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Turner Drake & Partners Ltd.
6182 North Street
Halifax, N.S.
B3K 1P5
Canada

Tel.: (902) 429-1811
Toll Free: (800) 567-3033
Fax.: (902) 429-1891

Suite 221
12 Smythe Street
Saint John, N.B.
E2L 5G5
Canada
Tel.: (506) 634-1811

Suite 11
109 Richmond Street
Charlottetown, P.E.
C1A 1H7
Canada
Tel.: (902) 368-1811

35 York Street
St. John's, N.L.
A1C 5M3
Canada
Tel.: (709) 722-1811

4th Floor
111 Queen Street East
Toronto, ON.
M5C 1S2
Tel.: (416) 504-1811

E-Mail: tdp@turnerdrake.com
Internet: www.turnerdrake.com

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# Wednesday, 25 October 2017

Nova Scotia’s 2018 Preliminary Property Assessments are available on the Property Valuation Service Corporation (PVSC)’s website, and there is a brief window to discuss assessments with PVSC assessors prior to the assessment roll being finalized on December 1st.

Between now and then, the PVSC is encouraging property owners to discuss any errors or provide additional information which may have an impact on the value of their property. The benefits in taking advantage of this opportunity are:


1)     It provides a higher level of certainty in preparing tax budgets for the 2018 fiscal year (for both the owner, and the municipality).


2)     It provides property owners with an opportunity to address concerns with 2018 assessments outside of the formal appeal process, and before the values are finalized and inserted on the official assessment roll.


3)     Owners who are not satisfied with the results of pre-roll consultations can still file a formal appeal when official assessment notices are received in January.

 

Preliminary consultations are typically less formal and more timely (and thus cost effective) than an appeal.  This is especially so because at the “pre-roll” stage, assessors aren’t in the position of defending an assessment that has already been published.  The best time to address an assessment issue is before the problem becomes one.

 

The link to proposed 2018 assessment data is as follows: https://www.pvsc.ca/en/home/findanassessment/searchbyaan.aspx.  Preliminary 2018 assessments are publicly available; owners will need their Assessment Account Number and PIN Access Code (which can be found at the top-right hand corner of their 2017 Assessment Notice) to access the underlying valuation records.


 

Giselle Kakamousias is the Vice-President of Turner Drake’s Property Tax Division.  Her experience negotiating and appealing property assessments is extensive (don’t be fooled by the photo - her calculator is older than some of her colleagues): it is a wise property owner who follows her advice.  If you’d like more of it, she can be reached at (902) 429-1811 ext. 333 or gkakamousias@turnerdrake.com.

Wednesday, 25 October 2017 12:49:18 (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | Nova Scotia | Property Tax | Turner Drake
# Friday, 18 August 2017

Of Heaven and Sea and Earth 

Please be suitably impressed by this photo: it has all three of a church, a lighthouse and a commercial heritage building


Five years ago, the Chronicle Herald reported that some of Nova Scotia’s churches were exploring the option of deregistering their buildings’ heritage status under the provincial Heritage Property Act.  Nova Scotia’s churches are often their town’s signature property, featuring architectural details ranging from elaborate stained glass windows to ceilings built by 19th century shipwrights using the same techniques used on the hulls of wooden ships.  But cultural and demographic shifts have reduced demand for churches in the province.  Dwindling congregations mean reduced budgets unable to cope with the high costs of maintaining and operating historic properties.  Deregistration is required for demolition, the only option some congregations saw in the face of financial realities: maintenance requirements outweighed the ability to keep these architectural gems standing.  Recent years have seen other churches amalgamate congregations, keeping and maintaining a single building while selling the rest off for (hopefully sympathetic) redevelopment.

Wolfville United Church as it was

A more literal beacon facing a similar threat of extinction is the Canadian lighthouse.  Changing technologies have rendered redundant their function, if not their cultural attraction.  In May 2008, Parliament passed the Heritage Lighthouse Protection Act, a bill to designate and preserve lighthouses of historic significance.  It took effect in May 2010, only to be followed in June by an announcement declaring almost all Canadian lighthouses surplus, no longer to be maintained by the Coast Guard.  Since then, community groups have become the champions of select historic lighthouses, while the rest, presumably, will suffer the same fate as many an unfortunate ship along our rocky coasts.  

Peggy’s Cove lighthouse, a likely survivor

The foregoing each illustrate the perils of functional obsolescence: when a building’s functionality no longer meets market demands only its cultural significance can protect it – and then only if a champion steps up, e.g. government, community group, or passionate property owner.  Urban heritage properties are particularly susceptible to rising functional obsolescence due to the high value of the land on which they sit: the financial rewards of redevelopment contrast starkly with the economic pitfalls of retaining and maintaining them. Demolition is tempting. 

This year we celebrate Canada 150.  With our history and heritage, for better or worse, on prominent display, we decided to turn our attention to the uphill battle faced by commercial heritage properties in Halifax.

Size Matters

Hemlines are the harbinger of stock prices.  Construction of the tallest skyscraper marks the dawn of recession.  Floorplates sound the death knell of heritage properties?  

Open concept office-in-waiting

Downtown heritage buildings in Atlantic Canada are at an inherent disadvantage versus modern construction because they are simply too small.  Even 30-year-old buildings are feeling the strain imposed by their new, more spacious contemporaries, whose design is able to accommodate demand for open concept offices.  In Halifax, total demand has yet to catch up with new supply. Rental rates are restricted and tenants can afford to move into the new buildings, leaving the last generation of Class A office space struggling to stay relevant – and occupied.  The trend is toward larger floorplates as companies are opting for large, open concept offices with collaborative workspaces and few individual offices.  Downtown Halifax doesn’t have a supply of unused historic warehouses with high ceilings and large floorplates ripe for conversion well suited to modern tastes. Instead, our heritage properties are mainly small buildings, 3-6 storeys high and with floor plates between 1,000 and 6,000 square feet (typically at the lower end of this range). 

Halifax has a few examples of what can be done to overcome this drawback.  Barrington Espace and the RBC Waterside Centre both maintained the façades of a number of adjacent heritage properties while completely overhauling their innards, joining the buildings within to allow for larger floorplates (Saint John’s CentreBeam Place is another example of where this technique was used successfully).  If done carefully, this can present a best of both worlds compromise.  If not, the result may be the Disneyfication of heritage: it looks about right, but there’s no soul.  Either way, it is not an option for detached heritage properties: they are left to find occupants happy with the original floorplates size.

Barrington Espace, RBC Waterside Centre, CentreBeam Place…thanks, Google Street View!

Finding a Fit

Heritage properties need a certain tenant.  The predominant competitor of the heritage office building is the home office: to attract a tenant away from this “free” space, a historic building must provide cachet and interest, and must find a tenant who wants (or needs) both as marketing tools for their business.  Heritage tenants are drawn from a pool of largely creative firms represented by public relations and marketing firms, IT companies, and (interestingly) employment recruiting agencies.  Often, these firms are start-ups; there is a symbiotic relationship between the two, with the heritage property providing an inspiring ambiance (and maybe cheap rent: see below), and the company providing income and life to the building.  What the heritage property has more trouble providing is a flexible workspace that can grow with the company.  When they become too large for their space, they must seek a larger floorplate in a more modern building.  There is a happy medium: mid-sized companies who could occupy an entire heritage property as a single tenant.  But in Atlantic Canada, most companies are either large or small, a by-product of provincial regulatory demands which force companies to “get large or go under” (Atlantic Canada is made up of four small provinces each with their own regulatory requirements for businesses: half the population and half the land area of any other province, but four times the regulations…but this is a topic for another day).         

The Champions

There are three classes of champions for heritage properties: passionate owners (hopefully with deep pockets), community groups who recognize the social benefit of maintaining our built heritage, and governments which either have a measure of both these characteristics or are open to the influence of those who do. 

Heritage property owners must appreciate the unique features of old buildings.  To quote one (you’ll never guess who), they “speak to you in a way new buildings don’t.  There is a sense of calm, a personality.  They have been there for centuries, and if the economics can work, they will be there long after you’ve turned to dust.”  Ah, the economics.  Heritage properties in Halifax do not attract a rental premium as they do in some larger cities, such as Toronto’s trendy Distillery District.  There may be a purchase premium, albeit not driven solely by heritage, but location as well, due to the prime situation some heritage properties enjoy by virtue of having gotten there first.  Halifax’s downtown is distinguished by its waterfront; heritage properties with a connection to it in particular may enjoy a purchase premium, provided this connection is maintained (pause now to be thankful for the public outcry that halted “Harbour Drive” before it started…and hopeful that the redevelopment of its first phase, the Cogswell Interchange, will be successful in repairing the fabric of the area). 

 

Toronto’s Distillery District, as modelled by a pair of junior TDPers

There is a social benefit to heritage properties, usually external to the site itself.  A 2011 study by Place Economics highlighted six areas of positive economic impact attributed to heritage preservation: jobs, property values, heritage tourism, environmental impact, social impact and downtown revitalization.  Heritage properties differentiate cities from one another, providing a unique draw to residents, visitors and immigrants alike.  The world’s most successful cities have vibrant heritage architecture, often interspersed with modern buildings.  Community groups recognize this and fight to preserve historic built environments, but it is often the building owners who fund these broader social benefits by bearing the increased costs of renovation and upkeep.  It is here that governments can play a vital role via heritage preservation policies, but they must take care that they get them right.       

Incentivise or incense?

Halifax Regional Municipality recently commissioned a study to investigate heritage incentives.  However structured, these are a means by which society as a whole, via taxes, can help pay for the social benefit of heritage properties.  Two of the largest pitfalls of which governments must be wary when enacting policies to protect heritage properties both involve the risk of (inadvertently) penalizing property owners. 

The first is the more obvious one, wherein the owner of a protected building is prevented from redeveloping a site to a more lucrative density, diminishing the ability to make money from the property and potentially its market value.  One avenue available to the city is to compensate the property owner for the diminished value by purchasing the air rights, i.e. the space above the building in which they would otherwise be allowed to build, but are prevented by heritage preservation policy.  This could be accomplished either directly, with the municipality retaining ownership of the air rights, or by opening the market for air rights trading, allowing heritage property owners to sell their air rights to developers of non-heritage sites to increase the allowable height on their sites.  (Yes, this has the potential to open another can of worms, but it’s a good theory if the policy is well thought out). 

The second potential pitfall lies in supporting some, but not all heritage properties; such as with the creation of a heritage preservation zone.  While those properties (and their owners) located within the zone stand to benefit from financial incentives offered by the municipality, any heritage properties outside the zone are placed at greater disadvantage.  Still competing against larger modern buildings, they are now on an uneven field against their direct (heritage) competition.  The supported properties have the money to modernize without deficit to their owners’ bottom line, while unsupported properties are further penalized physically and financially. 

For more on heritage rights and wrongs, don’t miss our Summer 2017 newsletter, coming soon to a mailbox near you.  If you are not already subscribed to this informative and gutsy publication, please get in touch with us at 902-429-1811 or tdp@turnerdrake.com.

Alexandra Baird Allen is the Manager of our Economic Intelligence Unit, a position which makes surprisingly good use of her liberal arts degree in history & cultural studies, as well as her expertise in GIS.  For more information on our Economic Intelligence Products, visit our website or contact Alex at 902-429-1811 ext. 323 or abairdallen@turnerdrake.com.

Friday, 18 August 2017 12:21:25 (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | Brokerage | Counselling | Economic Intelligence Unit | New Brunswick | Newfoundland & Labrador | Nova Scotia | Planning | Prince Edward Island | Property Tax | Turner Drake  | Valuation
# Thursday, 01 June 2017

I can honestly say that these 13 weeks have been nothing short of amazing, over this time I have learned so much and gained experience that will help me throughout my life. I expected to come in one day a week for 8 hours a day and job shadow someone. I never thought that I would have my own space to work and be able to do so many things on my own. Every Tuesday morning I would meet with Ashley Urquhart (my boss for the day) and she would tell me the plan. If I had any questions that her door was always open, she was always very upbeat and happy, that made it extremely easy to talk to her.

