Re-assessing MPAC's methods

Monday, January 13, 2014

THUNDER Bay is not alone in questioning the validity of property values established for taxation. It now has two reasons to do so and a likely ally in the province.
Fluctuations in residential property taxes and a host of appeals caused by changes in values set by Ontario’s Municipal Property Assessment Corporation (MPAC) have given way to similar questions about special-purpose business properties — everything from billboards to pulp and paper mills.
The growing chorus of discontent over MPAC evaluations across the board led the province to establish a review of its operations.
Property taxes raise approximately $24 billion per year in Ontario that support municipal services and the public school system. So Ontario’s intervention is understandable.
It has become glaringly evident that MPAC’s methods and decisions are all over the map. The province wants to quell discontent and restore fairness and predictability to the system.
Thunder Bay provides a good example of the confusion.
MPAC agreed with Resolute Forest Products to re-assess the city’s biggest industrial operation and decided the company was paying 60 per cent too much which, applied retroactively as MPAC recommends, would claw back $7 million from city tax coffers and reduce ongoing annual taxation by $1.8 million.
That is a big hit and if it sets a precedent, who knows how much could be hollowed out of Thunder Bay’s industrial taxes.
Resolute has weathered the recession and appears, at least, by its many active smokestacks to be running full-tilt 24 hours a day. It has built additional facilities and yet MPAC thinks it’s worth nearly two-thirds less than it was prior to 2009.
How does MPAC arrive at that? Is it tied to income and revenue and are those amounts down that much at Resolute?
Does MPAC know what Resolute could sell the mill for today? Economies here and in the U.S., it’s main customer, are on the rebound while a lower Canadian dollar boosts product export values. Resolute seems to be doing rather well so why is it worth so much less?
At the other end of the spectrum is Thunder Bay Terminals which, like Resolute, is an industrial survivor, moving coal, potash and other commodities through its waterfront operations.
Coal shipments are down as the energy sector moves to cleaner fuels. Potash volumes are down, too, yet MPAC looked at Thunder Bay Terminals and decided it wasn’t paying enough in taxes. A re-assessment nearly doubled its annual property tax bill and seeks $1 million retroactively.
The reason? Some new equipment to move material.
There was no expansion in the plant so why do investments in new equipment not physically attached to it mean that the company must pay higher property taxes even as its product volumes are down? Would MPAC raise a residential property assessment if the owner bought a truck to move his firewood?
City manager Tim Commisso is leading an appeal of the Resolute decision.
MPAC are supposed to be the experts in these matters and municipalities pay them well to set accurate and logical property assessments, Commisso said in an interview Friday.
“But scratch the surface and there is a lot of variability,” Commisso said, with some assessed values are going in opposite directions for no apparent reason.
MPAC is not in the paper mill business but it is valuing these special-purpose properties and others, like farms, wind turbine towers and landfills, with criteria that raise many questions. What mysterious criteria does MPAC use to decide the values of these operations?
The province has seen so many appeals of MPAC decisions that it established the review. Like MPAC’s ability to apply re-assessments retroactively, we trust the province will not be above reversing MPAC decisions found to be inaccurate.