Simcoe Taxpayers Gear to Fight Market Value Reassessment
By The Federation of Tiny Township Shoreline Associations
“SCRAM” (Simcoe County Residents Against Market value reassessment)
to voice taxpayers opposition.
Subsequent to an organizational meeting reported in a story on page 4, the new group, SCRAM, is making available to Simcoe County Ratepayers’ and Business Associations a 14 page publication that outlines the history and process of MVA, the decision process, the flaws, the impacts on property owners and an Action Plan for taxpayers to persuade politicians to vote “NO” to market value reassessment.
The Impact Study for Simcoe County will be released August 15, 1995.
The following is an abstract from the SCRAM publication with information about
(1)Market Value Assessment (MVA)
(2)Proposed Countywide Market Value Reassessment as it relates to
(i) 1992 market values
(ii) locked-in reassessment every 4 years
The Ontario Perspective
In 1970, property assessment (formerly handled by the municipalities) came under the jurisdiction of the Province. The provincial government tried to establish its uniform system of assessment across the province. Despite repeated attempts to have the new assessment system in place by January 1974, as specified in the legislation, the provincial government failed to implement province-wide assessment because of widespread political opposition.
Nine years later, in 1979, the Government of Ontario moved from mandated assessment reform to optional assessment reform. The provincial government began to permit municipalities to opt into one of two alternatives: full MVA or factored MVA. Since then, 728 municipalities representing approximately 50% of the population of Ontario have opted into some form of MVA.
Subsequently, the Government of Ontario introduced countywide market value reassessment. To date, only 21 counties or regions (out of a total of 55), representing 25% of Ontario’s population, have chosen to adopt the countywide market value reassessment option. Of the remaining 34 counties or regions, 8 (including four cities within those counties: Windsor, London, Stratford and Guelph) asked for an impact study on a countywide basis. Eventually, these 8 counties all voted against adopting market value reassessment.
In 1992, Metro Toronto voted 2113 in favour of the implementation of market value reassessment. Two months later, the Government of Ontario turned down Metro’s request.
The following year, in 1993, the Ontario Fair Tax Commission released its Report. The Report recommends that Ontario abandon market value assessment.
Some recently implemented countywide market value reassessments have created a flood of appeals:
(a) In the Regional Municipality of Sudbury, 10,000 appeals were filed after reassessment in 1986, in contrast to 1,500 the year before.
(b)In the Regional Municipality of Ottawa-Carlton, 45,000 appeals were filed the first year of implementation (1993); 22,000 appeals were filed in 1994 and a further 15,000 filed in 1995.
(c)In the District of Muskoka, countywide market value reassessment was implemented in 1995. 10,000 appeals have been filed in 1995, up from some 600 appeals in 1994.
The Simcoe County Perspective
Between the Provincial government and the local municipal government stands Simcoe County government. Decisions at County are made by County Council made up of two representatives (the Mayor and Deputy Mayor) from each of the 16 municipalities forming a 32 member Simcoe County Council.
The two representatives from each of the 16 municipalities come from: 7 towns (Bradford West Gwillimbury, Collingwood, Innisfil, Midland, New Tecumseth, Penetanguishene and Wasaga Beach) and 9 townships (Adjala-Tosorontio, Clearview, Essa, Oro-Medonte, Ramara, Severn, Springwater, Tay and Tiny).
The two cities of Barrie and Orillia are NOT part of Simcoe County Council.
In 1991, Simcoe County Council voted in favour of restructuring. At the same time, the County Council also voted to request the Ministry of Finance to do a countywide market value reassessment impact study of what the total assessment would be for each of the 18 municipalities (including Barrie and Orillia) by class of property.
On October 27, 1992, Simcoe County Council voted to adopt Report No. 25: “that the reassessment study be deferred until 1995 for taxation in 1996 using 1992 market value as a base.”
In 1993, the Report of the Ontario Fair Tax Commission recommended that the Province of Ontario abandon market value assessment. Has Simcoe County Council abandoned its impact study of market value reassessment in the light of the Fair Tax Commission’s Report? No.
Release Date of Impact Study and the Process
Simcoe County’s reassessment impact study was commenced in 1991 and will be completed in the summer of 1995. It will be presented to Simcoe County Council on Tuesday, August 15, 1995 and to each municipality about the same time.
