City of Calgary Taxation on Golf Courses

[Winsor_Pilates]

Originally Posted by Cecil Terwilliger

No. That is not the premise of the thread.

Read the OP.
They are suggesting golf courses should be taxed based on real estate land value instead of current business tax rate (which is similar to malls etc.)

Thus, differentiating how golf courses are taxed vs other land using businesses.

[CaptainYooh]

Originally Posted by Winsor_Pilates

Read the OP.
They are suggesting golf courses should be taxed based on real estate land value instead of current business tax rate (which is similar to malls etc.)

Thus, differentiating how golf courses are taxed vs other land using businesses.

Which is the OP fallacy. Highest and best use for the privately owned land is a subjective term. From whose perspective? The highest and best use for a private golf course is a golf course. That was why the owners bought it, got it approved, had it developed and are using it for. If the City wants to see a bunch of high-rise buildings or a shopping mall on the land occupied by a private golf course, they should buy it in an open market by negotiating an acceptable offer with golf course owners. Then, have the land re-planned, re-zoned, re-serviced and re-sold to builders who, presumably would be flocking to buy it at the prices set based on that highest and best use concocted by a bunch of city planners and approved by Council. That would make those taxes flow in fast and furious.

[GGG]

Originally Posted by Winsor_Pilates

Read the OP.They are suggesting golf courses should be taxed based on real estate land value instead of current business tax rate (which is similar to malls etc.)

Thus, differentiating how golf courses are taxed vs other land using businesses.

This isn’t quite correct.

If you go through the above link from the city of Calgary they are not taxed in the same manner.

Retail is assessed based on market rents which include consideration for location or

Retail properties may be assessed on the basis of its underlying land value if the value of the vacant land exceeds the value of the improved property.

[GGG]

Originally Posted by CaptainYooh

Which is the OP fallacy. Highest and best use for the privately owned land is a subjective term. From whose perspective? The highest and best use for a private golf course is a golf course. That was why the owners bought it, got it approved, had it developed and are using it for. If the City wants to see a bunch of high-rise buildings or a shopping mall on the land occupied by a private golf course, they should buy it in an open market by negotiating an acceptable offer with golf course owners. Then, have the land re-planned, re-zoned, re-serviced and re-sold to builders who, presumably would be flocking to buy it at the prices set based on that highest and best use concocted by a bunch of city planners and approved by Council. That would make those taxes flow in fast and furious.

But if the use category of the land makes taxes lower than a different use category you change the underlying value for each use.

This is essentially the royalty problem. If Quebec chooses not to develop fossil fuel resources it’s economic capacity does not consider fossil fuel resources. In the same way by not maximizing land use the golf course never has to pay more taxes.

[CaptainYooh]

Originally Posted by GGG

...In the same way by not maximizing land use the golf course never has to pay more taxes.

Why should they? The land value is always a residual function of a Council-approved land-use (not potential land-use). It cannot be done any other way, because a different land-use is not assured or certain; it is an opposite of being certain by being expressly prohibited in the By-Law. Using crude analogies: we shouldn't charge every man with rape just because they have a penis and might rape someone with it. We shouldn't tax every family doctor based on how much income they CAN be making if they were a neurosurgeon.

As I said earlier, these threads are always developing in the same predictable direction: how can governments grab more money from businesses and the salaried middle class (note - not the rich; the rich just laugh at all this noise in their Barbudian and Antiguan tax-free mansions). Progressive federal and provincial taxation systems are flawed to the core and need to be replaced with flat tax + net worth tax + consumption tax. Similarly, municipal taxation system based on FMV is flawed to the core and should be replaced by a flat tax + user-fee based system. But that is a very different discussion.

[GGG]

Originally Posted by CaptainYooh

Why should they? The land value is always a residual function of a Council-approved land-use (not potential land-use). It cannot be done any other way, because a different land-use is not assured or certain; it is an opposite of being certain by being expressly prohibited in the By-Law. Using crude analogies: we shouldn't charge every man with rape just because they have a penis and might rape someone with it. We shouldn't tax every family doctor based on how much income they CAN be making if they were a neurosurgeon.

As I said earlier, these threads are always developing in the same predictable direction: how can governments grab more money from businesses and the salaried middle class (note - not the rich; the rich just laugh at all this noise in their Barbudian and Antiguan tax-free mansions). Progressive federal and provincial taxation systems are flawed to the core and need to be replaced with flat tax + net worth tax + consumption tax. Similarly, municipal taxation system based on FMV is flawed to the core and should be replaced by a flat tax + user-fee based system. But that is a very different discussion.

I agree that best use taxation can be problematic though best zoned use might be reasonable. Essentially if you have a lot with a single SFH that is zoned to be subdivided is it unreasonable for you to pay more tax on that basis? I think it works better in residential than commercial.

I think the only question around the golf course taxation is why doesn’t location of the golf course matter in its assessed value and why can’t the unimproved land value supersede the calculated golf course value like it can for retail.

I like that you call people in the top 10-2% of earnings salaried middle class. We are not “middle class”. People like to think they are but people always underestimate their relative wealth.

