Taxpayers Could Take A $150M Hit

That we don't have and we could see a dramatic drop in tax revenue in future.

Tax fight could cost city $150M TheStar.com - News - Tax fight could cost city $150M
Bank tower owners challenge property assessments based on rental income, seek tax refunds
January 16, 2007
John Spears
city hall bureau

In an ideal world, no ordinary person should have to worry about the meaning of phrases like "fee simple if unencumbered."

But this is Toronto, and depending on the arguments put forward by a scrum of lawyers this week, those words could cost the city up to $150 million in property tax refunds to a dozen large downtown office towers.

That would leave the other taxpayers of the budget-challenged city to pick up the slack (although the province and school boards would necessarily share the pain.)

The lawyers have gathered in a Bay St. hearing room to haggle over how to assess the value of 12 towers in the office blocks named after the Big Five banks, plus BCE Place.

They're making final arguments this week before the Assessment Review Board on a marathon case that kicked off in November 2005.

Three teams of lawyers representing the towers, who want their assessments reduced, are facing off against lawyers for the Municipal Property Assessment Corp. and the City of Toronto.

Traditionally, the towers have been assessed on the basis of the income generated by their tenants' rent payments.

As a general rule of thumb, if a building kicks out $1 million worth of income each year, and if evidence shows that investors expect a 10 per cent return on their money, then the building is worth $10 million.

The towers' owners are challenging this system.

They want to be assessed on the same basis as houses, they say: based on the value the buildings would fetch if vacant, without furnishings or tenants, on the day of sale.

Hold your breath.......