Property tax collection has been around for hundreds, perhaps thousands of years in various forms, but in Calgary, the current market value assessment system just turned 25.
That’s right, back in 1999, right before the turn of the millennium, Calgary evolved its property taxation system to the one it uses today. On March 8, 1999, the City of Calgary mailed the 1999 property assessments to be used for citizens’ 1999 property taxes.
The Calgary Herald, at the time, dedicated a couple of pages to coverage of the tax switch, highlighting the pros and cons and the positive and negative impacts on citizens. Some advertisements in the same edition included pop-up open houses scattered all over the city to help people understand – and question – the new method.
Market value assessment is the mass appraisal technique used to determine the value of both residential and non-residential properties to generate a property tax value through the application of a mill rate. According to the City of Calgary website, market values are determined by one of three methods: Real estate sales comparisons (July 1 of prior year), income generated by the property, or land value and the depreciated replacement cost of an improvement.
It was a switch from the fair actual value system, according to Daniel Lidgren, manager of account management for assessment and tax at the City of Calgary, and acting department director.
Before the current market value assessment system, only the land value was assessed at market value (excluding agricultural land). From there, a detailed account of a structure was done for things like size, house type, concrete slab, drywall, etc.
“There’d be basically a prescribed formula for every type of building material used in the building,” Lidgren said.
Assessments were done every eight years before 1999
The effort required to undertake property assessments was immense, Lidgren said.
“It was very time-consuming. It was very process-driven,” he said.
“So, we would have to spend a lot of time going to properties, inspecting them in great detail. Rather than today, when we go inspect, and we do inspect a lot of properties, we don’t have to itemize every bit of building material that was used.”
Lidgren said that building permits were also helpful in gathering information on homes. However, when changes in building materials came along, so would new guidance from the province to update manuals that helped formulate values.
While some homes may have been similar on the outside, there were often differences on the inside, or on the property itself. Lidgren said back then, they’d have to know those nuances as well.
“I would also mention that in the previous system, the fair actual value system, there was a requirement not to do the assessments on an annual basis, but it was up to an eight-year cycle,” Lidgren said.
“That was really the only way to do it.”
That was a big disadvantage with the fair actual value system, according to Dr. Gillian Petit, research associate in the University of Calgary’s Department of Economics.
“You’d get your assessment in 1980, then you’d be reassessed in 1988, and we all know house values appreciate, so all of a sudden, your housing value, your housing assessment would jump and so would your property taxes – significantly,” Petit said.
The other disadvantage was the fact it came down to some accounting value in a manual, Petit said.
“We know that not all single detached houses are going to sell for the same price,” she said.
“Under the current market value system, it’s much more fair that you’re actually assessed at the value your house would probably sell for.”
Served Calgary well over a quarter century
Dr. Petit said that, generally speaking, the market value system has performed well over the years, mainly because of its overall fairness.
“We also think about property taxes, kind of like a wealth tax, if you will,” she said.
“It’s the value of an asset, the value of your home. As the value of your home increases, say with inflation, and one day, you’re hopefully going to cash in on that.”
Petit also said during that time, the value of City services also increased, commensurate with the level of services that you’re using.
Calgary Mayor Jyoti Gondek, however, said it’s an “unbelievably bad” system. Mayor Gondek, who led the Westman Centre for Real Estate Studies at the University of Calgary’s Haskayne School of Business and sat on the Calgary Planning Commission before becoming a councillor and mayor, said the system is regressive.
“The woman that has lived in her home for 50 years in an area that has gentrified, and her home value has gone up exponentially over time, but she’s on a fixed income,” she said.
“That’s not fair to her.”
The 1999 Calgary Herald piece included one such woman who had owned her 900-square-foot home in Elbow Park since 1935. The story didn’t indicate how much Mary Betts would have to pay extra, just that 95 per cent of Elbow Park residents would pay more.
The mayor said that other levels of government tax based on income – that’s what she’d like to see.
“We’re basing it on an asset because we have to – it is mandated within the Municipal Government Act. So, I don’t love this process. I would much rather get a share of income tax,” she said.
It is the system the City of Calgary has, though the mayor said that other provinces have a branch that handles the assessment process. In Ontario, for example, the Municipal Property Assessment Corporation (MPAC) handles all property assessments in that province. That organization is funded by all municipalities.
“I’d be very interested in seeing if we could achieve greater economies of scale by having a provincial arm that does this,” Mayor Gondek said.
