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Report To: Joint Committees
Date of Meeting: September 13, 2021 Report Number: FSD-039-21
Submitted By: Trevor Pinn, Director of Financial Services/Treasurer
Reviewed By: Andrew C. Allison, CAO Resolution#: JC-034-21, C-295-21
File Number: By-law Number:
Report Subject: Heritage Tax Incentive
Recommendations:
1.That Report FSD-039-21 be received;
Either:
Recommendation A - Maintain Existing Heritage Incentive Grant
2.That Staff include in the 2022 budget deliberations an enhanced Heritage Incentive
Grant program for consideration including increased project limits and overall grant
allocations; and
3.That all interested parties listed in Report FSD-039-21 and any delegations be
advised of Council’s decision.
Or
Recommendation B - Create Complementary Heritage Property Tax Rebate
2.That Staff be directed to create a Heritage Property Tax Rebate Program, in addition
to the existing Heritage Incentive Grant, for an amount of 10 per cent of the
Municipal portion of the property taxes for qualifying occupied residential properties
designated under the Ontario Heritage Act beginning with the 2022 taxation year;
3.That Staff bring back to Council the required by-law(s) to implement the Tax Rebate
Program;
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4. That Staff inform the local school boards and the Region of Durham of the intent to
create the Tax Rebate Program; and
5. That all interested parties listed in Report FSD-039-21 and any delegations be
advised of Council’s decision.
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Report FSD-039-21
Report Overview
This report provides Members of Council with information regarding financial support tools
available under the Municipal Act and Ontario Heritage Act to assist property owners of
designated heritage properties. The Municipality of Clarington currently provides financial
support to qualifying designated properties through the Heritage Incentive Grant Program
which provides grants for eligible physical improvements to properties.
This report looks at four options for providing, or not providing, financial support and
provides both the financial and planning considerations for each.
Two alternatives are recommended to Council. The first is to look at enhancing the existing
grant program for physical improvements. The second option is adding a tax rebate program
for eligible, occupied, residential properties. Any changes would be effective for the 2022
taxation year.
1. Background
1.1 At the Planning and Development Committee meeting of June 28, 2021, Com mittee
amended resolution #PD-208-21 regarding a request to repeal heritage designation by-
law 97-17 by adding “That Staff report back on a ‘Heritage Property Tax Relief Program’
as allowed for by the Ontario Heritage Act.”
1.2 At the Council meeting of July 5, 2021, the above-mentioned item from Planning and
Development Committee was referred to the Joint Committee Meeting on September
13, 2021.
1.3 Given the complexity of establishing a tax rebate program and the requirement to have
it in place before the start of the tax year to allow residents to apply, Staff have brought
this report to Joint Committee today. The intent of the referral regarding the “Heritage
Property Tax Relief Program” should Council wish to proceed would need to be included
in the 2022 budget.
Legislative Authority
1.4 The Municipal Act, 2001 (the Act) provides limited abilities for municipalities to reduce,
refund or cancel property taxes. Section 365.2 allows a local municipality (i .e. a lower or
single tier municipality) to establish a program to provide tax reductions or refunds in
respect of eligible heritage properties.
1.5 The purpose of the heritage property tax relief tool is to enable municipalities to assist
owners of designated heritage properties to maintain and restore their prope rties to the
benefit of the overall community.
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1.6 Eligible properties include properties, or a portion of a property, that is
a. Designated under Part IV of the Ontario Heritage Act or is part of a heritage
conservation district under Part V of the Ontario Heritage Act
b. Is subject to
i. An easement agreement with the local municipality in which it is located,
under section 37 of the Ontario Heritage Act,
ii. An easement agreement with the Ontario Heritage Trust, under section 22
of the Ontario Heritage Act, or
iii. An agreement with the local municipality in which it is located respecting
the preservation and maintenance of the property, and
c. That complies with any additional criteria set out in the by-law passed under this
section by the local municipality in which it is located
1.7 The amount of the tax refund or reduction provided by the local municipality must be
between 10 and 40 per cent of the taxes for municipal and school board purposes for
the portion attributable to the portion that is an eligible heritage property.