Upon completion of the impact study, The Municipal Act and the County of Simcoe Act, 1993 state that countywide reassessment will not be directed by the Minister:
“unless the council of the county and councils of a majority of the local municipalities in the county have requested, by resolution …” that countywide market value reassessment be imposed by the Minister.
The word “and” is important because without BOTH a majority of local municipalities and a majority of County Council voting for reassessment, the proposal will die.
The Councils of the Cities of Barrie and Orillia will be asked by the Assessment Commissioner if either one or both wish to participate in the process. A “no” vote by the Council of either city eliminates that city as a “player” in the process. A “yes” vote makes that city a “player” in the process. Each city has a large residential, commercial and industrial assessment base. If either city chooses to vote “no”, the total assessment base will be smaller.
If either Barrie and/or Orillia votes not to participate in the process, the Assessment Commissioner will have to recalculate all the numbers in the computer in order to determine the assessment of other municipalities in Simcoe County and do so without the assessment figures for Barrie and/or Orillia.
Whether Barrie and/or Orillia “opt in” or vote “no” there is a mandatory process for Simcoe County Council and the 16 municipal Councils that are its members:
ASSUME that the local municipalities are the first to decide:
(1) each local municipal Council will decide whether or not to adopt countywide market value reassessment to 1992 market values, including automatic future locked-in reassessment every four (4) years.
A majority of the local municipal Councils is needed for approval of the countywide reassessment proposal, anything less will result in a rejection of the proposal and the project will be dead.
The number that will form a majority will depend upon whether Barrie and/or Orillia is/are “in” or “out”. With both in, a majority is 10; with one or none “in”, a majority is 9.
(2) If a majority of all of the local municipal Councils vote “yes”, then the scene moves on to Simcoe County Council for discussion, debate and a vote.
If a majority of the votes cast by the representatives of the 16 municipalities at Simcoe County Council rejects the countywide reassessment proposal, the proposal will be dead.
If a majority of the votes cast by the representatives of the 16 municipalities at Simcoe County Council are in favour of the countywide reassessment proposal, the proposal passes.
It is to be remembered that Simcoe County Council operates on a system of “weighted votes”. For example, the vote of each of the 16 municipalities varies from Innisfil’s 11 votes to Penetanguishene’s 3 votes. (See enclosed listing of municipal councillors and their phone numbers the “weighted” vote of each municipality, at County, is also indicated.) If all 32 County Councillors are present and vote, the total vote is 108. A majority would be 55.
If the countywide reassessment proposal is voted “in” by a majority of the local municipalities and a majority at Simcoe County Council, market value reassessment to 1992 market values together with the automatic locked-in reassessment every four (4) years would be imposed on all local municipalities whether they want it or not.
If countywide market value reassessment is rejected, any local municipality that wants to be reassessed to 1992 values can, at any time, request reassessment for its own municipality. If a local municipality obtains reassessment by this route, it is not locked-in to automatic reassessment every four (4) years nor does it drag in other municipalities that don’t want reassessment.
Rejection of the scheme for countywide reassessment will send a clear signal to the Government of Ontario that we await property tax reform as recommended by the Ontario Fair Tax Commission.
The above analysis ASSUMES that the vote will first take place at the local level. If so, the proposal might never get to County Council.
N.B. The logic of the situation is that each of the participating local municipalities should study the proposal, receive the input of its taxpayers and then vote on the question. If a majority of municipalities reject the proposal, there will be no need for a vote at County Council. Remember a majority must be obtained BOTH locally and at County Council.
However, rumours prevail that the Assessment Commissioner wants the vote at County Council to take place FIRST.
WHY? It is a political “hardball” tactic by the Assessment Commissioner to try and achieve the goal of the Government of Ontario. It is probably correct to assume that there would be little scrutiny at County Council and there will be little or no “people power” at work prior to a vote by County Council. If the proposal gets the “green light” at County Council, then it would be assumed that the 32 County Councillors would “go home and rubber stamp what they’ve already done at Midhurst (County Council).”
Insist that “the first game” be played at “home”.
A Critique of Market Value Assessment (MVA) and Proposed Countywide Reassessment
For decades, the Provincial Government struggled to find a consistent assessment system for the Province of Ontario. In 1970, the Province introduced the market value assessment system that we are under today. From the outset, the Provincial Government faced difficulties promoting MVA.
