HomeMy WebLinkAboutTR-059-00
.'
THE CORPORATION OF THE MUNICIPALITY OF CLARINGTON
.
REPORT
Date:
Monday, September 18, 2000
File # ;:/0 G,:r
Res. tiff/!- if/3?Ji)
Meeting:
General Purpose and Administration Committee
Report #:
TR-!i9-00
FILE#:
By-law #
Subject:
Property Taxation Status Report
Recommendations:
It is respectfully recommended that the General Purpose and Administration Committee
recommend to Council the following:
1 . THAT Report TR-59-00 be received for information.
1.0 BILL 14 AND FINAL 2000 CAPPED BILLS
1.1 In December of 1999, the Province of Ontario passed Bill 14- More Tax Cuts for Jobs,
Growth and Prosperity Act, 1999. This legislation had a significant impact upon 2000
tax billing for properties in the commercial, industrial and multi-residential family of
classes. Specifically, new construction properties were to receive special tax treatment
under the 10-5-5 program for the 2000 billing as well as retroactively to 1998 and 1999
depending upon the date of the new construction.
1.2 Essentially, Bill 14 created an alternative method of calculating 1997 assessments for
properties that did not exist in 1997 by determining the average level of assessment of
comparable properties in the vicinity. This level was compared to the 1997 assessment
based on the average level of assessment for the class across the whole municipality
(based on provincially prescribed construction factors). The lower of the above two
values is incorporated into the frozen assessment listing for the property. The amount
of taxes then billed is the lower of the taxes determined using the frozen assessment
listing under the 10-5-5 calcuiations or CVA times the tax rate.
1.3 As mentioned, Bill 14 also provided for mandatory rebates to be paid to certain newly
constructed properties in 1998 and 1999.
1.4 For the 2000 year, the Municipality had two options. The Municipality could have issued
2000 final tax bills for the capped classes without waiting for the Ontario Property
Assessment Corporation (OPAC) to identify comparable properties under Bill 14 and for
the Online Property Tax Analysis (OPTA) to be updated to incorporate Bill 14
calculations. In this case, all post billing adjustments done to bring the tax
815
REPORT NO.: TR-59-00
PROPERTY TAXATION STATUS REPORT
PAGE 2
bills into conformity with Bill 14 would have to be funded from the local tax base. The
alternative was to wait until both OPAC and the Province (via OPTA) had provided all
necessary information in order to accommodate the Bill 14 adjustments into the final
2000 bill. In this case, the cost of the Bill 14 adjustments are financed through the 10-5-
5 claw back factors across the Region. This was the approach taken in Clarington in
order to minimize the tax impact upon local property taxpayers.
1.5 Final 2000 tax bills have now been issued for the capped classes with due dates of
September 20th and November 22nd A copy of the insert to these bills has been
attached for your information (Attachment #1). A copy of the Region of Durham Finance
Report #2000-F-44 is also attached for information (Attachment #2).
1.6 Unfortunately, the adjustments mandated for new construction for prior years must be
financed from the local tax base. A portion will be charged back to the Region and the
School Boards as appropriate. The total impact for Clarington new construction for
1998 and 1999 may be in the vicinity of $300,000 to $400,000 to be shared with upper
tier and schools.
1.7 Currently, all property owners qualifying under Bill 14 as new construction have been
notified of the comparable properties selected by OPAC. They have ninety days from
the date of mailing to appeal the comparable properties selected. OPTA has not yet
been modified to calculate these prior year adjustments as yet. It is the intention of staff
to issue rebates once the appeal period has expired and OPT A has been modified to
perform the calculations. Municipal Tax Equity Consultants will be assisting with the
calculations.
