After a commercial valuation model review, the Saskatchewan Assessment Management Agency (SAMA) is making changes to commercial property assessments in Moose Jaw. 

The biggest change will come to cap rates in 2023 due to information learned during the 2022 appeals process, which is changes in assessment case law and changes to assessment legislation. The changes will bring the number of cap rates down from 14 to 11. The cap rates went down as SAMA grouped together retail, office, and strip commercial properties into a general retail category. 

Coun. Jamey Logan said he was still confused as the secondary audit by Quality Assurance was denied, yet SAMA is admitting errors were made. 

“So, there was nothing wrong warranting a secondary audit. Yet, there were things that came out of the audit process that changed. The percentages by upwards of 70 per cent, so I'm not really following,” Logan said. 

Coun. Kim Robinson added that even small errors in calculations using the assessment formula can lead to large tax swings. 

“So if your net income is off by $7,000 that's going to result in about $120,000 in assessed value, just on a small estimation error in NOI (net operating income for rent). It’s going to cost a property owner to be taxed on $120,000,” Robinson said. 

The rate caps range from 3.98 per cent for restaurants up to 3,000 square feet to 8.6 per cent for two-storey general commercial properties. 

Buildings that will see a decrease in their value through the new assessments will be multi-storey retail, one-storey retail smaller than 2,800 square feet, offices with quality ratings of 1, 2, and 3, and strip commercial smaller than 7,500 square feet. Warehouses older than 1990 that are smaller than 3,750 square feet, older than 1990 between 5,650 and 18,750 square feet, and newer than 1989 and larger than 5,650 square feet will also see decreases in value. 

Meanwhile, commercial properties that will see an increase in value include the following: 

  • One-storey retail larger than 2,800 square feet. 
  • Office quality 4 and 5. 
  • Strip commercial properties larger than 7,500 square feet. 
  • Restaurants 
  • One-storey mixed use. 
  • Auto/Machinery dealerships 
  • Warehouse (Older than 1990 between 3,750 and 5,650 square feet) 
  • Warehouse (Older than 1990 and larger than 18,750 square feet) 
  • Warehouse (Newer than 1989 and smaller than 5,650 square feet) 

Mixed-use mulit-storey commercial properties will see no change in their assessed value. 

One-storey offices with quality rates of four and five with a footprint greater than 7,500 square feet will see the largest jump with an increase in value of 68 per cent. Multi-storey retail less than 2,800 square feet saw the biggest decrease of 64 per cent in the property value. 

Before the changes, Moose Jaw had the second highest number of rate caps among cities in Saskatchewan behind Regina with 85. Saskatoon and Swift Current each have 12 rate caps, Weyburn and Estevan have 10 rate caps and Yorkton has seven. 

Representatives from SAMA presented to city council on Monday night to outline that having multiple cap rates is not an error but reflects market data and the fact that different property types may capitalize at different rates. 

Nancy Wollner, manager for the SAMA office in Moose Jaw, said all properties are different and the percentage could vary. 

“The percentage changes listed are the typical changes for each group. The changes to specific or individual properties may be different depending on the property details, or if that property had changed since last year,” she said. 

Wollner added that SAMA is bound by legislation on how properties are assessed and the four-year cycle for assessments. Luhning said SAMA is already aware of the legislative issues through the Saskatchewan Urban Municipalities Association. 

“The city mayors’ caucus took it upon themselves to consider concerns like this that have come from the community to put together a request to do a report, and that report has come back. That committee is working on that possible change and a number of other changes to the assessment process which SAMA is aware of,” Luhning said. 

Luhning also noted that the more information SAMA receives through the surveys sent out to business property owners, the more accurate the numbers will be. 

SAMA uses the income approach in Regina, Saskatoon, Moose Jaw, Swift Current, Yorkton, Weyburn, and Estevan. The approach uses rental data along with sales data to come up with an assessment model. Models and values shift from one cycle to the next due to changes in sales data. 

The City of Moose Jaw received its 2023 assessment values from SAMA on March 9 for the city administration to review in order to finalize its 2023 assessment roll. 

With the new assessment values, SAMA says property owners can contact them to set up an appointment to discuss those values. 

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