1.8 If Council wishes to establish a heritage property tax rebate program it is required to
pass a by-law that includes:
a. The percentage of the rebate
b. If there are different percentages for different property classes or differe nt types
of properties within a property class
c. If there is a maximum or minimum amount of taxes for a year to be reduced or
refunded under the by-law
d. If there are additional criteria that must be satisfied in order for a property to
qualify as an eligible heritage property and may specify different criteria for
different property classes
e. Any specific procedures for applying for a tax reduction or refund for one or more
years.
1.9 The Municipality must provide a copy of the by-law to the Minister of Finance within 30
days of passing and must notify the Region of Durham of the amount of taxes to be
reduced or refunded for lower-tier purposes under the by-law.
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1.10 The Region of Durham may pass a by-law similar to authorize a similar reduction or
refund of taxes levied for upper-tier purposes. The Region may only pass a by-law if the
lower-tier has also passed a by-law.
1.11 Unlike other rebates or tax reductions, the benefit of the rebate is to the owner of the
property. Any refund under this program pertains to the owner despite any provision of a
lease or other agreement relating to the property.
Current Financial Supports Provided by Clarington
1.12 The Municipality of Clarington currently offers the Heritage Incentive Grant Program to
assist owners with properties designated under Part IV and V of the Ontario Heritage
Act (2005) with the financing of costs of repair or restoration projects to maintain and
restore a designated heritage property, for the features listed in the designation.
1.13 The program provides a grant up to 50 per cent of the project costs for eligible work per
building to a maximum of $2,000 for exterior work or $1,000 for interior work for a
maximum of $3,000 per property owner, in any given year.
1.14 The program has been in place since 2013. It received an annual budget of $6,500, for
the years 2018 to 2020, annually the program utilizes approximately 50 per cent of its
funding.
1.15 The Municipality currently does not provide a property tax rebate for heritage properties.
Current Supports Provided by Region of Durham Municipalities
1.16 The Region of Durham does not have any existing heritage property programs in place.
1.17 The following is a summary of heritage property programs in the other local
municipalities in the Region of Durham:
Municipality
Amount of
Tax Rebate Comments
Ajax 10% No fees for application
Pickering
20%
(proposed)
Property owner is responsible for all costs to
register the easement
No application fee
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Municipality
Amount of
Tax Rebate Comments
Whitby 40% $160 application fee, includes cost of
easement
Oshawa 40% $75 one-time registration fee (includes cost
for easement)
Clarington
0%
Offers a Heritage Incentive Grant to assist
owners with the cost of repairs and
restoration projects
Up to 50% of eligible costs
$2,000 maximum for exterior repairs
$1,000 maximum for interior repairs
Scugog 0% No programs
Uxbridge 0% No programs
Brock 0% No programs
1.18 As noted above, only Ajax, Whitby and Oshawa have existing programs. Pickering is
considering a program and the Municipality of Clarington has a grant program.
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2. Establishment of Financial Supports
2.1 In reviewing the options to provide financial assistance for heritage property owners,
Staff explored four options for consideration (not in order of preference).
Option 1 – Status Quo
2.2 This option would maintain the current Heritage Incentive Grant Program which provides
subsidization to qualifying property owners for repair and restoration project costs
incurred on heritage properties specifically related to designated features.
2.3 This option provides financial support to property owners in recognition of the added
costs associated with maintaining designated properties to the standard, condition and
character of a heritage property. This program provides incentive to keep properties in a
proper state of repair, while only providing partial funding for actual expenditures.
2.4 If this option is chosen, it may be reasonable to expand the grant program budget and
increase the grant levels to recognize increasing costs and provide further incentive
while only reimbursing for actual costs.