I got into a morning routine of doing certain jobs, I would do Tenders, Google Analytics, and they even let me post on their social media accounts! I got to tweet about news that I thought was important, that was probably one of the best parts of my Co-Op experience. I never thought that they would give a Co-Op student in high school this much responsibility, I am beyond grateful that they did.  I always had someone close by to help me if I ever needed anything. The person sitting closest to me was Michael McCurdy, he made the day fun and I got to see how to be professional in the workplace and how to talk to clients over the phone. I worked with a great bunch of people that made this experience a lot of fun and helped me learn new things. My aunt, Patti Farewell, has work at Turner Drake & Partners for 26 years and now I see why, it is a very enjoyable place to work and everyone makes you feel welcome. The owner, Mike Turner, would always talk to me and ask me how things are going, along with his wife Verna, who would always make a point of talking to me and saying how nicely I was dressed, they were nice little conversations that made me smile. One day I got to sit in on a support staff meeting, we got lunch and talked about new ideas for TDP, I felt very included and like I was a part of the team.

The Co-Op interview was with Mark Turner (Vice President of the company) it was professional like a “real” interview would be so that I would be prepared for the actual thing when I go to apply for my full time job later in life. He was very nice and made me excited to start, I later got to work on a small project for him.

Right away I was being trained by two people who did exactly what I wanted to do. Ashley Urquhart and Alex Baird Allen were my safety nets throughout this time. The first few things they let me do on my own was, Tenders- finding new jobs and properties for the company to look at. The next job was Google Analytics- finding out how many people looked at the websites and how many people follow TDP’s social media accounts. They also trained me to do a few other jobs that would help me later, Data Mining- updating client’s information, Media Sheets- updating who they send things to. There were also basic jobs such as, photocopying, mail-outs and manuals. After a bit of time went by I was able to post on the company’s twitter. I was given the job of making a new flyer that would later be sent out to clients, I was surprised that they felt like I was doing well enough to be given a project that important. I spent many hours on it and got nothing but positive feedback. It’s going to be weird not seeing these people for a while, I would really like to come back for my grade 12 Co-Op and give it my all once more. Lastly I liked how much responsibility I had. They gave me my own place to work but it was also around people so I never alone. This is definitely a place I would love at work at after I finish school.

Help us prevent youth migration, hire a coop student today!


Thursday, 01 June 2017 16:08:11 (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | Brokerage | Counselling | Economic Intelligence Unit | Lasercad | New Brunswick | Newfoundland & Labrador | Nova Scotia | Planning | Prince Edward Island | Property Tax | Turner Drake  | Valuation
# Monday, 08 May 2017


(Image via Global News)

Symptoms of an Election
In the run up to the now transpiring Nova Scotia provincial election, our governing party engaged in the time-honoured tradition of the spending announcement roadshow. A few million for a community centre here, a few million more for an overpass there, culminating finally in the double whammy of a new outpatient facility in suburban Halifax, and toll-free twinning of several sections of highway.

Unlike most spending announcements, the outpatient facility drew immediate criticism. While the highway twinning has started to attract some rightful critique, the patently foolish choice of locating a medical facility in the retail backlands of a dysfunctional industrial park was apparent to many; not the least of which being senior municipal staff who’d advised the Province of these issues months prior. Embarrassingly, the location is a miserable failure when measured against the Province’s own aging population action plan, Shift, which it had announced along with nearly $14 million in funding mere weeks before.

As an aside: of the opportunities for criticism of the outpatient location, and there are many, the purchase price of the land is not a fruitful one. Without the benefit of knowing the particular details of the deal, the $12.00/ft² paid by the Province for the raw land includes the cost to bring the site to a state of development-readiness. Land in this condition elsewhere in Bayers Lake has sold in the neighbourhood of $11.50/ft², so this is hardly the 12,000% markup insinuated by some reporters and rival politicians. (For future reference, comparing purchase price to assessed values for development land – or any real estate for that matter – can be extremely misleading. Media Types: if you’re looking for a real estate angle on a story, give me a call… I know some people.)

A Bad Prognosis if Left Untreated
So here’s the rub. Atlantic Canada, as we’ve described many times, is facing a serious demographic crunch that will constrain income tax revenue to the provinces, and property tax revenue to municipalities (in Nova Scotia, see Canso, Springhill, Hantsport, and Parrsboro for a preview). Given the scale of these trends, immigration is not likely to alleviate this difficulty. This means public investment utilises increasingly precious dollars; long gone is the time where we could rely on growth to overcome poor decisions.

Yet, public capital spending is and will remain one of the most significant factors in the trajectory of our communities. The provision and location of these facilities influences development trends for decades. A new medical facility is not just a site for convenient patient care. It is also a major employer, and consumer of both public and private services. It generates broader impacts; spinoffs that if harnessed properly can enhance the benefits of other facilities, strengthen neighbourhoods and local business, and mitigate future infrastructure costs. A newly twinned highway is not just a safety improvement for the travelling public, it is a half-billion dollars no longer available to be spent on other priorities. We’ve got to get serious, we’ve got to be scrappy, and we have to be careful to maximise the benefits our public spending generates. Opportunities of an equivalent scale from private-sector activity are few and far between.

By narrowly constraining their site selection study (I presume, as this information is also not publicly available), the government has perhaps saved money on the land for the outpatient facility, only to create far greater costs in the form of municipal servicing expenses, diminished economic spinoff, and foregone social benefits. This short-sightedness is not resigned only to our provincial overlords, municipalities large and small consistently miss opportunities to strengthen and improve neighbourhoods or commercial main streets. At best, we have a habit of placing community facilities in a location that only performs well on measures of land price and vehicular accessibility. At worst, it is directed by decades of parochial bickering and ends up in a location agreed to be equally terrible for everyone.


Nice wellness centre you have there, shame about the sidewalk.
(Image via Pictometry ©2015)

Prescription As the highway twinning issue has shown, no “overwhelming public consensus” is going to emerge on any policy or funding choice other than those promising a free lunch. It is going to take political guts to lead the way: the decisions we need to make are pound-wise at the risk of appearing penny-foolish. Better analysis can help identify the optimal site selection and communicate the wisdom of that choice. A paltry million saved in cheap land will pale in comparison to full lifecycle costs of poorly located public infrastructure. The property taxes generated by that good natured economic development project might never recoup its initial cost. And increasingly, methods are available to help quantify and communicate the broad community and economy strengthening effects that government undertakings can create. A complete approach to site selection and capital project analysis in a time where each dollar counts is the difference between spending decisions that achieve lasting public value instead of fleeting public relations.


Remember, an ounce of prevention is worth a pound of cure, and we have the skills required to evaluate your options in the context they deserve. Neil Lovitt, our Senior Manager of Planning & Economic Intelligence can be reached at 428-1811 ext. 349 (HRM), 1 (800) 567-3033 (toll free), or nlovitt@turnerdrake.com.

Monday, 08 May 2017 10:29:39 (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | Brokerage | Counselling | Economic Intelligence Unit | New Brunswick | Newfoundland & Labrador | Nova Scotia | Planning | Prince Edward Island | Property Tax | Turner Drake  | Valuation
# Wednesday, 26 April 2017

Property tax is by far the most important source of revenue for municipalities in Canada, accounting for 49.5% of revenue in 2008 with an annual average growth rate of 1.6% (1988-2008). As reliance on property tax increases, so does the complexity of administering this regressive but necessary evil. Increased computing power in the mid-1960s prompted a shift towards automation of property tax systems, beginning with simple tasks and culminating in today’s fully automated assessment, notification, and payment systems. Modern Automated Valuation Models (AVMs) allow for rapid processing of data with minimised human-bias… but (and this is a large but) real estate appraisal is a nuanced trade: reducing the role of Appraiser to AVM Technician can have significant negative repercussions.

Service New Brunswick’s ongoing cleanup of their attempt at an AVM is a prospective case study in the dangers of a “hands-off” approach to the valuation process. Massive value errors were created by a computer-driven system with insufficient checks in place to alert users to suspicious results. When reviewed by human appraisers many of the shockingly incorrect valuations were easily overturned based on traditional market comparison valuation. Autopilot replaced the flight crew and actual appraisers are left cleaning up the crash, while their political and bureaucratic colleagues deal with the rightful public outcry.

While seemingly seductive, potential time and cost savings offered by an AVM should never mask the fact that, in order to operate successfully, an AVM must integrate human expertise throughout the valuation process. At Turner Drake the “A” in our in-house AVM stands for Accelerated to reflect the role that expert opinion plays in our two-stage computer-assisted mass appraisal model. Stage One combs through real property sales to select comparable properties based on locally relevant, value-defining attributes such as size, location, and design. Stage Two adjusts and weighs a unique set of comparable sales to create a market-based value estimate for each subject property in an assessment area. Throughout each stage of the model, a professional appraiser defines the selection criteria and adjustment values for comparable properties based on market evidence and local expertise. The model does the heavy lifting but certified appraisers evaluate and refine the results.



Outliers - which no system can avoid - can wreak havoc on the results of an AVM unequipped to handle the inherently diverse nature of real estate. It is critically important to flag potential outliers for review so the model can be adjusted for future assessments. During the initial rollout of an AVM model, refinement is time consuming but absolutely necessary for creating reliable, equitable assessments in successive years. In developing our Accelerated Valuation Model, we put the time in up front so the system flags out of the ordinary results, and the professional appraiser, made aware of the potential issue, is able to quickly and easily account for them.

In a Case Study of condominiums on the Halifax Peninsula, the Turner Drake AVM out-performed PVSC assessment values by a margin of up to 45%. That is, 86% of TDP value estimates were within 5% of an actual time-adjusted sale price versus PVSC’s 41% and 98% of TDP values were within 15% of actual sale price versus PVSC’s 84% in the same pool of properties. Our combination of custom programs and a traditional direct-comparison valuation can produce a list of unique comparables with adjustments for 1,000 properties in about two seconds.

Property tax administration systems are as diverse as the municipalities they serve and every region relies to a degree on the convenience of computers and automation. However, no matter the size or complexity of a property tax system it is important to follow best practices, and learn from the success - or failure - of others. When the pursuit of speed comes at the expense of quality there is a significant risk to the accuracy of valuations and the credibility of the property tax system as a whole.

For more information on how our AVM can benefit you, call James Stephens at 902-429-1811 ext. 346 or email jstephens@turnerdrake.com

Wednesday, 26 April 2017 10:21:10 (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | Brokerage | Counselling | Economic Intelligence Unit | New Brunswick | Newfoundland & Labrador | Nova Scotia | Planning | Prince Edward Island | Property Tax | Turner Drake  | Valuation
# Thursday, 02 March 2017



If you own property in New Brunswick your 2017 assessment notice is in the mail and is likely to hit your desk later this week. There will be some surprises this year. Apartment and camp ground owners… sorry! The number you are looking at isn’t a mistake… both were re-assessed this year... Before you call the Premier’s office, grab another cup of coffee and give me a call and I’ll share what I know so far!

We’ll be compiling some data over the next few days and will have some more insights on what has changed but until then there has been some talk of reforms to the New Brunswick property tax system of late and there is one important issue that hasn’t been brought up but should be.

Equity, Uniformity, Fairness – The Missing Link

Ignoring the process part of the system (which is largely a function of resources committed to it) and the “my tax bill is too high side of it” (which is a function of municipal spending), the assessment part of the system which is governed by the New Brunswick Assessment Act generally represents the gold standard in assessment. New Brunswick has a market value system, requires that values be updated annually, and has a current base date (January 1st of the current year) so taxes are allocated based on the most current economic conditions. There is however one glaring omission and that is a provision to allow owners to challenge their assessment on the grounds their assessment is higher than other properties.

How can this be? Certainly equity and fairness is something all stakeholders would want in a system of taxation. During question period on December 13th, the current government confirmed that they want a “system of taxes that is relevant, that is fair, that is progressive…” During the discussion the word “fair” was referenced six times along with the word “equitable”. Similarly in 2012 when reforms were last made to the Act, the White Paper that was published referenced fairness 25 times, and the word equitable 12 times.

