Bulletin – Final Update on the Special Purpose Business Property Assessment Review
December 16, 2016

The Ministry of Finance has worked to strengthen the property assessment system by implementing the recommendations of the Special Purpose Business Property Assessment Review (Assessment Review) in partnership with the Municipal Property Assessment Corporation (MPAC), the Assessment Review Board (ARB), municipalities and stakeholders.  These changes will ensure that Ontario’s property assessment system remains fair, accurate and predictable. 

This is the fifth and final progress bulletin on the implementation of the Assessment Review recommendations.

The Assessment Review report included 26 overarching recommendations for improving the property assessment system, as well as recommendations related to the assessment of seven types of special purpose business properties.  This bulletin summarizes how each of the recommendations has been implemented (see Appendix), and also provides an update on the advance disclosure initiative and the Province’s commitment to continued collaboration with all the parties in the property assessment system going forward.

Advance Disclosure

One of the key recommendations from the Assessment Review was the introduction of an advance disclosure process for special purpose business properties that involve complex assessment methodologies. The twelve special purpose business sectors which went through this process were: pulp and paper mills, sawmills, value-added wood products manufacturing plants, mining, steel manufacturing plants, automotive assembly plants, automotive parts manufacturing plants, pharmaceutical manufacturing, chemical manufacturing, oil refineries, food processing and aerospace manufacturing. MPAC completed the implementation of this process for the 2016 reassessment, which enabled affected businesses and municipalities to contribute to the determination of assessed values before the assessment roll was finalized. 

As part of this process, in May 2016, MPAC shared preliminary assessed values with property owners and affected municipalities reflecting the sector-based valuation parameters in the Market Valuation Reports posted on MPAC’s website. 

In early October, following discussion and consultation regarding the preliminary values with municipalities and property owners, MPAC released updated 2016 preliminary values, including a breakdown of full cost analytics. Throughout October, property owners and municipalities had a final opportunity to contribute to the determination of values for the 2016 reassessment. Property assessment notices for these properties were mailed on November 28, 2016.

Ongoing Collaboration

The improvements resulting from the implementation of the Assessment Review recommendations are expected to enhance the transparency, predictability and accuracy of assessed values for the 2016 reassessment. 

The implementation plans for the Assessment Review recommendations were guided by the Assessment Review Reference Committee, which consisted of municipal staff and stakeholder representatives and included five sub-groups focused on different categories of recommendations. The insights and contributions from the Reference Committee were a crucial factor for the successful implementation of the Assessment Review recommendations. The implementation of the recommendations was also informed by input received in focus group sessions held with property tax payer representatives. 

Following completion of the 2016 reassessment, the Ministry will work with municipalities and stakeholders to begin an evaluation of the advance disclosure process and the implementation of other recommendations from the Assessment Review.  The Ministry will consider making enhancements for future reassessments based on lessons learned from the 2016 reassessment.

As noted in the Update Bulletin issued in April 2016, the Ministry will continue to consult with taxpayer and industry representatives on sector and policy specific assessment policy matters.  To further support the work with municipalities, the Ministry established the Property Tax and Assessment Municipal Advisory Committee in Spring 2016, which provides a collaborative environment for municipalities and the Province to discuss property tax and assessment policy issues.  The committee is made up of staff from municipalities and municipal organizations that reflect the diversity of the municipal sector in Ontario, including representatives from regions across the province, rural and urban municipalities and upper and lower tier municipalities. AMO and the City of Toronto staff co-chair the meeting, in partnership with the Province.

The Ministry appreciates the contributions made by municipalities, municipal associations, taxpayer representatives and other stakeholders towards the implementation of the Assessment Review.  This collaboration amongst all parties has strengthened Ontario’s property assessment system. 

The Ministry of Finance is committed to continue working with MPAC, the ARB, municipalities and stakeholders to ensure that Ontario’s property assessment system remains fair, accurate and predictable.

APPENDIX:

Summary of Implementation of the Assessment Review Recommendations

The tables below outline how each of the Assessment Review recommendations has been implemented.

