Loading...
HomeMy WebLinkAboutFSD-002-25 Staff Report If this information is required in an alternate accessible format, please contact the Accessibility Coordinator at 905-623-3379 ext. 2131. Report To: General Government Committee Date of Meeting: January 13, 2025 Report Number: FSD-002-25 Authored by: Trevor Pinn, Deputy CAO/Treasurer, Finance and Technology Submitted By: Trevor Pinn, Deputy CAO/Treasurer, Finance and Technology Reviewed By: Mary-Anne Dempster, CAO By-law Number: Resolution Number: File Number: Report Subject: Alternative Revenue Sources Recommendations: 1. That Report FSD-002-25, and any related delegations or communication items, be received; 2. That Staff be directed to take the necessary steps to implement a Municipal Accommodation Tax and report back to Council with the required revenue-sharing agreements and enabling by-law; 3. That Staff be directed to take the necessary steps to implement a Stormwa ter Management Fee by January 1, 2028 and report back to Council with the required agreements and by-laws as required; 4. That Staff be directed to review User Fees and include additional fees for consideration in the User Fee Bylaw under the principle that services benefitting individuals should be funded by the individuals; and 5. That all interested parties listed in Report FSD-002-25, and any delegations be advised of Council’s decision. Municipality of Clarington Page 2 Report FSD-002-25 Report Overview This report provides background on the authority and processes required for implementing non-tax revenue sources within the Municipality of Clarington. This report does not implement any new sources but provides Council a list of available areas to provide direction to Staff to pursue. 1. Background 1.1 At its meeting of October 7, 2024, General Government Committee passed a resolution requesting that Staff report back at the January 13, 2025 meeting on the no n-property tax revenue options available to the Municipality, an overview on the required process for implementation and required resources. 1.2 The Municipal Act, 2001, sections 9-11 provides municipalities with it powers of a natural person, and broad authorities. However, section 17 restricts certain financial powers like imposing taxes, borrowing or investing and provides specified authority in other places of the Act. 2. Vacant Home Tax Authority 2.1 Part IX.1 of the Municipal Act, 2001 relates to the Optional Tax on Vacant Residential Units. It allows that in addition to taxes imposed under Part VIII, a designated municipality may, by by-law passed in the year to which it relates, impose a tax in the municipality on the assessed value, as determined by the Asses sment Act, of vacant units that are classified in the residential property class and are taxable under the Act for municipal purposes. 2.2 Under Section 338.3 the Minister of Finance has the power to make regulations prescribing matters including the designation of municipalities for which this part applies, defining “vacant unit” and other provisions. 2.3 Ontario Regulation 458/22 outlines the designated municipalities to include all single-tier and all upper-tier municipalities. Therefore, the Municipality on its own does not have the authority to levy a Vacant Home Tax. 2.4 The Region of Durham has included the vacant home tax in its 2024 Strategic Property Tax Study. Section 8 of the report is dedicated to the Vacant Home Tax. Vacant Home taxes in a two-tier system are more complex to administer than in a single-tier system; further, based on water usage rates, there do not appear to be significant vacant Municipality of Clarington Page 3 Report FSD-002-25 properties in Durham Region. Their recommendation in 2024, and is expected to remain the same, is that no action be taken on a vacant home tax. 2.5 According to the Province’s vacant home tax website, the Cities of Toronto, Ottawa, Hamilton, Windsor and Sault Ste. Marie all have Vacant Home Taxes, all are single -tier municipalities. At this time no upper-tier municipality has implemented this tax. Staff Recommendation 2.6 Staff will continue to work with the Region of Durham to monitor and assess the appropriateness of adding the vacant home tax to Durham Region, however at this time it is outside the authority of Council to impose such tax. 3. Transient Accommodation Tax Provincial Authority 3.1 Part XII.1 of the Municipal Act, 2001 deals with the authority to impose a transient accommodation tax. Section 400.1 allows a local municipality, by by-law, to impose a tax in respect of the purchase of transient accommodation in the municipality in accordance with this part if the tax is a direct tax. 3.2 As the Municipality of Clarington is a local municipality, this optional tax is available to Council to explore and does not need to include the Region of Durham in the administration of the tax. 3.3 The by-law must include the subject of the tax to be imposed, the rate or amount to be paid, and how it is to be collected (which may include designated persons or entities authorized as agents). 3.4 The tax cannot be imposed on the Crown, education boards, universities or colleges, hospitals, long-term care homes, or other prescribed parties. 3.5 The collection of the tax can be through a partnership, several municipalities outsource the collection of accommodation taxes to a third party. As well, companies such as Vrbo or AirBnB have the reporting infrastructure in place to facilitate this type of taxation. 3.6 The Province has issued Ontario Regulation 435/17: Transient Accommodation Tax that provides additional information on the requirements of this tax regime. 3.7 There is a requirement under sections 4 and 5 of the regulation to share the revenue generated from the Transient Accommodation Tax. As there is no destination marketing program in existence in Clarington, we would fall under the requirements of section 5. Municipality of Clarington Page 4 Report FSD-002-25 3.8 The revenue sharing requires that we make payments to one or more eligible tourism entities totalling 50% of the amount collected less reasonable administration costs within 60 days of the fiscal year end. 3.9 There are no requirements in the Act or in regulation for additional public consultation or other steps than entering into the revenue sharing agreement and passing a by-law. Durham Municipalities 3.10 In October 2020, the City of Oshawa implemented the Municipal Accommodation Tax. The current rate is four percent of the purchase price of accommodation provided for a continuous period of 30 days or less. 3.11 The City of Oshawa uses the Ontario Restaurant and Hotel & Motel Association (ORHMA) to collect the MAT which is remitted the following month. 3.12 In October 2024, the City of Oshawa amended the rate to five percent and also included bed and breakfast or short-term rentals (e.g. AirBnB), on a quarterly remittance schedule. 