Commercial Property Tax

BOMA Nova Scotia Calling for Property Tax Reform

April 25, 2022

Executive Summary

As Nova Scotian municipalities draw up their first post-COVID budgets, a new focus on property taxation has emerged. The Building Owners & Managers Association of Nova Scotia (BOMA Nova Scotia) represents the commercial real estate industry; currently, our members pay taxes at roughly 2.85 times the current residential rates. We look for increased fairness in distributing the taxation burden in Nova Scotia, and have developed three key recommendations:

Taxation Powers of Municipalities in Nova Scotia – HRM is the first municipality to propose a significant change in taxation policy. As of February 2022, the council has unanimously approved a motion to direct staff to develop a taxation policy around “Option 3” one of the 4 options proposed to the council by staff in recent months. BOMA Nova Scotia does not support this option and feels that this policy does not promote fairness, transparency, and equity within the commercial tax base. We encourage our members and especially small business that will be negatively impacted by this policy to make their concerns heard to their respective council members before the policy is adopted by the end of the year.
Abolish the Capped Assessment Program (CAP) - The CAP qualified segment of the total global tax base is significant in size and unfairly benefits from a lower tax burden. This inadvertently shifts the tax burden to the non-owner-occupied residential taxpayers and the Commercial class.
Solidify the Equity & Uniformity provision in the Nova Scotia Assessment Act - Commercial property owners operate in a competitive space and require their assessments to be predictable, equitable, and have a uniform application. We recommend that the provincial government amend Section 42 of the Act with more concise and precise language so that assessed values are equitable with each other, and do not depend on an Assessment to Sales ratio (ASR) model which is currently being used.

Background

BOMA Nova Scotia encompasses the majority of commercial property owners within the province involved in the leasing and management of retail (including major shopping centers), industrial, and office properties. Our members also include institutional owners at all levels of government as well. As such, our membership is responsible for a significant amount of tax base within the province’s municipalities. In 2021, BOMA represented approximately 5.0% of the province’s total assessment base, and 16% of the province’s total commercial assessment base. If we look at Halifax Regional Municipality (HRM) where most of our members holdings are situated, we represent over 33% of the commercial assessment base of the city. If we were to include government owners who pay property taxes via grants or other methods those percentages would be even higher. We also recently took an inventory of our membership’s property tax liability and square footage under management/ownership.

Total Square footage under management:                17,050,000 sq.ft.
Total Property Tax liability:                                         238.1 million dollars
Total ownership companies                                        37

The following graphs detail BOMA’s representation within Nova Scotia’s commercial, and total assessment base in 2021:

Property tax is one of the top three, if not the top, operating expense for a typical property operating income and expense statement. As such, tax rates are a great source of concern for our membership.
All properties within the province are categorized as either residential or commercial with respect to taxation. Most commercial real estate (e.g., shopping centers, office towers, restaurants, industrial buildings) fall under the “Commercial Class” while single-family, duplexes, and multi-family apartment buildings fall under the “Residential Class” of property.
When comparing the two classes (for 2021), the HRM Commercial Class tax rate was 3.394% of the assessed value compared to 1.189% for the Residential Class. In other words, the Commercial Class property tax rate is roughly 2.85 times higher than the rate for Residential Class properties. This points to the fact that, assuming the same property value, a commercial property owner will pay 2.85 times more taxes than a residential property owner. Throughout Canada, there has long been a tendency to push the tax load onto the commercial tax base and, as such, the gap between the commercial tax rate and the residential tax rate has been widening significantly. This is especially true in HRM over the past four years.
Altus Group, the country’s largest property tax consulting firm, produces an annual report in conjunction with RealPac. The excerpt below shows the ratio between the commercial tax rate and residential tax rate in Canada’s largest cities, including Halifax, for 2021.