If we go back further… much further… to 1963… The New Brunswick Royal Commission on Finance and Municipal Taxation chaired by Mr. Edward Byrne (Byrne Commission) set out its vision for an equitable system of property assessment:

“The accurate assessment of property is as difficult as any tax administration problem. And it is impossible to have equitable taxation without accurate assessment. A primary aim in levying any type of tax should be to treat similarly-situated taxpayers similarly … In order to accomplish this, all property must be valued on the same basis … The only satisfactory basis is market value. If there are variations among different properties in the ratio of the assessed value to the actual market value, the taxes imposed by applying a uniform rate will be inequitable. The owner of property with an assessment ratio that is higher than the ratio for another owner will bear an unjustly heavier burden.”*

Nonetheless, despite more than 50 years of consensus that a fair and uniform property tax system is in the public interest, New Brunswick is among the few jurisdictions in North America that doesn’t give tax payers the right to seek tax relief on the grounds that their assessment is not equitable with other properties.

How is this possible? This requires some speculation. Before the Province took over the assessment process from municipalities during the mid 1960s assessments were ad-hoc. Assessment Levels (the ratio of assessed value to market value) varied by municipality from 23% in York County to 102% in St Andrews and most municipalities had at least one piece of special legislation setting municipal taxes for its major tax payers. When the modern Act came into force, legislators intended to bring consistency to the process and required that:

“all real property shall be assessed at its real and true value as of January 1 of the year for which the assessment is made.”

It can be difficult to know the exact intent, but knowing that the legislature was seeking a fair system of taxation that would ensure that assessments were uniform within and across municipal units it stands to reason they were assuming that the Assessment Services Division would be able to consistently achieve an assessment level at 100% of market value across all municipal units. At the time, the Act also included a provision for owners to appeal other assessments in the municipality providing at least a partial remedy for owners assessed at levels higher than their neighbors.

Legislators may have felt these provisions would be sufficient to ensure an equitable assessment roll, however the task of assessing tens of thousands of properties isn’t an easy one particularly when it comes to commercial properties. It requires developing models for all the different types of properties and for all of the individual neighborhoods in the Province and it isn’t always easy to return an assessment roll where all of the properties are assessed at 100% of market value. In fact, looking at statistics contained in SNB’s annual report from 2006-2014, the commercial level of assessment provincially has ranged from a low of 89% in 2008 to a high of 93% in 2010. The practical implication of this is that a property owner assessed at 99% of market value has no remedy for a reduction despite all other properties being assessed on average, at 89% to 93% of market value. Even had the owner been willing to appeal all of the other commercial assessments in the municipal unit, that option was removed when the Act was amended in 2008.

In the past, the New Brunswick Court of the Queens Bench has ruled there is no remedy within the Act or at common law for owners to have their assessments reduced on the grounds their assessment is unfair relative to other properties. Rather than hoping the Court of Appeal will provide a remedy at some distant future date, lets ask the legislature to give assessors and the Assessment and Planning Appeal Board the tools to ensure tax payers truly have a fair and equitable property tax system when they review the Act this year.

* Excerpt taken from Report of the Auditor General - 2005


Written by Andre Pouliot, Vice President of our New Brunswick operations and Senior Manager of our Property Tax Division. For more information about our counselling services, feel free to contact Andre at (902) 429-1811 or apouliot@turnerdrake.com

Thursday, 02 March 2017 09:50:50 (Atlantic Standard Time, UTC-04:00)  #    -
Atlantic Canada | New Brunswick | Property Tax | Turner Drake
# Thursday, 03 November 2016

On the 1st of this month, Bill 52, an amendment to the Halifax Regional Municipality Charter allowing HRM Council to set separate commercial tax rates in areas it designates, received its First Reading in the Nova Scotia Legislature.

The Bill (as tabled) provides that Council may:

(a) Set different commercial tax rates for commercial property located in areas of the Municipality designated by Council, based on the assessment of commercial property under the Assessment Act;

(b) Set different commercial tax rates for commercial property located in areas of the Municipality designated by Council, based on the length or proportion of frontage of a property on a street, including a private road;

(c) Set additional tiered or escalating commercial tax rates based on the factors set out in clauses (a) and (b) that are in excess of the rates set in clauses (a) and (b); and

(d) Set additional or different commercial tax rates using any combination of clauses (a) to (c).

The infusion of flexibility into the taxation regime is laudable, and while the tools could allow Council to, for example, provide assistance to owners affected by construction in the Downtown, or to reduce the tax rate in areas in the City that have been impacted by rapidly rising assessments, the potential changes allowed by the Bill won’t be the panacea for all commercial tax woes.

The potential for inequitable tax loads where “street frontage” is used, in whole or part, to calculate the tax rate is alarming (and puzzling) especially for properties located on corner lots or developed less intensively than neighbouring properties. It appears to be a way of circumventing the current ad valorem methodology for distributing the tax load. There have been many attempts worldwide to eliminate or “improve” the ad valorem (market based) method of allocating property taxes: none have yet been successful… some, such as the late Mrs. Thatcher’s infamous poll tax in the United Kingdom, resulted in riots.

There would be winners and losers for each amendment being proposed; any change to tax rates in one area, or upon one class of property, will shift the burden onto another, because there is nothing in the Bill that would reduce the overall contribution of the commercial sector to the City’s tax base. The true elixir would be a change that would make all commercial owners better off.

It’s unclear how Council will utilize their new tools, but it’s not anticipated that the Bill will result in any widespread changes to commercial taxation in the short term. We are monitoring the situation closely, and will provide updates as changes occur. Stay tuned.

Thursday, 03 November 2016 15:05:43 (Atlantic Standard Time, UTC-04:00)  #    -
Nova Scotia | Property Tax
# Wednesday, 05 October 2016

The City of St. John’s Assessment Division recently mailed out its Year 2017 Assessment Notices dated 20th September 2016. You have until 1st November 2016 to file your appeal. This is the second year of the tri-annual assessment cycle: a successful appeal will continue for the remaining two years of the cycle.

The legislated basis for your Year 2017 Assessment is your property’s market value on 1st January 2014 (the “Base Date”) having regard to its current physical condition. If you filed an appeal last year and it has been resolved, you have nothing to fear for the remainder of the re-assessment cycle (assuming your new notice reflects the reduction you secured for 2016). If you did not appeal last year, or your appeal from last year has not yet been resolved, the time to act is now.

If your property’s market value is less than its assessed value, it is over assessed and you should file an appeal on or before 1st November 2016. Market value is the price the property would command if it were sold to an “arm’s length” purchaser (i.e. to a nonrelated buyer) for cash or subject to conventional financing. It is not necessarily the price that would persuade you to part with the property but rather the price you could expect if you decided voluntarily to dispose of the real estate. The best evidence of market value is the sale prices of similar properties that were sold within six months of 1st January 2014. If your property is assessed at less than its 1st January 2014 market value, you may still be over-assessed because the Assessment Act mandates that your property has to be assessed in a uniform manner. This provision attempts to ensure that the tax load is spread across the municipality’s property inventory in an equitable manner. It also discourages the City of St. John’s Assessment Division from deliberately under-assessing property to thwart appeals. So, if for example, commercial properties are assessed on average throughout the municipality at 70% of their market value, you will have grounds for appeal if your property’s assessment exceeds this percentage. If similar properties to your own are assessed at lower unitised rates (e.g. per square foot for office, industrial and retail property; per room for hotels, apartments and seniors’ housing), that is also a sign that you may not be equitably assessed, and may be grounds for appeal.

The Bottom Line: If you did not appeal last year, or your appeal from last year has not yet been resolved, you get another kick at the can. You should appeal if your property is assessed at more than, (1) its market value on 1st January 2014, or (2) the assessment of other, comparable properties… or if you harbour any doubt that your property is overassessed. A successful appeal will continue for the remaining two years of the reassessment cycle.

Action Required: If you file an appeal, be careful not to restrict your grounds of appeal. We recommend that you use the following wording: “The assessment is excessive, unfair, not uniform with other assessments, and any other grounds that may appear.” If you prefer, we will file the appeal for you. For advice on whether to appeal, call our Newfoundland Tax Team, André Pouliot or Mark Turner at (709) 722-1811 (St. John’s) or 1-800-567-3033 (toll free), or email them at apouliot@turnerdrake.com or markturner@turnerdrake.com.

Wednesday, 05 October 2016 15:41:10 (Atlantic Daylight Time, UTC-03:00)  #    -
Newfoundland & Labrador | Property Tax
# Friday, 13 May 2016

Every year at this time, the Island welcomes the prospect of summer with an explosion of colour: yellow daffodils, orange tulips, green grass, blue skies and dancing waters. Less welcome is the annual burden heralded by flowering of the 2016 Assessment Notices. If you are a property owner, you should have received it by now. It was officially mailed on May 6th and you have 90 days in which to file an appeal or wear the consequences for the rest of the year. If your property is enrolled in our PAMSTM Property Tax Manager program, you can relax; we are already reviewing your assessment and will file an appeal if the opportunity exists to reduce your tax load. If your property is not yet PAMSTM protected, procrastinate not: you have work to do.

The legislated basis for your Year 2016 assessment is your property’s Market Value on January 1st, 2016. However, the Assessment Act also implicitly includes a “uniformity” provision hidden in the appeal process, so similar properties are required to have similar assessments. You should appeal your assessment if:

(1) Its Assessed Value > Market Value as of January 1st, 2016, or

(2) Its Assessed Value > Assessed Value of Similar Properties.

The first test is to estimate your property’s Market Value on January 1st, i.e. the price it would fetch had it been offered for sale during the last six months of 2015. Purchasers look to the future, but their expectations are usually coloured by recent history. So if, for example, you own a tourist related facility, your 2015 season will impact its value to the degree that it would influence potential purchasers for 2016 and beyond. The Market Value too is based on its anticipated selling price… not the price that would persuade you to dispose of the property.

In 2012, our Economic Intelligence Unit conducted a demographic study of Atlantic Canada for a national client. Their study utilised data from the 2001, 2006 and 2011 Statistics Canada censuses. The rate at which our regional population aged during that period is frightening; the rate at which it will age over the next ten years is terrifying. Last year, a government initiated study was released, which reviewed the changes to the economy resulting from that demographic change. The report studied Nova Scotia but its conclusions apply to all three Maritime Provinces. The report is not a happy read.

If you own a “lifestyle property,” e.g. motel, golf course, vineyard, restaurant, etc., past sales of similar properties may not be a reliable indicator of your property’s current Market Value. This type of property is usually owned by an owner operator, many of whom are now reaching retirement age. Unfortunately, the pool of prospective purchasers is shrinking rapidly as the entire population ages. Fewer purchasers translate into lower values. This is over and above any adverse impact resulting from declining tourist dollars as Americans in particular shun foreign travel.

If you own an office building in Charlottetown, you may be suffering from burdensome vacancy rates. Our most recent survey (December 2015) covered 100% of the rental stock and revealed an overall 15.69% vacancy rate… well above the sustainable economic rate and up from 10.4% from the previous year. Our survey of industrial space recorded an overall vacancy of 14.00%. If you own an office or industrial building, you should carefully consider if an appeal is warranted.

The provincial assessment authority sometimes assesses property at less than its Market Value to forestall appeals. There is an assumption by most property owners that they will not be able to successfully challenge an assessment if it is less than the property’s Market Value… even if the assessment is higher than those of similar properties. This is not the case. Buried in the appeal section of the provincial Real Property Assessment Act is the requirement that “the Minister shall demonstrate the uniformity of the assessment in relation to other assessments” (Section 28 [1]). Thus, albeit somewhat belatedly, does the Assessment Act acknowledge that similar properties should have similar assessments. Comparing commercial properties and their assessments can be a little tricky however, which is why we have built an Assessment Database for the entire province that allows us to conduct peer group comparisons… and quickly determine whether your property is uniformly assessed.

The Bottom Line: Fortune favours the brave.

