February 14, 2024
Is PVSC capable of providing fair and reasonable assessments?
Dear Editor,
Across the province, property tax assessments in 2024 have seen increases well beyond any historical precedent. These increases are not inline with any reasonable metric based on the Property Valuation Services Corporation (PVSC) guidelines. The tax implications may not be immediate for all residents, but over time, we will all end up paying for this. Massive tax increases should only be brought forth via elected politicians and not determined by an unelected third party.
I have begun my appeal process, but I believe this issue extends well beyond my property lines and I am asking for the media and elected representatives to help Nova Scotians determine if the PVSC is capable of providing fair and reasonable assessments into the future. I’ve attached my appeal letter, which I’ve submitted to the PVSC that outlines my main concerns, but I encourage you to speak with your residents and constituents to gather their perspectives as well. I’m sure many residents would agree that tax increases like this undermine the democracy on which our society is built.
Thank you for your time,
Geoffrey C. Gillstrom
Grand Etang
February 7, 2024
To the representative of the Property Valuation Service Corporation,
The property I’m appealing in addition to the vast majority in my area have seen increases in assessed value far beyond any historical precedent. The divergence between these newly-assessed values and the real estate market in 2022, as well as the change in assessed value are a statistical anomaly that must be addressed and rectified, not only for the property I’m appealing, but for the province of Nova Scotia as a whole.
It is my understanding that the 2024 assessment is based on the valuation of the property on January 1, 2023, which encompasses the change in value over the course of 2022.
During that year, the Bank of Canada embarked on the most restrictive monetary policy campaign in two generations, which commenced that March. This coincided with the highwater mark for the real estate market in Nova Scotia and abroad. Data from the Canadian Real Estate Association shows that home prices declined five per cent provincially on a year-over-year basis. What this data point fails to capture, however, is the euphoric and speculative real estate bubble that popped as the Bank of Canada commenced their rate-hiking journey. From January 2022 to March 2022, home prices rose by 17 per cent, then promptly crashed by 22 per cent by the end of the year.
This type of price volatility is a clear indication of an illiquid market which should not be used as an accurate valuation of any asset, especially when that valuation is created by an unelected entity and then used to tax citizens.
Your website implies that the valuations are created using market data as well as various qualitative data points, unique to each individual property. If there have been no renovations or changes to any of the qualitative features, the valuation should be calculated by applying the depreciation coefficient plus a yearly market price adjustment. Based on any publicly available data, it is completely reasonable for the average homeowner to expect a decrease in their assessed value based on your criteria. After browsing properties across the province, I was unable to find a single decrease in assessment which does not reflect the market whatsoever in 2022. Moreover, the variance in change for the year between individual properties is alarming.
In my community, many people saw increases of over 100 per cent, while adjacent properties may have increased anywhere from 10 to 70 per cent. This type of volatility is usually observed in the most risky assets, such as penny stocks. In this case, however, it is being used as a tool to generate tax revenue. Furthermore, these extraordinary increases compound over time, which will lead to exponential growth in the tax obligations of Nova Scotians. The second- and third-order effects of this increase will lead to more delinquent tax accounts, and thus residents losing their property via the tax auction process. The lack of consideration for these factors seems irresponsible and short-sighted.
Since the COVID lockdowns, many tried-and-true methods of analysis have broken down, regardless of the industry. The stable and placid world where two per cent inflation and two per cent growth prevailed has vanished. Closing the economy forced global central banks to reduce interest rates to zero per cent, causing the biggest wave of inflation in over 40 years. None of their models were able to anticipate the inflationary effects of their decisions and they were then forced to raise interest rates at the most aggressive pace in history to undo their mistake. This caused a global slowdown in 2022 where every single asset class experienced massive losses, except cash, and as portrayed by your models, Nova Scotia real estate. If the models used by global central banks can fail to protect the world when faced with unprecedented economic change, I would argue that under the same conditions, your models have failed as well.
For the reasons I have outlined above, I am appealing my assessment and seeking a zero per cent increase for 2024. In addition, I believe this should apply to every property across the province due to the questions that have been raised regarding the validity and performance of your models and therefore your ability to provide a fair, reasonable, and stable platform from which property taxes are determined. I implore the Property Valuation Services Corporation to review your procedures and to implement better methods, ensuring that, in the future, such obvious errors are discovered within your corporation before being presented to taxpayers.
Thank you for your consideration.
Sincerely,
Geoffrey C. Gillstrom
Grand Etang
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