As shown above, the Halifax 2021 commercial tax rate is 2.85 times the residential rate, and above the national average. This is the fourth year in a row where Halifax has sat above the national average. The red bar shows what the commercial to residential ratio will be if HRM adopts the fiscal framework policy proposed at the time this document was formulated.
As of the date of this publication, Council is undergoing budget talks that would see the “average tax bill” for both the Residential Class tax and the Commercial Class tax raised by 4.6%. This change would essentially lead to a reduction in the tax rate for the residential tax base as the city is benefiting from a significant jump in property assessment, while, for the commercial tax base, all the increase is coming from a hike in the municipal tax rate as the average assessment for the commercial tax rate is stagnant and has been for some time.
The commercial tax base in Halifax is comprised of four major asset types:

Retail
Office
Industrial
Hospitality

All these sectors, except for Industrial, have been under significant pressure from market forces over the past 5 years, with COVID-19 accelerating the negative outlook. We hope that the council appreciates that retail, including “big box” stores, are struggling with record bankruptcies, and the downsizing of brick-and-mortar retail sites. The Halifax downtown office vacancy currently hovers within the top 3 highest vacancy rates in Canada, and our hospitality sector especially has been under extreme pressure over the past 2 years. Our members own and manage commercial properties that touch all of these four sectors and have consistently been seeing a shift in the property tax burden to the commercial tax base. We must plead to Council that this stops now.
We are of the understanding that all of the proposed initiatives discussed in point “A” below are intended to be “revenue neutral,” which means the city is not intending to absorb the costs of these programs. This implies that if a portion of the commercial tax base benefits from taxation relief, another portion of the tax base must pay for it.
Given that the tax relief programs proposed are all intended to be revenue-neutral, there is the potential for the commercial tax rate to increase and therefore the divide between the commercial tax rate and the residential tax rate will continue. BOMA NS is extremely concerned that any relief provided to small business will increase the overall tax rate and the divide between the residential and commercial tax bases.

A. Taxation Powers to Municipalities

Assessment Averaging (3 years)
In an effort to bring more stability and predictability to the business community, HRM has been contemplating reform that would see ALL commercial assessment increases that are more than 5% over the annual commercial tax base average, the increase in assessments are proposed to be averaged over the next 3 years. The link below illustrates the mechanism. https://www.halifax.ca/home-property/property-taxes/commercial-tax-policy/commercial-assessment-averaging-program
The city is well on its way to implement this program and it should be fully operational by the fall of 2022 in time for the final tax bill deliveries in September of 2022.
Program Highlights

Applies to Commercial class assessment only
Must be located within area serviced by water and sewer
Targeted to be live for final 2022/2023 fiscal year (this year). Timeline below as per HRM documentation

Only applies to properties that are increased by 5% over the prior year’s assessed value.
Only the first $1,500,000 of value difference will be averaged over 3 years. Any amount over this threshold will be taxable.
The only possible negative impact of this program is that windfalls from high assessment increases (over 7% in this example) would be averaged over 3 years and therefore may result in an overall increase of the commercial tax rate over time. In order to remedy this, we recommend that the city exclude new construction or major capital improvements from this program so that new construction increases to the tax base is not averaged over 3 years. This will stop the shifting of the tax burden from new construction increases to the global tax base onto the remainder of the commercial tax base.
Example of the calculation below as per HRM documentation https://www.halifax.ca/home-property/property-taxes/commercial-tax-policy/commercial-assessment-averaging-program

HRM Relief to Small business Initiatives
HRM has been actively involved with the various commercial stakeholders over the past 10 to 15 years with hopes of finding ways to provide relief to small business operators within the municipality. Since end of Q2 2020, small to medium sized businesses that were heavily impacted by the pandemic have been quite vocal about the advantages that “big box” retailers have over small businesses. The smaller businesses were often subject to complete shutdowns while larger stores could remain open for essentials. Over the past year, the city has moved ahead with taxation reforms and does have the political will to act on taxation reform with the ultimate goal of supporting small businesses.
It is critical to note that these tax relief programs are meant to be “revenue neutral” meaning that when the tax rate is established annually it is intended to be spread around the entire commercial tax base so that some taxpayers pay more, and some pay less. Overall, the city is not intending on providing relief to the detriment of losing tax revenue on an annual basis with the implementation of the program. It is essentially a mechanism to redistribute the tax burden of the commercial tax in a different manner with the hope that it provides relief to small businesses but also implies that other taxpayers pay more.
Currently, HRM commercial and the residential tax rates are currently split into 3 rates as follows:

Urban
Suburban
Rural

The urban and commercial rates are essentially identical while the rural rate is lower given that not all municipal services are available to that sector of the municipality. As per Item 15.1.4 of the December 14^th 2021 council meeting and discussed at subsequent council meetings in early January 2022, here are the 4 options that are in front of the council at this time and further detailed on item 15.1.4 at the link here: https://www.halifax.ca/city-hall/regional-council/december-14-2021-halifax-regional-council.
Council later met at the Committee of the Whole (COW) where various stakeholders including BOMA Nova Scotia provided their recommendations to the council on February 15^th, 2022. At the COW meeting along with all the stakeholders, the following 4 options were presented. Full details of the agenda and minutes are available at the link below:
https://www.halifax.ca/city-hall/regional-council/february-15-2022-committee-whole
We have also summarized the options that were presented to the council by staff, these four options were narrowed down from a list of 10 to 15 options developed over the years. Unfortunately, the council voted unanimously to direct staff to prepare an administrative order for Option 3 described below. Although this option benefits the majority of the HRM tax base, the effects of the program will be negative for the Business Parks identified by the city and to the Industrial Parks to a lesser degree while the remainder of the tax base including the entire peninsula will benefit from property tax relief. We have fully analyzed the impact of this policy at the end of the section.

Option 1: Tax Relief to Business Improvement Districts (BIDs) that have Taxes per square foot Over the BID Average

The intent of this program is to derive the average per square foot taxes for all the commercial tax base within the geographical areas of each BID within HRM and provide a discount to the property tax rate for BIDs that fall below the average. Based on last year’s tax base (2021) the following chart outlines the taxes paid on a per square foot basis by HRM’s BIDs.

All BIDs that fall below the average per square foot tax (highlighted by the green color in the chart) would receive a 50% discount of the amount by which they exceed the average commercial taxes amongst all BIDs based on assessed value for any given year. In this case, this means that any BID below the $3.12 per sq.ft. tax amount would receive the discount while any BID above the average would not. This is further illustrated in the table below:

Program Highlights & Recommendations

Not recommended by City Staff, does not appear to have significant support from Council.
No application required.
High cost of implementation that would be spread over the entire tax base given the intent of a “revenue neutral” scheme by the province.
Could encourage the development of BIDs for property tax avoidance.
Most properties located in BIDs are higher valued large assets with the trend of consolidating smaller assessed parcels, therefore small business leasing space would not see significant relief as taxes are based on pro-rata share of GLA. The higher the value, the lower the taxes per square foot, all else being equal; therefore, the relief will be nominal or non-existent for the number of tenants that lease. Again, if the intent of the program is to provide relief to as many small businesses as possible, we feel that this option misses the mark and agree with the City Staff’s decision not to recommend this option to Council.
BOMA NS does not recommend this option for the reasons above.

Option 2: Tiered Tax Relief for Small Properties

Based on city research and analysis, small businesses in HRM are typically those that occupy or own properties with assessed values between the $1,000,000 to $2,000,000 mark. Therefore, the proposal for this option is to lower the property tax rate levied against the first million of assessed value, lower it even further for the second million, and increase the tax rate for all the value over the $2,000,000 threshold. Again, assuming a “revenue neutral” system, where $2.953 per $100 of assessed value is the rate without the program applied, the chart below illustrates the mechanism based on last year’s tax rate and assessment base (2021).

