Things have been relatively quiet of late at Thunder Bay City Council all things considered. Indeed, for the most part, this will be a relatively subdued year barring any unfortunate issues rearing their head because we are moving into the final year before an election next fall. Among the items that have emerged over the past few weeks include a new community well-being plan, piloting work from home projects, recognizing the National Day for Truth and Reconciliation, awareness campaigns for incident reporting in anti-racism matters, and vaccine policies for city workers.
In terms of direct services and expenditures, Thunder Bay is
moving forward with the curbside collection for organics by initiating the
process for studying the matter – that should take the better part of a year –
and is also going to spend an additional $1.5 million for the Boulevard Lake
Dam. And as a bonus, there was the debate
over whether residents be allowed to continue using plastic bags for garbage
pick-up or garbage bins made mandatory. None of these have been exceptionally attention getting but then it is summer and Thunder Bay's camp culture means a lot of people have gone to the countryside and are not paying much attention.
What issues have been rather quiet? Well, after a discussion about the multi-use turf facility being back on the agenda in June to solicit private sector proposals little has been said since. After a vote to move forward with a plebiscite to reduce its size and forwarding the matter to administration for a report, again little more in terms of what has been done since. There is also the matter of the budget – one expects some type of report soon on the budgetary position and the size of a likely surplus as we approach year end. And of course, there is the matter of the ongoing leaky pipe scenario which is still seeing homes dig up their front lawns as corroded service pipes are replaced in the wake of the addition of sodium hydroxide – not to mention interior pipes leaking and the resulting damage. Which brings me to the main event.
The damage that is being done in literally thousands of homes across the city by leaky pipes is resulting in repairs and often substantial renovations. Another unintended fringe benefit to all this – aside from water connection fee revenue to the city and a lot of employment for trades people and landscapers – is the potential of a rising property tax base in the wake of the property renovations. Even if property tax rate stays the same, the expanding base due to higher valuations on residential properties reflecting enhanced value due to renovations may be a factor in increasing the City of Thunder Bay’s property tax revenues. With increases in the tax rate, revenue increases could be greater. Far-fetched? Maybe and then maybe not.
The Municipal Property Assessment Corporation (MPAC) establishes the value of properties for taxation purposes using a method known as current value assessment. The most used valuation method for residential properties is what is known as direct comparison which analyzes the recent sales of comparable properties. However, it is not just the sale price that is used in the multiple regression models assigning a residential property but up to 200 factors using data from land title documents, building permits, on-site inspection and communications with property owners and reviews of sales transactions. In the structural features segment of the variable sets there is included the renovation and year of renovation.
The five major factors as reflected by ultimate weighting of results are the age of the buildings, the square footage of the living area, the location (reflected by recent sales in your area), lot size and construction quality. However, renovations do enter into the formula, and it remains to be seen if the increase in renovations as reflected by building permits issued to properties to conduct their renovations and repairs and any onsite inspections will ultimately also be a factor in increasing the total value of the assessment in Thunder Bay.
Homeowners in Thunder Bay affected by the leaky pipes fiasco
have had to contend with disruption and repairs to their property, the
inconvenience of having their water supply interrupted for a period, the stress
of worrying about future leaky pipes, the cost of repairs if insurance coverage
is inadequate, and future increase in home insurance costs as insurance companies
re-calibrate their rates to deal with the higher risk of insuring properties in
Thunder Bay. Now to all this is the prospect
that if future budgets begin to raise rates at historic levels of 3-4 percent,
some of the increase in taxes will inevitably reflect the effect of the leaky
pipe repairs on property values. And of course for the average homeowner, it will be difficult to separate any effect of leaky pipe renovations on assessed values from the increase in home prices that has occurred over the last year.
True, City Council has directed administration to restrain increases to 2.25 percent for 2022 and that will probably happen given the election coming in Fall 2022. However, once a four year mandate has been granted after next fall, be prepared for much higher rate increases with the increase in assessments a potential additional factor.
