TAXPERTS PROPERTY SERVICES LIMITED

OUR STAFF INCLUDES, TWO LAWYERS, AN ACCOUNTANT WHO SPECIALIZES IN PROPERTY MANAGEMENT AND SEVERAL ACCREDITED PROPERTY APPRAISERS. OUR EXPERTISE ALLOWS US TO PROVIDE THE DETAILED INFORMATION ON THIS SITE. YOU CAN ARRANGE TO HAVE US HANDLE YOUR RESIDENTIAL PROPERTY APPEAL.

1. PROPERTY ASSESSMENTS FOR 2009 – APPEAL DEADLINES

Residential Tax Appeals

1. INTRODUCTION

i) Onus on MPAC
ii) MPAC Data and Need for data on “Quality Class” - - the “TRAP”
iii) Who Can Act for an Owner

2. ASSESSMENT FOR 2009
3. CURRENT VALUE ASSESSMENT
4. THE NEW PROCESS FOR THE 2009 AND LATER TAX YEARS
5. “CURRENT VALUE”, TAX RATES AND PROPERTY CLASSES
6. PREREQUISITE FOR RESIDENTIAL ASSESSMENT APPEALS FOR APPEALS TO THE ASSESSMENT REVIEW BOARD (ARB)
7. SAMPLE PROPERTY ASSESSMENT NOTICE - - HOW TO READ IT .

1. INTRODUCTION

i) Onus on MPAC

Section 40 (17) of the Assessment Act reads: “For 2009 and subsequent taxation years, where value is a ground of appeal, the burden of proof as to the correctness of the current value rests with the assessment corporation”. ( Our Emphasis. If classification is the ground, the onus remains with the owner. ) When they mention the “assessment corporation”, they are talking of MPAC. MPAC is funded by all of the municipalities of Ontario, has a huge staff, has a massive amount of data and BIG computers and they will have legal counsel guiding them through their evidence at a formal Assessment Review Board hearing. In David and Goliath terms, why was the onus on the owner, David, under the prior regime. Please note that the evidentiary test at an ARB hearing is that of a “balance of probabilities” crudely seen as “Who has the best case?” or 51 beats 49. A slim victory for an owner is as good a rout.

MPAC assessed “current value” on January 1, 2005 and more recently on January 1, 2008 to obtain current values which will affect the 2009 through 2012 municipal tax years. There will be a “phase-in” mechanism. The increase in assessed values over the 4 years will be introduced in annual increments of 25% of the increased amount for the 2009 to 2012 tax years. So 2009 will see 25% of the increased added to the “current value” which will be subject to the annual mill rate, 2010 will see an addition of 50% of the increased assessed amount, 2011 will see 75% of the increased amount and, in the 2012 tax year, you will be taxed on 100% or the full amount of “current value” as assessed at January 1, 2008. The new process beginning for the 2009 municipal tax year provides that the Municipal Property Assessment Corp. (MPAC) has the onus to prove that an assessment is fair and accurate. This applies to all classes of properties including the residential class which includes condominiums. Despite this, owners will still need good evidence that their assessment is too high and both sales data and data on how similar homes in their neighbourhood are assessed will be needed to obtain a substantial reduction in their assessment. Essentially, it might be clear that MPAC cannot justify that your assessment is fair and accurate but it will be up to the owner to convince an MPAC Assessor during the initial process of a Request for Reconsideration or a Chair at a formal hearing at the Assessment Review Board (ARB) as to what dollar figure the assessment should be reduced. So, not much difference from the prior appeal system.

ii) MPAC Data and Need for data on “Quality Class” - - the “TRAP”

This issue will be the most contentious in the new process especially as it relates to residential property appeals. Owners now have access to MPAC data on up to 100 properties on assessed values and can request detailed property reports on up to 24 properties selected by the owner. Choose intelligently. This data is available through the MPAC service “About My Property” at their website at www.mpac.ca but you will need the Roll Number and your assigned “Password” from the bottom right of your Property Assessment Notice to access the data or to file an RFR by March 31, 2009 on their website.