3.13 In July 2024, the Town of Whitby implemented a four percent Municipal Accommodation Tax. Similarly to the City of Oshawa they have an agreement with ORHMA to collect and remit the funds, less 1.8% administration. 3.14 The Town created a Municipal Service Corporation, the Whitby Tourism Development Corporation and established a specific reserve fund for the use of the funds. 3.15 The Town is phasing in short term rentals once the Short-Term Rental Bylaw is updated. 3.16 The City of Pickering is in the process of implementing a MAT program, details at this point are not finalized. Staff Recommendation 3.17 The Municipal Accommodation Tax will provide additional resources to local tourism organizations to promote Clarington and increase economic development. 3.18 A Municipal Accommodation Tax provides an additional stream of revenue which can be used to support the infrastructure that is used, such as roads, parks, recreation facilities, by those travelling from out of town and staying locally. This transfers the cost of maintaining the infrastructure solely from the property tax base to those who are utilizing the services and infrastructure. Municipality of Clarington Page 5 Report FSD-002-25 3.19 Municipal Accommodation Taxes are becoming an increasingly utilized revenue source in Ontario municipalities of all sizes. Staff recommend that Council direct staff to begin the required steps to implement a MAT regime in Clarington similar to those already in place in Durham municipalities. 3.20 Finance Staff will work with the Economic Development team to facilitate the implementation of this tax. It has been identified in the Economic Development Action Plan as outlined in Report CAO-001-25. 4. Stormwater Management Fees 4.1 Stormwater management is becoming increasingly important as a result of climate change. Significant rain events in the City of Toronto have caused significant damage over the past decade and one of the contributing factors is the build-up of urban areas. This build-up reduces the natural ability to control rainwater and directs more water to the stormwater management system. 4.2 Municipalities in the GTA have started implementing user fees for stormwater management, which funds the stormwater management system similar to water and wastewater systems; it is based on user pays based on their usage of the system. 4.3 Stormwater “usage” is in substance, how do you contribute to the redirection of water from natural drainage systems (i.e.. the ground, watersheds) into the stormwater management system. Many municipalities use “non -permeable surface” as a way to measure usage. Others will set a base fee and provide “credits” for mitigating actions such as rain barrels or permeable surfaces. 4.4 The Municipality of Clarington’s stormwater management assets, such as ponds, sewers, and outfalls, are currently funded through the property tax levy. In 2022, the Asset Management Plan indicated that we had approximately $188.4 million in infrastructure costs for stormwater management including $129.0 million in mainline pipes. 4.5 Since these assets are funded through the tax levy, residential taxpayers support this infrastructure based on the assessment of their property, which is not reflective of the stormwater caused by these types of buildings. Staff Recommendation 4.6 Staff recommend that Council direct Staff to bring back an implementation plan for Stormwater Management Fees as a non-tax supported service of the Municipality. Municipality of Clarington Page 6 Report FSD-002-25 4.7 This work will require the use of outside consultants to assist in the determination of the most effective manner to apply the charge, the required revenue generation over time and establishing billing systems. 4.8 Work for this project would be multiple years and would likely not be fully implemented until 2027. Work on the pending asset management plan, development charge study, and secondary plans will form the basis of understanding the future needs of the stormwater system and customer-base. 5. User Fees Provincial Authority 5.1 Part XII of the Municipal Act, 2001 relates to the ability of a municipality to impose fees and charges. Section 391 of the Act allows a municipality to impose fees and charges on persons, 5.2 for services or activities provided or done by or on behalf of it; 5.3 for costs payable by it for services or activities provided or done by or on behalf of any other municipality or any local board; and 5.4 for the use of its property including property under its control 5.5 The Municipality already has a User Fee By-law in place for several services. Each year in May, Staff bring a revised by-law to Council for consideration if there are fees that are new or need to be adjusted significantly. Staff Recommendation 5.6 Staff will review the existing user fees to determine if there are other areas that are currently being funded by tax dollars that should more appropriately be funded by user fees. The principle that works benefitting an individual should be paid by the individual will be used to ensure that to the extent reasonable tax-support revenues are used to fund public services rather than personal services. 6. Financial Considerations 6.1 Financial considerations are indicated above. This report is seeking direction on which options Council is willing to consider implementing. There are no financial implications from this report directly. Municipality of Clarington Page 7 Report FSD-002-25 7. Strategic Plan 7.1 This report provides for the funding strategy and proposed service levels for assets identified as an action to priority L.2.5: Maintain, protect and invest in Municipal Infrastructure and assets. 7.2 The adoption of Stormwater Management Fees also facilitates the operations and investments in the stormwater management infrastructure. This supports G.4.2 Be a leader in anticipating and addressing the impacts of climate change. 8. Climate Change 8.1 The adoption of a Stormwater Management Fee has been identified and approved in the Corporate Climate Action Plan. 8.2 Stormwater management infrastructure mitigates the effects of climate change by enabling the flow of stormwater through built-up areas. Stormwater assets need to be sufficient to meet peak demand weather events. Durham is expected to see increased precipitation events as a result of climate change, assets need to be able to meet these higher demands. 9. Concurrence Not Applicable. 10. Conclusion It is respectfully recommended that Council provide support to the implementation of the additional non-tax revenue sources identified in this report. Staff Contact: Trevor Pinn, CPA, CA, Deputy CAO/Treasurer, 905-623-3379 x2602 or tpinn@clarington.net. Attachments: Not Applicable Interested Parties: There are no interested parties to be notified of Council's decision.