In our member survey last year, one area of concern was property assessments. In response, we compiled a list of recent assessments of Birch Island properties: 56 cottages assessed from $90,000 to $181,000 and 17 waterfront lots from $12,300 to $38,000.

The chart shows the number of cottages falling into various assessment categories with a median assessment of $125,000. We don't know all the factors that go into an assessment, but our data suggests that assessments are correlated more with size of cottage than with acreage or frontage, and that other factors weigh heavily, e.g., age of dwelling, and even quality of waterfront in extreme cases. On average, assessments seem in line with recent sales on Birch Island.

Using only cottage size, a simple data model provides a ball-park 2006 assessment of $80,000 plus $60 per square foot. Of course MPAC, for its estimates, uses a much more sophisticated model that includes frontage, acreage, age of dwelling, quality of construction, construction costs, type of foundation, site factors, neighbourhood factors, recent sales figures for comparable properties, and so on.

With respect to sales figures, "market value assessment" does not equal "what you paid for it", even for recent purchases. As I understand it, MPAC does not use property sales information to revise the assessment of a recently sold property to the sale price, but rather it uses aggregate sales information to adjust assessment parameters for the neighbourhood and the classes in that neighbourhood. It's understandable why MPAC does this. No only is the real estate market volatile, but also the bargaining process is not always logical and may not result in market price. Therefore MPAC smooths out some variability by adjusting neighbourhood modelling parameters rather than the individual assessment.

That being said, in some cases MPAC may assume a homogeneous neighbourhood neatly conforming to their model, whereas your property is an anomaly due to the state of the cottage, waterfront, etc. MPAC may not know this unless you tell them. Let's say you plug your square footage into the simple formula above and find your assessment off by 15% or more. Maybe you know why it's high -- new construction? -- or low. But suppose you don't see an apparent reason. If the assessment is low, maybe MPAC knows best! On the other hand, if it's high, check that MPAC has an accurate description of the property, including negative market factors that don't apply to your neighbours. Get descriptions of a half-dozen "comparable" properties and explore with MPAC why you are assessed higher. MPAC can be quite helpful, and the BIRPOA executive may also be able to help.

[ A tax note: an increase in assessed value does not always bring a commensurate tax increase. Suppose all municipal properties are assessed higher by the same percentage. Then in the absence of a budget increase, the municipality will decrease its mill rate to maintain its revenues, leaving your taxes the same. This hasn't happened in recent memory, of course. Budgets usually increase at least at the rate of inflation, and if waterfront assessments outstrip residential, the cottage owner will see a tax increase above the average residential increase.]