The DMA Way

BC Assessment Updates Major Industrial and Power Generation Assessments

by DMA Staff | Aug 24, 2017

As part of BC Assessments annual review a letter is sent out to all Major Industrial Properties (MIP) and Electrical Power Group (EPG) owners in August on the newly proposed changes to the legislated assessment factors for the 2018 assessment. They are two factors discussed in the letter from BC assessment. These are the Cost Update Factor and the Interest During Construction (IDC). 

The Update Factor is used to bring the MIP and EPG manual calculations of the base costs to current year value. This factor requires BC Assessment to use a 5-year rolling average to update the factor each year. BC Assessment does this through the annual changes to the Update Factor as seen by the change from 2017’s 1.61 to the 2018’s 1.64 as presented on the letter.

Update Factors for MIP Manuals

Legislated Manual Base Year Update Factor
2017 Roll
% Change  Update Factor
2018 Roll
 MIP (Divisions 1-9)  1986  1.61  2.02%  1.64
 MIP (Division 11)  1988  1.50  2.02%  1.53

Update Factors for EPG Manuals

Legislated Manual Base Year Update Factor
2017 Roll 
% Change Update Factor
2018 Roll
 EPG- Dams  1988   1.50   1.86%
 EPG- Generating  1988  1.53   1.96%    1.56 
 EPG- Substations  1990  1.17  1.62%  1.19

The second factor is the Interest During Construction (IDC) which uses the Bank of Canada’s business prime bank rate from 2015 to 2017 to create an average. In this time frame, there was a reduction in the average from the previous assessment year and these IDC factor will have a small decrease. This decrease is not enough to offset then 2% increase in the Update Factor discussed previously.

The improvements valued on major industrial an electrical property sites are all calculated using their respective manual and are then adjusted in the property record cards (PRC) using the Update Factor, IDC, and finally depreciation. For newer locations depreciation is usually greater than the changes to both factors, however, the majority of major industrial improvements in British Columbia are currently fully depreciated and these will see an increase in taxable value from the factor changes. 

With these letters it is important to look at your PRC’s to ensure what change your site will see. If it is fully depreciated and increase in the 2018 taxes paid is more likely to be expected as the trend is BC jurisdictions is not to decrease tax rates.

Please do not hesitate to contact your local DMA office should you have specific questions or requests.