Presentatiom by MPAC to the Oshawa Ratepayers Association

1. MPAC Presentation to the
Oshawa Ratepayers
Association
Presentation by
Bill Bradley, B.A., AACI, P.App.
Account Manager of Business Relations, MPAC
April 14, 2009

2. Presentation Topics
• MPAC Roles, Responsibilities and Relationships
• Overview of Provincial Budget changes from
2007 & 2008
• Review of a Sample Assessment Notice
• Key Sections of the Assessment Act
• How are assessed values established?
• Overview of CAMA

3. Presentation Topics (cont’d)
• Overview of Valuation Process
• Reviewing Your Assessment
• Access to Property Information

4. Ground Rules
• What we cannot address :
• Tax policy or changes to tax policy (Province of
Ontario)
• Individual Property Issues (contact the MPAC Call
Centre or Valuation Review Specialist at the local
assessment office)
• Municipal tax or servicing issues (City of Oshawa or
Durham Region)

5. MPAC Roles, Responsibilities and
Relationships

6. MPAC Roles, Responsibilities and Relationships
Legislate
Administer
Adjudicate Assessment
Review Board
Tax Municipalities & Province

7. MPAC: Roles and Responsibilities
• Assign a Current Value Estimate (CVA) & property
tax class to 4.7 million properties on a four year cycle
• Annual Assessment Rolls to all 445 municipalities
• Prepare provincial jury lists, school support lists and
municipal voters’ lists

8. MPAC: Roles and Responsibilities cont’d
• MPAC assigns CVA as well as property class
• Classification of property based on use
• Seven major property classes
– Residential, multi-residential, commercial, industrial,
pipeline, farm, managed forests
• Property class also determines Municipal tax rate to
apply

9. Assessment Act
• The Assessment Act is the legislation that outlines
the “rules” around property assessment in Ontario
• The Assessment Act directs MPAC to assess all
properties at their Current Value Assessment as of a
specific date (eg. Jan 1, 2008)
• The Assessment Act outlines the definition of Current
Value Assessment (CVA)
• The definition of CVA is what the property would be
expected to sell for as of the effective date of
valuation on the open market between a willing seller
and a willing buyer

10. Assessment Related Budget Changes:
2007 and 2008

11. Ontario Budget 2007/2008:
Assessment Related Changes
• Assessment Cycle changes to four years (tax
policy change)
– Four year cycle commences for taxation
commencing Jan. 1, 2009 based on Jan. 1, 2008
assessed value
– Next assessment update will be based on Jan.1,
2012 valuation date for taxation beginning Jan. 1,
2013

12. Ontario Budget 2007/2008:
Assessment Related Changes (cont’d)
• MPAC will phase in assessment increases over four
year cycle for residential, farm and managed forest
properties (2007 Budget).
• Extended to all property classes (2008 Budget)
– Example: Assume property increased in value by
20% from Jan. 1, 2005 to Jan. 1, 2008
– Means 5% increase in assessment over the next 4
years (2009,2010, 2011, 2012)
• Assessment decreases are immediate

13. Assessment Update
Cycle
Update Year Taxation Year(s) Valuation Date
2005 2006, 2007, 2008 January 1, 2005
2008 2009, 2010, 2011, 2012 January 1, 2008

14. Four Year Assessment Cycle
with Phase-In (Example)
Assessed Value of Your Property
Property Classification Residential
Your Property Value as of January 1, 2008 $240,000
Your Property Value as of January 1, 2005 $200,000
Over 3 Years Your Property’s Value Changed By $ 40,000
Therefore, the “phase-in” of the assessment increase would be:
2009 Tax Year $210,000
2010 Tax Year $220,000
2011 Tax Year $230,000
2012 Tax Year $240,000

15. New Terminology
• Starting Point
– The starting point will be the 2005 CVA
• Destination Value
– The destination value will be the 2008 CVA
• Phased-in Assessment
– Any increase in an assessed value from 2005
to 2008 will be phased-in in equal increments
over the four tax year ( 2009 through 2012)
– If there is an assessment decrease from 2005
to 2008 CVA then this 2008 CVA becomes the
phased in assessment for the next four years

16. Review of a Sample Assessment
Notice

17. Reassessment Impacts
Generally speaking if the subject property’s percentage
change from 2005 to 2008 is:
●
Less than the average change for Municipality then taxes,
as a result of the reassessment, would decrease
●
is close to the average percentage change for the
Municipality then, as a result of the reassessment, there
would be little or no tax impact

