+ RMA Rural Municipalities
of Alberta

Resolution 3-16F

Implementation of the Centralized Industrial Property Assessment

Date:
November 16, 2016
Expiry Date:
December 1, 2019
Active Status:
Active
Sponsors:
MD of Taber
District:
1 - Foothills-Little Bow
Year:
2016
Convention:
Fall
Category:
Municipal Governance and Finances
Status:
Intent Not Met
Vote Results:
Carried
Preamble:

WHEREAS on May 31, 2016 the Government of Alberta tabled before the Legislature of the Province of Alberta Bill 21: Modernized Municipal Government Act; and

WHEREAS the Modernized Municipal Government Act creates a Centralized Industrial Property Authority under the newly created position of Provincial Assessor; and

WHEREAS the Modernized Municipal Government Act indicates that the Provincial Assessor will be responsible for the assessment of ‘designated industrial property’ as yet to be defined in the regulations; and

WHEREAS the 2018 property taxation will be based on the 2017 property assessment which begins January 1, 2017 – in just 100 days; and

WHEREAS neither the Modernized Municipal Government Act nor any regulations pertaining to the Act have been proclaimed into law with respect to the Centralized Industrial Property Authority or the Provincial Assessor and no clear process has been established to transition the authority currently held by Alberta municipalities to the province; and

WHEREAS numerous procedural, policy and legal questions arise from the proposed legislation that remain unanswered by the Government of Alberta;

Operative Clause:

THEREFORE, BE IT RESOLVED that the Alberta Association of Municipal Districts and Counties call upon the Government of Alberta to delay or repeal the establishment of the Centralized Industrial Property Authority and the creation of the Provincial Assessor until such time as the appropriate studies, pilot projects, and consultation with all effected property owners has been completed and analyzed so the effectiveness of such a policy may be fully understood;

FURTHER BE IT RESOLVED that the Alberta Association of Municipal Districts and Counties call upon the Government of Alberta to consult with the Alberta Association of Municipal Districts and Counties and the Alberta Assessors Association in order to answer the numerous procedural, policy and legal questions which arise from the decision to create the Centralized Industrial Property Authority under the newly created position of Provincial Assessor.

Member Background:

Creation of DIP and Provincial Assessor

 “The MMGA amendments create a new property type: “designated industrial property” and a “provincial assessor”.  How does removing responsibility for more than half of a municipality’s assessment base demonstrate the “importance of working together with Alberta’s municipalities in the spirit of partnership the newly inserted Preamble states? Current rates utilized for regulated properties do not appear to be well researched and supported.  It has been stated there will be no policy changes in regard to regulated properties. If this is in fact the case how does changing the service delivery model to one that is less transparent and less accountable improve fairness and equity in the assessment process?”

 Preamble:

Currently, a municipal council is responsible to prepare assessments for all property except Linear and non?assessable property, this includes machinery & equipment, railway, other non?residential property not defined as Linear. Properties can be split into two groups: non?regulated properties – assessed on a market value standard and regulated properties – assessed using rates provided by Alberta Municipal Affairs.  Assessments are required to be fair and equitable among similar properties (MGA s.293).  Non?regulated properties are based on local market data and subject to the Quality Standards outlined in the Regulation and oversight by the Province via Assessment Audit. Regulated property assessments prepared by the municipal assessor utilizing the procedures prescribed in the MGA and Regulation and are subject to oversight by the Province via Assessment Audit. Assessed persons have the right of complaint for all property types.

MMGA Amendments:

The Preamble the Province has added to the MMGA states: “WHEREAS Alberta’s municipalities, governed by democratically elected officials, are established by the Province, and are empowered to provide responsible and accountable local governance…   … WHEREAS the Government of Alberta recognizes the importance of working together with Alberta’s municipalities in a spirit of partnership to co?operatively and collaboratively advance the interests of Albertans generally…”

