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HomeMy WebLinkAboutPLN 42-23Report to Executive Committee Report Number: PLN 42-23 Date: December 4, 2023 From: Kyle Bentley Director, City Development Department Subject: Heritage Property Tax Relief Program By-law -File: A-3300-080 Recommendation: 1.That the Heritage Property Tax Relief Program and By-law be approved, as set out in Appendix I to Report PLN 42-23, and be enacted by Council; 2.That Council delegates the Director, City Development & CBO to execute the Heritage Easement Agreement for Eligible Properties as described in the Heritage Property Tax Relief Program By-law; 3.That the City Clerk give notice of this by-law to the Ministry of Finance and the Region of Durham within 30 days of the passing of the by-law; and 4.That the appropriate City of Pickering officials be authorized to take actions as necessary to implement the recommendations of this report. Executive Summary: This report seeks to obtain Council’s approval to implement a Heritage Property Tax Relief Program and By-law. This initiative offers a financial incentive, in the form of property tax relief, to owners of eligible heritage properties. The goal is to assist them in managing the maintenance and repair costs associated with heritage buildings. The Municipal Act, 2001 (Section 365.2) allows municipalities the option of establishing a Heritage Property Tax Relief Program for properties that are designated under Part IV or Part V of the Ontario Heritage Act, and are also subject to a Heritage Conservation Agreement. The City of Pickering does not currently have any heritage conservation assistance programs in place. At the September 28, 2020, Council meeting, staff were directed to report back to Council, by the end of 2020, with a Heritage Property Tax Rebate Program, based on the Notice of Motion presented at the July 27, 2020, Council meeting. However, at the December 7, 2020, Council meeting, staff were directed to report back to Council on the implementation of the Heritage Property Tax Relief Program at such time that the COVID-19 Pandemic is under control. The maintenance and rehabilitation of heritage structures benefit the community as a whole. Well-preserved heritage structures provide a cultural link to our past, greatly augment the unique character and sense of place in our communities, support re-urbanization initiatives and tourism, stimulate adjacent development, and increase property values. Municipalities in Ontario may support built heritage conservation in various ways. PLN 42-23 December 4, 2023 Subject: Heritage Property Tax Relief Program By-law Page 2 The merits of implementing the Ontario Heritage Property Tax Relief Program as a possible heritage conservation support initiative are brought forward in this report. Heritage Pickering is in support of the property tax relief program. The draft by-law to be enacted is attached as Appendix I. Financial Implications: Municipalities may provide a property tax reduction between 10 and 40 percent of the property tax bill. The municipal portion of the tax relief is borne by the local municipality. The Province participates in the program by matching the municipality for the education portion of the property tax relief made available to eligible property owners. The Region can also participate with a matching reduction in the Regional portion of the property tax bill. Durham Region is currently deferring the decision to match any local program reductions until such a time as standardized programs are implemented Region-wide. In other words, it is staff’s understanding that Durham Region will participate in a similar program when all eight lower- tier municipalities offer a similar heritage property tax relief program. Approximately 50 properties could be eligible for this program in the City of Pickering. If the by-law is approved to provide a 20 percent rebate to properties enrolled in the program, this represents a refund of $19,755 in taxes yearly. Any costs associated with enrolling an eligible property in the program will be paid for by the property owner. For example, the first time an owner enrolls, they will have to pay for the preparation of a Heritage Easement agreement and register the Agreement on title in the Land Registry Office. 1. Discussion: Heritage property tax relief is a financial tool for municipalities to help owners of eligible heritage properties continue to maintain and restore their properties. Section 365.2 of the Municipal Act, 2001 gives municipalities the option of establishing a program to provide property tax relief to owners of heritage properties. Municipalities must first pass a by-law to adopt the program. The draft by-law to provide property tax relief to eligible heritage property, attached as Appendix I to this report, has been prepared in consultation with the City’s Finance Department and Corporate Services Department. 