It was a packed house in council chambers on Monday night as business owners voiced their concerns about inequitable property assessments as city council pondered its next move.
The City of Moose Jaw will push the Quality Assurance Division of the Saskatchewan Assessment Management Agency (SAMA) to investigate to see if a secondary audit of property assessments in the city is warranted as soon as possible.
City council voted unanimously to request the investigation with Mayor Clive Tolley and Coun. Dawn Luhning absent. Coun. Jamey Logan excused himself due to a conflict of interest.
Coun. Crystal Froese, acting Mayor for the meeting, said the recommendation from city council needs to be taken seriously by the Quality Assurance Division.
“We haven't had the gallery this full. There have got to be close to 70 people here tonight. There is only standing room. So, this is a real, real concern of the citizens of our city,” she said.
This comes after small business owners expressed concerns to city council about the assessment of their buildings compared to larger commercial buildings in the city.
Bernie Dombowsky, owner of Charlotte’s Catering, spearheaded a property assessment watchdog group in the city. He had previously shared that his business fell under general retail with a cap rate of 3.09 per cent, while medical offices, law offices, high-rise offices and funeral homes had a cap rate of 9.3 per cent.
His concern with the secondary audit is that it could take more than a year to see any real change.
“They can't afford another year or two or even beyond that of total inequitable property tax. This has to be fixed in the 2023 roll,” he said.
City Manager Jim Puffalt replied that he sees no reason why the secondary audit should take more than a year.
“I don't think that they have an opportunity for a year to work their way through the process. I'm not aware that there are any other secondary audits being completed in the province. The City of Moose Jaw is the largest contract that SAMA has,” he said.
Business owner Kristy Van Slyck spoke to city council. She said, with the evidence that has been presented, there should be no reason a secondary audit shouldn’t move forward.
“The wild swings in value and the irrational defence SAMA has should be reason enough to pursue a secondary audit,” Van Slyck said.
She also pointed out that, in Alberta, secondary audits are done on a yearly basis, while it has never been done in Saskatchewan.
Coun. Heather Eby cautioned that pushing for a secondary audit isn’t going to please everyone, but city council has to follow the correct processes.
“As your city council, we have to follow the appropriate steps or what we put in place isn't going to hold water. Whether anyone likes it or not, this is a provincially legislated situation and we can't push forward and say well, we're not listening to the province. We're going to do it our way. We have to do the proper steps so that when we put changes in place they will stick,” she said.
City council has sided with the small business owners and multiple meetings have been held between SAMA, the city and the concerned business owners. The last meeting took place on Dec. 13 with representatives from SAMA, property owners and a committee from the city consisting of Mayor Clive Tolley, Coun. Kim Robinson, Puffalt and City Solicitor Andrew Svenson were in attendance.
SAMA indicated to the city that it is drafting a letter to provide residents with a clear explanation of assessments in the city.
SAMA, while contracted by the city, is independent of the municipality and provides the city with valuation of property assessments.
The city's role in property assessments is limited, according to city administration. City council's role is to decide on the Board of Revisions. The city contracted an independent third-party last year for the Board of Revisions. The board hears assessment appeals and decides how those appeals are handled.
SAMA has an independent Quality Assurance Division that conducts assessment audits to make sure assessments are within the requirements laid out through legislation. All of the councillors voiced concerns about a division of SAMA conducting the audit, but felt they had to trust that the Quality Assurance Division will do their job properly.
The Quality Assurance Division conducts a primary audit each year to determine the city's local appraisals. A confirmation audit is then taken to confirm the tax roll.
The secondary audit, a detailed audit looking at property assessment statutory compliance, must be initiated by the Quality Assurance Division, but unlike the primary audit, it is not a requirement.
Coun. Doug Blanc said he hopes Quality Assurance actually digs into the problem and doesn’t take the easy way out.
“My only other concern is they don't just look at it and say OK we made a mistake with some of the big corporations. I mean the banks were included and dental offices and so forth. We'll just put their taxes back up and it's fair to everybody. That will not fix the problem,” he said.
Robinson said his concern is that a quality assurance audit will not unearth all of the problems.
“In my field of work, quality assurance usually means checking to make sure you've used the right standards and the right regulations. But if the cap rate is broken or the figures are broken then a quality assurance audit is not going to point that out,” he said.
With the assessment issue not resolved between the small business property owners and SAMA, the city reached out to the Quality Assurance Division to learn more about what could be done.
The city received correspondence back from the Quality Assurance Division managing director Karlo Simonson. In Simonson's response, he said "the secondary audit is interested in systematic issues" and "there is no ability for Moose Jaw to request a secondary audit directly. However, if you have an issue that you believe needs to be looked at, I'm interested to hear what it is. Also, any documentation you have around the issue or evidence of non-compliance."