CORNWALL – Cornwall will be at the front of the line of municipalities in Ontario going into mediation before the Assessment Review Board (ARB) on how the value of distribution centers (DC) is calculated.
A decision by the tribunal could be very expensive for the municipality should the ARB rule there needs to be an adjustment in the property assessment for the former Eleven Points Logistics (Target), Shopper’s Drug Mart and Walmart (Supply Chain Management) sites.
Prior to 2013, the Municipal Property Assessment Corporation (MPAC) had applied a Market Adjustment Factor (using real estate sales in the area as a factor in valuating property) to distribution centers in Ontario. But that was removed in 2013, causing values of distribution centers to soar 86-96 per cent in 2012, with the burden spread over four years (2013-2016).
The higher valued properties meant they were paying much more in municipal taxes. The three Cornwall properties – valued at $271 million – appealed.
Based on city calculations, the municipality would have to pay back $2.2 million in taxes for every 10 per cent reduction in assessment. The city already had $2 million set aside, pending the outcome of this Assessment Review Board hearing.
During an ARB telephone conference Thursday with a number of Ontario municipalities including Cornwall, MPAC indicated it would like to mediate with Cornwall first.
“The one group that would be nice to send to mediation first would be those in Cornwall because…most of them or all of them rely on a particular sale and so we would like to get to that property first and then get on with the rest of the Cornwall properties,” a spokesman said.
The former Eleven Points Logistics site has been sold to Walmart for its second DC.
Representing Cornwall on the conference call were CFO Maureen Adams, Cornwall Municipal Assessor Brad Maloney and Toronto real estate lawyer Jeffrey Cowan.
Cowan asked the city whether the municipality has responded to the assessment appeal by the DCs. “We have not put together a response. At this point in time, we are somewhat monitoring what’s going on with MPAC,” CFO Maureen Adams said.
Adams couldn’t answer whether the city intended to file a statement of response, when questioned by the ARB chairwoman. Later in the call, Adams said they could commit within 60 days whether the city would file a response.
Several representatives for the appellants said they were waiting on paperwork with MPAC before the ARB hearing could go ahead.
Because many of the issues maybe overlapping, real estate lawyer Jeffrey Cowan suggested the people in the hearing regroup in 60 days to plan the mediation phase. “Given the similarity of these large distribution centers in Cornwall there may well be some overlapping issues in…one party is using the others (arguments)…there needs to be more coordination. Once MPAC has settled on its positions on all three of them (Cornwall properties),” Cowan said.
The matter will be heard again in mid-July before the case proceeds to mediation – likely in the fall – possibly in October or November.