HomeMy WebLinkAboutCS 23/01
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REPORT TO COUNCIL
FROM:
Gillis A. Paterson
Director, Corporate Services & Treasurer
DATE: September 4,2001
REPORT NUMBER: CS 23-01
SUBJECT: 2001 Final Tax Due Date for Commercial, Industrial & Multi-Residential Realty
Tax Class
RECOMMENDATION:
That it is recommended that report CS 23-01 of the Director, Corporate Services & Treasurer be
received for information and that:
1. the Director, Corporate Services & Treasurer be authorized to issue the FINAL 2001 Tax
Bills for commercial, industrial and multi-residential properties with a due date of October
29th, 2001;
2. the Director of Finance & Treasurer be authorized to make any changes or undertake any
actions necessary, including altering the due date, in order to ensure the tax billing process is
completed;
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3. the necessary By-Law attached to this report be read three times and approved; and,
4. the appropriate staff of the City of Pickering be given authority to give effect thereto.
ORIGIN:
Director, Corporate Services & Treasurer
AUTHORITY:
The Municipal Act, R.S.O. 1990, as amended, and Regulations
The Assessment Act, R.S.O. 1990, as amended, and Regulations
The Education Act, R.S.O. 1990, as amended, and Regulations
FINANCIM, IMPLICATIONS:
The attached By-law is for the FINAL billing of property taxes for commercial, industrial and
multi-residential properties. This billing will raise approximately $15.4 million in property taxes
for the City, Durham Region and School Boards.
EXECUTIVE SUMMARY:
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Adoption of the above recommendations and passing the attached By-Law provides for the final
2001 tax billing for the commercial, industrial and multi-residential properties.
Report to Council CS 23-01
Date: September 4,2001
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Subject: 2001 Final Tax Due Date for Commercial,
Industrial & Multi-Residential Realty Tax Class
Page 2
BACKGROUND:
The City of Pickering will soon be in a position to issue the final 2001 property tax bill in
accordance with the capping provisions of Bill 140, Continued Protection For Property
Taxpayers Act, passed by the Province on December 4, 2000 and implemented through various
Regulations. This legislation was put in place to limit assessment reform related increases to 5%
per year on commercial, industrial and multi-residential properties.
Under this legislation, property owners facing increases due to property assessment reform had
their increases "capped" (reduced). Conversely, those properties experiencing decreases were
limited to that permitted under the legislation. This meant that taxes have to be "clawed back"
from those experiencing decreases to fund the loss of revenue resulting from the capped
increases.
For this year, the City of Pickering issued an Interim Tax Bill to these realty property tax classes
with two installment dates (March 12th and April 26th.) The proposed final installment date of
October 29th, will not only coincide with the residential due date but provide additional time for
staff and the printing service provider through the Royal Bank to finalize details in regards to the
issuance of these bills. In addition, some property owners have been collecting interest from
their tenants throughout the year in anticipation of the tax bill. The one installment date will
assist the City in better managing its cash flow due to the fact a School Board payment of $9.8
million is required on September 30th .
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Recommendation 2 will allow the Director of Corporate Services & Treasurer some latitude,
limited by Provincial legislation, in effecting whatever may be necessary in order to ensure the
taxes are billed properly and in a timely fashion. Any revised due date established by the
Treasurer would be governed by Section 399 subsection (6) of the Municipal Act that states that
the due date is fixed as 21 days after the billing date.
Bill 140 Statistics
Bill 140 basically limits the 2001 tax increase to 5% (of the 2000 taxes) plus the municipal
budgetary increase. In other words, Bill 140 puts a cap or ceiling on municipal tax increases.
The capped increase is paid for by those property owners who have their assessment related
decrease clawed back or with held. The cost of capping protection is funded with-in the same
property tax class. This means that the capping protection provided to the industrial tax class is
"paid for" by clawing back or with holding assessment related property decreases from industrial
property owners. The Region wide claw back percentages for 2001 are presented below in Table
One.
Table One
Region of Durham
Comparison of Property Tax Claw back Percentages for 1998 to 2001
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Col. A Col. B Col. C Col.D Col. E
1998 1999 2000 2001 Change
Property Class (Col.C D)
Multi- 67.6% 66.5% 48.8% 100.0% N.A
Residential
Industrial 79.9% 66.7% 60.3% 29.6% 50.9%
Commercial 74.2% 57.7% 45.9% 59.2% -28.9%
For 2001, an industrial property owner will be able to keep 70.4% (1 - 29.6%) of their
assessment related decrease.
Report to Council CS 23-01
Date: September 4,2001
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Subject: 2001 Final Tax Due Date for Commercial,
Industrial & Multi-Residential Realty Tax Class
Page 3
The Multi-Residential realty tax class experienced a significant increase in assessment value as a
result of the Province Wide Re-Assessment. (The re-assessment was based on the change in
valuation dates from June 30, 1996 to June 30, 1999.) Multi-residential buildings are assessed
using the income approach and with the change in rent controls, their incomes have increased
and therefore, increased their assessment value. The higher assessment values increased the
amount of capping protection required due to the fact municipal taxes were generally capped at
5% increase over last year. As a result of the higher assessment and 5% cap, there was a
shortfall of approximately $2 million (Region wide) to fund the required capping protection. In
order to decrease the amount of capping protection, the multi-residential tax ratio was reduced
from 2.7103 to 2.4900. The lowering of the tax ratio translated into a lower tax rate that reduced
the number of properties and dollar amount requiring capping protection. The multi-residential
tax ratio was calculated to create a tax neutral position from a funding perspective between the
capped and clawbacked properties. Therefore, the 100% clawback percentage as shown in Table
One reflects the tax neutral position.
