Commercial property owners are concerned their latest assessments may be over estimating the value of their properties and they may have found an ally in a well-known municipal politician.
Mayor Laurence Mawhinney of Lunenburg says it may be time the municipalities reconsider how commercial assessments are done.
“I think we need to revise the way we do it,” he says. “Market value may have worked in the past and I know everyone will tell us it’s the fairest way, the most transparent way of actually coming up with a valuation on a property, but I can’t help but think there’s a difference between urban Nova Scotia, in HRM and rural.”
Municipalities build their budgets around property assessments. If the commercial properties are overly inflated, those municipal units could face a crisis if their major commercial property taxpayers leave town, he says.
Mawhinney points to an extreme example to help prove his point.
“We were looking at commercial assessments, particularly in light of some of the things that have happened on the South Shore. Not the least of which was the sale of the Shelburne (naval) base and commercial property in November, which was a property, with an assessed valued of $2.8 million, (that) at a public auction sold for $125,000.”
So is the property’s true value $2.8 million or $125,000?
Mawhinney says the value of the property is probably less than the original assessment and significantly more than the price paid at last year’s auction.
“I would suspect if a guy can buy a $2.8 million property in Shelburne for $125,000 there’s something wrong with the assessed value,” he told me in a phone conversation Tuesday.
“I’m not exactly sure what it is. I’m not sure how to fix it. I just think we should engage in the discussion about where we are and where we may be going.”
The mayor says he hasn’t come to any conclusions, yet, but he tabled a resolution at the last regular town council meeting in an attempt to get people talking about it. He hopes to take a resolution from Lunenburg to the next Union of Nova Scotia Municipalities annual meeting.
On the surface, it may appear the union could change the rules for commercial assessments if it wanted to because it controls the management and board of directors of the Property Valuation Service Corp., which assesses all residential and commercial properties in the province. But that’s not necessarily the case.
In fact that’s another sticking point for Mawhinney who says he never favoured the union of municipalities taking over operational control of the assessment service because the rules are still being made in the provincial legislature.
“Whatever way we want to coat it, we are governed by what the province legislates,” they mayor says. “We are paying the shot, yes that was nice, we’re calling the shots about the management structure and some of the internal processes but when it comes down to what actually appears in the mail with an assessment notice, that’s based on the Assessment Act and (there’s) nothing that Property Valuation (Service) can do about it.”
Mawhinney says he personally didn’t mind having Service Nova Scotia run the assessment service but when there was a movement to create an arms-length organization to run the property service, he believes it should have been arms-length for both the province and municipality and not just the province.
If his resolution reaches the Union of Nova Scotia Municipalities and passes, he assumes the organization would be calling upon the provincial government to review the assessment system.
He assumes the two large paper mills in Nova Scotia have high assessments but if one or both should ever shut down, the value of that property would be significantly less than the current assessments.
“We really need to talk about this before we see these serious situations because it could be devastating for the Strait (of Canso) area or Queens (County) if one of those large players was to pull out.”
