Manitoba Committee Hansard — 28 June 2001 (Management Commission Committee, Sitting 3, 37th Legislature, 2nd Session)

37-2-ma3

Manitoba — Debates (Hansard)

Second Session - Thirty-Seventh Legislature of the Legislative Assembly of Manitoba Standing Committee on Municipal Affairs Chairperson Mr. Tom Nevakshonoff Constituency of Interlake Vol. LI No. 3 - 6:30 p.m., Thursday, June 28, 2001

Member AGLUGUB, Cris ALLAN, Nancy ASHTON, Steve. Hon. ASPER, Linda BARRETT, Becky, Hon. CALDWELL, Drew, Hon. CERILLI, Marianne CHOMIAK, Dave. Hon. CUMMINGS, Glen DACQUA Y, Louise DERKACH, Leonard DEWAR, Grego!) DOER. Gary, Hon. DRIEDGER. Myrna DYCK, Peter ENNS, Harry FAURSCHOU, David FRIESEN. Jean, Hon. GERRARD. Jon. Hon. GILLESHAMMER. Harold HEL WER. Edward HICKES, George JENNISSEN, Gerard KORZENIOWSKI. Bonnie LA THLIN. Oscar, Hon. LAURENDEAU. Marcel LEMIEUX, Ron, Hon. LOEWEN, John MACKINTOSH. Gord, Hon. MAGUIRE. Larry MALOWA Y, Jim MARTINDALE, Doug McGIFFORD. Diane. Hon. MIHYCHUK, MaryAnn, Hon. MITCHELSON.

Bonnie MURRAY, Stuart NEVAKSHONOFF, Tom PENNER, Jack PENNER, Jim PITURA, Frank PRAZNIK, Darren REID, Daryl REIMER, Jack ROBINSON, Eric, Hon. ROCAN, Denis RONDEAU, Jim SALE, Tim, Hon. SANTOS, Conrad SCHELLENBERG, Harry SCHULER, Ron SELINGER. Greg, Hon. SMITH, Joy SMITH, Scott, Hon. STEFANSON, Heather STRUTHERS, Stan TWEED, Mervin WOWCHUK, Rosann, Hon. MANITOBA LEGISLATIVE ASSEMBLY Thirty-Seventh Legislature Constituency The Maples St. Vital Thompson Riel Inkster Brandon East Radisson Kildonan Ste.

Rose Seine River Russell Selkirk Concordia Charleswood Pembina Lakeside Portage Ia Prairie Wolseley River Heights Minnedosa Gimli Point Douglas Flin Flon St. James The Pas St. Norbert La Verendrye Fort Whyte St. Johns Arthur-Virden Elmwood Burrows Lord Roberts Minto River East Kirkfield Park Interlake Emerson Steinbach Morris Lac du Bonnet Transcona Southdale Rupertsland Carman Assiniboia Fort Rouge Wellington Rossmere Springfield St. Boniface Fort Garry Brandon West Tuxedo Dauphin-Roblin Turtle Mountain Swan River Political Affiliation N.D.P. N.D.P. N.D.P. N.D.P. N.D.P. N.D.P. N.D.P. N.D.P. P.C. P.C. P.C. N.D.P.

N.D.P. P.C. P.C. P.C. P.C. N.D.P. Lib. P.C. P.C. N.D.P. N.D.P. N.D.P. N.D.P. P.C. N.D.P. P.C. N.D.P. P.C. N.D.P. N.D.P. N.D.P. N.D.P. P.C. P.C. N.D.P. P.C. P.C. P.C. P.C. N.D.P. P.C. N.D.P. P.C. N.D.P. N.D.P. N.D.P. N.D.P. P.C. N.D.P. P.C. N.D.P. P.C. N.D.P. P.C. N.D.P.

71 LEGISLATIVE ASSEMBLY OF MANITOBA THE STANDING COMMITTEE ON MUNICIPAL AFFAIRS Thursday, June 28, 2001 TIME - 6:30 p.m. LOCATION - Winnipeg, Manitoba CHAIRPERSON - Mr. Tom Nevakshonoff (Interlake) VICE-CHAIRPERSON - Mr. Schellenberg (Rossmere) ATTENDANCE- 11 - QUORUM- 6 Members of the Committee present: Hon. Ms. Friesen, Hon. Ms. McGifford, Hon. Mr. Selinger Messrs. Aglu gub, Derkach, Laurendeau, Maguire, Martindale, Nevakshonoff, Schellenberg, Mrs. Smith Substitutions Mr. Faurschou for Mrs. Smith at 9:50 p.m. APPEARING: Hon. Jon Gerrard, MLA for River Heights Mr.

David Faurschou, MLA for Portage Ia Prairie WITNESSES: Bill 31 - The Municipal Assessment Amendment Act Mr. Rick Weind or Paul Moist, Canadian Union of Public Employees, Local 500 Mr. Jae Eadie, Councillor, St. James Ward, City of Winnipeg Mr. Brian Moore, City Assessor, City of Winnipeg Mr. Henri Dupont, KPMG Mr. Jim Baker, President and CEO, Manitoba Hotel Associa tion Mr. Antoine Hacault, Private Citizen Mr. John Petrinka, Norman Commercial Realty Ltd. Bill 32 -T he City of Winnipeg Amendment Act Mr. Jae Ea die, Councillor, St. James Ward, City of Winnipeg Mr.

David Sanders, Director, Real Estate Advi sory Services, Colliers Pratt McGarry WRITTEN SUBMISSIONS: Bill 32 - The City of Winnipeg Amendment Act Mr. Joe Masi, Director of Policy and Research, Associa tion of Manitoba Municipalities Bill 34 - The Municipal Am endment Act Mr. Joe Masi, Director of Policy and Research, Association of Manitoba Municipalities Bill 31 - The Municipal As sessment Ame ndment Act Mr.

Henri Dupont, KPMG MATTERS UNDER DISCUSSI ON: Bill 31 - The Municipal Assessment Ame ndment Act Bill 32 - The City of Winnipeg Amendment Act Bill 34 -T he Municipal Amendment Act Bill 38 - The Local Authorities Election Am endment Act Bill 43- The Audit or General Act Bill 48 -T he City of Winnipeg Ame ndment (Pensions) Act *** Mr. Chairperson: Good evening. The Standing Committee on Municipal Af fairs, please come to order.

This evening the committee will be considering the following bills: Bill 31, The Municipal Assessment Ame ndment Act; Bill 32, The City of Winnipeg Amendment Act; Bill 34, The Municipal Ame ndment Act; Bill 38, The Local Au thorities Election Ame ndment Act; Bill 43, The Au ditor General Act; Bill 48, The City of Winnipeg Amendment (Pensions) Act. In our meeting this morning the committee agreed on several points of inf ormation as

72 LEGI SLATIVE ASS EMBLY OF MANITOBA June 28, 200 1 follows. It was agreed to consider public presen tations in the following order; Bill 38, Biii 31, Bill 32, and we did hear all registered presenters this morning to Bill 38. Presenters who do not appear when called will be dropped to the bottom of the list and called again after all presentations have been heard. Finally, it was agreed to allow 15 minutes for presentations and 5 minutes for questions and answers. I will read the names of the persons who have registered to make presentations this evening.

Bill 31: Rick Weind or Paul Moist of CUPE Local 500; Councillor Jae Eadie, City of Winnipeg; Henri Dupont, KPMG; Jim Baker, Manitoba Hotel Associa tion; Antoine Hacault, Private Citizen; John Stefaniuk, Private Citizen; John Petrinka, Norman Commercial Realty Ltd.; Bill 32: Councillor Jae Eadie, City of Winnipeg; and David Sanders, Colliers Pratt McGarry. If there is anybody else in the audience that would like to make a presentation and has not yet registered, you may do so with staff at the back of the room.

For the information of presenters, please be advised that 20 copies of any written versions of presentations would be appreciated. If you require assistance with photocopying please see our staff at the back of the room. Finally, as a courtesy to the indi viduals on our list waiting to present, are there any suggestions as to how late the committee should sit this evening? Mr.

Doug Martindale (Burrows): I would suggest that we try to hear the presenters and do clause by clause of all the bills. but perhaps we could canvass the committee at midnight and see how much progress we are making if we are not finished by then. Mr. Chairperson: Is that agreeable to the committee? {Agreed} Bill31-The Municipal Assessment Amendment Act Mr. Chairperson: We will begin with Bill 31 . The first presenter, Rick Weind or Paul Moist of CUPE Local 500. Mr. Weind, do you have written presentations? Mr. Rick Weind (Canadian Union of Public Employees, Local 500): Yes, I do. Mr. Chai rperson: Please proceed.

Mr. Weind: Thank you, Mr. Chairman and members of the committee. We are pleased to have an opportunity to make this presentation. CUPE Local 500 represents the 5000 inside and outside workers in the city of Winnipeg and more specifically the approximately 140 line workers in the Assess ment Department. We have been involved in market value assessment since its inception. All members of the department were asked for input into this brief and many responded. We can summarize our views as follows: Firstly, in 1996 Bill 43 originally gave the various boards and courts the ability to raise or lower taxes.

The Scurfield report, which was commissioned by the City of Winnipeg, en dorsed the proposed amendments ofBill 43 with some minor qualifications. This provision was not one of them. He did not have any concerns with that. At the time the knowledgeable members of the assessment and appraisal community were aware of the implications of that provision. The legislation passed without a lot of concern in that respect. Our second point is that the ultimate authority to raise or lower assessments rests with the impartial review boards and courts.

These decisions are based on evidence presented at these hearings by both parties. The final decision as to the market value of a property is not an arbitrary decision made by a bureaucrat. Any restriction on the review panel to make a decision irrespective of who files the appeal erodes the intent of the legislation to determine market value and equitably distribute the tax burden. The province of Manitoba is, to our knowledge, the only jurisdiction where the boards do not have this power. Our third point centres around the legislation and how it has been interpreted.

One of the mandates of the Assessment Department is to establish market value. We give the definition of market value and we give the fair and equitable provisions of the act. That is basically what guides how we come up with assessments. Of the two requirements, the courts have determined that market value wiii be the prime determinant in assessing properties and that assessments will be fair and equitable when properties are assessed at market value. We

June 28, 200 1 LEGIS LATIVE ASSEMBLY OF MANITOBA 73 include some of the decisions that have confirmed this view. With the Marion Holdings decision and the Rideau Towers decision, the courts have emphasized that when we do the initial assessment, we do a mass appraisal. That is we come up with a generic technique for looking at all the properties in the city of Winnipeg. We come up with methodologies for valuing residential properties, commercial properties, industrial properties and the like. * (18: 40) That is fine, the courts have said at the initial stage, at the Board of Revision level.

When we go to the Municipal Board, the board finds that that is fine for undertaking the initial reassess ment. The assessor must assess all properties in a municipal corporation and is so charged with an onerous task. In dealing with apartment blocks alone, there are 1800 apartment blocks in the city of Winnipeg. It is unreasonable to expect the assessor would be able to do site inspections for each of these properties. So when we get to the Municipal Board level, the process becomes more finite, and we do a site-specific valuation on each property.

We look at each property and the specific character istics relating to that. The board quotes that later on. So the Assessment Department works within the guidelines set down in the legislation and subsequent

interpretations by the court. In light of this decision, if after the mass appraisal new evidence comes to light which indicates a change in assessment, the board should be able to raise or lower the assessment based on the evidence before it, and we quote portions of the Rideau Towers decision which, again, empha sizes that point. Counsel for the city assessor points out that the methodology used in arriving at the initial assessment figure is a mass appraisal method which is applied to a very large number of assessable properties.

That same mass appraisal system is used to justify the assessment at the Board of Re vision level, but when the matter is further refined by an appeal to the Municipal Board, a site-spec ific analysis of the property is conducted. So we have a situation where the process has evolved, where we have to do a mass appraisal at one level, site-s pecific. We will look at a property and we will make recommendations downward, but we should also be able to make them upward.

