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HomeMy WebLinkAboutTR-40-86 TOWN OF NEWCASTLE HANDOUT f REPORT File Res. By-Law # MEETING: General Purpose and Administration Committee IATE' JUNE 2, 1986 REPORT #: TR-40-86 FILE #: SMECT: SITE VALUE ASSESSMENT RECOMMENDATIONS: it is respectfully recommended that the General Purpose and Administra- tive Committee recommend to Council the following: 1 . That report TR-40-86 be received; and 2. That, the correspondence received from the City of Peterborough with respect to the Site Value Assessment be lifted from the table; and 3. That Council support the request of the City of Peterborough Council to the Premier of Ontario to arrange with the Minister of Revenue to do a pilot study of Site Value Assessment in the City of Peterborough. BACKGROUND AND COMMENTS: As a result of Councils Resolution #C-272-86 dated March 24, 1986, staff has investigated the concept of Site Value Assessment. Site Value Assessment proposes to base tax assessment on land value alone, excluding the worth of any buildings or structures on the property. The value of the land would be based on the highest and best use of the land, whether developed or not. Proponents of Site Value Assessment feel that since every household receives the same benefits ( i .e. sewer, fire and police protection, garbage disposal ) , all should pay an equal amount of property taxes. 2 - TR-40-86 A discussion of the advantages and disadvantages of Site Value Assessment is as follows: 1 . LAND SPECULATION Those in favour of Site Value Assessment believe that this form of assessment will discourage land speculation because both vacant and improved land would be taxed at the same level , that is, reflecting its' highest and best use. As a result, it would be unprofitable for developers to hold land for any length of time. It may be difficult for the land holders to sell large parcels of undeveloped land that will have high taxation rate. This may result in municipalities taking over more land for taxes. 2. LAND DEVELOPMENT & INDUSTRIAL EXPANSION Site Value Assessment may encourage idle lands to be developed and underdeveloped lands to be more intensely developed. Since all land i would be taxed at a rate that reflects it as if it were fully de- veloped, it would be a disadvantage to keep vacant or underdeveloped land. Also, under Site Value Assessment, development might be stimulated by the fact that landowners would not be taxed for improving buildings, as they are now under the present Market Value Assessment. C I I 3 - TR-40-86 One problem area with Site Value Assessment, is that development may tend to be concentrated in the areas with the highest land value instead of overall development. Site Value Assessment might also encourage urban construction on smaller sites. This may allow for the most efficient use of municipal services but may not be in the best interests of the community. Although Site Value Assessment may encourage industry to expand, there are other factors that affect development and expansion such as proximity to markets, trained manpower, etc. This means that lands held may not be developed even though taxation would be high. 3. EMPLOYMENT Site Value Assessment is promoted because increased land development and industrial expansion would create employment. Most of this increased employment would be of a temporary nature due to the fact that much of the development would take place immediately following implementation of Site Value Assessment. Once most of the land is developed, employment would be reduced. 4. TAXATION Site Value Assessment would move part of taxation from industrial and commercial taxpayers to residential taxpayers and farming communities, especially in mixed urban/rural municipalities. For the j residential and farming taxpayers, the less intensively their land is built upon, the higher the burden of the tax would be relative to the value of the whole property. i I - 4 - TR-40-86 SUMMARY In other parts of the world Site Value Assessment was generally chosen when nations were young. Australia, New Zealand, Denmark and Kenya are now using some form of Site Value Assessment. This form of taxation base seems to have more application where a ground lease arrangement by the Government is a form of tenure. Site Value Assessment does not reflect the current market value of the land and its' structures but seeks to establish a taxation rate based on what the land would be worth if it was developed to its' potential . The major area of concern would be taxation of residential and farming communities. Would these taxpayers be taxed at an unreasonable rate because their land has not been developed to its' "maximum" potential? This area plus the other areas such as land speculation, land development and employment are all important aspects to be considered when evaluating Site Value Assessment. It should be noted that the province does not recommend a change to site value assessment at this time. However, staff recommend that Council support the City of Peterborough's resolution to have a pilot study done of site value assessment. This study may bring to light inequities in both Market Value Assessment and Site Value Assessment which could possibly result in a more equitable system of assessment being developed. Staff note that this area has quite an urban-rural mix and as such, encouragement or support of a pure Site Value Assessment System could conceivably cause an undesirable reaction from local ratepayers. Respectfully submitted, J.R. Blanchard, Treasurer. JRB/pp I