A Property Assessment Act for the 21st century : property taxation system in Alberta PDF
Preview A Property Assessment Act for the 21st century : property taxation system in Alberta
Property Taxation System in Alberta A P roperty Assessment Act for the 21st century Municipal Statutes Review Committee August 1991 MUNICIPAL AFFAIRS Municipal Administrative Services Division 17th Floor, CityCentre, 10155 - 102 Street, Edmonton, Alberta, Canada T5J 4L4 403/427-8861 Fax: 403/420-1016 August 15, 1991 Honourable Raymond A. Speaker Minister of Municipal Affairs Room 127, Legislature Building Edmonton, Alberta T5K 2B6 Dear Mr. Speaker: On behalf of the members, I have the honour to submit to you the recommendation of the Municipal Statutes Review Committee for a new Property Assessment Act for Alberta. The recommended Act contains changes in policy and drafting style which the Committee believes are necessary in order to carry out its mandate to "recommend legislation appropriate to carry Alberta municipalities into the 21st century". This report begins with an introductory section summarizing the observations of the Committee which influenced its recommendations. The remainder is the Committee's draft of a new Property Assessment Act. The Committee has appreciated the advice received from Alberta municipalities, government departments and interested groups and individuals, all of which greatly assisted in the preparation of this report. Respectfully submitted. Glen Clegg, M.L.A Chairman COMMITTEE MEMBERSHIP Councillor Gary Browning, Devon Councillor Dick Papworth County of Lethbridge County of Grande Prairie Alderman Craig Reid, Calgary ^Frank Lambright, Tangent ACKNOWLEDGEMENTS The Committee wishes to express its appreciation to the thousands of municipal and provincial officials, organization representatives and individuals who read the discussion papers and took part in preparing considered comments and advice. The creative insight of Mr. David Elliott, Barrister and Solicitor, who served as Legislative Planner for the Committee, and the knowledge and experience of Mr. Rene Gagne, Assistant Deputy Minister, Assessment Services Division, Alberta Municipal Affairs, were key resources to the Committee in preparing this draft . The continuing support of the Secretariat (Tom Forgrave, Coordinator; Norm Milke, Deputy Coordinator; Margaret Suelzle, Secretary) enables the Committee to function effectively. INTRODUCTION The Process When the Municipal Statutes Review Committee began its work, the members sought to engage all interested Albertans in a public consultation on municipal government. The process used by the Committee involved the distribution of more than 3000 copies of discussion papers, receipt of comments, revision of proposals and eventually the submission of a report to the Minister of Municipal Affairs . The Committee began its work by using the discussion paper process to develop a recommended statement of municipal policy. In the course of this, a June, 1988, discussion paper, "How Should Municipalities Be Financed" first raised an number of questions related to property assessment in Alberta. The questions included whether assessment should be based on 100% of market value and whether Alberta should consider establishing a central Assessment Authority. Response to these questions indicated considerable interest in pursuing both ideas further. Thus the second draft of the finance discussion paper proposed that both ideas should be implemented for Alberta. This work was put on hold while the Committee focussed its attention on developing a new Municipal Government Act. In October, 1990, the Committee published a Special Issue paper on assessment in which it reported its conclusion that "the people and municipal governments of Alberta would be best served if a market value approach to assessment was used by a central assessment administration, referred to as an assessment authority." Respondents were invited to comment on the Committee’s conclusion . In April, 1991, the Committee published Legislation Papers providing discussion drafts of a "Property Assessment Act" and an "Alberta Municipal Assessment Corporation Act". Concerns have been expressed to the Committee regarding both the concept and the details of the proposed assessment corporation. Therefore the Committee has decided to issue a second discussion paper on this concept. It is expected that the discussion paper will be distributed in September, 1991, and that the Committee will report to the Minister by the end of the year. A variety of detailed comments has been received regarding the "Property Assessment Act" but there has been general support for the concepts proposed. The Committee, therefore, is prepared to report to the Minister on this Act. The draft has been prepared without reference to an assessment corporation but is written in such a style l that the central authority may be re-inserted easily if that is the final decision. The recommended Municipal Government Act includes the budget and taxation provisions of the existing Municipal Taxation Act. Because of the style of drafting the Municipal Taxation Act it is not possible to make amendments to simply repeal these provisions and leave the assessment portions of that Act in place. Therefore, the proposed new assessment legislation must proceed concurrently with the new Municipal Government Act. Environmental Scan Early in its work the Committee noted a general acceptance that property taxation is an appropriate source of revenue for municipalities. There certainly has been growing concern expressed about the increasing burden of property taxation, particularly for support of the K-12 education system. However, the general public is concerned not only about the level of property taxes but also about the property taxation system. In its 1989 series of public forums the Committee became convinced that the systemic concerns largely arose from a lack of understanding, even among municipal elected officials and certainly among the general public, of what a "mill rate” means and of how to relate the assessment of your property to what you think it is worth. In the recommended Municipal Government Act the Committee intentionally avoided using the term ”mill rate”, referring instead to the ”tax rate” . The Committee thought this would allow municipalities to express the tax rate as a percentage of the assessment, for example, which many people told the Committee they would find more understandable . Perhaps more importantly, however, most people could not relate their assessment to the value of their property. They could not understand why Edmonton construction values would be used to determine the value of a house in Medicine Hat. They could understand the use of depreciation related to the age of a house but they couldn’t understand how that affected its value. They also could not understand why 65% of the assessed value would be used to arrive at an assessment. Making that calculation seemed almost a waste of time and resources in the views of many people. In line with the suggestion of several people, the Committee concluded that most of these misunderstandings could be overcome by basing the assessment on market value. The Committee is aware that there is a fairly direct correlation between the existing assessments (factored to 100%) and market value for most properties. However, the straightforward use of market seems to be acceptable to most people and also provides a reliable standard for the work of assessors. ii The Committee appreciates the need to make special provision for some special types of properties. Farmland in the hands of a farmer needs to be assessed at its value for farming purposes. The existing system based on productive value seems adequate for this purpose. Some properties do not have a readily discernible market value (a refinery, for example) and so there will have to be a ’’manual” to guide assessors in valuing these properties. But for most properties, there are procedures available to determine market value with reasonable accuracy as the basis for a property taxation system for Alberta. Therefore this draft recommends the use of market value, subject to the exceptions mentioned above. Many transitional issues need to be addressed in the shift from the manual based system to a market value system. Special regulation making powers are proposed for this purpose. The Committee is proposing to change the names of the two existing bodies which deal with complaints or appeals against assessments. The ’’Court of Revision” is proposed to be called the ’’Board of Revision” (since it is not a ’’court” as that term is normally understood) . The ’’Alberta Assessment Appeal Board” is proposed to be called the ’’Valuation Appeal Commission” both to avoid the confusion of having two ’’boards” in the system and because a commission would normally be considered senior to a ’’board” . With relatively minor modifications the functions of the two bodies are proposed to be the same as under the existing legislation. The Committee has attempted to simplify and demystify the language of the assessment legislation to increase its understandability by taxpayers and elected officials alike. In the course of the drafting there have been numerous minor changes proposed which the Committee expects will make the property valuation system more effective and efficient . The Committee hopes that the discussion of the property taxation system has been as much of a learning experience for those who have participated in the consultation process as it has been for the members. in Digitized by the Internet Archive in 2016 https://archive.org/details/propertyassessmeOOalbe RECOMMENDED PROPERTY ASSESSMENT ACT August 1991
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