There are a number of reasons why after the mass appraisal, when we are at the Municipal Board level, why we can increase or decrease or make a recommendation. We do a site inspection of the property, we have mis interpreted, or incorrect income and expense information originally submitted is wrong. Often information is not submitted to the department until an appeal hearing is filed or scheduled. So, based on that evidence that comes to light after the fact, we typically make recom mendations to go down, but the court should have the ability to look at our evidence and raise the assessment as well.

In keeping with the guidelines in the vision statements we quote at the beginning, we support the move to a more current reference year. Right now we are at a four-year cycle. It would probably be beneficial to evolve to a two year cycle. That has to be a process of evolution, though, as I said, and done over time. The fifth point is the Assessment Depart ment is and should only be concerned with establishing market value as defined in the act. If, as indicated, information comes to light after the fact, the assessment should be raised as well as lowered.

As sessors routinely recommend reductions to the board, and the city assessor frequently signs certificates of agreement lower ing assessments. All citizens should be con cerned that market value is achieved. If that means assessments be lowered or raised, then all concerned citizens will benefit. Our sixth point is very important to us, and I think it is the nub of some of the concerns here. The only enhancement of power contemplated by this legislation is that of the independent, impartial boards or courts. I am not getting any more power as an assessor. I am analyzing evidence. I am presenting evidence.

The board takes it or leaves it. Our seventh point kind of relates to one of the first points, where we feel we are the only

74 LEGISLATIVE AS SEMBLY OF MANITOBA June 28, 200 1 jurisdiction, that the courts or panels do not have the authority to raise or lower assessments. We believe that the province of Manitoba is the only jurisdiction where the burden of proof affecting assessment is on the assessor. WelL that is fine. We are not going to argue that. That is not before us here, but let us make the playing field level. The obligation of the assessor should be to present all evidence, be it for increasing or decreasing assessments.

The boards and courts should be allowed to make these adjustments irrespective of who has filed the application for revision. We do support this legislation, but we make the following observation: In keeping with the commitment to fairness and establishing a more current market value system, we suggest this legislation be enacted and come into eff ect for the 2002 reassessment. So again we appreciate the opportunity to appear before the committee to present our views. We present them in good faith and hope they are considered when the committee is making the recommendations. Thank you. Mr.

Cha irperson: Thank you for your presentation. sir. Questions from the members of the committee? Hon. Jon Gerrard (River Heights): I just would ask for clarification on the coming into effect for the 2002 reassessment. The biil, as currently written, would come into eff ect on January 1, 2002, which would meet. I gather. what you are looking for. Why would you not have it come into effect as soon as it is passed, for this year's assessment? Floor Comment: As we understand it. the whole- Mr. Chairperson : Pardon me. First of all. Mr. Weind, for the sake of the Hansard, I want to identify you as Mr.

Weind and not as Mr. Moist, and then I have to recognize you before you speak as well. So, Mr. Weind. Mr. Weind: Through the Chair to Mr. Gerrard. The legislation, as we understand it as written, comes into effect January 1, 2002. The Board of Revision hearings and notices are going out July 16, I believe. The Boa rd of Revision hearings and the appeals wiil be filed prior to that date. Any appeals that are filed prior to January 1, 2002, in the legislation coming into ef fect will fall under the old legislation, so we would like the legislation enacted as soon as possible. Mr.

Chairperson : Any further questions? Mr. Gerrard: You are saying it should be enacted. I mean if it were passed in the next couple of weeks, before the July 16 date. Mr. Weind: Through the Chair to Mr. Gerrard, I am not sure of the logistics. but we would like it enacted for the 2002 reassessment so that the appeals that are filed for 2002 roll can be covered under this new legislation. Mr. Chairperson: Any further questions? Hon. Greg Selinger (Minister of Finance): Thanks, Rick.

We had a representation earlier this morning that the ability to raise as well as lower an assessment could be used as a tactic by people such as yourself, assessors, to intimidate people into not appealing. Would you care to comment on that? Mr. Weind: Through the Chair to Mr. Selinger, I believe you are referring to the prior presen tation. I believe Mr.

Sanders kind of answered that question because he was asked a question of whether this was a predatory system or a money making system, and he made the comment that the only changes to assessments are based on recommendations by assessors and changes that the board finds fair and just. Well, nothing is changing under this legislation. If I make a recommendation to lower it, my motive is proper market value. If I make a recommendation to raise something, my motive is the same, fair market value. It is the same with the boards and courts.

Their motive is to find market value based on the evidence presented before them. So it is not a question of intimi dation, it is simply a question of market value. I do not really know where that is coming from. Mr. Selinger: Let me just pursue it a little bit more. Part of the rationale that it might be a form of intimidation or could be used as such was that

June 28, 200 1 LEGIS LATIVE ASSEMBLY OF MANITOBA 75 reasons did not have to be provided for why the value would be lifted. The person whose property was affected did not have to get the rationale for why it should be lifted, but it is sort of hanging out there. I think that was part of the rationale that Mr. Sanders put before us this morning. Do you wish to comment on that? Should there be a rationale that goes along with a recommendation to lift or lower an assessment, Mr. Chair? Mr. Weind: Through the Chair to Mr. Selinger, again as Mr.

Selinger has pointed out, the Municipal Board briefs are exchanged 15 days ahead of time. Prior to that, it will be in that brief 15 days prior to the hearing. If we see something in there subsequent to what the board, the legis lation allows for 10 days for us to make, and we present our evidence. We show our briefs to the appellant and to his agent and to the board beforehand so they know why. The other issue is that this applies basically to the tax agents, and most people know the value of their property and there is a range. It can go up. It can be lower. It can be higher.

So, in terms of intimidation and not knowing why, our methodologies are pretty straightforward, and we do exchange information as per the boards and if this legislation is passed, as per the legislation. Mr. Selinger: Just for greater certainty then, are you saying that if somebody's assessment is going to be raised, you have to give them the explanation and information as to why you are doing that before they show up at the hearing? Mr. Weind: Through the Chair, we exchange briefs 15 days prior. The 10 days' notice will give that information and we have rebuttal evidence. Mr. Marcel Laurendeau (St.

Norbert): How many properties do you think you would be talking about, Mr. Weind, that would be involved in this or during that reassessment time? Mr. Weind: Are you asking me how many properties will be appealed, Mr. Laurendeau? I do not know. The last time we had 15 000 properties that were appealed. I would assume that is, you know, I do not have a crystal ball. I do not know, 15 000, I think, would be the high end. *( 18 :50) Mr. Laurendeau: In your experience as a city assessor-! take it that your role is city assessor at this time. Mr. Weind: No, I am not the city assessor. I am an assessor for the City.

Mr. Laurendeau: Yes, you are an assessor for the City. Thank you for correcting me. But in your role, how many of those 15 000 would you say would be needing to be increased in value, the ones that are being appealed? Mr. Weind: I could not hazard a guess. Mr. Laurendeau: Would you, as an assessor, have ever looked at that in the past, seeing as you did have the ability to look at it under the existing legislation? Mr. Weind: I cannot remember specifically making a recommendation to increase some, but I know it was discussed with appellants from time to time. I may well have, but I do not remember it.

I certainly made a lot more recom mendations to reduce than I ever did to increase. Mr. Laurendeau: What would you think the reason for this legislation would be then? What is it giving you the ability to do that you have not already got the ability to do'? You have already, I understand, you said that you have the ability to increase now. Maybe I misunderstood you, but you seem to, that is the way I took it, that you have already the ability to increase assessments today. Mr. Weind: I thought you were talking prior.

When Bill 43 originally came in we had a window there where we were increasing assess ments or making recommendations to increase. That window closed. Subsequent to that we do not make recommendations now to increase assessments. Hon. Jean Friesen (Minister of Inter governmental Affairs): Thank you very much for your presentation. At the moment what

76 LEGI SLATIVE ASSEMBLY OF MANITOBA June 28, 200 1 assessors are doing is a fair number of cross appeals. What I am wondering is if you recognize what is the difference in this bill between a cross- appeal and the onus that will now be on you to provide greater information and timing much more advanced or more advance notice to a home-owner or to a business owner than you had in the past. Have you recognized the differences in obligations on the assessor and do you see any problems with this? Mr.

Weind: I am not entirely sure how many properties we are cross-appe aling these days. but I know with the 10 days that will make a difference, but we do not hide anything. If we are going to go to court with evidence we are bound to show it one way or the other. I do not see that as a particularly onerous task for us. I mean, whatever requirements are to show evidence bef orehand or exchange briefs. that is what we do, and it is the same for both parties. Ms. Friesen: I think there was some conf usion in the earlier discussion about the changes in the assessor's role.

What this does, I mean it does have requirements for you to give information ahead of time, which in many cases you have, but perhaps not always. But essentially what this does is alter the power of the boards, not of the assessor. It enables the boards to raise or lower, as they can in other provinces. the nature of the assessment. Is that your understanding of it? Mr. Weind: Absol utely. Our point No. 6 is the only enhancement of power contemplated by this legislation is that of the independent boards and courts. So this does not affect me at all. I come up with the evidence and the board makes the decision.

Ms. Friesen: The City of Winnipeg has taken a proactive role, Jet us say, this time around, in assessments. We are all relatively new at market assessments in Manitoba. We are in our second phase now. The City has developed preliminary assessment notices and then has held open houses, has had information on the Web. It has been, I think, a more citizen-f riendly process than perhaps it has been in the past. Given the nature of the web I think that has helped it. Do you have a sense of how those open houses have been received? Do you think it will reduce the number of differences between assessors and taxpayers?

Are you able to sort some of the things out that you might not have been able to before? Mr. Wiend: Through the Chair, ultimately the test will be in the number of appeals we get. Myself, I am open to anything that reduces the number of appeals and makes the process more transparent. I think that did accomplish that. Again we will see how it translates, but I think it was helpful to both parties. I have heard, probably, more positive than negative feedback on it. Mr. Chairperson: We are out of time, but I will allow Mrs. Smith one question. Mrs. Joy Smith (Fort Garry): Thank you. I just have one question.

Have you talked in general with the public? Is the public generaiJy aware of this new change in assessment, because it is my understanding at this point in time that, number one, there is a great deal of assessments going through, and number two, the assessments are lower. If they are appealed and accepted, the assessments usually come back lower. Do you feel the citizens here in Winnipeg are aware that this legislation could. when they appeaL raise their assessment on their properties? Are they generally aware? Do you have any evidence the public is aware of the ramifications of this legislation? Mr.

Wiend: In my experience, my belief is that probably a lot of people are not aware of it. Probably most people are not aware of it. The average home-owner, this is not going to affect them. This does not have a whole lot of effect on the average home-owner, the average taxpayer. This is going to impact more on commercial properties. industrial properties, the tax agents and the lawyers. I do not see this as having a big impact either way in terms of the average home owner or the average taxpayer. And, no, I have not heard any comments from them, from individual home-owners. Mr.

Chairperson: Thank you very much, sir, for your presentation. I caJI on Councillor Jae Eadie, City of Winnipeg. Mr. Eadie, do you have written copies of your presentation? You may proceed, sir, when you are ready.

June 28, 200 1 LEGISLATIVE AS SEMBLY OF MANITOBA 77 Mr. Jae Eadie (Coun cillor, St. James Ward, City of Winnipeg): Thank you. Mr. Chainnan, I am going to ask for some guidance from you and from the committee. I am also here to speak on Bill 32 which comes some time later this evening. I wonder if you, through the committee, would indulge me the opportunity to make my brief presentation on both bills while I am standing here at this podium right now. I am not reading that written submission in full. I am just going to hit the highlights of it, but I am obviously in your hands. Mr.

Cha irperson: Is there leave of the commit tee that Mr. Eadie present on bills 31 and 32? [Agreed} Okay. Mr. Eadie, you have leave. Mr. Eadie: Thank you very much. Mr. Chainnan and committee. First of all. on Bill 31, as I have said, I have submitted sort of a written brief. I am not going to read it through. You will be able to read it. I am going to hit just a couple of highlights. I, first of all, want to indicate to you on behalf of the City of Winnipeg that we do support the amendments that are proposed in Bill 31.

