To: Councillor Saundercook
July 13, 2004
WHAT IS WRONG WITH MPAC AND A SOLUTION: The Municipal
Property Assessment Corporation (MPAC) has generated a deep well of anger, resentment and
frustration because of the injustices being heaped on helpless taxpayers. From some
research on MPAC’s output I can offer the following comments on various aspects of
MPAC’s operation, under the following headings:
MPAC is too expensive to operate The property values are too
inaccurate and unstable MPAC is too secretive MPAC’s tactics at appeal hearings are
reprehensible The system for dealing with complaints has collapsed MPAC’s flawed
estimates are ripping the fabric of our society What has to be done? What is the solution?
MPAC IS TOO EXPENSIVE TO OPERATE: The Corporation is spending
$130 million per year of municipal taxpayer’s money. The head of the Corporation
(Robert Richards) is being paid $300,000 — twice what the Mayor of Toronto, for
instance, is paid and, much more than Members of the Provincial Legislature, who have
accountability to the electorate and much heavier responsibilities. These figures are
available at www.mpac.ca in MPAC’s annual financial statements.
THE PROPERTY VALUES ARE TOO INACCURATE AND UNSTABLE: We have
a wealth of laboriously collected data and anecdotal evidence to support this statement.
The methodology being used results in large swings because the sample used to establish
coefficients is different in each cycle.
For example in the City of Toronto, MPAC reported that the
average increase for Ward 13 was 17.4% and for Ward 14 was 15.6%. These average values
obscure the huge range of changes on individual properties. For example Gothic Avenue, in
the most recent cycle, shows a range of from 4.2% to 57.4% on its 70 homes. Furthermore,
the RELATIVE values of homes shift dramatically from cycle to cycle. These swings are by
no means isolated examples. Another street in your Ward is Ellis Park Road (71 homes)
where the increases ranged from 4.1% to 45%. The largest percentage increase was on a home
which has not been renovated!!!
At the very least, there is a need for an independent review,
best done by academics from university departments of mathematical statistics. However,
such a review would only delay the necessary day of reckoning, because the system of
calculations is inherently unstable and is extremely unlikely to achieve an acceptable
level of accuracy or stability.
MPAC IS TOO SECRETIVE: At a recent public meeting it was
pointed out that MPAC recently severely restricted internet access to even the most basic
information, the CVA’s for properties. The MPAC spokesperson tried to explain that
this was because of a privacy issue. Such an explanation is clearly nonsense because
owners are not identified and the information is already in the public domain, in the Tax
Rolls in municipal offices and in libraries.
Restricting internet access just makes it more difficult for
taxpayers to get the information with which to assess whether MPAC’s estimate for
their property is reasonable. Only after MPAC had been dragged MPAC through several
“pre-hearings” at the Assessment Review Board did we finally get the details of
the numerical values of the components that went into MPAC’s estimates for our home
and some (incomplete) information on all of the actual sales in our area on which MPAC
totally relies in its calculations and at hearings.
This is especially galling since all of the data is already
in the public domain and MPAC’s processing of the data is done with taxpayers’
money!
MPAC’s TACTICS AT APPEAL HEARINGS ARE REPREHENSIBLE:
Because MPAC has access to their whole database and appellants do not, MPAC can
“cherry pick” a biased sample of “comparables” which sold in the time
period of interest and present a plausible sounding case which appears to support whatever
figure the seriously flawed computer model has produced.
Aspects of properties which have been rejected by the
computer model as having no significance, such as views of a park, are still introduced at
hearings, under oath, as evidence in support of the figure arrived at by the computer
program.
THE SYSTEM FOR DEALING WITH COMPLAINTS HAS COLLAPSED: We were
told by MPAC at the meeting that 14,500 Requests for Reconsideration had been received
from Toronto homeowners and that only 4,500 have been dealt with to date. As a result
people are being told to file a defensive appeal with the Assessment Review Board before
the deadline of March 31, 2004.
The Board, we were told, is still dealing with appeals left
from the previous cycle and will be unable to schedule new appeals any time soon.
Now that the method used to deal with complaints has
collapsed it would be reckless, in the face of so much voter anger and frustration, to
consider throwing good money after bad in an attempt to rescue a clearly failed system by
increasing its budget.
MPAC’s FLAWED ESTIMATES ARE RIPPING THE FABRIC OF OUR
SOCIETY: Because these seriously flawed estimates are being used to calculate municipal
taxes, people, especially seniors, are being driven from their homes due to rapidly rising
municipal taxes over which they have no control. There is also a clear disincentive to
improve the housing stock.
The Toronto Star, on January 14, 2004, published an article
and letters to the editor regarding MPAC’s fiasco in Oakville and Mississauga, where
some homeowners received valuation notices in October or November and then much higher
revised notices in December. An example was a 34.8% increase followed by a further 42.9%
($571,000 to $770,000 and then to $1.1 million.)
To add insult to injury, these increases were described by an
MPAC spokesperson as “fine tuning” on selected homes.
The municipalities which are “Creatures of the
Province” are frequently the first place for irate taxpayers to seek help. All that
Councillors can do is to refer people to the already collapsed appeal processes.
A further problem for municipalities is that following any
reductions in assessments due to appeals, the homeowners have to be given a refund of
taxes already paid, thus actually reducing the funds available for municipal services.
WHAT HAS TO BE DONE? MPAC has made four attempts (1996,1999,
2001 and 2003) to arrive at reasonable estimates for property values and has failed
dismally. The mathematical analyses we have been able to conduct show that the system is
unlikely to ever achieve fairness and stability.
This antiquated system of trying to base municipal taxes on
volatile property values has to be discarded completely and not just repaired with
“band-aids”.
WHAT IS THE SOLUTION? At the federal and provincial levels,
income and consumption taxes are used for revenue and this approach should be used also
for municipal taxes. The tax gathering infrastructure is already in place with the ability
to apply sanctions, including fines and prison terms, against cheats.
Such a system is not only based on hard and verifiable data
but is more closely related to ability to pay.
At the moment 23% ($1.5 billion) of the budget for the City
of Toronto comes from the provincial taxbase, 32.3% ($2.1 billion) from user fees
(including TTC fares) and 44.6% ($2.9 billion) from property taxes using MPAC’s
flawed methodology.
Taxpayer and voter unrest about property taxes is already
widespread and can only become stronger as time passes and it becomes more evident just
how chaotic and unjust the MPAC monster is.
I would be happy to share with you, or anyone else, more
details from the results of our research and experience.
In addition, if you can obtain an electronic copy of the file
showing the previous and current CVAs by address for your ward, which MPAC provides the
City, I can extend the mathematical analysis I have done for our “homogeneous”
area to other areas in the Ward.
Sincerely,