A municipal Council may not prepare an assessment for properties defined as “Designated Industrial Property” nor does it have the ability to request information to know how a DIP assessment was prepared (or a summary of a neighboring municipalities DIP assessment) to ensure fairness and equity.  Market value assessments are subject to oversight by both the municipality and the province.  There are no known quality control mechanisms other than the right of complaint by an assessed person to ensure accuracy, fairness and equity for DIP properties at this time.  The creation of Designated Industrial Property may have the effect of creating two standards of assessment for the same or similar property (i.e. veggie processing plants)

Recommendations:

To ensure transparency and accountability, it may be much more cost effective and efficient for the Ministry to dismiss the concept of “designated industrial property” and fulfill the existing mandate of supporting property assessment by providing modernizing and maintaining regulated rates/manuals, training for municipal officials, assessors, and industry representatives in conjunction with other stakeholders, and an adequate oversight and advisory component to ensure quality control.  The MD of Taber supports the Alberta Assessors’ Association report and recommendation on the topic of Centralized Industrial Assessment submitted to the Stake Holder Advisory Committee earlier this year.

Letter sent to Minister Larivee September 13, 2016

September 13, 2016

Honourable Danielle Larivee, Minister of Municipal Affairs

Alberta Municipal Affairs Legislature Office

Room 204, Legislature Building

10080 – 97 Avenue NW

Edmonton, AB   T5K 2B6                                               via email: minister.municipalaffairs@gov.ab.ca

RE: Implementation of the Centralized Industrial Property Assessment for the 2018 Tax Year (2017 Assessment Year)

Dear Minister Larivee,

As you are aware Bill 21 – The Modernized Municipal Government Act creates a Centralized Industrial Property Assessment Authority under the newly created position of Provincial Assessor. Effective for the 2018 property tax year the Provincial Assessor will be responsible for the assessment of ‘designated industrial property’ as yet to be defined in Regulation.  2018 property taxation will be based on the 2017 property assessment – the 2017 assessment year begins January 1, 2017 – in just over 100 days. The Municipal District of Taber remains opposed to this change in Provincial policy and the removal of this portion of property assessment from the responsibility of the municipal assessor for reasons previously submitted in our letter dated April 15, 2016.

However, we would be remiss in our duties to our citizens if we did not consider the effect Centralized Industrial Property Assessment will have on resourcing, staffing levels, and the subsequent changes in our budgetary planning process which is rapidly approaching (beginning in October) for 2017.  To this end, we would appreciate your timely assistance in answering several of the following questions so we may be accurately informed prior to our decision making and budget processes.

