Saint John politicians struggling with shrinking budgets are beginning to question whether provincial tax assessors might be part of their problem — undervaluing multi-million-dollar properties in the city and shortchanging the municipality on tax revenue.

Coun. Donna Reardon raised the issue at a city council meeting last week about properties in her uptown district.

She insists Service New Brunswick — which is solely responsible for putting values on land and buildings upon which city taxes are then collected — routinely prices Saint John properties at a discount.

"I believe it's undervalued," she said about Saint John's entire south end peninsula, which includes part of the central business district

"I blame the province of New Brunswick that has undervalued and under-assessed the buildings."

One assessment that does raise questions in the city is Saint John's new courthouse.

Opened in 2013, the building is valued for taxes at $41.9 million. That's $5.1 million less than Moncton's new courthouse, which is two years older and 10 per cent smaller than the Saint John building, according to original designs of each.

Saint John's new courthouse is assessed for taxes by Service New Brunswick to be worth $41.9 million. Moncton's new courthouse is two years older and assessed to be worth $47 million. (Roger Cosman and Gilles Landry/CBC)

Every $1 million in assessed value on a commercial or industrial property in Saint John is worth $26,775 per year in municipal tax revenue and that makes multi-million dollar differences in assessments a significant issue.

Mayor Don Darling says there is a general lack of trust among Saint John residents in the reliability of assessments conducted by Service New Brunswick.

"How can buildings either of the same size or larger size in Saint John be valued at such a lower assessment than in comparative cities like Moncton?" asked the mayor.

Mayor Don Darling said his confidence in the assessment process 'is very low.' (Roger Cosman/CBC)

"I would say our confidence level in the assessment process is very low."

In addition to Saint John's courthouse, there are a number of commercial properties in the city that also carry lower valuations than what appear to be similar properties in Moncton.

For example Saint John and Moncton have similar Home Depot outlets. Moncton's is assessed at more than $10.8 million, $1.1 million more than Saint John's.

The Home Depots in Saint John and Moncton are both more than a decade old. Saint John's is assessed by Service New Brunswick to be worth $9.67 million. The Moncton store is assessed more than $1 million higher at $10.83 million. (Roger Cosman and Gilles Landry/CBC)

In addition, each of the Home Depots has a Montana's restaurant in its parking lot. The Montana's in Moncton is assessed for taxes at $1.74 million, $660,000 more than the one in Saint John.

The cities share a number of similar hospitality properties as well.

The Chateau Moncton, Best Western Plus and Hampton Inn in Moncton feature a combined 306 rooms and as a group are assessed to be worth $21.5 million.

The Chateau Moncton hotel advertises 103 rooms and is assessed by Service NB to be worth $7 million. The Chateau Saint John advertises 112 rooms but is assessed for taxes to be worth $5 million. (Roger Cosman and Gilles Landry/CBC)

By contrast, the Chateau Saint John, Best Western Plus and Hampton Inn in Saint John, which also advertise a total of 306 rooms, are assessed at a combined $14.7 million, $6.8 million less.

Individual property assessments can involve several factors and last week a spokesperson for Service NB said the agency could not respond immediately to questions about why similar buildings in Saint John and Moncton might be valued differently.

Moncton's Best Western Plus has 80 rooms and is assessed by Service New Brunswick to be worth $5.4 million. That's 47 per cent more than the Best Western Plus in Saint John, which advertises 77 rooms. It's assessed to be worth $3.6 million. (Roger Cosman and Gilles Landry/CBC)

But in Saint John, politicians are openly suspicious of how Service NB treats the city, a wariness sharpened after the agency's handling of Saint John's LNG terminal.

In 2016, as Saint John was deciding to end a multi-million dollar municipal tax concession to the terminal, Service NB commissioned a study of the property by a U.S. consultant often used by energy companies to fight high tax levies.

Based on the consultant's report, Service NB cut its own estimated valuation of the LNG property from $300 million to $98 million on the eve of the date that full property taxes would have applied to the facility.

The revision cost Saint John and saved Irving Oil Ltd. — the owner of the land the terminal sits on — more than $5 million per year in property taxes. The episode lingers as a sore point with city leaders, according to Reardon.

"Absolutely," she said.

"I feel like they throw a dart at a dart board and come up with a number."

I think we need to know and understand how the assessment practices are working. We have to have confidence in those. - Mayor Don Darling

Assessments are an issue between individual property owners and Service NB.

There is no mechanism in legislation for a municipality to challenge valuations even if it feels they might be costing it tax revenue.

At public budget meetings being held in Saint John this summer, Coun. David Merrithew, the head of city council's finance committee, has questioned several Service NB assessments of city industrial properties and sarcastically referred to the "magic" Service NB uses to arrive at its valuations.

Darling said there may be good reasons some properties in Saint John are worth less than similar properties elsewhere, but he would like to have it explained in detail.

"Folks have concerns and it is about confidence," he said.

"I think we need to know and understand how the assessment practices are working. We have to have confidence in those."