INTRODUCTION
Property tax in Calgary is a fraction of assessment value and is annually collected by the Municipal Government of Calgary (usually called "The City of Calgary"). The City of Calgary annually assesses residential properties (including condominiums) using a market value standard to produce assessment values. A property’s assessment value is based on the City of Calgary’s estimate of the property’s market value on July 1 in valuation year and based on the property’s characteristics and physical conditions on December 31 in valuation year. According to law, valuation year is defined as a year prior to taxation year. For example, in 2009 taxation year, a property is assessed at $500,000 which means that the City of Calgary estimates the property’s market value at $500,000 on July 1, 2008 on the basis of the property’s characteristics and physical conditions on December 31, 2008.
The City of Calgary keeps saying that, to be a leading annual, market value assessment jurisdiction, the City of Calgary earns the respect and trust of Calgarians everyday. However, should Calgarians trust the City of Calgary on making property assessments? This manuscript answers the question.
MY PROPERTY AND THE CITY OF CALGARY
On September 1, 2004, I purchased a residential property in Banff Trail community, Calgary, Alberta, for the price of $255,000 in open market, i.e., MLS #31xxxx6 (note: MLS = a multiple listing service managed by Calgary Real Estate Board - CREB). My property had three disadvantages:
1. The property was not situated on a prime location for a residence, because it backed onto off-ramps on both sides of Crowchild Trail NW (one of the main expressways in the City of Calgary), plus eight (8) lanes for motor vehicles on Crowchild Trail NW, plus two (2) lanes of LRT tracks (note: LRT = light rail transit).
2. The property occupied a large but high-maintenance lot.
3. The property required major building renovation, because it had attic insulation made of asbestos (called “Vermiculate”), a basement floor containing asbestos, poor insulation that caused extremely high cost of utility, very old kitchen and bathroom, old furnace and boiler, malfunctioned fireplace, etc.
Since the purchase date, there has never been major renovation done to my property.
The original assessment notice released by the City of Calgary in February 2005 contained the assessment value for my property of $335,500. The value of $335,500 is supposed to be the market price of the property if the property’s owner could have sold it on July 1, 2004. Obviously in their original assessment, the City of Calgary failed to generate the actual market price of $255,000 as I paid for on September 1, 2004 (or just a few weeks after July 1, 2004). Note that the property was listed in MLS #31xxxx6 with the asking price of $289,900, but it was sold at much lower value (let alone $335,500 as originally estimated by the City of Calgary). Why was nobody willing to purchase the property at the price range of $289,900 - $335,500? The answer to the question is the actual condition of the property described in three disadvantages above.
In February 2005, the City of Calgary (without hearing) agreed to adjust the assessment value to $269,000. However, until now, the City of Calgary has been using the same assessment method that failed to produce my property’s market value of $255,000 in 2004, while my property has never significantly changed since 2004. In another word, the City of Calgary continues to produce “rubbish” shown in Table 1 for my property assessments and should not be trusted in property assessments. The “rubbish” will clearly be seen if Table 1 is compared with Table 2 that contains the average prices of residential properties in Banff Trail (a community in which my property is located). My property’s actual market value (or sale/purchase price) of $255,000 in 2004 is below the average price of $294,824 for residential sales in Banff Trail in the same year, but the City of Calgary’s assessment values of my property have always been above the average prices since 2004. The case where the City of Calgary always overestimates my property’s market values is called “rubbish”, and it is why Calgarians should not trust the City of Calgary in property assessments.
Table 1. The Continuous "Rubbish" Production by the City of Calgary for My Property
Taxation Year; Actual Market Value ($); The City of Calgary’s Assessment Value ($)
2009; n/a; 621,000
2008; n/a; 664,000
2007; n/a; 574,500
2006; n/a; 371,500
2005; 255,000 (MLS #31xxxx6); 335,500
Table 2. Residential Sales in Banff Trail (District 415)
Valuation Year (Taxation Year); Number of Sales; Average Price ($); Source
2008 (2009); 26; 534,188; CREB (2008)
2007 (2008); 64; 552,164; CREB (2007)
2006 (2007); 63; 486,894; CREB (2006)
2005 (2006); 73; 338,009; CREB (2005)
2004 (2006); 56; 294,824; CREB (2004)
LITERATURE CITED
CREB. 2004 District Statistics – Year Summary 2004.
CREB. 2005 District Statistics – Year Summary 2005.
CREB. 2006 District Statistics – Year Summary 2006.
CREB. YTD 2007 – Single Family – Community Statistics.
CREB. YTD 2008 – Single Family – Community Statistics.
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