The URL can be used to link to this page

Home My WebLink AboutFND-007-04 tV , ClfllmglOn REPORT FINANCE DEPARTMENT Meeting: GENERAL PURPOSE AND ADMINISTRATION COMMITTEE MONDAY, MARCH 29, 2004 Resolution #: ((f'fl-/c;r-(y( Date: Report #: FND-007-04 File#: By-law #: Subject: RAILWAY RIGHT OF WAY REVENUE - PROVINCIAL COMPENSATION IMPACT Recommendations: It is respectfully recommended that the General Purpose and Administration Committee recommend to Council the following: 1, THAT FND-007-04 be received for information; 2. THAT the Province be requested to make a determination for 2003 and future years to instruct railways to pay the railway rights-of-way at the phased-in rates for the 2003 and subsequent years; 3. THAT the Province provide clear direction that the revenues at the appropriate phased-in rates for the Municipalities is assured; and 4. THAT this resolution be copied to Mr. John O'Toole, MPP, and the Minister of Finance. , ,I. ,. (. ( ( Reviewed by:' --' ..\J:../ . . '. . Ll Franklin Wu Chief Administrative Officer NMT/LB/hjl 1304 . REPORT NO.: FND-007-04 PAGE 2 BACKGROUND 1.0 In 1998, the Province introduced a new regional tax rate per acre system for the railway right-of-ways (ROW). The intent was to work towards a uniform provincial average rate. The change was to be phased in over seven (7) years from 1999 to 2005. In 2001 and 2002, the municipal specific rates were frozen at the 2000 tax rate levels for ROWs being phased up to the mature regional rates. For both 2001 and 2002, the Province compensated the Municipality for the revenue losses associated with the ROW rate freeze, A copy of the Ministry's correspondence is attached for your review, For rates in municipalities that were declining, the rates were not frozen in order the railways received these savings. 2.0 The budget for the 2003 tax year was prepared based on ROW receipts at year 4 rates as prescribed under Ontario regulations 387-98 and 392-98. The ROWs were billed out to the effected railways at the full year 4 rate with reductions allowed to reduce the balance to the 2000 frozen level. At the time of billing, discussions with the Province resulted in no firm commitment to compensate the Municipality for the revenue losses in 2003, At the same time the railways were being advised to pay at the same rate they had paid in 2002. 3,0 Due to the change in governing parties in Ontario, the Ministry of Finance is unable as yet to provide the Municipality with a decision on ROW billings for 2003. 4.0 As a result, the Municipality currently has an outstanding account receivable for ROW in the amount of $177,914.07. The local municipal share of this is $66,554.82, the balance being the Region of Durham's share. It is unclear whom this payment will corne from or when we can expect to receive the outstanding balance. There is also the continuing uncertainty for 2004 and subsequent years. 5.0 Discussions with Ministry staff indicate that no decision has been made. 6,0 To better manage the municipalities cash flow requirements and to stabilize any tax rate impact we need the Province to direct the railways to assume responsibility for the phased in rates pursuant to Ontario Regulations 387-98 and 392-98, There has been difficulty confirming whether there is any risk to the municipalities that the rates will be frozen but no compensation made to the municipalities for 2004 or whether the phase-in schedule would be revised over a longer time frame. In either case, a revenue reduction for Clarington would result. 7.0 For budget purposes, the applicable 2004 rates have been used. Should an unfavourable decision be made, the tax levy will have to be adjusted to make up for any shortfall. 1305 I . REPORT NO.: FND-007-04 PAGE 3 Attachment: letter from Ministry of Finance Copies to: Mr. John Dennis, Provincial Local Ministry of Finance Provincial - Local Finance Secretariat 10th Floor, 777 Bay Street Toronto, Ontario M5G 2C8 Mr. John O'Toole, MPP 75 King Street East Bowmanville, Ontario L1C 1N4 CORPORATION OF THE MUNICIPALITY OF ClARINGTON 40 TEMPERANCE STREET, BOWMANVILLE, ONTARIO L 1 C 3A6 T (905)623-3379 F (905)623-4169 1306 Ministry of Finance Provincial-Local Finance Secretariat 10'" Floor 777 Bay Street Toronto ON MSG 2C8 Tel (416) 327.0264 Fax (416) 325-7644 l\1inistere des Finances Secretariat des relations prminciales- municipales en matiere de rmances 10e etage 777 rue Bay Toronto ON I\15G 2C8 Tele, (416) 327-0264 Tele.:. (4t6) 325.7644 Attachment FND-007-04 @ Ontario February 25, 2003 riD !f(r r- / ~1F- 0,smYl:fSff0 hi ". \. jf; "~.,, ? <, ), "~,Il:'.: 'U'v J).n~ _.., '. Ii 1(;/,0", ,_ , Vt..." "l" \.' "'_ ~;A ot-CiAR' '-',i/A~.f"""'" - . IlVt:'/'O .J!,,.. U Ii) Ms. Nancy Taylor Director of Finance/Treasurer The Municipality of Clarington 40 Temperance Street Bowmanville, ON L 1 C 3A6 Dear Ms. Taylor: I am writing in respect of the railway right of way (ROW) compensation payments for the 2002 tax year. As you may know, the province introduced a new regionai tax rate per acre system for ROWs in 1998. Movement to the mature regional ROW rates was to be phased in over 7 years from 1999 to 2005, In 2001, the firm specific rates were frozen at 2000 tax rate levels lor ROWs being phased up to the mature regional rates. The treatment of ROWs being phased down to the mature regional ROW rates was unaffected. The freeze was extended to the 2002 tax year by Ontario Regulation 387/98. As in 2001, the province is compensating municipalities for the revenue losses associated with the ROW rate freeze for 2002, The ROW compensation payments for the 2002 tax year were recently delivered to your municipality by wire transfer. The composition of the payment is set out below. Base 2002 Amount 2001 Adjustment Total Payment $ 117,270.42 $ 304.57 $ 117,574.99 As in 2001, this amount must be shared with your upper tier municipality on the same basis as ROW revenues are shared with the upper-tier under section 368.3 of the Municipal Act. The compensation should not be shared with school boards as the Ministry of Education is directly compensating the boards through increased education grants, 1307 .../2 Municipal Treasurers Page 2 For most municipalities, the 2002 payment will be approximately double the 2001 payment. This is because the compensation is based on the difference between the firm specific 2002 tax rate that would have been in effect in the absence of the freeze and the firm specific frozen 2000 tax rate. However, some variances will occur due to year to year acreage differences that occur as a result of line expansions, abandonments and sales to third parties. (ROWs that have been sold to new owners move immediately to the mature regional rates). The 2002 base amount also reflects the 2002 portion of the 2001 adjustment amount. The initial 2001 payment was based on preliminary acreage information as the year over year acreage differences on the assessment roll could not be confirmed prior to payment delivery. The 2001 adjustment amount reflects a CNR line expansion of 3.57 acres. Municipalities will be notified about the decision regarding 2003 tax rates in the near future. Please direct all inquiries about these payments to John Dennis, Provincial Local Finance Secretariat, Ministry of Finance at 416-327-0272 or by email at John. Dennis@fin.gov.on,ca. ffl /J/, /, i/?7 /j~jr{~r/{ Nancy Naylor Assistant Deputy Minister 1308