A Braddon building owner has been stunned by the overnight revaluation of his property for rates from $1.7 million to $4.8 million, and a rates bill that has increased three-fold to $266,000 a year.
To make matters worse, ACT Treasury has asked him to pay back rates of $546,000 after backdating the new valuation to 2011.
Steve Flannery and his business partners have owned the building that houses Paddy Pallin for 14 years, but Mr Flannery said the rates bill now made it uneconomic, and unless the decision was reversed they would sell.
Mr Flannery, a valuer and director with Knight Frank Valuations, said the valuation for his property was out of step with the Braddon precinct. Only those on double blocks or that had been fully redeveloped had similar values. For others, from 2 to 34 Lonsdale, the average value was $1.7 million.
He believed the decision to re-value his property was a result of a lease-purpose change in 2010, when he and his fellow owners applied to add residential and restaurant uses to the lease in line with new planning regime for the area. The lease change went through and they paid a change of use charge (of about $70,000) but they had never redeveloped the building.
In 2012-13, Mr Flannery's rates were $56,960. In August, he received his 2016-17 rates bill, at $90,517. But on September 6, a reassessment notice arrived, saying his bill was now $265,907.
He has formally objected but been told it might take six months for his objection to be considered and meantime has started paying the higher rates. As a result of paying the first instalment, he missed last month's mortgage repayment on the building, with the building secured against his home.
The building was tenanted to Paddy Pallin, Avis, Seeing Machines, and until recently Braddon Cellars. Mr Flannery said the owners collected $480,000 in rent and paid $314,000 in rates, insurance and other outgoings. Mr Flannery said the income stream of the property was effectively halved by the valuation decision.
A treasury spokesperson the ACT Valuation Office was reviewing unimproved property values for Braddon.
While it could not discuss individual cases, properties were valued assuming their "highest and best use".
"The highest and best use is the most probable use of a property which is physically possible, appropriately justified, legally permissible, financially feasible, and which results in the highest value of the property being valued," the spokesperson said.
Mr Flannery believed the government would revalue properties in the Braddon area and the Northbourne corridor, as part of its "value capture" to pay for light rail. The government says the tramline will result in a significant increase in property values either side.
"We can only imagine that the same situation will apply for the bulk of properties within the Braddon precinct and light rail corridor, particularly for properties between Braddon and Dickson," Mr Flannery said. "We see this as the thin edge of the wedge."
Mr Flannery, who doesn't belong a political party and said his motivation for sharing his story was not political, nevertheless said businesses, investors and residents should be "petrified" about what might happen to rates.