Predictable, Fair and Transparent Market Value Assessments

Issue

Non-residential property assessment values have often fluctuated, resulting in sudden, unexpected and significant increases of tax liabilities for some property owners. While changes are not uncommon, the lack of transparency, fairness, and predictability of non-residential property assessments impacts the ability of business to operate with a clear understanding of the value of their property and the expenses it incurs.

Background

The Municipal Government Act (MGA) requires all properties to be assessed by the municipal assessor and prepared using mass appraisal methodology, to reflect the market value of the property. 

Assessment notices for non-residential properties are then sent to taxpayers who have the ability to file a complaint heard by composite review board panels (CARBs) if the taxpayer feels the assessed value on the notice does not reflect the market value of the property. 

There are three approaches to determine the market value assessment of a property: the sales comparison approach which examines sale price of similar properties; the cost approach which is used for unique or new properties and reflects estimated replacement cost for the asset; and the income approach which evaluates properties based on their earning potential. The accuracy and reliability of an income approach analysis will depend on the availability of market data and the degree of comparability of the subject to other properties. 

Our Recommendations

1. Provide clarity and direction in the creation of methodology reports including recommended metrics used, data collected, and application of rates which are reflective of local market conditions; 
2. Require municipalities to consult with local industry experts and stakeholders to gain market information and local expertise and knowledge; 
3. Provide specific criteria and guidelines for subjective metrics such as rental income quality and stratifications; 
4. Require physical inspections of a property to determine accuracy of such metrics including changes to income quality classifications; 
5. Require municipalities to flag irregularities and follow up with individualized consultation, education and information and applying corrections to the roll consistently for identified or similar properties with a 5% or greater error due to an error in data, calculations or incorrect assumptions; 
6. Increase transparency in the assessment process by recommending municipalities provide advanced consultation and provide optimal information through a section 299 and 300 requests; 
7. Recommend municipalities provide the provision of prior years’ assessments on assessment notices; 
8. Make greater distinction of roles and responsibilities between the Province and municipalities to ensure consistent interpretations of policies and regulations; and 
9. Provide assessment departments with guidelines for best practice.