2.0 ARB PRIOR YEAR MANUAL ADJUSTMENTS
2.1 Due to the significant volume of appeals submitted as a result of the implementation of
Current Value Assessment, there were unavoidable time delays in processing by OPAC
and the Assessment Review Board. Generally speaking, residential appeals were dealt
with first and others such as commercial, industrial and multi-residential followed
thereafter. As a result, the Municipality received a significant number of ARB decisions
relating to the capped classes in late 1999 and early 2000 for the 1998 and 1999
taxation years.
2.2 Bill 79 (10-5-5 capping legislation) required that the capping adjustment be recalculated
to reflect any subsequent changes in assessment applicable to the 1998, 1999 and
2000 taxation years. In August, the Municipality processed 84 manual adjustments
relating to 1998 and 1999 taxation years. This represents approximately 10% of the
properties in the capped classes with each requiring a significant amount of time due to
the complexities involved. Municipal Tax Equity assisted in determining the capping
adjustment and Municipal staff verified this and calculated billing adjustments. Multi-
year impacts were determined and adjustments made to taxpayer accounts prior to the
issuance of the 2000 final bills.
816
REPORT NO.: TR-59-00
PROPERTY TAXATION STATUS REPORT
PAGE 3
2.3 As ARB decisions and appeals are ongoing, subsequent adjustments will be calculated
as they are received by the Municipality. This includes those relating to the 2000
taxation year that could not be processed until final tax bills issued.
3.0 SUPPLEMENTARY BilliNGS
3.1 As mentioned in section 2.2 above, Bill 79 required that the capping adjustment be
recalculated to reflect any subsequent changes in assessment. This also applies to
supplementary assessments. This, in particular, picks up properties that switch from
residential into one of the capped classes. In the case of supplementaries. the capping
calculation must be done but the property may also require removal from the residential
phase-in program depending upon the effective date of the supplementaries.
3.2 In 1999, all supplementaries relating to capped classes were put on hold until capping
calculations could be done. In particular, there are special rules relating to expansions
of facilities etc. that provided complications. The Municipality's auditors were apprised
that the bills could not be issued. This was typical across the Province.
3.3 In conjunction with the manual adjustments mentioned in section 2, supplementary tax
bills were calculated and issued for all supplementary rolls received in 1999 from OPAC
with the exception of one that incorporated multiple supplementaries as well as Bill 14
impacts.
3.4 For supplementary assessment rolls received in 2000, all bills were issued in August,
2000 for the non-capped classes. Those affected by Bill 79 and Bill 14 will be issued in
the fall of this year.
4.0 2001 AND BEYOND
4.1 As is mentioned in the Region Finance report attached and the 2000 capped tax bill
insert also attached, there are some major outstanding issues relating to the 2001
taxation year. During this year, OPAC has been compiling information for a province
wide reassessment effective for 2001 based on June 1999 as the valuation date.
Information regarding impacts will be forthcoming in the fall of 2000.
4.2 Also, as you are aware, Bill 79 (10-5-5 capping) is completed in 2000. The Province has
stated that some form of phase-in will continue. However, they have not yet released
any legislation or information to indicate what form that phase-in may take.
4.3 Staff will report back as soon as the Province releases information or draft legislation.
MFOA jointly with AMO and AMCT have recently released a position paper with their
recommendations. It is available on the MFOA website. Potentially, tax bills will be
delayed again in 2001 depending upon when the Province proceeds with legislation and
the form of that legislation.
817
REPORT NO.: TR-59-00
PROPERTY TAXATION STATUS REPORT
PAGE 4
5.0 CONCLUSIONS
5.1 Due to the volume of activity during the month of August, and the need to issue correct
2000 final bills for the capped classes in a timely manner, some taxpayers received long
awaited prior year adjustments (both bills and credits) back to back with the final bills.
Staff felt it was necessary to ensure that those taxpayers awaiting credits received those
credits in time to apply them to their final 2000 tax bill. Those receiving bills relating to
prior year adjustments have been aware for some time that the bills would be
forthcoming and have received the benefit of the bills being deferred until now.