Action Required: Call our PEI Tax Team members Mark Turner and André Pouliot at 902-368-1811 (Charlottetown) or toll free at 1-800-567-3033. Alternatively, you can email them at markturner@turnerdrake.com or apouliot@turnerdrake.com. Using our proprietary software CompuVal®, our PEI Assessment and Transactional Databases, and basic property information provided by yourself, they can usually determine in a five minute telephone conversation whether you should appeal. There is no charge for this service, nor will big men come to call.

Friday, 13 May 2016 15:41:46 (Atlantic Daylight Time, UTC-03:00)  #    -
Prince Edward Island | Property Tax
# Thursday, 24 March 2016

You have just seven days left to take action to reduce your property tax load this year. The 2016 Request for Review (Appeal) period runs out at midnight on March 31st. If your property is protected by our PAMS® Property Tax Manager program, rest assured, matters are well in hand; we have already reviewed your assessment and have taken action if the opportunity exists to reduce your realty assessment. If your property is not enrolled in PAMS®, roll up your sleeves and take some time to complete your review now!

If you own industrial, commercial, or investment (ICI) property, real estate taxes are undoubtedly your largest occupancy expense and account for approximately 40% to 50% of your total operating costs. If you haven’t renovated or altered your property, odds are your assessment has not increased significantly this year. Although this may be a pleasant surprise, the reality is simply that last year’s weaker real estate market did not provide the assessment office with a statistical basis for a larger increase. In fact, even when market values are increasing, property specific issues may warrant a reduction in your assessment. So, if you are aware of any property specific issues that negatively affect your property’s value, this is an excellent time to bring them to the attention of the assessor in an effort to have your assessment reduced!

The basis for your 2016 realty assessment, as mandated by the provincial Assessment Act, is the Real & True Value of your property on 1st January 2016 (the “base date”). When you review your assessment, make sure you apply the correct test. The Courts have held that Real & True Value equals market value but the devil is in the details. Market value is a reasoned estimate of a property’s value based upon a given set of assumptions. It can vary greatly depending upon the interest being valued and can only be consistently applied if the same assumptions are applied to all properties. These assumptions are not laid out in the Act. On the contrary, they represent a culmination of directives given by the Courts along with policies set by assessment authorities. The interest to be valued is the fee simple, not the leased fee or leasehold interest. Market value is not the value to its current owner, but to any owner. Some properties are so unique or specialised that there is effectively no market requiring a unique solution to the valuation problem.

If your primary area of expertise is not property tax, there are some basic tests you can apply to determine if you should request a review. Compare your assessment to similar properties in your municipality. If your assessment per unit (per ft.² for offices, warehouses, dealerships; per room for hotels and motels; per unit for apartments) exceeds those of similar properties, the assumptions used to assess your property may be different. You should also look at the circumstances that existed on the base date of assessment (1st January 2016) to determine if there are property specific issues that would afford you the opportunity to have your tax load reduced. Factors such as declining occupancy or utilisation, declining demand for your products, and environmental contamination must all be considered in striking your assessment.

The Bottom Line: It’s decision time. If you are in any doubt as to whether you are over-assessed, you should file a Request for Review.

Action Required: File a Request for a Review (Appeal) before midnight on March 31st or forever hold your peace. If you would like some (free) advice, please do not hesitate to call our New Brunswick Tax Team, André Pouliot or Chris Jobe, toll free at 1-800-567-3033 (634-1811 in Saint John).

Thursday, 24 March 2016 14:56:28 (Atlantic Standard Time, UTC-04:00)  #    -
New Brunswick | Property Tax
# Thursday, 03 March 2016

It’s that time of year when many Canadians are suffering from dry mouth, a stiff back, and a feeling of bewilderment and disbelief – otherwise known as “tax pain.” Residents and property owners in New Brunswick will be the next set of Canadians to experience these symptoms as their annual property assessment notice and tax bill was sent on March 1st.

The fabled “tax pain” experienced by property owners is all too real, but following these tips will help ease the pain of determining whether or not your property taxes are too high.

What is my Assessment Notice/Tax Bill?

The tax bill is composed of two elements: an assessed value and a tax rate. Service New Brunswick (SNB) calculates the assessed value based on market value: an estimate of what the property would sell for on the open market. The second element, the tax rate, is a combination of rates set by the provincial government and your local municipality. By multiplying these two elements together, you will get your annual property tax bill.

If you believe your property is overvalued when you look at your assessment notice and tax bill (and you experience any of the symptoms listed above), you have until March 31st to “seek treatment” and appeal to hopefully reduce your taxes.

What am I appealing? Is my property overvalued?

In New Brunswick, the first level of appeal is known as a Request for Review (RFR). When you file an RFR, you are challenging the assessed value of your property.

Determining if you are over-assessed can be a little tricky. It requires access to data on your property and on comparable properties. I have conducted property tax appeals all across the country and each province has the resources and technology available to assist in the collection of property information, with some provinces being more advanced than others. For example, several provinces (i.e. Nova Scotia, Ontario, British Columbia) offer online services that enable property owners to access their specific assessment calculations by inputting the associated property account and pin numbers located on their assessment notice/tax bill. Along with the assessment calculations, these provinces offer additional information including assessment history, sale prices, and mapping imagery all within the convenience of one website.

Unfortunately, New Brunswick is not yet offering a “one-stop-shop” service similar to other provinces to obtain assessment calculations and other information. This makes it difficult for property owners to determine if they are over-assessed because they do not know how their specific property value is calculated. Property owners can request their assessment calculations from SNB; however, these can be difficult to obtain during the appeal period as assessors are dealing with a large volume of paper work and inquiries.

Fortunately, there is no cost to appeal. So if you believe you are over-assessed and have not been able to obtain your assessment calculations, file an appeal before the end of the appeal period by completing the bottom portion of your assessment/tax notice and submitting it to SNB.

What resources are available to help determine if my New Brunswick property is overvalued?

Below are a few websites that are useful for gathering property information in New Brunswick:

1. Propertize.ca - Arguably the best resource when determining whether or not you are assessed fairly in New Brunswick. This website has no affiliation to SNB and was created by a local resident of New Brunswick who grew frustrated as historical assessment data was not being made readily available to the public. The website enables the user to search their assessment history as well as the assessment history and sales prices of neighbouring and comparable properties.

2. GeoNB Map Viewer - Operated by SNB, this website works by inputting a Parcel Identifier (PID) into the website search application enabling the property owner access to Geographic information. This information can assist in determining parcel shape, building outline, lot size, and other value-added applications. It is possible to use GeoNB without searching by PID, but it can be difficult to navigate and find the appropriate parcel. As well, the aerial imagery in some areas of the province are out-of-date or not available, so be careful when searching for comparable properties as some buildings may no longer exist or may have been renovated. Overall, this is a helpful website in gathering information to determine if your property is overvalued as parcels throughout the province are identified.

3. Property Online - Operated by SNB, this website has three search features: by Property Account Number (PAN), by PID and by location. The free version of this website does not offer much else in terms of information like the other sites above. However, the subscription-based website provides many more features including mortgage information, deeds, and site plans.

How can I use this information to determine if I am over-assessed?

By combining the information obtained from these resources you can get a sense of where your property falls in relation to neighbouring and comparable properties based on such things as:
• Percentage increase of assessment
• Assessment per ft2 of building
• Assessment per ft2 of lot size

Keep in mind that arguing your property is unfairly assessed in relation to your neighbours is not a sure-fire bet for a reduction, as there is no statutory requirement for assessments in New Brunswick to be uniform. Determining that your property might be over-assessed is the first step, but the assessor typically requires a proper position using one of the three approaches to value (Income, Cost, and Direct Comparison). In order to achieve a reduction, the assessor requires a proper inspection of the property, market data, and a list of facts and issues about the property that were not previously accounted for.



Written by Chris Jobe, Manager of our Property Tax Division. If you have any questions about your property tax assessment, feel free to contact Chris at (506) 634-1811 or CJobe@turnerdrake.com.

Thursday, 03 March 2016 10:30:38 (Atlantic Standard Time, UTC-04:00)  #    -
New Brunswick | Property Tax
# Wednesday, 02 March 2016

If you own property in New Brunswick, your 2016 assessment notice and tax bill is in the mail and will land on your desk within the next couple of days. It is dated the 1st of March, and unless your property is enrolled in our PAMS® Property Tax Manager program, you have work to do! You have just 30 days from the date your notice was mailed to review your assessment and decide if you will take action to reduce your tax burden this year.

New Brunswick tax payers are being asked to make additional sacrifices this year. The HST rate is increasing from 13% to 15%, reaching deep into consumers’ pockets and leaving businesses that rely on consumer spending with a smaller pie to compete for. The corporate income tax rate is on the rise and will increase from 12% to 14% (an increase of 16.7%) this year. The reward for these sacrifices is a budget deficit of $347 million this coming year, a provincial debt that will rise to $13.4 billion by the end of the fiscal year, and a projection of a balanced budget… in 2021! We’ve seen this movie before.

Do not despair! Opportunity knocks! Although it’s the tax man who reviews your self-assessment of your consumption and income taxes, the New Brunswick Assessment Act gives you the authority to review and provide your input on the tax man’s estimate of your property tax assessment.

The basis for your 2016 Realty Assessment, as mandated by the provincial Assessment Act, is the Real & True Value (a.k.a. market value) of your property on the 1st of January 2016 (the “base date”). Market value and “value to the owner” are not the same thing. Do not fall into the trap of asking yourself “at what price would I be willing to sell?” or in estimating your property’s value as an input to the going concern value of your business. Ask instead what others would be willing to pay if the property was offered for sale. Ignore value attributable to leases if your skill as an entrepreneur has allowed you to outperform the market in terms of rental and or vacancy rates and ignore the value of any speculative or hypothetical uses of the property.

Market value then is the first test: if your Realty Assessment exceeds your property’s market value on the 1st of January 2016, it is over-assessed and you should file an appeal. If not, try applying our unofficial uniformity test. While the New Brunswick Assessment Act does not contain a uniformity provision (i.e. require that assessments bear a fair relationship to one another), there are circumstances where assessors can be convinced that such should be the case. Multiply your property’s market value by the general level of assessment prevailing in your municipality. In our experience, these levels are usually in the range of 75% - 90%. If you’re still not sure, try comparing your assessment on a unitised basis to similar properties. If the resultant figure is less than your assessment or you are assessed at a higher rate than other properties you may be able to secure a tax reduction this year.

The Bottom Line: The Assessment Act empowers you to have a say in what your 2016 property taxes will be. Speak now or forever hold your peace!

Action Required: Review your 2016 assessment and file an appeal if there is an opportunity to reduce your assessment. Not sure? Contact our New Brunswick tax team, André Pouliot or Chris Jobe at (506) 634-1811 (Saint John) or 1-800-567-3033 (elsewhere).

Wednesday, 02 March 2016 11:08:32 (Atlantic Standard Time, UTC-04:00)  #    -
New Brunswick | Property Tax
# Friday, 19 February 2016

The Property Valuation Services Corporation (PVSC), formerly the provincial assessment department, is going boldly where it has gone before… demanding that property owners hoist themselves with their own petard. It is doubly ironic that property owners are required to pay for the cost of PVSC by way of a levy on their tax bill… and then are expected to do much of its work for it by downloading, printing and then completing its Income and Expense Questionnaires. While disregarding the request is poor strategy, completing it has its dangers too. PVSC will use the information it gleans from the Questionnaires to assess property for the 2017 taxation year. If your property is currently under-assessed, it is tempting to ignore the request in the hope that this happy circumstance will continue. Unfortunately, failing to file the Questionnaire can send a clear signal to PVSC that you think you are undervalued. Far from keeping you out of sight, it has the opposite effect. And it gets worse. In the absence of a completed Questionnaire, PVSC will use its own data, unimpeded by your property’s factual income and expenses, to calculate its assessment… and you will be left without recourse, as the penalty for failure to comply with the request will be loss of 2017 appeal rights. We recommend therefore that you complete and file the Questionnaire, but with your audience in mind. Comfortably cushioned from the vicissitudes of tenant selection, rental negotiation and collection, and things that burst in the night, PVSC will happily accept at face value your rental income, unless it appears to be too low… and gaily disregard expenses they consider to be above the norm. Do not expect them to empathise with your sweat and tears, services you undertake yourself to minimise costs, unless you monetise them. Nor should you expect increased maintenance costs - inherent, for example, in a single bedroom apartment building with a transient population - to strike an echoing chord. Expect PVSC to discount these as “outliers,” or your management and administration costs as “excessive,” unless you explain the nuances of revolving doors and are prepared to supply provenance. Tenant inducements and management efforts to maintain occupancy are concepts unfamiliar to the cozy world of PVSC. You will have to quantify them. If your building contains office, retail or industrial tenancies, be careful how you describe your leases; the subtleties of “net” versus “gross” lease terms may not be fully understood by PVSC.

