Table Of ContentProperty Taxation System
in Alberta
A P roperty Assessment
Act for the 21st century
Municipal Statutes Review Committee
August 1991
MUNICIPAL AFFAIRS
Municipal Administrative
Services Division
17th Floor, CityCentre, 10155 - 102 Street, Edmonton, Alberta, Canada T5J 4L4 403/427-8861 Fax: 403/420-1016
August 15, 1991
Honourable Raymond A. Speaker
Minister of Municipal Affairs
Room 127, Legislature Building
Edmonton, Alberta
T5K 2B6
Dear Mr. Speaker:
On behalf of the members, I have the honour to submit to
you the recommendation of the Municipal Statutes Review Committee
for a new Property Assessment Act for Alberta.
The recommended Act contains changes in policy and drafting
style which the Committee believes are necessary in order to
carry out its mandate to "recommend legislation appropriate to
carry Alberta municipalities into the 21st century".
This report begins with an introductory section summarizing
the observations of the Committee which influenced its
recommendations. The remainder is the Committee's draft of a new
Property Assessment Act.
The Committee has appreciated the advice received from
Alberta municipalities, government departments and interested
groups and individuals, all of which greatly assisted in the
preparation of this report.
Respectfully submitted.
Glen Clegg, M.L.A
Chairman
COMMITTEE MEMBERSHIP
Councillor Gary Browning, Devon Councillor Dick Papworth
County of Lethbridge
County of Grande Prairie
Alderman Craig Reid, Calgary
^Frank Lambright, Tangent
ACKNOWLEDGEMENTS
The Committee wishes to express its appreciation to the
thousands of municipal and provincial officials, organization
representatives and individuals who read the discussion papers
and took part in preparing considered comments and advice.
The creative insight of Mr. David Elliott, Barrister and
Solicitor, who served as Legislative Planner for the Committee,
and the knowledge and experience of Mr. Rene Gagne, Assistant
Deputy Minister, Assessment Services Division, Alberta Municipal
Affairs, were key resources to the Committee in preparing this
draft .
The continuing support of the Secretariat (Tom Forgrave,
Coordinator; Norm Milke, Deputy Coordinator; Margaret Suelzle,
Secretary) enables the Committee to function effectively.
INTRODUCTION
The Process
When the Municipal Statutes Review Committee began its work, the
members sought to engage all interested Albertans in a public
consultation on municipal government. The process used by the
Committee involved the distribution of more than 3000 copies of
discussion papers, receipt of comments, revision of proposals and
eventually the submission of a report to the Minister of Municipal
Affairs .
The Committee began its work by using the discussion paper
process to develop a recommended statement of municipal policy. In the
course of this, a June, 1988, discussion paper, "How Should
Municipalities Be Financed" first raised an number of questions related
to property assessment in Alberta. The questions included whether
assessment should be based on 100% of market value and whether
Alberta should consider establishing a central Assessment Authority.
Response to these questions indicated considerable interest in
pursuing both ideas further. Thus the second draft of the finance
discussion paper proposed that both ideas should be implemented for
Alberta. This work was put on hold while the Committee focussed its
attention on developing a new Municipal Government Act.
In October, 1990, the Committee published a Special Issue paper
on assessment in which it reported its conclusion that
"the people and municipal governments of Alberta would be
best served if a market value approach to assessment was
used by a central assessment administration, referred to as
an assessment authority."
Respondents were invited to comment on the Committee’s
conclusion .
In April, 1991, the Committee published Legislation Papers
providing discussion drafts of a "Property Assessment Act" and an
"Alberta Municipal Assessment Corporation Act".
Concerns have been expressed to the Committee regarding both
the concept and the details of the proposed assessment corporation.
Therefore the Committee has decided to issue a second discussion paper
on this concept. It is expected that the discussion paper will be
distributed in September, 1991, and that the Committee will report to
the Minister by the end of the year.
A variety of detailed comments has been received regarding the
"Property Assessment Act" but there has been general support for the
concepts proposed. The Committee, therefore, is prepared to report to
the Minister on this Act. The draft has been prepared without
reference to an assessment corporation but is written in such a style
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that the central authority may be re-inserted easily if that is the final
decision.
The recommended Municipal Government Act includes the budget
and taxation provisions of the existing Municipal Taxation Act. Because
of the style of drafting the Municipal Taxation Act it is not possible to
make amendments to simply repeal these provisions and leave the
assessment portions of that Act in place. Therefore, the proposed new
assessment legislation must proceed concurrently with the new Municipal
Government Act.
Environmental Scan
Early in its work the Committee noted a general acceptance that
property taxation is an appropriate source of revenue for municipalities.
There certainly has been growing concern expressed about the
increasing burden of property taxation, particularly for support of the
K-12 education system. However, the general public is concerned not
only about the level of property taxes but also about the property
taxation system.
In its 1989 series of public forums the Committee became
convinced that the systemic concerns largely arose from a lack of
understanding, even among municipal elected officials and certainly
among the general public, of what a "mill rate” means and of how to
relate the assessment of your property to what you think it is worth.
In the recommended Municipal Government Act the Committee
intentionally avoided using the term ”mill rate”, referring instead to the
”tax rate” . The Committee thought this would allow municipalities to
express the tax rate as a percentage of the assessment, for example,
which many people told the Committee they would find more
understandable .
Perhaps more importantly, however, most people could not relate
their assessment to the value of their property. They could not
understand why Edmonton construction values would be used to
determine the value of a house in Medicine Hat. They could understand
the use of depreciation related to the age of a house but they couldn’t
understand how that affected its value. They also could not
understand why 65% of the assessed value would be used to arrive at
an assessment. Making that calculation seemed almost a waste of time
and resources in the views of many people.
In line with the suggestion of several people, the Committee
concluded that most of these misunderstandings could be overcome by
basing the assessment on market value. The Committee is aware that
there is a fairly direct correlation between the existing assessments
(factored to 100%) and market value for most properties. However, the
straightforward use of market seems to be acceptable to most people and
also provides a reliable standard for the work of assessors.
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The Committee appreciates the need to make special provision for
some special types of properties. Farmland in the hands of a farmer
needs to be assessed at its value for farming purposes. The existing
system based on productive value seems adequate for this purpose.
Some properties do not have a readily discernible market value (a
refinery, for example) and so there will have to be a ’’manual” to guide
assessors in valuing these properties. But for most properties, there
are procedures available to determine market value with reasonable
accuracy as the basis for a property taxation system for Alberta.
Therefore this draft recommends the use of market value, subject
to the exceptions mentioned above.
Many transitional issues need to be addressed in the shift from
the manual based system to a market value system. Special regulation
making powers are proposed for this purpose.
The Committee is proposing to change the names of the two
existing bodies which deal with complaints or appeals against
assessments. The ’’Court of Revision” is proposed to be called the
’’Board of Revision” (since it is not a ’’court” as that term is normally
understood) . The ’’Alberta Assessment Appeal Board” is proposed to
be called the ’’Valuation Appeal Commission” both to avoid the confusion
of having two ’’boards” in the system and because a commission would
normally be considered senior to a ’’board” . With relatively minor
modifications the functions of the two bodies are proposed to be the
same as under the existing legislation.
The Committee has attempted to simplify and demystify the
language of the assessment legislation to increase its understandability
by taxpayers and elected officials alike. In the course of the drafting
there have been numerous minor changes proposed which the Committee
expects will make the property valuation system more effective and
efficient .
The Committee hopes that the discussion of the property taxation
system has been as much of a learning experience for those who have
participated in the consultation process as it has been for the members.
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RECOMMENDED
PROPERTY ASSESSMENT ACT
August 1991