18. Reassessment Impacts con’t…
• If the percentage change from 2005 to 2008 is
above the median percentage change for the
Municipality then taxes, as a result of the
reassessment, would be expected to increase
It is important to note that any tax rate changes
would then have to be factored into any
reassessment changes

19. Request for Reconsideration (RfR)
• There have been changes to the legislation affecting
the request for reconsideration process
• Request for Reconsideration is the free and informal
review of an owners current value
assessment/classification
• Property owner would file a Request for
Reconsideration form with MPAC stating the reasons
for the review
• For example, property owner may consider filing RfR
if they purchased the property on the open market in
and around the effective valuation date date of
January 1, 2008 at a purchase price less than the
current value assessment

20. Request for Reconsideration
Is it Mandatory?
• Beginning in 2009, Request for Reconsideration
(RfR) mandatory first step for properties in the
residential, farm & managed forest property classes
[39.1(3)]
• RfR not mandatory for business classes (commercial,
industrial, multi-residential properties)

21. Request for Reconsideration
Filing Deadlines
For 2009:
• Regular Notices - March 31 of taxation year
[39.1(1)]
• Supplementary/Omitted/Amended Assessments –
within 90 days of Notice mailing [39.1(3)]

22. Request for Reconsideration
Deadlines to Complete RfRs
• MPAC shall mail the results of its reconsideration:
– By September 30 of taxation year, or
– By November 30, if all parties agree to
extension [39.1(7)]
– Within 180 days of request being made, for
supplementary/omitted/amended assessments
[39.1(8)]

23. Request for Reconsideration
Settlements
• MPAC to give notice of settlement to the clerk of the
municipality [39.1(9)]
• Clerk must alter the tax roll and levy taxes according
to the amended assessment [39.1(10)]
• Municipality may appeal to the Assessment Review
Board within 90 days after receiving the settlement
[39.1(11)]

24. ARB Appeals
Deadlines
ARB appeal deadlines for 2009:
• Regular Notices -
– 90 days after the mailing of the results of the
reconsideration [40(5)]
– March 31 of the tax year for property owners in
business classes who do not file an RfR [40(6)]

25. ARB Appeals
Onus
• Onus simply means who has the burden of proving
their case in any legal proceeding
• When value is grounds for appeal, burden of proof on
correctness of current value lies with MPAC [40(17)]
• Traditional onus on the appellant applies to all other
grounds for appeal (classification of property, school
support)

26. ARB Appeals
Onus (cont’d)
Burden of proof rests with the appellant:
If he/she fails or refuses to:
– Allow MPAC to inspect property
– Comply with a request for information and
documentation [40(18)]
•Person whose assessment is subject of an appeal
may make a closing statement [40(15)]

27. ARB Appeals
Test on Appeal
• For 2009 and subsequent taxation years, the ARB must:
– Determine the current value of the property (accuracy);
AND
– Have reference to similar lands in the vicinity and adjust
the assessment to make it equitable only if comparison
results in reduction (equity) [44(3)]

28. Correction of Factual Errors
Amended Notices
• For 2009 and subsequent taxation years, errors in
assessment and classification may be corrected by
Amended Notice [32(1.1)] if the error:
– Called a Post Roll Amended Notice (PRAN)
– Results from incorrect factual information
– Is not from a change in opinion of current value
• Factual errors may be corrected at any time during
taxation year

29. Other Announcements
Phase-in Extended
• 2007 Ontario Budget - mandatory 4-year phase-in of
assessment increases for residential, farm and
managed forest properties
• 2008 Ontario Budget – extended 4-year phase-in of
assessment increases to all property classes

30. Ontario Budget 2007/2008:
Assessment Related Changes (cont’d)
Tax Grants and Credits for Seniors
• New Senior Homeowners’ Property Tax Grants for
seniors with low and moderate incomes who own their
own homes:
●
Up to $250 in 2009
●
Maximum increased to $500 for 2010 and
subsequent years
• Enriched Ontario Property and Sales Tax Credits for
Seniors for low-income seniors who own or rent their
homes

31. Tax Grants and Credits for Seniors
• Senior couples with $250 or more in property taxes in
2008 and incomes up to $45,000 will receive the
maximum grant in 2009
• Single seniors with $250 or more in property taxes in
2008 and incomes up to $35,000 will receive the
maximum grant in 2009
• Application doe the 2009 grant and Ontario Tax credit
is contained in the 2008 personal income tax returna
(Form ON 479)
• For more information call 1-800-337-7222

