January 5, 2004

Dear Member:
During November you will have received a notification from the Municipal Property Assessment Corporation (MPAC) that your property has been yet again revalued, this time as at June 30th, 2003. This is now planned to be an annual event.

What does the Notice mean?
The assessed value for your property shown on the Notice represents MPAC's best estimate as to the market value of your property at June 30th,2003. This value replaces the 2001 value which was used for your taxes in the year 2003. This new value will be used as the basis of your taxes in the year 2004.

How was it calculated?
The files of MPAC include a great deal of detailed information on each property in Ontario. As was the case in 2001, this information includes the location and size of your property, the actual and effective measurement of your waterfront, the number, exact size, and detailed quality of all the buildings on your property, as well as much other descriptive information . This information is gathered primarily through periodic visits to properties and through building permit information.

Sales of all properties between mid-2001 and mid-2003 were analyzed and time adjusted so that the sales prices were deemed to be as at June 30th, 2003.

Factors were applied to each of the many variables ascribed to the sold properties and adjusted so that a formula was developed which would produce the median value for sales in each neighbourhood.

Although the nature of this formula was very similar to that used in 2001, the current assessed value is not simply an update of the 2001 value, but rather a complete revaluation based on sales in the intervening period and the resulting re-estimation of all the factors applied to property variables. This means that although recognition of special circumstances previously agreed upon should be on your file and reflected in the new valuation, previous reductions based on comparables will not likely be reflected in the new assessment.

What is the implication for property tax?
Market values of waterfront properties in Muskoka, and therefore assessed values, have continued to go up between mid-2001 to mid-2003. Table 1 (attached) shows the average increases in assessed values for the principal property locations on the major lakes.

Individual assessment changes may vary dramatically from these averages due to local market conditions, under-valuations at the previous assessment date, new development on the property, imperfection in the estimation procedure, or errors made in the calculation.

Calculating the effect on your expected taxes in 2004 based on the change in your assessment is somewhat complex, as property taxes are collected on behalf of the Town/Township, the District, and the Province, for the District of Muskoka Lakes; and on behalf of the Township and the Province for the Township of Seguin.

If the budgets were to remain the same in the year 2004 as they were in 2003 in all of these jurisdictions, then the effect on your taxes relates directly to the increase in the value of your property relative to the other properties being assessed in each jurisdiction.

Table 2 (attached) shows the average increase in assessment in each Town and Township in the District of Muskoka, as well as the Township of Seguin (which is in the District of Parry Sound). This table also shows the approximate percentage increase in your assessment which should not attract additional taxes in 2004 if each jurisdiction does not increase its operating budget. This is referred to as the “neutral increase”, as only increases above this amount should cause your taxes to go up strictly as a result of reassessment

As an example, for a property in the Township of Muskoka Lakes, since 46% of taxes last year were paid to the District, and 41% were paid to the Province, a full 87% of the tax load is paid outside the Township. Therefore even though the average increase in the Township is 13%, the neutral increase is 14%, as average assessment increases outside the Township are slightly larger. Consequently, anyone whose assessment increased less than 14% is not likely facing a tax increase strictly as a result of reassessment.

What can you do about it?
A question you should ask yourself is, does the assessed value reasonably represent the amount you might have expected your property to sell for at June 30th, 2003, if you had decided to sell it? If the answer is, that your property is worth at least that much, it could be difficult to achieve any change either by talking to the assessor or making a formal appeal.

However, regardless of your estimation of true market value, if you feel strongly that your property has been overvalued relative to properties you think are somewhat comparable to yours, the following steps should be taken:

1. You should phone an assessor at MPAC at the number shown on your Notice (1-866-296-6722) identifying your property by its roll number shown on the Property Assessment Notice;

2. You may verify with the assessor that the right detailed information is included in your file as to location of your property, shoreline, and the number, size and quality of buildings on your property; and that any special negative circumstances of your property have been recognized on your file.

3. The assessment office will provide you with twelve comparable property assessments at no cost, in order for you to understand or appeal your assessment. Each additional property request, beyond the first 12, will cost $10.00. You may specify the properties to which you wish to be compared, or leave that up to MPAC. You may ask the assessor to include one or more properties that have actually been sold and have been used for comparison purposes;

4. If you still feel that your property is overvalued, you may fill out a "Request for Reconsideration" form (available on the internet at www.mpac.ca) which will be reviewed by the assessor. You have until December 31st, 2004 to complete and submit that form. If the assessor feels that you clearly have a strong case based on some unusual aspect of your property, or there has been an error, this is the best route. In 2003, less than 6% of the waterfront properties in Muskoka attempted this, of which more than half were successful.

5. The alternative is to lodge a formal appeal with the Assessment Review Board (ARB) for a fee of $50.00. This appeal must be registered prior to March 31st, 2004 (i.e. - well before the deadline for the "Request for Reconsideration" approach). In 2003, appeals to the ARB were registered on less than 1% of all properties in Muskoka but more than half of these would appear to have been successful - usually for fairly small amounts, unless there had been a material misunderstanding. An appeal could possibly result in an increase, rather than a decrease. However, a well documented appeal with appropriate comparables convincingly presented, may well win the day.

6. There are a limited number of firms that are prepared to assist you in appealing individual assessments, because of the cost of developing a good case. Two firms have specifically expressed interest in helping:

a) Colt Realty Advisors Inc. – Howard Colt, 416- 636-2103 or colt@coltax.com . Fee basis is a sliding fixed fee depending on property value + 50% of first year tax saving. Minimum 5 properties in vicinity for lower valued properties.

b) Simcoe – Muskoka Real Estate Appraisals – Tom Emmons, 1-800-900-9322. Fee basis is a fixed price after initial discussion.

Yours Truly

Alan Morson, Chair Political Portfolio