The new system is purportedly more transparent and fairer with a mandate from the province to MPAC to be more open, honest and helpful to owners. An MPAC Assessor will be assigned to handle your Request For Reconsideration and, if the process mirrors previous appeals, this same individual will appear as an expert witness at your ARB hearing to justify the original “current value” or the amount of the reduction, if any, given in their written RFR decision. Our firm views this as an inherent conflict on the property appeal process. The natural inclination of any government body or bureaucracy like MPAC is to not, or only reluctantly, admit that there has been a mistake made. Healthy skepticism is recommended in all dealings with MPAC Assessors. It is interesting to note that MPAC is now referring to Assessors as “Valuation Review Specialists”. The primary problem remains that MPAC is not disclosing sufficient information in the detailed property reports to allow an owner to find suitable “comparable properties” so as to obtain a full and proper reduction in their assessed value. MPAC is not providing its information on the condition of owner’s requested detailed property reports and does so only for the owner’s property. Of even more critical importance in a residential property assessment appeal, MPAC is not disclosing the specific “quality code” now termed “quality class” on either of the owner’s home or in the detailed property reports requested by the owner. MPAC will provide you with a “Your Property Report” and also “My Neighbourhood Properties of Interest” report for details on up to 24 properties which you select. [ See our discussion #4 “OBTAINING DATA FROM MPAC WEBSITE”. You must carefully pilot your way through their system. ]

MPAC characterizes the condition of properties as “Excellent”. “Good” “Average” and “Poor” and has detailed descriptions of “Quality Class” numbered 1 through 10 but for which it also assigns half- figures. For Toronto homes, MPAC starts at a “base” of 6.0 and rises to a maximum of “Quality Class 10”. In Toronto, a quality code of 6 is, generally, the lowest code assigned. Remember that MPAC only has a description of “Quality Class” for classes 6, 7, 8, 9 and 10 yet still breaks out half-figures of 6.5, 7.5, 8.5 and 9.5. It is a mystery to determine how these `half-figures’ are determined. “Quality Class 6” describes properties of: ”Average design type, plain detailing and adequate windows and doors” with average quality materials and workmanship for both the interior and exterior. The description of exterior again uses the terms “average” and “adequate” and refers to “Roofing is usually low-grade asphalt shingle or rolled roofing”. The interior is” “Utility-grade materials, painted. Minimal outlets and electrical service. No closet space.” ( Our Emphasis ) This is not your dream home. It is a small plain, boring, bare-bones house with a frame or cheap brick siding and a value in the $200,000 range. This is the least-valued property to be had in Toronto.

Now let us jump up the ladder and see how “Quality Class 9” is reads in its entirety: Under “General Description” it reads: “High quality materials and workmanship used throughout. Architecturally and custom-designed to owner’s(s’) specifications. Particular attention given to interior and exterior finishes.” Under “Exterior” it reads: “Typically good quality brick, stone, limestone, or stucco. Roofing is cedar shingles or shakes, slate, or clay tile with copper flashing, downspouts and eaves. Roof often has multiple levels with architectural features. Custom-built oversized windows. Custom-designed entrance. Custom-designed entrance with oversized door(s). Ornate trim and mouldings. Under “Interior” it reads: “Premium quality materials and finishes. Good quality broadloom, hardwood, slate, marble, quality ceramic, quarry or mosaic tiles. Above-average ceiling heights, open concept, and vaulted or cathedral ceilings. Grandiose staircase(s) for multi-level homes. Built-in features and valances. Spacious interiors with specific purpose rooms such as library, gym or theatre room. Specifically designed, custom-built kitchen that generally has many hardwood cabinets and built-in features. Countertops are generally premium granite or marble. Kitchen has custom-designed island. Bedrooms generally have sitting areas, large ensuite bathrooms and large walk-in closet(s)” Under “Bathrooms” it reads: “Typically more than one ensuite bathroom, other full bathroom(s). Premium quality custom-designed cabinets and features”. ( Our Emphasis ) THE END.

Don’t we all love the “grandiose staircases”? Well Hello Rosedale and Forest Hill!! ONLY $3,000,000? What a steal!! Is the floor in the bathroom in the master bedroom heated? How about heated driveways? Maybe that’s a class 10. Sorry about the sarcasm but ALL of this relevant and extremely helpful information on how MPAC assigns quality classes and what features are common to each class is being kept from owners since they are not given the quality class of their home, of MPAC’s comparables and of the owner’s selected comparables. So far, there is every indication that MPAC does not want the public to know about quality classes but you can be damn sure you will be whacked on the head with a “quality class” attack if you give evidence at an ARB hearing. The “TRAP”.

CLICK HERE FOR THE MPAC DESCRIPTION OF “QUALITY CLASS”. TORONTO READERS SHOULD LOOK ONLY AT CLASS 6 AND HIGHER.

