CORNWALL – The city’s chief financial officer says Cornwall is seeing some “significant changes” in property valuation in the next four years.
But Tracey Bailey explained it won’t be affecting the city that much next year, while she reviewed data from the Municipal Property Assessment Corporation (MPAC) with the budget committee Monday morning.
For residential properties, A Cornwall home valued at $164,804 would see its value rise to $173,752 by 2020. That change of roughly $9,000 will be phased in from 2017-2020.
But the biggest change will see a drop in the value of commercial properties by nearly eight per cent, which Bailey warns will shift the tax burden to residential homes in the future.
Based on the city’s numbers, the Seaway City would see a loss of $68 million in 2017 alone in the value on existing commercial property in the city and, by extension, fewer tax dollars.
Adding to the loss is the reclassification of some properties, like King’s Landing, which went from multi-residential to residential. That’s due to the Montreal Road property being converted to condominiums from an apartment building, which changes the value by $6.8 million.
Taxes are calculated based on the value of a property calculated by MPAC.
“That’s a scary document. Where is that money come from to continue what we’re doing,” Coun. Andre Rivette said.
Bailey said the other property classes, like multi-residential and residential, will pick up the slack of reduced value in the commercial sector. In the case of 2017, the tax burden will go from 49.7 per cent to 52 per cent for residential properties.
Residential taxes have dropped steadily since 2008 but that’s about to change next year.
“I think one thing that should be made clear, this actually snuck up on us. Was there any way to forecast these drastic changes in assessment?” Mayor O’Shaughnessy asked. Bailey said no.
“We’ve been dodging bullets,” Coun. Elaine MacDonald added, in suggesting the city has never really passed two per cent tax increases.
When MacDonald asked if this was a hit or a trend, Bailey believes the property assessment adjustments will be a “hit” in the first year (2017) but will be relatively steady through the remaining three years.
Also weighing on the city, is a ongoing legal battle between the city’s three current and former distribution centers, which are appealing their assessments. They combined value is $271 million.
“The MPAC numbers (in the budget) are based on 90 per cent of the assessed value,” CFO Bailey said. “But these numbers could actually be lower,” Mayor Leslie O’Shaughnessy warned. Lawyers for the distribution centers and the Arbitration Review Board will be going to mediation in December.
A ruling of a 10 per cent change in assessment would equate in the city having to pay back $2.2 million in taxes. The city has been setting aside money to pay for any forthcoming judgment.
“I think the future is not that negative,” CAO Maureen Adams said. “To have another distribution center (Walmart) come in and replace Target…all of that is very positive. What is happening in 2017, it’s a re-calibration (of property values).”