HomeMy WebLinkAboutTR-73-99
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THE CORPORATION OF THE MUNICIPALITY OF CLARINGTON
REPORT
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Meeting:
General Purpose and Administration Committee
Date:
December 6, 1999
Report #:
Subject:
TR- 73 -99
Linear Properties Assessment/Revenue Update
Recommendations:
It is respectfully recommended that the General Purpose and Administration
Committee recommend to Council the following:
1. THAT Report TR-73-99 be received;
2. THAT unanticipated funds from linear property taxation revenue of
$1,500,000 be transferred into the Working Funds/Rate Stabilization Reserve
account #2900-1-x with approximately $800,000 to be used to offset
construction costs for the combined Library/Municipal Administration facility
as identified in Report ADMIN-33-99 with the balance to be used for Mure tax
rate stabilization;
3. THAT should the funds become refundable to Ontario Hydro Services
Company in 2000, that they be repaid from the Working Funds Reserve.
Background and Comment:
Prior to the implementation of Current Value Assessment, linear properties such
as hydro rights of way and railway corridors, were taxed on an assessment basis.
The assessed values were not related to market value and there was great
disparities across the province in how the value was determined.
In 1998, the taxation of these properties changed. Instead of being done on an
assessment basis, the province changed the legislation so that the properties
would be taxed at a prescribed rate per acre times the number of acres in a
particular municipality. At this time, the disparity in the amount charged between
municipalities across the province became very obvious.
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TR.73-99
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The Province, in order to achieve consistency, has prescribed rates for each
municipality on a six year phase-in. At the end of the six years, the rate per acre
will be consistent across the province. In the interim, those municipalities that
had a higher assessment base for these properties in 1997 will slowly phase-in
the decrease. For Clarington, in 1997, the assessment base was very low.
Therefore, the prescribed rates will gradually increase over the six years.
An unanticipated impact occurred in 1999 with the privatization of Ontario Hydro.
Because of the wording of the provincial regulation establishing the six year
phase-in, as of April 1, 1999, Ontario Hydro Services Company did not qualify for
the phase-in rate and immediately reverted to the full year six rate. For
Clarington, this resulted in a large increase of approximately $1.5 million.
Ontario Hydro Services Company have paid the higher rate but have indicated
that potentially the Province may revise the regulation to correct the situation.
Ontario Hydro Services Company will still pay the same total tax dollars.
However, those municipalities that were phasing-in decreases have been faced
with the entire reduction at once while municipalities like Clarington are receiving
the increase all at once.
At this time, there is no word from the Province as to when or if the regulation will
be revised. Should it be revised early in the 2000, it is unclear as to whether it
will be retroactive for 1999 or if it will apply for 2000 and onward. Should the
retroactive revision take place, Clarington would have to repay the extra funds
received.
CONCLUSION:
It is recommended that the unanticipated funds received for linear properties be
transferred to the working funds/rate stabilization reserve. This can then be used
to finance a portion of the Library/joint use facility as identified in Admin-33-99
with the balance to be used for future tax rate stabilization. Should the funds
have to be repaid, they will be repaid from this reserve. Staff will monitor the
situation in early 2000 to determine the status of any new provincial regulations
on this issue.
Respectfully submitted,
Reviewed by,
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arie Marano, H.BSc., AMCT
Treasurer
Franklin Wu, M.C.I.P.,R.P.P.
Chief Administrative Officer
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