First published: October 06, 2005
Northumberland County is becoming a country club where only the rich can afford to live.
Over the past week or so, property owners across Northumberland County received their assessment notices from the Municipal Property Assessment Corporation, many with raised eyebrows. Every year, the non-profit corporation, which works for the Ontario government, appraises the value of 4.4 million properties from homes to businesses to institutions. This dollar-value is then used by municipalities to set tax rates.
With very few exceptions, the rates increased, some as high as 40 per cent over last year. Recent stories in the news tell shocking tales of assessments skyrocketing. In one case reported last week, a Cobourg woman says she faces a $100,000 increase. Some farmers in the county are looking at a 40 per cent hike, while others are facing even more hardship as their operations are being reclassified at a higher rate as businesses rather than at the lower rate of a farm.
The driving force behind this is the rising price of homes. And while there is plenty of room to criticize the government and the assessment corporation, no one needs to look any further than their neighbours to understand why we are all getting hit so hard.
To understand this, it is necessary to go back a step or two to understand how the assessment process works and a bit about its history.
Before 1970, each municipality developed its own assessment system and method of valuing property. The system was inconsistent and distribution of taxes unequal. Properties with a similar appearance and value within the same municipality could have very different assessments. Then, in 1970, the Ontario government tried to introduce market value assessment; meaning local governments could evaluate each home based on its fair value if it was going to be sold. Often, municipalities would not keep up with the current market values. The trouble was it was a voluntary program and many municipalities did not adopt it. Again, the system was inconsistent across the province.
Then, in 1998, under the Conservative government of Premier Mike Harris, a current value assessment system was introduced. It looks at the value of land and any improvements to buildings. It also factors in things like building permit values, on-site inspections and real estate activity. It decides what your home or business would be worth if it was sold in the open, competitive market under all conditions of a fair sale.
West Northumberland is getting hit pretty hard because we are experiencing a hot real estate market. People are putting their house up for sale at high prices. In talking with several real estate agents, they describe a situation where these prices are inflated. In some cases, people put their homes up for sale knowing they can wait it out until somebody meets their asking price or more.
Meanwhile, buyers, especially those from Toronto, are coming to Northumberland with their pockets brimming with cash. After selling their homes in the big city, they have plenty of money to spend, like a drunken sailor on pay night. Instead of paying market value, these buyers are paying inflated prices. Like lemmings over a cliff, as one home in a neighbourhood goes, the next person is asking for more. Up and up the prices spiral.
Then, add to the scenario the local developers who are asking ever-larger sums for new homes, townhouses and condominiums. A recent townhouse development in Cobourg is asking $300,000 for a tiny townhouse.
Is it any wonder why assessments are going through the roof?
There can be no doubt greed is one of the driving forces behind this crazy rate increase. And while that will upset all the free-market, laissez-faire capitalists, who think the open market should determine everything, then ask some poor senior on a fixed income how they feel when they cannot afford to live in a house anymore. Or better yet, ask some middle-income family who cannot afford to buy a home in Cobourg or Port Hope because it has become too expensive to purchase, let alone pay the annual taxes. And, what about those people who rent facing escalating rents, driven by landlords, who transfer the additional tax-costs into their tenants’ monthly payments.
Then, to add gas to the fire, the assessment system takes into account improvements to homes. That means if a homeowner decides to build an addition or improve the house through renovations, there can be a ripple effect as the house then becomes valued higher than before.
The system is crushing. In the short-term homeowners and business can appeal their assessment rates, but get ready for a long haul. Less than five per cent of property owners ever challenge the system and rates make a miniscule drop.
But, there is little incentive by those in positions of power to do anything. Real estate brokers, developers, municipal politicians and the assessment corporation itself are under no obligation to do anything. And some might argue, they shouldn’t.
The Canadian Advocates For Tax Awareness, based in Campbellford, are rallying people and municipal politicians. Trent Hills, Cramahe, Brighton, Alnwick/Haldimand, Northumberland County and Hamilton Township have joined in its battle. The group wants to give control of the assessment system back to local municipalities and to freeze assessment at 2001 levels.
Yet, reform will only solve part of the problem. As long as greed drives the system, then there is little to be done. Smart, informed consumers must crush the unrealistic prices dominating the current market. And insatiable homeowners need to get a grip.
Realistically, there is little hope any of those players will change. Politicians can no longer sit back. With a municipal election coming in the next year, this should be a central issue for debate. MPP Lou (Who?) Rinaldi must get a strong message. Not every aspect of public life needs to be run like a business, nor should it be.
If nothing happens, then get ready for the country club called Northumberland County – wealthy members only.