2.5 This program would not provide support for day-to-day expenses such as insurance,
routine maintenance or other “operating” costs that may be higher than the average
home as a result of the heritage designation.
2.6 This program does not and would likely continue to not receive matching funding from
the Region of Durham as it is unique to Clarington.
Option 2 – Eliminate Heritage Incentive Grant and Establish Heritage Property Tax
Rebate Program
2.7 This option would replace the existing financial support with a new Heritage Property
Tax Rebate Program, similar to those in place in Ajax, Whitby, Oshawa and Pickering.
2.8 The program would provide support for both capital and day-to-day expenses, through
one mechanism which is not based on actual outlays of funds by the owner. There is no
guarantee that rebates will be reinvested into the properties to maintain them; however,
this could be controlled through additional criteria in the by-law requiring certain regular
maintenance and repairs to be carried out which would require staff resources to inspect
and confirm compliance with the requirements of the program.
2.9 This option follows the argument that there are additional non-capital costs of ownership
of a heritage property that owners are subject to. These could include higher insurance
costs, or higher operating costs for routine maintenance as a result of the heritage
nature of the property.
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2.10 The downside with this option is that the Municipality loses control on how the funds are
spent, there is no correlation between the rebate and the added incremental costs
associated with the property. The Planning and Development Services Department has
highlighted a concern that properties could be in a state of disrepair and receive the
property tax rebate, depending on how the rebate is structured. If this approach was
chosen, it is recommended that criteria be included to set minimum standards of repair
that are required to be met in order to qualify for the subsidy, Planning and
Development Services would be responsible for the determination of eligibility under
these criteria.
2.11 There are two key-ways that the program could be administered. The first would be
solely based on the designation, every property qualifies if they are designated. The
second would be an application based program, this is the more common approach.
The application-based program could be a one-time application or annual application.
The one-time application is less administrative work; however, mechanisms would need
to be included in the program to ensure that properties maintain their eligibility year over
year.
2.12 In either case, the Municipality has the right to develop additional criteria such as:
a. Minimum maintenance and repair standards which ensure that the properties are
kept in good repair;
b. Minimum or maximum assessment values. This would target the program to specific
types of properties, it could scope out small ancillary buildings and larger homes;
c. A requirement that the property tax accounts be in good standing;
d. Specific property tax classes that would be eligible, this could ensure that
commercial or industrial buildings are not included in the program;
e. A requirement that residential properties must be occupied; and
f. Any other criteria that Council deems appropriate.
2.13 It is suggested that the above-mentioned additional criteria be included in any property
tax program to ensure that properties are kept in good repair, property owners remain in
good standing with their tax accounts and that the programs are scoped to properties
where Council wants to provide assistance.
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Option 3 - Establish a Heritage Property Tax Rebate Program to Complement Grant
Program
2.14 This option would provide multiple tools for the Municipality to support owners of
heritage properties with overarching goal to preserve and maintain Clarington’s heritage
assets. The grant program provides the ability to support actual project costs of physical
improvements to the interior and exterior of properties, to maintain the property in
keeping with the designation. Complementing this program with a tax rebate program
recognizing the potential added day to day costs, such as insurance and routine
maintenance, that typically are higher for heritage properties.
2.15 If this option was chosen, Staff would recommend that property tax rebate percentage
be on the lower end of the allowed range to recognize the fact that there are additional
supports available. The heritage tax rebate program could be designed so that property
owners would not be eligible for both the tax rebate program and the heritage incentive
grant program in any given year. For example, a property owner could participate in the
heritage tax rebate program on an annual basis to keep up with routine maintenance.
However, should they wish to undertake a larger project in a certain year, they would
apply for the grant program and forgo the heritage tax rebate for that year. This creates
complexity as the timing of the incentive grant and the rebate do not necessarily match
up, which could create issues where the property gets both in one year and neither in
the following year. These details could be worked out in the creation of the by-law if this
option is explored.
