Whitehorse property taxes are going up, but Coun. Ranj Pillai says that increase is also driving up the price of property in the city.
“Commercial landowners have taken a tremendous hit over the last number of years and they’re going to continue to do so,” he said.
He pointed to the Titanium Way commercial centre, currently being developed by Northern Vision Development, as a prime example.
The taxes on that property have increased more than 300 per cent in the last four years, said Pillai.
That’s because when the company subdivided the land to develop the lots, each one became a taxable property.
The Yukon government assesses the price of lots and the city applies the taxes, but there is no consideration given to large development projects, like Titanium Way, which may take a long time to sell.
About half of the 49 lots in the commercial development have been sold, said Rich Thompson, president of Northern Vision. But it will still take another couple of years before it sells all of them.
In the meantime, as property taxes rise so do the costs of development.
“We saw a 40 per cent increase this year alone,” said Thompson. But that was on the back of some more substantial jumps.
“It adds up quickly,” he said.
Those costs just get tacked onto the final purchase price, which is contributing to the “skyrocketing price of commercial land within the city,” said Pillai.
“I think we have to look at some of these projects within the city, have a conversation with the Yukon government, and maybe put a hold on some of these rates so people can afford to put them up, because the end result is it just increases the cost for the commercial purchaser,” he said.
If Whitehorse wants to become a hub for the mining industry, private commercial developments, like Titanium Way, are a necessary element, he added.
“If you’re going to be the hub, you have to have land prepared and ready to go for sale in these service sector areas,” said Pillai.
“No one’s going to get land prepared and ready to go if they know, as soon as they subdivide it, they can be paying 300 per cent more.”
No one but the Yukon government.
The government can do it for less because when it develops vacant commissioner’s land, like in the Whistle Bend subdivision, the property isn’t titled and so it isn’t subject to municipal taxes.
Thompson said he isn’t under any illusions about how much sympathy Northern Vision is going to inspire.
“No one is going to shed a tear for us,” he said.
And he isn’t against paying property taxes.
Northern Vision owns lots on the waterfront where paying full property taxes is appropriate and that helps encourage development, said Thompson.
But the Titanium Way property, which was an unused treed lot before Northern Vision paved the road, developed the lots and brought in electricity, is another story, he said.
“Our issue is that the appropriate rationale does not exist when you’re in a development situation,” said Thompson.
“In a normal situation there would be a recognition that those lots are development lots, and that they would become appropriately taxed only when they become productive land ... when they’re sold and put into productive use by someone who wants to build a building, or what have you.”
The Titanium Way property is more expensive than the average.
With the passage of the city’s operating and maintenance budget Monday, commercial property owners will see an annual increase of $843, bringing the average bill to $13,498 while the average homeowner will see a $29 increase on the average bill of $2,130.
Contact Josh Kerr at joshk@yukon-news.com