Further complicating this year’s round of requests is the fact that it is being made almost a full fiscal quarter earlier than is customary. For 2016, and for the recent past, assessments reflect a property’s market value as of a date two years in the past (called the base date). In an effort to produce assessments that are more current, PVSC is shifting the base date to reflect market values one year in the past. This means that assessments provided to property owners in January 2017 will reflect a property’s market value as of January 1, 2016. With this shift comes a requirement to analyse income and expense information earlier in the year…so early, in fact, that owners with December year-ends may not yet have 2015 statements completed. Any owner in that predicament should provide the most recently-available information, because the PVSC has no legislative authority to extend the 30-day deadline.

The Bottom Line: Download the appropriate Questionnaire from the PVSC’s website at www.pvsc.ca. Complete it with caution; your responses may be misinterpreted. Return it to PVSC by 17th March.

Action Required: If your property is enrolled in our PAMS™ Property Tax Manager program, let us review your completed Questionnaire before you return it to PVSC. Our Lead Consultant assigned to protect your property will be pleased to provide you with assistance in completing the Questionnaire. If you are not yet a PAMS™ client, and would like assistance in completing the Questionnaire, please call our Nova Scotia Tax Team, Giselle Kakamousias, Mark Turner, or Greg Kerry at 1-800-567-3033 (902-429-1811 in HRM).

Friday, 19 February 2016 12:27:08 (Atlantic Standard Time, UTC-04:00)  #    -
Nova Scotia | Property Tax
# Tuesday, 02 February 2016

If you own a residential property in Nova Scotia you may have noticed recently when you received your assessment notice that there are two values assigned to your assessment; the market value and the capped value.  If you've lived in your home for a few years now, you will have also noticed that your capped value is lower than your market value. You might be thinking that you are benefiting from the capped value, but in reality for a lot of people those savings are what we call "phantom savings".  The Capped Assessment Program (CAP) was introduced in 1995 in order to protect homeowners from rapid and sudden increases in assessment values. The CAP was implemented in response to concerns from families and seniors worried about not being able to afford higher property tax bills as a result of higher assessment values. It sounds like a great idea, but there are some major flaws in the program.

One the biggest issues with the CAP is that it doesn't discriminate between homeowners with high levels of wealth or lower levels of income. The property owner who hasn't seen much of a rise in the market value of his or her property will end up having to pay higher tax rates in the long run in order to subsidise the properties which have increased significantly in value but are only paying taxes on a much lower capped value. The problem will only get worse over time.

The longer the program remains in place, the more distorted the assessment base becomes. Assisting those who can least afford to pay their property taxes would be better served with more targeted efforts such as credits and deferral programs. Allowing seniors to defer a portion of their property taxes when their assessment values increase will allow them to stay in their homes longer and once their homes are sold the outstanding taxes can then be repaid. Some people believe that it's important to continue using the capping program because taxpayers benefit from lower property taxes. This is a gross misconception however. Every year municipalities need to collect a certain amount of revenue in order to fund their budgets. Property tax collection is the main source of revenue for municipalities and whether everyone has a high assessment value or a low assessment value, the tax rate needs to be adjusted accordingly in order to generate the necessary amount of revenue. If we lower one of the factors, the other must go up and vice versa.

Property Taxes = Assessed Value (or Capped Value) x Municipal Tax Rate


The result is that for many properties, a reduction in the assessed value via the cap simply results in a higher tax rate and a shift in the tax burden to properties which are ineligible for the cap. The CAP is not producing the outcomes that it was designed to do, and I'll provide a simplified example to illustrate one of the problems with the program.

In our example, the municipality consists of many different neighbourhoods with all different types of properties, but we’re going to narrow our focus and make the assumption that there are only two types of houses that will fall under the CAP criteria and all other properties are assessed at their market value. The two types of capped homes are each in a different neighbourhood; we’ll call them Home A and Home B.
  The people that live in the neighbourhood with home type A are mostly seniors and families that have lived in the area for a long time. These are older homes that haven't been renovated in years. The people that live in the neighbourhood with home type B are younger working age people who all built brand new homes in a new up-and-coming neighbourhood back in 2007. As of 2007, both home types had a market value of $200,000.   

The people that live in Home A have seen the market value of their property rise at an annual rate of 3% which is slightly above the capped rate while the people that live in Home B have seen an annual increase of 8% in the market value of their property which is much higher than the capped rate of growth. While homeowners in both house may be thinking that they are benefitting from the CAP, in reality the people living in House A (i.e. seniors) are having to pay property taxes at a higher tax rate in order to subsidise the lower capped values of the working age people in House B.

The table below shows that the taxable value of both house types is $237,000 and produces tax revenues of $2,867.70 per house on a rate of 1.21%. If we were to remove the CAP, the tax rate could actually be lowered to 0.87% and the people living in Home A would actually pay less property taxes while people in Home B would pay more.

While there are people out there who are benefitting from the CAP, the program has serious flaws and is creating distortions in the assessment base. For more information on the CAP, I encourage you to check out the Final Report on Municipal Property Taxation by the Union of Nova Scotia Municipalities which can be found on their website. 


Written by Mathieu Chaput, Consultant in our Property Tax Division. If you have any questions about your property tax assessment, feel free to contact Mathieu at (902) 429-1811 or MChaput@turnerdrake.com.  
Tuesday, 02 February 2016 16:45:09 (Atlantic Standard Time, UTC-04:00)  #    -
Nova Scotia | Property Tax
# Monday, 01 February 2016

There are just 7 days left in which to appeal your 2016 property tax assessment ... or forever hold your peace. The Property Valuation Services Corporation (PVSC), the municipally controlled body responsible for tax assessment throughout the province, mailed out your Assessment Notice on January 8th. The appeal period ends at midnight on February 8th. If you have enrolled your property in our PAMS™ Property Tax Manager program, PVSC have already sent us an electronic copy of your Assessment Notice enabling us to review your assessment and file an appeal if the opportunity exists to reduce your tax burden. If you do not have PAMS™ protection, and have not yet asked us to review your Assessment Notice, you should do so now. The 2016 increase experienced by many property types is lower than that of years past, however the decision to appeal/not appeal should never be based solely on a single years change in value. Most property types are assessed 25% to 30% higher than five years ago. You should be vigilant in your efforts to manage your tax load and take every opportunity to minimise your assessment.

The basis for your Year 2016 assessed value is your property’s Market Value on 1st January 2014 (the “base date”) but having regard to its physical state on 1st December 2015 (the “state date”). In practice these criteria are oft stated by PVSC in defence of its assessed values, but in our experience property is often assessed at less than its market value perhaps because supporting sales data is not available, or to discourage appeals. (There may be legitimate reasons too for assessing a property below its base date sales price; for example, if the property had lost a major tenant by the state date). Of course it would not matter if all property were under-assessed by the same percentage amount, but such is not the case. Fortunately the Assessment Act does provide protection against such shenanigans by including a requirement that all properties in the municipality be assessed in a uniform manner. Case law has determined that uniformity is achieved by calculating the “General Level of Assessment” within the municipality, by property category (commercial or residential). The General Level of Assessment is the ratio of the 2016 assessment to the property’s 1st January 2014 Market Value. This can only be achieved by totalling all of the 2016 assessments, for those properties whose sales occurred between 1 st July 2013 and 30th June 2014, with the aggregate of their sale prices. Sales data is now publicly available; however, its format and accessibility is fairly limited. PVSC usually insist that their General Level of Assessment is 95% to 100%. This is rubbish: base your calculations on 80% and file an appeal if the assessed value of your commercial, industrial or investment property > 80% x Market Value (@ 1st January 2014). Exclude the HST from the market value. (We have built an information technology platform Compuval™, and have populated it with sales, assessment and rental information. It allows us to calculate Market Values and gives us a broad indication of the true General Level of Assessment. The quantity of sales data varies by municipality since we gather it from multiple sources, so we have built capability into CompuVal® to run a variety of analyses comparing your property with others in its peer group).


The Bottom Line: If your Realty Assessment > [(Market Value as of 1st January 2014) x (General Level of Assessment)], you are over-assessed. The real General Level of Assessment is probably between 0.8 and 0.9 in most municipalities.


Action Required: If in doubt, appeal ... or contact our Nova Scotia Tax Team, Mark Turner, Giselle Kakamousias or Greg Kerry at 1-800-567-3033 (429-1811 in HRM).

Monday, 01 February 2016 16:40:28 (Atlantic Standard Time, UTC-04:00)  #    -
Nova Scotia | Property Tax
# Monday, 11 January 2016
If you own property in Nova Scotia, you have probably now received your annual Assessment Notice from the municipally-owned and controlled assessment authority, the Property Valuation Services Corporation (PVSC): it was mailed on Friday, 8th January. Resist the urge to light it on fire, and review it carefully… or risk being unpleasantly surprised (and without recourse!) when your tax bill arrives later this year.

The 2016 appeal period was a scant few hours old on Friday when the PVSC began trumpeting the fact that its average 2016 property assessment increase is only about half of 2015’s. Don’t be lulled into a false sense of security by an assessment that has only increased marginally, remained unchanged, or even declined - particularly in secondary centres and rural locations. Leaving the assessment unchanged is a strategy routinely employed by assessing authorities to discourage appeals. The PVSC is undoubtedly hoping that Nova Scotian taxpayers have short memories, because in spite of a more moderate 2016 rise, assessments have increased by between 20 and 25% over the past five years … and by 30 to 35% in Halifax (where over 50% of Nova Scotia’s assessment base is situated).

And, the comparatively temperate rate of 2016 increase reported by the PVSC (which, of course, is only an average) will be of hollow comfort to property owners who have experienced unforeseen, double-digit increases in value. Early indications are that apartments, retail property, and income-producing industrials have been particularly hard hit for 2016.

The basis for your 2016 Realty Assessment, as mandated by the provincial Assessment Act, is the market value of your property on 1st January 2014 (the “base date”), having regard to its physical state on 1st December 2015 (the “state date”) and the assessments of the other commercial properties in the municipality (the “General Level of Assessment”). Market value then is the first test: if your realty assessment exceeds your property’s market value on 1st January 2014, it is over-assessed and you should file an appeal.

The second test to apply is the General Level of Assessment (“GLA”), calculated by dividing the sum of the 2016 assessments of those properties that sold between 1st July 2013 and 30th June 2014, by the aggregate of their sale prices. PVSC has, on occasion, (and only when prodded!) condescended to divulge their General Level of Assessment. On the occasions where we have formally reviewed PVSC’s calculations, they’ve often proven to be nonsense. It would be reckless in our view, to place any reliance on PVSC’s General Level of Assessment ... which it usually insists is 95% to 100%. A more realistic figure is 80% to 90%. So if your investment, commercial or industrial property’s assessment is greater than 80% of its base date market value, file an appeal.

The Bottom Line:
You may have to pay taxes ... but you don’t have to leave a tip.

Action Required:
If you are in any doubt that your property is over-assessed, you should file an appeal on or before 8th February 2016. You will not get another opportunity this year. If you wish, we can file the appeal for you. If you would like to discuss your property assessment with us before you file an appeal, call our Nova Scotia Tax Team, Giselle Kakamousias, Mark Turner, or Greg Kerry at 1-800-567-3033 (429-1811 in HRM).

