Municipalities levy property taxes based on the value of the property being taxed. A key measure of a property’s value is what someone is willing to pay for it.
In Alleyn and Cawood, people have been willing to pay quite a lot more for empty lots in recent years.
Understandably, this led to a significant increase in the valuation of such properties, in this case by 370 per cent.
Less understandable is why that same 370 per cent increase was poised to be applied to the valuations of not just empty lots in hot demand, but across the board to all property within the municipality’s borders. It created an alarming situation in which ratepayers anticipated their property taxes would go up beyond their ability to pay.
Fortunately, this didn’t happen. In the end, Alleyn and Cawood lowered its mill rate to keep everyone’s property taxes from going through the roof.
But the Alleyn and Cawood experience made it clear that there was a problem with how valuations were being done. If a rapid increase in the value of one type of real estate could also affect the valuation of all other properties within a municipality, regardless of their market value, something was broken and needed to be fixed.
It seemed to have a lot to do with something called the comparative factor, a number derived from increased prices paid for properties and used in the calculation of all property valuations within a municipality. It also features in the calculation of municipal shares, the contribution that each municipality is obliged to make to the MRC to help cover the costs of running the county. In the case of Alleyn and Cawood, its shares more than doubled, rising from $112,000 in 2023 to $289,000 in 2024.
This was the concern that the Alleyn and Cawood mayor, councillors, DG and citizens repeatedly brought to MRC Pontiac’s Council of Mayors. Last fall, the mayors agreed to reduce the power of the comparative factor in the calculation of municipal shares. Now only half a municipality’s shares are determined by the comparative factor, and half are determined by property assessments done in the first year of the triennial role, which is supposed to be more accurate.
Alleyn and Cawood believes its shares for 2024 should be $150,000, an amount the municipality is prepared to pay. Meanwhile, almost all the mayors of the MRC are of the view that Alleyn and Cawood must pay the $289,000 that was calculated by the application of the old formula.
The two sides are at an impasse. Meanwhile, interest on the outstanding amount is accumulating to the tune of many thousands of dollars per year. And both sides have lawyered up in preparation for the matter to go to court.
It has been suggested that the MRC’s surplus fund could be used to help finance the budgetary shortfall that would result from accepting Alleyn and Cawood’s offer to pay the $150,000 it says it owes. There is also the counter-view that such a move would set a precedent of allowing municipalities to avoid paying their dues.
When Pontiac’s mayors sit at the MRC table, they pride themselves on leaving their own municipality’s interests at the door in favour of serving the broader interests of the county as a whole. We need them to bring that spirit to resolving this issue, with a focus on what would be fair to all concerned and would enable all the municipalities to move forward productively together.
