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Many business operators, who typically have to pay the property taxes as part of their leases in Vancouver, don’t seem to know what’s coming.Jason Lee/Reuters

The city's skyrocketing house-value assessments were bad enough.

But people who watch Vancouver's small-business sector say they're nothing compared with the increases that will be hitting many of the shopping areas outside downtown.

"There's going to be a massive shift in the tax burden onto community retail this year," said Paul Sullivan, a property-tax agent with the firm Burgess Cawley Sullivan & Associates who has analyzed the pattern of assessment changes. "This is the beginning of a disaster."

Many brokers say it's the result of high-priced land sales in key areas, where buyers, both local and offshore, are paying unheard-of prices on the bet the values will just keep rising. That means some property assessments are increasing as much as 60 per cent.

"What we've seen in this market is a little bit of speculation," said Scott Bowden, the director of property-tax services for Colliers International in Vancouver, whose company has also identified some hot-spot areas.

Buyers are paying prices for land that are far higher than can be covered by the rents coming from the existing building, indicating that either they think land values will keep rising and they can flip the property or that there is some development potential.

Assessments have doubled in some parts of the Marpole commercial village in south Vancouver, have gone up by as much as 53 per cent on West Fourth Avenue, and vary widely between 10 per cent and 59 per cent along much of Broadway between Commercial Drive to the east and Alma Street to the west. Commercial, Fraser and Main have all increased by around 30 per cent.

Broadway seems to be particularly affected by expensive land deals that happened in time for this year's assessment calculation, as developers raced to acquire property they think will become more valuable when a Broadway SkyTrain is built.

Elsewhere, developers appear to be paying high prices to acquire properties where they can tear down older one-storey buildings and replace them with the four to six storeys (retail on the ground level and residential above) that the city allows on most arterial streets. The city's West End plan generated some big increases because of the new height and density allowed in some blocks.

B.C. Assessment Authority values properties by looking at recent sales and the development potential of a site, not what is actually on it. Commercial property owners, small-business operators and agents like Mr. Sullivan have long objected to factoring in the property's potential.

A bank building at Granville and Broadway has been valued as worth 59 per cent more this year, said Sharon Townsend, the executive director of the South Granville business improvement association. A mini-mall at Hemlock and Broadway is seeing its value jump from $9.5-million to $14.4-million, a 50-per-cent increase.

Other properties north of Broadway on Granville – home to art galleries, home-decor shops and clothing boutiques – have gone up by between 30 per cent to 35 per cent, she said.

"The majority of the hit is coming outside the downtown. It's extremely disconcerting," Ms. Townsend said.

The city's average increase in commercial assessments is 16 per cent. Owners whose properties went up by only the average will see just the standard tax increase that the city approved. But those whose assessments jump by much more than that will see much higher increases, Mr. Sullivan said.

Many business operators, who typically have to pay the property taxes as part of their leases in Vancouver, don't seem to know what's coming.

Sabrina Faas, who runs Bayswater Tea on West Broadway, said she hadn't had news from her landlord about any changes for this year.

Patrick North, at GNK Insurance, said, "I haven't seen our bill yet."

He said any big jumps that bring tax increases will be very hard on the smaller businesses along Broadway.

"These are mom-and-pop operations. And we've been struggling, like most areas, with online shopping."

Councillor Geoff Meggs said city staff are seeing the pattern of high assessments. The city has some policies that allow owners in areas with big jumps to average their values over three years, although that won't help if the same thing happens next year.

Mr. Meggs said there's a limit to what the city can do.

"We have averaging, but there's nothing we can do about the assessments that would make a difference for someone in a [lease where they have to pay the taxes]."

He also said the city has to be careful about making sure it isn't lifting the tax burden off one set of businesses only to shift it to other taxpayers in the city.

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