Interesting Assessments

The 2024 property tax assessments are out for most properties in NB. Here are some interesting assessments around Saint John:

-- Via Calabria apartments that sold for $22.5 million in 2022 are assessed for less than $15.8 million, or 70% of the purchase price. Do the assessors think the investors paid almost $7 million too much?

-- The former St. Patrick's school sold for $745,000 in October 2023. The assessment is only $40,200, or 5.4% of the purchase price. Put another way, the sale price is 18.5 times the assessment

-- The Fundy Quay development area is assessed for a total of $3,792,500 up just 7.2% from 2023. Apparently the assessors think all the work that was done in the last year is worth only $254,500.

-- The hole at the top of King Street's assessment went up from $309,100 in 2023 to $323,800 in 2024. 4.8% growth for a hole in the ground. 

-- The new apartment building on Technology Drive is already assessed at $14.3 million - that's going to be a big assessment and tax bill by the time the building is done. 

-- The main oil refinery property creeped up $1.8 million or 1.7%.

-- McAllister place is up 4.6% from 2023 to 2024.

Highest Assessment in NB

Back in 2013 the CBC reported that Canaport LNG had the highest property assessment that year in all of NB. Higher than Point Lepreau, as the story reported.  The current “highest assessment” detail is repeated in recent stories about potential changes to the tax deal that froze the tax bill at $500,000.

In all the discussion I have heard on this topic, not once has a journalist or commentator contemplated if the assessment for the property was too high.  Instead they ran with the sensational detail that the property was assessed for almost $300,000,000.

Why would the owner appeal when tax bill would stay the same?

I haven’t heard a piece on the news about the many owners of high value properties that tend to appeal assessments frequently, to try to get their tax bills down.  The reason this matters, in the context of LNG, is that the owners of the property may not have fought the assessment, because the tax bill would be the same regardless. 

So the news repeats the fact that the assessment is the highest in NB. Meanwhile the owner would pay the same taxes if it were the highest or the 10th highest or the 100th highest. Why would they spend time or money to make sure that the $300 million assessment was accurate?

Does it make sense that Canaport LNG is worth more than any other property in NB?

I don’t know. But it would seem likely that the volatility in the liquefied natural gas market wouldn’t have made the gas terminal more valuable every year in since its construction. But again, why appeal if your tax bill is the same regardless.

Other high assessment properties

Like many (maybe most) assessments in NB, the assessment of the oil refinery property in Saint John did not go up in the last few years (check out Propertize.ca to explore assessment histories of NB properties). Based on Propertize, it seems the assessment was $95 million in 2014 down from $97 in the pervious 2 years.

At Point Lepreau the assessment was around $236 million in 2013, which was the same as the 2013 assessment (and up around $4 million from 2012). Apparently the billions spent on upgrades didn’t go a long way toward increasing property value.

Property taxes for transit facilities

The Provincial government seems to moving forward with its property tax reforms. These reforms will give property tax cuts to a lot of commercial property owners.

CBC reports that Saint John Transit would like to see their provincial property taxes cut to zero. The manager of the transit authority claims that NB is the only province that charges taxes on this type of building.

I have previously shaken my head at Saint John Transit’s complaints that their tax bill was too high by citing the fact that they really didn’t need to build such an expensive building. I do however support this latest attempt at lowering their expenses in an effort to improve service delivery.

Transit is a public good and the Province should support it.

Updated property tax system

Here is a link to the Province’s proposed property tax system change information site:

http://www2.gnb.ca/content/gnb/en/departments/elg/local_government/content/promos/property_tax.html

Interesting property tax rule changes

The CBC gives a pretty detailed explanation of the changes to property taxation that the Minister of Local Government introduced today here.

One interesting feature is that libraries will no longer be taxed.  As a number of “public good” type buildings are not subject to property taxes, this makes sense.

Apparently they will also be simplifying property tax bills. This is a good move.  Two TED talks that are great at explaining the value of simplified documents are Alan Siegel’s Let’s simplify legal jargon! and Dave Meslin’s The antidote to apathy.

There are also rules that should ease the tax burden on owners of investment properties.  There doesn’t appear to be a mechanism that ensures these savings are passed along to tenants, but hopefully this leads to more responsible building ownership/management.

There is also a mechanism in place to limit increases in any given year for owners.  One thing I like about this rule is that a reassessment will occur when a property sells.  Hopefully this will increase the likelihood of newly purchased properties being properly assessed.  However, my concern on the capping increases is that there are many drastically under assessed properties and this rule will slow the correction of these errors. This is bad because it puts an unfair burden on those who are properly assessed.

So, overall I think there are some good things coming with these new rules, and some things to be cautious about.

Rental properties tax issues

Now that the NB election is over most signs will come down.  Some that might stay up in an effort to sway the newly elected government read “Axe the Double Tenant Tax.” The signs direct readers to www.rentnb.ca.

As the website, The New Brunswick Apartment Owners Association has an information sheet that compares apartment building tax rates in NB and other parts of Canada.  The site indicates that our landlords are being taxed more than those in other areas.  The argument then points out that landlords have to pass this expense onto tenants, making this bad tax policy. 

