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Four Year Assessment CyclePhase-in of Assessment Increases
IMA Conference
Overview
Phase-in of “eligible increases”
What is the starting point?
Requests for Reconsideration and Appeals
Outstanding Decisions:
– New construction options
– Other types of in-year changes
– Frequency of mailing of Property Assessment Notice
IMA Conference
Phase-in of “Eligible Increases”
• For 2009 and subsequent years, if assessed value increases because of a general reassessment, the current value is reduced by
• 75% of the “eligible increase” in the first year
• 50% of the “eligible increase” in the second year, and
• 25% of the “eligible increase” in the third year
• Minister of Finance has authority to define “eligible increase”
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Phase-in of “Eligible Increases” cont’d
• Decreases in assessed value are immediate
• Initially applied only to residential, farm and managed forest classes, but was extended in Spring 2008 Ontario Budget to include all classes
• Phase-in applies at the tax class level
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Phase-In Example (Single Family Residential)
ValuationDate
AssessedValue forTax Purposes
2009 Tax Year 2010 Tax Year 2011 Tax Year 2012 Tax Year2008 Tax Year
January 1, 2005 January 1, 2008 January 1, 2008 January 1, 2008 January 1, 2008
$200,000 $240,000
$200,000$210,000
$220,000$230,000
$240,000
25%50%75%
100%
“Starting Point”2005 CVA
Destination 2008 CVA
$40,000 over 4 years = $10,000 /year
$240,000 $240,000 $240,000CurrentValueAssessment
AssessmentTo BePhased-in
“Phased-in Assessment”
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Phase-In Example (Mixed-Use Property)
ValuationDate
AssessedValue forTax Purposes
2009 Tax Year 2010 Tax Year 2011 Tax Year 2012 Tax Year2008 Tax Year
January 1, 2005 January 1, 2008 January 1, 2008 January 1, 2008 January 1, 2008
$200,000$140,000 (CT)$ 60,000 (IT)
$210,000$142,500(CT)$ 67,500 (IT)
$220,000$145,000(CT)$ 75,000 (IT)
$230,000$147,500(CT)$ 82,500 (IT)
(CT) $10,000 over 4 years = $2,500 /year
$240,000$150,000 (CT)$ 90,000 (IT)
CurrentValueAssessment
AssessmentTo BePhased-in
$240,000$150,000 (CT)$ 90,000 (IT)
$240,000$150,000 (CT)$ 90,000 (IT)
$240,000$150,000 (CT)$ 90,000 (IT)
(IT) $30,000 over 4 years = $7,500 /year
$200,000$140,000 (CT)$ 60,000 (IT)
$240,000$150,000 (CT)$ 90,000 (IT)
IMA Conference
What is the Starting Point?• 2005 Current Value Assessment, amended to reflect
any changes to the state and condition of the property prior to roll return, is the starting point for phase-in
• For example, if the 2007 roll return indicated a 2005 current value of $200,000 and this assessed value was amended in 2008 to $225,000, the starting point for the phase-in is $225,000
• Several activities underway to ensure that the 2005 starting point is up-to-date so that only the “eligible increase” is phased-in
• Starting point 2005 assessed value will appear on the Property Assessment Notice
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Requests for Reconsideration and Appeals • Right to request a reconsideration (RfR) and appeal
to the Assessment Review Board continues to be annual
• Under the current legislation, the 2005 starting point and phased-in value is not subject to RfR or appeal, only the 2008 current value can be reviewed/ appealed
• Bill 44, 2008 Spring Budget, gave Minister of Finance authority to prescribe other basis for appeal
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Requests for Reconsideration and Appeals cont’d
• If assessed value reduced through RfR or appeal, phase-in is recalculated with new 2008 current value as destination point
• Reduction applies only to years under appeal (and subsequent years as MPAC will carry forward any adjustments, where appropriate)
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Example: 2008 CVA Reduced on Appeal