Monday, 11 January 2016 16:00:48 (Atlantic Standard Time, UTC-04:00)  #    -
Nova Scotia | Property Tax
# Monday, 21 December 2015

You have just 10 days left to reduce your property tax burden for 2016.  The appeal period expires at midnight 31st December.  A successful appeal now is a gift that keeps on giving . . . since this is the first year of the tri-annual re-assessment cycle, the reduction in your assessment will continue through three full years.

 

Commercial property assessments increased by an average of 21.4% for next year in St. John’s.  This would not matter if municipalities exercised the same fiscal restraint as the private sector and held the line on spending.  They would then be able to drop the tax rate by a commensurate amount.  Unfortunately this does not happen:  the temptation is just too great.  Initially they tend to reduce the tax rate somewhat but then it rapidly regresses to its pre-assessment level.  Our research clearly shows that municipalities quickly expand their spending to take advantage of their “increased fiscal capacity”.  For most commercial properties, realty taxes are second in line only to debt service as a percentage of the rent.  Irrespective of whether you pay the taxes directly or recharge them to your tenants, property taxes have a direct impact on your bottom line since tenants will ultimately seek rent relief if their gross rent, including taxes, falls out of line with competing properties.  Be proactive, property taxes should be managed like any other expense.  Effective property tax management requires a solid understanding of the assessment process.

 

The basis for your Year 2016 assessed value, is your property’s Market Value on 1st January 2014 (the “base date”).  In practice the market value requirement is often cited by the City of St. John’s Assessment Division and other assessment authorities in defence of their assessed values, but in our experience property is often assessed at less than Market Value to discourage appeals.  Of course it would not matter if all property were under-assessed by the same percentage amount since the tax load would still be distributed equitably:  but such is not the case.  Fortunately the Assessment Act does provide protection against such shenanigans by including a requirement that all properties in each municipality be assessed in a uniform manner ... so like properties should carry similar assessments.  In practice it is not quite this simple:  you have to compare the sum of all commercial assessments in the municipality with their aggregate market value ... a herculean task unless you have access to the City of St. John’s Assessment Division database.  Since they are unlikely to be that generous we have compiled our own database to assist you.  We can also run a variety of analyses comparing your property’s assessment with others in its peer group.

 

The Bottom Line:  You should appeal if your property is assessed at more than, (1) its Market Value on 1st January 2014, or (2) the assessment of other, comparable properties ... or if you harbour any doubt that your property is over-assessed.

 

Action Required:  None, if your property is enrolled in our PAMS® Property Tax Manager program.  If it is not and you file an appeal, be careful not to restrict your grounds of appeal.  We recommend that you use the following wording: “The assessment is excessive, unfair, not uniform with other assessments, and any other grounds that may appear.  Praise the Lord and pass the ammunition.”  If you prefer we will file the appeal for you.  If you would like advice on whether to appeal, call our Newfoundland Tax Team, André Pouliot or Mark Turner at (709) 722-1811 (St. John’s) or 1-800-567-3033 (toll free) and pick their brains.

Monday, 21 December 2015 10:20:52 (Atlantic Standard Time, UTC-04:00)  #    -
Newfoundland & Labrador | Property Tax
# Wednesday, 02 December 2015

 

The City of St. John’s Assessment Division recently mailed out its Year 2016 Assessment Notices dated 1st December 2015.  You have until 31st December 2015 to file your appeal.  This is the first year of the tri-annual assessment cycle, so a successful appeal now will continue to provide you with tax savings for a full three years.  (If your property is enrolled in our PAMS® Property Tax Manager program, you can relax:  our Newfoundland tax team is already reviewing your assessment and will file an appeal if the opportunity exists to reduce your tax load).

 

The legislated basis for your Year 2016 Assessment is your property’s market value on 1st January 2014 (the “Base Date”) having regard to its current physical condition.  This then is the first test you should apply.  If your property’s market value is less than its assessed value, it is over assessed and you should file an appeal on or before 31st December 2015.  Market value is the price the property would command if it were sold to an “arm’s length” purchaser (i.e. to a non-related buyer) for cash or subject to conventional financing.  It is not necessarily the price that would persuade you to part with the property but rather the price you could expect if you decided voluntarily to dispose of the real estate.  The best evidence of market value is the sale prices of similar properties that were sold within six months of 1st January 2014.  If your property is assessed at less than its 1st January 2014 market value, you may still be over-assessed because the Assessment Act mandates that your property has to be assessed in a uniform manner.  This provision attempts to ensure that the tax load is spread across the municipality’s property inventory in an equitable manner.  It also discourages the City of St. John’s Assessment Division from deliberately under-assessing property to thwart appeals.  So, if for example, commercial properties are assessed on average throughout the municipality at 70% of their market value, you will have grounds for appeal if your property’s assessment exceeds this percentage.

 

The Bottom Line:  You should appeal if your property is assessed at more than, (1) its market value on 1st January 2014, or (2) the assessment of other, comparable properties ... or if you harbour any doubt that your property is over-assessed.

 

Action Required:  None if your property is enrolled in our PAMS® Property Tax Manager program.  If it is not and you file an appeal, be careful not to restrict your grounds of appeal.  We recommend that you use the following wording: “The assessment is excessive, unfair, not uniform with other assessments, and any other grounds that may appear.”  If you prefer we will file the appeal for you.  If you would like advice on whether to appeal, call our Newfoundland Tax Team, André Pouliot or Mark Turner at (709) 722-1811 (St. John’s) or 1-800-567-3033 (toll free).  If you prefer you can email them at apouliot@turnerdrake.com or markturner@turnerdrake.com.

 

 

Wednesday, 02 December 2015 15:42:09 (Atlantic Standard Time, UTC-04:00)  #    -
Newfoundland & Labrador | Property Tax
# Friday, 30 October 2015

On 14th October the Property Valuation Services Corporation (PVSC) published its proposed Year 2016 assessments for Nova Scotia (with the exception of apartments).  If your property is enrolled in our PAMS® Property Tax Manager program we are reviewing the assessment and will do our best to engage PVSC in negotiations to mitigate the increase.  Unfortunately PVSC’s customary tardiness may limit this opportunity:  the official Assessment Roll will be finalised on 1st December.  (If your property is not yet PAMS® protected you can check what PVSC has in store by accessing their web site www.pvsc.ca.)

The practice of publishing an Assessment Pre-roll began in 2000 as a well-intentioned initiative by the then Minister of Municipal Affairs to bring some stability to municipal budgets.  It followed a meeting between the Minister, Deputy Minister, our company president and senior members of our Property Tax Division.  At that time the Department of Municipal Affairs was responsible for calculating assessed values and the Minister reasoned that publishing a Pre-roll would give property owners the opportunity to informally challenge incorrect assessments, which could then be rectified before the official roll (on which municipal budgets were based) was published in January.  The “Pre-roll” was to be published in June, six months prior to the publication of the official Assessment Roll.  It was an idea of such startling common sense that we thought it unlikely to prevail.  But it did!  True to her word, the Minister implemented a policy of publishing the Pre-roll mid-year to provide ample time for negotiations.  The policy survived subsequent Ministers until the job of determining assessments was passed to PVSC, a “not for profit” corporation (paid for by property owners) created for that very purpose in April 2007 … but sadly no longer answerable to the Minister.  Despite the fact that PVSC inherited the Minister’s assessment staff the “Pre-roll” was an early casualty.  At first “transitional” computer cockups bore the brunt of the blame but as the years rolled by excuses were no longer deemed necessary as PVSC struggled to issue its Pre-roll at the eleventh hour.  Today we raise our eyes to the heavens and offer silent thanks if and when the Pre-roll materialises … or as is the case this year, a partial Pre-roll.  Still half a loaf is better than none at all even if it comes at a cost to taxpayers of $17 million annually.  (To be fair PVSC is the only assessment authority in Atlantic Canada that publishes a Pre-roll).

So, if your property is not yet in the PAMS® fold, how do you determine whether your commercial property is overassessed?  The basis for your 2016 Realty Assessment, as mandated by the provincial Assessment Act, is the market value of your property on 1st January 2014 (the “base date”), having regard to its physical state on 1st December 2015 (the “state date”) and the assessments of other commercial properties in the municipality (the “General Level of Assessment”).  Market value then is the first test:  if your realty assessment exceeds your property’s market value on 1st January 2014, it is over-assessed and you should so remonstrate with the assessor (or ask us to do it for you). 

The second test to apply is the General Level of Assessment (“GLA”), calculated by dividing the sum of the 2016 assessments of those properties that sold between 1st July 2013 and 30th June 2014, by the aggregate of their sale prices.  When PVSC divulge their General Level of Assessment they invariably claim it to be between 97% to 100%. Discerning readers will readily realise that 100% can be achieved if half the properties in the municipality are over-assessed by 50%, so long as the other half are under-assessed by 50% … so a property may be assessed at double its twin and still meet this test!  No matter, on the one occasion in which we were afforded the opportunity to review PVSC’s calculations, they proved to be a nonsense:  a point on which the court concurred.  A more realistic GLA for commercial property is 80% to 90%.

The Bottom Line:  If you do not challenge your assessment now you will have to wait until the Appeal Period in January 2016.

Action Required:  If you are in any doubt as to whether your property is over-assessed contact a member of our Nova Scotia tax team, Giselle Kakamousias, Greg Kerry or Mark Turner at 1-800-567-3033 (902-429-1811 in HRM).  They may not be able to help; but by golly, they are nice people.

Friday, 30 October 2015 13:58:13 (Atlantic Standard Time, UTC-04:00)  #    -
Property Tax | Nova Scotia
# Monday, 26 October 2015

You have just 9 days left to reduce your property tax burden for 2016.  The appeal period expires at midnight 4th November.  A successful appeal now is a gift that keeps on giving . . . since this is the first year of the tri-annual re-assessment cycle, the reduction in your assessment will continue through three full years.

If you own commercial, industrial or investment property, real estate taxes are undoubtedly your single biggest occupancy expense.  In just over a 20 year period most property owners will pay taxes equivalent to the entire value of their property.  Irrespective of whether you pay the taxes directly or recharge them to your tenants, property taxes have a direct impact on your bottom line since tenants will ultimately seek rent relief if their gross rent, including taxes, falls out of line with competing properties.  Be proactive.  Property taxes should be managed like any other expense and effective property tax management requires a solid understanding of the assessment process.

The basis for your Year 2016 assessed value, is your property’s Market Value on 1st January 2014 (the “base date”) but having regard to its physical state on 1st December 2015 (the “state date”).  In practice these criteria are often cited by the Municipal Assessment Agency and other assessment authorities in defence of their assessed values, but in our experience property is often assessed at less than Market Value to discourage appeals.  Of course it would not matter if all property were under-assessed by the same percentage amount since the tax load would still be distributed equitably:  but such is not the case.  Fortunately the Assessment Act does provide protection against such shenanigans by including a requirement that all properties in each municipality be assessed in a uniform manner ... so like properties should carry similar assessments.  In practice it is not quite this simple:  you have to compare the sum of all commercial assessments in the municipality with their aggregate market value ... a herculean task unless you have access to the Municipal Assessment Agency’s database.  Since they are unlikely to be that generous we have compiled our own database to assist you.  We can also run a variety of analyses comparing your property’s assessment with others in its peer group.

If you own a property, the design or layout of which, is constructed of special materials or in a manner which restricts its use, your real estate will have been designated as a “special purpose property”.  The 2016 assessment notices for this type of property were not mailed on 5th November 2015; the Municipal Assessment Agency is once again waiting for the Legislature to define “special purpose property”.  The latter’s previous attempt was struck down by the courts as being too vague, and their subsequent decision to instead identify them by address was rejected as being arbitrary.  Since the exercise is akin to the parable of the blind man and the elephant, an early resolution may be some time in coming.  However because the Assessment of a Special Purpose Property is based on its Reproduction Cost (less physical depreciation) rather than Market Value the charade lacks levity to property owners so blessed. 

