Assessment Review Underway

Municipal Affairs is conducting a review of how some regulated property is assessed in Alberta. Results of the review could have a significant impact on the revenue of municipalities who have a larger amount of linear property.

Scope of the Review

The Regulated Assessment Model Review is currently focused on machinery and equipment, wells and pipelines (a.k.a. linear property). The formula to assess these regulated properties is based on four components:

• Construction costs
• Assessment Year Modifier (AYM) process
• Depreciation
• Additional depreciation (if applicable)

Significance

All components of the model will be included in the review, but the AYM is likely to garner the most attention as it has such a significant impact on the revenue collected on regulated properties - particularly by rural municipalities. For example, rural municipalities raised significant concerns about a decision by the province not to increase the AYM on wells and pipelines in 2018 despite the recommendations of the province’s contracted industry experts. The decision was reported to impact the forecasted revenue of some rural municipalities by millions of dollars. Although AYM does not have as much of a direct effect on urban municipalities, the revenue from linear property is a significant factor in cost and revenue sharing negotiations taking place as part of Intermunicipal Collaboration Framework Discussions. 

Timelines for AUMA Engagement

Municipal Affairs plans to work with AUMA and RMA in fall 2019 to consider potential impacts that changes to the AYM process and the broader assessment model may have on municipalities.

Assuming the review proceeds as scheduled, Municipal Affairs expects to have the review completed in time for the changes to be reflected in the 2019 Minister’s Guidelines for Linear Property, Machinery and Equipment, Railway and Farm Land, which would come into effect for the 2020 tax year.