Major property assessment increase reaches Saint John hotel five years after renovations finish
According to Mayor Donna Reardon, a renovated Saint John hotel that received a substantial raise in property valuations more than five years after the renovation is another example of stagnant valuations costing the city critical tax revenues.
“There’s a lot of money lost if it takes five, six, seven years for your building to meet an accurate assessment,” Reardon said in an interview.
“It’s hard to grow if you don’t accurately reflect the tax base.”
Last week, Service New Brunswick released a $6.1 million real estate appraisal for the Holiday Inn Express and Suites hotel north of the city for 2023. That’s an increase from just $1.9 million in 2022.
The 217 percent increase is the largest recorded this year in New Brunswick for an unconstructed building of this size.
The change will bring Saint John $119,000 in additional tax revenue per year.
Reardon is happy about this, but also has questions.
If much of the hotel’s change in value is related to extensive renovations on the property in 2016 and 2017, she believes it should show up in the city’s tax assessment and revenue well before 2023.
Service New Brunswick will not discuss details of how it has rated the hotel in recent years, citing “confidentiality,” but Reardon said the agency had all the information it needed to know as early as 2017 that the building has gained in value.
“They would have needed permits to do all this renovation work,” Reardon said
“You could track the permits.”
It wasn’t until the hotel was sold to new owners in 2021 for $9.24 million, five times its Service New Brunswick estimate at the time, that the agency began investigating the accuracy of its own valuation. It eventually found it was $4 million short.
CLOCK | The hotel where the renovation resulted in a 200% improvement in rating — ultimately
Renovations have not been included in this Holiday Inn Express’s property rating for six years.
That’s a significant gap and potentially expensive for the city, especially if the valuation has been undervalued for an extended period of time
For every $1 million that a Service New Brunswick commercial property is undervalued, Saint John costs Saint John approximately $26,000 per year in lost tax revenue, subject to fluctuating tax rates.
Morgan Lanigan has been a vocal critic of Service New Brunswick’s ratings work in Saint John and believes stagnant ratings, like the hotel’s, are citywide.
In October, 40 Saint-John homes valued over $200,000 received no increases at all on their 2023 valuations.
Neither Moncton nor Fredericton has seen a single home of this value that has not had a rating upgrade.
Included in this group was an entire street of seven oceanfront homes in west Saint John that had not been affected by a tax increase for three consecutive years. This is despite record home prices and sales, which are driving up residential tax ratings across New Brunswick.
“These are far from rare,” Lanigan said.
He advocates allowing New Brunswick communities to run their own appraisal systems, as in Alberta and Saskatchewan, since property taxes are far more important to local governments than the province.
“If you miss out on seven years of revenue that should be double that, it puts communities at a disadvantage,” Lanigan said. “I think decentralizing this process would bring a lot more clarity and urgency to the issue.”
Reardon said she met with Service New Brunswick to express concerns about how property in the city is valued, particularly large commercial and industrial properties, and has no plans to drop the issue any time soon.
“There are a lot of buildings out there in Saint John that would fit into that category of undervaluation,” she said. “So we’re still banging on that.”
