New Brunswick

Auditor general presents report on property assessment mess Thursday

New Brunswick Auditor General Kim MacPherson will be presenting answers on the property assessment and tax scandal Thursday, eight months after the scandal broke.

Many New Brunswick residents hoping to hear detailed answers of what went wrong and who is to blame

New Brunswick Auditor General Kim MacPherson will present her report on the property assessment scandal Thursday. (Maria Burgos/CBC)

Land owners famously swept up in New Brunswick's property assessment and tax scandal over the last eight months, from elderly widows like Sackville's Helen Wheaton, to the parents of youngsters like Ryder McIntyre of Quispamsis and thousands of others may finally get some detailed answers about what happened to them Thursday morning. 

Auditor General Kim MacPherson is presenting results of her self-appointed, five-month investigation into the matter at the legislature.

"It will be a written report with recommendations based on our findings of what happened with respect to the property assessment situation,"  MacPherson said of her investigation which she launched to the government's surprise last spring.

A $22,9000 property assessment increase imposed on Helen Wheaton's Sackville home this year by the province's new assessment system was so unjustified she eventually won a 119 per cent reduction of the amount. (CBC)

It was not part of the government's preferred plan to have MacPherson look into anything. 

Premier Brian Gallant announced in April that retired judge Joseph Robertson would prepare a report on the matter and present it directly to cabinet in August.

But behind the scenes MacPherson forcefully questioned the impartiality of Robertson's review and after the dust settled he was out and she was running her own investigation.

"I raised the issue of independence because I felt it was appropriate for me to do so," MacPherson said, explaining how she effectively muscled her way into the property tax controversy.

"In my view there can be a perception of a lack of independence if someone is engaged by and is expected to report directly to...the Premier and his cabinet. I work for the 49 MLAs of the legislature. The work of my office becomes a public report. There is a different accountability aspect to it." 

Unwinding the story

MacPherson is expected to unwind the story of what went wrong after Service New Brunswick launched a new digital property assessment system last fall that was supposed to be faster, fairer and more accurate than the old system.

Instead thousands of landowners of all kinds — rich and poor, young and old, married and single, French and English —  received inflated property tax bills by the thousands that are still being corrected. 

Worse still, Service New Brunswick managers, rather than catching and fixing those mistakes, were caught making up renovation amounts on some homes to justify inflated values the new system was falsely detecting. 

The family of Ryder McIntyre was shocked when their property assessment jumped $50,900 this year after a charity paved their driveway so the seven-year-old - who has cerebral palsey - could move around more easily in his yard. Ninety per cent of the increase was later retracted. (Submitted)

By law, in New Brunswick property taxes on homeowners are not allowed to increase by more than 10 per cent per year unless renovations have been done. Fabricated renovation amounts on homes that had not been fixed up allowed Service New Brunswick to issue property owners with tax increases exceeding the 10 per cent limit — over 90 percent in some cases. 

A record 18,000 challenges were filed by land owners this year about their tax bills in the wake of the controversy and as of last week over 10,000 properties have been awarded assessment and tax reductions.

MacPherson has said not to expect her report on the scandal to point fingers ("we don't tend to do that") but it should shed light on a number of murky issues, including four key unanswered questions still swirling around the controversy:

1. Was the Premier behind the decision to rush the new assessment system into service?

One of the ongoing mysteries of the property tax scandal  is why Service New Brunswick rushed the new assessment system into service two years ahead of schedule.

Premier Brian Gallant says he had nothing to do with fast-tracking the new property assessment system. (Jacques Poitras/CBC)

At least seven separate internal Service New Brunswick documents have surfaced, including emails, memos and agency presentations, directly implicating Premier Brian Gallant as the father of "fast track" after he was shown the new assessment technology in May of 2016. 

The premier has denied triggering that ill-fated decision and instead his chief of staff Jordan O'Brien has suggested the idea originated with Service New Brunswick.

When the scandal first erupted on March 31, Gallant told reporters he had no recollection at all of pushing for the accelerated introduction of the new assessment system. 