This potential scandal over “quality classes” is a repeat of the MPAC practice under the old appeal rules of failing to disclose key information. It is the type of thing that lead the provincial Ombudsman, Andre Marin, to write a very critical, even scathing report about the property appeal process and MPAC in particular. [ To their credit, you can access Mr. Marin’s report on the MPAC website. ] We cannot emphasize enough that it has to be dealt with and corrected before ARB hearings commence during 2009. It is a repeat of the ambush situation, under the old process, where an incompetent agent or a trusting and intelligent owner would not be told about quality codes and the owner would, to the glee of the MPAC Assessor, march in to an ARB hearing with ALL of his comparable sales for properties with lower quality codes. Bad news and guaranteed to be a losing case for the owner.

Let’s put this issue in context. On its own website, MPAC states that the five major factors accounting for “85% of the value” on residential assessments include: “location”, “lot dimensions”, “living area”, “age of the property, adjusted for any major renovations and additions” and “QUALITY OF CONSTRUCTION”. ( Our Emphasis ) [ Other “home features” affecting value include finished basements, garages, pools, fireplaces, number of bathrooms and the type of heating or air conditioning. “Site features” affecting value include traffic patterns, situation on a corner lot and proximity to golf courses, parkland and rail or hydro corridors. ]

MPAC is also not disclosing fully to owners when they use the MPAC data service. “About My Property”. In its printout entitled “Your Property Profile” on an owner’s home, there are about 37 different items of information provided including the “Condition” of the “subject property” which is the property being appealed. Still no “quality code”. Contrast this to the mere 20 or so items of information provided in their printout for requested detailed property reports called “My Neighbourhood Properties of Interest”. There is not enough information provided in the latter printout to determine if the property qualifies as a “comparable property” to be used by an owner to make an argument on sales for less than the assessed value or on assessed values of “similar properties” at much lower amounts. This is unfair and obstructs an owner or their agent from building their case. The answer is to provide equally extensive information in “My Neighbourhood Properties of Interest” report as is included in the “Your Property Profile” report. MPAC should be more generous and fair in its disclosure. We have given samples of the two types of reports below and also included them in our discussion #4 “Obtaining Data from MPAC” to show a reader what they will get when they ask for data on their property and when they request detailed property reports on up to 24 properties. There is simply not enough information provided in the detailed property reports. Each of the samples below has the “Homogenous Neighbourhood” zone of “C62” and marked with a circle as # “1”. The “Your Property Profile” report also has “Condition” marked as an “A” which we are reading as meaning “Average” and which we have noted with the circled # “2”. [ NOTE; You can enlarge to 150% on the toolbar at the top of your screen to read these samples better. ]

The big thing to note between the 2 Samples as that for the “Your Property Report” which is for the “subject property’ for which the owner is appealing the assessment, there is much more detail. There are about 15 more items of information than appears for each property to the right of the “Subject Property” in the “My Neigbourhood Properties of Interest Report”. Compare how all the information in the “Your Property Profile” on the property under appeal especially under the headings “SITE” and “STRUCTURE” have been reduced from 29 items of information down to 14. There is NOT enough information in the second report to know if your selected properties are sufficiently similar to qualify as “comparable properties’ which complicates the efforts to find data on “similar properties in the area” which is the essence of the process as set out in the Assessment Act. It is inexcusable that neither report includes the “quality class”.

The question arises why MPAC is not providing information on the condition and on the quality code or quality class when providing data through its “About My Property” service. It raises the further question of whether they are going to provide that same key information when they provide the details on THEIR selected 6 “comparable sales” which they are required to provide to confirm the accuracy of their assessment under the RFR process. MPAC is proceeding so slowly that we have yet to obtain that information on any of our files. It seems that is could be by the March 31, 2009 deadline or later before they get into action and provide the data they are legally required to provide.

CLICK HERE FOR THE MPAC DESCRIPTION OF “QUALITY CLASS”. TORONTO READERS SHOULD LOOK ONLY AT CLASS 6 AND HIGHER.

Premier McGuinty, Michael Bryant and the minister responsible for the assessment process have valiantly tried to make the process fairer and more transparent. They ordered the Andre Marin review and put a moratorium on assessments for 2 years to give MPAC time to improve its methodology and its dealings with the public. Despite this, MPAC is employing many of the unacceptable practices that it engaged in under the old appeal regime. We will be contacting Queen’s Park to get the governments assistance, lobbying MPAC to improve its practices and even going to the media if MPAC does not provide more extensive information including the condition and the “quality class’ for their comparable sales, the owner’s home and on those properties selected by owners.