2.16 The heritage tax rebate program would be an additional tool to support Claringt on’s
cultural heritage goals to promote the conservation of cultural heritage resources
through the designation of property under the Ontario Heritage Act. The program would
provide incentive for and acknowledgement of designated property owners’ role as
stewards of Clarington’s heritage resources to the benefit of the greater community, and
the achievement of its goals.
2.17 The rebate portion of the program would need to have the same considerations as
identified in paragraphs 2.11 and 2.12 above.
2.18 The Municipality of Clarington would be the only municipality in the Region of Durham t o
provide both a tax rebate program and a grant program for heritage properties. As this
program would be significantly different than the other three programs in place, it is
unlikely that the Region of Durham would match this program.
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Option 4 – Eliminate All Financial Support
2.19 An option available to Council would be to not provide financial support to heritage
properties. This would eliminate the existing Heritage Incentive Program which provides
up to $6,500 annually to property owners whom apply to share in the cost of capital
upkeep for designated properties.
2.20 This is not a recommended course of action by Financial Services nor Planning and
Development Services. For a relatively minor investment, the Municipality is able to
assist targeted properties maintain their heritage resource for the benefit of the
community.
2.21 The Region of Durham is only able to match programs if there is a program established
by the local municipality. If Clarington removes all financial supports, the Region of
Durham would not be able to establish a program for Regional taxes.
Preferred Recommendation
2.22 There are competing philosophies and perspectives between departments within the
Municipality as it relates to the provision of financial supports for heritage properties.
2.23 Provincial and Regional policy, and the Clarington Official Plan direct and support the
conservation of cultural heritage resources. Planning and Development Services
supports such heritage conservation goals to foster civic pride and a sense of place
through well-designed built form, and the preservation of features that define heritage
character and the recognize the Municipality’s history to the economic, cultural, and
social benefit of the community.
2.24 Financial Services wishes to ensure equitable treatment amongst taxpayers, limit
subsidization of taxes to areas where the whole community benefits (such as
community programming where part of the costs are funded by user fees and the rest
by taxation), limit taxpayers funding private individuals, and maintain control of how
disbursed funds are utilized.
2.25 These different views need to be considered to ensure that any financial support
program is feasible, benefits the community at large, and meets the objectives of
Council.
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2.26 The existing heritage incentive grant program provides financial support to property
owners based on the requirements to maintain their property associated with the
heritage designation implemented by the Municipality. The existing grant program is
designed to provide targeted support that can be controlled by the Municipality and is
based on actual expenses rather than a general rebate that may have no quantifiable
correlation to the heritage designation. The existing program also provides a community
benefit as it supports the heritage property owners maintain their properties, which
allows the community to enjoy the beauty and history these properties represent.
2.27 Financial Services Staff caution the appropriateness of rebating property taxes because
of the added day-to-day costs of owning a heritage building. This creates a precedent
where added costs for operating private property are taxpayer funded. It is felt that
grants for tangible, community-benefiting work are more appropriate and consistent with
how funds have been spent elsewhere in Clarington (for example, community gardens,
parks, playgrounds, public art). The incentive grant is an objectives-based funding
mechanism that ensures the use of public funds meet the desired objective.
2.28 For the reasons identified above, Option 1 (paragraph 2.2) is recommended by
Financial Services. If Council agrees, the resolution identified in the report
recommendation as Recommendation A would be appropriate to pass. The existing
heritage grant provides the best correlation of financial support and the objectives that
the Municipality are trying to meet. The program allows heritage property owners to
maintain their property while ensuring that the funds are dedicated specifically to
conservation of Clarington’s cultural heritage resources.
3. Financial Implications
Municipality of Clarington and School Boards
3.1 As with other rebate or refund programs, the funds for the program come from the tax
base. As this is a tax program that could benefit all property classes, it would come from
the entire tax base.