I’m still forming an opinion on this.  If you have any ideas or information in this regard that might inform my opinion let me know.

Realtors call for assessment increase caps

News 94.1 reports that the New Brunswick Real Estate Association wants the government to cap annual increases in property tax assessments, to allow for better budgeting and less uncertainty.

I think caps could only be acceptable public policy if the gulfs that exist between some property assessments and actual value are corrected.  It’s not reasonable to cap every property assessment, when some are assessed for as little as 1/3 of actual value.

I would prefer a policy where total property taxes collected had a cap in increases.  That way if assessments should go up (say there was a major upswing in property values), tax rates would be adjusted to accommodate this change.

Peel Plaza – a few minutes later

I’m sure my family, friends and co-workers wish this was true in my day to day life, but I try to avoid using Simpsons and Seinfeld quotes too much on the blog.

Tonight I make an exception.

After hearing the Peel Plaza debate and vote, I’m forced to quote Kent Brochman, news anchor on the Simpsons:

“I've said it before, and I'll say it again: democracy just doesn't work!”

Turning down the smug a bit, I imagine the construction of the project will be good for the local trades and I hope the parking garage creates enough competition and motivation for various empty lot owners to start developing new projects on their land.

My fingers are crossed that the tax rate can be at lease be kept at this same (though high) level after this gets going.

Finance Minister thinks tax bills too high

The provincial Minister of Finance is quoted by the CBC as saying:

I don't think we've had the uptake from the municipalities we thought we would that is disappointing.

Read more at the CBC NB news site.  These comments come after a provincial policy was implemented where municipalities had to actively decide to increase or maintain the tax rate if they wanted to bring in tax money with a growth rate higher than inflation and new property assessments.  It seems more municipalities decided to go for a rate higher than the provincial formula than the province hoped.

Minister Byrne’s comments indicate that the province wanted to leave the assessment calculation the same, but not allow cities to have a windfall from raising property values, without creating new value for tax payers.

Property tax season

I haven’t been to the “public square” much this week so I haven’t heard too much about people’s property tax bills yet.  I wonder if assessments are up a lot this year.  I also wonder how people in SJ are reacting to higher tax bills, which are likely as the tax rate was unchanged for last year.

With talk of reforming the system to limit assessment increases it might be necessary for assessors to increase assessments in the next few years to bring them to “fair value” numbers, before a cap is put in place.

Downtowns. What of taxes?

The same CBC article (Group seeks ways to revive downtown Moncton, topic of last post) has also drawn out comments about imbalanced taxes when comparing the suburbs to downtowns. 

I know there is a business improvement area fee in many downtowns, but what else is at play here.  I suppose land is more valuable, due to denser development. 

Still, if being downtown is less desirable than it once was, perhaps assessments could go down in the future. 

Presumably an identical building downtown and in the non-central city would have similar assessments, and similar tax rates (excluding BIA fees).

Transit Garage worth less than a third of cost?

According to a TJ article Frank McCarey, manager of the Saint John Transit Commission, feels the transit garage should be assessed at “about $7 million.”  This is less than a third of the cost to construct and around $3 million less than the city put into the project.

Citizens might be scratching their heads on this one.

New property tax rules

I’m disappointed with how the province’s new assessment and property tax system is being rolled out.  The system is set up so that the total property taxes collected of municipalities and other taxing authorities would only go up by the rate of inflation and based on new construction.  This is somewhat flawed, as there are properties that are greatly under assessed, and now if and when they are corrected this will not bring in new revenue for a municipality.

Outside of this, I think it would be fair that a city can’t maintain a tax rate, have assessments increase and then receive a windfall of new revenue without providing more value to taxpayers.

However, the new rules let municipal councils override the province’s calculated effective growth (which can shift tax rates down, so that taxes collected only go up based on inflation and new construction).  If cities were already willing to “hold the line” or cut tax rates, all the while receiving more funds due to escalating property values, why would they be any less willing to to vote against the province’s proposed rates?

When I heard this idea several months back, I thought its was a reasonable starting place – but that was based on my mistaken interpretation that nay increase in tax revenue above the provincial formula had to be put to the people in form of a plebiscite.  Unfortunately I was wrong, and likely not much will change in regard to the overall tax bills we pay (except that they will continue to go up).

Provincial tax reform for municipalities

The Telegraph Journal published an article today about the Province of New Brunswick’s proposed municipal tax reforms.

At first glance the reforms seem like they could force municipalities to be more prudent with spending.

If the article is accurate (inaccuracy is now a fire-able offence at the TJ now) and I’m reading it right the proposal is as follows:

• Assessment methodology will not change [I hope they speed up bringing property assessments in line with market value, which is intended in the act]
• The province will not let cities maintain the current tax rate and reap a windfall that is unearned; specifically cities can’t maintain property taxes rates at the same level to receive more revenue that isn’t explained by inflation [hopefully based on real estate markets, rather than CPI - though bring assessments in line with market value will handle this] and new assessments (from construction and the like)
• Any tax rate changes that are counter to the new cost-controlling policy (described above) will have to be voted on by citizens

I think this reform should be coupled with the municipal boundary reforms the province has shelved could really put pressure on municipalities to spend wisely and be accountable to citizens.

