Editorial – Assessment time bomb

The 2021 provincial budget froze municipal property tax assessment values at 2020 levels for three years. Until 2023, property values will remain the same. That action provided short-term relief for homeowners during the unknowns of the COVID-19 pandemic. It also began the countdown on a ticking time bomb for property owners and municipalities.

The last time the Municipal Property Assessment Corporation assessed property values in Ontario was 2016. This means the reassessment of homes in 2023 will factor in seven years of increases in property value. Since 2016, home prices in this region have increased by over 40 per cent. The increase in the past 12 months has been over 20 per cent alone. Property sales are one of the key factors used by MPAC to calculate assessment increases. Improvements to property is another.

Since the pandemic began, many people have renovated their properties instead of going on vacation or buying new homes. The cost of materials has gone up due to high demand. Lumber alone has doubled in price in less than five years. Renovations add value to existing homes. A rising tide lifts all boats. Property owners have not had to do anything to their property to add value at all. This affects everyone.

Freezing assessments means that next year municipal taxes will go up the usual one-to-four per cent depending on your location. Any new money municipalities receive to the tax rolls is from new home growth. That means relative stability until 2023 when the bill will really come in. MPAC assessment increases are usually phased in over a four year period. Starting in 2023, your homes assessed value will go up, and if the super-heated real estate market continues, it will be much higher than the gains from 2016-2021.

The other side of this is what municipalities will have to do, and the risk to property owners. Wild increases in assessments mean more money for municipalities. The challenge for municipal leadership will be balancing assessment increases with the needs and wants of the budget. Far too often, past leaders have taken a year-over-year assessment increase and also added in a tax increase. Increased assessments also affect funding from upper levels of government. For example North Stormont has high farm property assessments and the lowest population in SDG Counties. This places that community at a significant disadvantage compared to South Dundas. Less money at one level means higher taxes for property owners or less services.

The Ford government’s approach to freeze MPAC assessments until 2023 was characterized by outgoing SDG Counties Warden Allan Armstrong as “irresponsible” and we agree. No value assessments in seven years leaves a ticking time bomb of taxation messes for property owners and municipalities. Long term, it is a very expensive way to score cheap political points leading up to a provincial election.

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