April 12, 2017 Town of White City Presentation 2017 Revaluation April 12, 2017 Town of White City Presentation

Presentation Overview Responsibilities Purpose of Assessments Assessment Basics and Principles Overview of the Cost Approach SAMAView

SAMA’s Roles and Responsibilities AMA Act -- Board Governed Agency Policy (Advisory Committees) Quality Assurance Computer System Communication Safety Net for Province Governance $160B /$1.83B Ass’mt / Taxes Annual Maintenance General Re-inspections Revaluations Support of Value Assessment Services 760 of 768 Municipalities

Purpose of Assessments Financial Foundation for local governments Municipal services (police, fire, streets, water, parks, recreation, libraries...) K to 12 Education What is does with it is up to the local government Local Autonomy

Assessment Basics Valuation policies are now stabilized going forward with the 2017 revaluation with notable changes to the 2013 (carryover from 2011)Manual as follows: Improved the definition of “heavy industrial property. Created rules regarding long term closures of heavy industrial property. Currently proposing revamped agricultural mixed use land valuation procedures to ensure agricultural use land assessed correctly. The 2011 Manual revisions went through extensive consultations before implementation. Quality Assurance Standards implemented with extensive consultation with assessment service providers and provincial government.

Assessment Principles Ad Valorem Property Values Property Assessments - Striving for equity between property values and property assessments

Assessment Principles Mass Appraisal Base Date (January 1, 2015) Four Year Updates (Revaluations) January 1, 2011 base date for 2013-2016 January 1, 2015 base date for 2017-2020 January 1, 2019 base date for 2021-2024 Foundation in Legislation Market Valuation Standard Regulated Property Assessment Standard Equity

Assessment Principles Three Accepted Approaches to Value Cost Approach Sales Comparison Approach Property Income (Rental) Approach

Valuation Publications The Saskatchewan Assessment Manual – 2015 Base Date (2015 Manual) contains rates only for regulated property. Property types valued using the regulated Manual. Agricultural land, heavy industrial property, pipeline, railway, resource production equipment (mine, oil & gas).

Current Valuation Publications Non-regulated valuation publications. Market Value Assessment in Saskatchewan Handbook. SAMA’s 2015 Cost Guide. Marshall Valuation Service (MVS), October 2014 service update.

Assessments - Foundational Component of the Property Tax System SAMA Tax Classes, Percentage of Value & Exemptions MA Property Taxes Payable Local Mill Rates & Tax Tools Municipality Uniform Education Mill Rates MA

Assessment Changes Tax Changes Before Revaluation Local Gov’t Budget Needs $250,000 Taxable Assessment $25,000,000 Required Mill Rate 10 (0.010)

Assessment Changes Tax Changes Before Revaluation Local Gov’t Budget Needs $250,000 Taxable Assessment $25,000,000 Required Mill Rate 10 (0.010) After Revaluation - Emphasis on revenue neutrality Local Gov’t Budget Needs $250,000 Taxable Assessment $50,000,000 Required Mill Rate 5 (0.005)

Overview of the Cost Approach

Land Valuation Average selling prices for land As of the applicable base date (January 1, 2015)

Land Valuation Non-Agricultural Land Valuation Arm’s length sales are collected and verified Determine units of comparison Identify neighbourhoods Determine base land rates (select median based on sales in the neighbourhood)

