HANSARD

NOVA SCOTIA HOUSE OF ASSEMBLY

COMMITTEE

ON

PUBLIC ACCOUNTS

Wednesday, November 22, 2006

LEGISLATIVE CHAMBER

Service Nova Scotia and Municipal Relations

Printed and Published by Nova Scotia Hansard Reporting Services

PUBLIC ACCOUNTS COMMITTEE

Ms. Maureen MacDonald (Chair)

Mr. Chuck Porter (Vice-Chairman)

Mr. Alfred MacLeod

Mr. Keith Bain

Mr. Graham Steele

Mr. David Wilson (Sackville-Cobequid)

Mr. Keith Colwell

Mr. Stephen MacNeil

Ms. Diana Whalen

[Mr. Alfred Macleod was replaced by Mr. Patrick Dunn.]

In Attendance:

Ms. Mora Stevens

Legislative Committee Clerk

Mr. Jaques Lapointe

Auditor General of Nova Scotia

Mr. Alan Horgan

Assistant Auditor General

Witnesses

Service Nova Scotia and Municipal Relations

Mr. Greg Keefe

Deputy Minister

Mr. Nathan Gorall

Executive Director, Municipal Services

Ms. Kathy Gillis

Executive Director, Assessment Services

[Page 1]

HALIFAX, WEDNESDAY, NOVEMBER 22, 2006

STANDING COMMITTEE ON PUBLIC ACCOUNTS

9:00 A.M.

CHAIR

Ms. Maureen MacDonald

VICE-CHAIRMAN

Mr. Chuck Porter

MADAM CHAIR: Good Morning. I'd like to call the committee to order, please. Today we have with us witnesses from Service Nova Scotia and Municipal Relations, regarding property assessment. We will begin in the usual manner with introductions from the members and the Auditor General and his staff, as well as our witnesses. We will afford a brief opportunity to Mr. Keefe, the Deputy Minister, to make some opening comments and we will begin with an opening round of questions of 20 minutes, per Party caucus, and we'll proceed from there.

So we'll begin with the introductions.

[The committee members introduced themselves.]

[The witnesses introduced themselves.]

MADAM CHAIR: Thank you. Mr. Keefe, the floor is yours for some opening comments.

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[Page 2]

MR. GREG KEEFE: Good morning, Madam Chair, and thank you very much to you and your committee for the opportunity to share the accomplishments and activities of Assessment Services, a division of Service Nova Scotia and Municipal Relations. Staff, Kathy Gillis, Executive Director of Assessment Services; Nathan Gorall, Executive Director of Municipal Services; and I look forward to answering your questions. Kathy is here to help provide detail on the operations of assessment and Nathan will assist if there are any questions on the municipal taxation side.

As you know, earlier this month, Service Nova Scotia and Municipal Relations Minister Jamie Muir introduced legislation that would establish the Property Valuation Services Corporation. This legislation will see Assessment Services transition from a government division to a municipally controlled, not for-profit agency beginning in April, 2007. My opening comments today focus on the history of this proposed transition and the reasons why Assessment Services is well-positioned as an effective organization to make the transition with success.

Assessment Services has been working towards this transition for some time. Since April 2001, Assessment Services has operated on a cost- recovery basis, with 100 per cent of the budget paid for by municipalities. In 2005, this budget was just over $14 million, and yet, even though they paid 100 per cent of the budget, municipalities had no formal input into the products or services they received from assessment. Therefore, we hired an external consultant to evaluate alternate governance models. The consultants recommended that one entity outside the direct operation and control of the provincial government deliver assessment services. Further, they recommended the province maintain responsibility for the legislative standards.

With these recommendations, and as a result of negotiations between the province and the UNSM, the minister appointed an Interim Assessment Management Board in January 2005. Predominately comprised of municipal representatives, the board has been part of the decision- making process affecting the ongoing and effective delivery of property assessment services in Nova Scotia. Under this mandate, the board also made recommendations to the UNSM and to the minister, regarding the preferred operation of the delivery of assessment services.

In October, 2005, UNSM met and passed a resolution widely supporting this establishment of this organization, separate from government; in response, the board made the request to the province to go forward with this initiative. Then in December of 2005, Cabinet gave Assessment Services approval to investigate and make recommendations about becoming an independent entity. A provincial cross-sectional team of Assessment staff, other staff from Service Nova Scotia & Municipal Relations divisions, and other departments created a business case for moving to a municipally controlled organization.

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We presented the case to Cabinet this past May. It included details about governance, finance, operations, technology, human resources, and the effects these changes will create, both internally and externally. Assessment staff was advised to develop an implementation plan and draft legislation for the current sitting of the House. In addition, in June of this year, the minister approved the creation of a transitional board to replace the internal board. The membership remains the same, but for the addition of myself, the deputy minister, as a full-time, ex officio, non-voting member. The transitional board provides continuity and will become part of the official Assessment Management Board. So you see, we've been working for a number of years to reach the stage where we are now and the legislation that is now before the House.

I'm confident in saying that Assessment Services is a robust, solid organization that is ready to make the transition outside of government. We are mandated by provincial legislation to provide an accurate, dependable, and equitable market-based property assessment roll to Nova Scotia's 55 municipalities. We provide this on time and on budget each year. We are proud of the accuracy of this assessment roll and we are proud that our clients, the municipalities and property owners, are satisfied with the service.

How do we know this? We measure customer satisfaction every year. For example, 96 per cent of municipal clients say assessment is professional, courteous and friendly, and we score in the mid-80s for the information we provide and how easy we are to contact; 92 per cent of property owners are satisfied overall with our assessments. These and other satisfaction measures are in our annual report, we have given copies of that to the committee. We also see that despite rising assessments, appeals have fallen from over 18,000 in 1998 to about 10,000 now.

We have 162 committed, experienced and highly trained staff who generate extensive and important property information for municipal units, property owners and other stakeholders each year. Their major activities include the preparation of the annual and preliminary assessment roles; management of the appeal process; coordination of client relations and communications; advancing business standards; enhancing assessment technology; managing special programs such as PAIP; and implementation of the CAP on seasonal and tourist business programs. The total assessment role for 2006 was just over $60 billion, representing almost 575,000 residential and commercial accounts.

We depend upon the knowledge and experience of our staff and the capability of our technology to help us collect, store and analyze data for those 575,000 accounts. The accuracy and reliability of assessment roles depends on a flexible evaluation system. That is why my colleagues are welcoming a new technology, as we speak. The Interim Assessment Management Board approved this expenditure in 2005. Implementation has begun on the sate-of-the-art technology, which will replace the old mainframe system

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this year, a requirement made more urgent because of the government's plan to cease operations to the mainframe by March 31, 2007. This new computer-aided mass appraisal system, or CAMA as we refer to it - the system is called "ias/World" - incorporates Web-based technology and will create excellent opportunities to work more closely with our municipal clients. We are very pleased to point out that this project is currently on schedule to go live on February 5, 2007, and is under budget.

If everything is going so well, you might ask, why the transition to a municipally controlled not-for-profit agency? As I mentioned, under the current structure, municipalities pay 100 per cent for Assessment Services. It had no say in how the money is spent nor the direction of the organization. An agency will have a municipally controlled board through its municipalities will have input on the strategic direction. This means an increased focus and accountability to municipalities. Assessment can respond to a municipal unit's increased expectation. It's a more collaborative relationship, more flexibility in the area of hiring a procurement of goods and services, and greater flexibility in managing or reducing current operating costs. The transition will also separate tax policy from assessment policy.

How do the municipal units feel about the proposed change? Well, the units have approved the transition and I personally visited the round tables to which we invited elected and staff representatives from each municipal unit to tell us how they felt. This support exists on both of these levels. We know our staff is enthusiastic about the change. We are, therefore, Madam Chair and honourable members of the committee, at a very important point in our history. We have a strong assessment organization and we have a compelling case for change and we have fairness and support from our stakeholders. So we are right now enthusiastically awaiting the decision of the House. At this point I will conclude my opening remarks and am happy to answer any questions.

MADAM CHAIR: Thank you very much. Mr. Steele, you have until 9:29 a.m.

MR. GRAHAM STEELE: Thank you for your opening comments. When representatives of Assessment Services last appeared before this committee, it was four years ago and none of you were here. I have read the transcript of the discussion that day and in a way, it wasn't entirely fair. That was when the issue of the skyrocketing assessments, particularly for waterfront properties, had hit the news. It was a very hot issue at the time and the assessment representatives who were there were asked to answer questions about, you know, assessment policy and the market value system. I thought it wasn't entirely fair because you folks aren't the ones who write the Act, you're not the ones who decide what the changes are going to be, you administer it.

So I'm going to try to be more fair to you today and talk to you only about aspects of the administration of the system, which continues to be an issue, I believe, of significant concern to many Nova Scotians. I want to start by focusing on the CAP

[Page 5]

Program. In preparation for this session today, all the members of the committee received voluminous materials, which I went through as best I could, and I was looking for statistics on the CAP Program because that is an area that is a particular interest of mine. For the record, I'll just note, that is the program that caps increases in assessment currently to 10 per cent per year, which provides some people some relief from really large increases. In all the material that was provided to the members of the committee, I don't recall seeing any statistics on CAP. So my first question is simply this, how many people have applied for the CAP and how many have been granted the CAP?

MR. KEEFE: The total number that has been granted is in the 70,000 range, which includes about 46,000 cards from last year. Kathy, you can correct me about it.

MS. GILLIS: The number that applied since the program has begun is 70,000.

MR. STEELE: That is 70,000 residential homeowners.

MS. GILLIS: That's right.

MR. STEELE: Remind me what the total number of residential properties in all of Nova Scotia is.

MS. GILLIS: Oh, it is over 400,000.

MR. STEELE: Okay, 70,000 have applied and how many of those have actually been granted?

MS. GILLIS: To this point, and our numbers aren't in for next year because there is a process underway for next year, but to this point, we have about 40,000-some in the program.

MR. STEELE: Forty thousand have been accepted, and I note, for the record, that my house is one of them, and so is the Minister of Service Nova Scotia and Municipal Relations; his property is under the CAP as well.

Of the remaining 30,000 or so - and I know those are rough figures - how many have been rejected and how many are simply waiting to be processed?

MS. GILLIS: Well, at this point, 40,000-some are in, so that means the remainder haven't been accepted into the program.

MR. STEELE: Okay, but what I'm trying to draw the distinction between is ones that simply have been rejected or the ones that haven't even yet been looked at.

[Page 6]

MS. GILLIS: At this point we have about 9,000 new applications in this year. Those have to be looked at.

MR. STEELE: Okay, and where are the hot spots? You must track the location of these CAP properties geographically - where are they concentrated?

MS. GILLIS: Mostly they are coming from the South Shore, in the Lunenburg area, for instance. HRM has a fair number of applications as well, too. You see some in the Cape Breton areas, along the waterfront areas as well.

MR. STEELE: And what about in HRM?

MS. GILLIS: Yes, there are quite a few in HRM as well.

MR. STEELE: I mean specifically in HRM, I wonder if you could identify the specific pockets of HRM where . . .

MS. GILLIS: The actual number? What parts?

MR. STEELE: Yes.