Table 1 – Overarching Recommendations
Implemented Recommendations
1. Evaluation of MPAC –The Ministry of Finance retained MNP to conduct an independent performance evaluation of MPAC, which was completed in Fall 2014.  The findings of the independent performance evaluation aligned with the Assessment Review data integrity recommendations that it is vital to have a strong data quality management framework, reflecting an approach to quality that is cohesive and proactive rather than responsive. For a summary of initiatives relating to data quality, see recommendations number 4, 15, 16 and 17.
2. Key Performance Indicators (KPIs) – Fair, meaningful and achievable performance standards for assessment services have been established in the new service level agreements with municipalities.  These performance standards were identified as priority services for municipalities and taxpayers.  In addition, in its Annual Report, MPAC publishes its Balanced Scorecard KPIs, which are reviewed and updated with input from municipalities and taxpayers as MPAC’s Strategic Plan is developed for each reassessment cycle.
3. Service Level Agreement – MPAC worked with municipalities to develop a province-wide standard service level agreement (SLA) that establishes performance standards for assessment services.  MPAC is piloting an SLA with 21 municipalities between July 2016 and July 2017, with full implementation province-wide in Fall 2017.
4. Leadership structures – MPAC has restructured its organization and realigned the focus of the Municipal and Stakeholder Relations team to strengthen MPAC’s relationship with municipalities and stakeholders, improve transparency and responsiveness, build trust and provide better service.  In addition, to address the recommendation from the independent performance evaluation of establishing a strong quality management framework, the role of MPAC’s Quality Services Commissioner has evolved to provide greater oversight on quality, with greater independence.  MPAC also conducted a leadership development initiative for members of its senior management team.
5. MPAC’s succession planning – MPAC has conducted talent reviews to improve succession planning within the organization.   Specifically a succession planning model was developed for top 10 positions within MPAC identified as ‘at risk’.  MPAC has also successfully filled key positions within the organization.
6. Roles, responsibilities and accountability frameworks – Through outreach to municipalities, taxpayer representatives and stakeholders, and public documentation such as Assessment Review progress update bulletins, as well as the redesigned Property Assessment Notices for the 2016 reassessment, the Province and MPAC have clarified roles and responsibilities in the assessment system.  The establishment of two-way Service Level Agreements with municipalities also clarifies roles and responsibilities by making accountability frameworks transparent.  The Property Tax and Assessment Municipal Advisory Committee, established by the Province in early 2016, is made up of a variety of staff-level municipal representatives. The role of the committee is to create a collaborative environment to discuss emerging property assessment and tax policy issues and to provide an opportunity for early engagement to discuss changes to these policies.
7. Education campaign to clarify appeal process – The Assessment Review Board (ARB) and MPAC have been proactively communicating with municipalities to increase awareness of the assessment appeal process and to encourage active municipal participation.  In addition, the ARB delivers presentations at numerous stakeholder events as part of its ongoing education outreach program.
8. MPAC’s board structure and governance – The role of each of the committees of MPAC’s board of directors has been published in MPAC’s Annual Report, which is available on MPAC’s website.  In addition, as noted in the 2016 Ontario Budget, the Province is consulting on potential changes to strengthen MPAC’s governance.
9. Accreditation standards – MPAC has developed and implemented accreditation standards for assessment valuation staff.  Property valuation specialists will be required to obtain and/or maintain specified accreditation designations.
10. Drafting of legislation and regulations – The Ministry of Finance has and will continue to work collaboratively with MPAC in the development of legislation and regulations to ensure that MPAC’s understanding and interpretation of legislative and regulatory changes clearly reflects the government’s policy intent. 
11. Information sharing by taxpayers – MPAC published an information and data sharing policy which provides clarity regarding the types of information and data that property owners need to provide.  As part of the advance disclosure process, MPAC actively sought out, examined, and where appropriate incorporated information shared by taxpayers and municipalities in the valuation process for special purpose business properties.
12. Guidelines for assessment methodologies – MPAC carried out iterative discussions with taxpayers, municipalities, and key experts, which informed the development of technical assessment methodology guides for special purpose business properties that explain valuation procedures.  Twelve methodology guides have been published on MPAC’s website for special purpose business properties.  
13. Advance disclosure process – Consistent with the Minister’s direction, MPAC established a new advance disclosure process for the 2016 reassessment, which enabled affected businesses and municipalities to contribute to the determination of assessed values before the assessment roll was finalized.  MPAC published an Advance Disclosure Protocol on its website in April 2015.  As well, as part of this new process, MPAC developed and published market valuation reports (MVRs) that detailed the data and analysis undertaken in the determination of valuation parameters, and subsequently shared preliminary values for special purpose business properties with property owners and municipalities.
14. Assessment methodology change protocol – The Ministry and MPAC have established an assessment methodology change protocol that ensures a consultative approach is taken when a major change in assessment methodology is proposed.  For example, as part of this protocol, MPAC led a consultative process in 2015 regarding the methodology used to assess multi-residential properties for the 2016 reassessment. 
15. Data integrity and accuracy – MPAC has implemented new process controls and data systems to improve data integrity and accuracy by providing additional transparency and tracking of assessment changes.  To enhance data quality and the accuracy of assessments, MPAC reviewed 2.9 million data points in preparation for the 2016 reassessment.
16. Improve quality assurance – MPAC has restructured the role of the Quality Service Commissioner to improve quality assurance of assessed values.  MPAC revised the role of the Quality Assurance Board Committee to improve the committee’s oversight.  The committee regularly advises MPAC’s Board of any concerns or issues and assesses the quality of MPAC’s operations.  The committee also approved a new Charter in June 2015 that enhanced the role of the Quality Service Commissioner.  In addition, MPAC published reports on its website which show the quality of the residential assessment roll for each municipality in Ontario.