To underscore the importance of this issue, as a general rule, arguably, the greatest weight is placed by MPAC and Members presiding at ARB hearings on the two factors of inside square footage being close to the inside square footage of your property AND on those properties with the same “quality code”. These are the two main factors determining whether a Chair presiding at an ARB hearing will even accept a property as a “comparable property”. It must qualify as such or it will be seen as irrelevant and as having no probative value as to what a fair and accurate assessment figure should be. In mid-February, one of our employees went to the Toronto MPAC office on north Yonge Street to obtain the requested detailed property reports and specifically asked the MPAC Assessor for the data on the general condition and the quality class conditions for all MPAC comparable properties, that of our client’s “subject property” and all of our requested comparable properties. The MPAC Assessor said that the demand constituted a “special request” and would take weeks if not months to provide. This is disheartening. Why is such critical data not routinely provided to EVERY owner or their representative!!! We will keep you updated but remember to demand this critical information in writing since MPAC will provide it if you expressly demand it. We also have several months for MPAC to get its act together and provide the same detailed information about “Properties of Interest” as it provides on the owner’s “Subject Property”. You need to know your class conditions and how to use them to undermine the assessed value as determined by MPAC and to strengthen your own submissions. Substantial success on an appeal is only possible if you weigh all of the MPAC comparables and your selected comparables against data obtained on the general condition of properties and the data on quality class. Our attention to this analysis explains why we obtained very good results in earlier years.

iii) Who Can Act for an Owner

Another unwelcome development is new criteria setting out who can act as a “representative” for an owner on property appeals. Problems will arise if MPAC refuses to deal with your representative or if a Chair presiding at an ARB hearing will not allow that individual to act for you at a hearing or prevents an appraiser acting for you from making submissions on their own “expert evidence’. An owner can handle their own appeal but please follow the guidelines and points set out on our website if you hope to have any success. For instance, to obtain relevant and helpful data from the MPAC database under their “About My Property” service, you will need the assistance of a real estate agent or property appraiser with access to the Toronto Real Estate Board’s Multiple Listing Service (MLS) to identify the sales of similar properties which will assist you in getting a reduction in your assessment. They can also assist you by identifying “comparable properties” to your own which are assessed at much less than your assessment which can increase the amount of the reduction in your assessment that you might succeed in getting. We suggest that you read our discussion on “How to Pick Relevant Sales for an Appeal” and follow the steps as set out in that discussion.

The change seems to be intended to drive ‘corner-store’ operators out of the process. A lawyer who is a licensed member of the Law Society of Upper Canada (LSUC) including in-house Counsel for an “employer’ who is an owner can act as your representative. You may also be represented by a paralegal who is registered with the LSUC and operates under the supervision of the LSUC. Lawyers and registered paralegals do not need to have the owner/client complete a “Representative Authorization Form”. That form will need to be signed by an owner who is appealing their assessment if they use “an individual acting for a family, friend or neighbour [ read “the owner” ]” or a member of “The Appraisal Institute of Canada”. It would appear that real estate agents do not qualify or anyone charging a fee for their service if they are not a lawyer or registered paralegal. A related point is that if you use a qualified appraiser, they can deal with MPAC on your behalf on the merits of a Request For Reconsideration but if the a formal appeal is later made to the Assessment Review Board, the appraiser will likely give evidence as a “qualified expert witness”. They can give their expert evidence on the merits of the comparable properties tendered by MPAC at an ARB hearing and present evidence on both sales of comparable properties, the assessments of comparable properties and what their opinion is as to the dollar figure for a fair and accurate assessment. A problem will arise if they are also acting as the advocate for an owner in which case they cannot comment on the relevance and weight to be given to their own expert testimony. It would seem that an owner can take a qualified appraiser to court to give expert evidence at an ARB hearing but the owner will need to be capable of understanding the evidence tendered by MPAC and their own expert’s evidence so that the owner can make submissions as to what “current value” will be assessed by the individual presiding at the hearing. The owner can give evidence under oath and comment on the MPAC comparable sales and tender and comment on their own comparable sales which they will propose support a reduction in the assessment and the owner can make submissions on the MPAC evidence and their own evidence. The problem hear is that MPAC witnesses will always be qualified as “expert” witnesses while the evidence of the owner does not qualify as expert evidence and expert evidence is given greater weight. An owner need be well-prepared, articulate and understand the evidence thoroughly if they hope to have any success. To give credit to the Chairs who provide at ARB hearings under the old system, they are usually fair, helpful and will even sometimes guide an owner representing themselves at a hearing. As discussed above, DO NOT fall into the trap of presenting properties with a lower “quality code” than your own as “comparable properties” supporting your argument for a reduction of your assessment. Such properties are rarely helpful as they will deemed to not qualify as a “comparable property” and it leaves you open to the obvious attack that, sure they are assessed or sold at less than your assessed value but that is because they are not up to the quality of your home and are not worth the value of your home. So, get quality codes and use relevant properties if you handle your own appeal at an ARB hearing. [ Please read our discussion on “Assessment Review Board Hearings”. ]

