Two heads aren't always better than one

June 2006

Two heads aren't always better than one

The god Janus. Original image at www.livius.org/a/italy/rome/arch_janus/janus.html

Now I understand
For some time I've been puzzled -- as many people have been -- about the seeming inability of MPAC (the Municipal Property Assessment Corporation) to come up with assessment changes that make sense. Both this past year and two years earlier, there've been numerous complaints and Requests for Reconsideration (not to mention appeals to the Assessment Review Board) about increases in home values that bear no relation to the reality of the marketplace.
Indeed, two of my previous newsletters have chunnered away at the fact -- see what I said in December 2003 and elaborated upon in November 2005.
But a few weeks ago, Ontario's Ombudsman issued a report that clearly identified the nature of the difficulties and recommended some changes that could improve the situation.
Perhaps we ought not to hold our breaths. The wheels of government do tend to move slowly.
However, the report does lend strong support to any argument against an assessment that can be considered to be wide of the mark.

A certain point of view
The Ombudsman's report is a lengthy one but it's exceptionally well written.
(If, ahem, there's nothing worth watching on TV and/or you're willing to risk being put to sleep, you can work your way through its 94 pages of text, which you can find at http://www.ombudsman.on.ca/pdf/MPACFINALREPORTENG.pdf.)
The essential point of the report is that MPAC does NOT use the Comparable Market Value method (which is the standard approach of appraisers) as the basis for determining the massive volume of assessments that it's required to produce for Ontario's numerous municipalities.   Rather, it employs a variety of computer models that each take a complex mixture of factors into account. The theory is that these adequately -- and properly -- reflect the elements that determine the value of different groups of similar properties in the several locales that make up a given community.
There's merit in this thinking -- and it explains away my puzzlement about how MPAC's staff could have got things so wrong. Beyond question, they are highly qualified appraisal people with a vast experience behind them. Their rates of pay alone prove that they aren't mere beginners. Indeed, their Head Honcho earns more than our province's Premier does.
However, as the Ombudsman points out, there are recognizable flaws in the models. More than one instance can be found in which the facts that have been used to design the models are simply outdated or just plain incorrect.
Furthermore, there's an unfortunate reluctance by (at least some of) MPAC's staff to admit to these mistakes, let alone to adjust the models in the light of them. Instead, there's an internal opinion that "exceptions to the rule" are no more than that. There's an ingrained belief that the fundamentals have been very seriously and meticulously designed from the beginning. Thus, it's held that, although wrong results occasionally turn up, the reason is simply an example of the commonplace claim that statistical reports are right "in 19 cases out of 20 with a sampling error of +/- 2%."

A lack of acceptance
Any Request for Reconsideration -- and most certainly any appeal to the Assessment Review Board -- is, without doubt, based on the use of a Comparable Market Analysis. In turn, its success turns on the selected comparables and how well they do -- or don't -- support the case against what MPAC has decided.
The problem, though, is that this neither coincides with the way MPAC has reached its assessment figure nor -- as just mentioned -- with much willingness on their part to accept it.
Admittedly, they have no choice but to let the municipality concerned adjust their record for the year when it's called for. However, there's no apparent commitment to take note of the reduction themselves -- and this is demonstrated by the frequent complaints from property owners that the next MPAC assessments simply reflect an increase on the figures that were originally proved to be unsupported by comparable sales records.
Talk about two ways without a single (common) thought, eh?
And, believe me, I've been a personal witness to it.
I appealed my 2004 assessment and won, but you'd never know it from the way my 2006 assessment came out. Thus, like many others, I've been compelled to put my case before the Assessment Review Board.

Hope on the horizon?
The Ombudsman's conclusions and recommendations are difficult to ignore and they do appear to have been duly noted by both MPAC itself and the relevant government officials.
However, as I've already implied, adjustments to the assessment process are likely to be slow in coming, even though their arrival does seem to be inevitable.
As the report mentions, public protests have been too numerous to be set aside. They certainly led to the study the Ombudsman was asked to undertake, and his report is not only very readable despite its length but also -- to more minds than just mine -- faultlessly argued.
The obvious dichotomy between MPAC's approach to its task and the customary reliance on comparables to determine value cannot continue for much longer.   Even if the need for models is undeniable -- because individual assessments of over four million properties is a practical impossibility -- the case for modifying the models is too well marshalled to be simply pigeonholed.

Democracy in action
Although the ways of politicians and bureaucrats can be irritating, full credit must be given to those who conceived the idea of an Ombudsman. Charged with the task of receiving and investigating complaints about the efficiency, effectiveness, and overall fairness of government policies and practices, he is empowerd to act independently and make recommendations that he considers duly warranted. His analysis of MPAC's shortcomings is a commendable illustration of how well his office serves the taxpayers.
Meantime, I'm in there this time around with both guns blazing in my appeal to the Assessment Review Board -- and I won't hesitate to quote from the Ombudsman's report when my chance for a hearing arrives!

With my best wishes for the summer that -- as one of my earliest newsletters said -- is now icumin in.