Ontario's Assessment Review Board (ARB) has ordered that the City of Greater Sudbury must accept the lower value assessments for several large properties owned by local mining companies.
The review board has upheld the assessment values decided by the Municipal Property Assessment Corporation (MPAC). This means that Vale Canada Limited, Xstrata Canada Corporation, and Glencore Canada Corporation will not have to pay property taxes as high as the city had hoped.
Local property taxes are determined by the value of property assessment. The higher the property assessment value, the more the property owner pays in taxes.
The MPAC assessments were recently reviewed at an appeal hearing requested by Greater Sudbury, which had argued that the assessment values for several properties were too low, for the taxation years of 2017 through to 2021. The municipality had requested higher value assessments. The review board said the city had asked "the board for a significant increase".
The assessments include the following properties:
- The Vale building at 18 Rink Street in Copper Cliff with a value of $63,431,000 (includes $55.6 million Large Industrial and $7.7 million Commercial apportionment).
- The Meatbird Lake Vale property at 1045 Regional Road 24 with a value of $3,483,000 (includes $3.2 million Large Industrial class and $283,000 in Commercial class).
- The Vale processing facility at 487 Power Street in Copper Cliff with a value of $6,451,000 in the Large Industrial property class.
- The Vale processing facility at 1700 Elm Street at Clarabelle in Copper Cliff with a value of $16,965,000 (includes $16.4 million in the Large Industrial property class and $523,500 in the Commercial property class).
- The Vale Garson Mine property with a value of $1,862,000 (includes $1,719,500 in the Industrial property class with an apportionment of $142,500 in the Commercial property class).
- The Glencore Canada / Xstrata property at 6 Edison Road in Falconbridge with a value of $22,406,000 (includes $19.6 million in the Large Industrial property class and an apportionment of $2.7 million in the Commercial property class).
- Another Glencore Canada/ Xstrata property at 6 Edison Road with a value of $23,001,000 (includes $20.2 million in the Large Industrial property class and an apportionment of $2.7 million in the Commercial property class).
Don Davies, an expert witness for the municipality, "agreed that the MPAC experts properly identified and quantified the components of the improvements in ACS (Automated Cost System) for the Subject Properties" , said the board.
Davies also suggested that the "Costs New" of all improvements do not reflect the actual costs, and ACS data is not in-line with actual construction costs in Sudbury.
"Mr. Davies determined that the declared building permit values were, on average, 2.1 times higher than the Costs New generated by ACS. Accordingly, he concluded that ACS does not reflect local cost data," said the board report.
Responding to Sudbury.com, MPAC said it uses the cost approach to assign value to mining properties said MPAC's communication office.
MPAC said it uses a three-step process to assess a property’s current value:
-Calculating the current cost (“Cost New”) of replacing buildings, structures or other taxable components on the land, using a cost manual called the Automated Cost System (ACS);
-Applying a deduction for depreciation due to age, functional utility or economic conditions that could impact the value of the property, and;
-Determining the value of the land and adding it to the calculations noted above to produce an overall property valuation.
“More detailed information about how we assess mining properties is available in our Methodology Guide for Assessing Mining Properties in Ontario on mpac.ca."
Despite the lengthy back and forth arguments on the value of the mining properties, ARB issued its conclusion.
"As stated by the City in its Reply Submissions, “[i]t is not a question of perfection – it is an issue of who presents the best evidence in this case before this Board," said the report.
"The Board finds that the best evidence in this case was that adduced by MPAC. MPAC was able to demonstrate that its proposed current value is supportable and reasonable, that it is more likely that it is correct than not correct, using the cost approach valuation methodology."
