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Home My WebLink AboutFND-004-01 . ~ Cl~-!llglon REPORT Meeting: GENERAL PURPOSE AND ADMINISTRATION COMMITTEE /LC7f /) I 0'/11- 7./v-u SEPTEMBER 4, 2001 Date: Report #: FND-004-01 File #.f!1;f- By-law # Subject: PROPERTY TAXATION STATUS REPORT Recommendations: 1. THAT FND-004-01 be received; 2. THAT staff continue to monitor Minutes of Settlement received from the Municipal Property Assessment Corporation (MPAC) and where necessary, be authorized to employ the services of Municipal Tax Equity Inc. (MTE) to represent the Municipality's interests at the Assessment Review Board, to be financed from the Tax Write-Off Reserve #2900-5-X; and 3. That Council appoint the firm of Municipal Tax Equity Consultants Inc. to acton behalf of the Municipality of Clarington regarding assessment and taxation matters for Roll #'s 18-17-010-020-00400 and 18-17-010-020-06680 (St. Mary's/Blue Circle) before the Assessment Review Board (ARB) at an approximate cost of $10,000, to be financed from the Tax Write-Off Reserve #2900-5-X. Reviewed bO ~ t<.. Jk. Franklin Wu, M.C.I.P. Chief Administrative Officer CORPORATION OF THE MUNICIPALITY OF CLARINGTON 40 TEMPERANCE STREET, BOWMANVILLE, ONTARIO L 1C 3A6 T (905) 623-3379 F (905) 623-0608 967 - REPORT NO.: FND-004-01 PAGE 2 BACKGROUND AND COMMENT 1.0 Final Tax BillinQ 1.1 As Council is aware, the Province prescribed the format of tax bills for 2001 for all property classes. As a result, the issuance of tax bills was delayed due to required reprogramming, as well as manual calculations for each roll number to provide the information for the new bills. 1.2 At the time of writing this report, the bills for the Residential, Farmland, Managed Forest and Pipeline property classes have been produced and have final due dates of September 20, 2001 and October 25, 2001. The bills for the capped classes (Commercial, Industrial, Multi-residential) are in process with tentative due dates of September 27,2001 and October 25,2001. 2.0 Bill 140 Amendments 2.1 Bill 140, an Act to amend the Assessment Act, Municipal Act and other Acts with respect to property taxes, received Royal Assent on December 4,2000. Regulations to prescribe the rules for implementing the Act have been released as recently as August 20, 2001. The Act is far reaching and in conjunction with the standardized bills has resulted in the delay in issuing final bills for the 2001 tax year. 2.2 Bill 140 establishes the continuation of a capping program for commercial, industrial and multi-residential taxpayers. There are some other items included in Bill 140 that are of important note. 2.3 Minutes of Settlement 2.3.1 Prior to Bill 140, if a taxpayer appealed their assessment and MPAC (Municipal Property Assessment Corporation- formerly OPAC) felt a change was warranted, Minutes of Settlement would be issued. The Minutes of Settlement would be forwarded to the Assessment Review Board. The Municipality would then receive legal direction from the ARB. 2.3.2 Under Bill 140, Minutes of Settlement are no longer sent to the ARB. The new provision directs the municipality, upon receiving the Minutes of Settlement directly from MPAC, to alter the collector's roll and make the necessary tax adjustments. The onus is on the municipality to appeal to the ARB within 90 days of receiving the notice. This places additional pressure upon the tax department to review appropriateness of Minutes of 968 REPORT NO.: FND-004-01 PAGE 3 Settlement and determine if an appeal is warranted. Staff does not have the expertise or assessment information available to determine if the proposed settlement is reasonable. 2.3.3 It is recommended that, where necessary, MTE be requested to assist in assessment matters in order to protect the assessment base for future years. 2.4 New Construction 2.4.1 Bill 140 expands the rules substantially for properties to be considered eligible for new construction status. Essentially, new construction properties are to be taxed at a level of assessment that is no higher than that of comparable properties. 2.4.2 The Municipality is also obliged to look at multi-year incremental changes to a property to determine if there is a cumulative effect resulting in the new construction eligibility. This is extremely difficult in that Supplementary and Omit assessment rolls do not provide sufficient information on their own to determine if a property would be eligible. 2.4.3 Also, the Municipality now has only 60 days to recalculate the tax bill from the date the list of comparables is received from OPAC. This is a much shorter time frame to perform calculations, especially if the notice is received during billing and installment periods. 2.4.4 Finally, the cost of the protection for new construction properties identified at the time of billing could previously be financed from the clawback rate established at that time. Now, the cost for this must be written off after the billing and therefore will directly impact the Municipal budgets. 2.5 Vacancy Rebate 2.5.1 Prior to Bill 140, owners of commercial and industrial properties submitted vacancy applications directly to MPAC. The deadline was November 1 of the preceding tax year. As long as the vacant unit was available for lease from July 1 to September 30, they would be eligible for the vacant tax rate for the entire subsequent year. The annual returned roll for the Municipality would include the vacant components of properties. The Municipality then would only budget to collect tax revenue based on the lower rate for that assessment. 969 REPORT NO.: FND-004-01 PAGE 4 2.5.2 Bill 140 substantially changed the rules for vacant properties and the regulations have just been released on August 20, 2001. The returned roll for 2001 included all properties as fully occupied. As a result, the municipality had no option but to budget tax revenue on this basis. There was no way to determine the amount of the total municipal wide vacancy rebate. 2.5.3 Under Bill 140, we have moved to a real time vacancy system. Essentially, if the property was vacant for a minimum 90 day period any time during the tax year, the property owner is eligible to submit an application to the Municipality. The taxpayer has until February 28 of the following year to submit his/her application. The Municipality forwards the application to MPAC. MPAC will provide the value of the eligible property to the Municipality "as soon as practicable". The Municipality must then calculate the rebate amount. The Municipality has 120 days from the date the application is submitted to the Municipality to pay any rebate or interest is also payable. 2.5.4 There are concerns over how MPAC will be able to determine if the application is valid if it is submitted months after the vacancy occurred and the unit subsequently became occupied. There are also concerns surrounding short time frames for calculation of rebates as well as determining what the true budget impact may be. 3.0 Blue Circle 3.1 The Municipality has received a Notice of Hearing for an appeal of properties identified as 18-17-010-020-00400 and 18-17-010-020-06680 (shown on roll as owned by St. Mary's Cement Corporation) for the 2001 taxation year. Due to the scope of potential issues and the potential significant impact on the Municipality's tax base, it is recommended that MTE be requested to act on behalf of Clarington, in conjunction with the Director of Finance, regarding this assessment appeal. An approximate cost of $1 0,000 is recommended to be financed from the tax write-off reserve, account #2900-5-X. 970