2. Benefits of Heritage Property Tax Relief Well-maintained heritage properties enrich quality of life and give communities a sense of place and unique character. Although there are community benefits to conserving heritage properties, many are privately owned. The program provides an incentive to owners to make regular investments in the ongoing maintenance and conservation of their properties. Further, with regular repair and maintenance, costly major renovation projects can be avoided. PLN 42-23 December 4, 2023 Subject: Heritage Property Tax Relief Program By-law Page 3 3. Property Tax Relief Amount The Municipal Act allows municipalities to provide between 10 and 40 percent of tax relief, and the rebate amount is currently proposed at 20 percent. The rebate is applied to the City of Pickering portion of municipal taxes, as well as on the education portion. The Region of Durham is currently not participating in the program. For example, a property owner would receive a 20 percent refund on the City of Pickering portion of their tax bill, and a 20 percent refund on the education portion of their tax bill. Should Council approve the by-law, a notice will be sent to the Ministry of Municipal Affairs and Housing, enabling the province to fund the education portion. Staff recommend that the City provide a credit to the property tax account, similar to the Low-Income Seniors/Persons with Disabilities Property Tax Grant program. In addition, the property owner’s tax account has to be in “good standing” to be eligible for the program The amount of taxes a property owner pays depends on the assessment of the property from the Municipal Property Assessment Corporation (MPAC). Municipalities can work with MPAC to determine the area of a property eligible for the heritage tax rebate. It is assumed that most properties will be straightforward to assess. For example, the tax rebate would apply to the property in its entirety. In some instances, however, a heritage house may be located on a 40-acre farm, with other outbuildings and landscape features not described in the designation by-law. The municipality may then apply the tax relief to only the assessed portion surrounding the house or a portion of the house. 4. Eligible Properties Approximately 50 properties are eligible for the Heritage Property Tax Relief Program, both within the Whitevale Heritage Conservation District, and outside of the District. This number excludes properties that are currently owned by the provincial or federal governments. Should those properties be purchased by a private owner in the future for residential use, they may be considered eligible for the program. Properties within the District that are identified as having no historical or architectural significance, as noted in the Whitevale Heritage Conservation District Guide, are not eligible for the Heritage Property Tax Relief Program. The intent of the heritage tax relief program is to incentivize the maintenance and repair of buildings with cultural heritage value or significance. The Municipal Act sets out minimum criteria for an eligible property, and allows the municipality to have flexibility with additional criteria. The draft by-law includes the following eligibility requirements (see attached Draft By-law, Appendix I): • designated under Part IV of the Ontario Heritage Act (an individually designated property); • a property that is part of a heritage conservation district under Part V of the Ontario Heritage Act, except for properties included without having Historical or Architectural Significance within the Whitevale Heritage Conservation District Guide; PLN 42-23 December 4, 2023 Subject: Heritage Property Tax Relief Program By-law Page 4 • subject to a Heritage Easement Agreement with the City of Pickering under Section 37 of the Ontario Heritage Act; • complies with the additional eligibility criteria set out in this by-law; • that has a realty tax class of R – Residential, and a realty tax qualifier of T – Taxable; and • that is in a good and habitable condition, as determined by the City. 5. Application Process and Enrollment City Development staff will develop an application form, a template for an easement agreement and a property owner information package. The owner of an eligible property may apply before the last day in February, in the year following the year of which the owner is seeking to obtain a heritage property tax refund (a deadline mandated by the Municipal Act). For example, to receive a tax relief for a particular year (for example 2023), property owners must submit their applications by February 28 of the following year (for example 2024). The property owner will be required to submit the form along with any additional information such as photos of the property or proof of ownership. Staff