The Mayors of Kingston and Sault Ste. Marie have stated, publicly, that they regret the introduction of MVA in their cities. The Deputy Mayor of Sudbury referred to the MVA proposal as a “Snow Job”. The Mayor of Sault Ste. Marie stated:
“They [the Province] sell it to the Municipal Council, but they’re very vague about what will go up and what will go down. They really do a selling job saying it’s good, fair and equitable all catch words.”
In spite of great opposition, the Government of Ontario is now encouraging reassessment of Simcoe County on a countywide basis with a locked-in reassessment every four (4) years.
In 1993, the Ontario Fair Tax Commission completed its study of all taxation in Ontario. The cornerstone of its recommendations is property tax reform. Its Report recommends that education should no longer be funded from property taxes. Its Report also recommends that the province should abandon market value assessment. From our research, we concur with the findings of the Ontario Fair Tax Commission on property tax reform.
The proposed countywide market value reassessment of Simcoe County creates the following problems (see details on following pages):
(1) It causes municipalities to lose control.
(2) It influences provincial grants and education funding.
(3) It is disproportionately influenced by the location of the property.
(4) It bears no relation to ability to pay.
(5) It has negative social implications.
(6) It penalizes general improvements.
(7) It taxes potential future gains.
(8) It creates assessment uncertainties.
(9) It is difficult to appeal.
(10) It creates, forever, a large provincial government bureaucracy.
Each of these aspects weighs heavily against the adoption of MVA. Let’s examine them in closer detail.
1. Local Municipalities Will Lose Control of the Assessment Process (to the Province) due to Automatic Locked-in Reassessment Every Four (4) Years
At present, a local municipal Council can decide if and when it wishes to request a reassessment of its municipality; their ratepayers can make input to that decision making process. If reassessment is requested, it is a “one time” deal the municipality is not “locked-in” to automatic reassessment every four (4) years.
Under the current countywide reassessment proposal, new legislation would automatically cause reassessment of all properties every four (4) years without reference to the municipality. The provincial assessor’s office would then determine current market value trends every four (4) years.
2. Influences Provincial Grants and Education Funding
In these days of financial restraint, every government is looking for ways to lessen its financial commitment, that is, “how can it pay less?” The Federal government is “downloading” to the Provincial governments and the Provincial government, in turn, is “downloading” to municipal governments. A number of transfer payments made by the province to the local municipalities (e.g. roads) are calculated on the assessment base. If the assessment base goes up, the provincial grants go down and you pay more property taxes.
Market value reassessment every four (4) years would increase the apparent wealth of the municipality. MVA will balloon the assessment in your municipality. The higher the assessment valuation in a municipality, the lower the educational funding from the provincial government. School taxes are levied on the assessment; as the assessment increases under MVA so will your school taxes increase.
3. Location Tax
Under MVA, similar houses, each receiving identical services, can have different market value assessments and pay different taxes because they are located in different parts of the municipality or county.
In a fair system, property taxes should be based on the services provided to the property by the municipality, such as: roads, sewers, water and sewage treatment, etc.
In a fair system, property taxes should not be based on the volatility of real estate values which are greatly influenced by the property’s location. If property taxes were related primarily to services received, the “location” value factor would have a fairer impact.
4. No Relation To Ability To Pay
Higher market values do not equate to greater income with which to pay the higher taxes. The mere fact that the market value of a house increases does not mean that its owner’s disposable income has increased accordingly.
If ability to pay is a just basis, then it can only be based on income and not property values. The 1967 Ontario Committee on Taxation confirmed this point when it said: “As a matter of general practice … income has become more widely regarded as the best Windex of tax paying capacity.” The 1993 Ontario Fair Tax Commission said: “… the residential property tax is not strongly related to ability to pay whether ability to pay is measured by income or by wealth …”
5. Negative Social Implications
Many property owners, some now on fixed incomes, purchased modest homes twenty or thirty years ago. These neighbourhoods may become fashionable, or “trendy”, locations thus causing land values to increase. Property taxes will rise accordingly. If property owners are unable to pay the increased taxes, they may be forced to move.
There will be similar disastrous effects on young families, who purchased their homes on limited budgets, if they are faced with excessive tax increases. Sooner or later, they may be forced to sell their homes because of inability to carry the tax burden.
If a large number of properties are listed for sale, general real estate values drop and the total municipal assessment drops. This will necessitate an increase in the mill rate and a corresponding increase in taxes.
