City motel and hotel owners won't be getting much of a break on their hefty tax bills.
At a special tax meeting last Wednesday, city council indicated owners shouldn't expect any dramatic changes to their taxes which roughly doubled last year.
A sample of the tax increases faced by hotels was the Waverly Hotel's tax bill going from $5,470.22 in 2009 to 14,078.26 this year. The Melsask went from $2,742.12 to $6,644.29 and the Classic's went from $13,836.86 to $24,428.72.
While sympathetic to the large increases, council said there is little they can do. Tax assessment is done by the Saskatchewan Assessment Management Agency (SAMA) and it is beyond the control of council.
"That just because SAMA says all is right with the world does not make it so," Mayor Streelasky reminded the meeting and categorized SAMA's assessments on motels and hotels as a potential "boo-boo".
"How does SAMA come up with numbers? One building (hotel) is taxable at $50,000 with the other at $500,000"
Councilor Gord Brown wonders. With a large element of the tax issue in the hands of SAMA and fixed amounts of tax required for schools there is little wiggle room for council. City manager Michael Hotsko reported that he had a meeting with a SAMA official before the meeting to gather as much information about the assessment process as possible.
He also asked the official what steps SAMA could take to accommodate Melville's hotels and motels. SAMA values are based on the hotel or motel's income. One major issue from the SAMA's assessment process is the valuing of VLTs. They are valued at $32,000 per machine by SAMA. So if a hotel or motel has five machines with each valued at $32,000 it adds $160,000 to the value of the establishment.
Assistant city treasurer Shannon Bell expressed concerns about the SAMA formula and how it impacts Melville. Using a hypothetical example, "In a larger centre like Regina for example a hotel may have an income of $5 million in one year versus a hotel in Melville or Estevan which may only have $500,000 or $600,000 in a year" Bell says.
However Bell believes party of the controversy about tax levels on hotels and motels comes from a lack of information about how taxes are applied and how much can be done by council.
One issue was the 20 per cent cap on total taxes paid.
"This was a one-time measure and perhaps people thought this would be done again," Bell says. "We need to remember that before this year not all hotels and motels were paying taxes on the same basis," Bell added.
In a follow up interview following the meeting Bell said SAMA was moving to adjust its formula whereby Melville's values would be compared to other rural hotels and motels in the 2003-2006 time frame and SAMA was no longer assessing Melville's hotels and motels as commercial property (such as grocery stores).
Council requested more information on how it can contribute to a fairer tax system for hotels and motels but encourages rate payers to pursue SAMA directly if they feel they are being treated unfairly.
The meeting also addressed matters dealing with the Vacant Land Base tax. In particular there are three property owners on the residential tax incentive program who had the incentive taken away in 2010 since they had not paid their 2009 taxes. Council wishes to write to each explaining the terms of the incentive and if they pay the arrears within 30 days the incentive will be re-instated.
The next issue was land with old buildings. Council made a motion to write letters to property owners that have a lot next their residence that only has an old building on it. The letter would state that if they remove the building within two months that the city would remove the $500 base tax, the $200 recreation levy and the $100.
The final matter dealt with was clarifying a motion made by council on May 31 to join vacant lot that is next to an improved lot together so the owner would only have to pay the $500 in base tax. If the owner has more vacant property they would pay $200 per vacant property.