32. Key Sections of the Assessment Act

33. Key Assessment Act Sections
• What is assessable in Ontario?
• Definition of Current Value

34. What is assessable?
• According to the Assessment Act of Ontario all land,
real property and real estate is assessable
• This will include:
– Land covered with water
– All trees and underwood growing on land
– All buildings and structures erected or affixed to the land
• Personal property is not assessable in Ontario

35. What is Current Value Assessment?
• According to the Assessment Act, in relation to the
land, current value is what a property would be
expected to sell for on the open market between a
willing seller and a willing buyer
• Arms-length, open market sales become part of the
MPAC analysis in determination of CVA
• Family sales, sales between related parties, power of
sales, foreclosures, sales between related companies
are eliminated of analysis purposes

36. How are assessed values established?

37. How are assessed values
established?
• 3 recognized approaches to estimating value
– Direct Comparison Approach
– Income Approach
– Cost Approach

38. Property Types Valued by the
Income Approach
• Office Buildings, Shopping Centres
• Multi residential – Rows & Apartment
Buildings
• Hotels, motels
• Nursing homes, Retirement homes
• Golf courses
• Multi-use properties
• Specialty properties i.e. Air Canada Centre,
Scotia Bank Place, CN Tower, Rogers
Centre.

39. Valuation Approaches (cont’d)
• Direct Comparison (Sales) Approach
– Models the behavior of buyers and sellers in the real
estate market
– Compares property to be valued with recently sold
properties
– Works best when there are sufficient comparable sales
– Sales Comparison approached used to value s.f.d.,
condominium, res. waterfront, vacant land, store front
retail Toronto and Ottawa
– Property sales best evidence at Tribunals

40. Valuation Approaches (cont’d)
• Cost Approach
– Seeks to determine the replacement cost of the
improvement less depreciation plus the land value
– Primary approach on properties that do not regularly
trade in marketplace
– Land estimate from vacant land sales and land residual
methods
– MPAC has developed an Automated Cost system
(ACS)

41. Valuation Approaches Used
INCOME
39,900.0 / 1.1%
LEGISLATED
COST
2,300.0 / .1% 322,850.0 / 8.8%
DIRECT
COMPARISON,
MRA
3,288,700.0 / 90.0%

42. Current Value vs. Sale Price
Current Value
– Most probable price a property should bring in a competitive
and open market under all conditions requisite to a fair sale
– MPAC derives a median sale price which will incorporate the
range of market sales
Sale Price
– Price a particular buyer and seller agree to in a particular
transaction
– Only indications of market value
– Range in sale prices possible for a particular property
Source: Mass Appraisal of Real Property, IAAO

43. Overview of Computer Assisted
Mass Appraisal (CAMA)

44. Single Property Versus Mass Appraisal
• Single property appraisal is the appraisal of one
property at a time
• Mass appraisal is the process of valuing a group of
properties as of a given date, using standardized
methods and allowing for statistical testing
• Multiple Regression Analysis (MRA) is an appraisal
application of the sales comparison approach

45. Five Key Components to Value Using Sales
Comparison
85% of a property’s value is generally attributed to
these five characteristics
1. Building area
2. Construction grade
3. Age -Adjusted for additions and renovations
4. Lot dimensions
– Frontage, Depth and/or Acreage
5. Location, location, location (neighbourhood)

46. Sample MRA Value Calculation: Residential
• Sample subject property has the following attributes:
– Located in the area referred to the “East End of Town“
– Lot frontage 50 feet; lot depth 120 feet
– 2 story house with full basement built in 1985
– Finished basement area of 500 square feet
– 2 full and one half baths
– Single car attached garage
– Fireplace, air conditioning, small deck
– Property abuts an active railway line

47. Relationship between Sale Price & Living Area
Sales Price v. Living Area
700,000
600,000
500,000
Sales Price
400,000
300,000
200,000
100,000
0
1,000 2,000 3,000 4,000 5,000
Living Area (sq. ft.)

48. What makes up the value of your home ?
Location & Site
50 feet @ $2,000 pff
East End of Any Municipality - Base Value = $30,000
’
120
$100,000

49. Structure
Age of Structure
May, 1985 = - $ (15,000)
2nd Floor
800 s.f. @
$45/sq.ft. =$36,000
Main Floor Attached Garage
800 s.f. @ $60/sq.f. =$48,000 250 s.f. @ $20/sq.ft.
=$5,000
Deck - 150 s.f. @ $8/sq.f. = $1,200
Bsmt - 800 s.f. @ $10/sq.ft. = $8,000
Finished Bsmt
500 s.f. @ $12/sq.ft. = $6,000

