Supporters of full market value assessment (Current Value Assessment or CVA as it's now called) would have you believe that the value on your assessment notice represents the market value of your property as of a given date, currently January 1st 2008 for taxation in 2009.
If they were to study the assessment process they would find this may not be so as a single formula or assessment "model" as it is called by the assessment world is used to determine the value of all properties in a given area or neighbourhood.
The multiple regressional analysis (MRA) process utilized by the assessment department requires large numbers of sales to accurately predict values. While the process is capable of producing quality assessed values in municipalities where the housing stock is primarily all new subdivision homes it starts to fail in rural municipalities (such as Georgina and Uxbridge) where the housing stock is very mixed. A major reason for the failure is the small amount of sales available to analyze.
The Process
The assessment process is broken down into a series of tasks. To better understand the assessment process one needs to walk in the shoes of the local Assessor.
The Assessor checks the site and verifies the lot size and locations as well as topography and neighborhood information. He takes exterior dimensions of all the structures and draws a diagram showing the dimensions (for later use in sq. ft. calculations)
Inadvertent errors can be costly to the taxpayer
In a new subdivision the assessor may only measure one home of each model being built. I have seen where this meant that a homeowner was paying taxes based on a finished room over the garage that did not exist in his home but did in the model measured.
While inspecting the exterior and interior he will note the quality of construction and materials as well as any additional information required such as: basement height, finished area and quality of finished area, number and types of plumbing fixtures, fireplaces, is the property on well and septic, does it have restrictions such as easements or any other factor that would affect the value. The quality designation which can have a substantial impact on the assessed value of your home can vary from assessor to assessor as it represents his or her personal subjective opinion. (there are other steps in the process that "may" also be tainted by personal subjective opinion)
Environmental factors affect assessments
In the past a closed industrial dump led to a reduction for two entire subdivisions during an appeal to the Ontario Municipal Board (OMB) while an appeal based on a hydro corridor was denied by the Assessment Review Board (ARB) and now the information bulletin that came with your assessment notice says that a hydro corridor may affect the assessment.
Improperly classified homes can be costly to the taxpayer
The incorrect classification for an entire subdivision was downgraded during the appeal process because they were misclassified by the original assessor resulting in a savings of approximately 5% for the taxpayer
After using the above information to calculate the replacement cost new (RCN) of your home the assessment department will establish land values by deducting the RCN from the sale price on properties they have determined are valid sales.
The established land values are then subtracted from the valid sales and the remaining information is subjected to analysis using the MRA process. While the goal is to achieve assessments that are within 5%, either way, of actual time adjusted sales, any one who understands the MRA process and how it is applied to assessment knows that your assessment could be too high or to low by as much as 20% from the real world of an actual sale. For example a $300,000 home could have an assessment anywhere from $240,000 and $360,000 and still be considered equitable by the assessment department.
Actual appeals show it can be worse
There is on record where during a hearing here in Ontario an assessor stated that a property that was demonstrated to be high by 40% was fair and equitable.
All this analysis leads to a computerized formula (know as the assessment model) which is then applied to all residential properties in a given area to calculate the assessed values.
Understanding How Your Assessment was determined
If you are interested in understanding the assessment model and how it was applied to your property (in the calculation of your assessment) go to your local Assessment Office (not your municipal or city tax office)and ask for a print out of the MRA. calculation details on your property along with the residential structure enquiry and site enquiry print outs.
While the names of the print outs may have changed the basic information on them will not
The Formula or Assessment Model
The following is taken from an MRA calculation details sheet in Georgina a few years ago. You will find that although they are not exactly the same they will be somewhat similar for property anywhere in Ontario.
The names of the various factors found here may change if different factors are considered in your area but the process will be the same. The value's orf each factor and how they are calculated will also change.
You will find (in dealing with residential properties) it contains the primary values called "INTERCEPT" a basic value assigned to all properties and "N/HBHD" a value adjustment factor up or down for neighborhood factors affecting values in your area.
Next is a list of standard variations "STD VAR" which when multiplied by the established coefficient (established by the MRA process) produces a value that is added or subtracted from the basic value
Sample Variables:
"SAN_SEPT" or septic system, "WTR_WELL" which is water from a private well, SQRT_LSZ or the square root of your actual lot size, "BATHS" a value determined by the number and or possibly quality of bathrooms, "EFFSQFT" the effective age x the square footage, along with another variation would see QU1FLRAR quality adjusted 1st floor area combined with SQREFGSF which is the square root of the effective age times the total area
The application of this information to the data collected on your property will result in the assessed value or CVA .
Stay Tuned --- .
Earlier posts in the series
You and "YOUR" Property Tax Bill -- Is Your Assessment Fair and Equitable
You and "YOUR" Property Tax Bill -- OUCH!!!!!
You and "YOUR" Property Tax Bill -- Your Assessment Notice Is In The Mail
You and "YOUR" Property Tax Bill -- Mill Rate Idiosyncrasy's
You and "YOUR" Property Tax Bill -- Is Current Value Assessment (CVA) A Better Way?
You and "YOUR" Property Tax Bill -- Who Takes The Biggest Bite?
It will be interesting to watch what happens to
"Your" Property Tax Bill
With province wide re-assessment taking place
for your 2009 property tax bill.
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