We believe that a properly administered assessment system ensures the equitable distri bution of costs of government to citizens and the system should ensure fairness and equity for all taxpayers by allowing the appeal tribunals to establish accurate market values on appeal. Those tribunals should be able to move assess ments up or down, or leave them unchanged, based on whatever evidence is presented to the appeal tribunal at the time.

Others have mentioned, and I notice it was mentioned in second reading debate on this bill, that Manitoba is the only province in Canada that does not allow this process to happen in the assessment appeal process.

Our own department has also retained independent analysis of the assessment process throughout Canada and has confinned that Manitoba indeed is the only province without this ability in the appeal process. * (19: 00) So we being the City of Winnipeg are of the view that the legislation that is being proposed is certainly not unfair; it is fair, but it should come into effect, not on January 1, 2002, it should come into effect on the day this bill receives royal assent so that the application of this bill can be made during the current reassessment process that is under way in the province of Manitoba and not have it actually come into effect in the next process four years down the road.

This is not a new request, by the way, as you know, and members will know that this request is a rather old request of the City of Winnipeg Council. The previous government did consider this very same request, got almost to the point of passing legislation and then got cold fee and withdrew it. However, from the City's perspective, we are happy to see this back. We think that, again, this is a fair process.

I can tell you that if, in fact, this bill is passed and does become effective immediately for this reassessment, certainly our Assessment Department has plans to start publicizing this entire process and the proce dures almost as soon as possible. We can put infonnation on our Web site. We can do public infonnation advertisffig, and we can certainly include the process for assessment appeals, as we do when we send out our reassessment notices in the formal sense perhaps later on in July.

So there is lots of opportunity for government-and that is munic ipal government- because this is a Manitoba bill to infonn their citizens regarding the rules and processes and regulations regarding assessment appeals. So, from the City of Winnipeg's perspective, we do not think it is going to take five or six months in order to infonn the public.

We can be ready and willing and certainly are able to make the public in this city very well aware of what all of the rules and regulations are around the reassessment process, and we can use all manner of media for infonnation purposes and can get that infonnation out so that people can under stand it. There are comments in here about some of the statements that were made earlier this morn ing by Mr. Sanders. I am not going to repeat

78 LEGI SLATIVE AS SEMBLY OF MANITOBA June 28, 200 1 them for you. We have made some comments in the brief. By the way, I am accompanied here today by Mr. Brian Moore, the City Assessor. If there are questions of a technical nature, I do not pretend to be able to answer them, and with your indulgence, Mr. Moore is here to answer any sort of technical questions or mechanical ques tions that I am not capable of answering. I am simply going to sum up my remarks on this bill, Mr.

Chairman, by indicating that the City of Winnipeg is supportive of the concept of the amendments because we believe that the appeal process for citizens should benefit all citizens, but we beli eve that the changes should come into ef fect on royal assent or in time for this year's, 2001, reassessment and should be in effect prior to January 1 of 2002. I am going to end my presentation on that. As I say, you have a more detailed brief. If you want, I will move right on now to Bill 32, unless you want to do the question period now. I am in your hands. Mr.

Cha irperson: First, we will deal with questions for this bill, and then we will move on to the next one. Questions from the committee, Mr. Derkach. Mr. Leonard Derkach (Russell): Mr. Eadie, in your presentation, you make statements such as Manitoba is the only province where an appel lant has no risk in appealing. Now, as an elected person of a residential area, what you are saying to your constituents here is that they should have a risk when they go forward to appeal their assessment.

Now, I can hardly believe that statement from someone who is elected who would say: My constituents should have a risk when they go to appeal an assessment which they think is too high. I find that statement almost unbelievable, but, nevertheless, I will allow you to explain that statement. Mr. Eadie: Mr. Derkach, it is you putting words in my mouth. The City of Winnipeg believes that the assessment appeal process should be fair to all citizens, and that is why we believe that it is only right and proper in any appeal process.

This happens in other venues, as well, that when you take the opportunity to appeal, you have to realize that in this process-which is fair and independent of government intervention, I might add, contrary to statements that were made at second reading debate which I found offensive-the ap pellant, the citizen should have the right to expect a very fair process. It is up to the assessor to prove in that process that the appellant's assessment is accurate. How accurate that is will depend on the evidence presented to the appeal panel. So I have not made the statement that you have attributed to me. Mr.

Derkach: I am only reading the statement that is made in your brief, Mr. Eadie, and I will read it again: The current legislation is unfair. That is not our statement. That is your presentation, where you are saying Manitoba is the only province where the appellant has no risk in appealing. Then you go on to say Manitoba is the only jurisdiction, which is true and for good reason, in Canada where the onus is on the assessor to prove the assessment is correct rather than on the appellant proving that the assessment is wrong. Now, Mr.

Eadie, it is the jurisdiction of whether it is the Province or the City of Winnipeg who, in fact, hires the professional people to assess the properties. It is my under standing these people are trained to assess these properties in an accurate way. As a taxpayer, I am not trained in that field.

Therefore, I come before the appeal tribunal as Joe Public, citizen of Winnipeg, or Manitoba, who is requesting that consideration be given to retook at my assessment to ensure whether in fact it is not too high, because in my very, I guess, unscientific approach to research I seem to feel that my property is overassessed. So I do not have the powers of a large battery of lawyers and assessment people to be able to argue my case, but now I am faced with the prospect that in fact I could have my property adjusted upward because the assessor could very easily come

June 28, 200 1 LEGIS LATIVE ASSEMBLY OF MANITOBA 79 forward and say, well, you know, we did make a mistake here but that property should be assessed in a higher manner. That is not why I am appealing my assessment. Al though Manitoba is the only jurisdiction in Canada, I think over time it has been shown that it is for good reason that we in fact have a system where the onus has to be on the professional people and the professional body to ensure the assessment is correct.

I simply argue this from the point of the ordinary citizen who does not have a great deal of choice when it comes to assessment and paying property taxes. Mr. Eadie: I assume, Mr. Chairman, somewhere in there, there was a question.

I certainly agree, and I think all of my colleagues at City Hall will agree that assessors, wherever they are, whether it is in the City of Winnipeg or the Province of Manitoba, have an obligation to do their very, very best to get the assessment right the first time, but there are appeals that happen and that is where the opportunity arises to actually focus on an individual piece of property.

Where that focus is on that property, if it has been proven in that process that the general assessment was inaccurate, then obviously that information is dealt with in an independent panel and the panel makes the decision it feels is the best possible decision. I guess that is the risk for any property owner, Mr. Chairman, but one must ask the question: Why is Manitoba so out of sync with the rest of Canada? Every other province in Canada follows a different process. I have travelled all across this country.

I know munic ipal leaders in every city in this province, and we do talk a lot about assessment processes because it evolves and it changes rather rapidly, almost everywhere else except here. You have to ask the question: Why is Manitoba out of sync with what is happening in the rest of the country? Where it does not appear that people elsewhere feel the process in their jurisdiction where this bill is trying to head is unfair. Mr. Derkach: Mr. Eadie, I go down to your last point on your first page where you say up to now the appellant has had the unfair advantage.

The worst case on the appeal from the appellant's point of view is that the assessment is main tained. In other words, if the tribunal determines the assessment is too low it cannot be raised to the proper market value unless there is a counterappeal by the assessor. Mr. Eadie, is it not correct that, in fact, if through the appeal process the tribunal does determine the assess ment is too low the onus then goes back to the assessor to file a counterappeal in order to be able to protect him or herself, or for that matter the true market value of the property? * (19:10 ) Mr. Eadie: The present process?

Yes, that is correct. Mr. Derkach: So, having said that then, there is fairness in the system in that there is opportunity to raise the assessment by a simple cross-a ppeal by the assessor. Mr. Eadie: Yes, there is, under the present legislation.

Only it involves yet another step, and I suppose another time-consuming process, which may or may not be all that significant, depending on your point of view, but this process envisions that these matters should be dealt with right at the first instance with the appellant and the assessor and all other inter ested parties in the room with full knowledge of all of the details of the assessment that is under appeal where they can deal with each other right there, one time, hopefully, not taking it to another step. Ms.

Friesen: I wanted to clarify the exchange that you just had, because your brief also says: The assessor, under the present conditions-t hose are my words; I have added them-but the assessor is not made aware of the appeal until after the appeal application deadline, thereby precluding the assessor from filing targeted counterappeals. The only alternative is for the assessor to appeal all assessments prior to the deadline which, I understand, is what has been happening and is what you say here. So I am trying to clarify the exchange we just had. Mr.

Chairperson: Sir, would you recognize yourself for the purpose of Hansard. First of all, we have to have leave from the committee that you speak.[Agreed] Mr. Brian Moore (City of Winnipeg): My name is Brian Moore. I am the city assessor for the City of Winnipeg.

80 LEGISLATIVE ASSEMBLY OF MANITOBA June 28, 200 1 Mr. Chairperson : Your name, I did not quite catch it. Mr. Moore: Brian Moore. M-o-o-r-e. Mr. Chairperson: Okay. Proceed, Mr. Moore. Mr. Moore: Under the current system, the major alternative that we have is to appeal all assessments once the assessment roll is returned to ensure that the courts have the ability to increase assessments on the off chance that the small percentage of properties that do get appealed, are appealed.

That is the only avenue that is currently available to the assessor to ensure that there is an ability for the tribunals to increase an assessment upon appeal as a result of the Valley Gardens decision. The current situation is, as is stated in the councillor's presentation, that the Assessment Department is not made aware of appeals by individuals until after the appeal deadline is finalized.

So, we cannot make targeted appeals to cover the potential that the assessment should be increased when we get into the situation where we have an opportunity to investigate the particular aspects of individual properties on a site-specific evaluation perspective. The only avenue that we have then is to do a broadcast appeal, which obviously we do not want to do, because that adds cost to administration and it does exactly what everyone is concerned about the assessor doing and that is intimidating the taxpayers. That is the last thing that we want to do. Ms. Friesen: This may be addressed first of all to Mr.

Eadie. I am going again from his presentation where he says that Manitoba is also the only jurisdiction in Canada where the onus is on the assessor to prove that the assessment is correct, rather than on the appellant proving that the assessment is wrong. I wondered if the City was aware that that principle does not change under this bill. It is because the context of how this is written suggests that you believe that it is changing, but that principle remains. Mr. Eadie: Yes, that is clear. Mr.

Selinger: I just want to clarify under the current situation you cannot do a counterappeal until after the appellant has filed their appeal and by then the deadline has passed, so you are forced into a situation of almost a pre-emptive mass counterappeal and then you withdraw all the ones that you do not think are relevant or not being contested. Is that the current situation? Mr. Moore: That is the only option that is available currently to the assessor to cover off all appeals, to do a broad appeal of all properties or groups of properties. Mr.

Selinger: That would seem to me to be an unfortunate process because it would create anxiety with a number of people that may not have any issues at stake that they want to contest with the City Assessment Department or Board of Revision. So my question is: Under the proposed legislation would you have to make available to appellants the reasons why you would be considering raising the assessment before they showed up at the appeal, or would they be "ambushed" when they arrived there? Mr. Moore: As Mr.

Weind pointed out earlier. particularly when you get to the higher levels or to the Municipal Board, there is an exchange of information that by regulation has to occur prior to the actual hearing. This is 15 days prior. As has been indicated, this legislation indicates, and that is by the rules of the Municipal Board by the way, that the assessor has up to within 10 days of the actual hearing to indicate that they are going to be seeking an increase in assessment. The rules of the board may have to change, to change that exchange of information. That is a regulation sort of thing that is not ours.

There is a bit of a conflict there in process. We, as we have done, for example-and I do not know if any of you took advantage of the open-house process; what we went through in the open house process, a process that we go through within the appeals, where we make available to the taxpayer sales information, physical charac teristics of properties comparable to theirs that we have based their value on. We do the same thing when we are looking for an increase and then we say we think the property should increase, and here is why. It is really not an ambush. It is an exchange of inf ormation. We

June 28, 200 1 LEGI SLATIVE AS SEMBLY OF MANITOBA 81 just do not get these sorts of things by asking. Mr. Chair, we have to prove a point and provide information. Mr. Chairperson: Last question, Mr. Selinger. Time has just expired. Mr. Selinger: I have to make this a really good question then.

