Introduction
A property’s assessment value in Calgary is based on the City of Calgary’s estimate of the property’s market value on July 1 in valuation year and based on the property’s characteristics and physical conditions on December 31 in valuation year. Valuation year is defined as a year prior to taxation year. On September 1, 2004, I purchased a residential property in Banff Trail community, Calgary, Alberta, for the price of $255,000 in open market, i.e., MLS #31xxxx6. In February 2005, the City of Calgary generated the assessment value for my property of $335,500. Obviously, the City of Calgary failed to generate the actual market price for my property of $255,000 as I paid for on September 1, 2004 (or just a few weeks after July 1, 2004). In 2004 valuation year, the market price for my property of $255,000 was below the average residential sale price of $294,824 in Banff Trail community as released by CREB. It is interesting to note that, while my property has not significantly changed since September 1, 2004, the City of Calgary’s assessment values for my property in following years were always higher than the average residential prices released by CREB: 2006 taxation year - $371,500 (the City of Calgary) vs $338,009 (CREB), 2007 - $574,500 (the City of Calgary) vs $486,894 (CREB), 2008 - $664,000 (the City of Calgary) vs $552,164 (CREB), 2009 - $621,000 (the City of Calgary) vs $534,188 (CREB). In another word, the City of Calgary continues to produce “rubbish” for the assessments of my property. This manuscript shows reasons for the City of Calgary’s continuous “rubbish” production.


Reason #1 – The City of Calgary’s Assessment Method and Calibration
The City of Calgary is so secretive not to publish the equation used for their assessment method. However, after attending hearing after hearing with the City of Calgary, I can say with absolute certainty that the City of Calgary uses this kind of equation shown in Eq.(1):

Assessment value of a property = FUNCTION (parcel area, living area above grade, building age, whether or not basement is developed, attached or detached garage, etc.) ……………. (1)

Eq. (1) shows that the assessment value of a property on the left hand side of the equation has the unit of Canadian dollars, while parcel area, living area above grade, building age, etc. on the right hand side of the equation do not have the units of Canadian dollars. Because elements in the right hand side of Eq.(1) do not have the same unit of Canadian dollars as the left hand side, multiple parameters such as C1, C2, C3, … Cn are required in the right hand side of the equation. Those multiple parameters are initially unknown, but could be determined through a process called “calibration”, just like scales (used in weight measurement) to be calibrated before their use. During the calibration process, the City of Calgary adjusts the multiple parameters C1, C2, C3 etc so that the assessment values generated by Eq.(1) match comparable sales data listed in the City of Calgary’s Residential Sales which cover a period of two years and which are grouped according to communities in Calgary. For example, for 2009 taxation year, the City of Calgary’s Residential Sales cover a period of July 1, 2006 until June 30, 2008.

The City of Calgary always says that property taxes are levied in proportion to the market value of real estate. The City of Calgary also says that market value is defined as the amount at which the property would change hands in open market (i.e., trade between a willing buyer and a willing seller when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, and both parties having reasonable knowledge of the relevant facts). The previous statements by the City of Calgary give impression that all open market sales (such as those in MLS) are listed in the City of Calgary’s Residential Sales to be used to calibrate Eq.(1). But wait a minute ! For argument’s sake, let as define “Benchmark Properties” as properties whose sale prices receive blessings from the City of Calgary to be used as comparable sales and to appear in their Residential Sales.

In 2007 taxation year, the City of Calgary’s Residential Sales covered a period of July 1, 2004 until June 30, 2006. Please bear in mind that my property was sold to me in open market (MLS #31xxxx6) on September 1, 2004. I expected my property to be listed in the City of Calgary’s Residential Sales July 1, 2004 – June 30, 2006. I visited the City of Calgary in July 2007 and to my surprise I did not find my property in the document. Let us define “Non-benchmark Properties” as properties whose sales in open market do not receive blessings from the City of Calgary to be used as comparables. My property is therefore classified as a Non-Benchmark Property by the City of Calgary.

From the previous paragraphs, the following conclusions can be made:

1. My property is classified as a Non-benchmark Property by the City of Calgary, because its sale in open market in 2004 was never listed in the City of Calgary’s Residential Sales.

2. The City of Calgary’s Residential Sales only contain Benchmark Properties, and therefore the City of Calgary’s Eq.(1) on which the City of Calgary’s property assessments are based is always calibrated against Benchmark Properties.

3. The City of Calgary’s Eq.(1) is never calibrated against Non-Benchmark Properties, so when the equation is used to make an assessment for a Non-Benchmark Property (for example, my property) the City of Calgary always produces “rubbish”.