5.2 Some complaints have been received as a result of the balances owing. Staff have
spent many days working with the taxpayers who have called with concerns and
questions. Although it is not permitted under the Municipal Act to waive penalty and
interest, staff have been as accommodating as possible regarding payment
arrangements while treating all concerns consistently and reasonably.
5.3 As mentioned above, a status report for the 2001 tax year will be forthcoming when
further information is available.
Respectfully submitted,
Reviewed by,
",
~/6~
~rie Marano, HBSc., AMCT, CMO.,
Treasurer.
O~~
Franklin Wu,
Chief Administrative Officer.
MM/NT/hjl
Attachments
Interested parties to be notified of Council and Committee's decision.
818
ATTACHMENT III
MUNICIPALITY OF CLARINGTON
TAX INFORMATION INSERT
2000 PROPERTY TAX UNDER PROVINCIALLY MANDATED BILL 79 CAPPING
(Also referred to as the 10-5-5 Cap)
2000 INSTALLMENT DATES: September 20TH AND November 22ND
The Province of Ontario implemented Current Value Assessment (CVA) in
1998 along with a number of other policy-related changes (i.e. business occupancy tax
elimination, provincial services downloading, residential education taxes reduction, farm
rebate elimination and region- wide tax ratios).
. Bill 79 ties the 1998-2000 property taxes to the property taxation that existed in
1997. The Provincial Government has mandated this calculation for all Ontario
municipalities (excluding Metro Toronto) and for all properties within the Multi-Residential,
Commercial and Industrial family of classes. Residential, farmland and the managed
forest classes are not affected.
By tying the 1998-2000 property taxes to 1997 (before CVA implementation), the
Province has significantly reversed the implementation of the 1998 reforms. As stated
above, the reforms introduced in 1998 were wide-ranging and complex. To achieve the
partial reversal of these reforms requires a very detailed and complex mathematical
calculation for each property. The Province has created and mandated the methodology,
formulas and factors required for the calculation and the municipality has no flexibility in
implementing the legislation.
The delay in the implementation of Bill 79 is a direct result of the complexity of the
mathematics involved. Although the legislation became law in December of 1998 the
Province prescribes, through regulations, the formulas and factors required for the
calculation. Many regulations were not filed until 1999.
The Province has also passed Bill 14 in late 1999. Bill 14 introduced new rules for
the treatment of newly constructed properties under the 10-5-5 capping program. Bill 14
ensures that these properties will have a 1997 assessment that is no higher than that of
comparable properties in the immediate vicinity. These rules have been applied for the
2000 tax bill attached. Prior year adjustments for applicable properties will be
forthcoming.
2000 TAXES & BEYOND
Didn't I already receive a final 2000 Tax Notice?
Final 2000 Tax Notices for the uncapped classes (residential, farmland and
managed forests) were issued in May. If you own a mixed-use property (Le. one property
with multiple assessment classes) then you may have received a final tax notice for the
uncapped class portion of the property. The capped class assessment based property
taxes were NOT included on this bill.
819
What about future taxes?
In the year 2001, Bill 79 expires and it is not currently known what will transpire.
Also, a reassessment process has been done for the 2001 taxation year (valuation date of
June 30, 1999) by the Ontario Property Assessment Corporation. Property-by-property
impacts are not yet available.
lawyer to resolve discrepancies in your purchase transaction.
Does it matter if I have had an assessment changed?
If your assessment has been adjusted by either the Ontario Property Assessment
Corporation (OPAC) or by a decision of the Assessment Review Board, then it will affect
the capping calculation. The majority of approved assessment related changes, which
have been received by the Municipality, are incorporated in the capping adjustments.
However, assessment changes are ongoing and will result in revisions to the appropriate
tax billing year.
What do I do if I have tenants?
