property taxes

Property Assessments of Conservation Lands A Guide for Land Trusts and Conservation Land owners Including case studies, references and bibliography of research on conservation land values Elk River, NCC protected site Land Trust British Alliance of Columbia THIS INFORMATION KIT DEVELOPED AND PRODUCED IN 2006 WITH FUNDING FROM:Introduction This following Information Kit was developed by the Land Trust Alliance of BC with additional information provided by the BC Assessment office and Alan Kotila, Accredited Appraiser with DR Coell & Associates. Funding was generously provided by the Victoria Foundation, the Vancouver Foundarion and the Real Estate Foundation of BC. As covenants only became a conservation tool for land trusts in the mid 90’s, there is limited market evidence to measure the impact of conservation covenants on property assessments. The case studies in this guide were selected from the Greater Victoria region; however this research has brought to light important information, and steps that landowners and land trusts should take to ensure that BC Assessment is advised of the details of the covenant’s impacts on market value. The Land Trust Alliance of BC believes that this information is useful for a variety of interests, including landowners considering a conservation covenant, the land trusts that assist in protecting these significant natural or cultural sites, and assessment staff in BC communities. The BC Assessment Authority wishes to ensure that covenants are duly considered. Many thanks to Jennifer Paton for providing the case studies, TLC for their assistance with the property data, John Pebbles and the staff of BC Assessment for information on their policies, and Alan Kotila for providing a review and report on the data in addition to his own knowledge of appraisals and assessments of covenanted properties. Definitions Land Trust (Land Trust Alliance of British Columbia) A non-profit, charitable organization committed to the long-term protection of natural and/or cultural heritage. A land trust may own land itself, or it may enter into a conservation covenant with a property owner to protect or restore natural or heritage features on the owner’s land. Land trusts also engage in stewardship, restoration and management of lands. The words “land trust” and “conservancy” are often used interchangeably. Conservation Covenant (Land Trust Alliance of British Columbia) A voluntary, written legal agreement between a property owner and either a government body or one or more land trust organizations designated by the Surveyor General, on behalf of the Minister of Agriculture and Lands, that sets out specific restrictions or requirements that the landowner will uphold to ensure conservation of all or parts of the land. It is registered on title and “runs with the land” (it continues to exist on title after the property is sold or transferred, binding future owners). Property (Assessment Act) Includes land and improvements Subject Property (BC Assessment) Property that is the subject of assessment and taxation. Improvements (BC Assessment) Any building, fixture, structure or similar thing constructed or placed on or in the land, or water over land, or on or in another improvement (i.e. houses, roads). This report may be copied by land trusts noting its source. LTABC July 2006 with assistance from BC Assessment, and Alan Kotila, Appraiser.. 1 Contents The Assessment Process in BC ……………………………. 2 Assessments on Properties with Conservation Covenants. 3 Assessments on Properties owned by Land Trust ………… 6 Other Tax Consequences……………………………………. 8 Case Studies ………………………………………………….. 9 Bibliography of Research on Property Tax ……………….. 11 Further Resources on Conservation ………………………. 15 The Assessment Process in BC An ancient cedar shades the forests floor on Gabriola Island. Islands Trust Fund. BC Assessment produces independent and uniform property assessments annually for all property owners in the province. Assessors are required, by the Assessment Act to determine the actual (market) value of a property for assessment purposes. Actual value means “the market value of the fee simple interest in land and improvements” Market value is defined by the Appraisal Institute of Canada as follows: “The most probable price which a property should bring in a competitive and open market as of the specified date under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus.” The valuation date is July 1 based on the property condition as of October 31; the notice is mailed at the end of the year. Most properties are to be assessed at actual value. Exceptions include dams, power plants, infrastructures such as pipelines, farm property and managed forest lands. Once a property’s actual value has been determined, it is used as a base for the tax rolls created by municipal and rural taxing authorities. The tax rate is calculated as a percentage of the net taxable value of the subject property, that is, actual value less exemptions. The applicability of various exemptions depends upon a property’s location and other unique characteristics such as the property’s ownership, use, or features. Staff at BC Assessment is required to consider all factors which affect the market value of a property. If a covenant is registered against a property, they must consider if there is an impact on the value of the property. Whether or not, or to what extent a covenant will impact the actual value of the property will vary based on the restrictions stated in the specific covenant. The difficulty in measuring the impact of covenants is that there is limited market evidence to date and covenants vary. BC Assessment values all properties in British Columbia and by necessity uses mass appraisal techniques. Thus, detailed appraisals such as those required by the Canadian Wildlife Service for Ecological Gifts, would need to be undertaken by an independent appraiser. 2 Lands Subject to a Conservation Covenant Section 219(1) of the Land Title Act authorizes the provincial government, a Crown corporation, local governments or a local trust committee under the Islands Trust Act to work together with a private landowner to create a conservation covenant on the owner’s property. Additionally, s. 219(3)(c) of the