‘We want fair taxation,’ businessman tells Iqaluit’s finance committee

City bylaw has caused tax bill inequities for owners of some multi-use buildings, says Nunastar Properties president

Nunastar Properties Inc. president Ed Romanowski stands outside Iqaluit’s Storehouse Bar and Grill, a commercial space at the bottom of the company’s six-storey mixed-use building that also has residential units above it. Romanowski says property tax on this building is 54.2 per cent more than it would be if there were no commercial space on the bottom floor. (Photo by David Venn)

By David Venn
Local Journalism Initiative Reporter

There are “two classes of Iqaluit citizens” when it comes to property taxes: those who live in residential units and pay residential property taxes and those who live in similar units but pay commercial property taxes.

So says Nunastar Properties Inc. president Ed Romanowski, who appeared in front of the city’s finance committee Tuesday to ask councillors to consider changing a 2018 bylaw. He and members of the mayor’s housing task force say it creates an inequity among taxpayers and hurts developers.

“[Developers in Nunavut] already have the highest cost in Canada to build residential development,” Romanowski said. “We want fair taxation.”

The Government of Nunavut has an overarching law that has some control over how the city charges property taxes.

The Property Assessment and Taxation Act — which Coun. Romeyn Stevenson said Tuesday is “extremely problematic and needs a lot of repair” for a number of different reasons — states that buildings must be taxed based on their predominant use.

Nunastar owns building 350, for example, which has commercial space on the bottom floor and two floors of multi-family residential units above it. Under the territorial government’s law, it should be taxed in the residential class because the majority of the building is residential.

But in 2018, the city passed a bylaw that contradicts the territorial property assessment act, Romanowski said.

The bylaw makes it so that owners of multi-family buildings that also have a business on the first floor pay 54.2 per cent more in property taxes than owners of multi-family buildings that do not have a business on the first floor, he said.

“Explain to me why that inequity makes sense. Nobody has been able to explain it,” he said. “Nobody.”

The result: increased expenses for property owners, who are already experiencing inflation in other areas of their operations, such as insurance, construction and water bills, said Romanowski.

Nunastar, which owns three of the 30 multi-use buildings in Iqaluit, has plans to build between 350 and 400 units in the city over the next few years, but the company can’t secure the necessary financing, Romanowski said, because of rising costs, which are currently around $470 to $500 per square foot of residential development.

He said costs to operate properties increase about 9.5 per cent each year, but the company only passes on those expenses in rent increases of about 2.6 per cent each year.

“That deficit makes it very difficult to finance new projects,” Romanowski said. “When we go to them [the banks] and we’re showing a decreasing margin, there aren’t many people that are happy, and how do you then build new homes?”

If council were to make the change the committee proposed, it would create four new mixed-use property tax classes that will determine tax amounts by the percentage of commercial and residential space within a multi-use building.

This option would also bring about a 5.54 per cent property tax hike across the board, according to city estimates, for the city to maintain current revenue levels.

But any option that would propose a lower tax rate for mixed use buildings would require an increase in other property tax rates, said Alison Drummond, Iqaluit’s senior director of corporate service.

“On all of these [options], there is a necessity to increase the tax rate across the board to maintain the revenue level that the city requires to operate and provide these essential services,” she said.

Coun. Kyle Sheppard, the finance committee chairperson, agrees a change needs to happen, but he asked Romanowski how the city could sell what seems like a tax break for corporations.

Romanowski said the 5.54-per-cent estimate is rough, and that a tax break for the company simply isn’t the case.

“To suddenly say that the tax increase will just be eaten up or gobbled up as profit by us is a very bad misrepresentation,” he said, “because we’re dealing with costs that have increased far greater than any cost that we could’ve passed onto the renters.”

Mayor Kenny Bell made a motion that council instruct city staff to research the amount this will cost residents and developers, but that if staff can’t pull the information together by January 2022, then the city move ahead with amending the bylaw.

It passed unanimously.

Another motion was passed to request council to lobby the territorial government to change the property assessment act for 2023 so that the city can assess property tax by square footage.

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(18) Comments:

  1. Posted by Nunavutmiutaq on

    We want fair rent too!

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  2. Posted by Anne Crawford on

    The most relevant questions would be: what is the per square foot rental cost of commercial space in Iqaluit Vs the per square foot rent for residential ?

    How much garbage do commercial units generate vs residential? Water usage?washrooms?

    How much parking space do commercial units need vs residential? Taxi traffic?

    How many calls for police services?

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  3. Posted by Snappy 20 on

    No way. I’m sick and tired of homeowners paying the bills for extravagant services like the 40 million aquatic centre that nobody uses. No flipping way are you raising my property taxes again to give big corporations a tax break. I’m already paying this city 4000 a year in property taxes. Not one penny more! This is where we draw the line. Looking forward to the next election! FYI, the city by-law is illegal. Nunastar should be taking the city to court and questioning why the GN hasn’t already done so. And no, Alison, raising rates across the board is not the only solution. You can also reduce services.

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    • Posted by Ummm on

      But I like swimming….