  •  When may we expect the Regulation defining ‘designated industrial properties’ to be completed and available to us?
  • What transitionary process has Municipal Affairs developed for the transfer of responsibility for the assessment of ‘designated industrial property’ from our municipal assessors to the Provincial Assessor?
    • How much time will be required of our municipal assessors to complete this transition?
    • How many years can we expect the transition to take before completed?
  • How many properties within our boundaries do you anticipate will be redefined as ‘designated industrial property’ whose assessment responsibility will be transferred to the Provincial Assessor?
  • When will we be informed which properties will be redefined as ‘designated industrial properties’ and under the Provincial Assessor’s responsibility?
  • When will we be informed of the process (potentially including the regulated rates) to be used by the Provincial Assessor to prepare the assessment of ‘designated industrial properties’ within our boundaries so we may provide information to our citizens and property owners when we are asked?
    • When can we expect consultation to happen regarding how the assessment will be structured and what the valuation standard will represent?
      • Will ‘designated industrial properties’ be a regulated process with regulated rates for improvements and land?
      • Will the valuation standard for ‘designated industrial properties’ be based on market value? Current replacement cost? Current Construction cost?
        • As consultation has not yet occurred what valuation standard will be in effect for the 2017 assessment year beginning January 1, 2017?
      • Given the range of properties that may be redefined as ‘designated industrial property’ as indicated in Bill 21 how much can we expect our assessment base to change as a result of the valuation standard changing from the current one of market value to a potentially regulated rate?
        • Currently regulated rates described in the Minister’s Guidelines are not representative of current market/replacement costs (being based more than 10 years ago) nor do they include fee simple market land values.
      • Bill 21, as drafted, allows municipalities to sub-class the non-residential tax rate according to a yet to be determined Regulation.
        • Will municipalities be allowed to balance potential losses resulting from a change in the valuation standard for ‘designated industrial properties’ through a sub-class tax rate change outside of the prescribed 5:1 ratio?
        • How many sub-classes will there be?
        • What will the sub-classes be based on?
        • Will sub-classes be mandatory or optional?
        • Will sub-classes be linked to each other? To what degree?
        • Please indicate what resources you estimate we will require to implement a split tax rate for non?residential properties (including system changes and man hours).
      • If consultation determines the valuation standard to be market value as currently defined in the MGA, will our assessors be required to provide ‘market data’ to the Provincial assessor for the assessment of ‘designated industrial property’?
        • If so, what will the timeline be for this?
        • Will this requirement take precedence over the resources required to prepare municipal assessments (Condition date for centralized industrial property proceeds the municipal date, however our assessors will be busy preparing municipal assessments and may not have time to assist the Provincial assessor)?
        • If so, wouldn’t it be more administratively efficient for the responsibility of the assessment of ‘designated industrial properties’ to remain with the municipal assessor? A greater level of cooperation, education, advisory and oversight with/by Municipal Affairs could be implemented to ensure consistency, accuracy, and fairness and equity.
      • Will we be charged a fee over and above the provincial levy described in Bill 21 for the preparation and defense of ‘designated industrial property’ assessments?
        • Can Municipal Affairs provide an estimated value as to what this cost structure will look like for our budgetary purposes?
          • For assessment preparation?
          • For assessment defence in the event of an appeal (including appeal to the Courts which will likely require retention of legal counsel)?
        • Will ‘designated industrial property’ assessments be audited by an entity independent of the Provincial assessor and Municipal Affairs?
          • Will we be charged a fee for the auditing of ‘designated industrial property’ within our boundaries?
          • Can Municipal Affairs provide an estimated value as to what this cost structure will look like for our budgetary purposes?
        • Bill 21 gives us the right to appeal ‘centralized industrial property’ assessments. Has a process been developed to enable us to access information in regards to ‘designated industrial property’ assessments?
          • As the Province is preparing these assessments on our behalf will ALL data be forwarded to us when requested?
          • Will we be required to pay a fee in exchange for this information?
        • Bill 21 states an assessment prepared by the Provincial Assessor will take primacy over an assessment prepared by the municipal assessor on the same property. How many ‘lost’ hours can we expect to pay for without recompense when the Province invokes their primacy right in regards to the assessment of any particular property and negates/cancels the value prepared by the municipal assessor?
        • Bill 21 does not expand the tools a municipality has to recover unpaid taxes from non-titled properties. Will we be responsible to pay for the preparation of the assessment of a ‘designated industrial property’ whose non-titled owner is in receivership, facing bankruptcy or the account is otherwise uncollectable? Will the school taxes also continue to be levied on these properties in perpetuity?
        • We can only assume Municipal Affairs performed shift/cost studies and/or ran this as a pilot project in a particular municipality prior to determining such a radical policy change was appropriate. When will the results of these studies/pilot project be available for municipalities to review so we may draw conclusions to better prepare ourselves for this transition and answer questions posed by those non?residential property owners who were not consulted in the process?

As you can see the significance of this policy shift creates a marked impact on the predictability and stability of our primary revenue stream as well as the annual budgeting and forecasting processes a prudent municipality must complete to carry on sustainable operations.  Until the action plan Municipal Affairs intends to implement is revealed to municipalities the impact of ‘designated industrial property’ assessment will continue to impose difficulties and uncertainties and threaten local autonomy and accountability.

We continue to believe the issues currently surrounding property assessment, and more specifically industrial property assessment, could be better resolved by Municipal Affairs fulfilling a mandate it’s had for more than 20 years to provide:

  • clear, concise and responsive Legislation,
  • adequate ongoing training,
  • current up-to-date guidelines and manuals responsive to evolving issues and technologies, and
  • expanded oversight functionality (assessment audit).

As such, it remains our opinion the creation of a centralized industrial property assessment authority under a Provincial assessor puts further strain on a department already appearing to struggle to fulfill its mandate.

