News Release

FREDERICTON (GNB) – Premier Brian Gallant announced today that the government will introduce legislation in the fourth session of the legislature to create an agency independent of the provincial government that will oversee property assessment. He also announced that an independent review will study the facts and circumstances surrounding how Service New Brunswick has calculated real property tax assessment values for the current and recent taxation years. Recommendations will be provided as part of the review.

“There is clearly a problem and we are going to fix it. Your provincial government is getting out of the property assessment business. It is important for all New Brunswickers to be confident in the quality, accuracy and transparency of the property tax assessment process,” said Gallant. “There have been thousands of errors every year, and in 2011, and again in 2017, arbitrary formulas were used to reduce the estimated increase. Although Service New Brunswick officials may have had good intentions in applying these formulas, the appropriateness of these formulas must be questioned and reviewed.

“The property assessment process must be better than that for the people of New Brunswick. We believe New Brunswickers will be better served by having an agency independent of the provincial government do the property assessments in the future,” said Gallant.

Several measures are being undertaken immediately to address the issues. As always, there is no deadline for New Brunswickers to report errors and for those errors to be corrected. Although there is a legislative deadline of 30 days for New Brunswickers to submit a request for review of their assessment where no error has been made, the government will continue to accept requests for review received through August 1. 

“There was clearly a failure of process and communication within Service New Brunswick, and that is why we will be having an independent review to ensure we learn exactly what happened and it can be corrected in the setup of the new independent assessment agency," said Gallant.

Gallant said an independent commissioner will lead a comprehensive review of all policies and procedures related to recent assessment processes, including a review of the assessment methodology, factors related to timing and deadlines, the use of various technological aids, quality control processes, and the use of formulas to estimate values.

The review will look at assessment practices for the past seven years, all significant changes to the assessment process and procedures, how previous assessment errors were corrected, and how present assessment errors have or will be addressed.

Following the review, the commissioner will report his findings and make recommendations about what measures or policies should be implemented to reduce the probability of future assessment errors. In the interim, all properties to which an estimation formula was applied will be visually reassessed and revised bills issued as warranted. Any property owners who have their assessments lowered as a result of recommendations from the independent review will have any overpayment refunded with interest.

The review will be overseen by Justice Joseph T. Robertson, a former judge of the Federal Appeal Court and a former justice of the Court of Appeal of New Brunswick. He is currently the jurist-in-residence at the University of New Brunswick.

The provincial government is aware of the following facts which will be subject to Justice Robertson’s review and verification. He will also be asked to determine the chain of decision-making, internal communications procedures, and what steps should be taken to address similar situations in the future.

• In 2011, there were 8,800 errors against 29,300 reassessments, an error rate of 30 per cent;

• In 2012, there were 9,470 errors against 38,000 reassessments, an error rate of 25 per cent;

• In 2013, there were 7,800 errors against 44,400 reassessments, an error rate of 18 per cent;

• In 2014, there were 8,940 errors against 54,100 reassessments, an error rate of 16 per cent;

• In 2015, there were 5,860 errors against 45,000 reassessments, an error rate of 13 per cent;

• In 2016, there were 5,350 errors against 22,900 reassessments, an error rate of 23 per cent;

• In 2017, there were 3,000 errors against 100,000 reassessments, an error rate of 3 per cent;

• Service New Brunswick has said that in 2011, and again in 2017, a formula was used.

“New Brunswickers deserve to know why this many errors occurred. This independent review will ensure that we get these answers,” said Service New Brunswick Minister Ed Doherty. “We, as a government, are working very hard to rectify this situation in a timely manner.”

“We understand that accountability and transparency are crucial to ensuring our province can move forward on issues that are priorities of New Brunswickers, including the economy, education and health care," said Gallant.

BACKGROUNDER:

Terms of Reference - Real Property Tax Assessment Review

An independent review will be undertaken of the facts and circumstances related to the errors made by Service New Brunswick in calculating real property tax assessment values for the past seven taxation years. 

A comprehensive review of all administrative policies and procedures in place related to the assessment process over the past seven years shall be undertaken, including a review of the assessment methodology, factors related to timing and deadlines, and the use of the various technological aids, quality control processes, and the use of formulas to estimate values.

The review will look at all significant changes to the assessment process and procedures over the past seven years, how previous assessment errors were corrected and how present assessment errors have or will be addressed.

Justice Robertson will report his findings and make recommendations by Aug. 1, 2017 as to what measures or policies should be implemented to reduce the probability of any future assessment errors. The findings of the review will help inform the design and setup of a new independent assessment agency.

Timeline:

Re-inspection of a property in New Brunswick often only occurs every 10 to 15 years, and, as a result, some New Brunswickers see property tax spikes and assessments as being unfair as some properties are assessed differently from properties of similar value due to the lag in assessment cycles. This is why new technology has been used to reassess more properties in a shorter timeline, to ensure all properties are treated equitably as so spikes can be reduced in the long term.

2011 – Assessment cap launched

A three per cent assessment cap was implemented for the 2011 taxation year. Assessors were required to use an arbitrary formula to assist in the estimation of property values. This year 8,800 errors were made.

2012 – Modernization project launched

The property assessment modernization project was launched in 2012 with a view to leverage new technology to provide for more timely and fair property assessments while also ensuring Service New Brunswick’s underlying technical infrastructure could support the modernization project. This year 9,470 errors were made.

2013 - 7,800 errors were made in this year.

2014 - 8,940 errors were made in this year.

2015 – Modern assessment model using new GIS technologies is piloted

Property Assessment Services conducted pilots using transformational technologies, such as geo-referenced imagery, to improve its data capture capabilities. This combines geographic information system technology and multiple regressing analysis models to significantly reduce inspection cycles. This year 5,860 errors were made.

2016 – New assessment process was utilized and 100,000 properties were re-inspected for the 2017 taxation year. In June 2016, a presentation was provided to the government that outlined modernization efforts and efforts to fast-track these initiatives. Additional resources were hired to assist in this process, in order to reassess more properties in a shorter timeline, to ensure all properties are treated equitably, and so spikes can be reduced in the long term.

February 9, 2017 – Assessment officials realized that a number of properties with high assessment increases would not be able to undergo the full quality control procedures prior to the billing cycle. This included only a small percentage of the total properties as part of the 2016 re-inspection program. They developed a formula to lower these assessments. Namely it capped the rate of new construction and/or major improvements at 60 per cent while applying a 10 per cent spike protection mechanism to the remainder of the tax bill. In 2011 a formula was also used to assist with the estimation of property values.

March 1, 2017 – Property tax assessments were distributed in the mail. Issues with specific assessments begin to surface in the days following, in both publicized media reports and by property owners contacting regional offices. Service New Brunswick informed the media and stated in briefings that it is normal to have errors in any given year, and that the error rate was, in fact, much lower than previous years.

March 14, 2017 – Service New Brunswick issued a news release to indicate about 2,400 property owners would be issued amended tax bills, and that new tax bills would be issued by Service New Brunswick throughout the year for any discrepancy in property assessments identified.

To date, a total of 3,000 re-bills have been identified, which includes about 700 apartment dwellings where an incorrect tax rate was applied (1.21 instead of 1.12). All of the affected property owners have been contacted through written correspondence and advised of the issue and a new amended bill will be forthcoming.

March 30-31, 2017 – Through media reports, the decision taken by officials on Feb. 9 was brought to the attention of senior government officials, and Premier Brian Gallant pledges to review the situation.

April 3, 2017 – Gallant announced the intention to transfer responsibility for assessments to an independent agency, and to undertake an independent review of all recent assessment processes.