In 1998, the Province eliminated the Business Occupancy Tax (billed to business
rather than property owners) and the lost revenue was recovered by an increase in the
general property tax rate. The Province passed legislation that allowed the property
owner to pass through some of their increased costs to tenants who were relieved of tax
liability in 1998. Bill 79 requires that property owners recalculate any tenant's tax
adjustment in light of the 10-5-5 Cap.
Guidelines for this calculation have been provided by Province and are available
from the Municipality of Clarington Municipal Administrative Centre.
CONTACT INFORMATION
Assessment related questions:
Ontario Property Assessment Corporation
(905) 432-8444 (Oshawa) or 1-800-268-2224
Provincial Information:
Ministry of Finance (Centre Street and King, Oshawa)
Online at www.gov.on.ca/FIN
or
Ontario Legislation:
www.ontla.on.calDocuments/documentsindex.htm
Municipality of Clarington (Tax Department): (905) 623-3379
PAYMENT I NfORMATIQN CAN BE FOUND ON THE FRONT OF YOUR TAX BILL.
820
I recently purchased this property, shouldn't this bill go to the previous owner?
Under the current legislation, it is the property and not the individual owner that is
taxed. As such, the current owner is responsible for any outstanding taxes, including pre-
ownership taxes resulting from legislated retroactive adjustments. Please contact your
ATTACHMENT 112
'September 13, 2000
TO:
The Finance and Administration Committee
FROM:
RJ. Clapp, Commissioner of Finance
RE:
REPORT #2000-F-44
FINALIZATION OF 2000 10/5/5 CAPPING FOR MULTI-RESIDENTIAL,
COMMERCIAL AND INDUSTRIAL PROPERTY TAXES AND SUMMARY
OF THREE YEAR PROGRAM
RECOMMENDATIONS:
That the Finance and Administration Committee recommend to Council that:
1) This Report be forwarded to Region Council for information; and
2) The Regional Solicitor be directed to prepare the requisite by-Iaw(s)
REPORT:
1.0 BACKGROUND
. The 10/5/5 capping program (under Bill 79, Fairness for Property Taxpayers Act,
1998) is set to expire on December 31,2000.
. On May 24. 2000. Council was informed that there would be a delay in issuing
the final 2000 property tax bills for the capped classes (Report #2000-F-25). The
delay was primarily due to the new methodology required under Provincial Bill 14
(More Tax Cuts For Jobs, Growth and Prosperity Act, 1999) for new construction
properties.
2.0 FINALIZATION OF 2000 CAPPING DATA
. Unfortunately, the final capping data was not available prior to the last Regional
Council meeting. Regional Finance staff along with Area Municipal staff
continued to worked over the summer months to ensure the integrity and
accuracy of the 2000 capping data and calculation.
2.1 Establishment of 2000 Reqion-Wide Cut-Off Date
. On July 4, 2000, the Commissioner of Finance with the agreement of the
Area Treasurers, set a Region-wide cut-off date of July 7, 2000, for the
calculation of the Region-wide clawba'ck percentages, municipal levy
impact percentages, education tax cut percentages and the school tax
recovery amounts.
. Following the cut-off date, municipal staff reviewed the capping results
from the OPT A system and on July 18, the capping data was frozen for
the purpose of proceeding with the final 2000 property tax billing.
821
REPORT #2000-F-44
FINALIZATION OF 2000 10/5/5 CAPPING FOR MULTI-RESIDENTIAL, COMMERICAL
AND INDUSTRIAL PROPERTY TAXES AND SUMMARY OF THREE YEAR PROGRAM
Page 2
2.2 New Construction Complexity Added
. The capping analysis and finalization were more difficult and time
consuming this year. The implementation of the new construction
methodology, mandated in Provincial 8i1l14. resulted in increased
complexity, required substantial input from the Ontario Property
Assessment Corporation (OPAC) and detailed review by Area Municipal
staff. The implementation of this new methodology was. the primary
reason that the final 2000 capped property tax bills were delayed.
