Amendments Allow for Clearer Application of Property Assessments

Amendments to the Assessment Act, 2006 introduced in the House of Assembly today will provide clearer, more consistent application of property assessments for special purpose properties throughout the province. A special purpose property is a property which is assessed based on its reproduction cost as there is little to no market data available to determine the market value of the property for assessment purposes.

Prior to 2007, all property assessments were completed using the fair market value. Changes to the Assessment Act, 2006 introduced the reproduction cost method.

“Previous changes to the Assessment Act in 2006 acknowledged the fact that there are properties for which fair market value may not be the most appropriate means of assessment,” said the Honourable Kevin O’Brien, Minister of Municipal Affairs. “While these previous changes made it clear how special purpose properties were to be valued; the broad definition was vague on which properties are designated. These amendments address this issue, providing clearer application of property assessments.”

The Assessment Act, 2006 governs property assessments that are undertaken by both the City of St. John’s and the Municipal Assessment Agency. Property assessments are conducted using one of two methods: fair market value or reproduction cost. Using the fair market value method, property is assessed at fair market value where an assessor compares assessments of other properties in the municipality. The reproduction cost method is used for special purpose properties.

The Provincial Government consulted with the City of St. John’s and the Municipal Assessment Agency (MAA) on these changes. Current changes to the act will result in the creation of a definitive list of property types or properties. The list will be developed in consultation with the city and the MAA. The list will create uniformity across the province in the assessment of unique properties and would ensure that property types listed may be changed in the future if necessary with the approval of the Lieutenant Governor in Council.

“The City of St. John’s is pleased the Provincial Government is moving forward with legislation to address these special purpose properties,” said St. John’s Mayor Dennis O’Keefe. “This clarification to the Assessment Act will ensure we have the authority to adequately assess these properties and collect appropriate municipal taxes.”

There have been recent court challenges in which the appellants were assessed by a city assessor as special purpose properties but both argued that the designation was discriminatory because the city failed to similarly assess other properties which also met the statutory definition. As a result of the vagueness of the definition, municipalities were at risk of losing significant municipal taxation revenue from special purpose properties.

“The goal of the amendments of the Assessment Act, 2006 is to further clarify for assessors as to which properties are to be assessed using the reproduction cost methodology while protecting the integrity of the municipal property tax base,” said Minister O’Brien. “Changes to the legislation will help to protect the current municipal taxation base in order to ensure strong, sustainable communities throughout the province.”

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2012 06 21             5:00 p.m.