Concerned Citizens for Fair Taxation

During the last term of city council a group called “Concerned Citizens for Fair Taxation” protested furiously against the municipal government’s decision to use tax incentives in an attempt to stimulate economic growth.

What I’ve been reading in the Telegraph Journal lately about the city’s current spending on Peel Plaza, including a “man on the street” poll today, makes me wonder where those concerned about fair taxes are today.

I don’t think the group should necessarily be resurrected, as I recall they would gather and address city leaders in less than productive ways. 

Instead I want to hear from these concerned citizens that unfair spending on a police station and parking garage is an outrage.  If we shouldn’t give a company a discounted tax rate to stimulate the economy – we shouldn’t let “it will be good for uptown” or “the area needs this development” be defenses for building a boondoggle of a police station on prime real estate that the city should have been more prudent in acquiring in the first place.

The private sector is succeeding in revitalizing the uptown.  We don’t need to spend $28 million on a police station for the city to be a better place.  The current police location could likely be upgraded for an interim period while the city waits to get its finances in order, so that when a police station is built it can be done without raising taxes.

The citizens that the police protect must be considered when we think about spending money on the force’s station; a paternalistic approach from the City where the citizens are told that we “need” to spend this money for our own good is unacceptable.

It’s time for the people of Saint John to demand answers and for us to see a cost-benefit analysis that proves we should proceed with Peel Plaza as proposed, or for the project to be scrapped. 

Anything else is unfair.

Updated Propertize

The Propertize tool (http://shawn.sytes.net/propertize/Default.aspx) by Saint John Shawn that I posted about last week has been updated.

The online tool lets you search for the assessment, tax and recent sale prices (based on provincial records starting on January 1, 2009) by street name. The tool is a good way to check out how the prices and assessments in your neighbourhood compare to your property.

Cool App from Saint John Shawn

I'm new to Twitter (http://twitter.com/urbanplans) but have already stumbled across something cool on it. Saint John Shawn (http://twitter.com/saintjohnshawn) has posted a link to a tool he developed that will show assessment information for New Brunswickers looking to find out the assessments on their street.

The tool (http://shawn.sytes.net/propertize/Default.aspx) streamlines the process for those who are curious about their neighbours' assessments and don't want to look them up one by one.

It seems to only work for Saint John properties at current. **EDIT** I was wrong. It does work for other municipalities.

Not being a programmer myself, I'm going to ask Shawn if he would be able to add a column showing the sales price information the Province just added to the assessment page.

Regionalization of Taxes and Services

The mayor of Saint John (Ivan Court) has been in the news over the last couple of days saying that local taxes are high because people who live in the suburbs are using city services. He noted the greater increases in suburban assessments in the defense of his agreement.

The mayor believes we should regionalize services so that each suburban municipality is paying for a share of more services. This would effectively create a higher tax rate in the suburban areas.

It's been a few years since I was in school getting an economics degree, but these sorts of debates still get me thinking about the way taxes impact people's decisions.

I think if there was one regional tax rate some people might be willing to move to the centre of the region (in this case Saint John), all else being equal. If there were no tax advantage to living away from the city centre, it would cost more to live in the suburban areas because of the cost of travel.

Of course taxes are not the only things sending people to Quispamsis, Rothesay, Quispamsis and other communities on the fringes of Greater Saint John. Because all else isn't equal tax increases in the suburbs won't likely create a flood of people back to the city.

If minor changes in taxes won't drastically impact where people live, is there a benefit for Saint John to see our riverfront neighbours pay more taxes? Maybe. If taxes from the suburban areas can fund regional services, the tax rate in Saint John might be able to decrease, which puts more cash in owner's pockets and possibly a greater willingness for them to improve properties and possible build new ones. This of course is dependant on whether or not regionalization would create lower costs for Saint John - which is another debate.

Property Tax time

Property assessment and tax bills were sent out at the beginning of March here in New Brunswick. Property tax time inspires people and journalists to pay a lot of attention to tax rates and assessments.

I too am going to weigh in on these issues. 

First, I hear a lot of people talking about appealing their assessments.  If people feel their assessment is higher than the value of their property, appealing can be the right decision.  The problem is, many folks want to appeal their assessment because of high taxes – not because of an inaccurate assessment.  Just because assessments have gone up – even if they go up a lot – if the assessed value is not more than the property is worth (i.e. what it could sell for) appealing probably won’t benefit a home owner.

Now that assessments are getting higher people are being shown more acutely the importance of their tax rate.  Now that tax bills are higher due to higher assessed values, it is increasingly important for municipalities (and the province) to control and possibly decrease tax rates.

Tax Rate

The property tax rate in Saint John has been increasing for some time now. The Telegraph Journal presented tax rates for 1967 to 2008. I graphed these with a 3 year moving average (as this was the typical mayoral term until recently). It will be interesting to see if a decrease will soon be at hand.