2. ASSESSMENT FOR 2009.

The new procedures for residential tax appeals create two stages in resolving an appeal of your residential property assessment. You MUST first must file a Request for Reconsideration (RFR) to the Municipal Property Assessment Corp. (MPAC) by March 31, 2009. You then file a formal appeal to ARB within 90 days of the date of mailing of the MPAC decision. Owners of commercial, multi-residential and industrial class of properties may file an RFR to MPAC or, failing that, they MUST file a formal appeal to the Assessment Review Board (ARB) and pay the $150 fee by March 31, 2009. Owners of the latter class of properties should file an RFR to MPAC by March 31, 2009 to enjoy the extended time for filing a formal appeal to ARB. An RFR can be filed by fax or on the MPAC website but you will need your to use the Roll Number given as “User I.D.” and your assigned “Password” which appears at the bottom right of your Property Assessment Notice to file an RFR on the MPAC website.

There is no cost for filing an RFR to MPAC, so since such a filing has been made mandatory for residential homes and there is no charge, our firm believes that every homeowner whose assessment has risen by 25% or greater from the figure assessed at January 1, 2005 versus the assessed figure at January 1, 2008 should file an RFR by March 31, 2009. The MPAC figure for the average assessment increase from the January 1, 2005 to January 1, 2008 valuations was 21.56% for the Toronto area. Some neighbourhoods saw higher or even lower increases than that figure but the 25% increase figure does serve as a good rule of thumb for filing an RFR. Neighbourhoods like the Beaches, Rosedale, Forest Hill, Lawrence Park, the Bridle Path, the South Kingsway are termed by MPAC to be “locational neighborhoods” although they still must meet the test of constituting an “homogenous neighbourhood” since they have a high profile are every distinct. Some of these area enjoyed market increases in value well beyond the Toronto city average of 21.56 over the 3 years from January 1, 2005. Their values might have gone up more than the average, but it is clear that massive over-assessments by MPAC are most common with the most expensive homes. We feel that the MPAC computerized process just DOES NOT WORK WELL with the more expensive homes. Our firm believes that any increase of 25% or more is questionable and potentially challengeable and if your increase is 30% or higher that it would be unwise not to file a Request for Reconsideration. You can withdraw an appeal. Under the new rules, your assessment may not be increased unless new information is discovered which would add to the value of your property. In this case, such as finding out about a substantial renovation, Under s. 19.1 of The Assessment Act, MPAC may do a “Notice of Adjustment” amending an assessment and then inform the owner within 90 days. MPAC has access to city building permits. Did you obtain one? Be careful. Generally, MPAC will welcome the reduced caseload and accept a withdrawal. Once you have filed a formal appeal of your 2008 assessment to the Assessment Review Board, you must withdraw in writing. You can access their “Withdrawal Form” on the ARB website at www.arb.gov.on.ca. If you withdraw your appeal, you will lose your $75 filing fee, $150 if for a commercial, multi-residential or industrial appeal.

3. CURRENT VALUE ASSESSMENT (CVA)

The Current Value Assessment (CVA) process was introduced under the Harris Conservative government for the 1998 tax year and all properties across Ontario were assigned a “current value” assessed at June 30, of the prior year. The last June 30th assessment was in 2003 for the 2005 and 2006 tax years. An assessment date of January 1, 2005 was used for the 2007 and 2008 tax years. That change occurred when the McGuinty Liberal government imposed a two-year moratorium on valuations for the 2007 and 2008 tax years due to concerns about the inconsistency and reliability of the computerized MPAC process with its analysis of sales data and its statistical analysis termed the Multiple Regression Analysis. There were also concerns that the assessment process was not sufficiently transparent, that not enough information was being made available to homeowners and that MPAC was not acting in an acceptably fair and reasonable way in its dealings with homeowners and even in its conduct during appeals before the Assessment Review Board. The moratorium on assessments did not prejudice city and local municipal governments as they simply adjusted their mill rates to raise sufficient funds to meet their budget requirements.