. According to the Province, new construction was being penalized under
the existing 10/5/5 capping rules and, therefore, introduced the new
methodology.
. However, as Regional staff discussed in Report #2000-F-29 (Appendix
2, Section 2.4.4), new construction properties by definition do not
require capping protection. These properties did not exist in 1997 and,
therefore, have no 1998 assessment-related tax increase for which
protection was intended.
. As well, these changes provide an unfair competitive advantage to
new construction who will receive the benefit of any protection offered
to comparable properties. Existing comparable properties which have
tax decreases clawed back will be at a disadvantage to these new
construction properties.
. As well as increasing the workload related to the 2000 capping, the new
construction methodology must be applied retroactivity to 1998 and 1999.
This will require that municipalities recalculate the 1998 and 1999 property
taxes for these properties and provide rebates (if applicable). The rebates
must be shared between the local municipality, upper tier municipality and
school boards.
. Section 6.0 of this report provides the financial impact of the new
construction methodology in 2000 and estimates the potential municipal
liability for 1998 and 1999 rebates.
3.0 2000 DECREASE CLAWBACKS AND SUMMARY OF PROGRAM (1998-2000)
. For 2000, the "assessment related" increases in taxes for the multi-residential,
commercial and industrial classes are effectively capped at 20% of the 1997
taxes (i.e. the 10% cap for 1998 plus an additional 5% cap for each of 1999 and
2000).
822
REPORT #2000-F-44
FINALIZATION OF 2000 10/5/5 CAPPING FOR MULTI-RESIDENTIAL, COMMERICAL
AND INDUSTRIAL PROPERTY TAXES AND SUMMARY OF THREE YEAR PROGRAM
Page 3
3.0 2000 DECREASE CLAWBACKS AND SUMMARY OF PROGRAM (1998-
20001/cont'd
. Table 1 provides the 2000
Region-wide c1awback
percentages required to fund the
capped increases.
. In order to finance the 2000
"capping" of property taxes,
Provincial legislation requires
that the property owners in the
capped classes who received
assessment related decreases
must have a portion of the
decrease clawed back in order
to finance the capped
increases.
TABLE 1
PERCENTAGE OF PROPERTY TAX
DECREASES TO BE CLAWED BACK FOR
THE YEAR 2000
Multi-Residential Properties
Industrial Properties
Commercial Properties
48.7739%
45.8831%
60.3042%
. Graph 1 shows the GRAPH 1
clawback percentages CLAWBACK PERCENTAGES BY CLASS FOR
90% 3 YEAR 10 /5/5 CAPPING PROGRAM
required over the three .1998 79.9%
years of the capping 80% 01999
74.2%
program by property tax 8 2000
class. 70% 67.&%1>6.5%
60%
. For the Multi-Residential
class, the small decrease 50%
in the clawback 40%
percentage from 1998 to
1999 is primarily due to 30% -
classification changes and 20% '
reduced CVA values as a
result of Assessment 10%
Appeal Board (ARB) 0%
rulings. Mu Iti-Residential Commercial Industrial
. For the Commercial and Industrial classes, the lower reduction in the clawback
percentages for 2000 when compared to the reduction that occurred in 1999 is
due to the impact of ARB rulings (the appeals for these classes began after the
residential and multi-residential hearings were completed for the Province). As
well, the impact of the new construction methodology in 2000 both reduced the
size of the decrease pool and increased the protection required for these
classes, resulting in upward pressure on the c1awback percentage.
823
REPORT #2000-F44
FINALIZATION OF 2000 10/5/5 CAPPING FOR MULTI-RESIDENTIAL, COMMERICAL
AND INDUSTRIAL PROPERTY TAXES AND SUMMARY OF THREE YEAR PROGRAM
Page 4
4.0 2000 PROPERTIES INCLUDED IN CAPPING PROGRAM AND SUMMARY OF
PROGRAM (1998-2000)
. There are approximately 160,000 properties in the Region of Durham, with
slightly over 6,100 (3.8%) in the capped classes. Although the number of
properties included in the 10/5/5 program is relativity small, these 6,100
properties pay approximately $58 million or 26% of the total Regional General
Purposes Tax Levy.
