Council here reviewed correspondence from Wellington County treasurer Ken DeHart to better understand the impact of local gravel pit assessment appeals.
In response to extreme Current Value Assessment (CVA) increases, particularly in the industrial tax class, the Ontario Stone, Sand and Gravel Association approached members to launch province-wide appeals with the Assessment Review Board.
The current round of appeals mirror similar action that was taken by OSSGA and property tax agents in 1998.
Gravel pits are complex properties to value and given the number of appeals at that time, many settlements had not been reached until 2008 when municipalities had to refund property taxes retroactive several years.
As of this date, the Town of Erin has received one set of Minutes of Settlement (MOS) and five additional settlements are proposed for Dufferin Aggregates in both Erin and Puslinch.
In addition, there remain nine appeals in Puslinch, four in Erin, and one each in Guelph/Eramosa, Centre Wellington and Minto.
Legal counsels for MPAC and the OSSGA agreed that the best course of action was to choose 10 properties as test case appeals, three of which are located in Puslinch Township.
Some of those the appeals will not be heard until mid-2014.
Given the uncertainty of the outcome of future ARB decisions and settlements, potential tax refunds may impact significantly on the 2014 budget.
Local treasurers may choose to consider the impact of gravel pit appeal settlements when preparing their 2013 and 2014 budgets.
Farm tax changes
Mayor Dennis Lever added there were also details of changes related to farm tax assessments.
“There’s been a lot of discussion at the county level,” he said. “We’ve always known that farm properties were treated as a house and one acre of property as residential. The rest was treated like farmland.”
Lever said a lot of people just recently became aware that the manner in which that house and one acre of land is assessed is different than normal residential properties.
“The net result is about half of what current market value assessment is.”
He said council should be aware of that should they have any discussions with members of the farm community concerned about increases they are seeing to farm taxes.
“They need to be aware if the same rules were being applied to their home and acre property, they would be facing a substantially higher increase.”
Councillor Susan Fielding agreed.
“I believe they are getting a much better deal the way it is now.” She said with her own property she couldn’t quite figure out how it works since the house value went down.
Fielding said that financially the farm people are much further ahead – “it’s not good for the township.”
Based on actual sales and market activity, MPAC has observed significant increases in the sale price of bona fide farmer-to-farmer sales throughout the province.
Upon updating the current value assessment (CVA) to the January 1, 2012 base year, MPAC reports the average farmland increase province-wide to be 49% and residential CVA increase of 19%.
By comparison, Wellington County CVA has increased by 52% and 13% respectively.
In order to offset higher valuation increases Wellington County and many other municipal councils are being approached by local agricultural federations to lower the farmland tax ratio from the maximum 25% in order to maintain their existing distribution of tax burden.
Staff have been informed that farmland value increases in Mapleton (69%) and Wellington North (75%) are higher given that farm acreage rate tables had not been updated in time for the previous reassessment base year 2008.
Farmers in those communities have benefitted from lower values and property tax for several years compared to farmers in our other municipalities .
As with all other properties, farmland valuation increases are phased in over a four-year period (decreases are experienced immediately). Farmland is also discounted from property tax liability by 75%.
Based on preliminary tax impact reports from the Province’s On Line Property Tax Analysis Tool (OPTA) the average farmland tax increase in Wellington County for 2013 is $108, while the average residential tax increase is $91.
The mandatory farm tax incentive program has resulted in shifting a large component of the tax burden onto residential property owners.
Reducing the ratio to 20% would add an additional $40 to each property in order to subsidize the FTIP. This would shift even more of the tax burden onto residential home owners.
The cost per owner also varies by municipality. For example residents in Puslinch, Guelph/Eramosa and Erin would contribute a larger component based on having higher residential CVA values.
The typical median value of a single family home in Wellington County is $309,000 while a typical farmer occupied home is assessed 54% lower at $143,500.