MS. GILLIS: Okay, sorry. With respect to the south end, is that the type of information you're trying to get to?

MR. STEELE: Yes.

MS. GILLIS: Right, that's primarily where they are. I don't have the detail right now on the 9,000 but when we look in the previous applications, you would see it in the south end, some parts of the west end of Halifax as well. It really is in different areas that people are applying.

MR. STEELE: Now there is a bill currently before the Legislature dealing with an extension of the CAP program and I think it is really unfortunate that the members of the Legislature are being asked to pass judgement on this bill with a remarkable lack of information about how the CAP program is currently working. All these things you have just told me are factual things that I am hearing for the first time. Is it possible to provide to members of the committee - through the Chair - the statistical information, which clearly you have. I may be wrong, it may be here but I just didn't see it and I think it would be tremendously useful for all of us to know these things - how many people applied, how many have been rejected, of the ones that have been accepted into the program, where are they? Things like that, basic, factual information which we're lacking.

[Page 7]

Let me turn, then, to the applications that have actually been rejected, or to use your much more gentle language, the ones that haven't been accepted into the program. Why have they been rejected? What are the reasons?

MS. GILLIS: Typically, why they wouldn't be in the program is because they are not a resident. You have to be a resident of Nova Scotia for 183 days. The property, if it is sold, for instance, it isn't eligible any more, so you would be out of the program. If the CAP isn't at the point or the assessment increase doesn't meet the CAP limitation. If you've done renovation on your property, you are not part of the CAP Program; that piece has to be taken out of the assessment value.

MR. STEELE: Do you have statistics on the reasons why applications have been rejected?

MS. GILLIS: I don't have them right here, I can go back and look and see - if we delve down into the reasons why people are not -we do have a total number of those who haven't gotten in but I don't know if I can bring it down to that defining point.

MR. STEELE: One of the issues that the NDP has raised with the government, ever since this program was initiated, is that we don't understand why it needs to be application- based; why can't it be automatic? When the government's computer system can tell you which properties are over the 10 per cent and which ones are not. Why are we forcing people to go through a paper-based application? And you know what? I've been raising that - when I was Service Nova Scotia and Municipal Relations Critic, it started a couple of years ago. I've been saying this for a couple of years, and my successors, as critics, have been saying it, and we still have never heard a good, solid reason why this program can't be automatic. I wonder if you could tell us - is it technically possible to be automatic?

[9:15 a.m.]

MR. KEEFE: The principal reason is the residency requirement. The data in the assessment system - we don't know whether or not the property owner is a resident of Nova Scotia. At best, we would have the postal code where the bill is mailed, which has some correlation obviously to residency, but not 100 per cent. So that's the principal reason right now. It's that simple - the residency requirement. There are some others because it could be transferred to a family and so on, but obviously we could look those up after the fact. We wouldn't necessarily need an application on those, but that's the principal reason - the residency requirement.

MR. STEELE: Okay, because I'll tell you the difficulty I have with it, although I can sort of understand that the residency requirement is important. In order to get that piece of the puzzle in place, what you do is you force all applicants - the vast majority

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of whom, I'm sure you will agree, are Nova Scotia residents - to go through a paper-based application process and as we all know, every MLA in this House, every MLA on this committee, whenever you have a paper-based application process, you are going to exclude some people because of their inability to read the material, understand the material, fill out the material, send in the material. So in order to capture a tiny percentage of people who are non-resident owners, we exclude people who are in desperate need of this relief, but for whatever reason are not able to complete and send in the application form. Has your department looked at this issue at all, about who it is whois being left out because of the application process?

MR. KEEFE: No.

MR. STEELE: Does the department acknowledge that literacy is an issue?

MR. KEEFE: Yes. Obviously literacy is an issue, and I would certainly agree that any program that would have an application-based process is more difficult for citizens to access than one that isn't - it's obviously more expensive for us to operate.

MR. STEELE: Does the department acknowledge that it's actually a relatively small number of Nova Scotians that even know this program exists?

MR. KEEFE: I'm not so sure that's the case because . . .

MR. STEELE: Have you done any surveys on that?

MR. KEEFE: No, we haven't done any surveys on that, that I'm aware of, but we do send out information on this program, with the notices of assessment.

MADAM CHAIR: Ms. Gillis.

MS. GILLIS: Just a couple of points. This year, for instance, we sent out over 300,000 notices in June, and we sent with that the material with respect to the cap application process - and I can appreciate your comment with respect to the application itself because we took a fair number of tries at making it as simple as possible because the legislation is a bit complicated, and to explain it to the public it's not a simple, straightforward explanation.

One of the other things that we did was, once you're in the program, you do not need to apply again. I know it doesn't get to the point of saying everybody's automatically in, but initially it was to be an application every year, so we recognize that when you're in, you're in, therefore we do the evaluation. The public doesn't need to do anything once you're in the program.

[Page 9]

MR. STEELE: I want to take a minute or two to tell you about my personal experience in my constituency of Halifax Fairview. I think the cap program is important. I think it's important enough that this year I decided that I was going to send out - through my constituency office - a notice to every single homeowner in my constituency, telling them about the cap program, encouraging them to apply, and offering my assistance to help them fill out the form and send it in. It got a very good response from people, but some of the responses surprised me and were very educational for me. Some were from people saying, oh, thanks for telling us about this, we had no idea that this program even existed.

I sat in the kitchen of one particular woman, in the Armdale neighbourhood that I represent and she was a very elderly lady, a widow, living alone. She's in her 90s, her eyesight was very bad and she needs assistance. She could not, she is not capable of filling out that form on her own because she can't see it and so she called my office and my assistant and I went out, sat in her kitchen, and helped her fill out the form. We took it and we sent it in on her behalf.

There was another lady living in the Fairview neighbourhood that I represent who called us and said, you know, I really think I should apply for this program and so I went to her house. We sat down and we went all over her assessment papers and tried to understand her current situation. I looked at the online material, which by the way is very good, that's a really good advance, the Nova Scotia property assessment online, it's a great thing, it's a great tool, very useful. Do you know what we found, that lady in Fairview was already under the program, she just didn't know it. Nobody told her. She didn't remember having applied for it. She thinks maybe her daughter did and if her daughter told her, she had forgotten and maybe her daughter never told her. She's sure she never applied for it herself, but she never received one scrap of paper saying you're under the CAP. It's not even on her assessment notice.

This is the thing, it's very educational for me, that if you're under the CAP program, you simply get a notice saying what your CAP assessment is. It doesn't say this is your CAP assessment. So we went through all of this rigamarole, me visiting her house, getting her documents, filling it out, sending it in, only to discover that she was already under the program and there was not one piece of paper in her house that told her or me that that was the case. (Interruption) Sorry, I worry most about the people who still, despite my leaflet, don't know the program exists, that their literacy may be at the point where they couldn't even understand my leaflet, never mind getting the form and filling it out, and those people are being excluded from this program. Some of those are in the greatest need.

So let me put the question to you this way. If the purpose of the application form is to make sure that we exclude non-residents, is there not, could there not be a better

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way to deal with that problem without excluding all those thousands or tens of thousands of Nova Scotians who simply are defeated by a paper-based application form?

MADAM CHAIR: Ms. Gillis.

MS. GILLIS: I think there's an intention to review the program as part of the legislation. I can certainly see that as being part of the perspective on, is the program working, is the public getting it and if it's not getting it, why isn't it getting it? So I can see that there would be a need to go back and look at that when our records show that, you know, we send out a certain number of applications and we only received a certain amount back. So definitely I think that should be part of the review process.

Just in terms of notification, assessment notice that is actually filed formally in January, once the CAP program is undertaken, it should show on that assessment notice the property owner's capped value. Whether or not that's clear enough to say that they're in the program but along the lines of this is your assessment and breaks it out commercial and residential and then it would say this is your capped value, and we could work to improve that communication as well.

MR. STEELE: My home is under the CAP and I am 99 per cent sure that my assessment notice doesn't tell me that I'm under the CAP. I just know it because I applied for it. Your answer, your first answer actually, led me exactly to where I'm going next and that's this review that is coming up. The review is legislated to be done by April 1, 2007, the legislated statutory review of the CAP program. Yet when we had the Union of Nova Scotia Municipalities in front of the Law Amendments Committee last week talking about Bill No. 92 to extend the CAP for the year, they said they have no information that the review has even started, never mind being close to being finished. So, Mr. Keefe, what is the status of that legislated review which is supposed to be finished in only a little over four months from now?

MR. KEEFE: The review has started. Staff in the department are working on it. They have a plan for consultation. I'm not sure of the timing of that plan. Nathan, can you let me know the plan you've . . .

MADAM CHAIR: Mr. Gorall.

MR. NATHAN GORALL: Yes, we start actually the first week of December and conclude, at least the consultation at the municipal level, by about mid-December.

MR. STEELE: Okay, it would be really good to let the UNSM know that because one of the reasons they're concerned about Bill No. 92 is because they have no information about the review at all. What they're saying to us is, the message to us is,

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essentially, please do that review before you extend the CAP, which seems like a reasonable position.

Let me talk now about customer satisfaction. As you said, Mr. Keefe, customer satisfaction numbers are tracked, which is good and I wish more units of government did that. Here is my concern. The numbers are on Page 10 of the most recent annual report and I'll tell you what I'm concerned about. The numbers of the overall satisfaction with the assessment information centre, which is not exactly the same thing as satisfaction with the assessment system, but I'll put that aside: in 2002 it was 73 per cent, in 2003 it was 69 per cent, in 2004 it was 71 per cent, in 2005 it was 68 per cent. So taking into account margins of error, it is essentially the same level of satisfaction, no significant difference from year to year.

I will tell you what concerns me, it's the line just above that, "Property owners are unlikely to be happy about their assessment because of its connection to taxes. Therefore, the AIC is unlikely to have satisfaction scores much higher than the low 70 range." I'm concerned about that, is that really the case, that you aren't aiming for satisfaction of higher than 70 per cent because, well, it is taxes and people are by definition going to be unhappy. Is that the case across the country? Don't we have the right to expect that customer satisfaction would be in the 80s? The 90s? Why are we settling for 70 per cent?

MR. KEEFE: I would like the customer satisfaction to be much higher than that. We measure customer satisfaction across the department. As you may be aware, in some areas, for example our Access Centres, we're in the 90s, quite proud of that and love to keep it there.

I think this is just recognizing the fact that when you ask whether or not people are satisfied with your service, there are various measures of a service that were causing them to say yes or no - timeliness, professionalism, these types of things. What also goes in there is the outcome of that service, if you will - are they happy with the result? I think when you get into the area of taxation, that tends to dominate the answer a bit.

I'd love to get this number higher and we will continue working at getting it higher, but we obviously need to understand why 30 per cent are saying they aren't satisfied before we can drive that a lot higher.

MR. STEELE: One more question because my time is rapidly running out. It's about another missing statistic, one that I was specifically looking for and couldn't find, and that has to do with appeals. Now there is a Letter to the Editor in today's ChronicleHerald which I showed to Ms. Gillis, expressing pretty significant dissatisfaction with the appeal system. The statistic that I looked for and couldn't find was the percentage of successful appeals. I found the number of appeals and the number

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of appeals as a percentage of the number of properties, but nowhere did I find the number of successful appeals. What is it?