. Table 2 provides a breakdown of the number of properties in 2000 that were
included in the 10/5/5 capping program.
. In 2000, 2,435
properties had TABLE 2
a portion of NUMBER OF PROPERTIES INVOLVED IN THE
their decrease 10/5/5 PROGRAM IN THE YEAR 2000
clawed back Multi-Residential Commercial Industrial All
to provide ~ ~ ~ 9nw
protection to Capped Increases 173 1,792 448 2,413
2,413
properties that No Effect (Increase <:: 20%) 105 939 221 1.265
had their Decrease Clawbacks 142 1,961 332 2.435
increases
capped. Total for Class 420 4,692 1,001 6,113
. The following four
graphs (Graphs 2 to 5)
show the breakdown of
the number of
properties included in
the 10/5/5 program
over its three year
duration by property
class and the total
across all classes.
GRAPH 2
Multi-Residential
Properties Effected by 10/5/5 Program 1998 - 2000
211
.1998
01999
.. 2000
105
. As properties that had
assessment related
increases in 1998
approach their full CVA
taxation (CVA x
taxation rate) under the
10/5/5 program
parameters, they move
from the Capped
Increase group to the No Effect group.
Capped Increases
137 138 142
No Effect (Increase <; Decrease Clawbacks
20%)
824
REPORT #2000-F-44
FINALIZATION OF 2000 10/5/5 CAPPING FOR MULTI-RESIDENTIAL, COMMERICAl
AND INDUSTRIAL PROPERTY TAXES AND SUMMARY OF THREE YEAR PROGRAM
Page 5
4.0 2000 PROPERTIES INCLUDED IN CAPPING PROGRAM AND SUMMARY OF
PROGRAM (1998-20001/cont'd
. Properties with an assessment
related decrease in 1998 remain in
the Decrease Clawback group;
however, the percentage of the
clawback decreases as the amount
of protection offered to the Capped
Increase Group decreases or until all
increases have been phased in.
. The changes in the number of
properties within the Decrease
Clawback group varies slightly as a
result of Assessment Review Board
rulings that either alter the CVA of
the property or changes the property
classification. As well, new
construction properties (in 1998 or
1999) could affect the number of
properties in the Decrease Clawback
group. In 2000, new construction
properties are not permitted to be
clawed back.
GRAPH 3
Commercial Prooerties
Effected by 10/5/5 Program 1998 - 2000
2,456
.1998
01999
El2000
3K~
U
939
.1998
01999
" 2000
109~
U
Capped Increases No Effect (Increase Decrease
< 20"lo) Clawbacks
.1998
01999
" 2000
1,265
555~
ILII
GRAPH 4
Industrial ProDerties
Effected by 10/515 Program 1998 - 2000
'"
221
'"
Capped Increases No Effect (Increase < Decrease Clawbacks
20%)
. Graph 5 represents
the total number of
properties included in
the 10/5/5 program
across all property
capped classes (multi-
residential,
commercial and
ind ustrial).
Graph 5
All Properties
Effected by 10/5/5 Program 1998.2000
3,270
825
Capped Increases
No Effect (Increase < 20%) Decrease Clawbacks
REPORT #2000-F-44
FINALIZATION OF 2000 10/5/5 CAPPING FOR MULTI-RESIDENTIAL, COMMERICAL
AND INDUSTRIAL PROPERTY TAXES AND SUMMARY OF THREE YEAR PROGRAM
Page 6
5.0 2000 FINANCING OF THE 10/5/5 CAPPING AND SUMMARY OF 3 YEAR
PROGRAM (1998-2000)
. Table 3 provides the aggregate Region-wide financing required for the 10/5/5
program in the year 2000.
