With 2021 being a revaluation year for tax purposes, properties in Saskatchewan have been revalued. and at this time of year most municipalities have their assessment rolls open and property owners have the opportunity to appeal their assessments.
The Saskatchewan Assessment Management Agency (SAMA) is an independent agency that has developed an assessment system and is tasked by the provincial government to provide property valuation services to local governments.
Through SAMAView, land owners are able to check their valuations and compare them to others and every four years there’s a valuation year where SAMA updates all the values for all properties in the province to ensure they’re current—2021 is a valuation year.
SAMA CEO Irwin Blank says the agency started over 30 years ago when the province wanted to provide municipal governments with a better property assessment process.
“SAMA was actually the creation of the recommendation of a committee called the Local Government Finance Commission that was created by the provincial government in the early 1980s in recognition of the fact that the property assessment system was not being given the level of attention that local governments thought it should be given,” said SAMA CEO Irwin Blank. “So the Local Government Finance Commission recommended that an agency like SAMA be created that would be governed by a board of directors and the government agreed.
“In 1987, SAMA was created with the passage of the Assessment Management Agency Act and we have a board of directors who govern us and the majority of the board members were elected officials from local governments—urban and rural municipalities—with the minority being appointed representatives from the province.”
The revenue created through property taxes via SAMA’s assessment system is a key cog in municipal governments’ funding with a large chunk of it being poured into the education sector at a local level.
“SAMA is responsible through our board of directors for establishing the formulas, the rules, and the procedures that are used to establish assessed values that are used for property tax assessments for every property in Saskatchewan,” he said. “That assessment currently provides over $2.1 billion in annual revenue to local governments—that’s both municipalities and the education sector each year.
“It’s very substantial, it’s the major source of revenue for most municipalities that they use to sustain all of the necessary community functions, to keep things rolling. About $750 million of that $2.1 billion goes to the education sector, that represents just under 40 per cent of the total kindergarten to grade 12 operational funding for the education system—you can imagine what the education system would be like without that revenue to support it. Our assessment system essentially provides that predictable—hopefully stable—financial foundation for local governments to utilize to give revenue to sustain their communities. That’s why we exist.”
Having developed a thorough system to evaluate property worth through multiple formulas, SAMA doesn’t need to have their appraisers travel to every property in the province to develop the valuation number unless there’s a physical change on the property reported by the municipal government says Blank.
“We’ve got a team of over 100 assessment appraisers that all have particular training and they’re fully licensed and accredited—which you need to be to undertake valuations in Saskatchewan,” he said. “They actually go out at the request of municipalities to check whenever there’s new properties that are built or renovations are done on a property or a subdivision is developed or if something is torn down. When those things happen, we’re asked by the municipality to go out and check those properties and collect the physical characteristics of those properties.
“Also, on an ongoing basis, every week we get all the sales that occurred through information services corporation of any properties in any municipalities we serve and we’re continually validating those sales. We utilize that information to establish market rates which we apply to the physical data we collect. The assessment system is an ongoing process of collecting and keeping physical data up to date for all properties and utilizing market evidence combined with cost information to establish assessments that are supposed to be reflective of the average selling price of those properties as of a particular point in time, which we call our valuation base date.
“Once every four years we update that valuation base date—we don’t go out and physically check all the properties once every four years, but once every four years we look at all the current marketing information based on all of the sales that occurred over the previous four year period,” he said.
“We then use that updated sales information to update assessments to reflect that more current valuation base date.”
Due to many communities throughout Saskatchewan being rural, it can be difficult to use surrounding sales information to determine property worth. Blank explains that’s why SAMA has developed a system using specific formulas to help with the process.
“In most municipalities in Saskatchewan we’re applying what we call the cost approach,” he said. “The cost approach is considered the best approach to use in areas where you don’t have a huge amount of sales information and you don’t have a huge number of properties that are actively leased/rented in the market where the buyers of properties are actually buying those properties to get that rental income.
“In most small communities you don’t have enough properties that fit those categories so then the standard approach followed there is to determine what it would cost to reconstruct those properties and we have cost guides and manuals that provide that cost information. Anything that would be associated with the cost to construct a property would be things that we consider as part of establishing the assessed values. So we see what it would cost to build that property new and then we ask how old that property is. How many years ago was it built? What condition is it in? Good, average, or poor? That then effects how much depreciation we apply to that particular replacement cost to determine how much the depreciated replacement cost is. To that we add the known value based on whatever sales information we can get—it’s primarily on vacant land sales in the area.
