response” for Calgary’s 18 downtown hotels, including a deferral of all utilities and property taxes for 2021, to be repaid over 2022 and 2023.
Nenshi said he “dreaded” receiving the letter from the CHA, knowing what other cities were facing.
Statistics Canada numbers showed tourism spending in Canada was almost cut in half in 2020, with tourism jobs in the country falling by 28.7 per cent annually.
“When I received the letter, I really thought that their request for a deferral and a payment plan rather than a cancellation of their taxes was eminently reasonable,” Nenshi said.
Council directed city officials to evaluate whether the city could defer taxes for businesses and non-profits not eligible for other tax relief that have been “significantly impaired” by the coronavirus pandemic.
Administration’s recommendations will come to a committee meeting in two weeks’ time.
“If penalties for late payment of taxes and utilities were waived for Calgary hotels, this action would benefit the downtown hotels most due to their higher cost bases (costs per room),” Zia told Global News via email.
City assistance continues for businesses
Tuesday’s decision is the latest way the city aims to assist businesses during tough economic times brought on by the pandemic and related limitations on capacity and services. It’s assistance that is getting nationwide acclaim.
After city council approved waiving all business improvement area (BIA)-related levies for area businesses in March, Annie MacInnis, executive director of the Kensington Business Revitalization Zone (BRZ), shared the news with other BIAs across Canada.
“One of the cities said that Calgary is the gold standard for other city councils,” MacInnis told Global News. “And a lot of the other business improvement area organizations in other provinces are actually going to their city councils and saying, ‘If Calgary council can do this, why cannot you?’”
MacInnis sent a trio of letters to council with feedback from BIAs across the city and the country.
Ken Kelly, project manager with the International Downtown Association: Canada (IDA), lauded the “exceptional measures” to support businesses in the Calgary.
“In a province that is perceived by the rest of the country to be largely focused on the energy sector, you have demonstrated leadership in shifting focus to another dimension of Alberta: its vibrant and vital urban scene,” Kelly wrote on March 29.
To date, measures from city council include waiving fees for development permits, streamlining temporary and permanent patio set-up process, waiving licensing fees for taxis and rideshares, among others.
MacInnis, also member of the Canadian chapter of the IDA, said other cities are using similar tactics to help their small and medium businesses stay open through the pandemic.
“These are small — not huge — amounts of money,” MacInnis said Tuesday. “But for small businesses, this is big money that is there. There are a lot of (businesses) that are very close to the bone right now.”
There is still about $12.4 million left from $30 million city council earmarked on March 1 for “directed relief to businesses impacted by COVID-19,” with most of those funds to go to grants that are yet to be determined.
While MacInnis and businesses around the city are looking forward to seeing those funds help out their colleagues, Tuesday’s cap on property tax late fees will also contribute to their cause.
“Any money that can stay in the pockets of business at this point in time is a help.”