This post contains depictions of math and taxes. Reader discretion is advised.
I just did a property tax comparison on two of our local grocery stores. What I found was that the Real Canadian Superstore sits on an area of land 11.32 acres large with an assessed property value of $16,279,100. Going off of the commercial tax rate of 3.6%, they bring in just shy of $600,000 annually to the City in property taxes.
Our other featured store is Main Bread and Butter, which resides in the Central Business District. The CBD is located firmly in downtown Steinbach and does not allow for the same amount of sprawling acreage afforded to larger stores on the edge of town. Main Bread and Butter fits in a very cozy 0.35 acres of land and has an assessed property value of $727,600, with an estimated tax bill of $26,000 per year.
Looking at these numbers makes sense at first glance. You can see that Superstore which is a much larger business sitting on a much larger plot of land is assessed and taxed a lot more than the smaller grocer. That seems fair.
But we aren’t done with the math yet. The key difference lies in how the two examples utilize the land available to them. We call this “land use”.
Superstore is a large building with a large parking lot and so requires 11.32 acres to suit their needs. If we take their assessed property value of $16,279,100 and divide it by the total area, we get a value-per-acre of $1,432,083.
Doing the same calculation for Main Bread and Butter reveals how essential proper land use is to city prosperity. Sitting on only 0.35 acres, we get a value-per-acre of $2,055,367. That’s right, our tiny local grocery store on main street has a taxable value nearly 43% higher than the Loblaws giant when you look at how much land they use.
Going even further than that, Main Bread and Butter has a frontage area of just 68 feet. The amount of urban infrastructure required to service the store is minimal.
If we take that level of land use and apply it to the amount of currently sprawling acreage used by Superstore, we get a total taxable value of over $23 million. Annually that would bring in roughly $830,000, compared to the $600,000 currently being paid, while at the same time creating an environment compatible with people instead of just their cars.
Now, I’m not suggesting that we increase the property tax paid by Superstore immediately, or even to cut the tax rate for smaller stores to make it fair. Instead, I’m suggesting that It’s important to look at how developments are planned and built. Superstore is a huge grocery chain, and if they ever pack up and leave then the city will be stiffed with a huge empty grocery store building that can’t be used for much else. Remember the old Extra Foods, or more recently the Safeway building that sat vacant until a sufficiently large business was able to make use of the available space. Whereas if Main Bread and Butter ever exits their current location, the building they leave behind can be instantly modified into nearly anything from another grocer to general office space. (Or even housing, if only the zoning bylaws allowed for it.)