Business owners should submit their income and expense statements to the Saskatchewan Assessment Management Agency (SAMA) yearly so the organization can assess those properties accurately, a business owner says.
There are 945 businesses in Moose Jaw, but only 322 submit such statements, so SAMA is working with only one-third of the data, said Rod Van Slyck, owner of Viridian Property Corporation. Therefore, SAMA has given itself discretionary powers that include adding market adjustment factors “and all kinds of really weird things so that they can plug numbers in and come up with their end results.”
Viridian has “religiously” sent in its income and expense statements every year, which all commercial and industrial business owners should do since it will benefit them, he said on Sept. 9 during a chamber of commerce event about property taxes. If the agency had data from 75 per cent of those owners, its property assessments would be more accurate — especially for buildings with mezzanines.
Since it lacked information, SAMA made decisions that caused people to scratch their heads, Van Slyck continued.
For example, one businesses saw its taxes increase to $215,000 from $85,000.
“This is the hardest thing to fight (through the appeals process) because it’s so convoluted,” said Van Slyck. “This is the quandary we’re facing in trying to figure out what the heck is going on here.”
The “rule of thumb” should be that a higher market capitalization rate will mean a lower property assessment value, while a higher assessment value means a lower cap rate, he added.
‘Apples-to-apples comparison’
Ryan Simpson with Altas Group agreed with Van Slyck’s statement, saying this four-year cycle was based on market values as of Jan. 1, 2019, and prompted the overall property-value increase of 6.61 per cent. SAMA also moved from one single market cap rate for properties to 13.
“Now they did this to get a more apples-to-apples comparison between the properties. The problem is, now instead of basing the cap rate on 20 or 30 sales, you’re basing it on three,” Simpson said. “And if those sales aren’t representative of market value, if they’re not properly adjusted, you end up with market cap rates of three per cent.”
Since Regina had a cap rate of six per cent, SAMA is suggesting that Moose Jaw’s market is twice as good, which makes no sense, he continued. While the agency made some adjustments, its rent analysis compared Moose Jaw to three other jurisdictions, making assessing property values difficult.
“We are left with dealing with this kind of mess we see here today,” Simpson added, “and that has a cascading effect … on your taxes.”
The recent property revaluations saw SAMA, for the first time, include mezzanines inside warehouses as an extra feature of those buildings. Simpson noted that if an appeals court overturns that decision — which could take 18 months — only those properties that appealed in 2021 would be affected. If SAMA agreed to that ruling, other properties with mezzanines would receive the same deal during the last two years of the cycle.
Voices heard together
Property owners can voice their concerns through the Moose Jaw & District Chamber of Commerce, which is also working with the Saskatchewan Chamber of Commerce on this issue, Van Slyck said. Locally, city hall is aware that Yorkton is also facing similar property assessment challenges.
This co-ordination is about attaining fair taxation for property owners, he continued. The business community needs to tell SAMA to assess properties properly and let city council deal with the mill rate.
“There’s nothing radical about it. We just have to be common sense about it,” Van Slyck added, “and show them that we just need typical values on it.”
Representatives from SAMA did not attend the event.
The presentation was one of several held during the event. The Moose Jaw Express/MooseJawToday.com will have additional stories on some of these presentations.
