Hotel association requests ‘concession’ on property taxes
Niagara Falls Canada Hotel Association is requesting city council allow for “some type of concession” on property tax obligations for one year.
The industry group is also asking for “much more” time to be able to meet these obligations as the COVID-19 pandemic has led to the “most difficult economic challenge of our lifetime.”
“We understand that this is an extraordinary request, but the situation calls for extraordinary assistance,” said Doug Birrell, executive director of the association, in a letter to council.
The letter, dated Oct. 16, is part of Tuesday’s council agenda. Staff recommends council refer the issue to them.
Birrell said the pandemic has left the industry in “turmoil,” and while hotel owners “appreciate” the consideration to lower interest penalties on overdue tax payments, more needs to be done.
“The first wave was the ‘shock and awe’ of the initial global pandemic, shutting down travel and tourism worldwide,” he said.
“But now, and more egregious, is the reality that this has no signs of improving — in fact, the numbers reflect the problem is getting worse, and we will be in serious jeopardy for well more than a year.”
Birrell said the industry is in “acute” need for liquidity assistance, from all forms of government.
“Unfortunately, the government assistance programs — other than the wage subsidy, which provided some very modest assistance to our industry — have eluded the industry and according to the Hotel Association of Canada, the overwhelming majority of hotels who attempted to access loans from these existing government programs have been unsuccessful.”
He said the industry has been left in a “very precarious” position, including carrying high costs and overheads, “very” high mortgage obligations, and “skyrocketing” insurance costs.
Birrell said the “cold reality” is the worldwide recovery will be “much more” protracted than originally anticipated, leaving the industry with “no revenue to contribute to the large costs associated with our business for a long time.”
He said hotels incur a “very” high property tax burden on a per-room basis. “The four-star hotels in Niagara pay more per single room available than the average home.”
Birrell said hotels are paying taxes based on the 2016 assessment year, “which was a banner year,” and assessment is based on revenue.
“Today, the Niagara hotel industry is suffering with a loss of revenue over 80 per cent, so the taxes we are being forced to pay are grossly unrealistic,” he said.
“In essence, if the assessment was being conducted this year, we would be paying 80 per cent less in taxes.”
Birrell said the “reality” is the industry cannot pay “these hyperinflated” property taxes, based on a formula that had “dramatically” higher revenues in previous, normal years.
“The industry is not generating enough net operating income to be able to pay these large amounts.”
He said the request for council to make a “special consideration,” allowing for a temporary concession on property-tax obligations, would be “an investment in Niagara’s industry.”