MR. KEEFE: Do you know that number, Kathy?

MS. GILLIS: I don't have my numbers here right in front of me. Successful is measured in different ways. Success for us, for instance, would be holding the value and confirming the value; success may be for the property owner that there would be an adjustment. So we have a number of different pieces of information that we can share with you with respect to the appeal process. So if you want me to give you that information, I can certainly do that. I just need to know a little clarification on specifically what success is from your point of view, what you're looking for.

MADAM CHAIR: Order, the time has run out, we will come back to that.

Ms. Whalen, you have 20 minutes, until 9:49 a.m.

MS. DIANA WHALEN: Thank you very much and welcome this morning. I actually had wanted to go to the issue of appeals as well, so it's a good segue into that right now. What I would like to ask, I noticed again that the numbers are down significantly. Is that because people have gotten discouraged?

I bring you back to the latest Law Amendments Committee, where we've had people in to talk. There was a Mr. MacNeil who had done extensive research. I don't know if you were there for his presentation - he gave us quite a bit of information - but what I noticed from his account was that he has a number of appeals in and they seem to relate to 2002 and 2003, so they're quite old. Can you tell me what your time frame is for moving these through and getting a decision and why that would be staying there for so long?

[9:30 a.m.]

MS. GILLIS: We have about 10,000 appeals this year and that's down considerably over the last number of years. One of the reasons we would say our appeals are down is that we do that preliminary assessment every year and so when we send out 300,000 notices, we could get up to 15,000 inquiries this summer and that seems to satisfy people in terms of the assessment, so they won't take it to the next step in terms of the formal appeal process. Once we do get the formal appeal in January, our efforts are really to move those appeals through as quickly as possible for a lot of reasons. One, that the public wants the answer to their assessment question and at the same time, the municipality wants to set their tax rates, so they want to know what their assessment base is and have a fairly good idea. So our efforts are to try to get those completed as quickly as possible. So we aim for roughly around May to do that.

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If people choose, after our review as an assessor, to take it to another level, which would be regional court, or even further to the Utility and Review Board, those take a bit longer. In the case of the Utility and Review Board - and I believe that's where Mr. McNeil's appeals are, but I can't be certain because I wasn't getting his information specifically - is that can take some time. There could be reasons why it's going back to 2002, 2003. I can't be specific on that because . . .

MS. WHALEN: Can you tell me how many people choose to go beyond your initial appeal?

MS. GILLIS: At the regional court level?

MS. WHALEN: Yes. Or to higher - like URB after that.

MS. GILLIS: We probably, right now, at the Utility and Review Board, we may have 100 appeals at the Utility and Review Board right now, and that grows as appeals get processed and regional court gets heard.

MS. WHALEN: And the regional court would have more than that again because that's another level?

MS. GILLIS: It's not as high as it used to be as well. People again are satisfied because they get that preliminary notice and they understand their assessment. So our regional courts, and the amount that are appealed to the regional courts, are down as well. I don't have that number in front of me, but I do know it has been down . . .

MS. WHALEN: I think that would be something else we might like to get brought forward for the committee later, but my feeling is that people are either intimidated, and I'm not saying you intimidate them, but they're intimidated by the process; or they've just become discouraged, year after year, with these high increases and feeling that they won't get anywhere. I know from my years on city council that people felt that if they called for an appeal, they were told that an assessor would come and look at their home and they were told very clearly, your assessment could go up, rather than down, if they come and look at your home, and I think that's a good way to dissuade somebody perhaps from even wanting to have that greater scrutiny on their home, because they become frightened that it could be even worse than the news they currently have. So would you agree that that's something you've been hearing as well?

MS. GILLIS: Not necessarily. I think the reason why the assessor may talk to that is because we have to be clear to the homeowner what we actually do. So if in the case, when we're going out and we find information with respect to the appeal, and there is a change, I think it's important to let them know in advance that's a possibility, but the intention is not to intimidate or to dissuade people from appealing, and again I go back

[Page 14]

to the preliminary notice process. We put ourselves out there every year, transparent, with 300,000 notices, set up a call centre, ask for people to call us, put it on the Web sites, and so we really want people to talk to us. There may be that perception, but it's certainly not our intention.

MS. WHALEN: No, I acknowledge that the preliminary notice is a good thing and I do think it has probably led to the decrease you've got now in terms of the number of appeals, but I also think that people are discouraged and to go back to the CAP - I know I talk to some people, actually through UNSM, who said that in certain places people feel that if they apply for it, it will go over 10 per cent. So it's a bit of a conspiracy theory that if I acknowledge that I've got a property in an area that's a hot market, or it's going up too fast, that they're a little bit nervous to even put that application in and I think that's an important part too, to recognize it. Again, we've talked about the difficulty of the paper form and the onus being on the individual to do that, but there is also a concern that this will flag their property. I don't know if you could comment on that.

MS. GILLIS: I guess it's an irony of some sort, in terms of the assessor. We have people saying, you've never seen an assessor and they want us out there, then when we go out there's the concern about an assessor being there. Again, it's certainly not our intention. I go back to our Web site. I go back to our attempt for public education, for awareness, to meet with municipalities and explain what we do.

MS. WHALEN: One other thing I wanted to ask again on the CAP program - a couple of questions - one is, what does it cost the assessment division in order to manage that CAP?

MS. GILLIS: There are different costs with respect to mail out, for instance on the CAP application. We do have assessors who are responsible for managing the applications when they come in or doing the review. I think the numbers in the last couple of years have been a couple hundred thousand dollars a year to run the program.

MS. WHALEN: So when that law was introduced, it would have added about $200,000, perhaps, to your budget. Now, on the number that apply, we have the 70,000, I think, that applied. How many are eligible who have not applied? I may have missed that if it was asked earlier.

MS. GILLIS: Well, eligibility, in our opinion, we can look at the information on the assessment database and presume that these people are residents, or presume that there hasn't been a family transfer. So we do have some numbers of what we think could be eligible. When we mailed out the notices the first year, our best record at that time was 65,000, but it goes to the deputy's comment about we don't track residency. That's

[Page 15]

not part of the assessment process. The second year, again, what our preliminary numbers looked at was somewhere in the 100,000 group we thought may have been eligible.

MS. WHALEN: In year one, how many applied?

MS. GILLIS: In year one, 25,000.

MS. WHALEN: So less than half . . .

MS. GILLIS: Sorry, 32,000 applied.

MS. WHALEN: Which is about half?

MS. GILLIS: About half, so it has run about half every year.

MS. WHALEN: The same thing the second year, you were up to about 50,000?

MS. GILLIS: Yes.

MS. WHALEN: Do you have an exact figure?

MS. GILLIS: It was 46,000.

MS. WHALEN: So actually just below half?

MS. GILLIS: Yes.

MS. WHALEN: I think that's a very telling number again, about perhaps the difficulty of doing it or the difficulty in getting people to be aware of the program. We obviously haven't, I don't think, got it out well enough because if we had, people would love to have a little bit of sheltering from the high tax rate and, of course, their taxes will be affected by the assessment rate. So that is a concern. I don't know - have you done anything about it, and realizing that perhaps 50 per cent have not taken advantage?

MS. GILLIS: Well, yes, as a matter of fact. The first year of the program - I think if you recall, it was only a month that people had to do it, and that was because the legislation was passed in May and the program had to be up and running in order for the roll to be filed in 2005. So we learned from that, around getting more information out to the public, changing the application form to make it easier, doing advertisements. Actually, we monitor the applications as they come in and, close to August, because the deadline is September 30^th, we will say - we have to put an advertisement out in the paper because we're just not getting the response. So we're watching it and we're trying to

[Page 16]

make sure or understand why people aren't applying, but we haven't gone to the public and said why aren't you applying.

MS. WHALEN: In the second year, your rate of take-up on this program didn't increase, though, even though you had the full year then to let it roll out with proper planning?

MS. GILLIS: Right.

MS. WHALEN: So there's still a missing component. I would suggest that it's pretty significant in terms of how we do that. Our aim, of course, is to get as many people able to access this as possible.

To go back to the residency requirement and the need to have a paper-based one. Have you explored any other way to determine that, because I think we've agreed there aren't that many non-resident properties out of your total 500,000-some base. Any other ideas how we could do that so this isn't the major reason why we have to go to paper-based?

MADAM CHAIR: Mr. Keefe.

MR. KEEFE: The biggest potential I could see would be some kind of leverage through our deeds system, if through that process we could check residency status. Again, there, we would only know the residency at the date of purchase, which doesn't necessarily stay the same over time. Someone can move in or someone could, indeed, move out. I think that non-resident is a bit of an issue for this one if you look at the areas, particularly the coastal water areas, I don't know if the percentage of non-resident owners there would be higher than the overall average in the province. I suspect that might be - I have heard real estate people say that is one of the reasons the market is increasing, ex-pat Nova Scotians moving back, whatever. So I believe the non-residency is an issue there. Should government decide that we can cap them, period, obviously that one goes away, but as long as the requirement is there for residency, it's going to be hard to get away from that application. Again, what we're trying to do is make it a one time, once we have established this, then we know it and you don't have to apply year after year, but that up-front application is the only way we have right now to determine residency.

MS. WHALEN: Have you any idea what percentage of the properties in Nova Scotia might be non-resident owned?

MR. KEEFE: No, again, because we don't have that, the best we can go by is the postal code and where we mail information to. As I said before, obviously that has some correlation to residency but it wouldn't be 100 per cent.

[Page 17]

MS. WHALEN: I think it's a pertinent question, and I would think it would be of interest to the assessment office given the legislation that's in place, to determine that for your own benefit, even, to know what - and I know about five years ago there was a study done on coastal ownership and whether there should be a change in the coastal properties and how they're assessed. So it would be, I think, a very pertinent question to ask because it's hard to make policy if you don't know that kind of information. So perhaps that's something you could look at from a tax policy point of view, maybe from that end. I'm really quite surprised that you don't have that information available.

I'm just looking at the time and I think I had better turn it over to my colleague, Mr. McNeil.

MR. STEPHEN MCNEIL: Thank you very much and thanks once again for coming in. Just to go back to the update that you've been receiving on the cap program, you had mentioned that about 50 per cent of the properties that are eligible have been applying. Why wouldn't we be aggressively pursuing the properties, as opposed to the individual person who is in the property? We could determine that they might not be eligible at the end of that, but if we know on that particular property, the assessment has been increasing and would qualify for the cap program, why wouldn't we be aggressively going after those properties? If it came in that we knew it was a non-resident or an ownership issue, then we could deny the application at that point.

MR. KEEFE: I would suggest that your primary resource issue, if I understood your question correctly, you're saying that where we've identified 100,000 properties that have gone up more than 10 per cent, why aren't we proactively going out to determine whether or not they are eligible? Obviously that would be a fairly resource-intensive activity and therefore, it would cost some dollars.

MR. MCNEIL: I'm sorry, I didn't hear you. What was the reason?

MR. KEEFE: Well, I think we would have to visit those folks to find out why they are not applying. Does that answer your question?

