Bulletin - Special Purpose Business Property Assessment Review Update April 8, 2016

This is the fourth bulletin on the progress of the implementation of the Assessment Review (Special Purpose Business Property Assessment Review) recommendations. The Ministry of Finance is implementing these recommendations for the 2016 province-wide reassessment in partnership with the Municipal Property Assessment Corporation (MPAC), municipalities and stakeholders.

The Assessment Review report included specific recommendations related to the assessment of special purpose business properties, as well as overarching recommendations for strengthening the property assessment system.

Advance Disclosure

As noted in previous bulletins, one of the key recommendations from the Assessment Review is the introduction of an advance disclosure process for special purpose business properties that involve complex assessment methodologies.  An important objective of this process is to reduce the number and impact of assessment appeals by increasing the transparency, predictability and accuracy of assessed values.

MPAC is now implementing this process, which enables affected businesses and municipalities to contribute to the determination of assessed values before the assessment roll is finalized. 

Most recently as part of the advance disclosure process, MPAC developed market valuation reports (MVRs) that detail the data and analysis undertaken in the determination of valuation parameters for special purpose business properties.  MPAC held consultations on draft MVRs with property owners and municipalities in Fall 2015, and posted the final reports on its website in January 2016.  Information shared by consultation participants has been valuable in improving the quality of information used by MPAC in the determination of assessed values. 

MPAC plans to begin sharing preliminary assessed values, including a breakdown of key valuation components, in early Spring 2016, followed by full cost analytics.  Property owners and municipalities will be provided an opportunity to meet with MPAC to discuss these values. The advance disclosure process is expected to be completed by Summer 2016. 

Through the advance disclosure process, MPAC has received valuable data from business property owners, particularly from the auto assembly manufacturing and forestry industries. The information provided was used by MPAC to refine the market analytics that underlie the assessments for properties in these industries. Full participation and collaboration from property owners, municipalities and industry experts will continue to be a critical factor in the success of the advance disclosure process.

The consultative process led by MPAC regarding the methodology used to assess multi-residential properties is another good example of the advance disclosure of information prior to the delivery of the assessment roll. This consultation has been undertaken as part of the new assessment methodology change protocol that MPAC and the Ministry of Finance have established to further support the objectives of accuracy, predictability and transparency through early disclosure of information.  The protocol ensures that a consultative approach is taken when a major change in assessment methodology is proposed.  

In addition, to support greater participation in advance disclosure, a legislative amendment was made to the Assessment Act in 2015 to strengthen the protections for commercial proprietary information received by MPAC for assessment purposes.  As such, MPAC requires timely access to reliable site-specific information and market data in order to prepare accurate assessed values for all properties in Ontario. 

The legislative amendment is intended to increase compliance with MPAC’s information requests by increasing property owners’ confidence in MPAC’s ability and duty to protect sensitive commercial proprietary information shared by property owners.  The draft regulation that defines “proprietary information of a commercial nature” was posted on the Regulatory Registry last Fall.  A consultation session with taxpayer and municipal representatives was also held to obtain feedback on the proposed regulation.  The Ministry plans to finalize the regulation in the near future and will keep stakeholders informed. 

In summary, the advance disclosure process and the assessment methodology change protocol are transforming the property assessment system into a more transparent and collaborative system where municipalities and property owners are able to contribute to the determination of values and methodologies used to assess properties. The Province is confident that these improvements will result in a more transparent, accurate and predictable assessment system for the 2016 province-wide reassessment.

Property-Specific Assessment Review Recommendations

The Assessment Review recommended that the Ministry of Finance and MPAC continue to consult with stakeholders to arrive at a recommended valuation approach for landfills in time for the 2016 reassessment.  To support this objective, the Ministry of Finance has selected a Reviewer who will provide recommendations with regards to an appropriate valuation methodology to assess landfills.  Through a competitive procurement process, the Ministry has retained the services of PricewaterhouseCoopers (PwC).  PwC has brought former Ontario Cabinet Minister and former Vice-Chair of MPAC John Wilkinson to lead this review. 

The Reviewer has sought input from stakeholders and municipalities on a recommended approach that aligns with the principles of accuracy, fairness, transparency, predictability and feasibility of implementation for the 2016 reassessment cycle.  Mr. Wilkinson is expected to provide his recommendations to the Minister by early Spring 2016.

