Councillors fight projected property-tax hike

By Nicole Howe

Ottawa’s economic boom may bust the bank for some Centretown residents.

Higher property assessments caused by the hot housing market in downtown Ottawa may cause a drastic increase in property taxes.

Somerset Ward Coun. Elisabeth Arnold says she fears seniors and young families may have a hard time coping with the increased taxes.

Arnold, along with councillors Alex Cullen, Clive Doucet and Shawn Little, whose wards have been most affected by high property re-assessments, have asked city council and the Ontario government to review the property tax system.

“There are a number of fundamental changes that need to be addressed,” says Arnold.

The property assessment system currently in place is called the Ontario Fair Assessment System.

This new assessment system, which was created to bring property assessments up to date, took effect in 1998 and is still in the process of being phased in.

When the system began in 1998, properties were evaluated using 1996 values.

The current re-assessment for 2001 was based on 1999 values and the next assessment in 2003 will be based on 2001 values. After 2004 assessments will be updated annually.

Lorne Hess, evaluative manager of the Ontario Property Assessment Corporation in Ottawa, says the real estate market in Ottawa started to take off in 1999 so it’s natural that property values have increased since they were last assessed in 1996.

The average increase in property value for homeowners from 1996 to 1999 was 4.5 per cent but Hess says certain types of property like downtown urban or waterfront property usually grow in value faster than property in rural areas.

“Some of the downtown areas have increased 10 to 12 per cent,” he says.

It’s these homeowners whose property value has increased more than the average 4.5 per cent who will see their taxes go up. When the new assessment system is completely phased-in in 2004, homeowners shouldn’t see drastic increases or decreases in their property assessments.

“Once we get into doing annual re-assessments, and in 2005, when an averaging process is introduced, there will be a significant tempering of property values,” Hess says.

Harry Fletcher, vice-president of Viceroy Property Tax Consultants Ltd. says this will provide predictability and stability to the system.

But Arnold says there are also larger issues regarding the property tax system that have to be addressed.

“We are also asking for a review of what is funded on the property tax base,” says Arnold.

She says a combination of downloading of services from the province and cuts to municipal payments have caused municipalities to stretch their property tax dollars to the limit.

Property taxes are currently being used to fund social housing, social services and subsidies for child-care and Arnold wonders whether these costs should have been shifted onto the property tax base.

Arnold and other councillors have asked the provincial and federal governments to review the appropriate role of property taxes in funding local services and provincially-mandated social services.