TABLE 3
FINANCING OF THE 10/5/5 PROGRAM IN THE
YEAR 2000 ($millions)
Multi-Residential Commercial
Class Classes
Capped Increases
(0.874)
(8.651)
No Effect (Increase < 20%)
Decrease Clawbacks
0.874
7.538
Total for Class
0.000
(1.113)
Industrial
Classes
All
Classes
(4.113)
(13.638)
3.445
11.857
(0.668)
(1.781)
. The Provincial school tax recovery program ensures the 10/5/5 program is
revenue neutral on a Region-wide basis. Area Municipalities are required to
lower the 2000 payments to the school boards by an assigned amount and
forward it to the Region in its role as banker for the capping program. The
aggregate amount from the area municipalities in 2000 will be $1.78 million,
making up for the shortfall in the financing provided by the decrease clawback
group.
GRAPH 6
Protection Provided by Property Class under the
10/5/5 Program 1998 - 2000 ($millions)
. Graph 6 represents
the protection
provided by property
class for the duration
of the program.
11.6
. As the capping
threshold increases
(10% in 1998,15% in
1999 and 20% in
2000), the amount of
protection required
decreases.
~
Multi-Residential
Commercial
826
.1998
01999
\012000
5.6 5.3
Industrial
REPORT #2000-F-44
FINALIZATION OF 2000 10/5/5 CAPPING FOR MULTI-RESIDENTIAL, COMMERICAl
AND INDUSTRIAL PROPERTY TAXES AND SUMMARY OF THREE YEAR PROGRAM
Page 7
5.0 2000 FINANCING OF THE 10/5/5 CAPPING AND SUMMARY OF 3 YEAR
PROGRAM (199B-2000Ilcont'd
. Graph 7 shows
the total decrease
clawbacks
required to fund
the capping
protection (in
addition to the
school tax
recovery).
. In all three years
of the 10/5/5
program,
approximately
$1.7 to $1.8
million in school
tax recovery was
need to ensure
the program was
revenue neutral
on a region-wide
basis.
GRAPH 7
Clawbacks Required to Finance Capping Protection by
Property Class under the 10/5/5 Program 1998 - 2000
1o.<($millions)
n
.1998
01999
"" 2000
4.9 4.6
Multi-Residential Commercial Industrial
Note: To make the 10/515 Program revenue neutral on a Region-wide basis, the
School Tax Recovery funds the difference between protection and the claw backs.
6.0 IMPACT NEW CONSTRUCTION METHODOLOGY
6.1 Estimated Impact of Bill 14 on the 2000 10/5/5 CappinQ PrOQram
. Table 4 provides an overview of the impact of the new construction
methodology on the 2000 capping program for the Region as a whole.
Table 4
Estimated Impact of New Construction Methodology in 2000
Pre Bill 14 With Bill 14 Effect of Bill 14
Old MethodoloClV New MethodoloQv New Methodoloqy
Number of Number of Number of
Properties Impact $ Properties Impact S Properties ImpactS
Regional Capped 15 (298.921) 19 (459.009) 4 (160,0881
Clawback 32 453,047 (32\ (453.047)
No Affect 39 67 os
Total 86 154,126 86 (459.009) (613.135)
827
REPORT #2000-F-44
FINALIZATION OF 2000 10/5/5 CAPPING FOR MULTI-RESIDENTIAL, COMMERICAL
AND INDUSTRIAL PROPERTY TAXES AND SUMMARY OF THREE YEAR PROGRAM
Page 8
6.0 IMPACT NEW CONSTRUCTION METHODOLOGY/cont'd
· In 2000. 86 properties were designated as new construction. Of these:
· Overall protection to the properties increased by $160,000 (or 1.2% of
total Region-wide protection provided);
· 32 properties had their c1awbacks eliminated and (p~tentially) were
provided with protection, reducing the c1awback pool available to fund
the protection for all properties by $450,000 (or 3.8%); and
· The overall impact of these changes was $613,000 or approximately
4.5% of the 2000 protection provided.