17. Resolve data system interfacing limitations – In advance of the 2016 reassessment, MPAC developed a new platform for sharing assessment data with municipalities (Municipal Connect 2.0) and introduced enhancements to the online platform for sharing information with property owners (AboutMyProperty).  MPAC also worked with the ARB to improve data interface compatibility.
18. Improve appeal tracking and reporting mechanisms – An email notification system has been developed by the Online Property Tax Analysis (OPTA) system to improve tracking of appeals and alert municipalities of assessment at risk.  In addition, MPAC has enhanced its Municipal Connect platform, where appeals can be tracked by municipalities.
19. Consider expanding use of Request for Reconsideration (RfR) process – MPAC implemented the advance disclosure process for special purpose business properties.  Like the RfR process, advance disclosure encourages the early resolution of assessment issues outside of the appeal system, and is less formal than the appeal process.  The Province introduced legislative amendments to make changes to the RfR timelines to encourage greater effectiveness of the RfR process starting with the 2016 reassessment. 
20. Encourage use of alternate dispute resolution processes – The ARB has promoted the use of alternate dispute resolution through mediation and active adjudication.  In 2014, the ARB introduced new rules on mediation, which is a less formal means to resolve appeals and helps narrow the issues between parties and is also a more collaborative approach to resolving disputes compared to a hearing.  For the 2016 reassessment, the ARB’s strategic plan incorporates additional mechanisms to promote negotiated settlements.
21. Increase municipalities’ awareness of best practices and tools to mitigate financial risk as a result of appeals – OPTA tools and resources available to track and manage assessment at risk have been demonstrated to municipalities. Municipal associations have also shared best practices of financial mitigation strategies.   
22. Improve all parties’ compliance with ARB disclosure requirements – The ARB implemented sanctions where parties have not complied with disclosure requirements, including the dismissal of appeals.  In addition, MPAC introduced a work management system (WMS) to monitor MPAC and other parties’ compliance with these requirements.  
23. Develop a process to expedite appeals – Tools and resources to identify high priority appeals have been shared with municipalities, and the ARB is working with municipalities to refine its processes for quicker resolution of high priority appeals.
24. MPAC to adequately prepare for the appeal process – MPAC developed a work management system (WMS) to track appeal status and manage MPAC’s compliance with the ARB’s rules and timelines.  MPAC continues to prepare for hearings in a timely manner and reaches out to parties and proactively communicate through the appeal process.  For the 2016 reassessment cycle, MPAC has worked to improve its appeal disclosure package, which will include similar information as was provided to special purpose business property owners as part of the advance disclosure process.
25. Increase early and ongoing municipal engagement in ARB and settlement processes –MPAC transformed its Municipal and Stakeholder Relations department to ensure there is increased engagement with municipalities, including greater communication regarding assessment appeals.  In addition, MPAC utilizes Assessment Base Management to proactively keep municipalities apprised of assessment appeals.
26. Develop tools to assist municipalities better understand assessment at risk – Tools to analyse assessment at risk and the local inventory of properties under appeal are availableto municipalities through OPTA.  These tools can be used by municipalities to assess trends with regard to past appeal outcomes, to assess which appeals should be prioritized for involvement and to plan for possible future appeal outcomes.  Awareness of these tools has been promoted by the Province’s partners, including municipal associations.
Table 2 – Property Specific Recommendations
Implemented Property Specific Recommendations
Farms – MPAC has developed enhanced assessment methodology procedures for farm properties for the 2016 reassessment to ensure that a greater number of properties can be included in MPAC’s sales analysis for valuation purposes.
Grain Elevators – The Ministry introduced regulatory amendments to provide consistent province-wide classification treatment of grain elevators in accordance with the following parameters:
  • licensed commercial grain elevators are classified as commercial;
  • elevators located on farms that store only the farmer’s own grain are classified as farm; and
  • on-farm elevators are classified as farm or split farm/commercial if the farmer also has a licensed commercial elevator operation.
Wind Turbine Towers – The Ministry introduced regulatory amendments to prescribe that the assessment of wind turbine towers used in the generation of electricity shall be increased based on the average increase in industrial property values, updated with every four-year reassessment.
Industrial Land MPAC has published an assessment methodology guide for lands in transition which includes guidelines for the assessment of industrial properties located in designated employment areas.  This guide clearly describes valuation procedures for industrial properties in employment areas, utilizing the current permitted uses (zoning), rather than speculative uses.
Billboards – Regulatory amendments were introduced to provide that billboards shall be assessed based on the replacement cost approach.
Landfills Early in 2016, former Cabinet Minister and former MPAC Vice-Chair John Wilkinson led a review on the assessment methodology to value landfills. The recommendations in his report on the Landfill Assessment Methodology Review were accepted by the Minister of Finance. In Fall 2016, Mr. Wilkinson provided further advice on the implementation of certain technical aspects of his recommendations. Mr. Wilkinson’s advice on the definition of the new landfill property class is reflected in the property assessment notices recently issued to landfill property owners by MPAC.
Mills – The Province developed a shared responsibility approach, which included the provision of one-time financial assistance to a small number of northern municipalities most adversely affected by mill assessment appeal losses.   In preparation for the 2016 reassessment, MPAC implemented the advance disclosure process for the forestry sector.

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
Review the fourth progress update on the Assessment Review
Link to list of Reference Committee Members

FOR INQUIRIES CONTACT:
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