The other point that was raised in the brief this morning that was concerned about this legislation was that the I 0-day notice period sort of speaks to the issue of having the letter in the mail, but the recipient, the appellant, might not actually get that letter until very close to or a couple of days before the actual appeal hearing is scheduled. Is that a concern? * (1 9:20) Mr. Moore: There may be odd instances where that happens. I cannot say that there will not be.

But during this process there is usually ongoing communication between the appellant and the assessment authority, be it the City or be it the provincial Municipal Assessor's Office. So there is an ongoing exchange of information. Generally speaking, I mean, what happens now even without this I 0-day provision, the assessor makes the taxpayer aware that the evidence would indicate that an increase is warranted. What the notification is about is the formal written notification that the assessor is going to be seeking an increase.

It does not speak to the informal discussion that constantly goes on through the appeal process with the exchange of information. Bill 32-The City of Winnipeg Amendment Act Mr. Chairperson: Thank you for your presentation, gentlemen. Now, for the sake of the record, Councillor Jae Eadie of the City of Winnipeg will make his presentation on Bill 32, The City of Winnipeg Amendment Act. Do you have a written brief, sir? Mr. Jae Eadie (Councillor, St. James Ward, City of Winnipeg): No, I do not, Mr. Chairman. I am just going to skip through my notes very quickly. Mr. Chairperson: Okay, proceed when ready. Mr.

Eadie: Thank you again, Mr. Chairman, and members of the committee for your indulgence on Bill 32. I want to indicate at the beginning that the City of Winnipeg certainly appreciates that the amendments that are contained in this bill are now coming forward, as they do provide some additional improvements to what is a very outdated act. At this juncture I am going to put in my editorial and commercial comment to indicate that the City of Winnipeg is requesting that the provincial government bring forward to the Third Session of this 37th Legislative Assembly the complete rewrite of The City of Winnipeg Act.

The drafting has long ago been completed. It is now time to move forward with a brand-new act that will restruc ture our city's municipal government for the 21s t century. However, having got my commercial out of the way, I will get directly to Bill 32 to go through very quickly the points in the bill. One of the items in the bill will allow City Council to pass a by-la w to establish urban tax credits to encourage and assist in the construction, reno vation or preservation of buildings within an area designated by Council. This is an amend ment that the City had requested some time ago.

I am here to indicate that we certainly support the amendment as here, but with one change. The bill states that the tax credit by-la w must expire in five years. That has caused us a concern, but I understand that legal counsel between the two governments have gotten together and that amendment will be coming forward to delete that requirement. We certainly have the capability within the City to review our by-la ws and make changes from time to time. But putting a statutory requirement there would cause problems in the application of this particular

section of the by-law. So we appre ciate that particular change, which I understand will be modified. We are also supportive of the amendment that would allow the City to use monies collected from frontage levies to be dedicated to the repair of residential streets and sidewalks. We have been on record for a number of years as a municipal government that we would like this

82 LEGISLATIVE ASSEMBLY OF MANITOBA June 28, 200 1 flexibility. We are very supportive of this particular change, which will certainly help us in our ongoing struggle to try and catch up with the infrastructure deficit that exists in residential areas. The bill also concurs with the City of Winnipeg request that the business tax assess ment cycle correspond to the property assess ment cycle. We think that is common sense and we appreciate that one.

Finally, the bill amends the act to change the regulations for the drawing of electoral ward boundaries at each redistri bution every nine years by, among other things, amending the present population deviation, which is currently I 0 percent, plus/minus 10 percent, to up to 25 percent. This particular recommendation is in line with recommended changes that were suggested by the Electoral Boundaries Commission in 1999. The current 1 0% tolerance level is far too restrictive. It does not enable boundaries com missions to try and keep neighbourhoods and communities intact in one electoral district.

It has been extremely difficult to do that and if well, obviously most of you or probably none of you were at any of the public hearings that took place with the Electoral Boundaries Commis sion-you will know that that was a very common complaint amongst many private citizens who attended those hearings, with the electoral commission being hamstrung, as it will, with a 10% tolerance figure. We have electoral districts proposed that simply separate commu nities all over the place or tie-in communities together that really do not make any sense. There is absolutely no common community of interest.

One of the requirements in the act and with boundaries commission reviews is to try and keep historical neighbourhoods together as much as you possible can. This amendment is simply a common sense amendment. It allows a boundaries commission to change to use the tolerance figure of up to 25 percent in order to try and keep the municipal electoral districts as whole as possible, if you will, insofar as the historic neighbourhoods and communities are concerned. There was one further change that we asked in this regard.

It is not in the bill but I am going to bring it forward and ask you to consider it as an amendment. That was the right in conjunction with the boundaries review process every nine years, the right of City Council to determine at that point in time the number of members who will compose City Council. Right now the act specifies the number of members, except for the mayor, shall total 15 .

We believe, as a city government, that we should have the right to consider the number of members at each redistribution process every nine years, just as you have that right as a Legislature every ten years for provincial redistribution to determine the number of seats that will compose the Manitoba Legislature. We think that is a legis lative right that should be conferred, not only on the City but on all municipal governments, but I am speaking now for the City.

I have suggested to both the previous minister and to this minister if that particular amendment was also included in the act, if you want to have a level of comfort, you can put in a range, a minimum-maximum range. In terms of numbers, I have suggested a minimum of 12, a maximum of 24, which would leave your total membership which includes the mayor at an odd number of members. so that the incidents of tie votes might be further reduced, but I think minimum of 12, maximum of 24 is something that we have suggested is not unreasonable.

The duly elected members of the Winnipeg City Council, every nine years when the redistri bution process is under way, should also be able to make a determination as to the total number of members comprising the City Council, just as you do here every 1 0 years with the Legislature. I mean, that is a decision we would be account able for, obviously. We are elected and we would be accountable for that. I think we are grown up enough to know what is real and what is not.

In closing on this, I would ask you to consider adding that as an amendment, along with the others, and enabling the new ward boundaries commission that will be struck to go forward with a new set of rules, and perhaps a different number. I cannot predict that, but at least allow that flexibility to exist and let Council make those decisions. Mr. Chairperson: Thank you, sir. Questions from the committee?

June 28, 200 I LEGISLATIVE ASSEMBLY OF MANITOBA 83 Mr. Leonard Derkach (Russell): Thank you very much, Mr. Eadie. I have a question as it relates to the variation quotient of 25 percent. I certainly understand the issue with regard to keeping communities together as much as possible in their boundaries, but if you allow for a 25% plus or minus quotient that means that one ward in the city could potentially be 50 percent higher in population than another ward, as I would understand it. That seems to be a fairly significant variation in size in terms of councillors representing populations.

Now that may not be necessarily a bad thing, but I just wanted to ask the question whether or not this has been considered and whether or not this is still acceptable to City Council. Mr. Eadie: Mr. Chairman, it certainly is not out of anybody's mind on that. Our administrative staff are currently engaging the technicians to begin the process of another boundaries review, and there are various scenarios that can be developed, including the type of scenario that could arise. Please be reminded that the bill and the legislation says up to 25 percent. It is not fixed at 25 percent. It is an up to 25 percent.

So it allows a considerable amount of flexibility to a bounda ries commission. as they should have, and I think as is available provincially and federally to those boundaries commissions to be as flexible as they can.

So it is an up to 25 percent. and certainly we are cognizant of those types of concerns and it is an issue that, certainly, a new boundaries commission will be very well aware of as they go through the mechanics of trying to redraw electoral districts, and hopefully redraw electoral districts based on a number that Council has determined is the correct number to have, subsequent to the next election. So there are all kinds of scenarios that can be developed there, and we are not unaware of some of those potential difficulties in terms of overrepresentation versus underrepresentation. * (1 9:30 ) Hon.

Jean Friesen (Minister of Inter governmental Affairs): It is not so much a question as a comment. Councillor Eadie, you and I and other city councillors have spoken frequently about the need to move on The City of Winnipeg Act. Let me say again that, yes, that is important, but it is a big task. It is also a task that I think is evolving-the mayor's big city conference. I think there are certainly some new questions emerging around cities that I think were not there, necessarily, in the kinds of streamlining of the legislation that has been done in draft form.

So I am aware of the need to move on that and that it is a big task, and it is one that we want to do, obviously, in conjunction with the City. As part of that, I take your other point that cities should have the right to determine the number of councillors that they have. You did not say so, but there are comparable powers within The Municipal Act for other munici palities in Manitoba to do that within a certain range.

The difference in The City of Winnipeg Act. obviously this is nothing new to anybody, but the difference is, of course, that so much of The City of Winnipeg Act talks about the number of people on committees and the nature of needing a majority, et cetera, so there are ripple effects through it which there are not in other municipalities. So it is something that is a little more complex to deal with, even to simply adopt the same principle. So it is something that I think we would want to look at in the context of the larger review of The City of Winnipeg Act, whatever movements we are able to make on that.

Finally, what I wanted to comment on was the percentage of deviation that has been spoken of here, and there are members who have concern and spoke at second reading. Mr. Loewen is not here, but he certainly spoke about it at second reading. It is a legitimate concern. You do not want to have wards that are too unbalanced, one from the other, but setting boundaries and ensuring historic communities is the other side of that balance, too, to ensure that. This is what we are trying to do, as I know you recognize, by enabling, and it is enabling. It is up to 25 percent.

It may be anywhere up to that, and I just wanted to put on the record that Halifax, Ottawa, Toronto, Calgary all allow a deviation in their municipal boundaries of up

84 LEGISLATIVE ASSEMBLY OF MANITOBA June 28, 200 1 to 25 percent. I do not actually have information on whether they go the full 25 percent and what the range of differences might be, but, certainly, that is not uncommon in large cities across Canada. Obviously, I would expect that there are strong reasons for that, for developing cities, as well as for cities that are seeing shifts in population. I just wanted to thank you for making your presentation and for looking at some longer-term issues, as well as some of the flexibility that I think we may be offering to the Boundaries Commission around this. Mr.

Eadie: If I may and very quickly. First of all on the major rewrite, the minister will know that whenever I get an opportunity I am going to be talking about it because it is one of our top priorities as a city government, and, indeed, much of the work has been done, and we want to move forward sooner rather than later. The minister is right when she talks about what is happening in the municipal world across Canada today, Mr. Chair. It is changing very rapidly. Municipalities are certainly the engines of economic growth.

Certainly large cities are, and we have to be able to keep up to the times and have the tools that are necessary to do so without having to come here every year or so, getting piecemeal changes. So we are on board with that. Sooner rather than later is sort of our motto and our battle cry, if you will. We are certainly prepared to work together to that end, hopefully quickly. The change in the number of electoral districts, we would prefer that it happened during this redistribution process.

We within the City of Winnipeg, the political element, can certainly deal with our political structure and the committee structure as we always have. The Cuff report, which eventually was adopted in legislation in The City of Winnipeg Act in 19 98, has provided a lot more of that ability to the City to determine its committee structure and all of that.

The ability to change numbers of elected members is not going to cause a problem that we cannot overcome, no different than whatever the situation might exist in this place every 10 years if the total number of members changes, which, by the way, it has not in 52 years. I could talk about that, too. Regarding the tolerance level, the minister is right. The act specifies up to. By the way, elected officials are not drawing boundaries these days. It just is not done.

We have independent boundaries commissions, who, I think, are well equipped with technical staff to take into account a number of these concerns with overpopulation, underpopulation of wards and neighbourhoods, et cetera, and then hear what the public has to say about the draft results. I think, basically, that is my comment. I think we are in sync in a lot of this, and a little bit more nudging on one thing will help us out a lot, too. Hon. Greg Selinger (Minister of Finance): Thanks, Councillor Eadie.

