MacKinnon Cann seeks tax restructuring

Belle Hatfield
Published on January 24, 2013
Michael Tavares and Neil Hisgen operate the MacKinnon Cann Inn, part of a corporate enterprise that includes three other multi-unit residential/commercial buidings in the heritage district along Willow and Collins streets.

By Belle Hatfield

The Vanguard


 They have transformed the face of central Yarmouth and in the process, reversed the deterioration of a key residential neighborhood, but now the operators of the complex centred around the MacKinnon Cann Inn on Willow Street say they need relief from interest being charged on their property tax accounts in order to stay in business.

In a written brief, presented at Yarmouth Town Council’s committee of the whole on Thursday, Jan. 24, MacKinnon Cann Corporation president Michael Tavares said inns, multiple-unit residential properties and restaurants have been hard hit by the economic downturn precipitated by the loss of the region’s two ferry services (Scotia Prince in 2005 and Cat ferry in 2009). He questioned whether it was good business for the Town of Yarmouth to benefit (through interest charged on tax account arrears) on the backs of the hardship.

He outlined the tax burden that has been created on his business by the  effect of the 18 per cent interest rate the town has been charging on tax account arrears (that rate was reduced to 14 per cent two years ago).

 “This interest is a death sentence and compromises the continuance of the Inn as we know it today,” wrote Tavares.

In response to a question from Councillor Phil Mooney, the town's CAO Jeff Gushue pointed out that the rate the Town of Yarmouth charges on tax arrears is one of the lowest in the province. It is lower than either of its neighboring units. 

For the last couple of years the MacKinnon Cann has been on a monthly installment plan to try and address the tax arrears issue, but Tavares said because of the interest being charged the company cannot get ahead.

“Our monthly payments are paralyzing and have completely compromised our ability to see the end of this situation,” he said.

Last year, for instance, under a repayment plan, Tavares said the corporation paid, in total, $66,704 to the town in property taxes.

According to the written documentation, from the time of purchase, taxes on all four properties has amounted to $118,052.10. The corporation has paid $84,056.31 in taxes during that time. The amount of interest owing due to arrears now stands at $48,790.63 and it continues to accumulate.

In his written brief, Tavares said that his business is not the only one facing a crisis caused by the loss of the ferry and the downturn in the economy.

Tavares is asking the town to develop a policy “to address the hardest hit taxpayers and protect the [town’s] infrastructure.”

He came with a proposed policy and a plan for restructuring the payment owed to the town. He wants to restructure the principal and arrears currently owed and pay it over ten years. But the key, he said, is that the accumulation of interest on those arrears has to stop.

"We're proposing a 10-year payment plan at $637 a month [to clear the tax bill arrears on the Inn]," he said, adding, "Neil and I want very much to continue. We have spent 15 years building something spectacular and we don't want to see it destroyed by the people that it serves.

"It really comes down to this group (town council] and us. You've got a willing participant here. All we're asking this town to do is stop gouging us for interest and structure this baggage in such a manner that we can pay it and still function." 

And he had a warning.

"If you start tacking interest onto this, our position is we're not going to do it. You will get your balances due, but we are immediately going to go in development mode again," he said.

Tavares said an option would be to strip the valuable architectural features from the buildings to pay the tax bill and then repurpose the properties to create residential rental units. If reassessed residential, Tavares said the town stood to lose $100,000 in tax revenue over the next decade.

“We need to develop a plan to prop up this infrastructure or risk losing it entirely,” he said.

 At the conclusion of the presentation, the committee of the whole approved a motion directing staff to review the proposal, seek advice from its legal counsel and its municipal affairs advisor, and bring back suggestions for possible consideration. Council also approved a motion made by Councillor Ken Langille seeking regional input leading to a request for provincial assistance in developing a tourism infrastructure support program to "prop up" tourism operators in south western Nova Scotia until such time as ferry service is resumed.

"A message has been given here today and we have to get off the pot. We knew about this in 2010 and we've done nothing," Langille said, in commenting on the crisis facing tourism operators in south western Nova Scotia.