3.2 The Municipality would share the cost of the program with the school boards as it
relates to the education portion. The Province of Ontario, through the school boards,
would fund the portion related to education taxes. It should be noted funding for schools
is not negatively affected by a heritage tax relief program, as overall funding for public
education is protected through Provincial grants from fluctuations in property tax
revenues.
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3.3 The following table shows the estimated total annual rebate for eligible properties,
assuming all taxable properties applied, based on the 2021 tax roll and rates:
Property Tax 10% 20% 30% 40%
Municipal Rebate $ 18,183 $ 36,365 $ 54,548 $ 72,730
Education Rebate 8,419 16,839 25,258 33,677
Total Rebate $26,602 $ 53,204 $ 79,806 $ 106,407
3.4 In the above table there are 74 properties, the municipal rebate averages $246 (10%) to
$983 (40%). The average municipal tax bill was $2,457 ($180 rebate on an average bill
of $1,800 if the three largest heritage properties were excluded). The benefit to
individual properties is not significant. In fact, the existing grant program provides
potentially more support to property owners than a tax rebate program.
3.5 The Municipality’s current incentive program is tax-funded to the amount of $6,500 per
year and should be added to the above totals if the program were to be continued. The
municipal cost of doing both incentive programs (as it stands) and a tax rebate program
could therefore be in the range of approximately $24,700 to $79,200.
3.6 The Municipality cannot have a rebate program that is less than 10 per cent; therefore
any program that includes a tax rebate would be a minimum of approximately $18,200
budgeted item on the levy.
3.7 Alternatively, and preferably, the program can be structured to only be availab le to
occupied residential properties. This would remove commercial properties (which have
financial support through other programs), unoccupied residential properties (such as
Camp 30 and Belmont - Sam Wilmot House) and vacant properties with historical
plants. If this occurs the costs dramatically decrease, as follows:
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Property Tax 10% 20% 30% 40%
Municipal Rebate $ 11,798 $ 23,595 $ 35,393 $ 42,190
Education Rebate 4,501 9,001 13,502 18,003
Total Rebate $16,299 $ 32,596 $ 48,895 $ 65,193
3.8 By restricting the tax rebates to residential properties, the target audience is better
addressed without supporting certain businesses that could be seen to be getting an
advantage based solely on a historical designation.
3.9 Under the restricted eligibility program, the tax-supported costs for the tax rebate
program would range from $11,800 to $42,190.
Region of Durham
3.10 The Region of Durham has indicated that they will not match a heritage property tax
rebate program unless all local municipalities have a program in place. Unless all lower-
tier municipalities developed programs there would be a shift of the tax burden, where
non-participating municipalities would be funding the heritage rebate for participating
municipalities. This is a consistent approach that the Region takes with their tax
policies.
4. Concurrence
This report has been reviewed by the Director of Planning and Development Services
who generally concurs with the recommendations. However, the Planning and
Development Services Department prefers the option of adding the property tax rebate
to the existing incentive grant program (paragraph 2.14); if Council desires to add the
property tax rebate Recommendation B in the report recommendations would be
appropriate to pass. Either of the proposed recommendations (Recommendation A –
Option 1 or Recommendation B – Option 3) meet the goals of providing support to
maintaining heritage properties for future generations. The Planning and Development
Services Department would like to see, at a minimum, the continuation of the grant
program with additional funding and a review of the maximum allocations.
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5. Conclusion
While two alternatives have been provided to Council, from a Financial Services
perspective it is respectfully recommended that Staff include an enhanced heritage
incentive grant program in the 2022 budget. The creation of a heritage tax rebate
program is acceptable; however, there are concerns with the correlation of the tax
rebate and the heritage preservation objectives that Council has established.
Staff Contact: Trevor Pinn, Director of Financial Services/Treasurer, 905-623-3379 ext. 2602,
tpinn@clarington.net
Attachments:
Not Applicable
Interested Parties:
The following interested parties will be notified of Council's decision:
Clarington Heritage Committee
Region of Durham
Minister of Finance