What’s new for 2017 Simplified residential cost model Commercial exterior walls Commercial depreciation adjusted Why change First two items – aligns our system more directly with the costing service we use so less work to keep using in the future. Commercial Cost Simplification - Exterior Wall Tested 62,000 commercial building sections using MVS default wall costs: Ratio = RCN simplified / RCN detailed wall costs Some assessment shifting will occur Median Ratio 0.999. No overall assessment shift. COD = 3.784. Minimal assessment shift on average. Reviewing high/low ratios for issues. Commercial Age Life Depreciation 2013 revaluation market analysis = Over depreciation for 11 of 256 commercial building types: Life Expectancy from the Marshall Valuation Service Overly short life expectancy for 11 building types 17,500/78,000 building sections (22%) impacted 11 occupancy codes are in MVS, Section 17 - Sheds and Farm Buildings 15 to 35 year “life expectancies” in MVS Buildings fully depreciated after 15 to 35 years; not recognized in marketplace / sales Buildings receive excess depreciation; causes low cost approach values relative to selling prices, and this causes high market adjustment factors (MAF’s) Recommend using substitute life expectancies (LE’s) from comparable buildings in MVS, Section 14 – Garage, Industrials, Lofts, Warehouses

Why change? It still runs, but it takes a lot of work to keep it going.

Residential Cost Simplification Sequence Steps = 19 (was 75) Sequence Step Options = 83 (was 336) RCS FOR USE STARTING WITH 2017 REVALUATION STRATEGIC DIRECTION TO DOUBLE PRODUCTIVITY Residential Cost Simplification Current basis is Marshall Valuation Service detailed wall costs: 97,000 rows of wall costs in CAMA Recommend using MVS default base rate wall costs: Eliminate data collection of wall materials Reduce errors and improve consistency; improve efficiency of CAMA updates

Residential Cost Simplification 2017 marks a major change to how residential properties are valued. Previously 36 quality classes reduced to 7. Allows for increased consistency and easier application of Marshall costing service. Previously Marshall manual was converted each base year from the 6 Marshall qualities to 36 SAMA qualities Only one quality per property versus quality of each attribute (deck, house, garage) Depreciation and condition applied to entire property

Improvement Valuation Replacement cost new determined from SAMA’s 2015 Cost Guide (residential and selected commercial) or Marshall Valuation Service (commercial) Adjust for depreciation (based on the age and condition of the structure) Adjust to reflect average selling prices for comparable improvements as of the base date (January 1, 2015) by using a MAF (market adjustment factor) A MAF is calculated for each sale and the MAF applied is developed from the median of comparable sales in the neighbourhood

Improvement Valuation Market Adjusted Cost Approach Calculate land value from sales Calculate Replacement Cost New (RCN) of Buildings less Depreciation Depreciated RCN X MAF = Building Value Land Value + Building Value = 2015 Assessed Value

Summary of the Cost Approach Property Value = land value + building value - Vacant land sales used to estimate land value. - Buildings are costed (RCN) using standardized procedures; actual cost is not used - Physical depreciation assigned - Market depreciation assigned (MAF) MAF generally represents the relationship between building market value and building cost (eg. The market demonstrates that building value is 84% of RCNLD). Also is a final adjustment for any plus and minus adjustments due to depreciation and land value. Restated, MAF is calculated by extracting the land value from a sale and comparing this residual value to what we have calculated for building cost less physical depreciation.

Assessment Shifts Value changes represent market update from January 1, 2011 to January 1, 2015 Three levels of shifts Provincial (SAMA) Local Property

Percentage of Values - 2017 Only change here is the railway, pipelines and elevators have increased from 75 to 100% New percentages of value will be out in the fall of 2016

Additional Resources www.sama.sk.ca SAMA’s website - www.sama.sk.ca On-line manuals, handbooks, FAQs etc SAMAView Ministry of Government Relations website www.saskatchewan.ca/government/government-structure/ministries/government-relations BoR Handbook Assessment Appeals Manual. Tax policy review

SAMAView

Search Options Direct access to website. www.samaview.ca All legal land descriptions maintained by SAMA Qtr/Sec/Tp/Rg/Mer. Lot/Block/Plan 9 LLD formats in all ISC Parcel No. Integrate ISC link to old legal desc.

Regular Data Updates Data currently updated in an ad hoc manner Developing automated procedures to maintain current assessment information on SAMA View Updated values will be posted to SAMA View as they are validated

Questions?