How long have you been requesting the change in the frontage levy to allow more flexibility in the application of those resources? Mr. Eadie: I think it goes back eight or nine years, maybe a little less than that. It has been since, I think, the mid-'90s anyway. I do not have the specific date. I could not bring all my files with me, but it is some five, six, maybe eight years ago. Mr.

Selinger: Another question I wanted to ask on the population base: Would you agree that this might be valuable for older neighbourhoods, which tend to be the ones generally that depop ulate somewhat, to retain their character and their voice at the civic level as opposed to them losing their voice through rigid variations being imposed or narrower variations being imposed as cities change and expand? Mr. Eadie: Yes, I generally agree. What is being sought in this amendment is the flexibility to try and retain the historic, the older.

I represent one, as well, and I am not here for my own self-interest, but, sure, what we are seeking is the flexibility to a boundaries commission to try and keep historic neighbourhoods together. It is a requirement. It is a mandate to a boundaries commission in The City of Winnipeg Act now. I think it is also a mandate provincially under your

June 28, 200 1 LEGISLATIVE ASSEMBLY OF MANITOBA 85 own electoral act when you deal with this every 10 years. But it is certainly a mandate in the city of Winnipeg for a boundaries commission, and this helps to give a commission the kind of flexibility they need and, as well, to respond to concerns that were raised by private citizens during this very recent process in 19 99. Mr. Larry Maguire (Arthur-Virden): Two quick snappers, Mr. Eadie. Thank you for your presentations. On the lighter side, just for the record, were you recommending that there be fewer or more MLAs? Mr. Eadie: Actually, Mr.

Chairman, I think I worked out the numbers one time. If you use the process that we have to go through, there should be about 42 of you in this place. I will not tell you whether 57 is the right number, except it has not changed in 52 years, and I think there is something wrong with that picture. But that is something that, 10 years from now or at the next redistribution, those of you who are here will get to worry about. Mr. Maguire: Hopefully, Mr. Chair. the popu lation changes, and we can maintain the 57 we have with the increase. Mr.

Eadie, in your experience, in asking for an increase in the variance from 10 percent to 25 percent. and notwithstanding what I have heard in regard to other cities that are working off a 25% variance, in your experience have you seen any need in Manitoba to move that high, or would a smaller percentage have been workable? In other words, have you seen any examples of where it would have needed to be higher than 15 percent, say? Mr. Eadie: I will only try to speak for what I have been able to experience and understand within the city of Winnipeg, that 10 percent does not work.

You cannot make it work and also comply with other requirements, even in the current legislation about the communities and that sort of thing; 10 percent does not work. Up to 25 percent, and I stress, and it is in the bill in

section 6(3 .1 ), it is up to 25 percent. So it allows considerable flexibility. The boundaries commis sion may feel that 21 percent provides just the right balance and maintains the integrity of communities and all of that sort of thing. Perhaps 16 members might be better than 15 . Then you really have a perfect picture, I do not know. But it is up to 25 percent, so it allows considerable flexibility, and that is really what we are seeking here, is the flexibility not the rigidity of the current proscriptive legislation. It just does not work anymore.

It may have worked I 0 years ago when this change was first enacted, but it is long out of date today. * (1 9:40) Bi1131-The Municipal Assessment Amendment Act (Continued) Mr. Chairperson : Thank you, Mr. Eadie. Time for your presentation has expired. For the sake of clarity, we will now return to Bill 31 , The Municipal Assessment Amendment Act, and I call Henri Dupont of KPMG. Mr. Dupont, do you have a written presentation of your brief? Mr. Henri Dupont (KPMG): Yes, I do. Mr. Chairperson: Mr. Dupont, you may pro ceed when you are ready. Mr. Dupont: Mr. Chairman. honourable mem bers. my name is Henri Dupont.

I am the credit appraiser with KPMG and a senior manager of the property tax division. We specialize in professional representation of owners of prop erties with respect to assessment appeals. I am a professional in the business. I have been appraising for 20 years. I have done over 2500 appeals over the last 10 years, and I have represented some of the largest clients shown there. I appear today in opposition of sections 4 through 10 of Bill 31 .

My opposition arises in large measure from my sense of personal experiences with individuals from both the City of Winnipeg assessment and the provincial municipal assessor. I believe my experiences should help the committee make their decision on the bill. I am gravely concerned about the proposed changes. You would have the potential to unfairly and unreasonably compromise taxpayer rights. The proposed changes, generally speaking, stack the

86 LEGISLATIVE ASSEMBLY OF MANITOBA June 28, 200 1 deck in favour of the assessor at the expense of taxpayers' rights. It is also my firm belief that Bill 31 is flawed and entirely unnecessary. I will explain why there are flaws to it, but next is that it provides the assessor with unbalanced powers to request an increase at either the Board of Revision or the Municipal Board appeal. The result is the fairness of the appeal process is now in jeopardy.

I would respectfully remind this committee that it is particularly important that the legislation not only be correctly awarded, but equitable in its treatment of all citizens of this province as this legislation will undoubtedly be subjected to judicial scrutiny. I will explain a bit further later on, but whatever right is given to the assessor to ask for an increase should be given also to the taxpayer to ask for a decrease. That is the main thing, that it has to be balanced that way. The assessor currently has the right to appeal any assessment, as does the owner or the taxpayer.

They have the same right as the taxpayers now. In fact, the assessor for the city of Winnipeg exercised this right on a myriad of properties during the 19 94 general assessment when the City of Winnipeg Property Assessment Department filed applications for revision on all properties within the city of Winnipeg for all assessments in excess of $1 million. They filed a blanket appeal.

In Winnipeg, the assessor who holds the file appeals against their reality assessments at the Board of Revision on many selective assess ments in anticipation of taxpayer appeals and, in one particular case I am aware of, against a number of business assessments solely in antic ipation of appeals from one individual tax agent. In essence it is saying: If you appeal, we are going to go after you. We are going to try to match the appeal, counterappeal. They had the problem of trying to find out who was appealing. Therefore, they did the blanket appeals, Mr. Chair.

However, that indicates to me they did not think these assessments were not correct. In 19 94 they placed these assessments themselves. This is our assessment, then they filed appeals against them. It is not because they want to correct under assessment. It is solely to counter act any appeals from the taxpayer on the off chance that it is underassessed or as a way to get back at those people that dare to appeal. The Municipal Assessment Act was amend ed in 19 96. Among those amendments was the authority which allowed the board to increase an assessment. These amendments are still in the act.

During the period of time between the 19 96 amendment and the Valley Gardens case in 19 98, which I will address in a moment the assessors again regularly threatened to seek increases at hearings if appeals were not with drawn. Part of my business is, with appeals quite often you talk with assessors before the threats of increase, even if they do not threaten, it is implied, it is there. If they give you a notice that we may increase, it is there. You have the implied threat, if not the real threat. Mr.

Chair, virtually every single appeal to the Municipal Board that I was involved with between 19 96 and 19 98, they had an assessor request an increase in the assessment. There used to be a time where I could negotiate with the assessors before going to the Municipal Board. The last go-round. virtually no negoti ation, virtually everyone they asked for an increase. It was a bit funny to see the appraisal reports come in from the assessor because we were wondering how they were going to ask for an increase.

It came, and they had all sorts of ways, very inventive sometimes. but usually with large amounts of increases, which gave us an extra risk. This practice on the part of the assessor required us to report the potential risk of proceeding with any particular appeal to our client and that a decision would have to be made regarding proceeding with the appeal or withdrawing it, and that forces us to assess that particular risk.

In virtually every case, we continued with the appeal and, to the best of my recollection, only one appeal resulted in a modest increase with all others resulting in reductions or confirmations of the existing assessments. This indicates to me that, almost without fail, the assessor's request for an increase was found to be unreasonable and overly aggressive.

June 28, 200 1 LEGISLATIVE ASSEMBLY OF MANITOBA 87 It is a tactic. It is tactical on their part to ask for an increase whether it is merited or not. It is better for them if they do that. It does not take much to understand that it is to their benefit, doing that. Our experience with the assessors and the appeal process during this time was that they regularly and unfairly threatened and attempted to intimidate the applicants as a tactical device to discourage proceeding with appeals. I have been personally threatened many times that if we do not settle or withdraw, they will go for an increase.

Many times, they do not say it in a very threatening way. They say: Oh, by the way, and the offer, if you do not settle, is gone, and they walk away. If you do not take what we offer, you could be facing an increase. So that is there at all times, and the assessor will use it to his advantage. The risk of an increase is very real to the people who appeal. It is very real to my clients. So it does not matter whether the assessor has a good basis. Even if they have a 1 0% chance of an increase we have to weigh that.

As a consequence of the mass appeals by the City of Winnipeg assessors in 19 94 and the changes in legislation in 19 96, there was poten tial for an increase for most appeals from '94 to late '98. Because I do commercial appeals, I was involved in mainly those of a million and over. In 19 98 the Valley Gardens decision was issued by the Court of Appeal. I mentioned the 19 96 decision of the Orange Properties also. It is highlighted there. It says that it is to give both parties equal access to the Board of Revision and the benefit of rights and procedural safeguards set forth in the statutory scheme.

That is my emphasis. The next page is equal access and benefits of the safeguards and the procedures that are necessary. In the Valley Gardens case, Judge Huband wrote that the procedures for applying for a revision to the Board of Revision and the procedures for a further appeal to the Municipal Board were designed to guarantee procedural fairness, including protection from a side-wind demand by the assessor without prior notice for an increase in the assessment.

It is reasonable, and I would suggest impera tive, that both the assessor and the taxpayer are treated equally under the legislation, neither party having an unfair advantage over the other. In our view it is not appropriate to allocate additional rights to only one party in the appeal process, in this case the taxing authority. I do not show it here, but I will give you an example. When we go to the Board of Revision we get a decision. Let us say we get two-thirds of what we are asking. There is a third left. and we say, okay, we will not appeal any further.

The assessor can file the appeal and we have the same problem. We do not know about the appeal until after the deadline. * (1 9:5 0) So in that case there would be only an appeal at the Municipal Board with the right to increase. There would be no right to decrease because there was no appeal by the taxpayer because we did not know. If we had the right to the 1 0-day notice also, which the City is appealing, okay, we want to ask for the right to decrease. Then we go in front of the board and there is an increase and decrease. So the 1 0-day notice has to be given to the taxpayer.

Instead of saying the word "assessor," you should just say the word "respondent," because if we appeal, the City is the respondent or the assessor is the respondent, but if the City appeals or assessor, we become the respondent. So the respondent should have a right to that. If you do not have that, it is totally unbalanced. The main problem with the potential of assessment increases is that the assessor has historically used it to intimidate taxpayers in an attempt to have the taxpayers withdraw appeals or not file one due to fear.

There is no doubt in my mind that the assessor will continue this practice if the bill is unchanged. It is, in my view, highly unlikely that the assessor will simply file the proposed 1 0-day notice at the Board of Revision in each and every instance of an appeal for the sole purpose of intimidation. Now, Mr. Weind said that the home-owners were not affected, but if 15 000 appeals are filed, 14 000 from home-owners and the rest from professionals, if they receive a letter in the mail for seeking an increase, a lot of these 14 000 will withdraw or have a risk.

So the simple fact they send that notice will intimidate people.

88 LEGISLATIVE ASSEMBLY OF MANITOBA June 28, 200 1 At the formal hearing before the Board of Revision, they may not seek an increase but rather simply state they filed a notice as a precaution. We have not had time to study the matter, and we just filed a notice in case we wanted to increase it. That could happen. If they do file, it will happen often, because they are not usually prepared at the first board. So meanwhile many appeals will simply and quietly have been withdrawn and the assessor will have produced the desired result. How can you diminish the potential for abuse by the assessment authority?

Even if they do not want to abuse it, the fact they give notice, it will intimidate people. That is there. The assessor should not be granted the unbalanced power to unilaterally ask for an increase. There should be some restrictions or penalty for assessor abuse. Under the proposed system, many taxpayers must pay a filing fee for an appeal to the Municipal Board of between $50 and $500 per roll number. It is $10 per $1 00,000 of assessment, minimum of $50, maximum of $500. Now, the assessor will pay nothing for the 1 0-day notice.