The “Date of Assessment” is the day on which a property is valued and the date at which the property is classified. The assessment dates are:

1999, 2000	June 30, 1996
2001, 2002	June 30, 1999
2003, 2004	June 30, 2001
2005, 2006	June 30, 2003
2007, 2008	January 1, 2005
2009, 2010, 2011, 2012	January 1, 2008
2013, 2014, 2015, 2016	January 1, 2012

and thereafter, January 1st of the year preceding the taxation year.

The new terminology is that January 1, 2005 is the “starting point” for MPAC assessments while January 1, 2008 is the “destination value” for the 2009 through 2012 tax years. The “starting point” for the next MPAC assessment will be January 1, 2008 while the “destination value” for the 2013 through 2016 tax years will the date of January 12, 2012.

4. THE NEW PROCESS FOR THE 2009 AND LATER TAX YEARS

Under the new tax-year 2009 regime, there will be an assessment every four years starting with January 1, 2008 for the 2009 through 2012 tax years. The next assessment date is January 1, 2012. Any increase in assessed values from the January 1, 2005 date to the new date of January 1, 2008 will be phased in with 25% incremental increases for each of 2009, 2010, 20111 and 2012. Thus the assessed value at June 30, 2005 will act as the “base” and the new assessed values which will be subject to the mill rates as set by local municipal governments. Note that where there is a decrease in the assessment from 2005 to 2008, the lower assessment will be applied immediately. This scenario is possible with certain cities hit by the massive auto layoffs but is not likely to have occurred in any property in the City of Toronto.

The average increase in assessed values for Toronto as the result of the January 1, 2008 assessments as cited by MPAC was 21.56%. Whatever the dollar value of the increase, you will be taxed on the base plus 25% of the increase for 2009; the base plus 50% of the increase for 2010; the base plus 75% of the increase for 2011; and, the base plus the full increase for 2012. This totals an incremental increase of 250% over the 4 years and shows why it is critical to appeal your assessment if you believe that it is excessive

EXAMPLE:

January 1, 2005 assessed “current value” - $ 850,000. The ‘starting point”.
January 1, 2008 assessed “current value” - $ 1,050,000. The “destination value”.

This represents an increase of $ 200,000. You will be taxed on an assessed value of the starting point figure of $850,000 plus 25% of the increase up to the “destination value” for the 2009 tax year, on an assessed value of the starting point figure of $850,000 plus 50% of the increase up to the “destination value” for the 2010 tax year, on an assessed value of the starting point figure of $850,000 plus 75% of the increase up to the “destination value” for the 2011 tax year, on an assessed value of the starting point figure of $850,000 plus 100% or the full amount of the increase up to the “destination value” for the 2012 tax year. So the “current value” on which you will be taxed will be:

$ 900,000 for the 2009 tax year;
$ 950,000 for the 2010 tax year;
$ 1,000,000 for the 2011 tax year; and;
$ 1,050,000 for the 2012 tax year.

Any successful reduction in your new assessed value will therefore give you tax savings for 4 years. Also, the argument can be made that obtaining a reduction in assessed value will provide a permanent residual benefit as your property will have a lower base or starting point for the next assessment in 4 years. The next assessment will have a relevant date of January 1, 2012 and apply to the subsequent four tax years starting in 2013. Mill rates will again be set locally to raise taxes to cover local budgets and owners, the media and professionals in property tax appeals will watch the mill rates to ensure that there is no `hidden’ tax increase by local governments by setting mill rates that do not correspond to percentage increases in assessed values. A bit of a cat-and-mouse game. We will have our eyes on City Hall to make sure they do not “pull a fast one” and try a sneak a tax increase past us. It will be a while before it is clear if Mayor Miller’s 4% increase is only that announced amount.

5. “CURRENT VALUE”, TAX RATES AND PROPERTY CLASSES

The basic approach through 1997 was always $ASSESSED VALUE X %MILL RATE = $TAXES, but the process through 1997 used antiquated property values which had no correspondence to market values. The 1988 new Current Value Assessment (CVA) system involved an entire reform of the assessment process to get assessed values to approximate market values. The new formula is thus $CURRENT VALUE X %TAX RATE = $TAXES. This was a wise rationalization of the assessment process. There were seven main Classes of Properties created in 1997 legislation: Class 1 – Residential; Class 2 – Farm; Class 3 - Managed Forest/Conservation Land; Class 4 - Multi-Residential - - 7 or more self-contained units; Class 5 – Commercial; Class 6 - Industrial; and, Class 7 - Pipeline. EACH CLASS HAS ITS OWN MILL RATE as set by the local municipality such as the City of Toronto. [ Additional classes include Class 8 - New multi-residential; Class 9 - Office building; Class 10 - Shopping centre; and, Class 12 - Large industrial. ] All classes 4 and higher for such as Commercial, Industrial, Multi-residential etc. are valued on the three bases of “Direct Sales Comparison Approach”, “Income Approach” and “Cost Approach” with a combination of the three approaches in many cases. The valuation of these classes of properties is a much more complex process than the valuation of residential properties.