The first million of assessed value would pay $0.15 lower, the second million of assessed value $0.30 lower, and all assessed values above the two million mark would pay $0.15 more. The breakeven point would be an assessed value of $5,000,000, where any property assessed over the five million mark would pay higher taxes, and all assessments below the five million mark would pay less.

Program Highlights & Recommendations

Easy to implement and would be easily understood by taxpayers.
The tax burden and relief would be applied to ALL the HRM without geographical limits.
Would not provide relief for small businesses which are located in higher valued properties over the +/- five million threshold.
Favors lower assessed commercial properties over higher assessed properties. Does not provide relief for small businesses occupying mixed use properties and growth centers by the Regional Plan
Could be implemented quickly and at low cost.
Recommended by City Staff.
Out of the 3 options that are in front of Council at this time, this would be our most favored option; however, we believe that exploring a fourth option, as brought forward by a motion from Council at the January 14th Council meeting which is summarized at the end of this section that should be explored further.

Option 3: Tiered Tax Relief Combined with Tax Zones

This option is not favored by City Staff but appears to have some support from a few councilors and business associations. As the name implies, the idea is to implement assessment tiers while also implement zones subject to varying tax rates. Below are the various zones being contemplated as per the last iteration of the map sourced from City documentation. The map zones listed below are color coded to match the map legend.

Business Park
High Density
Industrial
Small Medium Enterprise
Rural

Any property located within the Business Parks zone would pay less tax for an assessment below two million, as with option 2. However, at that location, an assessment over two million would pay a rate of 3.513 per $100 of assessed value, much higher than option 2 proposes ($3,103 per $100). A property located in the High Density zone (downtown) and the Small Medium Enterprise zone (the larger geographical area of HRM) would be the benefactor of this program as the first two million of assessed value would pay less.
Below the zones are listed in order of the zones paying less taxes (1) to the zones where overall taxes would be higher for the majority of BOMA NS members (5).

Rural
Small & Medium Enterprise
High Density
Industrial
Business Park

Program Highlights & Recommendations

Based on our analysis of municipal documents, properties located in the rural zone would not be subject to any change in taxation from the prior regime.
Properties located in the Business Parks (Dartmouth Crossing, specified portions of City of Lakes, Bedford Commons, and Bayers Lake Shopping District) and properties assessed over two million in the Industrial zones are subject to higher taxation (the other zones and tiers of value actually benefit from lower tax rates).
Staff are not recommending this option; however, some councilors and business associations favor it.
This model may result in higher tax rates overall over time, as the lower valued assessment thresholds will have to be subsidized by the reminder of the commercial tax base.
Even though this option most likely benefits the majority of the BOMA NS membership, it is simply taxation policy to establish various tax rates to zones to purposefully penalize a specific geographic zone based on its use (being retail in this example). BOMA NS discourages this option as it does not promote transparency, unfairly taxes a small, localized portion of the tax base, and is punitive to a small portion of the commercial tax base.
Would discourage development in Business Parks and would peg different zones against each other for tenancies. Given that property tax is the largest occupancy cost for tenants, it is “shopped” around. If the taxes per square foot of a Business Park property is higher than any other zone, it will automatically put all Landlords within this zone at a disadvantage.
This option certainly penalizes small businesses located in “Business Parks” as they will pay more overall, especially if they are located in higher assessed properties. The majority of “big box” retail and shopping strips are assessed at more than four to five million over the breakout point.
Most small businesses in the “Business Park” proposed taxation zones lease their space and the buildings they occupy are assessed over the $2M mark from our analysis. Given that most leases are on a triple net basis, the taxes would simply be spread over the square footage of the property including small businesses within the property therefore denying any relief to small business.
For all of these reasons, BOMA NS strongly disagrees with the city exploring this option further. It goes against all common sense in our view.