So the way it is now at the Board of Revision, all the taxpayers have to pay their 500 bucks. The assessor comes along and they file a 1 0-day notice, no charge. That is totally uneven also. Why should one party have to pay, the other party not have to pay? The thing is also that the assessor's appeal is often tactical. They do not know whether they are underassessed or not. They are just doing that as a way to counter another appeal. If you had attached a fee, then you say you have to be serious to file an appeal.

You tell the assessor if you know for a fact that it is underassessed and you really want to proceed, pay your fee like everybody else, because if they are going to have to pay $50 per appeal for 1 0 000 appeals, it is going to cost them. So you cannot just give them a power that can intimidate. Make them pay. The fact that they pay $500, maybe not that much for a big commercial, but it will make them think twice; only file if you think there is a case. This, again, is unfair as it would be a cost to the taxpayer and not for the assessor.

The final fee to the Municipal Board is refundable if the appeal is successful. So, if the assessor is successful, they can get their money back. That fee is not meant to pay for the cost but as a deterrent, Mr. Chair, against frivolous and aggressive appeals. That fee is there against taxpayer appeals which could be frivolous or aggressive. So history and my experience has shown that taxpayer appeals are serious,

whereas assessor appeals are, more often than not, used as a tactic. A fee should definitely be attached to the filing of any 1 0-day notice in order to ensure that the intimidation tactics be kept to a minimum. The cost structure should at least partially diminish the potential for abuse. A cost structure for any type of appeal, a 1 0-day notice or a normal appeal will mean that the assessor or taxpayer would actually believe in a real case rather than it being a tactic only. Under the present legislation, the assessor has the right to appeal whenever they thought the assessment was too low.

This, in my view, is the ample authority and further right for an increase would be the same as the assessor filing appeals on all properties, whether they would be deemed high or low. This would result in frivolous appeals on the part of the assessor for the sole purpose of intimidating taxpayers. Another disturbing aspect of Bill 31, it allows the board to increase the assessment beyond the original assessment.

In contrast, under The Municipal Assessment Act as it now exists, in a previous ruling of Orange Properties, this was not possible unless the assessor had filed an appeal against the original assessment at the Board of Revision. So this proposed amend ment would change that. Part of the principle is that the taxpayer should know the case it has to meet, so when there is a criminal charge against somebody, the defence lawyer knows the case he has to meet, and he tries either to bring it down or to contest it. The prosecutor does not change-oh, I may change my charge against it. It is not a moving target.

You know the case you have to meet. So this is the same thing. There should be an assessment. We know we have to meet that case,

June 28, 200 1 LEGISLATIVE ASSEMBLY OF MANITOBA 89 either try to bring it down or contest it and not have the assessor say it is a moving target. We believe the assessor has four years between general assessments, and that should be ample time for them to come up with a proper assessment. Mr. Chairperson: Order. Mr. Dupont, I am sorry. Your time to make your presentation has expired. Mr. Marcel Laurendeau (St. Norbert): Could I ask Mr. Dupont exactly where he was in his presentation, what page? Mr. Chairperson: Mr. Dupont, where were you exactly in your presentation? Mr. Dupont: Page 4. Mr. Chairperson: Page 4.

Third paragraph? Mr. Dupont: I was down to the second last paragraph. Mr. Laurendeau: I wonder if we might have leave to allow the rest of his presentation to be taken as read. Mr. Chairperson: Do we have leave? [Agreed} Mr. Laurendeau: It will be printed as it is printed. It will be printed in Hansard as you have written it, and we will make sure we read it. Mr. Dupont: Right. Okay. Mr. Chair person: Okay. questions. Let us go to Mr. Leonard Derkach (Russell): Thank you, Mr. Dupont. Mr. Dupont, you present an argument as a professional who acts on behalf of taxpayers who are appealing their assessments.

Although I understand your position, I want to ask a question as it relates to a vested interest that you might have in your view of assessment. Sitting here as a former minister of Rural Development who had some responsibility for assessment, I cannot help but appreciate your presentation in terms of being on the side of the taxpayer.

I understand that you derive your income from the appeals that you take forward, but, on the other hand, I have to also have some feeling that the taxpayer needs to be treated fairly and at least be able to act on a level playing field when it comes to appealing his or her assessment. So I want to ask you whether or not this is a view that is held by the people that you represent, or is this basically a view that is held by you as professionals?

In other words, have you consulted with people, the taxpayers, on this issue, and is this the view that you are getting from the people that you perhaps have consulted with? Mr. Dupont: I did not consult with any of my clients. I have talked to a few of them about this. I have told them I had to come here to make a presentation. and they wished me luck, et cetera, but as far as actually a formal survey, no. Mr. Derkach: Mr.

Dupont, from your dealings with taxpayers in the province, is it fair to say that taxpayers would view this piece of legis lation as tipping the scale in favour of the assessment branch and in favour of government, rather than in favour of putting some fairness and some equity into the way they are treated when they go to the appeal board? Mr. Dupont: Yes, I believe the purpose of this is to remove underassessments in the system. However, the lack of legislation does not cause underassessments, Mr. Chair. Assessors do. They place them. Those who are underassessed do not say anything. They are quiet.

Only those who appeal are the ones this legislation will affect, so it does not affect the underassessments. You are not hitting the problem head-on. The problem is here and you are hitting over there, so that does not help remove the underassessments in this system. It just helps intimidate. (20:00) Mr. Derkach: One statistic you gave us which troubles me is found on page 2, where you say: In fact virtually every single appeal to the Municipal Board that I was involved with between 19 96 and 19 98 had an assessor request an increase in the assessment. Now we heard from Mr.

Weind where he indicated his only interest and the interest of

90 LEGISLATIVE ASSEMBLY OF MANITOBA June 28, 200 1 assessors is to arrive at a fair assessment based on market value. Yet this almost flies in the face of that statement when you indicate to us that in those two years every assessment that you were involved with had the assessor file for an increase in the assessments. Mr. Dupont: Yes, there has been a change in the way the assessor deals with taxpayers, because there was a time when I could negotiate most of the time before the Municipal Board, and that has stopped. Part of that is, I guess, the Assessment Department is using this new weapon to their advantage.

If they can get a few cases where we are hit with increases, it will make us think twice, so all guns against the professionals like us, to make us get hit a few times and make us think twice. As a tactic. it is something the assessors have tried to use, with some success, because we have to weigh all risks. Mr. Cha irperson: I am sorry, Mr. Derkach. Time has expired. I will allow Mr. Laurendeau one question. Mr. Laurendeau: Thank you very much, Mr. Chair. Monsieur Dupont, how many of your cases that you have put in place that you have taken over the years have you lost and seen increases on?

You said you have taken in 2500 cases. Mr. Dupont: There were a large amount of these cases prior to '94 when there were cross-appeals, so they were not subject to increases. Over all, very low. Ten, twenty, because we tend to file appeals on properties where we think there are cases, so it is unlikely there will be a case for the assessor to ask for an increase. We choose which ones, and those that are underassessed we do not appeal. We tell our clients: There is no case here. Do not bother us. Mr. Chairperson: I will allow the minister one question. Hon.

Jean Friesen (Minister of Inter governmental Affairs): Mr. Dupont, thank you for the presentation. I think, as you are looking at your experience, one of the things that you have hit on, and I think your exchange with Mr. Derkach illuminates this, that at the moment the only way the board can have the authority to set a just assessment is if the assessor cross appeals. What we are having is a lot of cross-appeals. Cross-appeals are made difficult for both the citizen and for the municipality, because there is one finite deadline.

If the citizen files his appeal at, let us say 4: 29 p.m., the assessor then has only one minute to determine whether he is going to appeal on that particular one or not. What we have had is a lot of cross-appeals in order to enable the Board to set a just price, if I can call it that. I am wondering if your assumption is that the board must have that right to set the just price, or do you not believe that?

What we are trying to do here is not to change the role of the assessor, not to change the power of the assessor, but to give the boards that basic responsibility they have in every other juris diction to set the just price, something which affects all taxpayers. If someone is undertaxed, then somebody else is bearing that burden. So what we are trying to do here is to protect the nature of the taxation system, as well as the rights of every taxpayer. Mr. Dupont: I understand the principle of fair is fair.

I understand that to be the principle and that maybe in 10 percent of the cases that principle will come into play. The rest of the time, it is an intimidation tactic. It stops people from appeal ing. It stops people from continuing their appeal. It makes people settle what they should not settle with the assessor. It is the fact that it is some thing hanging over them, a potential hammer. Therefore, you get a bit of justice 10 percent of the time. You get injustice the other 90 percent of the time.

If the Assessment Department sends 1 0-day notices to all 15 000 appeals at the Board of Revision, they will have the result of people withdrawing their appeals because they are scared. An Honourable Member: We will give the minister leave to ask a question. An Honourable Member: The minister can have leave to ask another question. Mr. Chairperson: Is it the will of the committee that we give leave to the minister to ask an extra question? [Agreed]

June 28, 200 1 LEGISLATIVE ASSEMBLY OF MANITOBA 91 Proceed, Honourable Ms. Friesen. Ms. Friesen: Thank you. One of the difficulties in the whole cross-appeal system that has been brought to my attention is that once the assessor has filed a cross-appeal there is no withdrawal possible under the present legislation, and that under what we are proposing here a withdrawal is possible by the citizen, and again there is much more flexibility, advance notice, level playing field. Everybody has the facts on the table. They know there is going to be an appeal before the actual deadline.

There is a much greater clarity to the situation and more flexi bility. Is that how you understand it? Have we made that point, and would you accept it? Mr. Dupont: I believe the 1 0-day notice would be less onerous than the cross-appeal, because then the taxpayer, if he withdraws, it dies. The other way around, the taxpayer can withdraw but the assessor can continue, and a taxpayer could be stuck in an appeal defending himself. So it is less onerous that way.

As far as the 1 0-day notice. it is kind of meaningless at the Municipal Board, because everybody has been saying it is 15 days anyway and 10 days is less notice than before. At the Board of Revision, usually that is where you find out there is no prior exchange; that is where you find out that the assessor wants the increase. So a 1 0-day notice there would be helpful at that board. It would not be helpful at the second board. Mr. Cha irperson: Thank you, Mr. Dupont. I now call upon Mr. Jim Baker, Manitoba Hotel Association. Mr. Baker, do you have a written presentation? Thank you, sir.

You may proceed when ready. Mr. Jim Baker (President and CEO, Manitoba Hotel Association): I am Jim Baker, the President and CEO of the Manitoba Hotel Association. By way of background, prior to my association with the Hotel Association, I was a chartered accountant in private practice for over 25 years. During that time I was involved with many business evaluation engagements and have completed several courses in the area of valu ation, Mr. Chair. In the two years since being in my current position, the matter of property tax assessment has been one of the priorities of my position.

I have been a member of the advisory committee on hotel property taxes since its conception and have met with City of Winnipeg Assessor Brian Moore and with the provincial assessing office on several occasions. The purpose of those meet ings was to gain an understanding of how these two offices view and administer the property tax assessment of Manitoba hotels. In short, I have determined there are funda mental differences in approaches, not only between the Province and the City of Winnipeg, but also between other provinces and jurisdic tions in other provinces.

In short, there is not one accepted method of assessing property taxes on hotels. The history of assessing in this province is one of inconsistency and appeals. We are now at the beginning of an assessment cycle, and this week some hotel properties have received noti fication of their proposed assessments, assess ments that are 10 0 percent to 400 percent greater than the last assessment. If these assessments hold true, the added tax will eliminate any profit potential and seriously impact on the going concern of many properties, Mr. Chairperson, especially rural properties.