MR. MCNEIL: Well, that could be, but not necessarily. If you recognize that property A on the South Shore is eligible and your data bank tells you it is eligible, you've looked at it and you haven't received an application or, quite frankly, that application could be marked and say, you know what, you qualify for this program, we need you to return the application, or that you may qualify for this program, depending on a residency issue, but we are encouraging you very strongly to look at this. Is there any proactive part on your department?

[Page 18]

MR. KEEFE: Yes, I'll ask Kathy for details, but when we send out preliminary notices, we do advise people of the cap program and that their property has increased by a range that would indicate they are eligible.

MADAM CHAIR: Ms. Gillis.

MS. GILLIS: We did send out application forms to those who we thought were eligible, so we directly sent to those 65,000 that I mentioned in the 108,000 and said, we believe you are eligible but you have to confirm with us that you are eligible. The return rate we got was in the numbers that I told you. So we did attempt at what our best understanding of eligibility was to have them confirm it.

MR. MCNEIL: So someone who your department had flagged as being a possibility, received a different notice than someone you were sending out to, who you weren't sure about.

MS. GILLIS: Well, for instance, in the first year, the 65,000, we would have sent out preliminary notices to people who we thought were eligible, with an application form. So those people got that information. Again, last year, we did the same thing. So, as per the legislation, it was incumbent upon those to return it to sign it and say I am a resident of Nova Scotia and that is how we confirm, by the signature that they are a resident of Nova Scotia. Otherwise, we don't have that detail.

MR. MCNEIL: Of the people who you believe are eligible for the program who are not applying, where would they reside in the province? Have you broken that down? Are they coming from the Shore?

MS. GILLIS: Again, I don't have that with me here today, in terms of a profile of those eligible. I could get that. I would think, without the numbers in front of me, where those increases are most significant, so where you have the waterfront properties are the areas where you would see that eligibility being, or where the market is significantly increasing, that is where you would see it.

MR. MCNEIL: The assessment is up all over the place. It is pretty consistent, quite frankly, from 5 to 8.3 really all across Nova Scotia. So I guess this may go to some of the earlier questions - what are the reasons that people aren't applying?

[9:45 a.m.]

I think if we don't have the data on where they're from, we may be missing some of the reasons. Some it may be, quite frankly, is that they are unable to fill out that application. Some of it may be that the information is not getting to them properly. If we have part of the province where the uptake on this program is low, it may be based on

[Page 19]

the fact that information is just not getting to them. So I am surprised that we haven't looked at that.

MS. GILLIS: I'm not responsible for the review, but I certainly appreciate the comment with respect to why people aren't applying. I think, as I mentioned before, that should take part of that review to get a good idea of what it is that is preventing people or why they don't want to apply.

[9:45 a.m.]

MR. MCNEIL: Who is doing the review?

MS. GILLIS: My colleague.

MADAM CHAIR: Mr. Gorall, would you like to respond to Mr. McNeil's questions?

MR. GORALL: Would you restate the question?

MR. MCNEIL: I was just saying that when you look at the people who are not applying who are eligible for this program, have we determined where they're from in the province and why they're not applying for it? Is it based on the fact that the information may not be getting there? Is it all kinds of other reasons? I'm wondering if you've broken down that information at all.

MR. GORALL: No, we haven't yet. I'm not sure how we would collect it. It could form part of our review if it makes sense from a cost benefit point of view.

MR. MCNEIL: You've said you identified 108,000 properties that would be eligible for the cap program, so you're getting back 65,000 applications, it's quite simple to remove those from the ones you've identified as being eligible and then look at the remainder of the properties and say, where are they in Nova Scotia? I can't see that being that difficult, and then we could say, why aren't they? Maybe they're all from Cumberland County, maybe a large percentage of those not applying are from Cumberland County. Maybe a large percentage are from HRM. Who knows? But if you know where they're from, then we can do that outreach program and say maybe it's a breakdown in the system or maybe it is because there's a low literacy rate in this part of the province, or whatever. But, until we look at that information, it's going to be difficult.

You had mentioned it was difficult to explain the legislation to Nova Scotians. What recommendations have you given to the minister to improve the legislation so we can explain it to ordinary Nova Scotians?

[Page 20]

MS. GILLIS: I should be clear on why it was difficult. I guess from the point of view that the assessment cap was actually back to 2001 and it started in 2001. Then we would explain what your assessment was between those periods, if you had new construction, we would pull that piece out of the cap value. That was what I meant with respect, it wasn't a straightforward apply 10 per cent.

I think the public just needed to understand how we were doing this, I guess is the point.

MR. MCNEIL: Did you make any recommendations though to the minister about how you could improve the legislation?

MR. KEEFE: I think any recommendations that come forward will come forward through the review that is going on.

MR. MCNEIL: I look forward to the review when it comes out. I think my time is just about up, but thank you and we'll see you in the next round.

MADAM CHAIR: Mr. Bain.

MR. KEITH BAIN: Thank you, Madam Chair and good morning. I just have a few questions. Reading through the information, I read where residential properties are valued using three factors - the sum of the land, the building value and it says miscellaneous value. Could you explain what miscellaneous value is?

MS. GILLIS: A shed would be a miscellaneous improvement, a deck, things of that nature. They're small, they don't form the biggest part of the formula so we call them miscellaneous. They're still important.

MR. BAIN: Unattached structures. Okay, thanks. I didn't know what it was, that's why I had to ask. There is detailed information on my property and everybody else that's here and everybody in the province. So, as a property owner, how much information on my assessment do I have access to?

MR. KEEFE: On your assessment notice itself, there's just a number, but the last couple of years we've been including a PIN with your assessment number. If you have access to the Web site, there's far more information available on the particulars we keep about your property.

Also, of course, if you contact one of our assessors, then there's a lot of information about your property available and you can review the file. Do you want to expand on that, Kathy?

[Page 21]

MS. GILLIS: It's just that every detail with respect to what has happened with your property is available for you to look at. Just you to look at, though.

MR. BAIN: So I can't compare my property to the person down the street?

MR. KEEFE: Yes, again, on the Web site or through contact with one of our assessors, you can easily compare the value - I believe we break it down by land and building. You just go in and click on the map and you can see the various values around your street. What you don't see in that general access site, of course, is the extra detailed information. The age of the house, the number of bedrooms, whether or not it has a deck. That type of thing is only displayed to the individual homeowner.

MR. BAIN: The proposed assessment that everyone receives in the mail, will the value of that proposed assessment be the same as the formal assessment that they would receive in January?

MR. KEEFE: Generally, it is. There may be data updates that come in after that, building permits, or information we capture, but I believe for the most part, those two numbers would line up quite well.

MADAM CHAIR: Ms. Gillis.

MS. GILLIS: Our cutoff for the preliminary is June of every year. So, unless there have been some physical changes to the property between June and when we actually file the roll you should probably see roughly the same information.

MR. BAIN: My final question before I turn it over to my colleagues. Property assessments are supposed to generally reflect fair market value, I guess. A suggestion was made to me by one of my constituents that if I sold my house to my colleague here and the both of us have determined that my house is worth x number of dollars, and that is a market value, I guess you could say it was a market value at that point, why couldn't my assessment - or his assessment, because I just sold it to him - start at that point and increase by cost of living, year after year? Is something like that feasible or how would it be done?

MADAM CHAIR: Mr. Keefe.

MR. KEEFE: I guess it would be feasible. Any policy government came up with as how we would want to apply the assessment value, we could probably figure out a way to do it. A sale between two individuals, I would assume for the most part, does reflect that market value, especially if it's an arm's length sale. But of course, different people have different negotiating skills, so you're obviously going to get minor differences away from market, some can cut a better deal, some don't. As far as applying CPI after that,

[Page 22]

well that moves away from market value. What we're saying then, you can lock a property down to the last sale and only increase it by CPI, so for us to be able to do that in assessment, we'd need to change the Act. The Act says it has to be market value, and we peg it at market value about two years old, generally. So that would be the reason. Now if we amended the Act to say CPI, then that would be the method we would use.

MR. BAIN: It's just that when the constituent mentioned that to me, it sort of set the wheels in motion and that's why I wanted to ask that question. That's it for me, Madam Chair. I don't know if any of my colleagues have questions or not.

MADAM CHAIR: Thank you. Mr. MacLeod.

MR. ALFRED MACLEOD: I just have a couple of quick ones. It is about appeals. In my area I have a lot of older people and when they hear the word, appeal, all of a sudden they say, what's that going to cost me? Is there any cost to the appeal is the question. I know the answer, but I'd like to get it on the record?

MADAM CHAIR: Ms. Gillis.

MS. GILLIS: No, there isn't any cost for the appeal.

MR. MACLEOD: The other question that I hear from time to time is, well, I appealed last year and nothing happened. Can I appeal again this year?

MS. GILLIS: You can appeal every year, yes.

MR. MACLEOD: I know these are probably questions that you hear a lot, but we hear them a lot in our constituency office. Is there a time limit on when people can appeal?

MS. GILLIS: Yes, there is. That's why we do the preliminary notice though because there are only 21 days and that has been looked at around whether that is an appropriate length of time for somebody to actually file an appeal. So it is 21 days from the time the assessment notice is mailed. The preliminary notice however goes for a six-month period, so if we mail in June, you effectively have six months to talk to us and it's not a formal appeal, but it satisfies the same process in terms of having an assessor contact you and explain the property.

MR. MACLEOD: Thank you, Madam Chair.

MADAM CHAIR: Mr. Porter.

[Page 23]

MR. CHUCK PORTER: Service Nova and Municipal Relations, my question is more on the municipal relations side, I think. Having sat on a municipal council seat for a couple of years, my question is, what is the relationship between municipal council, UNSM, I guess, maybe more. How does that work? Do they have input in the funding requests that are required? I'm not really sure how all that relationship is right now.

MADAM CHAIR: Mr. Keefe.

MR. KEEFE: I'm not sure I totally understand the question but I think the relationship is generally very good. We work very closely with the UNSM. Especially on any issues that affect multiple municipalities. UNSM is generally the spokesperson for the municipalities. That's not to say there aren't some bilateral issues with any individual municipality at any given time, but otherwise, no, I believe we work very well. The Municipal Government Act requires 12 months notice on any legislation that is going to change the fiscal capacity - if I can put it that way - of municipalities to generate revenue, for example.

So we try to live up to that as best we can, I believe we do for the most part. There may be examples of bills in the past that have overridden that, I don't know. But, I think the relationship is quite positive, certainly at the staff level it is very professional. We exchange a lot of ideas, have good discussions.

Input into funding, as far as assessment goes - right now that's virtually 100 per cent. Kathy and her staff work with the board, they come up with a budget, the interim assessment board says, yes, this is what we feel we should be paying for assessment next year. I assume they have some vetting process with the UNSM on that, after all, they're UNSM appointees. Then they bring that into the department, into the minister, who, of course, obviously, has the final say.

From government's point of view, regardless of what that number is, it was $14 million last year, $14.9 million this year, it doesn't change the bottom line of the province, it all comes to zero because the total amount is recovered. So, they have a lot of input into the amount of money that's spent on assessment.

MR. PORTER: So, is there a schedule, like a regular schedule, where you then go out to the municipalities and meet or do they come to you or is it just solely that representative for the UNSM?

MR. KEEFE: Are you speaking in general, or just as it relates to assessment?