Option 4: Grant Mechanism through Application

Although not a formal option brought forward to Council by Staff as this time, at the January 11^th, 2022, council meeting, the Council voted on the following motion:
THAT Halifax Regional Council direct the Chief Administrative Officer to provide a supplemental staff report on options to create a commercial property tax rebate program designed to target small independent businesses based on the CRA definition of a small business with a threshold of $500,000, as per the small business deduction definition, which considers the following:
a) Association of corporation rules
b) Calculations for applying rebate on an applicable square foot of occupied space.
c) Determining an option for when a rebate would be warranted or triggered.
d) An application-based system; and
e) Options for penalties for any misuse of a rebate
Program Highlights & Recommendations

Given that the intent of all of these options is to be a “revenue neutral” program, any administration and implementation costs would most likely be absorbed by the commercial tax base in the form of increased overall tax rate. We are concerned with implementation and would caution that entry into the program should be well defined and costed so that the remainder of the tax base does not bear the brunt of the program.
Although this program is not fully detailed by staff as of the date this document was compiled, BOMA NS feels that this option should be explored further as it could potentially provide targeted relief to small business, which is the intent of this program. All other programs are not targeting small business specifically enough and offer tax savings to owners of commercial real estate that do not fall within the description of a “small business” at the expense of the remainder of the tax base. If the intent of the program is to provide relief to small business, this appears to be a viable option.

HRM Taxation Powers Policy Statement and Impact Study

HRM council have unanimously voted in favor to adopt “Option 3” put forward by staff and as such have directed staff to implement this tax policy for the city fiscal 2023/2024 year by September 2023.
The policy will reduce taxation for commercial properties located outside the “Business Parks” and “Industrial Parks” for their first 2M of assessed value by the same amount across the board regardless of the zone. The following is an impact study for taxpayers situated in the various zones.

Rural

This taxation policy will have no impact on properties located in the “Rural” zone, this is the same zone designated as “Rural” as of the publishing of this report. The rural zone encompasses areas of the city not typically serviced by water and sewer and/or located outside the circumferential highway.

Small & Medium Enterprise

This is the largest geographical area after the Rural zone and includes the majority of the peninsula, most of Dartmouth, and Bedford. The following table outlines the impact of taxes on a % basis solely based on “Option 3” policy. This zone’s taxation scheme will be the same as the “High Density” zone.
The table outlines the assessed value on the x axis and the % change of taxes on the Y axis strictly due to this proposed policy.

Like all zones, assessments below the $2,000,000 mark will pay substantially fewer taxes than before however the savings for taxpayers located within this zone are significantly lower as the assessed value of the property increases.

High Density

This zone encompasses the downtown Halifax business improvement district area shown in orange on the map presented earlier. The taxation policy for this zone will be identical to the “Small & Medium Enterprises” zone discussed above.

Industrial

These zones are colored in blue on the map presented earlier and encompass the city's major industrial parks. Taxation for these zones will be reduced substantially for the first $2,000,000 of assessed value as with the other zones right up to $5,000,000 where the total tax liability will be higher than if there was no change to the current taxation policy at all.
The table outlines the assessed value on the X-axis and the % change of taxes on the Y-axis strictly due to this proposed policy.

Business Park

The region’s business parks are the biggest losers in terms of higher taxation as evidenced below. Properties within this zone will have the same taxation for assessed values below the $2,000,000 million mark right up to about $2,500,000 of assessed value, after that, taxes start to increase substantially as per the chart below. A property assessed at $3,500,000 of assessed value will pay 3.8% more than in “Small & Medium Business” and “High Density” zones right up to as high as 13.6% more for a property assessed at $10,000,000 or more. The city has decided to shift taxation to this segment of the commercial tax base, and it will mean a substantially higher tax bill for these taxpayers.

The table outlines the assessed value on the X-axis and the % change of taxes on the Y-axis strictly due to this proposed policy.

