More Than MPAC Needs Reform
By Michael Hasley
The Municipal Property Assessment Corporation (MPAC) was the subject of an extensive investigation by the Ontario Ombudsman, culminating in a report on March 28th of this year. He was scathing in his criticism of many of the practices of MPAC, including “…the undeniable fact that there were a shocking number of errors in its data, signaling a troubling systemic problem”. His conclusion contained opinions that “MPAC has failed to ensure that property owners are provided with sufficient and timely assessment information to enable them to understand and fairly challenge their property assessments” and “has failed in its responsibility to ensure that its assessment decisions are accurate and fair, and has undermined the integrity of the Assessment Review Board process through its conduct”. The Ombudsman believes that “the Corporation’s practices are unreasonable, unjust, oppressive and wrong, under subsections 21(1)(b) and (d) of the Ombudsman Act”. You can obtain this report online at http://www.ombudsman.on.ca/link.aspc?langID=1 by clicking on the title “Getting it Right”, or by requesting it from the Ombudsman’s Office.
A Tiny Township resident attended an all-day Assessment Review Board (ARB) hearing in July 2006 in order to observe the process. The following are some excerpts from her personal account of the kind of evidence that led the Ombudsman to those conclusions and that reveal that MPAC had not yet changed its ways:
“The ARB member, who was the Chair, was late and apologized as he didn’t know Tiny and got lost! I liked the gentleman, but he is restricted by the set guidelines as to what is admissible and, he did not know the Township of Tiny. He knew nothing about the possible impact of dynamic beaches on assessment value.
The ARB member made it clear that although it is not a courtroom, only documented evidence is of any value. If an offer that is on the table from MPAC is not accepted, you are starting over. Whether you can afford to pay or you think the system is unfair will not change the present guidelines.
From the first hearing to the last, I felt that it was the computer against us. Taxpayers would present an argument with the information they had and the Assessor would respond with his. Often he would retire to the next room and would return with new stuff that had never been seen. The first three individuals heard complained that although they had requested comparables, they were not given them and therefore they were limited in their ability to argue their case. The Assessor tried to provide reasonable excuses for these omissions, but by the third case it was looking like there is something seriously wrong at the Barrie office.
One woman, after eight phone calls and a visit to the Township MPAC Open House, was told there was only one comparable, but the Assessor arrived at the Hearing with 14 she had never seen. The Chair thought this was so unfair, he offered to adjourn the review, but she was tired and not well and said she could not go through the day again. Her words were, ‘the present system is frustrating, humiliating and not accessible’.
I found it interesting that there was not much value put on real estate listings or the written opinion of realtors who were not certified appraisers, and I was told by someone else that even a certified appraisal was not much good unless the appraiser was available for questioning.
One lady presented comparables that she had researched and found herself that were less than half a mile away from her property. They clearly showed her property was over assessed. The Assessor had used two comparables in Wasaga (in a different Township and farther away). When she inquired if these properties had municipal services, the MPAC Assessor did not know. This would greatly change the value of a lot. Without this information they were not good comparables.
One gentleman asked for an explanation of the following:
In 1999 his neighbour’s house was assessed at $490,000 with 83 feet more frontage than his own and his was at $389,000. Since then his neighbour has made improvements; he has not. His current assessment is $130,000 more than his neighbour’s.
The Assessor had no explanation for the discrepancy.
I heard six properties reviewed that day. I don’t know if any of the applicants were successful. I do know that as of the end of August some of the applicants had heard nothing from MPAC!
My opinion is that the taxpayers are at a distinct disadvantage and we need to scrap this method of taxation. It is not fair and equitable and I agree with the woman who said it “is frustrating, humiliating and not accessible”.
The Ombudsman’s Report contained 22 recommendations to improve the system. Two require Government action and of the remaining 20, MPAC has agreed to implement 17 and is reviewing the others. Hopefully, some of the aggravations of the system will diminish as these reforms are put in place. However, fixing MPAC will not correct the underlying problem that, in many areas of the Province, property taxes are out of control.
Final 2006 property tax bills have been received. Many are facing rude shocks, as property tax increases mirror the exceptionally violent changes in current assessed values (CVA). Even if MPAC is reformed, volatility in real estate markets and assessments causes massive shifts in property tax between different residential areas. Taxes are unpredictable from one year to the next and are levied on unrealized gains in property values.
As you may be aware, Premier McGuinty declared in June that his government was “seized” with the property tax concerns. Subsequently, Finance Minister Greg Sorbara announced a moratorium on reassessments for two years, while MPAC works to implement the Ombudsman’s recommendations.
At a recent meeting, Minister Sorbara showed absolutely no intention of studying the system beyond the recommendations of the Ombudsman. This is not an acceptable response to the crisis. It is now over two years since a study was promised by the Liberal government and it is just a few months since the Premier said he was “seized” with the issue.
We must attack the policy problem and ensure that the system is properly studied during the hiatus, and that modifications are introduced before reassessment commences in 2008 for the 2009 tax year. Otherwise, the problem will be swept under the rug until after the 2007 election. If real estate trends continue as they have been, the volatility and “sticker shock” in 2009 will be substantial.
The Coalition After Property Tax Reform (CAPTR – www.captr.org) is an alliance of over 700 ratepayer associations across the Province. One of its founders is the Waterfront Ratepayers After Fair Taxation (WRAFT –www.wraft.com), which has been advocating tax reform for the past 18 months. Recently, the Coalition has been joined by the United Senior Citizens of Ontario, adding another 300,000 voices to the chorus for reform.
CAPTR has been formed to lobby for reform – specifically to cap annual CVA increases at 5%. Without such a cap in place, residential property owners will continue to find annual property taxes unpredictable and impossible to budget.
What Can You Do?
Although MPAC administration and processes clearly need improvement, the underlying system also needs modification if it is to meet any normal standards of fairness. The volatility, unpredictability and tax burden shifts caused by adherence to a pure CVA system in any hot property market are disastrous, particularly to seniors on fixed incomes. There are four things that can be done:
1) Talk up the need for reform, particularly with your friends who may have some influence in Provincial matters. You can keep up to date through the website of CAPTR at www.captr.org.
2) Contact your MPP at Queen’s Park to express your feelings. Phone numbers or e-mail addresses are available from Elections Ontario at 1-800-677-8683, or consult its website www.electionsontario.on.ca.
3) Contact the Ontario Ombudsman at firstname.lastname@example.org and request that he study the need for reform of the system – not just MPAC.
4) Send a cheque to WRAFT (the major funding partner of CAPTR) at 131 Bloor Street West, Suite 200, Box 263, Toronto M5S 1R8. Get your concerned friends to contribute as well.