MR. PORTER: In general. Is there a plan for the coming year, I guess, for proposed changes? Is there someone going - like Ms. Gillis in your department - is there

[Page 24]

someone going out to meet with the individual municipalities or is that something maybe just the minister would go out and make those annual visits around and so on?

MR. KEEFE: Yes, the new minister, generally, especially when a new minister comes in, we try to get out and meet with every municipality. We haven't done that with our current minister, of course, mostly because of timing, with the timing of the election, coming into the Fall session. But, generally, we try to get them out and meet them. We certainly, as a department and minister, attend, for example, the annual general meeting of the UNSM.

We have three staff, we call them municipal advisors, who work very closely with municipalities. These folks would have virtually a day-to-day contact with various municipalities. Sometimes we refer to them as the eyes and ears of the minister, if you will. There's a very close working relationship between the department and the municipalities, at least in that way.

That's more from the municipal government's point of view. There are other parts where the department works quite a bit with the municipal staff - property data is a big one, whether it be deeds or whether it be assessment, we can't work without municipalities, they can't work without us. That goes into everything from the mapping we do, we share that data. Even as far as 911, currently they're using our systems for dispatch. That wouldn't be possible if the municipalities weren't helping us keep that up to date on a very regular basis.

There's a lot of working relationships between the department and individual municipalities on an ongoing basis.

MR. PORTER: My understanding is there's a new municipal corporation to deal with assessments. Can you tell me a little bit about the structure of that?

MR. KEEFE: Yes. It would have a board, I believe, 12 members that would be largely appointed by the UNSM. It's half elected members and half non-elected people. That would be mostly three non-elected from the AMA - Association of Municipal Administrators - these are CAO types. There would be the executive director of the UNSM, myself, there is also a provision on that board for two board appointees. This isn't a requirement, but it's a provision, that they do not come from either the municipalities or assessment. That was suggested from a visit to Ontario, if I'm not mistaken.

[10:00 a.m.]

It allows you to bring in other stakeholders to the board. Whether that would be a citizen representative or a business representative or whatever. By and large, the board

[Page 25]

is certainly municipally controlled. The elected representatives, I believe, it is generally two from each caucus - there are three caucuses in the UNSM - towns, rurals and the cities. So, there's representation from each of them. There's no particular piece of UNSM that will control that board. It's set up so the turnover, three members change every year, so there's not a massive change in the board in any given year that you get transition as it goes forward. They would obviously be accountable back to the UNSM through their annual general meeting. I believe there are also going to be some requirements for reporting to the minister because our role would still be to make sure that this organization runs in compliance with the Act, just the same as we oversee any other business, in compliance with some of our other Acts.

So I guess in a nutshell, that's pretty well the way we expect it to work. Oh, we also have put in place what we call a tax policy committee, or tax liaison committee. The reason that is there is, I found from previous experience in another part of the department, the sales tax - when we turned the provincial sales tax into the harmonized sales tax, one of the things that happens there is when you are getting someone else to deliver that service for you, you lose contact. You don't have their staff out there every day contacting the folks that are impacted by this policy. So to be able to further do the policy down the road, you need that flow of information back. So I think it has to be very important that we have a two-way flow of information between the department and this agency, to enable both of us to go forward with our mandates. That is why that extra committee is there as well.

MR. PORTER: So now you have a structure, a board, a committee of 12. There are obviously other staff that have to come from somewhere, though, along with this board. Where will they come from?

MR. KEEFE: We'll be transitioning the entire staff of Assessment as it exists now in the division. There are 162 funded positions there, I believe there might be a dozen of those vacant right now, but those staff will be transitioned over. The agency will have to add a few additional staff in the sense that things like legal services, HR services, payroll, accounting - these are central services in government. Those staff are located within the division so right now we have it set up where the rest of the department - there are bill assessment services for those charges but those aren't staff who will be able to transition because for each of them only part of the day is working on assessment. Part of the day is working on something else so in that case there will have to be new hires by the agency to fill those roles.

MR. PORTER: Great, thank you very much, that's all I have at this time.

MADAM CHAIR: There are six minutes remaining in your time. Fine, we will have another round of questioning. I think we can have 17 minutes per caucus. Mr. Steele.

[Page 26]

MR. STEELE: Thank you. I want to take up where I left off and just clarify the information that I am looking for. Essentially it is very simple - I am looking for whatever you have on the cap program because we really lack any statistical information, so whatever you have, I'd like to have. Of course don't give it to me, give it to the clerk of the committee and she will distribute it to all members.

The second thing was the outcomes of appeals. Now the typical administrative tribunals that I'm familiar with would keep information in terms of appeals allowed, appeals denied and appeals partly allowed. Those are the choices. I assume you keep that information. Rather than trying to stipulate what I want, let me to put it to you the same way; what I'm looking for is whatever you have. I am not looking for you to generate anything that you don't already generate; whatever information you have on the outcome of appeals, perhaps you could supply to the clerk because I think that would be helpful for us to know.

With that, Madam Chair, I'd like to turn it over to my colleague.

MADAM CHAIR: Mr. Wilson.

MR. DAVID WILSON (Sackville-Cobequid): Thank you, Madam Chair and thank you for coming before the committee. I know it is an important issue for a lot of the residents that we represent, we get quite a few calls when the assessments come out and we try to deal with them as best as we can.

Unfortunately, unlike my colleague, my rate seems to be right at that threshold of 10 per cent over the last several years so I haven't applied for the cap but it is interesting that it seems to come in just at that number every year. I'll ask a few questions on that a little later - a coincidence, as my colleague says.

I know that so far government has set the cap at 10 per cent and they do that through Cabinet on a yearly basis. It is always anticipated, wondering is the cap going to be in place this year, not only for residents who are waiting to see if they'll be able to access that opportunity to cap rising assessment costs, but also I think it is a lot of anticipation on behalf of the municipalities in the province because, of course, they have to figure out what their tax rate is and their tax base and redistribute the tax income that they're going to have. We all know and understand that they're not going to take in less money, they're just going to spread it out a little more for when they decide who falls under the caps each year.

My first question is around the setting of the cap and government's ability to do that every year. Do you find that we need a longer term plan, I guess, on setting caps, if that's the road we are going to go down? Should government come out with a two-year or three-year plan so that not only residents but the municipalities can plan ahead on what

[Page 27]

the tax rate is going to be for the municipalities. Do you feel that is a step that government should take, so that there is not this speculation every year or anticipation on what the tax rate is going to be for the municipalities throughout the province?

MR. KEEFE: I don't know; I don't foresee any particular benefit to that. What the cap essentially does from the municipalities' point of view is it changes who pays the tax. It doesn't particularly change the amount of tax the municipality collects so I'm not so sure about knowing that percentage going forward for a long period of time, if that would be a great benefit or not. An interesting question to ask them, they certainly haven't raised that issue with me, in terms of having that locked down for a long period of time.

MR. DAVID WILSON (Sackville-Cobequid): Now we all know that the cap came about because of the high rise in assessments over the years; especially I would say the last six or seven years possibly, around some of our coastal communities. I think that is where we hear of most of these dramatic increases on some of these rural coastal communities and the properties that they own.

I know it is supposed to be a short-term solution to try to address that, but do we need a permanent solution? Does the government need to figure out what we can do for residents to ensure that we don't need to be worrying about a cap every year? Is that something that government and your department need to focus on? How do we get away from this? How do we get away from having to talk about caps every year and find a permanent solution around the taxing ways that we have here or assessments in the province?

MR. KEEFE; At the end of the day, that's a policy decision for government to make. The current policy is market value. One of the things we're into now is that the market isn't increasing equally everywhere. You're getting some areas of the province where the market is going up quite high, there are other areas of the province where the market is not changing much.

This isn't unique to Nova Scotia, this issue. It is almost hard to imagine an assessment jurisdiction that doesn't have this exact same issue, probably driven by changing buying tends. I'm not a real estate agent but it would certainly seem to me now that properties in certain areas are a lot more popular than properties in other areas, so those are being driven up. As a result, that shifts who pays the tax. Whether that is a reasonable shift or not is a policy decision at the end of the day.

You mentioned you were close, Mr. Steele. My property for example, nowhere near it - I must live in an unpopular area, I guess. My assessment is barely going up 2 or 3 per cent a year. So I think that's part of the issue here. If everybody's property was going up the exact same amount, I don't think this would be an issue.

[Page 28]

Now how long that particular real estate situation is going to stay in place, I don't know. We may be near the end of that now, we may be just at the beginning, again, not being a real estate expert. But it is a policy decision at the end of the day - is a wide-open market system okay, or, do we need to do something else? If we need to do something else, do you need to do it on the tax side or do you need to do it on the assessment side. For example, the municipalities have the legal authority, should they wish, to introduce bylaws to address rapidly increasing taxes, as opposed to assessments. I believe HRM did last fiscal year, they chose not to do it this fiscal year. That was a specific authority, more broad-ranging. They all had the authority to do it, based on need. So that's another way to address the same issue, on the taxation side.

MR. DAVID WILSON (Sackville-Cobequid): I think part of the problem is the way it is set up, or the province. I know we're moving and shifting to that outside identity and I think more input from the municipalities and UNSM in this new identity that is going to be overseeing assessments, do you feel that will benefit residents and taxpayers having that separate identity, maybe having a little more input from the UNSM because I believe that is one of their criticisms over the years, we are stuck with delivering this and we don't really have the avenue to have input on it. So do you feel that maybe with the shift of forming this new identity that there may be better opportunities for the municipality to do what you were just stating?

MR. KEEFE: Yes, I think the principal beneficiaries, if you will, of moving to the agency will be the municipalities themselves. They obviously have a very vested interest in the assessment roll and a very vested interest in making sure that is as accurate as possible.

They are also on the front line, of course, in terms of the citizens complaining about their tax bill. Right now the citizens had to go to two places; they either had to complain about their tax bill to the municipality or they had to complain about their assessment to us. This might try to narrow that down.

I believe there are lots of opportunities in that agency for perhaps administrative savings across there. We try to do that anyway - our department is about trying to streamline and join up services - but it is a lot easier to do those when you're not crossing boundaries from one level of government to another. Those make it very difficult. So I think there's lots of opportunities for them to integrate their operations more. Maybe some of the smaller municipalities might want the agency to send the tax bill. If we are sending a notice, maybe we can send the tax bill at the same time and save postage. I think there are a lot of ideas like that they can explore.

As far as the citizen is concerned, at the end of the day the assessment shouldn't change a bit. It should be identical, whether it is done by the agency or whether it is done by the province because really it is driven by what the Act says - market value, uniform,

[Page 29]

fair. So they would have to live to those same standards. So it won't affect the assessment amount per se but I believe the municipalities do live a little bit closer, particularly in this area, to the citizens and they may have some opportunities to help things up.

MR. DAVID WILSON (Sackville-Cobequid): And you answered my next question, will it cost less or will they save money? Hopefully they'll have an opportunity to do that.

Do you see the role, and maybe I've missed this reading through the material, do you see the role of this new identity to set a cap, like we've seen in the past? Is that still going to be under the authority of Cabinet or will this new identity be able to say, we acknowledge the increases we see, maybe some of them are excessive, that they'll be able to set it. Do you see that role on the new identity? I don't know what the true name is - maybe you can clarify that.