will then determine the heritage attributes of the property and whether it meets the eligibility requirements, and may conduct research and a site visit to do so. A Heritage Easement Agreement must be registered on title with the Land Registry Office. This process could take several weeks or months as the one-time process of creating the Agreement is finalized. Finance staff will then enroll the eligible property into the program. The owner will be responsible for paying the City all costs incurred by the City relating to the registration of the Heritage Easement Agreement on title with the local Land Registry Office. No additional fee will be charged by the City for enrollment. Applications must be made each year that an owner wishes an eligible property to be considered. Staff anticipate that the homeowner, if enrolled, will receive a credit directly on their tax bill. 6. Non-Compliance If an owner of an eligible property is in non-compliance with their Heritage Easement Agreement, then no property tax reduction, or refund, will be issued to the owner until the City is satisfied that the eligible property is back in compliance. The owner shall be required to repay part, or all, of any heritage property reduction, or refund, previously provided to the owner during any period of non-compliance. Should an eligible property be demolished or removed from the program for non-compliance, the City shall add the value of any heritage property tax reduction or refund previously provided, plus applicable penalties and interest, to the owner’s property tax bill. PLN 42-23 December 4, 2023 Subject: Heritage Property Tax Relief Program By-law Page 5 7. Program promotion The Heritage Property Tax Relief program will be advertised on the City of Pickering’s Heritage Website. Staff will prepare an application form and information brochure about the program. Staff also plan to mail a letter to eligible properties each year to remind them of the program. 8. Pickering Heritage Advisory Committee supports the draft by-law and program The Draft By-law was presented to the Pickering Heritage Advisory Committee at its November 8, 2023, meeting. City Development staff responded to various questions regarding the program including matters related to: the cost to property owners to enroll in the program; the gradual growth of the program over time; how the eligible property owner is held accountable to the program; what happens when the eligible property is sold; and, what the consequences are to an enrolled property owner opting out of the program. The Committee passed the following motion: “That Heritage Pickering recommends that Council approve the draft Heritage property tax relief by-law.” 9. Staff recommend approving the program and by-law to provide property tax relief to eligible heritage property in the City of Pickering Recognizing that preserving built heritage is a community benefit, the by-law provides an incentive for property owners to provide ongoing maintenance before repairs become too costly. Staff recommend that the by-law and program be approved. Appendix: Appendix I: Draft Heritage Property Tax Relief By-law PLN 42-23 December 4, 2023 Subject: Heritage Property Tax Relief Program By-law Page 6 Prepared By: Original Signed By Emily Game, BA, CAHP Senior Planner, Heritage Original Signed By Nilesh Surti, MCIP, RPP Division Head, Development Review & Urban Design Approved/Endorsed By: Original Signed By Catherine Rose, MCIP, RPP Chief Planner Original Signed By Kyle Bentley, P. Eng. Director, City Development & CBO Original Signed By James Halsall for Stan Karwowski Stan Karwowski, MBA, CPA, CMA Director, Finance & Treasurer EG:ld Recommended for the consideration of Pickering City Council Original Signed By Marisa Carpino, M.A. Chief Administrative Officer Appendix I to Report PLN 42-23 Draft Heritage Property Tax Relief By-law The Corporation of the City of Pickering By-law No. XXXX/23 Being a by-law to provide property tax relief to eligible heritage property in the City of Pickering. Whereas Subsection 365.2 of the Municipal Act, 2001, S.O. 2001, c.25, as amended, provides that a local municipality may establish a program to provide tax reductions or refunds in respect of eligible heritage property; And whereas the Council of a Municipality may in a by-law delegate its authority in accordance with Section 23.1 of the Municipal Act, 2001; And whereas The Corporation of the City of Pickering finds it in the public interest to provide financial assistance in the terms set out in this by-law as an incentive for property owners to renovate, restore and maintain heritage property in the City of Pickering; And whereas for the purpose of administering the program to provide tax reductions or refunds in respect of eligible heritage properties in the municipality, the City of Pickering finds it would