Manitoba & COVID-19: Impacts on CRE valuation and property tax assessments
On March 30, 2020, the Province announced the following additional measures under the Public Health Act that took effect on April 1st:
- All businesses that are not listed in the schedule of critical services that accompanies the order must close between April 1 and April 14. Businesses may operate on a remote basis during this period
- All restaurants and other commercial facilities that serve food are prohibited from serving food to customers in their premises. This prevents eat-in dining at all facilities. However, restaurants and other commercial facilities can prepare and serve food for delivery or takeout, but operators must ensure that social distancing measures are maintained
These measures, while clearly necessary, will cause substantial disruption across most real estate sectors, particularly those in the retail and hospitality industries. The cumulative effects of all of the measures taken since the onset of the pandemic will be much wider still.
Property & Business Tax Relief Measures
On April 3, 2020, Winnipeg City Council announced an “unprecedented relief plan” for property and business taxpayers in the City of Winnipeg. Under this plan, the City will waive penalties for unpaid property and business taxes for up to three months following their due date. Property taxes that are due on June 30, 2020 will have fees waived until October 1, 2020. Business taxes that are due on May 29, 2020 will have fees waived until September 1, 2020.
The City will also waive Tax Instalment Payment Plan (TIPP) program fees on both property and business taxes until October 1, 2020. This means no enrolment fee for the TIPP program and no penalty fee as a result of non-sufficient funds during that time. Residents will be allowed to remain enrolled in the program and make delayed TIPP payments without any late payment fees.
The City of Brandon recently announced several property tax measures in response to the COVID-19 pandemic. These options include extending the due date for all 2020 property taxes from June 30th to July 31st, a deferral of penalties for unpaid taxes until October 1st, and changes to the Brandon Tax Instalment Plan to allow for variable or flexible property tax payment options through to the end of the year.
City of Winnipeg 2020 Assessment Appeal Hearings
The City of Winnipeg Board of Revision has announced that all appeal hearings that had originally been scheduled between March 23, 2020 and May 31, 2020 were to be rescheduled in response to the COVID-19 situation. The majority of the postponed hearings relate to the 2020 business assessment appeals, although some supplementary realty assessment hearings are also affected.
Although the appeal hearings have temporarily been postponed, Altus Group is continuing to hold proactive discussions concerning the assessment appeals directly with representatives of the Assessment Department. The purpose of these discussions is to identify those matters that may be capable of resolution, and to prepare our evidence now for those appeals that will require a full hearing to determine the matter. In so doing, Altus Group will be very well positioned to proceed to the appeal hearings expeditiously as soon as the Board resumes its normal schedule.
City of Winnipeg 2021 Assessment Appeals
Based on the information that Altus Group has received to date, it appears that the deadline for appeals of the 2021 property assessments for Winnipeg properties will be unchanged. While the exact date has not yet been announced, we expect that appeals of the 2021 assessments will be due in the third week of June, 2020.
Altus Group is currently reviewing 2021 realty assessments in anticipation of the appeal deadline in June, and we invite you to contact an Altus team member now to arrange for reviews of your 2021 values.
Manitoba Municipal Board Assessment Appeal Hearings
The Manitoba Municipal Board has also postponed all appeal hearings that had been scheduled before May 15, 2020. However, the Board is continuing to hold case management conferences via teleconference without interruption. Altus Group is a very active participant in these case management initiatives, with over 500 case management conferences scheduled during the 2020 calendar year. We look forward to the continuation of these conferences throughout the spring of 2020 and the remainder of the year.
Requests for 2019 Information – City of Winnipeg
The City of Winnipeg Assessor has indicated that his requests for 2019 income and expense information will be mailed on Thursday, May 28, 2020. The replies to the Assessor’s requests for 2019 information will be due on Thursday, June 18, 2020.
We recommend that property owners and managers prepare to reply to the requests for 2019 information now, in anticipation of the request by the City Assessor, by generating 2019 operating statements and 2019 rent roll information for each property within your portfolio. Having this information on hand will expedite the process of preparing and sending the 2019 calendar year replies upon receipt of the request from the Assessor.
We highly recommend that all owners comply with the Assessor’s request with all information in their possession and control to mitigate the chance of the Assessor requesting (and the Board granting) the non-compliance penalty (the withholding of the first year’s savings generated through appeal). This includes items that the Assessor may already be aware of, such as leasable areas and stall counts and rates for parking. As for the tenant verification and income/expense sections, it may be easiest to simply attach the December rent roll and fiscal year end income statement for the year in question (2019), so long as the statements include all information contemplated in the questionnaire. Please feel free to contact any member of our tax team should you have any questions in completing the forms.
Consider Supplementing the 2019 Information
The profound effects of the COVID-19 pandemic may not be fully known at the time that you receive the Assessor’s request for 2019 information. However, you may wish to supplement the 2019 materials with further information that was known as of April 1, 2020, since this is the valuation date for the 2022/2023 assessment cycle. Factors that you may wish to add include any rent or other relief you have provided to your tenants, any notifications by tenants that they intend to permanently cease operations, or any other information that was known as of April 1st that has impacted the operations of your property.
Note that this information would be in addition to the 2019 information, since compliance with the Assessor’s request will only be achieved by providing full and complete information for the 2019 calendar year.
The Effect of COVID-19 on Current Assessments
The far-reaching effects of the COVID-19 measures will clearly be under examination in connection with the 2022/2023 assessments, since the valuation date for that assessment cycle is April 1, 2020. Altus Group will incorporate these considerations into our analysis when reviewing the 2022 assessments for our clients next year.
However, there is less certainty around what impact, if any, the pandemic may have on the current 2020/2021 assessments. Manitoba legislation contains some provisions for adjusting assessment and tax rolls under certain limited circumstances (e.g. where a business ceases operations), but the application of these limited provisions to the current situation is unclear.
Altus Group will provide updates concerning the application of these provisions as further information becomes available.
For more information please contact your Altus representative or any of the team members listed below.
Rod Slaughter, B. Comm (Hons), AACI, P.App
Vice President, Property Tax / Research, Valuation, & Advisory
Kerry R. Reimer, LL.B.
Senior Director, Property Tax
Henri Dupont, B.A., AACI, P.App, MRICS
Director, Property Tax
Brad Borgstrom, CMI
Director, Property Tax
Director, Property Tax
Aimee L. Betker, Ph.D.
Senior Consultant, Property Tax
Jarrett Storey, B.A.
Consultant, Property Tax
Consultant, Property Tax – Manitoba
Senior Analyst, Property Tax