+ RMA Rural Municipalities
of Alberta

Resolution 25-02F

Assessment Classes and Tax Rates

January 1, 2002
Expiry Date:
December 1, 2005
Active Status:
Vote Results:

WHEREAS linear and commercial/industrial properties are included in the non-residential assessment class;AND WHEREAS Machinery and Equipment may be a separate class of assessment;AND WHEREAS under Section 354(3.1) of the Municipal Government Act, Machinery and Equipment tax rates must be equal to the non-residential (commercial) tax rates;AND WHEREAS linear and Machinery and Equipment assessments are regulated by the province while commercial/industrial properties are assessed at market value by the municipality;AND WHEREAS municipalities are faced with increasing the non-residential tax rate to offset the effects of the non-market value linear and Machinery and Equipment assessment, which in turn, translates into property tax increases for commercial/industrial properties;

Operative Clause:

THEREFORE BE IT RESOLVED that the Alberta Association of Municipal Districts and Counties urge the Province of Alberta to amend Section 297 (1) of the Municipal Government Act, to provide municipalities with the legislative authority to create a sub-class under the non-residential class of assessment for linear property, and amend Section 354 of the MGA to allow a municipality to set different tax rates for the non-residential, linear and Machinery & Equipment assessment classes.

Member Background:

Section 297(4)(b) defines that the non-residential class of assessment includes linear assessment. Machinery & Equipment is defined by regulation and generally includes manufacturing and processing (excluding linear). Differences exist on how these properties are assessed. Commercial/Industrial properties are assessed at market value. Given the economic conditions today and the ever-rising cost of construction and market values, the assessed value of Commercial/Industrial properties regularly increases. Linear and Machinery & Equipment assessment are regulated and do not reflect market value, which in turn reflects on the amount of taxes that can be collected from these properties.More specifically, if a municipality requires a certain amount of property taxes to be raised from the non-residential assessment base, the tax rate for the market valued Commercial/Industrial properties must be increased to offset the effect of this non market value linear and Machinery & Equipment assessment.Having the legislative ability to create a sub-class for linear assessment under the non-residential class as well as the ability to set different tax rates for linear and Machinery & Equipment enables the municipality to fairly proportion the amount of property taxes required from all non-residential classes of assessment.The following comparison outlines the cumulative effect of the existing systems and the proposed system.Assumptions:1. Assumes $1,000,000 tax dollars required from non-residential assessment2. Assumes no new growth in either Linear or Commercial3. Assumes 5% market value increase for Commercial in years 2000, 2001, 20024. Assumes 5% regulated depreciation in linear and M&E assessment 2000, 2001, 2002Year Assessment Type Assessment Tax Rate Levy Proportionate Share1999 Commercial 3,000,000 0.083333 249,999 25.00% Linear 8,000,000 0.083333 666,668 66.67% M&E 1,000,000 0.083333 83,333 8.33% 12,000,000 1,000,000 2000 Commercial 3,150,000 0.08547 269,232 26.92% Linear 7,600,000 0.08547 649,572 64.96% M&E 950,000 0.08547 81,197 8.12% 11,700,000 1,000,000 2001 Commercial 3,307,500 0.087489 289,370 28.94% Linear 7,220,000 0.087489 631,672 63.17% M&E 902,500 0.087489 78,959 7.90% 11,430,000 1,000,000 2002 Commercial 3,472,875 0.089371 310,380 31.04% Linear 6,859,000 0.089371 612,996 61.30% M&E 857,375 0.089371 76,624 7.66% 11,189,250 1,000,000 Proposed 2002 Commercial 3,472,875 0.071986 249,998 25.00% Linear 6,859,000 0.097196 666,668 66.67% M&E 857,375 0.097196 83,333 8.33% 11,189,250 1,000,000

RMA Background:

The AAMDC has no resolutions currently in effect with respect to this matter.

Provincial Ministries:
Municipal Affairs
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