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# Wednesday, January 22, 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, January 22, 2014 10:17:24 AM (Atlantic Standard Time, UTC-04:00)  #    -
Property Tax