Any amendment that gives more power to the assessor will contribute to increased appeals and will seriously aggravate an already confron tational relationship between assessor and prop erty owners. I believe this proposed bill will give the assessor more power, insofar as the assessor will be able to request an increase at either the Board of Revision or the Municipal Board. I apologize I have not been able to fully analyze the proposed bill, given the short notice of this committee hearing and my personal

schedule and other hotel matters relating to our industry. My interest was heightened, given this week's release of the staggering preliminary assessments. My recommendation is that this bill be deferred to the next sitting of the Legislature, which would give stakeholders such as the hotel owners an opportunity to provide more infor mation to the Government.

92 LEGISLATIVE ASSEMBLY OF MANITOBA June 28, 200 I That is my presentation. * (20:IO ) Mr. Chai rperson: Thank you, Mr. Baker. Questions from the committee? Mr. Derkach: Mr. Baker, thank you for the presentation. With regard to assessments, you have probably been involved in some appeals in the past, where, on behalf of your property, or others in your profession, you have appealed it before the Board of Revision. I am wondering whether or not you sensed, in any of those experiences, that there was an imbalance in terms of the fairness of the system, where the advantage was to the taxpayer or the appellant. Mr.

Baker: In clarification, I am not a hotel owner. I am the paid person in the business. I have, successfully, appealed personally in my residential. I have appealed on behalf of com mercial clients. I have attended at appeals for hotel owners. As I mentioned, I have partici pated in the last year on an advisory committee on taxing of hotels. I have been in contact with I 00 hotels on this matter, and there is a genuine feeling that, because of the complexity of property taxation, in general, the weighing is certainly in the assessor's hands. Mr. Derkach: Mr.

Chair, one of the issues that keeps coming back to us at this committee is the fact that the assessor does not have the ability to file an appeal until after the deadline. So it puts the assessor at a disadvantage in terms of being able to file an appeal, or counterappeal, when a taxpayer files an appeal. I have always held the view that it is the assessor who is the profes sional, and we, as elected people or ministers and also people in the city, depend on our asses sors to ensure that the assessment is accurate, or as close to accurate as is possible.

In cases where there might be error, we give the opportunity to the ratepayer, the taxpayer, to appeal on the basis of equity and fairness. If, in fact, the assessor cannot counterappeal until after the deadline, would you not think it would be fairer to simply move that deadline, or remove it, to allow for the assessor to be able to appeal or counterappeal after the deadline for appeal, so that it would correct that problem which the assessors seem to feel we have today? Mr. Baker: My concern and attention are not to the detail of deadlines and timing. Mr.

Moore from the city assessing office just previously mentioned that the I 0-day limit might give rise to some change required at the Municipal Board, and those are technicalities that I know have to be worked out. Indeed, I would think that would have been worked out at this point in time. My specific interest is the methodology of assessment, which has given rise to, I feel, unfair assessments and inconsistency in assessing practice. So I am trying to evade your question, because I do not feel qualified as to the tech nicalities of the timing. How ever, I do rely on people such as Mr.

Dupont, who spoke previ ously, who have been active in the technical filing of appeals. That has not been my role. Mr. Derkach: One last question, Mr. Chair, and I thank you for your indulgence. Mr. Baker, I know that, throughout the province, it appears there has been a fairly significant increase in assessments right across the board this year. As you indicated, in some hotels, it is as much as 400 percent. If, in fact, this legislation is passed, do you think it would discourage some of these property owners to file appeals? Mr.

Baker : When it comes down to a 400% increase, or a I 00% or a 30% increase, there will be appeals regardless of what this legislation does. That is the point I am making, Mr. Chair: That the assessment, the preliminary assessment, has appeared to be totally unfair and inconsistent with past practice. Mr. Larry Maguire (Arthur-Virden): I guess the previous presenter, Mr. Baker, indicated there were four years for the assessor. He has all the tools available to him, and everything to do the assessment and to make the assessment.

I am wondering if you would agree that it seems onerous for the assessor, who has the tools to do the assessment, who has four years to do the fine-tuning, also then has this jurisdiction to be able to levy the same kind of an appeal, as well, after the fact. Mr. Baker: Well, the situation now is, of course, that they have the technical expertise, the

June 28, 200 I LEGISLATIVE ASSEMBLY OF MANITOBA 93 software and the bodies. The advisory commit tee, I believe the purpose of that being formed by the City of Winnipeg assessing department was to try to reduce the number of appeals. We at the Hotel Association took the approach that if there was a clear methodology, indeed, a manual such that property owners, and I am speaking specifically for hotel property owners, where a property owner could take the manual and work through their situation, they would know what their assessment would be within a certain range.

The situation right now, if you are going to build a new hotel you have no idea what your taxes are going to be, absolutely no idea. Ms. Friesen: Thank you for the presentation. Mr. Baker. I take the point that your concern is about the nature of assessment and consistency wherever possible. Obviously, that is the goal that municipal governments as well as the provincial government would be aiming for. The hotel issue is not one I am familiar with. It is certainly something that in the longer term we can look at and talk to you about.

What I am going back to is your paper, where it says "any amendment that gives more power to the assessor." I wanted to reiterate that this bill does not give more power to the assessor. What it does is give different powers to the boards of revision and to the tribunals, the Municipal Board to raise as well as lower. Because they do not have that at the moment, the only way that they are enabled to have that is by a cross-appeal from the assessor. It seems to me that there are a number of unfairnesses inherent in the cross appeal process.

It is now frequently done at the very last minute so that the citizens when they appeal do not necessarily know until the very last minute that there is going to be a cross appeal by the assessor. What we are trying to do here is to level that playing field and to say, yes, I 0 days advance notice, a minimum of I 0 days advance notice. At the Municipal Board it will be more. In advance you will know what the playing field is going to be. In addition, the present legislation proposed when a cross-appeal is set in motion it cannot be withdrawn.

It sets in motion a series of events, which in the end neither party may want. What we are doing there is offering the flexibility for withdrawal. What we are trying to do is to make it more fair, advance notice for the citizen of what they are getting into, advance notice on the facts, all in advance of any actual appeal taking place. The purpose of this being to enable the boards, as they have in every other province, the ability to raise or lower, which they do not have now.

Again, the intent there is to make sure that citizens, individuals, businesses are paying, as close as we can, the right amount of taxation, because if someone is paying less than they should be, then someone else is taking up that burden. That is the goal that we are trying to get to and to make it a fair and open process. At the moment it seems to me that there are ways that that can be improved and that is what we are trying to do. * (20:20) Mr. Baker: With respect, IO days, I2 days. postal disruptions, they present problems. What ever day it is, is not going to solve the problem.

The power in the hand of assessors is-I was going to be subtle but it is not that subtle. I have been witness to it. I have had first-hand incidents related to me. It is very clear that, for example, these exaggerated assessments, the staggering assessments that came out this week, are a negotiating tool. I firmly believe that no one would possibly accept a 400% increase in property tax assessment. I feel that it is a tactic toward settlement. I had better take it because if I do not I will be in significant more problems.

Specifically, many of the hotel owners are not sophisticated people when it comes to property tax. They will get sophisticated with these types of increases, but a I 0% increase, a 20% increase or, you know, grumble, how am I going to find that money for that. So that it is a subtle power that vests in the assessor and primarily in the advantage they have for the preparation. The demands for information from hotel properties have increased significantly. Full disclosure of financial statements, personal interviews those are all happening. The hotel owners are sitting having to wait for some deadline.

An example is that the assessments for residential properties were available on the Web, which we have heard here is an ideal way of getting the information out. I think it was March 3I, when the commercial properties were to go

94 LEGISLATIVE ASSEMBLY OF MANITOBA June 28, 200 I on the Web and they have yet to appear. The latest date we have is they will appear after the notices go out. Again, and I know I am going back over the same ground. I am saying before you consider some tinkering like this, look at the real system, look at the real problem and let us work on it. This will tilt the scales perhaps in a minor way, perhaps in a subtle way, but there is an underlying problem that must be addressed. Ms.

Friesen: There is one further point I wanted to make, because you did indicate that you felt that perhaps many people were not aware of this. One of the parts of this bill is that it does not come into force until January I, 2002. It is an area where we thought people needed advance notice and to be aware that changes were coming which were essentially changes that had been debated before and introduced before and let us give people a fairly reasonable heads-up time on this. So that is one part of it.

I do want to say for the record, and you are not the first person to raise this, to talk of intimidation by assessors, I find that very disturbing. I think I should say that for the record, that is not how we as a Province, I do not speak for the City, but I am sure that no jurisdiction wants their public servants to be seen in that way. I am not questioning your judgment on this. I think you may represent a considerable body of opinion, but I do want to say that that is not the perception that we want to see for public servants.

We anticipate that all assessors are working towards fair and equitable assessments to the benefit of all the taxpayers. That is our principle. If there are individual cases, then I think we do need to look at that. I want to thank you for putting that on the record, but I do think it is also incumbent upon me to respond to say what indeed we do expect of civil servants. Mr. Chairperson: A comment, Mr. Baker. Mr. Baker: Firstly, clarification, my comments towards that matter do not relate to the provincial assessing department.

Secondly, the date, I think that date is appropriate, I mean, from the standpoint of notice and all that. Yes, I am not questioning that. Mr. Maguire: Mr. Baker, once again, just a couple of quick questions. In your presentation you added some words of clarification at the bottom of one paragraph. You mentioned that in light of the staggering assessments, I think the word was "staggering" that you used, that were just released this week. I know you have looked at here l 00 percent to 400 percent. Can you give us some examples of just the kinds of increases that have been there? Mr.

Baker: A property on Pembina Highway that was assessed at $800,000 previously is assessed at $2.7 million, with no physical change to the property. A downtown property that was previously assessed at $6 miilion is assessed at $20 million. In the last case, that would give rise to additional taxes of $800,000. Mr. Maguire: I can see what you mean when you say it might negate any profit potential or certainly effectively reduce it to close to zero. In short, there is not one accepted method of assessing property taxes on hotels in your statement here tonight as well.

Can you give me any assurance or indication that you know how the system works that they do use for assess ment, Mr. Baker? Mr. Baker: It is an evaluation that by its very nature arrives at a range of value. So there is always going to be questioning. It is a very complex issue. In particular, in defence of the City of Winnipeg, that assessing department is going through a change where they are concentrating, or as a matter of fact, they are dedicating to a method of what they call the income approach. It is an approach that they have been phasing in, and it presents many challenges.

One of the major challenges is it starts by establishing a market value, meaning how much would I pay for your hotel to take it over, but what they are assessing is the bricks and mortar value. To arrive at that bricks and mortar value from a market value, there has to be some subtractions that some people call business value, some people call goodwill, some people call it management expertise. You cannot find a definition anywhere. In previous assessments it has been expressed by a 4% deduction. It is a very, very complicated situation, requires a lot of study.

June 28, 200 1 LEGISLATIVE ASSEMBLY OF MANITOBA 95 The same situation as far as the hotels and the huge reassessment amounts has happened in Saskatchewan, which does not use the same system as the City of Winnipeg or the provincial assessing department. So I know that it is a very complicated issue, and it has a lot of decision components in it. I do not think you will ever get anything that is perfect, but what we are striving for is consistency and fairness. There cannot be consistency and fairness with those types of increases. Mr. Chairperson: I am sorry, Mr. Maguire, we are almost out of time.

I am going to give Mr. Selinger the next question. Hon. Greg Selinger (Minister of Finance): My question, Jim, this advisory committee on hotel property taxes, are you finding it productive? Are you making progress in getting your concerns understood and heard? Mr. Baker: Some parts of it have been productive, but I have found it at times an antag onistic exercise. We are dealing with people who are paid to do assessments and have instructions as to how to do it. On the other hand, we have people who have to pay the assessments and those positions are not always agreeable.

I have found it frustrating from a standpoint that after approximately a year there has been no documented methodology that my members can look to, to try to do a self-assessment, and from that standpoint I am frustrated. Going back, it is a very complicated situation, especially when there is a transition. Especially when, from my position, there are 200 hotels outside of Winnipeg and 93-odd inside Winnipeg and they are being assessed in a different manner.