With respect to the assessment of farm properties, consistent with the recommendation in the Assessment Review, and based on discussions with the Ministry’s Farm Assessment Working Group as well as industry groups and municipal stakeholders, MPAC has developed enhanced procedures for the 2016 reassessment to ensure that a greater number of farm properties can be included in their sales analysis for valuation purposes.  For example, MPAC is:

  • expanding the sales period from 3-5 years to a longer period of 6-8 years;
  • including sales of smaller parcels of farmland and farmland with minimal outbuildings in the sales analysis; and
  • simplifying the geographic areas that are used to adjust for local conditions.

In addition, the Province announced in the 2016 Ontario Budget that the government will be consulting with the farming community and the municipal sector to review the property tax treatment of small-scale value-added activities on farms, while maintaining a level playing field for large agricultural processors. 

Over the next several months, the Province will be working with the municipal sector and the farming community, including the Association of Municipalities of Ontario (AMO) and the Ontario Federation of Agriculture (OFA), to develop options for the government’s consideration.  The review will be completed in time to inform decisions that may be considered for implementation in the 2017 taxation year.   

Appeal System

As announced in the 2015 Ontario Economic Outlook and Fiscal Review, the Province has also made improvements to the Request for Reconsideration (RfR) process to standardize timelines and support the early resolution of assessment issues – a recurring theme expressed during the Assessment Review.

Property owners who disagree with the assessment or classification of their property may ask MPAC to conduct a review by submitting an RfR.  Starting with the 2016 reassessment for the 2017 taxation year, the deadline for a property owner to file an RfR with MPAC in a reassessment year will be 120 days after the notice of assessment is issued.  For years in which there is no reassessment, the deadline for property owners to request a reconsideration will remain unchanged at March 31 of the taxation year.

For the 2017 taxation year, MPAC will begin mailing residential assessment notices in Spring 2016.  Notices will be mailed in a staggered fashion by geographic area over the course of several months.  In the context of MPAC’s plans for earlier and staggered notice mailing for the 2016 reassessment, the changes to the RfR program are designed to create a more equitable process as the amount of time to file RfRs will be standardized at 120 days for all property owners.  As well, consistent with the objectives of the Assessment Review, the RfR changes will support the earlier resolution of assessment issues.

The Province will continue to work with stakeholders to introduce refinements that promote the early resolution of assessment issues and the accurate determination of assessed values through the timely sharing of information.  For example, the Ministry will seek input on possible changes that could improve the RfR process for mixed-use properties.

MPAC Governance

To support MPAC’s ongoing work to improve the property assessment system, the 2016 Budget proposed to enhance the continuity of MPAC’s leadership by increasing the length of time that members can serve on the board of directors.  Currently, board members can serve for a maximum of two terms of up to three years each.  It is proposed that the maximum period of service on the board be increased from two terms to three terms.  This would facilitate continuity of membership on the board, allow members to make a greater contribution to the oversight of MPAC’s operations and develop the necessary expertise to more effectively fulfil their mandate.

The Province will also be consulting on potential further changes to strengthen MPAC’s governance and support its objective of remaining accountable to stakeholders while maintaining excellence in assessment delivery.

Next Steps

The implementation plans for the Assessment Review recommendations were guided by the significant contributions of taxpayer representatives, municipalities and other stakeholders. The resulting improvements are expected to enhance transparency, predictability and accuracy of assessed values for the 2016 reassessment.  The Ministry of Finance has provided regular public updates, such as this bulletin, on the implementation of the Assessment Review recommendations. The ministry will publish a final bulletin before special purpose and other business property assessment notices are mailed by MPAC in October 2016.   

The Ministry of Finance is committed to continuing to work with MPAC, the Assessment Review Board (ARB), municipalities, taxpayers and professional organizations to strengthen Ontario’s property assessment system.

The Ministry will continue to consult with taxpayer and industry representatives on sector-specific assessment policy matters.  In order to further support the work with municipalities, the Ministry is establishing a new Property Tax and Assessment Municipal Advisory Committee, which will provide a collaborative environment for municipalities and the province to discuss property tax and assessment policy issues.  

If you have questions or comments about the implementation of the Assessment Review recommendations, please contact:  Assessment Policy and Legislation Branch, Provincial Local Finance Division, Ministry of Finance, at: SPBPAR@ontario.ca.

LEARN MORE

Read the Report on Special Purpose Business Property Assessment Review
Visit the Municipal Property Assessment Corporation – Advance Disclosure
Read the Minister’s Direction to MPAC – The Ontario Gazette
Review the first progress update on the Assessment Review
Review the second progress update on the Assessment Review
Review the third progress update on the Assessment Review

FOR INQUIRIES CONTACT:
Provincial Local Finance Division, Ministry of Finance

For media inquiries visit:
http://news.ontario.ca/media/en/contacts


SPBPAR@ontario.ca

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