Changes to Revaluation Cycles for Cities
Year: 2022
Resolution
Whereas Section 12.1 of the Assessment Management Agency Act states that the minister must approve an order to establish a base date for determining the value of land and improvements for the purpose of establishing assessment rolls for the year in which the valuation or revaluation is to be effective and for each subsequent year preceding the year in which the next revaluation is to be effective; and,
Whereas Clause 2(o.1) of the Assessment Management Agency Act states that revaluation means the valuation of a property on which a valuation has already been performed, to reflect a new base date for valuation established by the agency; and,
Whereas Section 3 of the Assessment Management Agency Regulations states that one year is the minimum period and three years is the maximum period between the base date and the first year in which the valuation or revaluation is to be effective; and,
Whereas the current Board Order for the 2021 Revaluation Base Date determines assessed values of properties for the years 2021 to 2024 and during this period of time, significant market value evidence shifts may occur directly affecting the property owners; and,
Whereas the market evidence used for the 2021 Revaluation Base Date did cause significant valuation shifting for the larger cities resulting in substantial increases and/or decreases in property assessments; and,
Whereas applying a shorter base date timeline for the larger cities would eliminate the potential of significant shifting in property valuations and allow assessment information to be updated more frequently which would reflect more accurate property values.
Therefore be it resolved that SUMA advocate the Government of Saskatchewan to change the Saskatchewan Assessment Management Agency Board Orders that are approved by the Ministry of Government Relations to reflect the period of time for a revaluation to change from a four (4) year period to a two (2) year period for the sixteen (16) Saskatchewan cities only.
ACTS AFFECTED: The Assessment Management Agency Act & Regulations
REGION/SECTOR AFFECTED: Cities
Provincial Response
- Government needs to consider the views of all stakeholders in the property assessment and taxation system, and is working to simplify the system in part due to stakeholders and the public believing it to be overly complex. This resolution would make the system more complicated by introducing two assessment revaluation systems in the province. This could also lead to fairness issues in taxation and uncertainty for businesses and residents with property around the province.
- Key issues in moving to a shorter revaluation cycle include the ability to deliver updated values more frequently, the need for more assessors and the associated costs. The Saskatchewan Assessment Management Agency (SAMA) would need to hire more staff while continuing to deliver its reinspection program. These extra costs would be borne by the municipalities using SAMA's services.
- Other considerations include an increased number of appeals potentially. Revaluation years see the highest appeal numbers, and there is no indication appeals would reduce with a shorter revaluation cycle, particularly if assessment service providers rely on trended data to update assessed values. In some jurisdictions that went to yearly revaluation cycles, up to 90 per cent of commercial properties appeal their assessment on a yearly basis. This leads to higher appeal costs which would be borne by the cities and more uncertainty regarding property tax revenue.
- Shortening the revaluation cycle may lead to greater instability in property assessments rather than stability, along with increased assessment appeals and their associated costs. This was part of the reason why Ontario moved back to a four-year cycle from a one-year cycle.
- The four-year cycle was established to ensure values are regularly updated, while allowing time for assessment service providers to determine new assessments and for government to analyze preliminary assessments for percentage of value and education property tax decisions.
- Having a two-year revaluation cycle for cities alone would also require the production of equalized assessments for education property tax (EPT) purposes. Without equalized assessments, residents and businesses in cities could be paying greater EPT compared to other municipalities. With EPT revenues going to the general revenue fund, there is no guarantee city school boards would receive higher EPT revenues. This could lead to inequities in the EPT system with property owners in cities paying a greater share of EPT than would otherwise be the case. The costs to provide equalized assessments would be borne by the cities and would need to be justified to their ratepayers.
- Cities currently have a range of tax tools to address the issue of large assessment shifts due to revaluations. Cities are the only municipalities with the authority to subclass property and the authority to phase-in property taxes. This allows cities to spread tax increases or decreases over two to four years of a revaluation cycle for any taxable property, a class of property or a subclass of property. Cities also have the power to abate, defer or cancel taxes.
- The Saskatchewan Urban Municipalities Association may want to raise and discuss the issue and potential implications of a shorter revaluation cycle for cities with SAMA at its various advisory committees to hear the views of other assessment sector stakeholders.
