CASUAL LEGAL: The Distinction Between Valuation Standards and Assessment Classes

Attention: AMSC Members – Please distribute to all appropriate personnel

The Distinction Between Valuation Standards and Assessment Classes

By Michael E. Swanberg

Reynolds Mirth Richards Farmer LLP

AMSC Casual Legal Service Provider

In a recent decision, the Alberta Court of Appeal discussed the distinction between valuation standards and assessment classes in the context of municipal assessments. Generally, a “valuation standard” refers to the methodology by which an assessor determines the assessed value of a particular property. In most cases, the valuation standard will be “market value”, which requires the assessor to use mass appraisal techniques to determine a fair and equitable valuation for the particular property. However, other types of property are subject to other valuation standards. For example, section 7(1)(b) of the Matters Relating to Assessment and Taxation Regulation, 2018 indicates that, if a parcel is “used for farming operations”, then the “agricultural use” valuation standard will apply (which is a set valuation formula prescribed by Ministerial Order).

Assessors are also required to assign an assessment class to properties under section 297 of the Municipal Government Act. In their taxation bylaws, municipalities are able to set different mill rates for different assessment classes, so the assignment of an assessment class by the assessor will determine the mill rate that will apply to calculate the amount of municipal taxes (and other levies) owing. For example, under section 297(4)(a), assessors must classify a property as “farm land” if it is “used for farming operations.”

In Associated Developers Ltd. v. Edmonton (City), 2020 ABCA 253, the Alberta Court of Appeal held statutory provisions affecting “valuation standards” do not affect statutory provisions affecting “assessment classes.” At issue was section 7(3)(d) of MRAT 2018, which indicates that, if a property used for farming operations can be serviced by water and sewer lines located adjacent to the parcel, then a 3-acre portion of that parcel must be assessed using the “market value” valuation standard instead of the “agricultural use” valuation standard. The question was whether this section also requires the assessor to assign a different assessment class to the 3-acre parcel, despite being used for farming operations.

The Court of Appeal determined section 7(3)(d) only applies to set the valuation standard for the property, and not its assessment class. Therefore, the 3-acre parcel should be assessed using the “market value” valuation standard (despite being used for farming operations), but should still be classified as “farm land” when determining the assessment class. In other words, sections that determine a property’s valuation standard will not necessarily affect the property’s assessment class.

The Court of Appeal’s decision in Associated Developers marks a change from how many Composite Assessment Review Boards have interpreted section 7(3) of MRAT 2018 in the past. Municipalities should consult with their assessors to determine if this decision will have any impact on their own assessments going forward.

To access AMSC’s Casual Legal Helpline, AUMA members can call toll-free to 1-800-661-7673 or email casuallegal [at] amsc.ca and reach the municipal legal experts at Reynolds Mirth Richards and Farmer LLP. For more information on the Casual Legal Service, please contact riskcontrol [at] auma.ca, or call 310-AUMA (2862) to speak to AUMA’s Risk Management staff. Any Regular or Associate member of the AUMA can access the Casual Legal Service.

DISCLAIMER: This article is meant to provide information only and is not intended to provide legal advice. You should seek the advice of legal counsel to address your specific set of circumstances. Although every effort has been made to provide current and accurate information, changes to the law may cause the information in this article to be outdated.