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    • Posted by Bert Rose on

      Your comments about the pool and recreation facility are totally incorrect.
      The old pool in the highrise was the most used recreation facility in the city. Way he ghee than curls ng rink or skating rinks.
      Iqaluit needed the pool and facility more than your comments recognize.

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    • Posted by Reality Check on

      Only the homeowners were allowed to participate in the vote for that pool. They voted for the pool. They promised to pay for that pool. Let them pay.
      .
      That pool increases the value of the homeowners’ property.
      .
      That pool means the City of Iqaluit has no money for land development. No money for land development means no new building lots in Iqaluit. No new building lots in Iqaluit means no new homes in Iqaluit. The lack of new homes in Iqaluit drives up the price of all houses in Iqaluit, no matter how poor their condition.
      .
      Thus those 100+ homeowners shafted everyone else in Iqaluit with their vote for that swimming pool. And they are renegging on their commitment to pay for that pool.

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  4. Posted by Why u dum on

    Just give the real numbers. Dollars and cents instead of percentages why. Because 54 percent of a million is a lot smaller 54 percent of a billion. The percentages hide the real numbers, making it hard to feel sorry for anyone.,

  5. Posted by Kyle Give Your Head A Shake on

    “Coun. Kyle Sheppard, the finance committee chairperson, agrees a change needs to happen, but he asked Romanowski how the city could sell what seems like a tax break for corporations.”
    Kyle, how can you agree to something without all the facts or any research into this issue.
    Whats next, no garbage fees for apartments that sit empty.
    All I see happening here is local home owners being cripple with yet another increase from the City for owning their own home.
    And to add insult to injury your asking a very very profitable business in town how to sell this to the public….REALLY
    Why don’t you just do what the city has done since you were elected. Tell the home owners and small business owners to bend over. The increase is coming weather you like it or not. End of Story

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  6. Posted by Dude Town on

    It sucks to see the biggest richest company in our community asking for a better situation. The units in building 350 are all rentals I take it? Therefore Nunastar pays those property taxes? Which is why they are offended that they paying more tax on those units? Way to swing that 8 story phallus around Nunastar.
    I am also angry at the city.

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    • Posted by …. on

      350 is the building with CBC and the embrace life council leasing the first floor.

  7. Posted by Sympathy for the dev(eloper)il on

    Fair or not, no one in this town feels sorry for developers.

    If you think it’s unfair: sell it. Someone will gladly swoop in and take this massive burden off your shoulders.

    Sheppard: remember, you represent everyone in town, not just the businesses.

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  8. Posted by Sit Down, Ed on

    “[Developers in Nunavut] already have the highest cost in Canada to build residential development,” Romanowski said.
    .
    Yep, and taxes aren’t a development cost, they’re an operational cost. Residential rent in Nunavut is also the highest in Canada, so what’s your point?
    .
    “Explain to me why that inequity makes sense. Nobody has been able to explain it,” he said. “Nobody.”
    .
    Well, you could easily argue that if people want to live in mixed use or commercial areas, with the convenience of living near businesses and workplaces, it’s going to cost them more. The same way monthly rent or property taxes are higher in downtown Edmonton than they are in Spruce Grove, or any other Canadian city and suburb. I realize that the purely residential neighbourhoods of Iqaluit are not suburbs, but I think the point still has justification.

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  9. Posted by Inuktituusuu on

    Monthly sales for muffins exceed $20,000 at the Caribrew Cafe, let alone the rest of the crap they sell. Crocodile tears.

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  10. Posted by Reduce Your Own Costs on

    “How are we supposed to get by only charging $36,540 per year for a 1,000 square foot 2-bedroom townhouse? Wahhhhh!”, exclaimed Ed Romanowski.

    • Posted by Part II on

      All told, this company takes in over $10,000,000 in annual revenue from their residential portfolio in Iqaluit alone. Let alone their tens-of-thousands of square feet of commercial space, the Frobisher Inn, and The Explorer in YK.

  11. Posted by Amitturmiut on

    Move Nunastar HQ to a smaller community & build more residential & commercial space where they’re needed, I’m sure they would appreciate all the jobs & new buildings, if you look at the smaller communities most of the house rentals are full & some people can’t find office space

  12. Posted by Out of towners on

    Another person at the top of the rental pyramid in Iqaluit whose name we didn’t know and we will all forget in a few months. Same as Northview, TNPG, and all the big companies who have little to no local staff at the “top”. Profitability and bonuses for their shareholders are their only goals, and they will do anything to get it. Northview refuses to do maintenance on their mass of units citing short staffed, emergencies only, etc. And when the units get trashed and in bad enough disrepair they just completely redo them and rent them again. It’s a business model that makes them millions, and no one does anything to hold them accountable. Tax them all, they can all more then afford it. Northview is now worth 9 billion. Nunastar, Northview, any of the big names have absolutely no sympathy from their tenants.

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  13. Posted by resident on

    These corporation that own a lot of property are so greedy, they already charge crazy rental fee, and they are whining about taxes.. If it was not profitable they would not be in Nunavut. Some real local home owners struggle they should not be subsidizing the companies that could afford to pay the taxes and as they say the additional tax will be passed on to their customers. I think they already do that…. Greed greed, the downfall of Iqaluit becoming the capital among many other reasons….

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