6.2 1998 and 1999 Rebates for New Construction
· As well as revising the methodology for the capping calculations of new
construction properties in 2000, Bill 14 requires a similar methodology to
be retroactivity applied to these properties in 1998 and 1999.
· Since it is not possible to reduce the protection provided to these
properties or retroactivity alter the c1awback percentages that existed in
previous years, the retroactive rebates required under Bill 14 will result in
a loss of taxation revenue for 1998 and 1999.
. By using the 2000 new construction impact as a guide. Table 5 estimates
the potential taxation losses of the 1998 and 1999 new construction
rebates for each taxation tier.
Table 5
Estimated Annual Cost of New Construction
Retroactive Rebates for 1998 and 1999
Based on Average Taxation Share of a
Commercial Occupied Property using 2000 Tax Rates
Taxation Tier
Total 2000
Impact
S
S hare of
Taxation
Share of
Rebate
S
Local Municipalities
School Boards
Regional
Total
612,000
612,000
612,000
N/A
18%
55%
110,160
336,600
165.240
612,000
27%
100%
828
REPORT #2000-F-44
FINALIZATION OF 2000 10/515 CAPPING FOR MULTI-RESIDENTIAL, COMMERICAL
AND INDUSTRIAL PROPERTY TAXES AND SUMMARY OF THREE YEAR PROGRAM'
,
Page 9
6.0 IMPACT NEW CONSTRUCTION METHODOLOGY/cont'd
· The Area Municipalities have the majority of legislative responsibilities under
the Bill 14 new construction methodology including:
· Providing property owners with a listing of comparable properties
(supplied by OPAC) used in 2000 capping calculation;
· Calculation of 2000 final taxation using the new 'comparable'
methodology, previous Provincial Prescribed Factor methodology and
maximum CVA tax methodology;
· Provision of final 2000 capped tax billed to property owner including
explanation and answering of any question;
· Calculation and provision of 1998 and 1999 potential rebates under
new Bill 14 rules; and
· Allocating costs of actual rebates to three taxation tiers (local, regional
and school),
7.0 NEXT STEPS
· The Regional Solicitor will prepare the by-Iaw(s) required for the 2000 10/5/5
capping program,
· On August 28, 2000, the Municipal Associations' official recommendations on a
post-2000 business protection program were released in a paper entitled
"RECOMMENDA TlONS FOR A POST 2000 TAX MITIGA TlON PROGRAM: A
MUNICIPAL PERSPECTIVE: FINAL REPORT August 2000".
· This paper has been submitted to the Province for consideration with the
"hope that this report will provide the basis for provincial-municipal
consultation on a post 2000 tax mitigation program".
· The approach, principles and recommendations contained in the
Associations' paper submitted to the Province are in line with the protection
recommendations contained in Commissioner of Finance Report #2000-f-29
as adopted by Regional Council on June 28, 2000, which outlines the Region
of Durham's recommendations to the Province on a post-2000 business
protection program,
829
,
REPORT #2000-F- 44
FINALIZATION OF 2000 10/5/5 CAPPING FOR MULTI-RESIDENTIAL, COMMERICAL
AND INDUSTRIAL PROPERTY TAXES AND SUMMARY OF THREE YEAR PROGRAM
Page 10
7.0 NEXT STEPS/cont'd
· The Region will continue to work with Area Treasurers on any post 2000
protection program and other property taxation issues,
· Regional staff will continue to keep Council informed of any developments in the
10/5/5 capping program or any post 2000 protection program,
~~,rp
Commissioner of Finance
Recommended for Presentation to Committee:
GH Cubitt, Chief Administrative Officer
MGIREPORTS\1 055 finalization
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