[CaptainYooh]

Originally Posted by GGG

I agree that best use taxation can be problematic though best zoned use might be reasonable. Essentially if you have a lot with a single SFH that is zoned to be subdivided is it unreasonable for you to pay more tax on that basis? I think it works better in residential than commercial...

If a SFH sits on an approved multi-family zoned land, it is taxed on the value of that MF-zoned land, for which city assessors have oodles of sales data on. But if it sits on a large lot, which is still zoned as a SF lot, then it doesn't for the reasons noted above. It is not just unreasonable, it is illegal to develop anything else on that land.

Originally Posted by GGG

...
I think the only question around the golf course taxation is why doesn’t location of the golf course matter in its assessed value and why can’t the unimproved land value supersede the calculated golf course value like it can for retail.

Same reason. A golf course land is just that - golf course land. It is not good for anything else while it is zoned a golf course land. If a golf course is sold and then re-developed (Shawnee Slopes, Highland etc.), then they quickly get re-assessed and re-taxed at much higher rates.

[Zarley]

Originally Posted by GGG

This isn’t quite correct.

If you go through the above link from the city of Calgary they are not taxed in the same manner.

A couple points on valuation:

There are three main methods of property valuation: comparable sales (which is used mainly for single family homes), income approach (for office / retail / most industrial and multifamily - essentially income producing assets), and finally the cost approach (for any property unique improvements, for example a specialized manufacturing facility - golf courses fit into this category). All of which are valid methods of estimating the market value of the property.

The concept of highest and best use also influences the valuation of a property. HBU is dependent on a number of factors, one of which is legal permissibility. In this case, zoning is is the primary legal consideration affecting the development potential of a property. Golf courses in the city are designated S-R Special Purpose - Recreation, which obviously does not allow for large scale development. Because the development potential is constrained by this, the value of the land is consequently lower than comparable lands slated for future development. If the course were to be re-zoned for development, the assessed value would increase.

A similar example would be if you were to rezone your house from R1 to a multifamily land use, the assessed value would increase based on the increased redevelopment potential.

Rightly or wrongly, we don't assess properties based on hypothetical or speculative development potential. Would it be fair for the city to assess you property as a multifamily development site if it is zoned for single family development, improved with a SFH, and being used as a residence?

Essentially what this means is that this idea that golf courses are incorrectly being under-assessed by the City is false. The cost approach is the correct method of assessing a property constrained in development potential and with specialized improvements. It's essentially a value in-use methodology.

One more note on assessments - assessed value does not equal market value. The assessed value of the majority of properties in the city is usually lower than actual market value. Specifically on the commercial side, I don't think I've ever seen a property where assessed value exceeds the actual market value. Putting on my tinfoil hat, I think the reason for this is to reduce the chances of successful assessment appeals.

[CaptainYooh]

Originally Posted by Zarley

...
Essentially what this means is that this idea that golf courses are incorrectly being under-assessed by the City is false. ...

And just like that, you've killed all the "let's go get'em" zeal of this thread.

[GGG]

Originally Posted by Zarley

A couple points on valuation:

There are three main methods of property valuation: comparable sales (which is used mainly for single family homes), income approach (for office / retail / most industrial and multifamily - essentially income producing assets), and finally the cost approach (for any property unique improvements, for example a specialized manufacturing facility - golf courses fit into this category). All of which are valid methods of estimating the market value of the property.

The concept of highest and best use also influences the valuation of a property. HBU is dependent on a number of factors, one of which is legal permissibility. In this case, zoning is is the primary legal consideration affecting the development potential of a property. Golf courses in the city are designated S-R Special Purpose - Recreation, which obviously does not allow for large scale development. Because the development potential is constrained by this, the value of the land is consequently lower than comparable lands slated for future development. If the course were to be re-zoned for development, the assessed value would increase.

A similar example would be if you were to rezone your house from R1 to a multifamily land use, the assessed value would increase based on the increased redevelopment potential.

Rightly or wrongly, we don't assess properties based on hypothetical or speculative development potential. Would it be fair for the city to assess you property as a multifamily development site if it is zoned for single family development, improved with a SFH, and being used as a residence?

Essentially what this means is that this idea that golf courses are incorrectly being under-assessed by the City is false. The cost approach is the correct method of assessing a property constrained in development potential and with specialized improvements. It's essentially a value in-use methodology.

One more note on assessments - assessed value does not equal market value. The assessed value of the majority of properties in the city is usually lower than actual market value. Specifically on the commercial side, I don't think I've ever seen a property where assessed value exceeds the actual market value. Putting on my tinfoil hat, I think the reason for this is to reduce the chances of successful assessment appeals.

Why doesn’t the location of a golf course matter per the city website.

Can a member of the public propose rezoning of a property they do not own?

[you&me]

Originally Posted by GGG

Why doesn’t the location of a golf course matter per the city website.

Can a member of the public propose rezoning of a property they do not own?

Probably because, as Zarley's excellent post pointed out, the zoning the golf courses fall under doesn't consider future potential, so the location of the course is irrelevant... That would be getting back into assessing " properties based on hypothetical or speculative development potential".

