WHEREAS Section 292(2) (a) of the Municipal Government Act states: “Each assessment must reflect the valuation standard set out in the regulations for linear property”; and
WHEREAS the Minister of Municipal Affairs had decided not to implement the adjustment to the assessment year modifier (AYM) reflecting increases for well assessments and for pipeline assessment in 2018 stating no reason other than that the Government of Alberta intends to conduct a rate review sometime in the future; and
WHEREAS this unprecedented action will result in lost revenue for many rural municipalities, create an unfair and unequitable shift in taxation to other assessment classes and result in significant increases to mill rates, for no apparent reason;
THEREFORE, BE IT RESOLVED that the Rural Municipalities of Alberta (RMA) lobby the Government of Alberta to immediately implement the 2018 assessment year modifier to well and pipeline assessments as identified in the draft calculation.
It has been brought to the attention of the Council of the Municipal District of Willow Creek No. 26 that the Minister of Municipal Affairs is not going to implement the adjustment to the AYM, which reflects increases for well and pipeline assessment as recommended by the Linear Property Assessment Unit within the Assessment Services Branch of Alberta Municipal Affairs.
The increase in the AYM is based on the recommendations of provincially hired consultants who applied changes based on the ‘ad volarem’ system which is founded on the philosophy that the more value there is in a specific property, the more the property owner is able to pay.
Property assessments are adjusted yearly to reflect increases or decreases in market value, or as in the case of industrial and linear properties, changes in estimated cost to construct or build a specific property. It has been a long standing principle that in times of economic downturn, when the cost of construction and materials drop, the assessment reflects the trend by applying a reduced AYM. In times of economic recovery, which was reflected in the adjustment determined by the consultants, the AYM increase is applied.
The principle of our fair and equitable assessment system is being destroyed. The Minister’s decision to not implement the AYM showing the increase in value will result in shifting the tax burden to residential and commercial ratepayers. There is a case to be made that this action will unfairly undermine the integrity of the provincial assessment system.
RMA has no active resolutions directly related to this issue.
Alberta Municipal Affairs
Alberta Municipal Affairs (MA) recognizes the freezing of the 2018 assessment year modifiers (AYMs) for wells and pipelines is a concern for the Rural Municipalities of Alberta and its members.
The annual cost updates have fluctuated significantly for pipelines and oil and gas wells over the past few years. This has created uncertainty for municipalities and for the energy sector, which is especially challenging given the early days of economic recovery we are experiencing in the province.
In response to these fluctuations, the province decided to freeze the 2018 annual cost updates for wells and pipelines at the same levels as 2017, while a review of the assessment model was conducted. We recognize there are opportunities to improve our processes, including AYMs, and we hope to explore these opportunities with stakeholders as part of a broader regulated model review.
The freezing of AYMs at 2017 levels caused significant frustration for RMA members, many of whom had prepared budgets based on draft AYM projections that the Government of Alberta had shared with municipalities prior to the freeze. In early 2019, Alberta Municipal Affairs informed RMA that the AYM process was being reviewed as part of a larger assessment model review that also includes updating construction costs for machinery and equipment and pipeline properties and depreciation measures. This review is expected to conclude later in 2019 with changes implemented in time for the 2020 tax year.
While RMA and its members recognize the importance of having an improved process that is reflective of local costs and assessment variables, it is not clear what the result of this review will be, and why it was necessary to freeze 2018 AYM with no warning to accommodate the review. RMA is disappointed that municipal stakeholders (including RMA and the Alberta Assessors Association) have not been adequately involved in the review process. As assessment is critical to municipal viability, the municipal voice must be properly represented during future reviews. The Government of Alberta’s continued freeze of the AYM means that this resolution is assigned the status of Intent Not Met.