New rules for assessment of industrial property
On April 1, 2026, the Minister of Municipal Affairs sent a letter to all mayors announcing several policy updates that will change how assessments are prepared for industrial property. These updates apply to properties such as wells, pipelines, telecommunications, electrical power systems, machinery and equipment, and railway.
The policy announcements are notable because previous reviews conducted in 2011, 2015-17, and 2019-20 resulted in no changes to the assessment system. The policy updates are intended to:
- Increase clarity in the system to reduce the number of assessment appeals and legal costs incurred by Municipal Affairs, property owners, and municipalities
- Set the stage for the next phase of the review to:
- Update costing data from the current 2005 level to current day costs
- Account for changes in technology
- Improve consistency and fairness in assessment of industrial property
Key changes include
- Clarifying what parts of construction costs are included and excluded from an assessment to improve efficiency in the assessment process and reduce appeals
- Increasing the use of standardized rates to assess industrial property. For example, thousands of well sites will start being assessed using a standardized rate instead of the current approach that relies on the property owner to report the actual costs of construction. This will increase Municipal Affairs’ efficiency to conduct assessments but may lead to some properties being assessed at values notably different from the actual costs of construction
- Creating a provincial benchmark to define the labour costs to be included in an assessment for properties constructed in remote areas. Currently, labour costs are assessed based on an estimate of what it would cost to construct a property in the Edmonton region, regardless of where it was built in Alberta. This has been a source of many assessment appeals
- Introduce penalties and remove the ability for property owners to appeal their assessment if they have not reported information to the provincial assessor on time
- A plan to develop an assessment model that is specific to mature oil and gas wells. No details are available, but this decision appears to be in relation to the Government of Alberta’s Mature Asset Strategy review that concluded in early 2025
- A commitment to maintain a ceiling and floor limit in how depreciation is calculated in the assessment formula for industrial property. This policy has been in place for decades, which reduces a property’s assessment value in the early years to incent industrial development, and maintains a property’s assessment at a stable level in later years to support revenue for municipalities
Several of the policy announcements align with the interests of assessors and municipalities; however, some of the decisions will continue to result in tax policy being embedded in the assessment system. For example, creating a specific model for mature oil and gas wells may create inequities in assessments compared to other types of property that lose value in the latter stages of life. Also, using a ceiling and floor limit for depreciation is a form of tax policy.
One of Alberta Municipalities’ (ABmunis) goals, through the assessment model review, is to remove existing tax policies from the assessment system so that measures to incent development can be better understood. However, under the existing system, industrial assessments are artificially discounted in value, which creates inequities in relation to residential and commercial property. This has a subsequent impact on equalized assessments used for provincial education property tax, grants, and policing costs. Moreover, it is challenging for the province to measure the financial payoff of the discount in assessment compared to using tax rate levers to incent development.
What does this mean for ABmunis members?
If your municipality has significant Designated Industrial Property and machinery and equipment, there will be no changes to assessments until at least 2029. This is because the assessment model review is still ongoing, with remaining phases needed to update the system to use current base costs and to formalize new depreciation schedules. When those phases are complete, Municipal Affairs plans to evaluate the potential financial impact on municipalities and property owners, to determine if measures are needed to support the transition to the new assessment rates and rules. That work is expected in 2028.
If a new Designated Industrial Property is constructed in 2027 or after, the new assessment rules announced in April 2026 will apply to that property beginning in 2027.
ABmunis is hopeful that the additional clarity that is to come through regulations will reduce the number of assessment appeals and legal costs for municipalities. This is still subject to Bill 28, the Municipal Affairs and Housing Statutes Amendment Act, 2026, being passed and given royal assent.
How is ABmunis involved in the assessment model review?
ABmunis is a member of Municipal Affairs’ Assessment Model Review Steering Committee along with several other municipal associations, two assessment organizations, and twenty-eight corporations and industry associations that represent property owners. Due to the scale and technical nature of the review, ABmunis is collaborating with Rural Municipalities of Alberta, other municipal associations, and assessment experts to inform our input.
Where can I get more information?
- Municipal Affairs has a website that explains the scope and timelines of the assessment model review or email ma.amr [at] gov.ab.ca (Municipal Affairs)
- Read ABmunis’ article from December 2024 explaining the change in the assessment year modifier calculation for industrial property assessments
- If you wish to learn more about ABmunis’ perspectives and involvement in the assessment model review, feel free to reach out to our advocacy [at] abmunis.ca (Advocacy Team)
We will continue to share updates on the assessment model review through our newsletter and events with members.