Recommendation
BOMA Nova Scotia is disappointed that the city is going ahead with “Option 3” as it does not promote any fairness and equity and for all the reasons we have outlined in this paper. We seem to be going back to the days after amalgamations where geographical zones of the city will be taxed differently discouraging development in higher priced zones.
Taxation reform was meant to provide relief for small businesses whereas this policy will only provide relief for small businesses in buildings assessed below $2,500,000 in business parks and below the $5,000,000 in industrial parks. Small businesses tend to lease space as they are not able to afford the investment in purchasing and developing commercial real estate. The majority of tenants are structured on net leases therefore any increase in taxation will flow directly to the small business that is situated within the affected zones. We would have liked to see an application-based program that would have targeted business that really needs relief. This policy, in our view, misses the mark.

B. Abolish the Capped Assessment Program (CAP)

Property taxes in ALL Canadian jurisdictions are based on some form of ad-valorem system, whereby properties that are worth more pay more in property taxes. This is the basis of a fair and transparent taxation system. As assessment authorities charged with the mass appraisal of property developed efficient methods of reflecting a more accurate current value, some segments of the tax base have been known to experience significant tax increases caused by increasing market values.

The issue became political in Nova Scotia in the early 2000’s as some homeowners, primarily seniors that have been occupying their homes for some time, felt that increasing tax bills due to higher assessed values were driving them out of their homes. Lobbying efforts were successful as the provincial government of the day enacted a law that saw eligible property taxpayers, primarily residential owner-occupiers, to be taxed on the “Capped Assessment”. Since 2004, qualified residents who own and occupy a residential property have been protected by capped assessments, with annual increases limited to the prior year CPI increase. For example, if over the prior year your assessment market value goes up by 3% due to an increase in the assessment but the CPI for the prior year is only 1%, your assessment would only increase by 1%. Since that time the Nova Scotia Federation of Municipalities (NSFM), encompassing all of 49 provincial municipalities has been lobbying the provincial government along with other industry groups to abolish the CAP program.

Since its inception over 15 years ago, the CAP program has resulted in an inequitable spread of the tax burden to other rate payers. Here are some of the inequalities the program has delivered:

Since the inception of the CAP in 2004, assessed values have increased at a significantly higher rate that annual CPI resulting in a significant variance between CAP qualified taxpayers and non-CAP taxpayers.
All properties that have transacted since 2004 (except to a close family member) do not qualify for the CAP, therefore first-time home buyers and new market entrants share a higher burden of property taxes for the same municipal services. The CAP program no longer achieves its intended purpose, protecting the fixed income senior population from spikes in assessed values. Many municipalities offer other type of programs to discount property taxes for lower income taxpayers; capping assessments should not be the method of lowering individual taxpayers tax load. The NSFM has done extensive research on the subject over the years and the socio-economic implications are elaborated here:
- Interactive Tool showing the disparity between CAP and non-CAP tax properties within the province: https://www.nsfm.ca/cap_map.html
- In-depth analysis of the CAP system and the implications of it province-wide: https://www.nsfm.ca/nsfm-documents/1623-ns-cap-report/file.html
The CAP-qualified segment of the total global tax base is significant, and this segment unfairly benefits from a lower tax burden. This inadvertently shifts the tax burden to non-owner occupied residential tax-payers, but more importantly further shifts the burden to the Commercial class that is already approximately 2.88 times the typical residential tax bill (of the same assessed value).
Any manipulation of an ad-valorem system should not be considered and is not recognized as “best practice”. It is counter-productive and defeats the purpose of an ad-valorem taxation system.

Recommendation
We support other industry leaders that believe the CAP program should be completely phased out as soon as possible. Given the shortfalls municipalities are facing in the post COVID-19 era, we believe the time is ripe for this antiquated program to be phased out.

Solidifying The Equity & Uniformity Provision in The Nova Scotia Assessment Act

One common frustration appears to be the issue of fairness: an appropriate public aspiration in our view. The first thing a taxpayer will consider when determining whether their assessment and taxes are excessive is to compare theirs to that of their neighbors. The situation is no different for BOMA members with commercial real estate.

