The Sutton Place Hotel at Revelstoke Mountain Resort

City of Revelstoke learns disappointing reality of strata tax rules

Is the Sutton Place Hotel a hotel or a strata development? For the City of Revelstoke, the difference is about $900,000 in taxes per year.

It looks like a duck, walks like a duck and quacks like a duck, but to their chagrin, Revelstoke city officials are learning it isn’t the goose that laid the golden eggs.

As most residents understand, the Sutton Place Hotel at the base of Revelstoke Mountain Resort is a combination of hotel rooms for rent and condos owned by private buyers. If they want, these buyers can put their condo back into the rental pool when they’re not using it.

From the City of Revelstoke’s perspective, the big question is how much taxation should be paid to them. Commercial properties (class 6) pay many times more tax than residential ones (class 1).

For the city, it would be great to be collecting on the much higher commercial rate. But the reality is, much of the hotel is now assessed residential.

To paraphrase Mayor David Raven at city council’s April 23 meeting: ‘I can walk in with my credit card and rent a room, but it’s not a hotel?’

The answer, in fact, is a bit of a grey area.

Katrina LeNoury, Deputy Assessor with BC Assessment, visited the April 23 meeting to answer council questions about assessments – specifically, why is the city collecting so much less than it thought it would? And what can be done about it?

It’s an important issue for the city’s financial picture. City finance director Graham Inglis said a switch from class 6 to class 1 meant the city is out about $900,000 in revenues annually. And this was the case this year, when an assessment appeal switched the development to class 1. (The city planned for an assessment shift, but not for the full amount. They were left in the lurch for $500,000 in March of this year.)

In a presentation to council, LeNoury laid out the rules, noting recent legislative changes have added uncertainty to the situation as precedents and practices are still being established. Her presentation got technical and hard to follow very quickly. Here’s a very simplified version.

LeNoury explained the Sutton Place Hotel is not an ‘either/or’ situation. Depending on who owns a particular unit, and what it is used for, it can be taxed differently. In addition, there is a “split” assessment, meaning a particular unit could be part residential and part commercial.

“It doesn’t matter who owns them,” LeNoury told council. “It bears more on whether or not they are being offered or available for rent.”

The legislation allows owners for wiggle room. An owner who rents out their condo a few weekends a year would pay less taxation than a frequent renter.

In addition, the hotel owner is entitled to rotate around the rooms they are renting, and factor in the off-season when rooms are not being rented. Using this formula, they can make the case for a lower assessment on an individual unit.

In the case of the Sutton Place Hotel, LeNoury said BC Assessment had asked for occupancy reports. “To this date which they have not provided [them to] us,” she said.

LeNoury said owners were within their right to seek to minimize their tax bill based on the legislation. “It’s a complicated piece of legislation; there’s a lot of loopholes,” she said, adding litigation is common.

LeNoury said the city could explore assessment appeals with the BC Assessment Authority (BCAA) appeal board. For the City of Revelstoke, this would be uncharted territory; municipalities rely on the BCAA for assessment services and as policy usually avoid getting involved in appeals. It would also be a political gamble; property owners don’t appreciate a third party trying to drive up their taxes.

Mayor David Raven said city council invited LeNoury to make the presentation so they could better understand the reasons behind the taxation uncertainty that council has faced over the past several years.

“It’s simply understanding the uncertainty that was put into the budget process with these changes in assessments,” Raven said.

Revelstoke Mountain Resort spokesperson Graham Rennie said the resort bears an “enormous” tax burden right now, and it was a challenge to generate enough activity just to pay all the taxes they encounter.

“The tax burden is extraordinary,” Rennie said.

He added that Revelstoke Mountain Resort is an economic generator for the city, creating lots of spinoff benefits for the community.

He said the resort had a number of property assessment appeals ongoing.

In an interview, city finance director Graham Inglis said the taxation at Revelstoke Mountain Resort would likely remain uncertain in coming years as assessments, appeals and occupation levels vary.

 

 

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