Town of St. Paul council was informed in early April of an overall nine per cent increase in non-residential property assessment in the St. Paul, and a one per cent decrease in residential assessments. For local property owners it wasn't until the 2018 tax notices arrived in the mail, that they got a first-hand idea of how that information impacts their wallets.
While the Town held the line on the municipal mill rates in 2018, the overall increase in assessed property value in the commercial sector in 2017 translates to increased taxes on non-residential property for many businesses who own their own commercial space. As an example, the St. Paul Journal building in the downtown core, has seen its taxes jump nine per cent over last year - a $730 hit on the tax bill. Meanwhile, some business owners are facing increases in the thousands of dollars.
Bob Daudelin of Accurate Assessment Group, the company contracted by the Town to undertake property assessment, told the Journal the explanation behind the increase in commercial property assessment in the community last year is two-fold.
"First off, there were sales that occurred between 2016 and 2017 that showed, quite frankly a surprise to me, a healthy and an increasing market and demand for that type of property (commercial) in town, not disregarding what property owners say, but the sales speak for themselves. So that contributed to some of the increase."
Secondly, Daudelin said they have "new analytical tools that helped us fine tune some of the parameters we consider when we are doing valuations on properties." As a result, Daudelin said they are now able to more precisely calculate factors such as vacancy rates in commercial buildings and more accurately determine typical lease rates for retail, office of warehousing space.
"Through our analysis, 2017 over 2016, we found that space was leasing for higher that it was in the past and, more specifically, office space was leasing a little bit higher than what we had estimated in the past, so that coupled with a reduced vacancy rate really sets the stage for a healthy market in that town," Daudelin said.
"When we did all the math, the 2016 assessments compared to the 2017 market and how the sales illustrated that market, it showed that the assessments needed to increase in order to be closer to market value and produce a more fair and equitable assessment overall."
Daudelin believes, based on the information he employs to determine property assessment values, St. Paul is holding its own.
"There are communities out there that are in much less fortunate shape than the town of St. Paul," he said. "The neighbouring town, Bonnyville, is a town that's in a decline, for obvious reasons, but because of diversity around St. Paul and the agriculture industry being fairly healthy, it has kept the town economic fairly healthy, I believe anyway."
But at least one St. Paul realtor isn't buying the rosy picture on commercial property values in St. Paul. Darryl Poirier of Century 21 Poirier Real Estate said the jump in non-residential property assessment is not a true reflection of what is actually going on in the commercial real estate sector in St. Paul. He said commercial market values continue to be depressed in the region and to suggest otherwise is not accurate.
"This group is doing their best no doubt but I'll tell you what, anybody that can say in northeastern Alberta that commercial building values have gone up is not paying attention to the market. We know what the market is and how tough it is to sell commercial buildings because the market is down."
Poirier said he's done a devaluation comparative in the region of St. Paul, Cold Lake, Bonnyille and up to Edmonton, and values are down as much as 30 per cent in some areas.
While Poirier said some vacant commercial property in St. Paul has been filled in the last couple of years which would add to the property's value, he said nothing indicates a turnaround in actual market values at this point. In general, he said, market values have dropped and, in some cases, by as much as 20 per cent in the community.
"There's no way a commercial property in St. Paul, unless it was vacant and got a lease, went up all. It went down. And the poorer locations have gone down much more than the top locations."
The east end business development, which now includes the new hotel, would be considered a top commercial location with that area renting out at the highest rates in St. Paul. As a result, return on investment for owners is higher than other areas in town.
"That particular area helps," Poirier said, but it's certainly not enough to impact assessments across the community.
"We've had a lot of people come to us over the last couple of years and say how can these assessments be going up when the market values are substantially lower," Poirier said. "Commercial is a complex animal. I've heard some assessments jumping even more than that (nine per cent) and I can't believe where they are coming from. The sales aren't there to back up any increase in St. Paul."