If we take two identical retail strips, one may be assessed at a different rate per square foot than the other, the first thing our members will do is compare the assessment and hence taxes on a unit of measure (per square foot) with other competing retail strips. If a competing retail strip pays less taxes, then that puts the lower-taxed strip plaza at an advantage. Tenants will also make these comparisons when contemplating where to set up shop, as they are concerned with total occupancy costs of which taxes typically represent about 15 to 25%.

The Property Valuation Service Corporation (PVSC) is responsible for the annual valuation of all of Nova Scotia’s 634,000 + accounts and as such the authority has developed robust mass appraisal techniques in order to value a large number of properties in an effective matter. It is the most sophisticated assessment authority within Atlantic Canada with the mandate to administer the Nova Scotia Assessment Act. From a quick skim of the act, one may assume that Nova Scotia does have an Equity and Uniformity provision; section 42 of the Act states:
All property shall be assessed at its market value, such value being the amount which in the opinion of the assessor would be paid if it were sold on a date prescribed by the Director in the open market by a willing seller to a willing buyer, but in forming his opinion the assessor shall have regard to the assessment of other properties in the municipality so as to ensure that, subject to Section 45A, taxation falls in a uniform manner upon all residential and resource property and in a uniform manner upon all commercial property in the municipality.

However, in practicality, the Nova Scotia Uniformity Provision has been interpreted through the courts as the “General Level of Assessment”. The term, as interpreted by the courts, can be summarized as the total of assessments of all properties in the municipality for a given class (in the case of BOMA members, Commercial), divided by the total market value of properties within the commercial class, expressed as a ratio or percentage. Practically speaking, the general level of assessment is determined by dividing the total of the assessments of ALL commercial class properties that sold in the prior year of the base date within the municipality and deriving an Assessment to Sales ratio (ASR).

BOMA Nova Scotia considers the following as shortcomings in the current Assessment Act’s interpretation of equity and uniformity.

In most jurisdictions, equity and uniformity is much more precise. If a taxpayer of an office property can prove that his assessment per square foot is assessed unfairly compared to another similar office property, those are grounds for a successful appeal. In that same scenario in Nova Scotia, the taxpayer’s office building assessment is compared with ALL of the commercial properties that sold in the prior year compared to their adjusted sale prices to achieve a median sale to assessment ratio for the municipality within the commercial tax class. The result from that equation results in the “General Level”. For HRM, that ratio has fluctuated from 92-98% over the past few years. The General Level can then be applied to the taxpayer’s market value estimate at appeal.
The “General Level” of assessment for the Commercial class of assessments in the majority of municipalities is calculated at 100%, due to a lack of a critical mass of sales data to derive statistical acceptable results as per the mass appraisal standard. This results in absolutely no equity and uniformity provision for those respective municipalities. Refer to the PVSC annual report below for General Level statistics: www.pvsc.ca/site/media/PVSC/Documents/201920%20PVSC%20Annual%20Report_with%20Financials.pdf
Although the equity principle is stated in the Assessment Act, in practice it is very difficult to substantiate, and is often not applied by the adjudicators through the first level of appeal at the Nova Scotia Assessment and Appeal Tribunal (NSAAT).
The practical application of the “General Level” is subjective and requires an in-depth knowledge of large amount of sales data that is not practical for a typical taxpayer, who may not have the expertise and resources to build a meaningful appeal case.

We do not have to go far to observe jurisdictions where equity and uniformity is adequately applied. In neighboring Prince Edward Island and in Newfoundland & Labrador, the assessment authority has to meet the market value test but also meet the equity and uniformity test with other competing properties. The market value sets the upper limit of value and taxpayers can also compare their assessments against other competing assessments as a basis for a valid appeal argument. This promotes fairness within the assessment jurisdiction.

Recommendation
Commercial Property owners operate in a competitive space and require their assessments to be predictable, equitable, and have a uniform application. We recommend that the provincial government amend Section 42 of the Act with more concise and precise language so that assessed values are equitable with each other, and do not depend on the current Assessment to Sales Ratio (ASR) model.