be expedient to delegate execution of heritage easement agreements to the Director, City Development & CBO, or designate; Now therefore the Council of The Corporation of the City of Pickering hereby enacts as follows: Part 1: Definitions “Act” means the Ontario Heritage Act, R.S.O. 1990, c. O.18, as amended. “Assessment Corporation” means the Municipal Property Assessment Corporation. “City” means The Corporation of the City of Pickering or the geographic area of the City of Pickering as the context requires. “Council” means the Council of The Corporation of the City of Pickering. “Eligible Property” means a property or portion of a property located within the limits of the City, (a) that is designated under Part IV of the Act; (b) that is part of a heritage conservation district under Part V of the Act, except for properties listed without having Historical or Architectural Significance within the Whitevale Heritage Conservation District Guide; By-law No. XXXX/23 Page 2 (c) that is subject to a Heritage Easement Agreement with the City under Section 37 of the Act; (d) that complies with the additional eligibility criteria set out in this by-law; (e) that has a realty tax class of R – Residential, and a realty tax qualifier of T - Taxable; and (f) that is in a good and habitable condition, as determined by the City. “Heritage Easement Agreement” means an agreement made under Section 37 of the Act, which sets out easement or covenant obligations with respect to but not limited to the preservation of heritage features and value of heritage property and is registered on title to an Eligible Property in the Land Registry Office, and which is enforceable by the City against the Owner and subsequent Owner of an Eligible Property. “Owner” means the registered owner(s), from time to time, of an Eligible Property, and includes a corporation and partnership and the heirs, executors, administrators and other legal representatives. “Program” means the Heritage Property Tax Relief Program. Part 2: Delegation 2.1 Council of The Corporation of City of Pickering delegates the authority to execute a Heritage Easement Agreement between an Eligible Property Owner and the City of Pickering to the Director, City Development & CBO, or designate. Part 3: Application and Eligibility 3.1 An Owner of an Eligible Property must make an application to the Program by submitting the prescribed application form to the City no later than the last day of February in the year following the year for which the Owner is seeking to obtain a heritage property tax reduction or refund. Applications received after this deadline will not be accepted. 3.2 Upon acceptance of a satisfactorily completed application by the Director, City Development & CBO, or designate, and if necessary in consultation with the Heritage Committee, the Director, or designate may approve a Heritage Easement Agreement and execute the agreement for registration on title to the Eligible Property. Once the registration is confirmed, the City’s Finance Department shall enroll the Eligible Property in the Program. 3.3 Applications to the Program must be made each year that an Owner wishes an Eligible Property to be considered for a heritage property tax reduction or refund. By-law No. XXXX/23 Page 3 3.4 In order to determine eligibility for the Program, the Owner consents to the inspection of the Eligible Property as and when deemed necessary by the Director, City Development & CBO, or designate. 3.5 Where multiple Heritage Easement Agreements are registered on title to one parcel of land comprising an Eligible Property, multiple heritage property tax reductions or refunds will not be provided in respect of the same heritage features of the Eligible Property. 3.6 The Program is subject at all times to funding made available by Council in its annual budget. This by-law does not obligate Council to provide funding for the Program, and the heritage property tax reduction or refund contemplated by this by-law may be eliminated by Council through repeal of this by-law at any time with no notice whatsoever to any affected persons. 3.7 The Program is subject to any regulations that the Minister of Finance may make governing by-laws on tax reductions or refunds for heritage property. Part 4: Non-Compliance 4.1 In the event that: (a) the Director, City Development & CBO, or designate, determines that the Heritage Easement Agreement has not been complied with to the satisfaction of the City; (b) the Eligible Property is in contravention of work orders, municipal requirements or liens; or (c) applicable taxes, penalties, interest and other charges for the Eligible Property have not been paid to the City, then no heritage property tax reduction or refund will be issued to the Owner and the City may require the Owner to repay part or all of any heritage property tax reduction or refund previously provided to the Owner during any period of non-compliance. Upon the Director, City Development & CBO, or designate, being satisfied that the Owner has brought the Eligible Property back into compliance, the Eligible Property will be re-enrolled in the Program. 