The Bottom Line:  You should appeal if your property is assessed at more than, (1) its Market Value on 1st January 2014, or (2) the assessment of other, comparable properties ... or if you harbour any doubt that your property is over-assessed.

Action Required:  None, if your property is enrolled in our PAMS® Property Tax Manager program.  If it is not and you file an appeal, be careful not to restrict your grounds of appeal.  We recommend that you use the following wording: “The assessment is excessive, unfair, not uniform with other assessments, and any other grounds that may appear.  Praise the Lord and pass the ammunition.”  If you prefer we will file the appeal for you.  If you would like advice on whether to appeal, call our Newfoundland Tax Team, André Pouliot or Mark Turner at (709) 722-1811 (St. John’s) or 1-800-567-3033 (toll free) and pick their brains.

Monday, 26 October 2015 14:34:51 (Atlantic Standard Time, UTC-04:00)  #    -
Newfoundland & Labrador | Property Tax
# Wednesday, 07 October 2015

The Municipal Assessment Agency recently mailed out its Year 2016 Assessment Notices dated 5th October for the entire province with the exception of the City of St. John’s.  You have until 4th November 2015 to file your appeal.  (The City of St. John’s will mail out its 2016 Assessment Notices on 1st January 2016 … no doubt hoping that you will be too full of Christmas turkey to notice).  This is the first year of the tri-annual assessment cycle, so a successful appeal now will continue to provide you with tax savings for a full three years.  (If your property is enrolled in our PAMS® Property Tax Manager program, you can relax:  our Newfoundland tax team is already reviewing your assessment and will file an appeal if the opportunity exists to reduce your tax load).

The legislated basis for your Year 2016 Assessment is your property’s market value on 1st January 2014 (the “Base Date”) having regard to its current physical condition.  This then is the first test you should apply.  If your property’s market value is less than its assessed value, it is over assessed and you should file an appeal on or before 4th November 2015.  Market value is the price the property would command if it were sold to an “arm’s length” purchaser (i.e. to a non-related buyer) for cash or subject to conventional financing.  It is not necessarily the price that would persuade you to part with the property but rather the price you could expect if you decided voluntarily to dispose of the real estate.  The best evidence of market value is the sale prices of similar properties that were sold within six months of 1st January 2014.  If your property is assessed at less than its 1st January 2014 market value, you may still be over-assessed because the Assessment Act mandates that your property has to be assessed in a uniform manner.  This provision attempts to ensure that the tax load is spread across the municipality’s property inventory in an equitable manner.  It also discourages the Municipal Assessment Agency from under-assessing property to thwart appeals.  So, if for example, commercial properties are assessed on average throughout the municipality at 70% of their market value, you will have grounds for appeal if your property’s assessment exceeds this percentage.

The Bottom Line:  You should appeal if your property is assessed at more than, (1) its market value on 1st January 2014, or (2) the assessment of other, comparable properties ... or if you harbour any doubt that your property is over-assessed.

Action Required:  None, if your property is enrolled in our PAMS® Property Tax Manager program.  If it is not and you file an appeal, be careful not to restrict your grounds of appeal.  We recommend that you use the following wording: “The assessment is excessive, unfair, not uniform with other assessments, and any other grounds that may appear.”  If you prefer we will file the appeal for you.  If you would like advice on whether to appeal, call our Newfoundland Tax Team, André Pouliot or Mark Turner at (709) 722-1811 (St. John’s) or 1-800-567-3033 (toll free).  If you prefer you can email them at apouliot@turnerdrake.com or markturner@turnerdrake.com

Wednesday, 07 October 2015 16:24:00 (Atlantic Daylight Time, UTC-03:00)  #    -
Property Tax
# Thursday, 01 October 2015

Property taxes, like all taxes, are mired in controversy.  We hear from hundreds of owners every year, and the refrain is often the same:  They’re too high”; “We don’t want to pay them”; “They don’t make sense”; “The services that I receive from the Municipality are declining, but my taxes keep going up”…

But still, we need to pay for our municipal services.  Halifax, for example, has historically relied on property taxes to fund approximately 80% of its budget.  Part of the controversy (and discontent!) with taxes stems from misunderstandings of how the property taxation system works.  This blog post will focus on a few of the central tenets of Nova Scotia’s property taxation system.  This primer will (hopefully) help you as a property owner/manager confront your issues with assessments and property taxes in the right place, and with the right people.

The first issue that needs to be clarified is the taxation process itself.  Your tax bill is the product of two numbers:  an assessed value and the tax rate (or mill rate).

 

Lesson 1:  Assessed values are the responsibility of the PVSC.

Assessed values are the responsibility of the Property Valuation Services Corporation, a not-for-profit corporation at arm’s-length from the government.  The PVSC’s has a CEO and a board of directors: these directors are in turn made up of representatives from individual municipalities.  We are experts in valuation, and as a consequence, our Property Tax Division specialises in – you guessed it – assessed values! Any issue with your assessed value is a matter to be taken up with the PVSC.

Assessment in Nova Scotia is done on an ad valorem basis (Latin for “according to value”) meaning property is assessed at its estimated market value.  The PVSC completes a revaluation of all the properties in Nova Scotia on an annual basis: some 612,000 properties.  The valuation of all the properties is compiled into what is called the assessment roll.  This roll is then forwarded to the Municipality, who use it to formulate tax rates.

Lesson 2:  Tax rates (and tax bills!) are the responsibility of the municipality.

Now, to move onto the next item in the equation:  tax rates.  Tax rates are set by municipalities. They are determined by setting a budget, calculating the total value of the assessment roll, and dividing those two numbers:

Now, there is a lot of fine print in this equation (especially regarding commercial versus residential tax rates), but what’s important to recognise is that the PVSC assesses the properties’ values, municipalities determine the tax rates (and what those taxes pay for).  Once the city has set its tax rate, they send out a tax bill to all property owners, and then in turn provide services to the community.  Your elected municipal representatives determine the services to provide and how they will be financed, this in turn creates a budget and voila! a tax rate is born.

Lesson 3:  Property taxes are based on the market value of property, not benefits received or services provided (or anything else!).

Another important takeaway from all of this is that ad valorem taxes are a tax on wealth. They are not a tax on income, and they are not a tax on services rendered. The idea behind the ad valorem tax is that wealth is a proxy for ability to pay: those with a greater ability to pay should pay more. Unlike income tax, property tax is not a tax on earnings: it is a tax on wealth. This is especially important for income producing properties, as income and property value are two very different things. Now that we’ve determined how a tax bill is calculated, let’s look at when:  the ‘base date’ of valuation for assessment is January 1st, two years prior to the current assessment year.  For instance:  the current assessment year is 2015. The ‘base date’ or ‘effective date of valuation’ is January 1st, 2013.  But what does this really mean in practice? It means that PVSC, who are estimating market value, are trying to determine the market value two years ago.

Why is this ‘base date’ issue important or even relevant at all? Because, as property owners, you feel market conditions as they happen.  If you have an apartment building and just can’t keep the units occupied, your vacancy and subsequent cash flow are hurting now.  What this two year ‘base date’ lag creates is disconnect between when vacancies happen and when you (may) feel some kind of assessment relief.  This isn’t to say that your current struggles can’t be considered, but for the most part, what’s happening to you now is going to show up in your assessment (and subsequently your tax bill) in two years.

This blog post is intended as a primer to help you as property manager/owner/operator understand the basic process behind your tax bill.  Property assessment and taxation are complex issues with a lot going on behind the scenes (and I mean a lot).  Turner Drake specialises in the assessment half of the equation: municipalities set tax rates, and there’s nothing we can do about that.  What we can do, however, is ensure that your assessment is fair.  My boss has told me time and time again:  we all have to pay our taxes, but that doesn’t mean you have to leave a tip."

Property assessment and taxation lessons provided by Greg Kerry, Manager of our Property Tax Division and Toronto Operations. If you have any questions about your property tax assessment, feel free to contact Greg at GKerry@TurnerDrake.com, (902) 429-1811 (Halifax) or 1 (800) 567-3033.

Thursday, 01 October 2015 16:16:51 (Atlantic Daylight Time, UTC-03:00)  #    -
Property Tax
# Thursday, 19 March 2015

If you own real estate in New Brunswick, you will have received your annual 2015 Assessment Notice and Tax Bill by now. Notices were mailed on March 2nd and there is a 30 day request for review period that expires on April 1st. This is the only opportunity for a property owner to reduce their taxes this year!

Property taxes are a significant burden on businesses and typically account for anywhere from 40% to 50% of a building’s total operating costs. Owners of commercial property in New Brunswick typically pay the equivalent of the entire value of their property over approximately 22 years… In many cases before they’ve paid off their mortgage! 

Although property taxes are significant, many owners lack the tools and data to effectively manage their property taxes. The assessment of commercial property is a complicated process. Many properties, especially large retail properties, are purpose built for the owner or occupant and may not appeal to a broad array of potential purchasers. Even though they may have a significant “cost” a purpose built or branded property may in fact have very little value if there isn’t a captive market for it. 

Assessment Act requires that property be assessed at its Real & True Value (aka market value) as of January 1st of the year in question. This definition seems transparent but the devil is in the details. The Act is silent on what constraints should be considered when determining a property’s value so one must have an understanding of precedent setting decisions, best practices, and the valuation expertise to correctly determine how a property’s unique attributes affect its value. The case law holds that Real and True Value is not the subjective test of “value to the owner” but rather the objective test of “value in exchange”. It’s important to ask the right question. Don’t ask at what price you’d be willing to sell, ask at what price a purchaser would be willing to buy!

Although not mandated in the Act, it is also important that assessments bear a fair relationship to others in the same taxing jurisdiction. Seasoned assessors recognise the importance of treating property owners fairly. The best way to do this is to compare your assessment per square foot to similar properties in your area. 

Many owners successfully navigate the appeal process on their own but our experience has shown there is a business case in seeking professional assistance when dealing with any commercial assessment. Although there is an investment required in obtaining a professional, it can be structured to eliminate the risk of the owner incurring a fee without obtaining a corresponding tax savings and typically the associated tax savings are 2-3 times the first year’s tax savings!

If you have questions concerning your property tax assessment, feel free to contact our New Brunswick tax team, Andre Pouliot or Chris Jobe (506) 634-1811 (Saint John) or 1-800-567-3033.

Thursday, 19 March 2015 14:23:23 (Atlantic Standard Time, UTC-04:00)  #    -
Property Tax
# Wednesday, 04 March 2015

June 28th, 2013 marked my twenty-year anniversary at Turner Drake.  At the time of writing this post, I’m almost two years closer to my golden anniversary. 

Originally hired, trained and educated as a commercial appraiser, I’ve spent the majority of my career in our Property Tax Division.  True to our in-house training program, which hires graduates directly from University, I started as a trainee valuer. Six years later I moved into a Manager’s role, and then, in 2006, became divisional Vice President.  As Vice President, I lead a team of seven that assist hundreds of owners every year in mitigating their tax burdens. 

Twenty-two years in property tax translates into tens of thousands of appeals filed and, over the course of addressing those appeals, some recurring themes have emerged.  I will discuss these themes below… and in the process, try to do a bit of property tax myth-busting.

Thou Shalt Not Covet Thy Neighbour’s Assessment.

If you own property in Nova Scotia,  it’s tempting (and, with the information available online,  relatively easy) to compare your assessment to competing properties.  For some owners I’ve encountered, logging on to assessment sites and feverishly clicking on surrounding properties has become sport… in some cases, bordering on an obsession.

Comparable assessments are undeniably a useful benchmark and helpful tool to identify an over-assessment (we do it too!). While some assessors will consider assessments on similar properties as grounds for reducing an assessment at the (relatively informal) initial appeal review stage, the fact that your assessment compares unfavourably to others will carry no evidentiary weight before Nova Scotia’s administrative Tribunals, Boards, and Courts.

Nova Scotia’s Assessment Act requires uniformity of assessment… but legislated uniformity is achieved across entire classes of property in a Municipality (and there are only two such classes: residential and commercial).  Sadly, ensuring that your property’s assessment is consistent with similar properties does not ensure uniformity.  This is one of the most common misconceptions that we encounter in dealing with property appellants.

