Pay No Attention to the Man Behind the Curtain
Often when a taxpayer sees their notice of assessment, the first reaction is “how did they come up with this?!?” If you ask the Municipal Property Assessment Corporation (“MPAC”), they will happily give you an explanation. But in some cases, they will refuse to give all the details.
In a recent case[i] a taxpayer made a motion to Ontario’s Assessment Review Board asking them to compel MPAC to release the details behind how assessments were arrived using their mass appraisal method. “He maintains that MPAC is responsible to collect this sales data, interpret it accurately and fairly apply it to the properties that do not have an anchoring sale. He submits that it is the lawful right of the Board and the assessed person to question the accuracy of the data base and the interpretation of this data by MPAC.”
This sounds reasonable. Why would MPAC refuse? And why would the Board let them?
It isn’t some grand conspiracy. The Board has ruled similarly in many cases in the past, and it is understandable if we consider the difference between how MPAC values properties for a reassessment, and what they bring to a hearing.
When a general reassessment is performed (the next one is for the 2021 tax year) MPAC is required to value every single property in the province. Think of what that entails – assessing every house, corner store, mall, factory, airport… the list goes on. Over 5 million properties must be valued. To no great surprise, computers are used extensively. In many cases, if the property hasn’t changed, the data MPAC has gets fed into the software appropriate to the property type, and out comes a value. These values are reviewed for anomalies, fine tuning is done, and then an assessment notice is printed and mailed.
When MPAC goes to a hearing, they don’t come ready to defend the entire valuation model every time, and this is really a good thing. Most appeals can be resolved without tearing down the entire valuation model. Often factual issues need to be resolved; other appeals focus on a change in use of the buildings or recent sales of similar property. The time it would take to present and defend their entire process would be far longer than your typical hearing. What MPAC does bring is what all parties to an appeal should bring – the evidence they need to support their value. The Board doesn’t much care how the initial value was determined, they want to know if it is correct. MPAC is not required to present the same approach at hearing that they used to prepare the initial assessment.
This isn’t to say that there are never legitimate issues surrounding disclosure. During an appeal both sides need to pay careful attention to disclosing all of the information needed to move forward; seek the necessary disclosure at the proper time. The disclosure obligations change as an appeal advances through the steps. Early on, MPAC only provides a basic disclosure. If you want more information, this must usually be requested later, after you have filed your Statement of Issues, and you need to show why the information is relevant to the issues raised.
That is one of the roles of a good consultant: having the knowledge and information necessary to identify issues before getting all of the data MPAC has available. You can’t just go on a fishing expedition – asking MPAC for volumes of data, hoping there is something useful to be found. While there is certainly room for improvement in the disclosure process, a capable expert can identify the issues early, which will then allow for a more focused disclosure request, one the Board will support.