2009 Tax Year 2010 Tax Year 2011 Tax Year 2012 Tax Year2008 Tax Year
January 1, 2005 January 1, 2008 January 1, 2008 January 1, 2008 January 1, 2008
$230,000 $270,000$240,000 $250,000 $260,000
ValuationDate
Taxable Assmt BeforeAppeal
$270,000
2010 Tax Year Under Appeal
Only 2008 CVASubject to Appeal
TaxableAssmt AfterAppeal
No Change No Change $240,000 $245,000 $250,000
$250,000RecalculatePhase-in
$230,000CVA reduced to $250,000 by ARB$20,000 over 4 years = $5,000/year
$40,000 over 4 years = $10,000/year
2009 Tax Year Not Under Appeal
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Outstanding Decisions
1. Will new construction be phased-in?
2. Will other in-year changes be phased-in? If so, how?
3. Frequency of mailing of Property Assessment Notices?
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1. Phase-in of New Construction
Two Options Under Consideration
1. No phase-in of new construction
– property assessed at its destination CVA with no adjustment for phase-in
2. Phase-in from some starting point to the assessed value –possible options include
a) establish a starting point by determining a 2005 current value as if the property had existed in the previous base year
b) value of new construction would be discounted by a factor which accounts for the increases that occurred as a result of the reassessment
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Example: New Construction OptionsExample: New house added June 1, 2010 with new 2008 CVA = $270,000
Option2(b)Factored*Assessment
2009 Tax Year 2010 Tax Year 2011 Tax Year 2012 Tax Year2008 Tax Year
January 1, 2005 January 1, 2008 January 1, 2008 January 1, 2008
$270,000
January 1, 2008
2005 CVA if it had existed
$20,000 over 2 remaining years
$240,000 $250,000 $260,000
Option 1NoPhase-in
$270,000
$230,000 $270,000
ValuationDate
Option 2(a)Recalculate2005 Value
Property assessed at 2008 destination CVA
immediately
$270,000
$270,000$249,000 $259,000
*Option 2(b): Assume market increase from the 2005 base year to the 2008 base year in this municipality for residential property was 15%. The 2008 CVA with the new house is discounted by the market increase to arrive at an estimate of the 2005 starting point.
2005 CVA determined by discounting 2008 CVA
$229,000 $239,000
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2. Phase-in of Other Types of Property Changes
• Awaiting key tax policy decision as to whether new construction is phased-in before decisions will be finalized with respect to how other types of property changes will be handled
– Severances and consolidations
– Classification changes
– Renovations and other improvements
– Demolitions, etc
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2. Phase-in of Other Types of Property Changes cont’d
• Options under consideration include:– No phase-in
– Recalculate 2005 CVA
– Discount by the average increase in property value in the municipality
– Discount assessed value based on increase the property experienced in the reassessment
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2. Example - Discount by Property Factor Option• Assume a small addition valued at $30,000 is added to an existing
residential property which was being phased-in from 2005 CVA of $200,000 to a 2008 CVA of $240,000; new 2008 CVA after the addition is $270,000
• Phased-in assessment after the addition is determined as follows:
– This property increased by 20% between 2005 and 2008
– Discount assessment after the addition by 20% to arrive at an estimate of what the 2005 CVA would have been had the addition been present before the reassessment
– New 2005 starting point is $ 270,000 x .80 = $216,000
– Phased-in assessment is recalculated based on new starting point
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3. Frequency of Mailing of Property Assessment Notice
Option A: Once in four year Cycle
• Property taxpayers given information about all four years of phase-in on initial Notice
• Less costly to administer
• Improves customer service in non-reassessment years
• Focus on serving property taxpayers who have experienced a change in assessment
Option B: Annually
• Property taxpayers receive timely notification of their assessment for the upcoming tax year
• Ongoing, direct communication with property taxpayers – open and transparent
• However, may be seen as wasteful to advise of phase-in changes annually
MPAC Products
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Background
• Complete review of existing MPAC products
• Identified products that require changes
• MPAC currently at various stages of the implementation process
– Business Analysis, Development, Quality Testing and User Acceptance Testing, etc.
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Year End Tax File - 2009 Taxation
• Current format to include:
– Phased-in assessment (for current tax year)
• Realty Tax Class /Residential Tax Qualifier (RTC/RTQ)and attributable assessment (school support) level
– 2008 Current Value Assessment (destination)
• RTC/RTQ level
• Additional RTC/RTQs as a result of the Business Education Tax (BET)
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Year End Tax File cont’d
• Provincial Land Tax Reform
• Structure of the file unchanged• Re-map and re-name fields to accommodate the above
• Supplemental Product to support four year cycle (data classification format - .xml) to include:• 2005 Current Value Assessment (starting point)
• Each year of the phased-in assessments
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Assessment Roll - 2009 Taxation• Current format to include:
• 2005 Current Value Assessment (starting point)
• 2008 Current Value Assessment (destination)
• Phased-in assessment (for tax year only)
• Assessment at the RTC/RTQ and attributable assessment (school support) level
• Additional RTC/RTQs as a result of the Business Education Tax (BET)
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Current View Assessment Roll
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Future View Assessment Roll
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Omitted/Supplementary Tax File and Listing
• No format changes planned for 2008 deliveries
• Additional RTC/RTQs as a result of the Business Education Tax (BET)
• Similar changes required for 2009 as with year end tax file and roll for 2009
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Market Change Profile 2008• Market Change Profile (MCP) - a series of reports and
data, produced by MPAC and made available to municipal and provincial stakeholders to assist with setting annual budgets and other financial planning.
