Province's stale property assessments shortchange Saint John, councillor says

A major correction in the property assessment of the Saint John courthouse is being applauded in the city but also being viewed as confirmation Service New Brunswick regularlyundervalueslocal properties, costing the municipality needed tax revenue.

"Property values in Saint Johnare absolutely undervalued," Coun.Donna Reardon said Friday about the years it took for Service New Brunswick to re-evaluate the courthouse assessment.

"I think it'sextremelyimportant they have a solid formula we can count on.If we weren'tin a position where we are struggling for dollars right now, then maybe we shouldn't be onto this stuff, but we need to have clarity on it."

Earlier this month, Saint John'sseven-year-old courthouse, which is owned by the province, had its assessed value raised by $6 million, or 14.2 per cent.

The increase is one of the largest in the province this year for an existing building not being renovated, and it follows a CBC News story last summer that questionedwhether the courthouse assessment was too low.

The re-evaluation by Service New Brunswick lifts the value of the building to $48 million, similar to the assessedvalue of Moncton's courthouse. The province will have to pay Saint John an additional $169,433 this year in taxon the property.

Reardon welcomes that development but is concerned the large single-year increase confirms the building was undervalued in previous years.

Now deemed as nearly equal in value to the Moncton courthouse, the Saint John structure was assessed as being worth between $2 million and $5 millionless in the four previous years, reducing taxes the provinceowed the city over that time by about $400,000.

"Right now we'recutting everything to the bone, so $400,000 or $500,000 is a lot," said Reardon.

"It's the difference between services for certain things and not.Every $400,000 or $500,000 you can collect or save its all important."

Saint John is in the middle of a municipal budget crunch driven in part by slow tax-revenue growth.

Over the past five years, property tax revenue in thecity has increased by a total of 6.4 per cent, far behind growth in Fredericton (11.5 percent) and less than half the growth in Moncton (13.7 per cent).

Several local politicians, including Reardon, MayorDon Darling, and city councilfinancecommittee chair David Merrithew,have been complaining for months that Service New Brunswick undervalues properties in the city and reduces tax revenue the municipality collects as a result.

In New Brunswick, property assessments are supposed to reflect market prices for real estate,but it is not always clear that is happening.

Assessments not matching sale price

In Saint John's uptown commercial core, Service New Brunswick records show more than 60 properties have sold in the last two years for amounts above what the agency values them to be worth, with new tax assessments this month still not matching those sale prices.

On SaintJohn's Union Street, the twin Harbour View apartment buildings sold to a Calgary investor 14 months ago for $3.5 million but even after renovations Service New Brunswick values them for 2020 property taxes to be worth $2.5 million.

On historic Horsfield Street, where a group of four properties, including three renovated brick apartment buildings sold a year ago for $875,000, Service New Brunswick values them to be worth one-third less at $584,500.

On Pagan Place, a lot assessed to be worth $11,000 sold in November for $71,340 but is still assessed at $11,000.

And near the top ofKing Street, a trio of commercial buildings that sold separatelybetween January and December 2019 for a combined$1.14 million are assessed for taxes this year at $837,700.

By contrast the privately owned City Hall building, which had been valued at $7.5 million was purchased in November 2018 for $3 million and for 2019 had its assessment lowered to that $3 million sale price.

Asked about the discrepancies, Service New Brunswick would not address individual assessments.In a statement, the Crown corporation said it considers sales when setting values, but there are a number of reasons why those may not reflect a property's true market price.

"In some cases, properties are purchased based on interests that are specific to the purchaser and not necessarily a reflection of the general market for the area," the statement said.

"In other situations, the property may have been purchased without firsthand knowledge of the local market.Some properties may also be acquired by real estate developers and/or investors with an intent of future redevelopment which may not be reflective of the current use of the property."

Asked specifically March 9about whether the Saint John courthouse had been undervalued for several years, Service New Brunswick acknowledged receipt of the question but as of Sunday had not supplied an answer.

Reardon saidSaint John's budget problems are placing more importance on the accuracy of Service New Brunswick's work, and she remains unconvinced changes in city real estate values arebeing detected as they happen.

"They need to change the way they figure out assessments," she said. "For us it's just not working right now."