The Saskatchewan Assessment Management Agency (SAMA) is continuing its public relations campaign to explain how it assesses properties in Moose Jaw by providing more information to the community’s elected leaders.
SAMA sent a two-page letter to city hall on Jan. 11 explaining its property assessment process here. City administration then presented that document during the Jan. 23 regular council meeting, with city council voting to receive and file the document.
Parts of the letter are similar to the one SAMA sent to media in earlier January discussing its appraisal process.
Assessments in Moose Jaw
While SAMA develops, regulates and delivers a stable, cost-effective assessment system, that does not mean property values will not change, only that values will be more updated, supportable and understandable, the agency said.
It values a property using a past base date, which means for 2021 to 2024, property values reflect the market conditions as of Jan. 1, 2019.
“(This) is an important part of a mass appraisal assessment system and is something SAMA and other assessment service providers in Saskatchewan are legislated to carry out,” the letter said.
In mass appraisal, service providers are concerned with valuing the property, not the business. SAMA’s goal is to capture what happened in the market on the base date, while it has “no vested interest” in increasing or decreasing the value of any land type. The only concern is accurately capturing a property’s value.
“The property income (rental) approach used for these types of commercial properties provides the most fair, reliable and accurate assessed values for commercial properties and rental apartments in areas where there are active lease and rental markets,” SAMA said.
Lack of influence
SAMA has no authority over taxation or implementing mill rates, which are the sole responsibility of municipalities since those tools allow them to maintain fiscal autonomy.
The agency also has no authority to influence the Board of Revision (BOR) — or a city hiring a new BOR, as Moose Jaw did in 2022 — or the Saskatchewan Municipal Board (SMB), which are independent and part of the existing appeal structure, the letter said.
“If the BOR or SMB has ruled that there is not enough evidence to overturn an assessed value, SAMA views this as evidence that we have carried out the assessment function in keeping with our legislated mass appraisal guidelines,” it said.
SAMA plans to review the 2022 appeal results to determine if changes are required in 2023, which it says is standard practice.
Cap rates
Since Moose Jaw’s commercial sales leading to the base date indicated different markets for various properties, SAMA grouped similar properties for assessment purposes, it said. The individual capitalization rates from sales are used to create a rate the agency applies to all properties in that group.
“Capitalization rates are solely determined by the analysis of market data. The sales in Moose Jaw did not support a single capitalization rate (cap rate) model,” the letter continued. “Cap rates reflect the sales that have occurred in the local market and are used to determine property assessments.”
SAMA completed seven steps while following standard appraisal practices for assessing commercial properties in Moose Jaw, including:
- Starting with existing property information in the agency’s database from previous inspections
- Collecting rent return data from owners to help identify market rents and expenses as of the base date
- Acquiring property sales data from Information Services Corporation, verifying them to determine if sales are arms-length and determining property information when the sale occurred
- Using this information and property attributes to determine assessments and model or predict property values as of the base date
- Applying the models to the sold properties
- Testing the results by comparing the proposed assessment to the property’s selling price
- Applying valuation models to all commercial properties to determine the assessed values
By following these steps, SAMA successfully supported its valuation models in Moose Jaw at the SMB in 2021 and the local BOR in 2022, the letter added. Also, SAMA acknowledged the importance and integrity of the appeal process “to ensure transparency and fairness” in the assessment system.
The next regular council meeting is Monday, Feb. 13.