50. Additional Adjustments to Value
$3,000
Yes => Minus $ (12,000)
$11,000 $2,500

51. LOCATION $3,000
STRUCTURE
+
$11,000 $2,500
SITE Yes => - $ (12,000)
$ 223,000

52. Overview of the Valuation Process

53. What is the Valuation Process?
• Data Collection
• Analysis
• Values to Field Offices for Fine Tuning
• Quality Testing of Models
• Fine Tuning and Value Application
• Production and Mailing of Assessment
Notices

54. What is the Valuation Process (cont’d)
• Production and Mailing of Assessment
Rolls to Municipalities
• Open houses
• Requests for Reconsideration
• Assessment Appeal if necessary

55. Data Collection
• Property information is collected by MPAC from a
number of sources
– Land transfer tax statements (sale prices,
owner names)
– Building permits (from municipalities)
– On-site inspections
– Sales investigations
– Income and Expense Data from owners
– Realnet, Realtrack, Marsh reports

56. Analysis of Data
• Sales analysis and Benchmarking
• Cost database determination
• Land Analysis
• Fair Market Rent Determination
• Income and Expense, Vacancy,Cap Rate analysis

57. Fine-tuning and Value Application
• Initial property values are reviewed by local office
field staff (Valuation Review Specialists)
• Necessary updates made to values prior to
placement on assessment roll
• Utilize statistical tests such as the Assessment to
Sale Ratio (ASR = 1.00 )
• Utilize digital mapping (GIS) to pinpoint areas
requiring review

58. Data Management - G.I.S.
0 - 0.89
0.9 - 1.1
Using GIS to Identify “Outlier”
1.2 & above Sales Requiring Fine-tuning

59. Benchmark Urban Two Storey Home Details
• Detached 2200 square foot home
• Two storeys
• 40 feet x 110 feet lot size
• Standard construction quality
• Built in 1992
• Two car attached garage
• 890 square foot finished
basement
• Urban area > 50,000 population

60. Benchmark Urban Two Storey Home Comparison
OTTAWA
$380,000
BARRIE
$297,000
MARKHAM
VAUGHAN
$430,000
$559,000
MISSISSAUGA OSHAWA
CAMBRIDGE $447,000 TORONTO $317,000
$323,000 $701,000
$338,000
WINDSOR ST. CATHARINES
$229,000

61. Major Property Classes
Provincial
Average
21.66%

62. Reviewing Your Assessment

63. How Do I Review My Assessment?
• Call us at 1 866 296- MPAC (6722)
• Complete a Request for
Reconsideration form, available at
www.mpac.ca
• Send a letter to:
MPAC
P.O. Box 9808
Toronto ON M1S 5T9
• Visit local field office

64. Request for Reconsideration Process
• Based on the RfR, if MPAC changes the property
classification or adjusts the property value, the
property owner will be sent a Minutes of Settlement
(MoS)
• Property owner can either:
– Sign the MoS and return to MPAC for processing of the
change(s)
OR
– Decide to file an assessment appeal with the Assessment
Review Board
• If MPAC does not receive the signed MoS from the
owner MPAC will send a reminder letter 45 days after
the original MoS offer was mailed

65. When to ask for Reconsideration?
• Current open market sale of subject property less
than CVA estimate
• Deferred maintenance/condition issues
• Unique site or structure traits not already captured
• Partially completed structure

66. When to ask for Reconsideration?cont’d
• Restrictive zoning or holding designation
• Change in GLA or reconfiguration of commercial
tenants
• Recent market value appraisal of property less than
CVA

67. Request for Reconsideration (RfR) vs.
Formal Complaint
• RfR is free and informal vs. Formal Complaint
requires a prescribed fee
• New Dates for RfR and Appeals
Property owners in the residential, farm or
managed forest classes must RfR by March 31 and
appeal 90 days after results are mailed by MPAC
– For more information on the appeal process, visit the
Assessment Review Board web site:
www. arb.gov.on.ca

68. Access to Property Information

69. New AboutMyPropertyTM
• A Redesigned AboutMyPropertyTM will be available to
support the delivery of the 2008 Assessment Update
• Username and password will be provided on the
2008 Assessment Notice
• Property taxpayers will have access to detailed
property report for their own property
• New AboutMyPropertyTM will also include options to
select properties of interest from an interactive map

70. New AboutMyPropertyTM
Sample Log-in Screen

71. New AboutMyPropertyTM
About My Property

72. New AboutMyPropertyTM
My Neighborhood Properties

73. Questions? Need Information?
Please Contact Us!
Visit our website at www.mpac.ca
Call our Customer Contact Centre
1 866 296-6722
Visit your local MPAC Office
(28 locations across the Province)

74. Thank you.
Questions?