In summary, we look forward to your timely response to the questions posed so we may be better informed of the Ministry’s intentions and planned actions regarding ‘designated industrial property’ so we may prudently complete our 2017 operating budget.  We continue to believe the modifications presented in Bill 21 for the purpose of centralizing industrial property assessment represent a fundamental encroachment on municipal autonomy.  We further believe this policy change to be based on the fallible beliefs of a limited few individuals rather than representing the opinions of the majority as offered and reinforced over the course of the Summer Tour.  There is a high potential our level of service to our citizens may be threatened by these unknowns negatively impacting our municipal operations and sustainability.

Thank you for your consideration of our concerns on this matter.  We greatly appreciate the opportunity to work in partnership with the Province where policy changes of such critical importance to our municipality are concerned.

Respectfully,

Brian Brewin

Reeve, Municipal District of Taber

cc: Mr. Brad Pickering, Deputy Minister Municipal Affairs

cc: Ms. Meryl Whittaker, Acting Assistant Deputy Minister, Municipal Assessment & Grants Division

cc: MLA

cc: Mr. Al Kemmere, President, AAMD&C

cc: AUMA president@AUMA.ca

cc: Foothills Little Bow Association

cc: Alberta Assessors’ Association lhodge@assessor.ab.ca

RMA Background:

RMA has no active resolutions directly related to this issue.

Government Response:

Municipal Affairs: The Modernized Municipal Government Act (MMGA) received first reading on May 31, 2016, and was introduced to provide Albertans the opportunity to review the changes, ask questions, and provide their feedback on our proposed amendments.

To ensure that Albertans had their chance to provide feedback, Alberta Municipal Affairs (MA) held 21 engagement sessions in 20 locations across the province. Municipal and industry stakeholders have indicated the complex nature of industrial sites creates provincewide challenges in consistently applying definitions, determining who assesses which portions of the property, and identifying the appropriate appeal body. During focused consultations for the Municipal Government Act in 2014, municipal and industry stakeholders agreed that assessment of property on designated industrial sites should be prepared by a central body.

Under the MMGA, designated industrial property (DIP) will be defined as major plants, properties regulated by provincial and federal regulators, linear property, and rail property. The assessment of all DIP will be centralized within MA, which has resulted in municipalities requesting further information about the transition of responsibility for DIP assessments. It is understood that these requests will become increasingly urgent as municipalities face important decisions for the upcoming year on their internal assessment staff resources and contracting arrangements. MA staff will share as much information as possible about this process as soon as it becomes available.

Regarding the transition of responsibility for the assessment of DIP, MA staff will collaborate with municipalities and assessors with expertise in DIP property assessment to plan this transition. More information about this process will be shared as soon as possible.

Development:

The Government of Alberta response does not indicate a willingness to delay or repeal the process of transitioning to centralized assessment for designated industrial property. The response indicates that the Government of Alberta received sufficient feedback in favor of the move to centralized assessment during previous MGA consultation opportunities to warrant the decisions being final. RMA appreciates the Government of Alberta’s willingness to share as much information as possible with municipalities related to procedural changes, and to take into consideration municipal input on the draft list of  industrial properties designated as “major plants,” but this does not address the intent of the resolution.

In an effort to support a successful transition to a centralized industrial property system, Alberta Municipal Affairs has implemented an interim hybrid model in which municipalities will be contracted to continue to assess industrial properties on behalf of the provincial assessor. While the RMA appreciates this approach, a preferred alternative may be to maintain this contractual arrangement permanently, as it allows municipal assessors to utilize their local knowledge with increased provincial oversight of the assessment process.  In 2018, the province is requisitioning about $5.8 million in designated industrial (DI) property taxes from designated industrial property owners, through a separate tax rate applied to every DI property owner’s municipal tax notice.

RMA and several RMA members have been involved in the planning of the transition to centralized industrial property assessment with the intent to minimize the disturbance to municipalities and assessors. This resolution is assigned a status of Intent Not Met, and RMA will continue to advocate on this issue.

Provincial Ministries:
Municipal Affairs
Back to Resolutions Database