What is “CVA Uplift”?

FACT SHEET: WHAT IS CVA UPLIFT?

The Current Value Assessment (CVA) of a property represents an estimated market value, or the amount that the property would sell for in an open market, arm’s length sale between a willing seller and a willing buyer at a fixed point in time.

Properties are valued every four years, beginning with the 2009 taxation year.

The City of Toronto, like other municipalities, collects most of its revenue via property taxes. In 2011, the City collected $3.6 billion in property taxes. The municipal residential rate was about 0.562% and the overall property values (all classes weighted assessment) was about $646 billion.

Overall property values increase by about 4.7% per year. That is, if a property was worth $500,000 in 2011, on average, the property is worth $523,500 in 2012.

As overall property values increase, one would think that overall property taxes collected by the City would increase as well. However, that is not the case. Currently, provincial revenue-neutral legislation prevents the City from collecting more property taxes despite an increase in property values.

Currently, as property values increase, the City is required to lower its municipal tax rates so that the amount of property taxes collected remains the same.

So, if the average increase of a property is 4.7%, and Property A increases by exactly 4.7%, then owner A pays exactly the same amount of taxes as he did the year before. If Property B increases in value, but at a rate of less than 4.7% (say 3%), then owner B actually pays less taxes than he did the year before, even though his property has gone up in value. Conversely, if Property C increases in value, but at a rate of more than 4.7% (say 6%), then owner C pays more taxes than he did the year before.

The increase in property values is called “uplift.”

The proposed CVA uplift funding model asks the Province to allow the City to capture some of that uplift, so that everyone whose property has increased in value contributes a little bit towards a dedicated transit legacy fund.

The proposed model asks for capturing 40% of the uplift. This is equivalent to a 1.9% property tax increase per year for four years.

Since public transit benefits everybody – including those who drive by freeing up the roads and improving air quality – funding for transit via property increase is fair and equitable.

What this means to an average home of $427,085 (the City average) is that in 2013, the owner would pay an additional $45; $90 in 2014; $135 in 2015; $180 in 2016 and $180 per year in future years.

The CVA uplift funding model was suggested in the expert panel report during the Sheppard subway discussion.