City looks to offset losses from Tolko shutdown

By on January 31, 2018
The shuttered Tolko mill applied to the BC Assessment Office for a shutdown allowance, which will impact the city’s budgeting process. (Herald files).


The City of Merritt is facing a $400,000 hit to its tax base in 2018 due to the loss of the Tolko sawmill, but growth in other assessment classes is absorbing most of the impact.

Tolko Industries shut down at the end of 2016, and has since applied to the BC Assessments Office for a shutdown allowance, a move which will shrink the industrial tax base for the municipality in 2018.

Despite the loss, the financial impact on the tax base hasn’t been as severe as first anticipated for the municipality thanks to increases in sectors such as business and residential property values, Thiessen told the Herald.

“You automatically assume when you lose a major employer that your housing values are going to go down, but they actually went up,” said Sheila Thiessen, financial director for the City of Merritt.

Across Merritt the average valuation for a single family home is up about six per cent compared to 2017.

More homes were built in Merritt last year as well. While not all may be taxable in 2018, there were 28 new housing starts in Merritt in 2017 up from 20 in 2016, according to statistics from the City of Merritt’s economic development department.

“There’s more residential houses and our overall assessment base has gone up,” said Thiessen. “A lot of houses went up in assessment because places were selling over assessed value.”

In 2017, 167 sales were used to determine market value for single family homes in Merritt, but this year, 187 sales were used to determine the assessment roll, said deputy assessor Graham Held with BC Assessment.

“For us, sales are great because they tell us what the market is doing in the community. We rely on them to set our values,” said Held. “I’m always happy when the volume is up, but it also speaks to the health of the real estate market in general.”

Thiessen noted the two new hotels in the Bench area of town being operational as part of the growth in other property classes.

While the Tolko shutdown is a big loss to the city’s tax base, the major industry class it fell under makes up only 15 per cent of all tax revenue the city collects, according to numbers included in the 2017 five-year financial plan bylaw. Residential properties on the other hand make up about 43 per cent.

Thiessen said the $400,000 loss of revenue from Tolko, which includes user fees for water and sewer, is not as much as it would be if the mill was dismantled completely.

“It hasn’t been decommissioned yet,” she said.

Delays at Merritt Green Energy provide tax relief

What would have exacerbated the loss to tax revenue this year will in fact help balance it out in the short term.

The Merritt Green Energy project (MGE) was expected to receive its revitalization tax exemption this year, but as the project is still not operational, that will have to wait a year.

“They haven’t got their occupancy permit,” said Thiessen.

The tax exemption is a four year program allowing MGE to be 100 per cent exempt from paying municipal taxes in its first year of operation, but pay a quarter of the tax the following year, increasing by 25 per cent each year until 2023 when they will start paying taxes in full.

“It gives them a bit of a help when they’re starting out to have their taxes reduced once they get up and operational,” said Thiessen.

MGE contributed about $750,000 in municipal taxes in 2017, Thiessen told the Herald.

She said 2018’s budget won’t stray too far from what was forecasted in the five year plan adopted last year.

“The big decisions will be on what capital items we pursue,” said Thiessen.

“That’ll be where the bulk of the budget meetings will be spent on.”

Included in the five-year finical plan bylaw is a projected two per cent property tax increase for 2018, but council will still need to determine what that number will officially be, Thiessen told the Herald.

This year’s budget deliberations get underway next Tuesday (Feb. 6) at 6 p.m. inside city hall with Thiessen presenting council with a general overview of the budget and the impact from the local mill closure.

Leave a Reply

Your email address will not be published. Required fields are marked *