Saturday, August 26, 2023

Corporate Welfare

My interest in the property valuation issue is because I own a neighboring forest property - 42 acres valued at $9500.  I've stared at the map of the dump frequently, but it never occurred to me to ask why it's only valued at $44,300.

A business like the apartment building at 1333 South Park St. Halifax is assessed for $73 million and pays $910k property tax. The property tax rate is 1.2% of the assessed value.

Turning to the dump, 3 contiguous properties bring the assessment  up to $130,500. but even so it is a much more valuable piece of real estate.
The real value of the dump is in its approved volume of disposal.  Page 15 of the 2017 Environmental Assessment Registration for this site has the approval for 468,750 cubic meters of disposed material in 6,600 truckloads.  Each truckload is 7 tonnes.  At the CBRM landfill the tipping fees are $100/tonne, so the value of the capacity of the site is 6600 truckloads x $700 = $4,620,000

The current tax on the 4 dump properties is $1834 - 1.4% of $130,500

Allowing for half a million development and operations expenses, the value of the dump might be $4.12 million.  With a ten year lifespan, the value decreases every year as space is used up:

YearValue1.5% taxPresent tax

Over 10 years, the property is undertaxed by $321,560.  

Property Valuation Services Corporation (PVSC does the entire province) allows for an Income Approach to valuation:

"We typically use the Income Approach for properties whose value is based on their ability to generate revenue, like apartments, office buildings, shopping malls, hotels, and manufactured home parks.

We collect and analyze detailed income and expense information for your property and compare it to similar properties to determine how much income your property could be expected to generate. Then we analyze the relationship between income and sales prices to calculate the capitalization rate."

A more apt description can hardly be imagined.  Why not use it?  They are missing significant revenue through misvaluing this particular property.  Multiply that province-wide and there is an opportunity to distribute taxes more equitably. 

I learned that  in Britain they do valuation of dumps using a Royalty calculation.

(ii) The most value significant item will be the quantity of waste materials permanently deposited within the hereditament to which an appropriate royalty value is applied. The royalty rate should be derived from available local evidence having regard to the type of waste materials under consideration. In considering royalty evidence, it is often convenient to consider the following types of Landfill Site:-

a. Site licensed for all types of waste including “special” and/or hazardous waste (Full Licence).

This is a question of PVSC's methods.  By incorrectly valuing privately owned waste facilities, they are favoring a very lucrative enterprise and punishing ordinary taxpayers.  It's obvious, correct arithmetic and uncontroversial - "comparables" are GROSSLY inappropriate.  Read about this clearheaded decision in Ontario.

Other examples where Environment and Climate Change robs taxpayers by awarding large corporations permits include quarries, windfarms, sand pits and mines - any enterprise requiring an Environmental Assessment.  Check out one near you.

There are more than 200 Environmental Assessments done since 2017.  Last time I checked, there has never been a "no".  This seems to be a program so corporations can avoid taxes.  Just to confirm, here's another:

Allowing 200,000 tons of aggregate to be removed annually for 40 years.
2 parcels, 299 acres, $55,200 Assessment, $157 tax
True value = 200,000 x 40 x $20/ton (rough guess) =   $160 million
Declines as resource is used.
Property tax this year should be $2.4 million

Gus Reed

PS Here's a photo from today (August 26) showing the gate to Mr. Dexter's hovel.....

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