4.2 The Director, City Development & CBO, or designate, shall send written notice to the Owner of the Eligible Property informing the Owner that the Eligible Property was found to be out of compliance. The written notice shall describe the nature of the non-compliance. 4.3 An Owner who has received written notice pursuant to Section 4.1, shall have thirty (30) days to: By-law No. XXXX/23 Page 4 (a) bring the Eligible Property into compliance to the satisfaction of the Director, City Development & CBO, or designate; or (b) satisfy the Director, City Development & CBO, or designate, that a workable plan has been developed to bring the Eligible Property into compliance. 4.4 Upon being satisfied that the Eligible Property is back in compliance, the Director, City Development & CBO, or designate; shall provide written notification to the Owner and the City’s Finance Department indicating that the Eligible Property is in compliance and that the heritage property tax reduction or refund will continue. 4.5 In the event the Owner does not bring the Eligible Property back into compliance within the timeline pursuant to Section 4.3, the Director, City Development & CBO, or designate, shall provide written notification to the Owner and the City’s Finance Department indicating that the Eligible Property shall now be removed as an Eligible Property from the Program. 4.6 Should an Eligible Property be removed from the Program for non-compliance, the City may add the value of any heritage property tax reduction or refund previously provided, plus applicable penalties and interest, to the Owner’s property tax bill. Part 5: Annual Tax Reduction or Refund 5.1 Subject to the conditions set out in this by-law, an Owner shall receive a heritage property tax reduction or refund for each year in which the Owner and the Eligible Property meet all of the requirements of this by-law. Part 6: Amount of Tax Reduction or Refund 6.1 The amount of heritage property tax reduction or refund provided in respect of an Eligible Property shall be twenty percent (20%) of the taxes for municipal and school purposes levied on the whole or a portion of the Eligible Property. 6.2 Any costs incurred by the City to register the Heritage Easement Agreement on title to the Eligible Property or to validate or calculate the heritage property tax reduction or rebate will be deducted from the heritage property tax reduction or rebate amount issued. Part 7: Property Assessment 7.1 The City will work with the Assessment Corporation to determine the whole or portion of a property’s total assessment that is attributable to the building or structure that is an Eligible Property, and the land used in connection with it. It will be solely the City’s decision to determine the amount of heritage property tax reduction or refund applicable to the Eligible Property. By-law No. XXXX/23 Page 5 7.2 In the event that an Eligible Property’s assessed value, as determined by the Assessment Corporation, changes for any reason whatsoever, then the amount of the heritage property tax reduction or refund shall be recalculated accordingly. Part 8: Interest 8.1 The City may require the Owner to pay interest on the amount of any repayment under this by-law, at a rate not exceeding the lowest prime rate reported to the Bank of Canada by any of the Banks listed in Schedule I of the Bank Act (Canada), calculated from the date or dates the heritage property tax reduction or refund was provided. Part 9: Penalty 9.1 If the Owner of an Eligible Property demolishes the property or breaches the terms of a Heritage Easement Agreement, the City may require the Owner to repay part or all of any heritage property tax reductions or refunds provided to the Owner for one or more years under this by-law. Part 10: Sharing of Repayment 10.1 Any amount repaid to the City by the Owner pursuant to this by-law shall be shared by the City, the School Boards and the Region of Durham, if applicable, that share in the revenue from taxes on the Eligible Property, in the same proportion that they shared in the cost of the heritage property tax reduction or refund on the Eligible Property. Part 11: Notification 11.1 The City Clerk is hereby directed to give notice of this by-law to the Minister of Finance and the Region of Durham within thirty (30) days of the passing of this by-law. Part 12: Force and Effect 12.1 This by-law shall come into force and effect on the date it is passed. By-law passed this XX day of XXXX, 2023. ________________________________ Kevin Ashe, Mayor ________________________________ Susan Cassel, City Clerk