6. Penalizes General Improvements
Under MVA, general improvements to one’s home or business (such as new siding, upgraded kitchens or bathrooms) will increase the real estate value which in turn affects assessed value and taxes.
Punishing taxpayers for improving their property is a bizarre situation.
7. Taxes Potential Future Gains
Basing property taxes on reassessed market values is tantamount to taxing property owners on future unrealized gains, gains that may never be realized. This clearly is an inappropriate and a very unfair system of taxation.
8. Reassessment Uncertainties
Because of the way provincial assessors determine market value even if you bought your home in the year of reassessment, it is quite likely that the market value assigned by the assessor will be higher than your purchase price.
The Metro Toronto Task Force Report said “Valuations by the Ministry of Finance are established to capture trends in the market, rather than the sale price at a particular moment.”
Automatic reassessment every four (4) years would insure a fluctuation in assessment values rather than produce stable values.
In the market value reassessment process, there are several numbers and factors which can be manipulated. Some are highly subjective in the judgment of the assessor. Thus, the opportunity exists for “government policy” to be injected into the calculation of “market
value”.
9. Difficult to Appeal
In most communities, less than 10% of the properties are sold annually. This small number of sales is used, by the assessors, as the yard stick to determine new assessed values. The assessment calculation process includes a great deal of “subjective judgment calls” by each assessor. Did you ever try to nail jelly to the wall?
The four year gap between the base year and the tax year makes disputable judgments more difficult to prove or refute. If market value reassessment is passed in 1995, in 1996 your property would be assessed on 1992 real estate values. Because of the elapse of time, your burden of proving that your 1996 assessment is “out of whack” is made much more difficult. The passage of time causes a certain “fogginess” to settle over the scene. Government knows this and exploits this fact of life.
Under the present law, the market value assigned by the assessor is assumed correct unless the owner can prove it is incorrect.
10. Creates, forever, a Large Provincial Government Bureaucracy
The annual budget (1995) for the Ontario Assessment office is in excess of $80 million dollars. Market value reassessment will lead to an increase in government spending, because a whole new bureaucracy is created to handle: (1) the process of reassessment every four years, and (2) the resulting flood of appeals.
The Province is paying for the costs of the 1992 reassessment study in Simcoe County. In future, who will pay the costs to reassess every four (4) years? Referring to the recent reassessment in the District of Muskoka, the Georgian Bay Association Update states: “The province currently pays for the costs of this assessment update, but this may change and would cost $1 million in Muskoka!”
Earlier in these pages, under “The Provincial Perspective”, you read of the thousands of assessment appeals pending after the implementation of market value reassessment: 82,000 in 3 years in Ottawa-Carlton, 10,000 in Sudbury, 10,000 in Muskoka. The appeal process can be difficult, costly and frustrating. Don’t forget that the bureaucracy against whom appellants struggle is funded with our tax dollar.
The Ontario Fair Tax Commission
The Ontario Fair Tax Commission released its report in 1993 after spending 3 years and millions of dollars studying all tax issues in Ontario. Local taxes, including education taxes, raised more concern than all the other issues combined. The following comments are taken from the Commission’s Report:
1. The market value system of assessment must be abandoned.
2. Education should no longer be funded from property taxes; education should be funded from provincial revenues.
There should be one standard of education funded on a per student basis. Education funding reforms would insure that:
(a) students across Ontario receive the same quality of education no matter how rich or poor their region is.
(b) the costs would be paid for by everyone according to their income.
3. Property taxes should be clearly related to the level of services and benefits provided by the local government.
Residential property assessments could be based on the physical characteristics of the property: size of lot, square footage of the building and street frontage.
These property tax reforms would significantly improve:
(a) the relationship between taxes paid and services received,
(b) the understanding of the assessment by the property owner,
(c) the assessment appeal process for the property owner,
(d) the updating of assessments, and
(e) the cost of administration.
4. Funding for mandatory social services should be removed from local taxes and provided from Provincial revenues.
The costs would be more equitably distributed to everyone according to their income.
A Plan of Action to Support What We Favour
What Do We Favour?
1. We are in favour of a uniform system of assessment for the province but we are not in favour of MVA because it is inequitable and unfair.
2. We are in favour of a system that bases assessment on the size of the lot, the size of the house and the services provided to that property by the municipality, such as: roads, sewers, water and sewage treatment, etc.