6. PREREQUISITE FOR RESIDENTIAL ASSESSMENT APPEALS FOR APPEALS TO THE ASSESSMENT REVIEW BOARD (ARB)

The biggest procedural change for appeals of the 2009 tax-year assessments was the creation of the prerequisite under The Assessment Act that for an appeal of a residential, farm or managed forest/conservation land assessment that a Request for Reconsideration MUST be filed with the Municipal Property Assessment Corp. (MPAC) and a decision on the RFR from MPAC must be received before you can file a formal appeal to the Assessment Review Board (ARB). There is no charge for filing an RFR to MPAC while the fee for filing a formal appeal to ARB is $75. Those appealing commercial, industrial, multi-residential or pipeline assessments are not required to file an RFR, although they might chose to do so, but they MUST file their ARB appeal by the March 31, 2009 deadline if they do not file an RFR to MPAC.

With RFRs, MPAC is required to mail its written decision by September 30th of each year or by November 30th if all parties agree to an extension. Our firm believes they should earn their pay. Every owner in Toronto who saw a 30% rise in their assessment should file an RFR. Such an increase is questionable on the face of it and let’s floods MPAC with FRS. We believe MPAC lobbied to have FRS made mandatory for residential property appeals. So if they want to make the process more formal and complicated then they are going to earn their salary. If you have a very strong case, push MPAC to accept your figure and refuse to consent to an extension. If they can’t get their act together by September 30th, they deserve to lose. The downside is they will `slap together’ a decision by that deadline if you do not consent to an extension so applied nuanced pressure to accept your figure. Tell them they deserve to clear some files off their desk.

The importance of the requirement for those appealing residential assessments to first file an RFR with MPAC is that the deadline of March 31, 2009 for filing a formal appeal to ARB is extended to 90 days after the mailing date of the RFR decision issued by MPAC. CAUTION: In the “ARB Assessment Appeal Form Instructions” for ARB filing deadlines it reads: “If your property or a portion of it is classified as residential, farm, managed forest or conservation land then you MUST file a Request for Reconsideration (RFR) with MPAC by March 31, 2009 and you then are governed by the rules for residential property appeals of filing a formal appeal to ARB within 90 days from the mailing date on the RFR decision.

So, if any part of your property is classed as residential, for instance a “mixed-usage“or “divided- usage” property such as a property with a store on the main floor and a residential apartment on the second floor, you are subject to the rule that you MUST file a Request for Reconsideration (RFR) to MPAC by March 31, 2009 as a prerequisite to filing a formal appeal to the Assessment Review Board.

There are several consequences to this new rule of making an RFR to MPAC a prerequisite to filing a residential, farm etc. appeal to ARB:

• The process will now be prolonged requiring you to subject your property to inspection by MPAC if so requested and to supply data on comparable sales supporting your position that your assessment is too high for MPAC to render a decision. In addition to concerns about the failure to provide information on the condition and quality codes of properties and the new restrictions on who can represent you, a third area of contention is that you face the unpleasant possibility that the onus on MPAC to prove its assessment is accurate reverses to the onus being on the owner to prove the assessment is too high under section 40 (18) of the Assessment Act if an owner refuses to allow MPAC to inspect their homes as they are allowed to do under s. 10 of the Assessment Act or if they refuse to provide relevant information requested by MPAC in writing pursuant to sections 11 (1) and 11(2) of the Assessment Act. That letter section allows MPAC to make a written request “to provide any information and produce any document relating to the assessment of land”. Too broad a brush. This section could be easily abused by MPAC during an RFR by them intimidating and ‘grocery-listing’ an owner. There should be some provision putting the onus on MPAC to show that an inspection was necessary and that any request for information was relevant and reasonable. If the onus is on them to prove the accuracy of the assessment, what evidence might a homeowner fail to provide that will prejudice MPAC???? Someone had too much coffee when this provision was made. This reversal of the onus onto the owner could be an area which is abused by MPAC if MPAC does not act fairly. An owner should certainly allow MPAC to inspect their home before a formal ARB hearing is held but how does a lack of an inspection by MPAC affect the RFR process. Something is goofy here. This provision needs discussion and clarification.
• Conversely, a big advantage is that you can file an RFR by internet at no cost just to remain eligible to file a formal appeal to ARB. We expect that it will be 2 to 3 months before an MPAC Assessor is assigned to your RFR as that has been the case with owners filing an RFR as early as the first week of December of 2008. To file by internet you will need to refer to your Property Assessment Notice to get your Roll Number and your assigned “Password” to access the MPAC website and file a Request for Reconsideration directly to MPAC. Their website address is www.mpac.ca. This is comforting to `snowbirds’, many of whom missed the filing deadline under the old system as they did not arrive back from their winter holidays until after the March 31st filing deadline. They then had only the recourse of filing an RFR by December 31st of the year which was OPTIONAL under the old regime but meant that you were saddled with whatever decision was made by the MPAC Assessor.
• The obvious point is that you should file an RFR if you believe that your residential assessment is excessive. In one case under the old system where an assessment was done annually, our firm got a reduction on a residential assessment of over $860,000 which amounted to a reduction of about 41% on the assessment. This was the highest percentage reduction which we obtained but was proof that many assessments were wildly off, With this last assessment 3 years later tan the previous assessment, we could again see wildly excessive assessments which seems much more common with more expensive homes where, despite all of the data available to MPAC and its sophisticated “Multiple Regression Analysis” computer process, the assessment of more expensive homes is frequently inconsistent and highly excessive. Their program just doesn’t work well with the most expensive homes. .
• To be fair to MPAC in relation to the former regime and which was proof that MPAC was not deliberately over-assessing was that, on an annual basis from 1998 to 2008, there were more homes under-assessed than over-assessed. This break for many homeowners was offset by the pattern, especially with more expensive homes, of massive over-assessments. The MPAC computer system did not work. This pattern of widespread over-assessments seems to be the case for the 2009 municipal tax year with waterfront cottage properties.
• The new concern is that since the new assessments have a “starting point” of January 1, 2005 and a “destination point” of January 1, 2008 which covers a 3-year period, those assessments which are excessive could be even more perverse. At a recent municipal ratepayer’s meeting at which MPAC gave a presentation and fielded questions, one owner of a waterfront cottage property pointed out that his assessment had gone up 40% while his neighbor’s assessment went up 120% when he felt that his and his neighbor’s homes were worth about the same if put up for sale. Such increases and such a disparity as cited by that owner are grotesque. Premier McGivney said this past December, after receiving numerous complaints from owners that many of the current MPAC residential property assessments were again proving to be “completely unreasonable”. The lesson is if your guts tell you are over-assessed, especially where the increase is 25% or greater, file the no-cost RFR. There is comfort in that the new rule is that no appeal can result in an increased assessment unless it is discovered that a material detail was missed. If you renovated your basement or added a deck/bathroom and MPAC was unaware of the improvement, they could take the step of filing an amended assessment if this new information, prejudicial to the owner, surfaces during the course of an appeal.

7. SAMPLE PROPERTY ASSESSMENT NOTICE - - HOW TO READ IT

Your “Property Assessment Notice 2008 for the 2009-2012 property tax years” will give you information on the 2005 and 2008 assessments, show you how the increased assessment will be phased in, provide basic data on your property and give you the “User ID” and “Password” information you will need to access data from the MPAC ”About Your Property” service. Please note the high-lighted and numbered areas and the related discussion.

1. This information will show you the 2008 assessed value, the 2005 assessed value and the total of difference of $200,000

2. Under the phase-in rules, 25% of the difference will be added to the 2009 assessment, 50% to 2010, 75% to 2011 and all of it to the 2012 assessment. The circled area number “2” shows the phased-in amounts for each year.

3. The discussion in the area numbered “3” shows figures an ANNUAL average neighbourhood increase of 5.49% whereas your home went up 7.24%. This reflects one-quarter of the increase in your assessment in terms of a percentage. By multiplying by 4 you can see that the average assessment increase in your neighbourhood was 21.16 while your assessment rose 28.96%. This is much higher than the 25% increase is assessment which we feel should trigger an automatically filing of an RFR just to make MPAC Assessors sweat to justify the increase.

4. Area “4” has a very few details on your property. Go to the MPAC service “About Your Property” and get the greatly detailed printout on your home entitled “Your Property Profile”. Go through that report carefully to make sure there are no factual errors in the information MPAC has on your home.

5. The area marked “5” will give you the Roll Number on your property as well as the “Password” assigned to you so that you can access the MPAC website and request data.