The Best Opportunity to Reduce Your Assessment (and Taxes) is NOT on Appeal.

In every province in which we operate, assessing authorities are willing to discuss assessments prior to those values being inserted onto the official assessment rolls.  In our experience, such preliminary consultations often produce better results – at lower cost – than waiting to file formal appeals.  A number of provinces, including Nova Scotia, fully embrace the opportunity to discuss proposed values and to make changes, where required, at the “pre-roll” stage.

Of course, it’s not always possible to do so, as values may not be available with sufficient “lead time” in advance of the filing of the roll.  But where the opportunity presents itself, my advice is to always be proactive, and to address a problem before it becomes one.  A stitch in time saves nine.

Not Every Property is Over-assessed.

There, I’ve said it. 

It’s the truth – not every property offers the opportunity for tax relief.  My colleagues and I take many, many calls where we have to break that unwelcome news to owners… sometimes in spite of a double digit increase, or an assessment that exceeds its neighbours by a considerable margin.   In fact, for every appeal we file, there is probably a second property that was reviewed and its value accepted. 

Assessors – They’re Just Like Us.

They wonder about going gluten-free.  They drive their kids to countless sport practices  and extracurricular  activities.  They think about work while they’re walking the dog.  They worry about getting enough fibre.  And, for the most part, they are well educated and professional, and open to reasoned argument.  That’s not to say that we don’t take the gloves off from time to time: positions do become polarised.  But professional relationships built on mutual respect with assessors from across the country have allowed for the settlement of hundreds of appeals every year without the need for Board and Court appearances.

 

Property assessment myth-busting brought to you by Giselle Kakamousias, Vice President of Turner Drake's Property Tax Division. For more on Giselle, check out her Featured Consultant piece on our Facebook page.

Wednesday, 04 March 2015 13:33:00 (Atlantic Standard Time, UTC-04:00)  #    -
Property Tax
# Friday, 23 January 2015

A decades-long dispute between Halifax and the federal government over the value of the Halifax Citadel National Historic Site of Canada (Citadel) came to a head on January 15, 2015, when the Payment in Lieu of Taxes Dispute Advisory Panel (DAP) issued its advice on the Market Value of the Citadel.

Overlooking the city’s downtown core, the Citadel comprises 48 acres of land including a historic fortress.

The issue before the DAP was the Market Value of the Citadel for the 2013 assessment year. The parties agreed on the value of the improvements to the property, however argued the value of the underlying land. The 2013 published assessment of the land was $25,763,700.

At the hearing, Halifax submitted two reports based on a land value estimate derived from sales of land in the vicinity of the Citadel, conducted by the following parties:

1) Local assessor who valued the land at $51,000,000, and;

2) Private Property Tax Consultant Mark Turner of Turner Drake & Partners Ltd. who put the value at $68,214,000.

Public Works and Government Services Canada (PWGSC) commissioned an appraisal report by a local appraiser, in which the value of the site was based on a hypothetical subdivision on a portion of the property, as well as a value for land beneath the footprints of the existing improvements. The appraiser valued it at $12,160,000. PWGSC then submitted a separate document stating the value in the appraiser’s report should be further reduced by 70% to reflect use restrictions tied to the National Historic Site designation. The final value submitted by PWGSC was $3,648,000.

The panel made a number of findings in preparing its advice on the Market Value of the Citadel:

  • The role of the Minster is not merely to review the value attributed by the local assessing authority; however, that value does serve as an important reference point.
  • A Market Value estimate should be based on the current/existing use of the property without regard to potential or hypothetical alternate uses.
  • The slope and restrictive zoning compliment the intended “public purpose” for the property; thus, are not suitable grounds for a reduction in value.
  • Properly selected and adjusted sales comparables form an appropriate basis for determining a Market Value.
  • The restrictions places on the property by virtue of its status as a National Historic Site area not an appropriate basis for a reduction in value.

The result: the panel determined the Market Value that would be attributed by an assessment authority for the 2013 assessment year to be $41,222,000.

If you have any questions regarding the Halifax Citadel property tax dispute, you can reach Mark Turner at (902) 429-1811 or MarkTurner@TurnerDrake.com.

Friday, 23 January 2015 16:29:32 (Atlantic Standard Time, UTC-04:00)  #    -
Atlantic Canada | Property Tax
# Friday, 09 January 2015

Apartment Property, Nova Scotia ($112,048/annum - 89 % in tax savings)

If you own property in Nova Scotia you should receive your 2015 Assessment Notice shortly: it was mailed out today, January 9th 2015.  You have 31 days in which to file a Request for Review (appeal).  If your property is enrolled in our PAMS® Property Tax manager program we have already reviewed your property assessment and have filed an appeal if the opportunity exists to reduced your tax burden.  If your property is not yet PAMS® protected we can still file the appeal for you or you can file it yourself.  Bear in mind that the basis for the 2015 Assessment, as mandated by the Assessment Act, is your property’s Market Value on January 1st 2013 (the “Base Date”) having regard to its physical condition on the date the assessment roll closed on December 1st 2014 (the “State Date”).  You can estimate the Market Value by comparing your property with the sale prices of properties that sold within six months of the Base Date.  Sale prices are now published on PVSC, the assessment authority, web site www.pvsc.ca  Find An Assessment  Advanced Search 

The fact that your property is assessed higher than a similar property is not a valid ground for appeal even though the Assessment Act contains a “uniformity” provision.  Instead, court decisions have established that “uniformity” must be applied to all properties in the municipality using the General Level of Assessment (“GLA”) mechanism.  The GLA is calculated by dividing the sum of the 2015 assessments of those properties that sold between July 1st 2012 and June 30th 2013, by the aggregate of their sales prices.  PVSC have, on occasion (when prodded) condescended to divulge their General Level of Assessment.  However it is unwise to place any reliance on it.  On the one occasion in which we were able to formally review PVSC’s calculations, they proved to be a nonsense: a point on which the Court concurred.  When calculating the GLA first determine whether the property is assessed as “residential” or “commercial” and utilise the relevant pool of property transactions.

þ If your property is enrolled in our PAMS® Property Tax manager program we automatically review your assessment and file an appeal where necessary.  If your property is not yet PAMS® protected and you would like advice on whether to file an appeal, call our Nova Scotia Tax Team, Giselle Kakamousias, Mark Turner or Greg Kerry at 902-429-1811 (HRM) or toll free 1-800-567-3033 (elsewhere).  They will be pleased to help you.  For further information visit our web site Corporate Site Property Tax Tax Appeals.

Friday, 09 January 2015 14:34:30 (Atlantic Standard Time, UTC-04:00)  #    -
Property Tax
# Thursday, 06 November 2014

This month’s blog is dedicated to providing some simple advice to help you increase your chances of successfully resolving your assessment appeal and avoiding the dreaded “confirmation letter”.  Ironically, it is actually inspired by some terrible advice a prospective client relayed to me while describing the process he used to resolve his own appeals. 

First off, the disclaimers.  All appeals are not created equal and as a result there isn't a “one size fits all” approach to successfully resolve all appeals.  Second, some appeals are complex and warrant an equally complex strategy to resolve them, but since the overwhelming majority of assessment appeals get settled without necessitating a contested hearing and most cases don’t warrant bringing in one of TV’s top lawyers[1], let’s assume our goal is to resolve our appeal at the review stage.

What Not to Do

Let’s start with the strategy my prospective client was using.  I may be paraphrasing here but as I recall when he was explaining his strategy he proudly proclaimed “I don’t tell the assessor a darn thing!”.  Presumably, this advice was rooted in an inherent distrust of the local assessor but given that an appeal is initiated by the owner, and in most jurisdictions the onus is on the owner to prove an assessment is incorrect, this strategy is condemned to failure.  In order to make a decision to reduce an assessment, an assessor requires facts and issues to justify processing a change.  Although it’s possible that an assessor will unearth these facts on his own, an owner greatly increases his chance of succeeding if he can assist the assessor in his quest for new facts.

A Philosophy For Success

If you keep in mind that your assessment is based on a valuation model that is by necessity, developed to estimate the market values for thousands of properties, the path to success in an assessment appeal is to show why this model overstates your assessment.  At the most basic level you should ask yourself, what is unique or different about your property that detracts from its value and hasn't already been accounted for in the assessment?  Accordingly, step 1 is to request disclosure and get a copy of your assessment calculation and step 2, is to develop a list of facts or issues that were not previously accounted for.

  • Is a portion of the land encumbered by an easement, a rocky slope, or a swamp? 
  • Does one of your leases have a clause or clauses that make it less desirable than those typical of the market? 
  • Is your vacancy higher than the market and is there a reason for it? 
  • Is the property awkwardly configured in a manner that makes it less useful than most others?

The list of potential issues is endless but the only way an assessor will be able to incorporate them into the assessment is if they are brought to his or her attention.  Seasoned assessors will appreciate the transparency and although you’ll still have to resolve by how much the issue should detract from the value you’ll be well on your way to getting past the confirmation letter.   

____________________

[1] In a recent poll of the members of our Property Tax Team it seems we’d hire Suit’s Harvey Spector, Breaking Bad’s Saul Goodman, Law & Order’s Jack McCoy or the unbeatable Ben Matlock. I can only conclude that our tax team spans a few generations!  Like our Facebook page if you agree and post any that we might have missed! https://www.facebook.com/TurnerDrakeLtd  

Property Tax advice provided to you by André Pouliot, Senior Manager of Turner Drake's Property Tax Division and New Brunswick office. If you have any questions regarding property tax, feel free to contact André at 1 (800) 567-3033 or apouliot@turnerdrake.com.


Thursday, 06 November 2014 14:12:40 (Atlantic Standard Time, UTC-04:00)  #    -
Property Tax
# Wednesday, 22 January 2014

On January 13th 2014 all property owners in Nova Scotia received their 2014  Assessment Notices. Over the past five years commercial assessments in the Halifax Regional Municipality (HRM) have risen by an average of 26%. Time to shoot the messanger? Not yet!

Property assessments are determined by the Property Valuation Services Corporation (PVSC), a "not for profit" entity controlled by the municipalities. However it is the latter who set the tax rates and they are the real villains of the piece. PVSC's assessments are based on Market Value: as values rise so do assessments. Tax rates therefore should fall....but they don't...studies carried out by our Property Tax Division show that municipal budgets expand instead, to take advantage of the increased assessments.

Take Halifax Regional Municipality for example. Over the past five years assessments have increased, on average, by the following amounts: Automobile Dealerships 29%; Apartments 28%; Industrial property 27%; Offices 26%; Hotels/Motels 10%...while tax rates have fallen by just 4%. That's right: 4%.

So where did all that extra money go...into additional or better services? Sadly not: over 60% of HRM's expenditures are consumed by staff salaries and pensions. And staff compensation increased by 82% between 2000 and 2010...during a period in which the cost of living increased by just 24%. In part this was because the municipality's staff complement continued to balloon. While competition was forcing the private sector to innovate...to do more with less...the public sector faced no such pressure. But largely it occurred because the average annual salary of their full time equivalent employees rose from $47,301 to $76,821, a rise of 62% over those ten years.

Municipalities have to face the facts: the next 10 years will not be a replication of the past decade. The Province's population is shrinking and aging: the ratio of working to non-working age population is declining rapidly. Some municipalies are now experiencing this reality but HRM has been buffered from it because of rural to urban migration. This will stop as rural areas are denuded of population. There is no evidence that HRM or other municipalities will take action until they face a Detroit type bankruptcy. It is up to property owners to minimise their exposure by ensuring their assessments are not excessive. Since commercial property owners often pay three times as much tax as their residential counterparts they should aggressively pursue an assessment appeal whenever the opportunity presents itself. They have until February 13th. to do so.

101123cow3pres.pdf (1.62 MB)
Wednesday, 22 January 2014 10:17:24 (Atlantic Standard Time, UTC-04:00)  #    -
Property Tax