Innisfil councillors got a crash course in Ontario’s property assessment system at Wednesday's meeting.
Representatives from the Municipal Property Assessment Corporation (MPAC) were among those presenting at the Feb. 22 meeting, which was held virtually due to inclement weather. And while they were able to give the newer councillors at the table a concise overview of what MPAC does, they weren’t able to say when the next assessment date will occur.
“We are waiting for the provincial government to release a new reassessment date,” said Nicole LaFrance, account manager for MPAC. “We are ready for when that date comes, but we are still waiting and they are the ones who provide us with that date.”
Typically, assessment cycles last four years, with the last one commencing Jan. 1, 2017. The reassessments on those dates were then phased in over the next three years, prior to the cycle restarting, based on data for 2020.
However, the Ontario government paused MPAC’s planned 2020 reassessment to provide additional stability to property owners in the face of the uncertainty caused by the COVID-19 pandemic. As such, property assessments continue to be based on 2016 figures, with new builds and upgrades being taken into consideration.
Innisfil Mayor Lynn Dollin said pressure is being put on the province to get the ball rolling again.
“The Association of Municipalities of Ontario (AMO) and other organizations are encouraging the province,” she said. “They have been engaging and asking what municipalities think, and AMO is suggesting sooner rather than later, that it’s time.”
Those organizations don’t want property assessments to go out of date as they did years ago, the mayor added.
MPAC was created by the Mike Harris government in response to the inequality in property assessments that permeated throughout the province prior to the late 1990s. Market-value assessments had been available to municipalities in Ontario since the 1970s, but on a voluntary basis, which allowed for discrepancies from town to town.
LaFrance led councillors through what MPAC is – and isn’t – responsible for.
“Monitoring the market and assessing newly built and renovated properties are things we do to keep our property data current (as well as) periodically update every single property assessment in Ontario,” LaFrance said.
MPAC determines these assessments through a variety of methods, including a cost-based approach for properties that would sell infrequently, such as industrial spaces, or a direct comparison approach, used most often for residential properties.
Several factors are in play with the direct comparison approach, LaFrance said, but there are five major ones that will account for about 85 per cent of a typical home’s value: location, lot size, quality of construction, square footage and age of the property.
By ensuring equity in comparing existing properties, MPAC helps ensure property owners pay their appropriate share of municipal taxes, to fund local operations and capital projects, as well as the provincial education system.
But LaFrance was quick to stress that an adjustment to your assessment from MPAC doesn’t equate to an equal adjustment on your tax bill.
“Assessments distribute taxes; they do not determine the taxes paid,” LaFrance said. “When a province-wide assessment occurs, the most important factor is not how much the assessed value of a property has changed, but rather how the assessed value has changed relative to the change in class in that community.”
If property values in a community rise – which they have in Innisfil since 2016 – the rise in property taxes will not increase at the same rate, LaFrance explained through a video she showed, which is also available on MPAC’s YouTube channel.
It’s a video Dollin has shared “hundreds and hundreds of times.”
“It’s a difficult concept for people to understand,” she said. “(Residents) are going to see their house price double and they’re going to think their property taxes are going to double and we’re all going to get panicked calls.”
But that’s not the case. If a property has doubled in assessed value – which many in the community likely have – its property taxes will not automatically double at the same time. Instead, those property owners will pay a greater proportion of the total amount needed to provide services in the community, just as will all the other homes that have increased in value.
The inverse is also true: if a property has a lower assessed value, the taxation it faces will decrease.
MPAC’s portfolio includes more than 5.5 million properties in the province, which have a total value of more than $3 trillion.
In 2022, 45,000 new homes were constructed, adding $37 billion in new assessment across Ontario.