The longer The Blue Mountains council examines the 20-year-old special tax rule for condominium rentals in Blue Mountain Village, the more questions arise.
The special tax class, which taxes commercial rental units in The Blue Mountains at the residential rate instead of a commercial rate, was once again before council at its meeting on March 17. Town finance staff brought forward an extensive report about the issue and asked council for direction on how to proceed.
The resort condominium tax class was created by the province in 2005 and applies to communities with a population of less than 10,000 residents.
Essentially, the tax class was created specifically for the Town of The Blue Mountains. It provides a tax break to commercial rental units at Blue Mountain Village.
Condos at Blue Mountain Village are owned by individuals but can be added to a rental pool. Those who are part of that pool can only use their condos for about 10 nights a month, and the rest of the month the condo needs to be available to rent through a Village-based rental management company.
Although the special tax class applies in The Blue Mountains, it is Grey County that has responsibility for continuing the tax classification. The county is responsible for setting tax ratios for various property tax classes.
In recent years, TBM resident Rick Tipping has raised the continued use of the tax class as an issue for council to consider.
In multiple presentations and letters to council, Tipping has argued that the tax class provides an unfair tax break for the owners of what are effectively commercial rental units at the village.
The issue was a hot topic at the meeting. Tipping again appeared as a delegation, council received multiple public comments opposing the continued use of the tax class.
Council also received a delegation from Patti Kendall, president of the Blue Mountain Village Association, who urged town officials to support continued use of the tax rule. Council also heard a similar message from Jesse Hamilton of Blue Mountain Resorts.
In her presentation, Kendall said removing the special tax class would result in massive property tax increases for the owners of the properties. She said the association had surveyed local owners, who expressed significant concerns about the tax class ending. Kendall said the possibility of ending the tax class “directly conflicts with economic development.”
She said there is serious concern at the Village that the next phase of the development will be hampered if the tax class comes to an end.
Kendall said in 2004 when the properties were reclassified to commercial the Village saw resales surge 126 per cent, construction on the Westin and Mosaic phases of the development halted and property taxes skyrocketed.
“What we’re looking at is something similar,” she said, if the special class was to end.
In a report to council, Monica Quinlan, the town’s director of finance/treasurer, said resort condominium properties would see their taxes essentially double if the special tax class ended.
Property taxes on a unit would rise from $2,168 to $4,334 (an increase of $2,166). Most of the increase ($1,647) would be for education taxes (the province charges commercial properties a much higher rate for education taxes).
Quinlan also explained that if the special tax class ended, there would be no financial windfall for the town or the county. She said there would be a tax shift if the special class ceased to exist and those properties flowed into the commercial class.
“It is not an increase in revenue,” she said. “It is a complex issue. There are lots of layers to this optional tax class.”
In her report, Quinlan asked council for direction on how to proceed. Previous council resolutions on the matter had sought information about the situation, but had not directed staff to take any action. She said if council wished to see the special property tax class end, staff needed to be directed to begin those conversations with Grey County.
Council peppered Quinlan with questions after her presentation. Coun. Shawn McKinlay wondered if the end of the special tax class could be phased in. Coun. June Porter asked a series of questions about how tax ratios work and wondered if there would be impacts on other tax classes if the special condo tax class ended.
Coun. Gail Ardiel wondered if county council had taken a view on the matter. Ardiel also suggested the town consult with the province before making a move on the matter.
It was also noted that the town may be about a year away from the tax class ending naturally. The provincial law that created the special tax class applies to municipalities with a population under 10,000 people. The population of The Blue Mountains is expected to surpass that number after the next census, scheduled for May of 2026.
“The more I look, the more questions I have,” Porter said.
Council chose to delay taking any formal action on the situation. Instead, it unanimously passed a resolution seeking more information from staff on a number of related issues including: how tax ratios work, phase-in possibilities, how education taxes are applied, more consultation with the province, the timing of the next census and any impacts the end of the special tax class may have on revenue from the Municipal Accommodation Tax.