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Home My WebLink AboutFND-012-03 ~ ~ Cl{J!i!Jgton REPORT FINANCE DEPARTMENT Meeting: GENERAL PURPOSE AND ADMINISTRATION COMMITTEE TUESDAY, MAY 20, 2003 r J-7 Resolution #:GI/I- :<p..-C() Date: Report#: FND-012-03 File#: By-law #: Subject: PAYMENT IN LIEU OF TAXES ON PROVINCIAllY OWNED PROPERTIES RENTED TO PRIVATE TENANTS Recommendations: It is respectfully recommended that the General Purpose and Administration Committee recommend to Council the following: 1. THAT Report FND-012-03 be received for information. /# Submitted by: /-~ :::t R. Reviewed b~ U Franklin Wu, Chief Administrative Officer. NT/hjl 1301 v c REPORT NO.: FND.012-03 PAGE 2 BACKGROUND AND COMMENT: In 2001, a new property code (referred to as a realty tax qualifier) was established for provincially-owned tenanted properties. The letter "P" was assigned. For example, CT means commercial taxable. There is now CP which means commercial tenant of the province. In the same year, Clarington's first property of this nature in the non- residential class appeared on our returned roll. The property was the large gas station/ fast food emporium on Highway 401 between Newcastle and Newtonville. All Municipal Clerks and Treasurers received the attached letter (Attachment # 1), dated February 5, 2001. The intent of the letter was to explain the new tax qualifier and how it was to be treated. Paragraph two indicates that tenanted portions of provincially owned properties are subject to payment in lieu of taxes and not subject to property taxation. Paragraph three also indicates that "P" signifies payment in lieu of municipal and education taxes. When a payment in lieu of taxes or "PI L" property is in the residential class, the education share is forwarded to the appropriate school board. If a PIL property is in the non-residential class, the education share is retained by the local municipality. This is prescribed by regulation and applies to all PIL properties (OPG for example). For the 2001 and 2002 taxation years, the tenanted property in question was treated as per the letter attached. That is, the Municipality retained the education portion approximating $82,000 annually. However, during 2002, as the Municipality was completing the Financial Information Return for the Province, the provincial software would not allow the property to be entered as a PIL and appropriately reflect the education retained. Staff spoke with Ministry officials in July, who indicated that the Municipality was appropriately treating the education retained. Later in 2002, it became apparent that the issue was not resolved. Staff spoke with Ministry officials again who, at this time, indicated that there was significant discrepancies across the province. The province was reviewing the issue and was looking to issuing a regulation to clarify the direction. I provided them with the letter (attached) that the Ministry had issued. On December 20, 2002, the Province issued Ontario Regulation 423/02, which dictates that for all properties coded with a "P" for provincially tenanted properties, the education portion of the tax bill is to be forwarded to the applicable school board. This results in an annual loss to Clarington of education retained funds of approximately $82,000. Across the Region, Clarington has over 80% of the non-residential tenanted provincial properties. Therefore, the other municipalities in Durham have only a minor impact as a result of this regulation. 1302 . REPORT NO.: FND-012-03 PAGE 3 CONCLUSION: This issue was briefly mentioned in the 2003 Current Budget Report FND-10-03. Council at that time requested a more detailed explanation. It is recommended that this report be received for information. Attachment: Letter from Ministry of Municipal Affairs and Housing CORPORATION OF THE MUNICIPALITY OF CLARINGTON 40 TEMPERANCE STREET, BOW MANVILLE, ONTARIO L 1 C 3A6 T (905)623-3379 F (905)623-4169 1303 In Case of Transmission Difficulties, Please Call ~l6-863-2l0l Please Deliver To: Municipality of Clarington Attachment MlDlJtry of Municipal Aft'aln IDd HODIi... Munieipal Support ServiceS Ilr:1nch 777 BIY SInlCl. 1111I Floor Tnrunto ON MSO ~ Ph""", (416)515.7264 Fox; (416) 585-7292 MlDlJetn cIn Atrlino mllDidpales etduLogemot Oin:criou des scrv1CC!J de snuuen lUX municipalitfs 777, rue Bay, 11' CboF ToronlO ON M5C 2ES Taq,hono; (416) 585-7264 T616copl...r: (416) 585-7292 ~ Ontario February 5, 2001 To: Municipal ClerklTreasurcr Subject: Payment in lieu of taxes on provincially owned properties rented to private tenants - Municipal Tax Assistance Act, Section 4(3) I am writing to inform you that Bill 140 (Continued Protectionfor Property Taxpayers Act, 2000) has amended the Municipal Tax Assistance Act. Section 4(3) of the Act has been amended to clarify that tenanted portions of provincially owned properties are subject to payment in lieu of taxes and not subject to property taxation. These amendments have been made to Str<""mline provincial payments in lieu to municipalities. The Ontario property Assessment Corporation (OPAC) bas confirmed that the 2001 assessment roll returned to municipalities incorporates these amendments. Provincially- owned tenanted properties now have a new realty tax qualifier of "P," wbich signifies payment in lieu of municipal and education taxes. With OPAC implementing these amendments in the 2001 taxation year, municipalities will no longer have to issue individual tax bills for tenanted provincial properties. The ministry will be able to process payments in lieu of taxes to municipalities based on both the assessment roll and the tax rates entered on the Online Property Tax Analysis (OPTA) system. If, however, your municipality is not on the OPTA system, we will not be able to issue these payments until we have received your payment-in-lieu (PIL) entitlement statement. This statement should show the following: property roll number; realty tax class (RTC); realty tax qualifier (RTQ)j assessed value; applicable municipal and education tax rates including the "CVA PIL" and the capping adjustment; and the total amount of the PIL entitlement. If your tax bills included local improvement charges in the past, you may now have to invoice these charges separately to the ministry that owns the property. Your invoice for drainage charges similarly should be sent directly to the owner ministry. 1304 il:l:2l.lIIiI~') <I -2 - Plcase also note the following: 1 . Provincially owned tenanted properties are subject to capping xules. 2. Because payments in lieu are being paid undel' the Municipal T~ Assisumce ACI. there is no authority for the Ministry of Municipal Affairs and Housing to pay interest or penalties on any outsr.m<ling amount. 3. The Ministry of Municipal Affairs and Housing m!lkes PIL payments only on behalf of the following ministries or crown agencies: . Management Board Secleta..iat . Outario Realty Corporation . Ontario Land Corporation . Ontario Development COIpOranon . Ministry of Transportation . Ministry of Natural Resources 4. The 2001 assessment roll indicates the oame and address of the ministry that owns the property. In the past, the owner ministry's address was shown as that of the Ministry of Municipal Affairs and Housini. This means all PlOperty-rdated correspondence should be directed to the ill'l',"V,iate owner ministry concerned for its review and action. If you have any questions, please feel free to call Braham Kapal, Supervisor, Tnmsfer Payment Unit, at (416) 585-6584 or Bev Hendry, Manager, Program AtlminiRtIation, at (416) 585-6200. bc AMCTO MFOA OPAC Owner Ministries Municipal Finance Branch Transfer Payment Unit 1305