Council Calls for Explanation of "Tax Agents" Hired for Property Tax Appeals
The large number of property tax appeals and the hired guns (or tax agents) it is drawing to the City had Council calling in the sheriff for an explanation.
"The four percent loss, on average, we don't see that as acceptable going forward. We have made a few changes going forward to handle that," Irwin Blank, Chief Executive Officer of the Saskatchewan Assessment Management Agency (SAMA) told Executive Committee.
Blank said that not only is the City seeing a loss in taxable appeal losses but it is also cutting into SAMA's resources. So far, the agency has spent 11,000 hours, over four to five years, handling appeals; which does not include external law firms giving SAMA support to fight tax appeals.
"We are in a subsidizing situation in terms of this contract," Blank said.
SAMA is contracted to provide property assessment services to the City.
In its report, SAMA stated that every property owner has the ability to appeal their property tax assessment but external factors are warping the intended process.
This warping of the process has led to lengthy delays, a large number of appeals and subsequent misinterpretations of the intent of legislation when it comes to property taxes according to SAMA.
In an analysis presented to the Committee, SAMA showed what was said to be an "unusually large" number of commercial property assessment appeals for Moose Jaw.
The data shows there are 100 commercial property appeals for 2018. While there were 107 appeals in 2017. Historically, the appeals spike in a reassessment year and drop the following years, the Committee was told. A reassessment year is when new values are attached to properties and 2017 was a reassessment year.
Blank said "everyone has the right to appeal their assessment every year" but external factors had skewed the system.
The first step in the appeal process is the local Board of Revision, then the Saskatchewan Municipal Board (SMB) followed by the courts.
He described the SMB as a body of "sober second thought" but there were changes in membership affecting outcomes.
"There is a new group of folks in provincial boards it took time to get their feet wet," Blank said.
The entire situation has led to the appearance of tax agents who are approaching commercial property owners to appeal their tax assessment thereby reducing their property taxes.
"The professional talent are targeting higher value properties," Blank said.
"It's a smaller number of properties having a big impact on appeal losses," Nancy Wolmer from SAMA said.
"If one appeal loss was taken out the appeal loss would only be 2.9 percent," Wolmer stated.
The appeal was the WalMart appeal which said SAMA had assessed the properties incorrectly by using an incorrect model. SAMA had used a rental approach whereas the local Board of Revision had used a properly value approach. The appeal made it to the Court of Appeal, where the court declined to hear SAMA's appeal setting a legal precedent.
Blank said to fight the tax agents and the 400 commercial property appeals in municipalities SAMA represents that SAMA was getting tougher.
He said a recent Saskatchewan Court of Appeal decision involving the RM of Corman Park and a golf course established precedence and parameters for local boards of revision.
The decision, Blank said, clearly defined and reigned in boards of revision. The decision clarified the board of revision and SMB were operating outside their roles and "not intended to be a court of inquiry...both boards, over the last five years, have gotten into more of an inquiry role."
Blank said the legal precedent insures "local boards and the Saskatchewan Municipal Board don't go way off the reservation" in terms of their authority.
It means the local Board of Revision and SMB may only use the facts which are presented to them and not do inquiries Blank claimed.
It also needs to be noted that the Corman Park decision was not defended by the property owner.
Blank described the municipalities SAMA is contracted to as being less formal then Regina, which has two lawyers employed in property tax assessment and its costing them.
"They don't want to be seen as heavy-handed bureaucrats to come in and close the doors...when you deal with professional tax agents its made us a soft target," Blank claimed.
Wolmer said Moose Jaw has been targeted for commercial assessment tax appeals.
"The tax agents are actively looking for clients," she said.
Reasons for commercial tax appeals vary but economic factors, such as reduced commercial rents due to a weakened provincial economy, is one factor. SAMA uses 2013 figures in determining rental values at a time the provincial economy was booming.
SAMA requires better reporting from commercial property owners to aid in more correct assessments.
Current market values for commercial properties being less than assessed values is another reason for appeal.
Road closures can also affect commercial property values and assessments.
Hotels are also appealing.
Councillor Scott McMann asked about the reason for wild fluctuations in commercial property assessments.
"If I haven't done anything to my building why is there a drop of 36 percent or an increase of 47 percent?" Coun McMann asked.
Blank said the reasons for changes was based "on the rental income information we get...the better reporting we get is the better assessments and values coming out."
Wolmer invited any concerned commercial property owner to come on and meet with SAMA.
Councillor Brian Swanson was none too forgiving of SAMA, calling for a RWS or Real World Solution.
Coun Swanson said a penalty clause in SAMA's contract to share in the tax losses with the City might improve the sorcery of assessments.
Blank responded that that would be economically impossible with what the City presently pays SAMA.
"What you are seeking is a warranty on a billion dollars of property tax revenue (provincially) on an organization only receiving $18 million."
Coun Swanson continued expressing his dissatisfaction with property assessment.
"People's faith in the system, particularly on the commercial side, is not high...I feel sorry for commercial properties hit hard that they have had to make up for appeals."
"There is work to do on our part and the boards part to rebuild confidence," Blank stated.
Coun Swanson went on to question the abilities of the local Board of Revision and how it was playing with people's livelihoods. Blank stated education might be the answer such as in Alberta.
Neither commented on judicial rulings which have backed up local Board of Revision rulings.