Premier Dalton McGuinty has called the 2008 property assessments ‘unrealistic.’ Despite this, city officials say residents have expressed little of the outrage that characterized the process in past years.
December 19, 2008
WAYNE CUDDINGTON, THE OTTAWA CITIZEN
Ken Hughes, revenue manager for the City of Ottawa, attributes the muted reaction to a greater understanding of the process.
“I think people have got a pretty good handle on the assessment process now and its tie-in to taxation,” Mr. Hughes said yesterday. “There was very little negative reaction this time.”
After a three-year freeze, assessments were mailed to property owners beginning in late October. They showed an average increase in property values of nearly 14 per cent across the city.
However, the real estate market has cooled considerably since the valuation date of January 1, 2008, prompting reporters to ask Mr. McGuinty this week if the assessments should be scrapped and redone.
“You would hope that municipal councils would act reasonably and responsibly given the circumstances,” Mr. McGuinty replied, “and recognize that that perhaps was an unrealistic assessment attained by values at the time.”
Representatives from the opposition Conservatives and NDP at Queen’s Park chastised the premier for refusing to rip up the 2008 values.
However, both the initial statement and the opposition reaction belie some misunderstanding about the province’s “current value assessment” (CVA) system, which, at its most basic level, connects the value of an owner’s home with his or her ability to pay taxes.
“The value of your home is assumed to be a proxy for wealth, an ability to pay,” says Mr. Hughes. “This is not a new concept, it has been around for hundreds of years.”
In reality, there is no direct connection between assessments and property taxes, he says. Cities set their budget, determine how much money they’re going to raise from taxes, and officials then divide it among property owners.
Tax increases are calculated relative to the city average, so properties that rise in value, but fall short of the 14-per-cent average could see taxes remain the same or even drop.
“An increased assessment doesn’t necessarily mean more taxes for you and it definitely doesn’t mean any more money for the municipality,” says Mr. Hughes.
In the past, the assessment system was criticized for exposing wild increases in the hot property market that has only recently cooled off. Homeowners in trendy neighbourhoods like Westboro, Hintonburg and the Glebe faced increases as high as 40 per cent.
The province responded by scrapping annual assessments and replacing them with a fouryear cycle.
Coun. Peter Hume, who is also the president of the Association of Municipalities of Ontario, credits the government with injecting much-needed stability into the system. He says scrapping the 2008 assessment would be a mistake.
“In a declining market, Westboro’s values would have to drop much more significantly than (less trendy) Alta Vista’s did for taxes to shift away from Westboro and onto Alta Vista. And you just can’t tell in this market whether that’s happening.”
Mr. Hughes agrees, saying the current system treats every homeowner equitably.
“They’re all assessed on the same basis, at the same time in the same market,” he says. “Now if the market has gone down, every property has reduced in value.”
Homeowners deserve property re-assessment
Queen's Park Report
BY Simcoe-Grey MPP Jim Wilson February 13, 2009 18:02
Between September and November of last year, homeowners across the province and throughout our riding received their 2009-2012 property assessment notices based on the current value of their home as of January 1, 2008 and already they are badly in need of review.
After cynically freezing property assessments until conveniently after the 2007 election, Premier Dalton McGuinty's Liberal government implemented a new assessment system that assessed homes based on Jan. 1, 2008 values - the height of a hot housing market - revising assessments from their previously assessed values of Jan. 1, 2005. Those now unrealistic values have been locked in and are now being phased in until a new assessment is conducted in January 2012.
By the time MPAC mailed out its new assessment notices this past fall, housing prices across the province had dropped dramatically from their January 2008 values which were significantly higher.
In fact, according to MPAC, residential property values as of January 1, 2008 increased in Grey and Simcoe counties by 22.7 per cent and 22 per cent respectively. Grey County farmers saw an average 23.7 per cent increase in their assessed property value while Simcoe County farmers saw an average increase of 35.3 per cent.
Because these new assessments were determined at the height of the real estate boom, homeowners in Simcoe-Grey that I talk to feel that it is unfair to be locked into an inaccurate assessment for four years.
Even Dalton McGuinty admitted that the assessments were "unrealistic" given the significant declines in the housing market throughout the year, and yet, instead of taking action himself, he's pinning it all on municipalities by telling councilors to "act reasonably and responsibly."
All that does is underscore Mr. McGuinty's failed leadership. When B.C. Premier Gordon Campbell realized the real estate market was softening, he froze assessments at their 2007 value in recognition of falling property values.
Mr. McGuinty can act too. My colleagues and I in the Progressive Conservative Party have been urging him to restore annual property assessments starting this month to better reflect current property values. We are also urging him to implement a cap on property assessment increases at an inflationary value, starting retroactively with the 2008 assessments.
I encourage constituents who support our proposals to email the Premier at dmcguinty.mpp.co@liberal.ola.org and urge him to act now.