Banff as seen from Mount Norquay in Banff National Park on Monday, Sept. 5, 2016.
ARYN TOOMBS RMO PHOTO
Property values in Banff are once again on the rise, with the average residential property assessment jumping 17 per cent from last year.
The biggest increase was led by residential properties on the north side of the Bow River, particularly in the central Muskrat district, which saw property values increase by an average of 31 per cent.
Property values have increased because of the value of the land itself, rather then the structures on it, according to Frank Watson, municipal assessor with Bow Valley Property Valuators.
“The land component is selling between $700,000 to a $1 million just for the land,” said Watson during a governance and finance committee meeting on Feb. 12.
“Land values are around $100 to $150 square foot, whereas previous assessments are probably at around $60 to $70 a square foot, so there's been a big shift in the values to the land.”
He stressed that the increase in land values didn't just happen over night, it's a trend he started noticing about three years ago.
“At first I thought it was maybe going to be an anomaly, but then you had a lot of sales indicating it was becoming a trend and that trend is now recognized for this year's assessment,” said Watson.
To put it in perspective, last year residential property values increased by 5.6 per cent on average.
South of the river residential properties increased this year by an average of 17 per cent.
Councillor Peter Poole asked whether the difference in residential assessments between the north and south side of the river had anything to do with zoning. The central Muskrat district is one of Banff's highest density districts.
“I don't know what caused it. All I can tell you is the effect,” said Watson. “I only deal with after the fact, so any of the sales I have are historic sales and north of the river, that is where the sales showed me the values had increased.”
He mused that a number of things could have caused the increase in assessments north of the river, however, he said the biggest factor is likely the low vacancy rate in town is driving developers to build multi-unit apartments in areas zoned for higher density.
According to Watson, apartment condominiums also increased by an average of 17 per cent with the highest assessment jumping by 40 per cent.
“When the land is developed to its highest potential, meaning there's already an existing duplex on there or a significant improvement, the buildings add value,” said Watson.
“When the land is not developed to it highest potential, the buildings add nominal value, meaning they're probably going to be removed and redeveloped.”
As part of his assessment he also took into consideration the redevelopment limits of six historic residential properties in town.
“If right beside it the land value is $1 million, I've discounted the value of the historic resort to show that the development potential is significantly impacted by the designation,” said Watson.
When it comes to bed and breakfasts, he said there is no added value to the assessment of the property because it is a discretionary use.
“If you were to sell a B&B, the new owner would have to go in and apply for that right so it's not really transferable as part of the real estate, whereas if you have a small inn, those are treated similar to a hotel,” said Watson.
Banff's commercial properties are valued on an income-based approach.
For retail properties along Banff Avenue and Bear Street, the average property value has increased by 12 per cent.
For full service hotels, which include food and beverage establishments, property values increased by 15 per cent. Limited service hotels will see their property values increase by 10 per cent.
“So, on average, the non-residential properties, all the hotels, all of the retail, has increased by 12 per cent,” said Watson.
“There are a couple of anomalies where there have been significant renovations that have been made to a property that had not been captured in the assessment until this year, so they could have a 60 or 70 per cent increase.”
Property values have an impact on how much someone pays in property taxes, however, Chris Hughes, manager of finance and corporate services, cautioned it isn't that simple.
“Everybody wants to know individually how this is going to affect their taxes; if they are going to go up or down,” said Hughes.
“There are three things that affect that. The first thing is the operating budget which was already passed at 5.34 per cent, the second thing is the mill rate split that will get determined when we pass the tax rate bylaw and the third thing is not the absolute increase or decrease in your assessed value, but your relative increase or decrease to the rest of the sector that you're in.”
For example, he said an individual could see a five per cent assessment increase on their property and still have a reduction in their overall taxes because of the interplay between those three factors.
According to Hughes, the total taxable assessment value for 2018 is $2.8 billion, an increase of 14.5 per cent compared to last year.
Residential properties represent $1.6 billion of the total assessed value, while non-residential properties account for the remaining $1.2 billion in assessed value.
Assessments are expected to be sent out by the end of February. Those who have questions or disagree with their assessment are encouraged to contact Watson. His contact details will be provided with the assessment.
“If I have missed the mark I'm more than happy to take a look at it. The last thing we want is 50 people making complaints on their assessment. It may happen, but if I can resolve the issue before we get that far, that's my intent,” said Watson.