What Do Higher Property Values Mean for Taxes?

With all the discussion, misinformation, speculation and confusion about the impact of soaring assessment rates on property taxes, the City thought it was a good idea to public this detailed explanation and offer it to local news outlets. I agree and I hope it calms some of the nerves out there!

COQUITLAM, BC, Jan. 10, 2017 - A higher assessed property value is usually good news for property owners – it means the value of their investment is going up.

But does a higher assessed value also necessarily mean higher property taxes? Not exactly.

When a city plans its budget for the year, the amount it needs to collect (revenue) is based solely on the services it plans to provide (expenditures). Let’s say this amount is $100 million. No matter how much property values go up or down, the City still only needs to collect $100 million to do its job for the year.

In a separate process, the BC Assessment Authority, a provincial body, determines the value of all properties across the province, based on factors such as age, location, size, improvements and the value of recent nearby sales.  The City is not responsible for property assessments, however the City is mandated by provincial legislation to tax the homeowners based on the assessed value of their property.

These two processes come together when cities set their tax rate (sometimes referred to as the mill rate): the calculation that determines each property’s share of the cost to run the city that year. If average assessed values go up, the tax rate goes down to compensate. The opposite is true if values decrease. But in the end, working from the example above, only $100 million is collected.

2017 Tax Increase
In Coquitlam, the 2017 tax increase for the average residence is 2.48%, which is in line with the Consumer Price Index (CPI).   As the cost of maintaining service levels continues to rise, the City is constantly striving to find efficiencies in the provision of services, as well as other sources of revenue. As such, this is the lowest tax increase in 25 years.

What this means is that if your home’s assessed value went up by the average (33%), your taxes will go up 2.48%. However, if your assessed value increased by more than the average, your taxes will increase by more than 2.48%. However, it still won’t increase at the same percentage as your property assessment increase. Similarly, homes with a below-average increase in their assessment could find themselves paying lower taxes than last year.

Homeowner Grant 
The Homeowner Grant is a provincial grant outside of the City’s control, but the City is responsible for administering the Grant on the province’s behalf. The Homeowner Grant assessment threshold was raised in 2017 to $1.6M at which point the grant is gradually reduced by $5 per $1,000 value.  Therefore depending on your property assessment, you may not lose the entire grant, just a portion of it.

Municipalities share the publics’ concern about the need to ensure the Homeowner Grant remains available as the assessed value of B.C. real estate continues to rise and we will continue to work with the province on this issue.

Any questions related to your property assessment should be directed to BC Assessment Authority (1-866-825-8322).  The deadline to appeal your assessment is Jan. 31.

For information on property taxes in Coquitlam, visit www.coquitlam.ca/propertytaxes.


Media contact:
Rhonda Anderson, Revenue Services Manager
604-927-3920

What those assessments mean

Central Coquitlam residential high rises. (Photo by Terry O)

A friend of mine who is a long-time Coquitlam resident approached me at a party a few days ago and said he wanted to shake my hand. I asked why, and he said that it was obvious that I was doing a great job helping to run the City because he had just learned that the assessment on his home had risen by more than $60,000 and so he was pleased that his net worth had risen so sharply, so quickly.

As appreciative as I was of the compliment, I had to tell him that the increased assessment of that magnitude also likely means that he will be facing a higher-than-average property-tax increase this year -- not in the realm of Port Moody's average 6.65% jump, mind you, but still above the average 3.34% hike that Coquitlam homeowners will face this year.

He seemed a bit confused by my comment, so I did some explaining. And the thought then struck me that many other homeowners may be somewhat perplexed by our property-tax system as well, so here's an explanation.

When I joined with the majority on Council in the late fall in voting 8-1 in favour of adopting our most recent budget (more about which I'll discuss below), I did so knowing full well that the 3.34% residential increase would be applied exactly against only those whose property value rose (or fell) by the exact same figure that the average residential property's value in Coquitlam rose (or fell). And it turns out that the average Coquitlam home enjoyed an increase of 5.59% in its value, according to assessment figures made public earlier this month.

With this assessment figure now in hand, and with the knowledge of what its ultimate revenue needs for the year are, the City will now set one universal residential mill rate (which is amount of tax payable per dollar of the assessed value of a property) and apply that rate evenly against all residential properties. Follow the logic, and you'll see that if your home rose in value more than the average 5.59%, your tax increase will be more than 3.34%, and if it rose less (or even fell somewhat), your increase will be less or maybe you'll even enjoy a decrease.

I'm guessing that my friend's $60,000-plus assessment increase represents something like a 7% or 8% increase in assessed value, so his property-tax increase will be greater than the 3.34% average. For my part, our now-long-in-the-tooth Eagle Ridge home recorded an assessment increase of just under 1%, which means our property-tax increase will be lower than the 3.34% average.

(You find more details about the City's five-year financial plan here.)

And, while we're on the subject of the budget, I'd like to take this opportunity to get a few more things on the record. First, Council actually passed a budget increase of 2.95%.  The average homeowner faces the higher, 3.34% increase, because Council embraced a one-point "tax shift" that sees the commercial/business sector facing an increase of only 2.34%. We did this because the business-tax rate in Coquitlam is among the highest in the region, and we are attempting to lower it to somewhere around the middle of the pack.

Some readers might recall that, in the last election, I signed the Canadian Federation of Independent Businesses' pledge, promising to work towards business-tax reductions. I am happy to report that, for the second year in a row, the majority of Council has voted for a one-point tax shift.

I am also pleased that, for the second year in a row, we have reduced the overall rate of property-tax increase in the City -- another one of my promises. As stated above, the average increase for 2013 is 2.95%; in 2012, it was 3.16%; and in 2011, it was 3.18%.

I believe we are headed in the right direction, and I will continue to work towards greater fiscal responsibility and a lower rate of property-tax-increase growth, while also meeting the legitimate needs of Coquitlam residents.

Some necessary distinctions

The Coquitlam Now's story, on the election of two new members to Coquitlam Council (Craig Hodge and me), conveniently runs on the same page (A7, Nov. 23 issue) as my "Thank You Coquitlam!" ad.
This ad reads, in part, "I promise to work hard on your behalf." But exactly what will be my priority? The answer is found, also in part, in the above-mentioned newspaper story. But the story, by the fine reporter John Kurucz, doesn't quite get it right.
Mr. Kurucz correctly quotes me as saying that I (and, moreover, a great many of the voters I talked with over the last two or three months) believe that "property tax increases"(this emphasis, added by me, is key) have been "way too high."
However, Mr. Kurucz paraphrases this position by saying that my platform "consisted of promises to rein in municipal spending and reduce property taxes."
This is only partially correct. I did say I would work to rein in municipal spending by limiting the increases in operating expenditures. But, I never said I would work to actually reduce property taxes. What I said is that I would work dilegently to reduce the rate of growth of those property taxes, and that I would be extremely happy if there was no growth.
But to actually reduce property taxes? While this would be wonderful, I don't think it's a realistic goal, and I never held that out as an option.
Furthermore, at the beginning of the campaign, I signed the CFIB's Taxpayer Pledge, in which I promised to rein in spending increases to no more than what you'd expect with inflation and population growth.
Given this, and given that there's a direct link between spending increases and property-tax increases, it can be concluded that I am not necessarily opposed to property-tax increases driven by the need for the city to raise revenues to keep up with inflation.
On the other hand, increased spending driven by increased population should not necessarily lead to higher property taxes; this is because the broader tax base created by that increased population will, by itself, generate more revenue without an increase in property tax rates.
Photo shows me signing the CFIB pledge.