MR. KEEFE: The Property Value Corporation is the current one.

MR. DAVID WILSON (Sackville-Cobequid): I'll keep calling it the new identity.(Laughter)

MR. KEEFE: Yes, we've been calling it the agency for years. No, they won't have that authority at all. That authority will stay with government, the way the Act is currently written. I guess it'll expire in three years but there is a bill before the House. No, that authority stays either with Cabinet or with the Legislature, depending on how the bill is drafted, but that won't go to the agency, no.

MR. DAVID WILSON (Sackville-Cobequid): So I guess we'll still be anticipating the cap every year and I think it just shows - I know it is a policy thing and it is not in your control but I think we just need to make sure that we emphasize the fact that I think we need a permanent solution to this and hopefully government hears that.

Around the assessments and the cap at 10 per cent, do you keep track or stats on the number of households that are on the thresholds, like myself? Are you actively trying to keep it just below 10 per cent, so that you don't have to go through capping assessments? Is that something that the department does?

MR. KEEFE: No, because what we're trying to do is reflect the market value. We analyze a lot of sales, try to find out where the market trends are, identify neighbourhoods that the trends are within and basically the computer, the mass appraisal system crunches all those stats and comes up with a value. So whether or not the values come out to be slightly below or slightly above, it really makes no difference to those

[Page 30]

calculations. Whether or not we have the stats for that, I don't know, I would have to ask Kathy...

MS. GILLIS: No.

[10:15 a.m.]

MR. DAVID WILSON (Sackville-Cobequid): And I would say that government benefits from the over-100,000 people who may receive a cap and only about 40 to 45 per cent - I mean, government is benefitting from the lack of individuals who take part or who actively try to seek a cap on their assessments, isn't that true?

MR. KEEFE: No, at the end of the day I don't think the cap impacts the amount of municipal taxes collected. To put it in the simplest form, the municipalities figure out their spending needs, here's their assessments, divide one by the other and there's your tax rate. I know it is a bit more complicated than that because there are area rates and everything else, but essentially that's it. What the cap does is change who pays; it doesn't necessarily impact the total amount paid.

MR. DAVID WILSON (Sackville-Cobequid): So because my colleague applied for the cap, I'm technically paying more in taxes. (Laughter) I understand.

MR. KEEFE: Now of course $46,000 capped over $400,000 not, it spreads out but that is true.

MR. DAVID WILSON (Sackville-Cobequid): I know that the UNSM have agreed and want to see this new agency formed, but I also know that there are some municipalities out there that feel this is not the step they want to go in. I understand that the size of the UNSM, and there are going to be those municipalities that feel this isn't the right approach, do you feel that once this agency is up and running that maybe those municipalities that feel that this isn't the right step will realize that it's a good step? Do you feel this is a good step, as bureaucrats? I know you have to implement whatever government policy comes forward but do you feel that this is a good step for the taxpayers here in the province and for the municipalities?

MR. KEEFE: Yes, I believe as time goes by that some municipalities that are somewhat skeptical now, will see the benefit of it. I know one of the early concerns expressed to us over the years was, did they have the capacity to run something like this. Assessment is a fairly large organization, an almost $15 million budget, 160 staff, a tremendous amount of data they need to process. Once we set up that interim management board - I believe it was back in 2005 - it brought a lot of folks in who got to see the internal operations of assessment and realize that at the end of the day it is just another organization, no different than running a municipality or part of a municipality.

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I think that confidence level on the part of those folks started to go up and that's when we saw a real turn.

We've always had municipalities right from the day we started the 100 per cent recovery of the costs, insisting that gee, we're paying for it, we should run it, but that support expanded as they got to know more and more about the organization. So I predict that trend will continue; once they take over and start running it, you'll see more support.

MR. DAVID WILSON (Sackville-Cobequid): And one of the concerns I do have is the employees who are involved in this, it is going to be a change. I mean, you are taking some employees who work for municipalities, some that work for the government, and bringing them into a new identity. Do you feel that that is going to have a smooth transition and that the rights of the employees, no matter what side they are on, are going to be taken care of? Do you feel confident that that will happen?

MR. KEEFE: Yes, I'm very confident that their rights are going to be taken care of and I am hoping it is going to be a smooth transition. We certainly can't ignore the fact that some of those folks are going to be nervous. Changing a job, if you will, is one of the most stressful things folks can go through and, at the end of the day, that is essentially what is happening here, they're changing employers.

The proposed legislation continues all the current benefits, including things like the Public Service Award, which is a benefit virtually unknown outside of the provincial and federal government. So I believe they are going to be very well looked after.

There is some concern about, is this a downsizing exercise? This has happened in other provinces. I don't see that as a risk at all. Actually, we're facing the exact opposite problem. You start looking at demographics, I have been more worried about our ability to hire 162 people five years out, as opposed to worrying about downsizing.

MR. DAVID WILSON (Sackville-Cobequid): So my last quick question is - and I will be a little selfish for the area I represent - our area has grown immensely and we've always heard about an expansion of the Access Nova Scotia, so is the Sackville area going to receive a new office? Yes or no.

MR. KEEFE: Yes, the answer is yes. We had hoped to actually do that in the Cobequid Centre. We're working with HRM and Service Canada, hoping to make it a bit bigger deal than an access centre. We couldn't pull that off in the timelines we had. We're still working on that behind the scenes because we think that it would be even better for the citizens to have one stop with all three governments there, than just one stop with us, but that's definitely on our radar.

MADAM CHAIR: Order, the time has expired.

[Page 32]

Mr. Colwell.

MR. KEITH COLWELL: Thank you. I want to thank the staff for coming in today and I know a lot of the questions that have been asked are really beyond your mandate and I do appreciate the answers and the attempts to answer those questions.

Assessment has always been a major problem for people, I'll give you one example. I have a retired friend who has a rather nice home. It was valued around $200,000 and over five years now it is $500,000 on the assessment roll. Now, that's an awful bill to have to be faced with every year to the point that they're probably going to have to sell the house. That's what it's coming down to. They won't get $500,000 when they sell the house. So that's a serious, serious problem.

I have also sat on council - as you're well aware, on the regional council here - and the tax increases have been, let's put it this way, outrageous in some areas. In some areas, I've heard in a couple of places the assessments slightly went down and the rates went down. I think this whole process is avoiding the municipalities taking responsibility for their financial situation.

I know you can't answer that because that's beyond your mandate, but if you need to raise more taxes to do some kind of project in your municipality, you should do it by a tax rate increase, not by allowing on the assessment rate and driving the taxes sky high and you can sit back and say we dropped taxes, which we did when I was on council, we dropped taxes, but at the same time had all kinds of money to work with. When I was there on council, I think we had almost a $500 million budget and two years later it was $600 million. Wow, what an increase. That's a pile of money to spend. So I think the assessments have really taken away a lot of the responsibilities from the municipalities.

I've got a very quick question and this one you should be able to answer, I hope. Is there any other way of assessing property values, or setting municipal tax rates, besides the system we use in Nova Scotia, anywhere in North America?

MR. KEEFE: I don't know of anywhere in North America. There are certainly other methods of assessing properties. Market value is the most common. I believe it's 127-odd countries around the world that use market value and I believe it's all in North America. There are some tweaks to that obviously. There are variations of the cap program in different jurisdictions and some have, the suggestion that was made earlier, you take what the property sold for and add the CPI and that becomes the assessed value, but there are issues with those as well and that's why at the end of the day it's a policy decision.

I'll give you an example with the fixed amount plus CPI, or the price it sells for and then plus CPI. You will end up with situations in neighbourhoods where the amount

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of taxes that neighbours pay, next door to each other, starts to vary greatly. So if I've been in my house for 20 years and the next-door neighbour comes in and just buys today, well, obviously, the market has gone up and therefore, the tax that they're paying varies significantly from the house next door.

So that's not a panacea either, it has its own issues, but there are certainly others. I'm quite encouraged, staff has brought a proposal, in HRM the staff has brought a proposal to council, and I'm not up-to-date on what council's position on that has been yet, to do a review of exactly some of these issues. They're tossing around some different ideas such as a minimum tax per house, maybe a maximum tax per house which might be a way of getting at this other than the cap. So, no, there are definitely other ideas out there and I know HRM - I don't know if council has supported it yet, but staff wanted to go forward and have a public discussion on some of these ideas.

MR. COLWELL: Yes, I agree with those approaches and I commend council for even looking at that and the staff for doing it because the reality is, the municipalities need money to run services; that's it, that's what this is all about, it's not anything else. The way they arrive at what value they're going to charge each individual person is causing a great deal of grief for people - these huge, huge assessment increases.

I know you guys are following the rules and you have to do that under legislation and I've got no argument with you doing that. The appeal process is long and drawn out. A lot of people are nervous about it and they just won't go forward. I know some of my constituents have gone forward with it and got nowhere. So they're totally discouraged and really upset because their property taxes - because of assessment - has gone right through the roof and the service level is staying the same or actually decreasing. So it's a whole process I think that needs major, major review and to go to something else.

Another thing is the cap. If the cap is automatic - now I realize, and I've got no sympathy for anyone who owns properties outside the country and comes here paying property taxes. I think they should pay their fair share, period, so that's not part of my point here, but wouldn't it be a lot cheaper just to apply the cap and save the $200,000 for the Assessment Department. I know the municipalities would lose a little bit of revenue, but it's going up - it's not going down. Wouldn't it be a lot more sensible to use that approach?

MR. KEEFE: It would be cheaper obviously. It would be administratively quite easy to apply a cap without an application process. The only thing you would have to look at there would be a change to the building, which for the most part we capture through building permits. So, obviously, that would lower the cost of administering the program by just putting the cap across the board, rather than having an application process.

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MR. COLWELL: And the argument of someone living outside the country, or outside the province, let's put it that way, a non-resident doing that, I think there was a court case in Prince Edward Island or something that said they couldn't double the property taxes and they won that case. Is that correct, or am I mistaken?

MR. KEEFE: That I don't know. I have heard that P.E.I. has a separate property tax or a different rate for non-resident owners, but I really don't know if that has been challenged or how it's administered. Do you have more information on that, Kathy?

MS. GILLIS: I do know that there's a different rate for non-residents in P.E.I., that's all I know.

MR. COLWELL: I realized that before, when we were in government, we looked at the possibility of doing the same sort of thing and somebody somewhere told us, informed us somewhere in government, that it was something that could be challenged and it wouldn't work, so in effect the cap is the same thing; if you live outside the province and you're paying a different tax rate, you're penalized on property taxes. In theory, someone should be able to contest this and possibly win. Hopefully they don't, because any time we can get more money in the province from outside the country is a bonus, as far as I'm concerned.

The board set-up. I'm very, very nervous about the municipalities actually looking after the assessment and the tax rate. It'll be a while before everyone catches on in the communities and really gets irritated, because they get really irritated about the tax rates and the assessment increases before they really do it and I don't want to see the municipalities have an excuse and say well oh, no, that's a corporation that does that, and forget to mention to the resident that, indeed, it's a corporation but the municipality controls it.

I think the board structure, it's probably under legislation is it, the board structure?

MR. KEEFE: Yes.