• MCP captures an estimate of assessment growth, as well as the estimated market change.
– Additional data included on data file
• Special Rate Area information to support Provincial Land Tax (PLT) Reform
• Phased-in assessments, all years, at the RTC/RTQ level
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Market Change Profile 2008 cont’d– Two Deliveries
• Notice Based (September to November)• Roll Based (December 9)
– Additional Product• Compares 2009 phased-in assessment to 2005 Current Value
Assessment
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New 2008 Proposed Property Assessment Notice
• All property taxpayers receive standard Notice
• Some property taxpayers receive added pages/schedules, e.g.,
• Multi-residential property taxpayers receive List of Occupants page(s)
• Multiple use properties, etc.
• Property taxpayers who filed a Request for Reconsideration or an Assessment Review Board appeal receive history and carry forward page
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Property’s Assessed Value/Classification
• Classification• 2008 assessed value• 2005 assessed value – state and condition of the property prior to rollreturn
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Message/Phased-in Assessment
• Messaging, although not legislated, to explain phase-in and extent to which assessment will change each year
• Four years of phase-in and accompanying assessment• Phase-in does not apply to assessment decreases
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Percentage of Change
• Property’s percentage of change of phase-in – year one (2009)• Municipality/Local Taxing Authority’s average percentage ofchange of phase-in – year one (2009)
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Property Summary
• Type of property• Number of acres (or some measure to show extent of land)• Summary of four property elements
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Property Profile Information
• Visit AboutMyPropertyTM complete with a User ID and password for easy access
• In addition to four property elements, property profile readily available
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Conclusion
• 2008 Notice is “a clear improvement” over previous notices according to focus groups:• More friendly and professional
• Level of detail and order of information flows better and helps understanding of the Notice
• Improvements to the 2008 Notice are consistent with our focus on our new customer-centred corporate strategy
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Conclusion cont’d
• Improvements to the 2008 Notice will benefit all 4.7 million property owners in Ontario
• Information is presented in a clear and accessible fashion with detailed and easy-to-find information on where to turn if they have any questions
Implementing the Four Year Assessment Cycle and
Phase-in of Assessment Increases
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Ontario Budget Implementation Project
• Four major policy areas impacting 2008 business year
– Ontario Budget 2007 and 2008
– Reassessment
– Provincial Land Tax Reform
– Ontario Ombudsman’s Recommendations
• Eight business initiatives brought under one core project – a unique and new project concept
• Enterprise-wide, integrated project oversight
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2008 Business Initiatives
• MPAC Products
• Assessment Practices
• Business Education Tax
• Reassessment Planning
• Request for Reconsideration/Appeal
• General Release of Assessment Data (GRAD)
• Property Assessment Notice Re-design
• Property Taxpayer Portal
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Enterprise-Wide, Integrated - Approach
• February 2008 – Project Leads, business and systems experts, brought together to fast-track project scope definition
– Fundamental change to business processes/procedures and system platforms including Integrated Property System (IPS)
• March to present – systems analysis and development; on track
• Project deliverables guided by first in-home Notice date of early September
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Preparing for Year End Activities
• Education/Training Program
– MPAC staff
– Property taxpayers
– MPAC’s stakeholders such as municipalities, provincial ministries/agencies, etc.
• Communications
– Timely information about MPAC’s products and degree of change, e.g., municipalities and their system suppliers, etc.
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Preparing for Year End Activities cont’d
• Presentations/Information Sessions
– Searching out opportunities to prepare property taxpayers and MPAC’s stakeholders about the four-year cycle and mandatory phase-in changes
Q & A Session
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Contact InformationGreg Baxter, M.I.M.A. Joan Young
Project Manager Business Project Manager
Municipal Property Assessment Corporation Municipal Property Assessment Corporation
Office (905) 905-837-6213 Office (905) 905-837-6189
[email protected] [email protected]
Rose McLean
Director, Legal and Policy Support Services
Municipal Property Assessment Corporation
Office (905) 837-6160
