Financial growing pains at city hall as property tax assessment growth slows to just 1.2 per cent

Homes under construction are seen in London, Ont. on Wednesday, Nov. 13, 2019. (Daryl Newcombe / CTV London)

Property tax assessment growth in London has slipped to its lowest increase since 2017.

Despite the citywide building boom, a report to the Infrastructure and Corporate Services Committee (ICSC) reveals that the increase to property tax assessment in 2025 will be just 1.20 per cent, contributing about $9.8 million more to fund service expansions and enhancements related to growth.

“The percentage increase from assessment growth is considerably lower than what we have seen in the last number of years, and as a result the revenue increases is quite significantly lower,” explained Anna Lisa Barbon, city treasurer and deputy city manager of finance supports.

The previous five years saw assessment growth range between 1.38 per cent (2021) and 1.82 per cent (2023).

Assessment growth is the amount of property tax generated on new construction within the city.

City hall’s financial principle that “growth pays for growth” means that property taxes assessed on new developments should pay to expand municipal services that address the needs of a growing city, like expanded snow plowing, garbage collection, firefighting, and policing.

However, even though council approved a record 22,0000 residential units in the last year, additional tax dollars only flow to the city once construction is completed and the buildings occupied.

“The lag that we’re seeing today is actually from the COVID-19 years and the increase coming out of Covid is not something we’re going to start to see the benefit of until next year, or the year after that,” Deputy Mayor Shawn Lewis tells CTV News.

He adds that the 1.2 per cent increase will still see improvements to municipal services to meet the demands of growth.

“It just means pacing and a slower rollout of service enhancements,” Lewis says.

He confirmed with civic administration that London’s emphasis on higher-density infill developments will likely also result in service improvements in established neighbourhoods where the population is rising.

Meanwhile, it’s been nine years (2016) since existing properties were reassessment by the Municipal Property Assessment Corporation (MPAC) for calculating individual property tax bills.

“The crystal ball, in terms of being able to project where things are going, has become completely opaque,” explained Lewis.

The provincial government paused the reassessment process (scheduled for 2021) because of the COVID-19 pandemic.

In November, a property tax decisions letter from the province stated, “the review of the property assessment and taxation system is ongoing, and the province-wide property tax reassessment will continue to be deferred.”

It means municipalities still don’t have a clear picture of how property values have shifted within the city so they can ensure fair taxation and smooth out any tax adjustments.

“We do need the province to take some action on that,” says Lewis. “We also need them to do so in a thoughtful way so that it’s not creating a more serious affordability crisis in housing than we already have.”

Council will consider the report about 2025 Assessment Growth on Jan 21.