Property assessment in a changing economic landscape

Transcription

1 Property assessment in a changing economic landscape Carla Y. Nell Vice President, Municipal and Stakeholder Relations ROMA Annual Conference January 22, 2018

2 Topics of Discussion Ontario s Assessment System How MPAC Assesses Property 2017 Year-End Assessment Summary Sector Highlights Questions? 2

3 Ontario s Assessment System 3

4 Ontario s Assessment Cycle Tax Years January 1, 2012 (valuation date) Tax Years January 1, 2016 (valuation date) Tax Years January 1, 2020 (valuation date)

5 Determining Assessed Values ONTARIO S 2015 ASSESSMENT ROLL To establish assessed values, MPAC applies appraisal industry standards, best practices and takes into account the unique characteristics of each municipality. DATA COLLECTION & PREPARATION + MARKET ANALYSIS + PROPERTY VALUE REVIEW = CURRENT VALUE ASSESSMENT January 1, 2016 Valuation Date 5

6 Assessing Properties Direct Comparison Approach Based on the sale prices of comparable properties. Income Approach Used to determine an income-producing property s ability to earn revenue based on the real estate. Income-producing properties including office buildings and retail properties. Cost Approach Used to value unique properties that are rarely sold on the market, such as large and general-purpose industrial properties, gravel pits and warehousing. COST APPROACH 6

7 2017 Year-End Assessment Report 7

8 Purpose of this Report It provides a snapshot of the key activities undertaken in 2017 to support the delivery of your assessment roll for the 2018 property tax year The report includes data specific to your municipality: 1. Assessment Change Summary by Property Class compares total assessment for the 2016 base year, as well as the assessment change for 2017 and 2018 property tax year by property class 2. Assessment Base Distribution Summary by Property Class compares distribution of total assessment for the 2016 base year, and 2017 and 2018 phased-in assessment, including percentage of the total assessment base by property class. 8

9 2017 Year-End Assessment Report - Highlights Assessment Growth One of MPAC s core deliverables is to capture assessment growth in municipalities across Ontario More than $37 Billion in taxable assessment growth was delivered to municipalities across Ontario Data Quality Reviews MPAC s valuation experts complete regular data validations and quality control process checks throughout the year Ongoing Reviews of Property Sectors Canada s retail environment is an example of one sector experiencing change as a result of an evolving economic landscape 9

10 Canadian Retail Sector Trends/Changes Changes in the Retail Sector: Closure of major banner retailers like Sears and Target Opening of major high-end retailers such as Nordstrom's, Saks Fifth Avenue and Restoration Hardware Increased use of online shopping by consumers and reduced need for retail space Changing shopping patterns by Canadian consumers High demand for retail space in urban centres vs crumbling demand in the rural market 10

11 Canadian Retail Sector - Sears Announcement in October 2017, that Sears would be seeking court approval to liquidate its assets 42 stores in Ontario now closed 32 located in Regional Shopping Centres 5,163,150 sq. ft. (total area) $477,000,000 (total 2016 CVA) Fulsome analysis being conducted in 2018, including a review of the development plans for each former Sears store 11

12 Canadian Retail Sector Big Box Stores Big Box Stores Large freestanding retail stores, greater than 53,000 square feet, such as Home Depot, Costco and Walmart May be located on its own site or form part of a shopping or power centre Feature minimal interior partitions and entrances; special-built with a sole use in mind 12

13 Canadian Retail Sector Big Box Stores Challenges with Big Box Stores The global retail market is changing Properties are not easily converted to a secondary use Restrictive agreements Limiting the pool of prospective purchasers can reduce property value New asset class relative to traditional real estate properties in Canada 13

14 Canadian Retail Sector Shopping Centres MPAC identified a group of Shopping Centre properties that have declined and continue to see a decline Impact is seen through various factors: Chronic vacancy Lack of triple A tenants (i.e., National Chains) Heavy competition in the area Outside major urban centres Shoppers prefer the Big Box outlet format Underperforming and/or approaching the end of their economic life 14

15 Canadian Retail Sector Appeals Majority of Big Box stores in Ontario appealed their 2008 and 2012 Current Value Assessments (CVA) It is not uncommon for specialized property types such as Big Box stores to end up under appeal Appeals of this nature, which often impact multiple tax years, are an ongoing issue for MPAC, property owners and municipalities Taking a Collaborative Approach In many instances, appeals are grouped together where there is common ownership or property similarities to help streamline the appeal process. A Municipal Working Group made up of municipalities was established, to ensure technical and administrative items under the appeal were discussed and shared by all parties. 15

16 Canadian Retail Sector Looking Ahead Continue to annually collect income and expense information from Property owners Review all sales for Office, Retail and Industrial malls and prepare the data for the next reassessment Meet with municipal stakeholders and property owners/ representatives as analysis is completed 16

17 Thank you! 17