Montreal Gazette

City back in court to keep housing group's taxes up

Judge had ruled high valuation on non-profit's building was unfair

The City of Montreal calls affordable housing a priority, but it's taking a non-profit organizati­on that houses poor and vulnerable people back to court rather than heed a judge's invitation to lower the municipal taxes on the building.

“I'm trying to understand what the city is trying to do by taking anon-profit housing corporatio­nwith less than a $150,000- a-year budget to court to prevent us from getting a $5,000-a-year tax reduction,” said Richard Phaneuf, the president of the non-profit, the Yellow Door Housing Corp.

“I'm preoccupie­d by the actions taken by the city because we furnish housing to people in need. The taxes are making it impossible to help this vulnerable population. Our central mission is in jeopardy.”

The Yellow Door Housing Corp., also known as the Corporatio­n d'habitation Porte Jaune, rents rooms, studios and oneand two-bedroom apartments in six greystones on Jeanne-mance St. in the Milton Park district of Plateau-mont-royal borough. Its tenants include people with mental health issues, seniors with no family and refugees.

For the last four years, the non-profit has been contesting its nearly $2 million municipal property assessment, which appeared on the 2020-2022 city assessment roll. Its municipal tax bill this year is nearly $17,000.

Yellow Door won a partial victory to lower its property assessment, and therefore its taxes, in the Court of Quebec in January. However, the victory was short-lived because the city has opted to contest the judgment in Quebec Superior Court.

The administra­tion of Mayor Valérie Plante declined to comment on the decision to file for a judicial review of the ruling, as did the city's civil service. The matter is before the courts so the city can't comment on the case, Montreal spokespers­on Sara-eve Tremblay said in an email to the Gazette.

In his 17-page ruling on Jan. 8, Court of Quebec Judge Patrick Choquette agreed with Yellow Door's argument that the unique private law that created the Milton Park Community housing developmen­t in 1987 and the co-ownership agreement binding Yellow Door and the two dozen other non-profit co-operatives and housing corporatio­ns in Milton Park should affect the municipal property assessment.

Both prevent any building in Milton Park from being sold for market value.

Under the rules, a building must first be offered to other co-owners of Milton Park. The price must be the balance on the building 's mortgage or the equivalent of one year's rent. Moreover, the buyer must commit to first offering units to low-income people.

One building in Milton Park sold for the $391,563 balance on its mortgage in 1996. In 2022, a second building sold for its $54,796 mortgage balance.

Yellow Door initially lost before the Tribunal administra­tif du Québec in 2022 and appealed in the Court of Quebec. The TAQ had applied the age-old principle in Quebec that the non-profit status of a building 's owner has no affect the real value of the building.

However, Choquette's Court of Quebec ruling agrees that the specific restrictio­ns in Milton Park are attached to the building and affect its objective value.

It was a partial victory for Yellow Door because it didn't carry out a private appraisal to suggest a new assessment.

However, the judge suggested the city reassess Yellow Door's property according to the principle that the restrictio­ns in Milton Park affect its value.

“This judgment is therefore not devoid of practical effect and the city may immediatel­y modify the property assessment roll to consider the effect on the real value based on the principles establishe­d therein,” Choquette wrote in his ruling. The city chose instead to file for a judicial review.

Yellow Door didn't have the funds to hire a private appraiser, said lawyer Manuel Johnson, who represente­d the non-profit in the Court of Quebec.

The city uses the comparison method in appraisal to come up with property assessment­s. But comparing the Yellow Door property to condo buildings in the area is “comparing apples and oranges because we can't sell at market value,” Johnson said.

He added that the city's decision to contest the Court of Quebec judgment places “an onerous burden” on his non-profit client, given its limited resources.

“The city has deeper pockets,” Johnson said. “That's what I find a bit deplorable. Instead of accepting the invitation from the judge (to lower the assessment) ... they're taking the other strategy, which is to wear down Yellow Door in court.”

Meanwhile, Yellow Door and five other non-profits in Milton Park are also contesting their latest building assessment­s in the city's 2023-2025 roll. The assessment for Yellow Door's property has increased to $2.6 million in the latest roll. The new challenge is suspended at the TAQ until a final judgment in Yellow Door's first challenge.

Phaneuf says he believes the city doesn't want a court decision to stand that might offer an opening to other housing non-profits to contest their property assessment­s.

He calculates that Montreal garners about $50 million a year in tax revenue from non-profit co-operative units and non-profit housing corporatio­ns.

“A 50 per cent reduction in taxes (for non-profits) would cost the city $25 million,” Phaneuf said, noting the city's annual operating budget is $7 billion.

“It's a trivial amount in the city's budget, but it would help over 1,700 non-profit housing bodies so that they can survive their year-toyear operations.”

Municipal taxes have risen, as have building insurance premiums and the cost of renovation­s, Phaneuf said. Yellow Door's property is in need of repairs, he said.