“So we know land in the area is selling for this much, we know the replacement cost of the property is this much and we’ve depreciated it, and the final step in the process is to look at actual sales of those kinds of properties from that area over the previous four year period leading up to the base date,” he said.
“With that we look at on average when these properties are selling, are they selling for the full replacement cost plus depreciation and the land value? Are they selling for a little more than that? Are they selling for a little less than that? And we adjust the cost based assessments using what we call a market adjustment factor to bring them in line with what the selling prices are telling us is the average selling price of those kind of properties in that area. That’s how we come up with the assessments.”
When SAMA’s property assessments come out, land owners are able to review them and have a window to decide if they want to appeal them. Blank says every municipality in Saskatchewan has a local board appointed to hear these challenges from land owners.
“In a revaluation year—this year is a revaluation year—we’re updating all the values for all properties to reflect a more current valuation base date. In 2021, all the new assessments are going to be reflective of what most properties are selling for on average as of January 1, 2019,” he said.
“That’s a four year move from what last year’s assessments were supposed to reflect—the 2020 assessments were supposed to reflect the average value of those properties as of January 1, 2015, which had been in place for the previous four years. In a revaluation year, the opportunity for people to inquire and potentially challenge their assessments is doubled from a non-revaluation year.
“From the time that assessments are placed on an assessment roll and advertised as being available for review, property owners have 60 days to review that property assessment and ask questions about it—which they can do any time—and they can also go on our SAMAView website which provides free access to any property owner across the province to look at their assessments and compare it against their neighbours’ assessments. If they’re satisfied their assessment is fair, that’s where the process usually ends, but if they look at it and think something isn’t right, they can challenge it and have a 60-day period to launch an appeal with their local board of revision—a group of local folks the municipality would appoint to sit as a board of revision.
“Before the board of revision happens, there’s usually a process where our assessment appraiser will contact whoever appealed the property and try to find out what their concerns were and if an error was made,” he said.
“Let’s say we haven’t checked the property for physical data for quite a few years and we haven’t assessed for a garage that was torn down four years ago, but for whatever reason it wasn’t reported by the local municipality so we never checked it out. If we find out that there’s an error of that type there, we can recommend an agreement to adjust and at that point just correct the assessment without having to have the person go in front of the board of revision to get that done.
“The first step is the appraiser contacting the person who has launched an appeal to inquire about the issues and if there is an error we try to work with the land owner to fix it and we show them what the assessment should be and if they agree and sign off on it then that’s where the process ends. If they can’t come to a meeting of the minds there and our folks don’t see an obvious error that should be corrected then the property owner goes in front of the board of revisions. It’s a somewhat informal process, but they do need to have some substance at that stage—they can’t just say, ‘I think my value’s too high,’ they have to say, ‘I think my value’s too high and here’s why.’ ”
When there’s an appeal it’s up to the locally appointed board to make a final decision, but if the property owner or SAMA appraiser don’t agree with the board’s decision, the appeal process can continue at a provincial level, says Blank.
“The appeal final decision is made by the local board of revision,” he said. “That local board of revision has that authority to determine if in fact this person has a case and they agree and suggest the assessment should be changed to a certain amount—whatever the appeal is seeking. For example if they say, ‘we agree this property is in poorer quality than what SAMA has rated it and we think it should be rated as a poor quality,’ they can ask our appraiser to tell them what the assessment would be at that poor quality and once the appraiser indicates that, they can say, ‘that’s what our decision is going to be.’
“That’s not the last step in the process though, if either party comes out of the board of revision and feels that justice wasn’t served they can then appeal to a higher provincial level called the Saskatchewan municipal board. That Saskatchewan municipal board has oversight across the whole province and these are folks who are appointed by the province to be that second level of appeal.
“It’s still relatively informal—you don’t need lawyers or anything like that—but these guys are that much more well trained in the whole process. They can be that final point of review for any issues of fact and interpretation of those things.”
Rob Paul, Local Journalism Initiative Reporter, The World-Spectator