Corbella: Done with citys taxes, drilling company packs up Calgary facility and moves to Saskatoon – Calgary Herald

Corbella: Done with city\s taxes, drilling company packs up Calgary facility and moves to Saskatoon - Calgary Herald
City hall seeks relief from large tax hike for business property owners
The skyline of downtown Saskatoon, new home for the drilling contractor Boart Longyear. Greg Pender/Postmedia

A huge tractor-trailer packed with industrial drills and other costly equipment is pulling out of one of the parking lots of Boart Longyear’s industrial facility in southeast Calgary.

The global drilling services and drilling equipment company for the mining industry is packing up shop in Calgary and moving to Saskatoon — where taxes are more reasonable and businesses are treated like valued citizens rather than cash cows for a spendthrift city council.

Andrew Cuthbert, senior manager of marketing and communications with Boart Longyear in Salt Lake City, Utah, acknowledged that Calgary’s annual double-digit business tax increases pushed the company out of the province.

Skies may or may not be sunnier in Saskatoon, but taxes are definitely lower, and thats leading to the departure of Boart Longyear from Calgary. GEOFF HOWE / Financial Post

“In Calgary, property taxes and business taxes have been going up, and so to help with the reduction in costs and improve efficiency we are moving that facility over to the Saskatoon area,” said Cuthbert, who didn’t know how much the company’s city taxes have increased.

As a result of the move, only five employees from the large operation are losing their jobs. The rest are staying on since they are mostly field-type salespeople.

Right across the industrial cul-de-sac off of Barlow Trail in the far southeast of Calgary is Alberta Storage Place, owned and operated by John Milino, who revealed Thursday that his city business tax bill has ballooned by 100 per cent over five years, from $46,983 in 2015 to $93,596 for a property that uses virtually no city services.

Richard Truscott, vice-president of B.C. and Alberta for the Canadian Federation of Independent Business, says their office phones are ringing off the hook as Calgary business tax bills start arriving in the mail.

Many of those small businesses are seeing tax increases of an average of around 30 per cent in one year and they are upset, angry and, worst of all, worried about their survival.

“This issue is really striking a nerve with small business owners across the city,” said Truscott.

“We’re asking business owners to put their hands up and show us your bill and explain to Calgarians how impactful this is going to be. It’s not going to be pretty. We’re going to see a lot of businesses pushed to the edge or right over it.”

Maureen Macdonald, an agent with CMS Real Estate, says the city taxes owed on the 10,000-square-foot building she owns on 17th Avenue N.E., just one block from the iconic Peters’ Drive-In, went from $36,715.90 in 2018 to $64,083.15 — a 74.5 per cent increase in one year.

“In this economy, the city is trying to tell me that my building’s value has gone up in one year from $1.89 million to $3.12 million? That’s just ridiculous,” she says.

“I’m appealing this assessment but this is complete madness. I really do think the province should fire this mayor and city council,” said Macdonald, referring to a suggestion made by Postmedia columnist Don Braid on Thursday.

Macdonald says she is going to have to pass on much of that increased cost to her tenants — a lawyer, a pharmacy and a health supplement business.

“I haven’t told them yet but it’s not like they can just raise their rates. I can’t raise my real estate rates. How and where are we supposed to make up this money?” asked Macdonald.

On top of that stress, Macdonald says she owns another building in the Foothills Industrial area that she hasn’t been able to rent for the past 18 months, losing $6,000 every month on mortgage payments and taxes.

“The mayor and council keep telling us that the downtown office towers are 30 per cent empty, but there are vacancies everywhere and we’re all hurting,” she said, pointing out that many of those buildings are owned by large pension funds, who don’t feel the pain as keenly as other Calgary landlords and businesses.

Vacancies in the downtown office towers have led to a $14-billion write down in property value and left a $250-million hole in the citys tax revenue. Darren Makowichuk / Postmedia

While 10 of his council colleagues (Gian-Carlo Carra, Ward Sutherland, Joe Magliocca, Jyoti Gondek, George Chahal, Jeff Davison, Druh Farrell, Shane Keating, Peter Demong and Mayor Naheed Nenshi) are in Quebec City for the annual conference of the Federation of Canadian Municipalities, Ward 11 Coun. Jeromy Farkas was feeling the pain of Calgary business owners and took action. Farkas entered an urgent notice of motion for Calgary city council to take emergency action for budget reductions and tax relief for local small businesses.

“Calgary businesses are facing a crushing tax burden as a result of council’s inaction and inability to address overspending,” said Farkas. “I refuse to accept the idea that our council is willing to do nothing while every business in this town has put all they have on the line just to survive.”

Farkas is calling on councillor office budgets to immediately be slashed by 15 per cent, to cut their pay by 7.5 per cent, freeze council and the mayor’s “platinum” pensions (which Farkas opted out of), a $50-million withdrawal from Opportunity Calgary Investment Fund plus an additional package of $35 million in cuts.

“It’s time for council to have skin in the game and demonstrate concrete action,” added Farkas. “Desperate times call for desperate measures. We have a duty to live within our means. This is the first step toward restoring financial responsibility at City Hall,” he said in a statement. “The future success of our city depends on it.”

Jim Wright, who co-owns Wheel Pros along with wife Frida, says while he hasn’t been hit with tax increases quite as exorbitant as he’s been reading about, he says his 10 per cent increase is hardship enough.

“Last year we finally got about a two per cent increase in our sales but that was after three years of accumulated 30 per cent drop in sales, so we’re just trying to stay in business,” said Wright.

“To get substantial tax increases during an economic downturn is just madness. It’s crazy,” said Wright.

Thankfully, most businesses can’t just pack up and move to Saskatchewan or even just into another municipality like Airdrie. But if emergency measures aren’t taken, this city will be much poorer as a result of bankrupt businesses and laid-off employees.

Then dear reader, city council, which clearly doesn’t know how to stop spending, will increase residential property tax bills by much more than 3.5 per cent.

A majority of Calgary city councillors say it's urgent to cut taxes for businesses in this city, and the mayor and 13 councillors announced Thursday they want to give $71 million to non-residential property owners, find another $60 million in budget cuts, and ask the province to reduce its property tax by $60 million as well.

The group says they came up with a new plan after Council couldn't come to an agreement on quick relief for businesses that continue to struggle with the economic downturn.

"We're talking about structural change here at city hall," said Councillor Diane Colley Urquhart. "It's a fundamental structural shift in the way we allocate tax dollars from citizens and that doesn't mean taxing people more."

Earlier this week, council rejected a $71 million small business grant program. Now it's pledging to get that money to businesses, find $60 million more dollars in savings — and ask the provincial government to lower its property tax by $60 million.

"We think that we can work together with Premier Kenney on a go-forward basis to work together to solve this," she said. The mayor and 13 members of council are backing the plan. Jeromy Farkas — who wasn't involved in the group — is outlining his own plan to address the issue. He wants council to cut its own salaries and office budgets, cut non-unionized salaries and find $35 million in cuts. "Calgary businesses are facing a crushing tax burden as a result of council's inaction and inability to address overspending," Farkas said in a press release Thursday. "I refuse to accept the idea that our council is willing to do nothing while every business in this town has put all they have on the line just to survive." City council will discuss the relief plan next month.

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