I am looking for one manner of assessment and it appears there is some dispute between the city assessing and the provincial assessing, and that adds to the problem that we are faced with. * (20:30 ) Mr. Chai rperson : Time for the presentation has expired. Thank you, Mr. Baker. I will now call Antoine Hacault, private citizen. Mr. Antoine Hacault (Private Citizen): Hacault. Mr. Chai rperson: Got it. Sorry for mis pronouncing your name, sir. I am of Slavic background. I see you have a written presentation. So proceed when you are ready, sir. Mr. Hacault: Yes, Mr.

Chairman, thank you very much for allowing me to speak. I have listened with much interest to the presentations of other people which preceded me, so honourable minister, members of the Legis lature, I will provide you with some background of who I am. I am a lawyer at Thompson, Dorfman, Sweatman. I am a member of the Canadian Property Tax Association and have contributed to their monthly newsletter which deals with assessment legislation throughout the country.

I note in passing, and I will deal with that later, I brought my manual with me because of the information that was brought, or appeared to be brought, that every jurisdiction has the power to determine fair assessment. My review of the manual, and I have a province-by-province tabulation in my manual. indicates that that information might be incomplete or incorrect, because for example in Prince Edward Island. the commission has the ability, and I am reading directly from the legislation, to hear and dispose of an appeal by either dismissing it or allowing it.

So it is directly related to an appeal and they can only dismiss it or allow it. I have not had a chance to review all of the legislation, but my cursory view of my binder dealing with legis lation across Canada seems to indicate that infor mation might be incorrect or have to be further studied. I have been asked to speak in the past to councils of municipalities. I am also a member of the Manitoba Bar Association Council. I have been asked also to speak to the Arbitration and Mediation Institute, and I think that will be a point which might be relevant later on.

I have acted both on behalf of municipalities and on

96 LEGISLATIVE ASSEMBLY OF MANITOBA June 28, 200 I behalf of landowners with respect to assessment matters. A preliminary point on the first page of my paper is an encouragement to this Government to make use of our association. At the Bar Council meeting that we had in Brandon a couple of weeks ago, we had directed our president, because a couple of bills were coming up and we had late presentations which would not be as thorough as if we had advance notice.

We, unfortunately believe because we have a wide cross-section of members in our association, lawyers that represent the City, private individuals, et cetera, that we would be useful. In most cases we have volunteers that are willing to provide comments on legislation before it is passed as a bill or proceeded with. So on behalf of the Bar Association, I again communicate that request and leave the invitation open to consultation to us.

With respect to the last presentation made by the Hotel Association, in the context of this co-operation, Alberta for example, and I have all of their manuals, jointly with owners, assessors and appraisers have done manuals which are part of regulations, so it is a joint effort. It is not an effort just by the city assessor or otherwise.

I guess that gets to my next point on page 2, that the obvious danger of proceeding with the bill which has basically been presented by one party with the input of only one party, is that it may result in unfairness to other groups which have not been consulted and maybe leave solutions that might not be otherwise considered. Based on my experience, there has not been a comprehensive review of this act and there are a number of issues that should be or can be dealt with.

For example, when I was speaking to municipalities at their conference, they express ed frustration at the inability to collect school taxes when there is a successful reduction. It is reduced. Not only do they have to remit the tax as the taxpayer remitted to them, but they then have to remit the school taxes which were remitted to the schools. They cannot recover those from the schools. That is a major problem for municipalities.

Another concern, and this is not always the case, but there seems to be some frustration that assessors do not, perhaps, have the time to prepare accurate assessments, and that the municipalities, with respect to some of the bigger items, are left with uncertainty for a couple of years as to what will really happen in their municipality. With respect to the background, and I am getting now to the solutions. Is the solution really to give this last-minute appeal to the assessor, or should it be dealt with earlier? We have heard other presenters say, we used to have full co-operation. Sometimes, it still happens.

I am not going to say it does not happen, but it depends a lot on the personality of the assessors that you are working with. Some people will be very forthright. They will provide and share with you the information that they have gathered, at your expense as a taxpayer. It is your infor mation on your file. Some people will refuse to provide it until 15 days before the hearing, when they are required to provide it. That, I believe, speaks to where the solution ought to be.

I think the move to have all these meetings in rural Manitoba and some of them in Winnipeg-some of them were not able to be conducted with an open-ended approach-is a good approach, and, perhaps, is a solution which ought to be explored, more so than this kind of backdoor, or end, approach. I get back to the three years to prepare an accurate evaluation. Prior to 19 90, the assess ment appeals were annual. So that, I will admit, put an awful lot of pressure on the assessor to come up each year with a valuation of the property in each year, as to what the market was.

Moved away from that, and we said, we will give the assessors three years. They have three years to gather the information, make an accurate assessment, and, that, even though it is unfair to the taxpayer because there may be movements in the market, we will hold him to that, because we want the assessors to have enough time. Now it turns out that the 1990 legislation, which provided three years, was not sufficient. There was an extension, and now it is a four-year general assessment. So they have a further year to gather relevant information.

Now I know there are mass appraisals, but in each property owner for any significant type

June 28, 200 1 LEGISLATIVE ASSEMBLY OF MANITOBA 97 of property, the assessor has a full fact sheet of all the physical characteristics of the property. So that when the hotel association comes, and says, this was subject to the assessment and it was $800,000 and it went up to $2.7, I do not know if those were the exact numbers, the physical characteristics on the file of the assessor have not changed. If they changed, there are building permits, and there are provisions in the act that require that to be put through, and those changes to be considered. But that fundamental information is there.

So there is no reason, if you know all the site-specific information based on your file, that you cannot provide an accurate evaluation if you only have to do it once every four years. would submit that allowing these amendments would only encourage sloppiness and incomplete work by assessors. I would urge this Government to focus, rather, on full disclosure at a very early stage, and by that I mean mandatory.

Right now, there is a reverse onus provision in the legislation that says if I, as a taxpayer, do not provide information of my property, I am penalized in the legislation and the way that the hearing will work. It will be automatically against me, and there will be penalties, even on the tax refunds. I will not get the full effect of them. But the reverse is not true.

If I go to the assessor, and I want the information on my own property, and ask for it when I get my notice of assessment, unless I have a co-operative assessor, there is no penalty and no recourse for that ordinary taxpayer to have full access to that file and full access to the information used by the assessor to arrive at that assessment. Going along those lines, all the information that is gathered by the assessor, either lease, data information, et cetera, Mr. Chair, that is all gathered through taxpayer expense.

It seems rather unfair that the taxpayer cannot have access to that information, at a very early stage, and discuss in a reasonable way. When I get to arbitration and mediation, that is where the presentation to that group was wondering, well, why do we not have more informal meetings, and avoid all these appeals and full disclosure at an earlier stage? * (20:40) Windfall for the taxing authority, page 4 of my presentation. Courts-and I am not pulling this out of the hat. The way the system works is you have all these assessments. They are put into place. Once you have the assessments-and they start early.

For example, for 2002 we saw they came out in the spring. Those have a chance to proceed through negotiations, through revisions, to be finalized. Once you have your assessment base finalized, then you fix the mill rate. Any increase over that kind of base of assessment, which is what is happening here after the fact, results in a windfall because, really, you are basing your budget on a known assessment. If you increase assessments, you are getting wind falls for the taxing authority.

Courts have held that that is a major reason why we should not allow these things to come after the fact and later in the day when the whole process has already seen its logical progress. With respect to allowing the assessor to appeal at any time, and I know, Madam Minister, that you have dealt with that in part, the assessor does have for every year the possibility to appeal. So for that year where you have your base and it has gone through the revision system, sure, there may not be an adjustment upward.

But for the year following that, if the assessor feels that he made a blatant error, he did not do his work the first time or was not able to in the mass assessment appeal process, he can appeal the following year. For the next three years following in that general assessment appeal, there will be a fair assess ment based on a decision. That is why I get into the windfall situation and then the appeal situation in the following year, again, because when you have the appeal in the following year, if the assessor felt it was too low, you get the full assessment.

You get the mill rate established on that full assessment and the system works. There is no need to tinker with it this way. We have heard, and my experience generally shows it to be true, that assessors will only do an on-site inspection prior to the Municipal Board hearing. Now, what does that do, for all practical intents and purposes? There have been several cases that have gone through on major tax reductions, including some of

98 LEGI SLATIVE ASSEMBLY OF MANITOBA June 28, 200 1 which I have been involved with, involving several hundreds of thousands of dollars that have only been heard two or three years after a relevant assessment, sometimes even more, at the Municipal Board level. We are talking about businesses because we also heard that this will probably not affect very many residential properties for businesses. Auditors are going to have to report annually. They will say: What are your liabilities? Well, we do not have any claims outstanding, because the assessor has not filed one.

He did not file one before the Board of Revision, he did not inspect the property. He did not file one this year because it is not before the Municipal Board yet. Three years later it is before the Municipal Board. He decides just bef ore the Municipal Board hearing to do an on-site inspection, gives his I 0-day notice, and then all of a sudden, what happens? It will be retroactive to two or three years back. That was the case that I was involved in, Repap.

Whatever the decision was by the Municipal Board three years later, because it is a valuation as revised, gets carried forward in each of the years from the date of the initial reference year that it was appealed. So a business could face a three-year increase as a result of filing an appeal three years down the road ten days before a Municipal Board hearing, not have any notice in writing until that time, and be faced with that uncertainty because he has something sitting before the Municipal Board on a reduction. Mr. Chairperson: One minute, sir. Mr. Hacault: Thank you.

The system, in my submission, already favours the assessor. The taxpayer pays the assessor's wages to do a proper job on the assessment. The taxpayer pays for the legal representation before the Municipal Board for the assessor. There are no consequences or refund. The taxpayer has to pay if he does not have any knowledge for the appraiser or consultant, and the taxpayer, if he is foolish enough to hire somebody like me, has to pay somebody like me. So he is faced with all these costs and he has a very real decision to make, especially with that reference of a threat.

If I can save $5,0 00 of property taxes, but to do a good job I have to hire an appraiser, I have to hire a lawyer, it is not worthwhile doing my property tax appeal. This would only tilt the scales further in favour of the assessor. Thank you very much. I would be more than pleased to answer your questions as best as I can. Mr. Chairperson: Thank you for your presen tation, sir. I have Mr. Derkach, Mr. Selinger, and the honourable minister. Mr. Derkach: Mr. Hacault, thank you for your presentation.

I think perhaps when you are referring to the experience that you have had with assessors, and I hate to say this, it is largely with the city assessors, not necessarily the provincial assessors. I have to defend the provincial assessment branch, because I know the experiences we have had in my part of the world have certainly been very positive in terms of the relationship with the assessor, i.e., explanations, information being extended to the taxpayer long bef ore it is necessary to use.

I think that is an approach that perhaps I would encourage the minister to take up with the City of Winnipeg Assessment branch, if that is possible, because in the long run it is going to serve all of us better, in terms of taxpayers. Mr. Hacault, I just want to ask you with regard to the appeal process, you have repre sented businesses, I am sure, of all sizes. It has been my experience that the assessment branch always has information that is more current and certainly has comparisons that business and perhaps even you as a representative of those businesses would not have.

In your estimation, do you think a fairer system would be one where all the information is shared with everyone and then you can go forward with an appeal based on all of the facts that are laid out before you with the assistance of the assessor as well? Mr. Hacault: Yes, definitely. That is why I sug gest looking at this and perhaps deferring it and getting some input from other parties. I will agree with your statement. Even with the city assessors, it is not everyone who has that kind of approach. I am not going to say that they do, but it is a hit and miss.

Some people will be very protective of their information, not want to share anything.

June 28, 200 1 LEGISLA TIVE ASSEMBLY OF MANITOBA 99 I would encourage, and in fact the courts and the whole system, people complain about costs. Well, as soon as you have

Document details

Collection	Manitoba — Debates (Hansard)
Citation	37-2-ma3
Type	hansard
Volume / chapter	37th 2nd hansardpdf ma3.pdf
Language	en
Format	pdf
Source	PROVINCIAL
Identifier	709bba77b8a92c301d33e942e136aa9a5ba7f4ef

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