"Was your office or the minister involved in any of those discussions to make it one year," he was asked.

"At this point it may be the case. I'm not aware," Gallant replied.

Days later he called suggestions his office pushed the fast track decision "unfounded" and his chief of staff put the blame on Service New Brunswick.

"We didn't say no don't do it in one year but we also didn't say rush ahead and do it in one year. They suggested they could do it in one year," O'Brien said.

Asked whether there was a "preference expressed either way" by the premier's office, O'Brien was less definitive.

"Not that I can find any record of," he said. 

The two accounts of the origin of fast track could not be much different and any information MacPherson adds to the understanding of which is true will be scrutinized closely.

2. Were inflated property assessments generated by the new system a mistake or an attempt to raise more tax revenue?

The decision to put the new assessment system on a fast track came with an expectation that the technology would unearth hidden property values from which the province and municipalities would gain extra tax revenue.

"Property Assessment Services expects to generate a $350 million increase on the assessment base," read a memo to employees in June 2016 explaining the decision to rush the new system into service.

There were 42 tax appeals won in one Quispamsis neighbourhood. (CBC)

But something went wrong with the new system. Tax challenges this year have shown it overvalued several thousand properties in the 13 communities it operated in, many in large clusters on single streets and in whole neighbourhoods.

In the Hillcrest drive area of Rothesay, 42 of 61 homeowners won tax challenges that showed their original assessments were an average of $47,400 too high each.

Glenn Galbraith is one of those 42 and his original assessment was eventually acknowledged to be $63,800 too high.

"All I know is I looked at it and said 'This isn't right,'" Galbraith said.

Mistakes like that helped the new assessment system reach its financial targets but was that because Service New Brunswick turned a blind eye as the system churned out inflated property values, or were those bad assessments honest mistakes that slipped through unnoticed?

3. Who made the decision to fabricate renovation amounts on 2,000 homes? 

The core controversy of the tax scandal involved a group of 2,048 homes that not only received hefty property assessment increases — mostly in error — but then had those increases falsely declared to be the result of  non existent home renovations. 

Glenn Galbraith's assessment and tax bill jumped 28 per cent despite no renovations. (Roger Cosman/CBC)

The combination of inflated assessments and fake renovation claims on the houses allowed Service New Brunswick to raise those homeowners' property tax bills beyond the province's 10 per cent legal limit.

A house by house review of 1,868 of those properties eventually showed they had been overvalued by an average of $27,300 each by the new assessment system and the renovations assigned to most of them never happened.

Saint John's Brian Lynch had fabricated renovation amounts added to his property account to justify an $85,000 assessment increase and $1,500 jump in his tax bill. 

No renovations had been done and 91 per cent of the increases were later retracted but he was shocked at the treatment.

"I'm just astounded," Lynch said. "I'm incredulous any public official would have the nerve to do that — something wilfully dishonest." 

The premier said back in March that those responsible for that part of the controversy would be held responsible, although who developed and approved the scheme has never been disclosed.

"We want to keep everybody accountable there's no doubt but we first have to find out who knew what — who did what," said Gallant.

MacPherson's report may finally answer that question.

4. Were ministers and deputy ministers really in the dark about what was happening — and who withheld information from them?

One of the most serious allegations levelled in the wake of the property tax controversy is that mid-level Service New Brunswick officials worked to keep details of the growing property tax mess — especially how they had fabricated renovation amounts on homes — a secret from both the public and politicians.

"The ministers would ask direct and detailed questions to try and understand what happened with the errors and this never came up,"  Gallant told reporters on March 31. 

"The President of SNB (Service New Brunswick) and the vice president are saying they weren't aware either."

This one-page document details how the property assessment modernization was going to be rolled out. (CBC)

That was one of the reasons Gallant said he did not immediately ask for the resignation of Service New Brunswick's Minister at the time, Ed Doherty or dismiss any of the agency's top officials.

Instead Gallant said he would wait for a full accounting of what occurred — and then take action.

"I think its very important we find out what happened before we start pointing fingers.  Before we really start going after people in any type of way we need to know what the facts are."


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