The Alberni Valley Senior Citizens Homes Society remains in a bind over how to pay $40,000 in property taxes for its Pioneer Cottages annually.
“In late 2015, the society was advised that the new Pioneer Cottages, which opened in 2011, do not qualify for a permissive tax exemption and that the society will be facing a property tax bill of approximately $40,000 each year,” said AVSCHS president George Rogers, before handing over the $40,000 property tax cheque for 2015 to Mayor Mike Ruttan on Monday.
“The additional $40,000 tax expense has largely depleted our capital replacement reserve fund.”
In the fall of 2015, then-president Ernie Bigelow received a letter from city hall stating that because the cottages were rebuilt in 2011 following a demolition, they no longer apply for a permissive tax exemption.
According to city clerk Davina Hartwell, the former cottages were considered statutorily exempt as ‘a building that was constructed with the assistance of the provincial government after January 1, 1947 but before April 1, 1974 and that is owned and used exclusively without profit by a corporation to provide homes for elderly citizens.
That, Rogers said, leaves the society in a bind.
“At no time during the planning stages of the new cottages was the society made aware of the fact that the new construction would result in a loss of a tax exemption,” he told council.
“If we had this information in the beginning, rents would have been set accordingly and we would have enforced allowable yearly increases. But since our mandate is to provide affordable housing, it was not necessary as the money from the Pioneer Towers helped offset the cost of operating the cottages.”
There are no requirements to live in the cottages beyond being 55 or older.
The additional $40,000 annual bill however, is too much for the towers to offset, Rogers said.
“Our sole source of revenue is the rents that we receive,” he added, noting that the Pioneer Towers building is an aging building that has in recent years required a new roof, windows and an elevator.
When the society attempted to increase the rent by $100 per month, residents protested and the rent increase was lowered to and extra $16 a month—not enough to make up the extra $40,000 needed annually. With 41 units, that only adds an additional $7,872 of rent revenue annually.
“We are left with only three options: tax relief from the city, approval of an additional rent increase application, or the sale of the Pioneer Cottages,” said Rogers.
“Selling the cottages would be a last resort. A loss of 41 units of affordable seniors housing would be a significant blow to a city that promotes itself as a retirement destination.”
However, Rogers said that the society would sell the cottages before allowing them to deteriorate.
“We would sell them, likely to the first qualified buyer.”