Roland Smith provides some thoughts on property values and property taxes in the City

Roland Smith provided me with this thoughtful discussion of taxes, relative to property values, here in the City. Nearly 80% of residential inventory inside the city boundary is assessed at $225,000 or less, which requires the city to establish a much higher mill rate for taxation purposes on local property than is done in neighbouring island municipalities that have greater numbers of homes with higher assessments, but lower corresponding mill rates for taxation. Interestingly, our city budget is actually quite comparable to our municipal neighbours. Additionally, when the owner of an “average valued home” here, or in those neighbouring communities, opens their wallets to lay down "c" notes to pay their taxes to their respective municipal government, the amount of money they have to take out of their wallets, irrespective of where they live on the island (excluding Oak Bay, Saanich and Victoria) does not vary by a large degree between them, or Port Alberni.   The problem within our city boundary is having the dubious distinction of a large inventory of low “average valued homes for taxation purposes” for communities of our size on Vancouver Island. The result of having so many properties in the residential class in our city with low average assessments, is a higher residential mill rate, and that is problematic for owners of property with assessments over $225,000, though it does not determine a tax bill on the “average valued house” locally that is out of line with tax on an “average valued house” in neighbouring municipalities. If our individual property assessments doubled overnight, the city would still meet their budget and collect the amount in taxes required for their budget, and the city could do so with a reduction in the mill rate by up to 50% for many properties in the residential class. Currently, a high mill rate is applied to a large volume of homes with lower average assessments in order to calculate taxes payable. Instead, if average assessments doubled, the mill rate could be lowered substantially even by using the same method of calculation to determine taxes payable, but with different values used in the equation. With higher average property assessments locally, we would compare more favourably to average values for taxation purposes that exist in neighbouring communities on the island, and in Cherry Creek and Beaver Creek here in the valley.    If our properties had higher average assessments for taxation purposes, then somebody planning to purchase a home, build a new one or replace an existing home after a fire or other catastrophe, would end up with an assessment, though higher afterward than the majority of properties in the residential class locally, that would still not be such a burden to the owner for taxes because the mill rate would be lower overall as a reflection of a greater inventory of higher assessed “average valued homes” in the residential property class in our city. It is the average assessed value for taxation purposes that must change if any amount of property renewal or development in all property classes is to take place, but particularly for property in the residential class.    Currently, it is those who do participate in renewal and development of residential property who are receiving tax notices with large annual payments due. The result, as many of us know, is that the location of choice for many people planning to build new, or buy existing local inventory, especially for valuations north of $300,000, is outside the city boundary in Cherry Creek or Beaver Creek, if they plan on living in the valley, or, they look elsewhere on the island to buy. In six nearby municipalities, Campbell River, Comox, Courtenay, Nanaimo, Parksville and Qualicum, the “average valued house for taxation purposes” is valued at 75% more than it is for the “average house” here in Port Alberni. In North Cowichan, where Catalyst Paper also operates, the value of the “average house” is 69% higher than it is for the “average house” here in Port Alberni. The exception to this is the local value for taxation purposes of newly built homes comparable in size and style to homes in the above listed communities. Assessments there and here are similar for newly constructed homes of comparable style, but because we sustain a significant inventory of lower assessed “average valued houses” and the mill rate is established on the aggregate volume of those low “average valued houses”, the result is that higher valued houses in Port Alberni are getting clobbered regarding the amount of annual property tax payable on them.  Further, if residential properties in Port Alberni had higher average assessments we would be more on par with neighbouring municipalities when it comes to decisions being made by prospective purchasers, and by a comparison of the amount of property tax payable on similar priced property here, or in a neighbouring municipality. Currently, we’re in a situation where a person can sell one “average” house in a neighbouring municipality and buy two “average” houses here, or worse, we have to sell two “average” houses here in order to buy one there.  Why we have such low average property assessments here, despite all of the city amenities including a career fire department (absent in the seven listed municipalities – they use composite, paid-on-call or volunteer models), good recreation/sport facilities and plenty of parks and other city services, is perplexing. We, and our neighbours, live on the same island, use the same ferries to travel to and from this island, have a similar climate and access to outdoor recreation such as fishing, hiking, beaches and lakes, and in many cases have similar sized populations. And still, Port Alberni suffers from low average assessments. Cross the city boundary and go into Cherry Creek or Beaver Creek in the same valley and a home there, similar in size and vintage to an average home inside the city, has nearly double the assessed value of a comparable home inside the city.  I have owned an "average valued home for taxation purposes" as defined in the city's budget process, for all of my adult life. After inflation adjustments are done to allow payments I made for taxation and user fees for all previous years going back to 1984 to be viewed in 2014 dollars, the result is that there has not been a dramatic increase over the years in taxation and fees for the “average valued house” in inflation adjusted terms. Instead, it comes back to the problem of too much of our residential inventory having low average assessments, which results in a small portion of inventory of newly constructed, or renovated residential developments having assessments that are significantly higher than the local average. It is for that small group of owners of residential property with higher assessments to whom taxation is an issue. But for owners of property defined as “average valued for taxation purposes”, it's an argument that is not adequately supported by data, or by comparison to our neighbours. Perceptions may tell us otherwise. Regardless, who doesn’t complain about paying taxes?  For the residential property class, there cannot be adequate renewal, revival, growth or whatever you want to call it while the current outcome is that after a person renews, revives or grows local residential inventory, they receive an outsized tax notice. Locally, until or unless average assessments rise, which may mean some upward adjustment to taxes for some property defined as “average”, but a subsequent lowering of taxes on the higher assessed properties, the wide spread between assessments of a new home and that of the "average valued home" will remain and will act to dissuade some of the activity required to rejuvenate our city and increase the inherent value we all hope to have in our own residential property. We need to solve the reasons why average assessments are so low in Port Alberni and elevate them so that our homes compare more equally to “average valued homes” in other municipalities on our island and to achieve a mill rate that doesn’t, in effect, attack owners of property with new homes having assessments that might be high when compared to the average for local properties, but are actually assessments that compare favourably with similar homes in other island municipalities.