Other options or improvements?
There are few other mainstream options to use instead of market value assessments. Some cities and countries use an asset-based system combined with other things like a utility tax, consumption tax and a municipal services tax.
In some jurisdictions a so-called Stamp Tax is used, whereby a certain portion of the home sales price is charged to the owner upon purchase (Example: if the Stamp Tax were 10 per cent on a $400,000 home, the owner would pay $40,000).
Lidgren said some areas incorporating market value assessment do so on a longer cycle – like three or four years. He thinks, while the systems may have a few downsides, the way that Calgary does it is the best system available.
One of the key advantages is clarity.
“I think it’s more easy for the public to understand whether or not their assessment is fair or not, particularly with the access to information that exists today,” he said.
Lidgren wasn’t sure if the system could or should be tweaked.
“We’re always striving to improve; get better information, better access for information, getting better at communicating with property owners, so we have a better understanding of their properties,” he said.
Dr. Petit said they could go one step further, too. Make it clearer when tax time comes how those taxes are apportioned.
“I think it would be interesting or helpful if the city could show homeowners how much of that property tax increase is going to new services, to funding the increasing cost of existing services, and what’s going to the increase in tax share,” she said.
“I think it helps with the public debate because without knowing why property taxes are increasing, we can’t say, ‘Well, is it fair or is it not fair?’”
Overall, Petit said it’s a good and fair system. It could also be fairer. For one, there could be a program in place for seniors or lower-income Calgarians that addressed the regressivity of the system Mayor Gondek referred to by allowing some of the property tax to be deferred until the sale of the (likely appreciated) home.
Also, some of the research she’s doing is on equity in municipal property taxes – and some of the disparity between certain similar-type home assessments. Dr. Petit said it’s happening primarily in east and northeast Calgary, areas where there’s a higher proportion of immigrant or racialized citizens.
She said the inequities they’re seeing are not because citizens are immigrants or racialized, per se, but perhaps they aren’t engaging with the system.
“They’re not appealing their assessment. They’re not updating the city with respect to the condition of their housing. These kinds of things,” Petit said.
The goal would be to bring that research to the City of Calgary to find ways to narrow the inequity that does exist in some neighbourhoods.
Not totally gone in Calgary
The fair actual value system, or traces of it, still exist in the city, Lidgren said. So, it hasn’t been completely abolished.
A version of it is still used on specialized properties within the city, like pipelines, wells, electrical power systems and other infrastructure.
“It has its advantages in that those properties rarely ever sell,” Lidgren said.
“So there has to be some method to do those assessments. But at the same time, it’s very technical, very process-driven.
“Definitely, the market value system lends itself very well to doing things quicker, more efficiently and in an easy manner.”
Data lens: Calgary’s 2024 Assessment – by Aryn Toombs
LiveWire Calgary, using the City of Calgary’s property assessment rolls for 2023 and 2024, looked at the residential assessment values for each of the categories of home types in the city.
Each of these home use types is identified on the property assessment rolls by a sub-property use code, such as RE0110, which indicates a single detached home.
By tallying up each of these sub-property use types, LWC was able to find the median assessment for the entire city for that type of home, and also further subdivide those homes by community, to find the median assessment values for that area of the city.
What LWC found was that the assessment values for the entire city were broadly in line with what City of Calgary City Assessor and Director of Assessment and Tax, Eddie Lee, announced on Jan. 3.
Lee had, at that time, said that the median assessment for single residential Calgary homes was $610,000, a $55,000 increase from 2023. That calculation consisted of combining single detached, single detached with backyard suite, duplex, and duplex buildings together, along with residential acreages.
Looking at the single home category, detached homes were assessed at slightly above the median increase of $55,000 by $1,650, whereas duplex homes that were individually assessed as part of a duplex saw a decrease by $5,000 from that median.
More expensive properties, like detached homes with separate backyard suites saw a larger increase over the median at $71,250. And duplexes that were assessed as an entire complex instead of as individual units, saw the largest increase over the 2023 to 2024 median at $72,500—or $17,500 over the median.
Likewise, the median residential condominium increase was said to be $295,000, representing a $40,000 increase from 2023. That category included both low and high-rise condominiums, along with townhouses and townhouse complexes.
Low-rise apartment condos, and both townhouses and townhouse complexes saw above-the-median increases, while low-rise rental condos and high-rise condos of both apartment and rental types saw below-median increases in assessments.