The value of the course would be determined by other metrics as related to it being a, you know, golf course.

[bizaro86]

Originally Posted by iggy_oi

I have long suspected this to be bizaro86’s M.O.

I don’t really have a dog in this fight, but I’ll propose a compromise that I think should satisfy both the eat the rich folks and the insecure white males who think they are being persecuted crowd, that compromise is to only close down or raise taxes on the golf courses that Slava goes to.

Lol. Iggy gets me. I think this is the first time ever I've been accused of being an "eat the rich" type by anyone ever.

Although my opposition to government subsidies for the wealthy/corporations keeps my out of sync with the UCP, I'm a pretty conservative person/voter.

[Weitz]

Originally Posted by bizaro86

Lol. Iggy gets me. I think this is the first time ever I've been accused of being an "eat the rich" type by anyone ever.

Although my opposition to government subsidies for the wealthy/corporations keeps my out of sync with the UCP, I'm a pretty conservative person/voter.

We know you tried golf once and it was really hard. Now you have an axe to grind.

[Zarley]

Originally Posted by GGG

Why doesn’t the location of a golf course matter per the city website.

The typical cost approach valuation equals the bare land value + depreciated cost of improvements. The bare land value would include adjustment for locational factors. So it's a little strange to say that location is not a factor when it should be captured indirectly within the land value component. You'd have to ask an assessor though.

Originally Posted by GGG

Can a member of the public propose rezoning of a property they do not own?

I've never heard of that happening - I believe a land use amendment would need to be initiated by the landowner.

Council however has the power to rezone properties without necessarily having owner approval. Typically we see this when a new ARP is adopted or if the land use bylaw is updated. Usually this is done with resident consultation.

[Lubicon]

Originally Posted by iggy_oi

New solution to fix most if not all of the world’s problems: Increase the wages of employees at golf courses, they’ll pay more taxes on the increased earnings so the golf courses will generate more tax revenue. The eat the rich folks can rest easy knowing that those wage increases will be covered by higher green fees paid by golfers who according to this thread are more likely to be insecure rich white males so they’ll be happy, and the insecure white males crowd can continue to live in their safe space of feeling persecuted so they’ll be happy too. Everyone’s a winner!

We’re such a powerhouse of problem solving when we work together Slava.

Except in this case the City would still not benefit since they do not tax income.

[GGG]

Originally Posted by Zarley

The typical cost approach valuation equals the bare land value + depreciated cost of improvements. The bare land value would include adjustment for locational factors. So it's a little strange to say that location is not a factor when it should be captured indirectly within the land value component. You'd have to ask an assessor though.



I've never heard of that happening - I believe a land use amendment would need to be initiated by the landowner.

Council however has the power to rezone properties without necessarily having owner approval. Typically we see this when a new ARP is adopted or if the land use bylaw is updated. Usually this is done with resident consultation.

My location question stems from the Calgary website saying location doesn’t matter. If it is bare land value plus improvements that would make sense.

So the circle is I own a golf course and is taxed based on current zoning, as long as the current zoning is maintained I get assessed as a golf course. As the owner I have significant influence on it staying a golf course. This seems like it stifles development and probably much more of an issue in the densification of neighbourhoods then with golf courses.

[iggy_oi]

Originally Posted by Lubicon

Except in this case the City would still not benefit since they do not tax income.

They continue to generate the same amount of revenue they were currently collecting, which according to some is adequate. Assuming it is adequate that should be a good thing, no?

Now is about as good a time as any to point out I’m still waiting on Jason14h to show his work on how much an increase of say $1/player in green fees would negatively impact tipping of staff if that money went directly to wages. For the sake of argument we can assume that each golfer has a tight tipping budget so the employees would be down $1 for each player that buys something/tips, but I’m waiting for him to demonstrate that the increased revenue wouldn’t outweigh that loss or that raising green fees by $1 would lead to less golfers playing. I’m sure he’s more than capable of defending his position and look forward to reading his explanation.

[iggy_oi]

Originally Posted by bizaro86

Lol. Iggy gets me. I think this is the first time ever I've been accused of being an "eat the rich" type by anyone ever.

Although my opposition to government subsidies for the wealthy/corporations keeps my out of sync with the UCP, I'm a pretty conservative person/voter.

You may fool a lot of people but you don’t fool me…commie!

[bizaro86]

Originally Posted by iggy_oi

You may fool a lot of people but you don’t fool me…commie!

You got me. Although I really am opposed to the government transferring money either directly or via everyone else to rich people.

So other things I don't approve of include supply management/dairy cartel, the SR&ED tax credit program, BCs LCFS credit program, the way Alberta assesses farmland for property tax purposes, and pretty much the entire history of Bombardier.

[Party Elephant]

Originally Posted by bizaro86

You got me. Although I really am opposed to the government transferring money either directly or via everyone else to rich people.

So other things I don't approve of include supply management/dairy cartel, the SR&ED tax credit program, BCs LCFS credit program, the way Alberta assesses farmland for property tax purposes, and pretty much the entire history of Bombardier.

Based