Whining in cottage country

Hey there, time traveller!
This article was published 09/01/2014 (4298 days ago), so information in it may no longer be current.

For reasons that seem lost in the mists of time, several Manitoba governments have allowed owners of cottages in provincial parks to enjoy their privileged lifestyles at a grossly undervalued cost.

Until this year, rental rates had not changed in roughly 30 years, while service fees have been frozen for 15 years.

The Selinger government has moved to correct the discrepancy, which even cottage associations agree needed to be fixed, but there are widespread concerns the NDP is reaching a little too deep into the pockets of cottage country.

Some property owners say they won’t pay the new fees, while the Whiteshell Cottagers Association is threatening to sue the province.

That’s what happens when a well-organized, passionate group of taxpayers feels it has not been properly consulted about hefty rate increases. In fact, consultations were held. Cottage owners in provincial parks just don’t like the results.

Service fees are rising roughly 250 per cent in some areas over five years, while rental rates will also increase dramatically during a 10-year period.

Before the change, fees ranged wildly depending on the services provided. At George Lake near Point du Bois, for example, fees will rise from $69 a year to $101.47 at the end of the phase-in period. For premium townsite services at West Hawk Lake, the fees will rise to $1,171 from $473.

The increases are based on the perfectly sound principle of full cost recovery for services rendered. The disgruntled cottagers claim services have declined and the province is gouging them mercilessly, but the cost to government is published on its web page for all to see.

The stiff increase in rental or leasing costs that await some cottage owners is also long overdue. A lakefront cottage lot in the Whiteshell with a rental value of $800 a year, for example, could see the rate rise by 500 per cent over time, a reflection of the increase in land values since the last appraisal in the 1980s.

The province is using a municipal assessment model to determine the rental value of raw, undeveloped cottage land. The value is pinned to the assessed value of property in adjacent municipalities or Crown land. The rent is based on four per cent of that value, a rate that has not changed since it was introduced around 1988.

Based on simple financial calculations, if a lease is $4,000 per year for a waterfront lot, and the return for the province is supposed to be four per cent, then the assumed market value is $100,000.

There aren’t too many places where Manitobans can buy a lakefront lot with road access for $100,000.

Cottagers don’t own the land, of course, but there is virtually no risk they will lose it either, providing they pay the rent.

Even with the dramatic increases, their total bill will still be less than the taxes paid by cottagers whose properties aren’t located in a provincial park. In fact, some rents are so low, the province has had to introduce a minimum $500 rate for lakefront property.

The province, moreover, has introduced a cap system, which this year is set at $3,000 for fees and rent combined. Not a single cottage owner, however, will have to pay that much in 2014. The cap will be reviewed annually, but the province should increase it every year until the property owners are paying the full freight.

And for those who are claiming poverty, the government has a deferral mechanism that allows cottage owners to continue paying current rents, with the balance owing when the cottage is sold or the owner dies.

The province intends to sock the new cash into its general revenue fund, but it should be reinvesting it all in parks, which need the investment.

It would also help convince cottagers and others who are paying more to use the parks they are getting value for money, rather than being picked on by a cash-poor government.