MR. COLWELL: That's something I think we should, as politicians, probably look at. I think there should be more citizens on that, fewer councillors and fewer bureaucrats. Maybe about 51 per cent of the board be residents, who have to face this problem every year with increasing taxes, instead of people who have a vested interest in both ways - not that that's bad, but a vested interest. That's something I think we should look at.

This whole system, and again I stress sitting across there you follow the law, you have to and you do it very well and there's no argument with that, but it just seems there

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has to be a better way to do this and I don't think there's anyone in this room, in this province, who says there isn't a better way somehow. How to make it fair, that's the big problem.

If this cap was applied and tied to something like the consumer price index or something, that would make this easier for people, excluding of course new construction, renovations, change of ownership for whatever reason, that really applies. Even in those cases my opinion would be - and this is my opinion - that if someone buys a home and they spend twice the amount that it's presently assessed for, they know what their tax bill is going to be and they're willing to take that chance and that leap, and it doesn't matter if they pay more taxes than the guy next door if they're willing to do it under the present rate.

I still don't think the whole system is fair because there are situations where people pay too much tax for the service they get. I think the service they get should be tied to the tax rate and nothing else. What's your opinion on that, from an administration standpoint? Do you think it would cause - you already indicated, I believe, that it would be easier if you just put the cap across it and you had a factor that you applied to it. How much would it reduce if you had a cap applied right across the whole province and you didn't have to go do assessments anymore on the majority of the products, only on the renovations, new constructions and change of ownership ones. How much would that reduce the cost of doing the assessments?

MR. KEEFE: I don't know, I'm not sure, I'm just trying to think through my head what process it would stop if we did that - probably the analysis of sales, so I don't know what percentage.

MADAM CHAIR: Ms. Gillis.

[10:30 a.m.]

MS. GILLIS: With the cap as it is right now, we still have to do a reassessment every year. We still need to know what that base value is, so if that meant that you still had to have that reassessment data, it wouldn't save any money. If you take out the whole notion of reassessing every year and only changing the value if there's new construction or if there's demolition or whatever, I'd have to go back and look at the portion of staff we attribute to that reassessment process versus - and it's not an easy one to pull out and make a comment. Purely on the administrative side, as we mentioned before, it's about $200,000 a year that would be saved on not having an application process, but I would have to look at that a little bit to better make an answer to that one.

MR. COLWELL: Could you do that and forward the information back to our committee?

[Page 36]

MS. GILLIS: Sure.

MR. COLWELL: I'll turn it over to Mr. McNeil.

MADAM CHAIR: Mr. McNeil, you have until 10:37 a.m.

MR. MCNEIL: Thank you, Madam Chair, just a follow-up. There has been talk around the intention of the cap and the reason for the cap and, you know, obviously part of it was the escalating assessments but, in my view, the real reason for the cap was to protect fixed-income Nova Scotians, or low-income Nova Scotians, from the scenario that was painted earlier by the deputy minister, of somebody coming in and building a new house which was driving up the assessment of their house. I'm wondering of the 65,000 people who have applied and the 45,000 who haven't, has there been any measure of income?

MS. GILLIS: No.

MR. MCNEIL: Would it not be wise to do that?

MR. KEEFE: The policy direction given to us was to protect Nova Scotians from dramatic and sudden increases. The affordability issue was not particular to the design feature of the cap program. Again, as I said, that would be possible, it would be possible to change the cap to be income tested. It would add to the cost of administering it, but it would certainly be possible to do, particularly with today's technologies that we have.

MR. MCNEIL: We've sat here and, you know, it has been mentioned a couple of times today about who qualified and who didn't. You viewed your own, whether you qualified or not, and you also said really this program is actually shifting the tax burden. So I guess from a government's perspective, I think we would want to know whether or not we're shifting the tax burden from Nova Scotians who are doing okay, or wealthy, to those who aren't. I don't think we would want to be, you know, forcing low-income Nova Scotians, or Nova Scotians on fixed income, to be sharing the tax burden of those of us who are sitting in this room on our property assessment.

MR. KEEFE: What I said, just to be clear, is that with the marketplace increasing more in some areas than others, that's what's shifting the tax burden. So the cap, in essence, is slowing down that shift. So the cap itself isn't shifting, it's reacting to the market, but your point is . . .

MR. MCNEIL: Well, if I understand it correctly - and I'll use my own constituency, for example, the riding of Annapolis - you had said that the municipality knows how much money they're going to spend and they then divide the number of residents. If those who are well off in my constituency have applied for the cap and have

[Page 37]

been granted the cap and their property assessment has been capped, who is the municipality going to pick that up from - those who haven't applied and those who, you know, may not be doing so well. I would think that would be an important piece of information for the government and the people of Nova Scotia.

MR. KEEFE: It would be a very difficult piece of information to get at. It's difficult to say whether the properties that are increasing, i.e. that are being capped right now, are owned by high-income people, low-income people, or somewhere in between. We certainly know some are owned by high-income people. You hear about that and it's probably obvious in some, particularly if they can afford to live in a neighbourhood, but we also hear quite a bit of anecdotal evidence that some of this property is increasing by folks who are not high-income. So how the cap is actually impacting people of various incomes is going to be very tough information to get at, because we certainly don't have income information within the department. Nor do we have the right to go to CRA to get it without permission. So to do that correlation is not going to be simple.

MR. MCNEIL: It may not be, but I think it goes to the heart and the purpose of the cap program, and that was to protect low-income Nova Scotians and fixed-income Nova Scotians from their assessment going through the roof and forcing them to have to sell their properties. So I think we need to go back to, you know, when you look at the intent of this, it wasn't to protect somebody in the South End of Halifax, it was to protect someone else. So I just want to share the rest of my time with my colleague, if I could.

MADAM CHAIR: Ms. Whalen.

MS. WHALEN: Thank you very much. I have a couple of quick questions. I know there's not much time so if we could keep our answers succinct, that would be great. On the use of the assessment information, are there other uses that the new agency will make of that information? Are there opportunities to sell the information or anything like that so that there's some other source of revenue for them?

MS. GILLIS: If you look at other assessment jurisdictions that have gone this way, they have taken that route and translated that information into something that would be of interest for people. For instance, real time value on a property, that's something that somebody may be interested in paying to get.

MS. WHALEN: Can I ask, will the new agency be selling that information back to the provincial government?

MR. KEEFE: I'll address that. What was worked out is that any information that the government has access to now, we'll continue to have access to. We obviously need that information for fiscal purposes which is also, as I mentioned, a tremendous flow of data between things like deeds, property mapping, assessment, and we'll let that flow

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continue. Obviously if, down the road, the provincial government has a request for information and the process of gathering that information has a cost to the agency, the agency would have a right to bill the province for that cost but as far as the access to the data itself, no.

MS. WHALEN: So right now you'll have access to the current information without paying for it.

MR. KEEFE: Yes.

MS. WHALEN: I think that's important. Do you have a cost on what it cost you to do the appeals process? That's the other question, I wanted to go back to appeals. Within your agency, you have not broken down how many staff members, or how many lawyers, or how many people are working on appeals?

MR. KEEFE: No.

MS. WHALEN: Could I ask for that information to be gathered and brought back to us, please?

MS. GILLIS: Sure.

MS. WHALEN: I think that's a very important one as well. On the market value, I don't know if I have a minute, but on the market value question - over the past time and in previous times here at the Legislature, you've spoken about the value and how good it is, using market value. How do you feel about changes to that as different laws come up and it's being changed?

MS. GILLIS: I am responsible to ensure that I do market value, I really have not looked at, or have an opinion on it.

MADAM CHAIR: Order, please. The time has now expired.

Mr. Bain.

MR. BAIN: Madam Chair, just one further question for me at this point. A lot of people, when they get their assessment, they look at what municipal services are available to them in their community or in their town and they'll compare it to Mr. Jones in another community in another part of the province and say, well, I'm assessed at this, all I have is fire protection and street lights but Mr. Jones has this, this, and this. I notice in some of the information we have that the process of valuing properties provides consistency between the property assessment, current market conditions and assessments of other properties in similar neighbourhoods. How do you define similar

[Page 39]

neighbourhoods? Is it the services that are available, or is it a combination of the market value with that neighbourhood as compared to what you're looking for?

MS. GILLIS: The assessors actually would take a particular geographic area and they would break it out based on boundaries, what that area has in it. So it could be where the streets are located, if there's a church, a school, and so we define that geographic boundary as a neighbourhood.

MR. BAIN: So it's just within a confined area?

MS. GILLIS: Yes.

MR. BAIN: Are available services - services that are there, municipal services - included in how the assessment is reached?

MR. KEEFE: No, the purpose of the assessment is to determine the market value. Now, I would assume in neighbourhoods where there are more municipal services available than others, that probably impacts on the market value of the house.

MR. BAIN: Yes.

MR. KEEFE: So there's probably a relationship there but, no, in determining the assessed value what services are available is not.

MR. BAIN: I guess that's where I'm going because you people reach your determination based on what you've just said, but the citizen sees their assessment based on what they're getting for their assessment and that was my reason for asking that. Thank you, Madam Chair, I don't know if any of my colleagues have questions or not.

MADAM CHAIR: Mr. MacLeod.

MR. MACLEOD: Thank you, Madam Chair. On a similar line, when you have a neighbourhood and there are a large number of housing starts and new construction going on in the neighbourhood, does that have a direct effect on the assessments in that area?

MS. GILLIS: Yes, it does to some degree. I mean the assessors would look at what's happening with those sales. They would look at what's happening with that development and make a determination of what the values in that area should be.

MR. MACLEOD: And I guess that leads to my concern. In a rural area, such as the one that I live in, we've seen some developers come in from the outside and build a number of large homes, $200,000 and $300,000 homes, in a community that had $40,000

[Page 40]

and $50,000 homes. We have people on fixed incomes and we have all these new housing starts taking place and this new assessment taking place and we see the people who are on the fixed incomes, as Stephen has mentioned - the member for Annapolis has mentioned - and we see those people's assessments going up and their taxes going up. Is there any way, besides the cap, is there any other solution to that?

MS. GILLIS: Well, the assessor would look at comparability of the property as well, so a $50,000 home and a $200,000 home - the assessor would distinguish between those two. The new development doesn't necessarily mean all assessments are going to be going up by that amount because we would collect information and retain information on every property.

MR. MACLEOD: It seems from the information I have and what people have said to us though, that that's not exactly the case; that, indeed, they feel their assessments and their property taxes are going up because of this activity. Quite frankly, they feel it is activity that's being created by people from the outside and they've lived there all their lives and all of a sudden now they're going to be taxed out of their home.

I am concerned that there isn't a way to - when somebody lives in a community and lives in a home all their life, they should have the right to live in that home as long as they want, all things being equal, and if there are activities taking place in the community that are driving them out of their own community, is there any way that we can find a way of levelling that out? You know, home is home and there's nothing more important to an individual in Nova Scotia than their home.

MADAM CHAIR: Mr. Keefe.

MR. KEEFE: As I mentioned, there would be a variety of strategies you could use to do that. At the end of the day, what you're referring to is that the market here is determining that the value of those houses is changing because more people want to live there, markets are basically supply and demand. If demand gets above supply, the price goes up and that's what's happening in some of these locations.