3. We are in favour of provincial funding of all education costs and its removal from property taxation. The quality of education should not depend on the wealth of the region.
4. Until there is an overhaul of the whole tax system, We are in favour of retaining what we have. We favour keeping the present system in place and leaving control with the individual municipalities.
Action Plan – For the People against MVA
We all must work for a fair system of taxation: (a) during the upcoming provincial election and (b) in our municipalities.
(a) During the Provincial Election Campaign:
1. Read the material in this booklet to get an idea of the implications of MVA and how your taxes can escalate under countywide market value reassessment.
2. Encourage your association members to become knowledgeable about the problems associated with MVA. Make sure they are aware of the recommendation of Ontario Fair Tax Commission that MVA should be abandoned.
3. Encourage your association members to speak to all the candidates running in their home ridings, attend all candidates meetings and ask questions. Remember MVA is a province wide system and, if changed, would be changed province wide. Ask for the views of each party and each candidate on tax reform. Ask each candidate if he/she will work to implement the recommendations of the Ontario Fair Tax Commission. Ask each candidate for the position of their political party on tax reform.
4. Make property tax reform an election issue.
(b) In our Municipalities:
1. Take strength from the fact that numerous municipalities have already rejected MVA by a simple majority vote.
2. Read the material in this booklet to get an idea of the implications of MVA and how your taxes can escalate under countywide market value reassessment.
3. Learn about the process. Demand that the reassessment proposal be forced into public scrutiny. Appear before your local council with a large group of supporters and ask for a public meeting on Market Value Reassessment.
4. Make sure that your municipality’s representatives to County Council debate and decide your municipality’s position before anything takes place at County Council.
5. Use the outline of what MVA can do to your tax bill as a basis for your presentation and outline:
what you are for (see above “What we Favour”), and
what you are against (countywide market value reassessment with locked-in reassessment every four (4) years.
6. The members of a local municipal Council should not be yelled at, shouted at nor abused in any way about MVA. Your local Council does not deserve to be threatened or accused about MVA. This is the Minister of Finance’s idea, not your Council’s idea. Bring the message to your Council that the residents believe that, after Council studies the market value reassessment proposal very carefully, it will side with the community and reject the MVA proposal.
7. Tomorrow, write a brief letter (on association or business letterhead) to your council outlining your concerns about MVA. Enclosed with this material, is a separate sheet listing the name of each councillor in your township, together with a mailing address and a fax number for your municipal offices and a phone number for each councillor.
8. Wear a yellow ribbon on your shirt, hat or lapel as your hope for fair taxation and opposition to MVA. A room full of yellow ribbons and strong vocal opposition will have a great impact on those voting “Yes” or “No” to countywide market value reassessment.
9. If approached by the media, be pleasant, tactful and have a statement prepared. There is a climate growing across Canada the taxpayers are tired of ever-rising taxes. Remember the Spadina extension proposal? Remember the Pickering Airport proposal? People power works. Why? Because ordinary people saw government trying to slip another one by the unsuspecting ratepayer. The taxpayer stood up and spoke out LOUD and CLEAR.
The taxpayers of Simcoe County can do the same. The very fact that no one is aware of the impending vote on countywide market value reassessment is witness to the fact that the Assessment office would prefer the reassessment process stay very quiet.
10. Attend every Council meeting, wear your yellow ribbon and have different people, in groups, speak against the County MVA proposal at every meeting.
Keep MVA front and centre. Call another public meeting, chances are your attendance will double.
Remember the Government of Ontario (and its mandarins) hopes that the taxpayer stays asleep on the topic of MVA and reassessment. If that happens, then on those lazy days of summer, MVA will sail through unnoticed and the rude jolt of reality will not set in until the taxpayer receives his/her 1996 assessment notice.
Remember Muskoka and MVA. Don’t let it happen in Simcoe County.
You’ve said “no” to MVA. Your task is to persuade your local Council and Simcoe County Council to vote NO to MVA.
Keep in touch with the committee: Simcoe County Residents Against Market value reassessment (SCRAM). It will keep you informed.
Prepared by the Federation of Tiny Township Shoreline Associations for Simcoe County Residents Against Market value reassessment (SCRAM).
The above material is available as a booklet from the Federation for $2.00 or ($3.50 by mail). Please call the number listed below.
