All these cranes and no assessment growth?

Repurposing of buildings doesn’t necessarily mean growth in taxes for the region, councillors learn

WATERLOO REGION — Regional officials are trying to make sense of weak assessment growth at a time when development is steady.

Staff told councillors at a meeting this week that the Region of Waterloo is expected to see its lowest assessment growth in 15 years for the 2017 budget.

“This trend just doesn’t make sense when you see the number of construction cranes, the number of homes being built,” Coun. Tom Galloway said.

The 2017 budget has been prepared with an assumption of 0.7 per cent assessment growth, about half what the region had for the 2016 budget.

Average assessment growth since 2000 has been 2.2 per cent with a peak of 3.53 per cent in 2006 and a low of 1.34 per cent in 2010.

The low increase in property tax assessment is putting pressure on taxes despite other economic indicators that look positive, such as building permits and the unemployment rate.

“That’s part of what makes things counterintuitive,” said chief financial officer Craig Dyer. “We know that building activity is healthy, we’re seeing positive reports from building permit revenue but building permit revenue doesn’t necessarily translate into more assessment or development charges.”

There are several factors playing into the low numbers.

Industrial development has dropped by about five per cent and multi-residential development is also down, Dyer said.

At the same time, there are conversions happening that don’t necessarily result in new assessment. For example, buildings are being repurposed into office space. Those projects generally won’t yield new assessment.

If a rental building converts to condominiums, that would put it in a lower tax ratio.

Regional Chair Ken Seiling said the large number of former Blackberry buildings on the market may have had an impact because companies are moving in there instead of building new.

“When that stock gets consumed we’ll then see. If the economy continues to boom here locally, those buildings are filled up, we’ll be able to see then the creation of new buildings along the way,” he said.

The same goes for downtown buildings being converted into office space.

Coun. Jane Mitchell said that’s supposed to be one of the region’s goals — to reuse and build upward instead of building outward.

“Isn’t that what we want is repurposing … people using up existing stock instead of building on greenfields,” she asked.

Other issues impacting assessment include decisions of the Assessment Review Board. It’s trying to deal with appeals from 2008 and 2012.

“It means a lot more downward adjustment in our assessment base,” Dyer said.

Also, the province is undertaking a reassessment of all properties in Ontario.

Dyer said that with that work underway there isn’t as much time spent on identifying new properties to add to the assessment roll.

Staff will report back during budget deliberations with more details on assessment issues.