Report to: General Committee                                                   Report Date: February 4, 2010

 

 

SUBJECT:                          2008 Property Reassessment: 2010 (Year 2 Phase-in)

PREPARED BY:               Paul Wealleans, Director Taxation

                                            Ext 4734

 

RECOMMENDATIONS:

THAT this report be received for information;

 

AND THAT staff be authorized and directed to do all things necessary to give effect to this resolution.

 

 

PURPOSE:

This report provides a summary of impacts related to the 2008 property reassessment for the 2009 to 2012 taxation years but in particular, the 2010 taxation year.

 

BACKGROUND:

The assessment of all property in Ontario is carried out by the Municipal Property Assessment Corporation (MPAC). For the 2009 to 2012 taxation years, properties have been reassessed to reflect a January 1, 2008 valuation date. This updates Current Value Assessments (CVA) from the previous valuation date of January 1, 2005.  Amendments to the Assessment Act, introduced by the Province of Ontario, require a four-year reassessment cycle beginning in 2009, with Current Value Assessment (CVA) increases being phased-in in equal increments over the four-year period 2009 to 2012. Any CVA decreases are not subject to phase-in and were applied in the 2009 tax year.

 

OPTIONS/ DISCUSSION:

The next assessment update will take place for taxation years 2013-2016, with the valuation basis being January 1, 2012. Table 1 below provides the valuation dates used for each taxation year from 1998 through 2016.

 

Table 1: Reassessment Cycle

 

Taxation Year

Valuation Date

 

1998, 1999, 2000

30-Jun-96

2001, 2002

30-Jun-99

2003

30-Jun-01

2004 2005

30-Jun-03

2006, 2007, 2008

01-Jan-05

2009, 2010, 2011, 2012

01-Jan-08

CVA increases phased-in over 4 years

2013, 2014, 2015, 2016

01-Jan-12

 

 

The 2008 Provincial budget mandated a four year phase-in of assessment value increases, for all property classes. Properties experiencing a valuation decrease were not phased-in and the full reduction flowed through for the 2009 taxation year. Table 2 shows an example of how an assessment increase was phased-in.

 

Table 2: Phase-in example

 

Assessed Value of your property

CVA

Property Value on Jan 1st, 2005

$280,000

Property Value on Jan 1st, 2008

$320,000

Over this 3 year period, your property value has changed by

$40,000

 

Phased-in property assessment over 4 years

CVA

2009

$290,000

2010

$300,000

2011

$310,000

2012

$320,000

 

Table 3 provides a property class summary of the 2008 reassessment and shows the overall percentage change in CVA due to the reassessment as well as for the 2009 and 2010 taxation years. For residential properties, the average value increase between 2005 and 2008 was 18.82% with the 2009 phased-in increase being 4.65% and 4.47% for 2010. Note that the 2010 change figures includes all in year assessment changes (appeals, supplementary assessment, severances, etc) that occurred for the 2009 and 2010 tax years.  

 

Table 3: 2010 CVA Changes in Markham

 

Property Tax Class

Over-all Reassessment

% Change

2009 Phased-In % CVA Change

2010 Phased-In % CVA Change

Residential

 18.82

4.65

4.47

Multi-Residential

 18.81

4.60

6.24

Commercial

 31.61

7.30

7.75

Industrial

 31.99

7.96

7.48

Farm

 38.88

7.85

9.77

 

CVA changes arising from a reassessment do not result in additional taxation revenue for municipalities. Following a reassessment, municipalities are required by legislation to reduce their tax rates by the same percentage as the reassessment increase in total assessed value following a reassessment, such that the total taxation revenue from all classes does not increase as a result of the reassessment. Therefore, while there is no municipal total increase in tax due to a reassessment, it does result in some properties experiencing reassessment-related tax increases, while others will see reassessment-related tax decreases.

 

Whenever a general reassessment is undertaken, which is every four years in Ontario, the following tax shifts may result:

1. between property types within the same property tax classes;

2. among property tax classes; and

3. among the local municipalities within the Region.

Residential Class

The residential tax rate calculation is based on the entire residential property class, which includes all properties that are assessed as residential. In addition to residential homes, the class includes vacant residential land, co-op housing, group homes, golf course greens and fairways.

 

Table 4 below only includes residential homes such as singles, semi-detached, town-homes.

 

Table 4: Residential Homes (Year 2 Phase-in Increase)

 

Ward

2009 CVA

2010 CVA

CVA Increase

1

$549,315

$580,661

5.71%

2

$457,223

$477,534

4.44%

3

$455,544

$479,007

5.15%

4

$377,682

$392,386

3.89%

5

$370,495

$385,122

3.95%

6

$524,180

$550,368

5.00%

7

$395,533

$409,110

3.43%

8

$371,863

$386,937

4.05%

Town Average

$421,638

$440,092

4.38%

 

The average assessed value for  residential homes is $440,092 for 2010, up from $421,638 from 2009.

 

For the 2010 tax year, one-half of the reassessment increase is reflected in a property’s assessment for 2010 taxation purposes. Any CVA decreases that arose from the 2008 reassessment, was applied fully in the 2009 taxation year.

 

Non-Residential Classes

Properties within the non-residential classes (multi-residential, commercial and industrial) will experience varying degrees of taxation impacts as a result of the reassessment, depending on whether properties are paying taxes at full CVA taxation levels, or whether the amount of taxes payable are subject either to caps on allowable tax  increases, or claw-backs of tax decreases. Capping/claw-back provisions within the non-residential classes have been in place since 1998, and were implemented by the Province of Ontario to mitigate the tax impacts that would have resulted from the introduction of the new Current Value Assessment system in 1998. The 2010 impacts are:

 

Multi-residential Class:

No. of properties:                                 51 properties

Avg increase overall (2005 to 2008):    18.81 %

2010 average increase:             6.24 %

 

 

Commercial Class:

No. of properties:                                 3,988 properties

Avg increase overall (2005 to 2008):    31.61 %

2010 average increase:             7.75 %

 

Industrial Class:

No. of properties:                                 1,796 properties

Avg increase overall (2005 to 2008):    31.99 %

2010 average increase:             7.48 %

 

 

FINANCIAL CONSIDERATIONS AND TEMPLATE:

None

 

HUMAN RESOURCES CONSIDERATIONS:

Not applicable

 

ALIGNMENT WITH STRATEGIC PRIORITIES:

Not applicable

 

BUSINESS UNITS CONSULTED AND AFFECTED:

None

 

RECOMMENDED

                            BY:

 

 

___________________________                     ____________________________

Joel Lustig                                                           Andy Taylor

Treasurer                                                             Commissioner, Corporate Services

 

 

 

ATTACHMENTS:

None.

 

 

Q:\Finance\SHARED\2010 General Committee Finance\1001 2008 Property Reassessment- 2010 (Year 2 Phase-in).doc