Now because we are also using market value to determine a tax, the tax is also going up. So between those two, if you need to address that area you can do it as we're doing now, for example, with the cap, that's one way of addressing the issue you're talking about but there are other tools as well.

As I mentioned already, municipalities have the right to put in the bylaw where people can apply for tax relief based on a means test. There may be other tools as well, So all I'm saying is yes, there are issues you can address from the assessment side. Some of the jurisdictions have done them, they had their pluses and minuses, there would be a list and you can also address it from the taxation side. Maybe the municipalities need

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more tools. The tools they have now are not a big set; they can set a commercial rate or a residential rate and they can allow some relief. Maybe some more powers for municipalities might be able to address the issue. So I think there could be a series of things that could be done.

MR. MACLEOD: Thank you, Madam Chair.

MADAM CHAIR: Mr. Porter.

MR. PORTER: My question is sort of, I guess, along the lines of the appeal process. So we have this formula to set my assessment and then I say oh, you know, I think this is too high, I don't like this assessment, I'm paying too much, so I file for the appeal. What happens? Does somebody now come back out - nothing's changed, everything is still the same as it was the day you sent my assessment out but I'm appealing it, giving whatever reason I want, I guess, as a taxpayer. Now I'm wondering, does someone actually come out physically, look at my home, compare the home next door and the one next door, and what happens from there? How does that work?

MS. GILLIS: Yes, when we get an appeal filed, the record is retained immediately that we have an appeal. That information is then provided to an assessor. The assessor will contact the appellant. The assessor will review the record of what we have on file with regard to the property. The assessor will offer to go out and do an inspection, if the appellant is agreeable to that.

[10:45 a.m.]

It is very important for us to get into the property because that's how we can really get definitive around the value. So all contact is made and if property inspection is required, we will certainly go and do that. So that's the first level of review, that's what we call, under the Assessment Act, the assessor's review.

Then, if the assessor after that makes a determination that the assessment is okay, a notice of confirmation is sent to the owner and then the owner can then decide if they accept the confirmation of value or if they want to re-appeal it, and if they re-appeal it, then that's when it goes into a regional assessment appeal court. Then a hearing can be held and then if that decision is rendered and they're still not happy, you can go to the Nova Scotia Utility and Review Board and file an appeal there. All the way through, the assessor contact is critical and we make every effort to get out and talk to the property owner, inspect the property.

[Page 42]

MR. PORTER: I'm a fairly young homeowner, I guess. I've owned a few homes over my time and I can remember back when I built my first home a number of years ago, there was an assessor. Fred comes out and he takes his measurements, he looks at my home, is my front step on or is my back deck on, is all the trim on my house? That doesn't happen anymore. I guess that's a question, that's not happening now? You're basing it totally on all of the other things in the formula - what's going on around me.

MS. GILLIS: Actually, what we do have is a program and the deputy referred to that in his opening comments. The program's called the Property Assessment Inspection Program. Every year for the last two years, we've had anywhere between 18 and 20 people employed to do door-to-door inspections. We have up to a certain number of inspections this year that have actually occurred as a result of that.

The efforts are made in addition to things like an appeal or a sales investigation or an inquiry, the effort is made to make sure we go door-to-door because in some cases we rely on building permit information from the municipality, for instance, and if it's not forthcoming, then we don't get that information. That's a critical piece on ensuring the assessment is correct.

We do attempt to get door-to-door. One of the issues for us is that property owners are home. If they're not home, then we leave what's called a call-back card and that advises the property owner we were there and asks them to return the call to us and we'll go out and arrange another time.

MR. PORTER: So there are two things here, I guess. One, if I'm going to build a new home next year where I live, I can call you up and say, I want you to come out and please do this inspection, in hopes of getting what I'll call a good or a fair assessment.

The other is, somebody's making a point then on behalf of the province to look at the municipal information and say there are 200 new homes being built in Halifax in 2007. Then, what percentage of the number of homes being built in any given municipality - I wouldn't think it's 100 per cent, but please, correct me if I'm wrong - what percentage is being inspected of the new homes annually?

MS. GILLIS: Again, we would rely on the building permit information from the municipalities to give us that. I think we do something in the vicinity of 14,000 inspections on building permits a year. From the point of view of - we reconcile every building permit that the municipalities provide us. We do that PAIP inspection to ensure we get renovations. The assessors would just, by contact - and if you know anybody in assessment, we don't seem to stop assessing 24/7. I'm always looking around HRM, for

[Page 43]

instance, making sure we have Dartmouth Crossing and things like that. It's a pretty constant effort on our end.

MR. PORTER: I realize you said, yes, that information comes from the municipalities. So that percentage of numbers in the municipality of West Hants, as an example, if there were 100 new homes being built, they would provide you with how many were actually inspected.

MS. GILLIS: That's right.

MR. PORTER: They would give you that percentage. You don't control that number?

MS. GILLIS: No. They would give us the building permit information.

MR. PORTER: They only control that based on how many they can get to, based on staff, et cetera.

MS. GILLIS: That's right.

MR. PORTER: I had another question, I'm sorry it slipped my mind. All right, I'll leave it at that. Thank you very much again.

MADAM CHAIR: Mr. Bain, you have until 10:54 a.m.

MR. BAIN: Just one final question from me and it's going back to the appeal process. Reference was made that you have 21 days to appeal and from the time the appeal was mailed out. I guess, just for clarification, there would be a date on that appeal and just so I'll be able to tell my constituents, that's what you go by? You don't go by when you received it?

MS. GILLIS: That's right. It's the date of the notice.

MR. BAIN: Because a lot of times - and I'm not being critical of our mail delivery system - but in some of the more remote rural areas of our province, it may be four or five days before they get that. So everything is based on the date that's on that piece of paper when they get it?

MS. GILLIS: That's right.

MR. BAIN: Thank you.

MADAM CHAIR: Mr. Porter.

[Page 44]

MR. PORTER: That has come back to me now. So you outlined all this appeal, there are four steps, if you will, to go through during the appeal if you want to take it to the bitter end. It seems a bit cumbersome, I guess, and I'm curious that if 50 people say, I don't like my assessment and I'm going to go to step one and create my appeal process, how many people follow it through? Do we know what the percentage rate of - they just say, this is a good process and it's fairly easy to do, those steps that you've outlined. What's the percentage, do we know - and maybe you don't - that go through it and completely . . .

MS. GILLIS: Yes, I would want to go back and confirm those numbers before I actually gave you a number, but I know it's a lot lower than what we used to have.

MR. PORTER: Any idea why that might be?

MS. GILLIS: Again I'll go back to the contact that we make with the property owners under the preliminary roll process and the notification and also we do annual reassessments. You're probably very aware of that if you get the contact from your constituents. So people see their assessment every year and they generally know where it's going.

MR. PORTER: Thank you very much, Madam Chair, and thank you, folks.

MADAM CHAIR: Mr. Steele has requested to ask an additional question and I think Ms. Whalen had an additional one. There are a couple of minutes left. Is there any objection that they place these questions? Mr. Steele.

MR. STEELE: I want to thank the members for their indulgence. I do have quite literally one question. I want to go back to this issue of the cap application process. I want to thank the member for Halifax Clayton Park actually for putting her finger on the real issue, something I had forgotten to ask, which is 40,000 or so people in the program but there could be 100,000 or more who are eligible for the program. All of this is done in the service of trying to identify a relative handful, I would argue, of non-residents. When you're assessing the applications for the cap program, do you actually verify the residents' information that's provided or do you simply accept whatever the applicant has stated?

MR. KEEFE: We're basically accepting it as a declaration right now. The first year, I believe, we looked at using something like the Health Card to help verify residency. We got into privacy concerns with that, so we backed away and basically are using a declaration.

MADAM CHAIR: Ms. Whalen.

[Page 45]

MS. WHALEN: A quick question for Ms. Gillis, if I could. Could you tell me how cell towers and communication towers are assessed or taxed?

MS. GILLIS: I'm sorry?

MS. WHALEN: Cell towers, communication towers that are put up, you know, just on vacant land or on hilltops, do you know the basis of their assessment?

MS. GILLIS: No, I think I would have to go back and confirm that. Was there a particular issue on that one?

MS. WHALEN: Well, I think they're similar to wind power and I would like to know what they're taxed at so I could have some idea about the wind power taxation which is before us at the moment. I think there's a parallel, so I would like to know that if I could.

MS. GILLIS: Yes.

MS. WHALEN: So that was one thing. On the other information that might form sources of revenue for the new agency, can you just take a minute and explain to us what kind of uses there are for this information beyond what it's used for now which is just property tax.

MS. GILLIS: Right. Well, I think, for instance, the municipalities may be very interested in information that we would be generating with respect to their assessment base, doing some analysis of what the tax rates could be, that kind of thing. So there's that piece. We could look at commercial properties with respect to rents, what's happening with the commercial sector. That's of interest to some developers, things of that nature.

MS. WHALEN: What was real time value?

MS. GILLIS: Real time value is actually taking the assessment up to the present day, current, right now.

MADAM CHAIR: Order, please. The time for questioning has now expired. I want to thank the witnesses. There have been requests made for a number of pieces of information that you have in the department and we will formalize that by a written letter to you requesting that information. Now you have an opportunity to make some closing statements if you would like to do that. Mr. Keefe.

MR. KEEFE: I will just be brief. I would like to thank you, Madam Chair, and the honourable members for this chance to respond to your questions. You've raised

[Page 46]

some good issues for us today, some nice suggestions I would like to take back. The literacy one is obviously an issue for us. It's actually becoming a bigger issue for us, or will be as we start to try to move to more on-line transactions. The accessibility is going to be a lot more than just literacy. There are other gaps out there on that one. So it is one on our radar and one we hope to deal with. So we'll take some of your suggestions back and I like the idea that maybe we should be identifying on the notice of assessment that it is capped, yes, that's a practical one and maybe we can do that one.

The agency information you talked about, there are possibilities there. That's one the agency is going to have to exercise great caution and we'll have to oversee as well that there are certain protection of privacy issues with that. There's certainly no doubt in our world, we get requests all the time for our data from people trying to do marketing studies and so on. I don't mind them maybe doing a marketing study, but certainly if they start to do that for marketing, that might make a different issue altogether. So yes, while there are possibilities there, there are also cautions as to what the appropriate use of that information will be.

To conclude, I would like to say that assessment is at a very important, exciting stage in its history. I think we have a strong organization and we're ready to go. We do produce our roll every year, on time, on budget. The folks have a very good track record. I'm quite pleased with this division. We have a compelling case for transition outside of government and garnered support for this agency, the Property Valuation Services Corporation, from key stakeholders, the UNSM - that support was 70 per cent, by the way, a year ago was the vote at the UNSM conference. We believe that will continue to build, so we anxiously await you and your colleagues' decision over the next week or two or whatever, in the House, as that bill moves forward.

So with that I just want to say thank you for the opportunity and we've enjoyed the morning.

MADAM CHAIR: Thank you very much, it was a pleasure to have you here. The next meeting of the committee is on Wednesday, November 29^th, and we will have witnesses from the Department of Education, the special education and APSEA audits.

So with that we now stand adjourned.

[The committee adjourned at 10:57 a.m.]