For the industrial realty tax class, the municipal budgetary increase could not be allocated to this
group due to the fact this tax class was hard capped. The term "hard capped" refers to the tax
condition where the tax ratio ofrealty tax class is above the Provincial Average. For the 2001
taxation year, the Durham Region industrial tax ratio of 2.98 was above the Provincial average
ratio of 2.63. Therefore, the budgetary increases of the Region of Durham and City of Pickering
were allocated to the other realty tax classes. The end result is that less capping protection was
required due to the hard cap that translated into a lower clawback percentage as reflected under
Table One.
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The increase in the commercial clawback is mainly due. to the change in the vacancy
methodology and recent Assessment Review Board decisions. Prior to Bill 140, any business
property or unit that was classified as vacant received a reduction in their tax rate of 30% for
commercial or 35% for industrial. For the 2001 taxation year, all commercial and industrial
properties are reflected as fully occupied and therefore, attract a higher tax rate and require more
capping protection. (Property owners have to apply for the vacancy rebate.) The increase cost
of capping protection requires more funding from the clawback property owners.
Within each realty class there are tax reductions and increases due to capping protection. Table
Two provides a detailed breakdown regarding tax shifts among the various realty classes.
Table Two
City of Pickering Breakdown ofl001 Tax Adjustments by Dollar Changes
Realtv Class Claw back Decrease Net Chan!!:e
Multi-Residential $0 $ (109,239) $ (109,239)
Commercial 1,422,836 (2,298,099) (875,262)
Industrial 36.688 (580.992) (544.303)
Total $1.459.524 $(2.988.330) $(1.528.804)
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For the claw back properties, the dollar changes vary based on the assessed value of the property
and the 2000 taxes paid. The "shortfall" of $1 ,528,804 will be provided for by a transfer of funds
from the Region similar to 1998 and 1999 when residential properties in Pickering assisted in
funding shortfalls mainly in Oshawa and Whitby.
Report to Council CS 23-01
Date: September 4,2001
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Subject: 2001 Final Tax Due Date for Commercial,
Industrial & Multi-Residential Realty Tax Class
Page 4
ATTACHMENTS:
1. 2001 Final Tax Rate By-Law for Commercial, Industrial & Multi-Residential Realty Tax
Classes
Prepared By:
Approved / Endorsed By:
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. i Stan Karwowski,
V v Manager, Financial Services
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--Gillis A. Paterson
Director, Corporate Services & Treasurer
GAP:vw
Attachment
Recommended for the consideration of Pickering
City Council
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Thomas J. Ouinn, Chief Administrative Officer
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AITAJ!M:: ;',.--:.- 'C REPOl\T#.......o....:>-:
THE CORPORATION OF THE CITY OF PICKERING
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BY-LAW NO.
Being a by-law of The Corporation of the City of Pickering to
levy the FINAL commercial, industrial and multi-residential
taxes for the year 2001.
WHEREAS the Regional Municipality of Durham has passed By-law No. 47-2001 to establish
tax ratios and By-Law 42-2001 to adopt estimates of all sums required by The Regional
Municipality of Durham for the purposes of the Regional Corporation and By-Law 45-2001 to
set and levy rates of taxation for Regional Solid Waste Management and By-laws No. 44-2001 to
set and levy rates of taxation for Regional General Purposes and set tax rates on Area
Municipalities; and,
WHEREAS Provincial Regulations reqUIre reductions III taxes for certain classes and or
subclasses of property; and,
WHEREAS the Regional Municipality of Durham has passed By-law No. 65-98 opting to have
the optional property classes consisting of the office building property class, shopping centre
property class and large industrial property class within the Region of Durham; and,
WHEREAS the City of Pickering passed By-Law No. 5856/01 to establish the tax rates for the
levying of taxes on all properties and,
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WHEREAS it is necessary for the Council of The Corporation of the City of Pickering pursuant
to the Municipal Act, to levy on the whole ratable property according to the last revised
assessment roll for The Corporation of the City of Pickering for the current year; and,
WHEREAS an interim levy was made by the Council of The Corporation of the City of
Pickering (pursuant to By-law No. 5802/01) before the adoption of the estimates for the current
year; and,
WHEREAS sub section 392(4) and (5) of the Municipal Act, as amended, permits the issuance
of separate tax bills for separate classes of real property for year 2001.
NOW THEREFORE THE COUNCIL OF THE CORPORATION OF THE CITY OF
PICKERING HEREBY ENACTS AS FOLLOWS:
1. For the year 2001, there shall be levied and collected upon the commercial, industrial and
multi-residential assessment the rates of taxation per current value assessment for general
purposes as set out in By-Law No. 5856/01.
2. The levy provided for shall be reduced by the amount of the interim levy for 2001.
3. The 2001 final tax calculations for the industrial, commercial and multi-residential realty
tax classes is based on the data as of July 31,2001.
4. The decrease retained percentage for the realty class is outlined below:
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Multi residential
Commercial
Industrial
Zero
0.407326
0.703279
5. The 2001 taxes owed for the commercial, industrial and multi-residential assessed
properties shall be due in one installment on October 29, 2001 or as adjusted by the
Treasurer.
6.
Except in the case of taxes payable under Section 33 and 34 of the Assessment Act,
R.S.O. 1990, c.A31, as amended, the percentage charge as a penalty for non-payment of
taxes and monies payable as taxes shall be added to every tax or assessment, rent or rate
of any installment or part thereof remaining unpaid on the first day of default and on the
first day of each calendar month thereafter in which such default continues but not after
December 31 of the year in which the taxes become payable, and it shall be the duty of a
Tax Collector, immediately to collect at once, by distress or otherwise under the
provisions of the applicable statutes all such taxes, assessments, rents, rates or
installments or parts thereof as shall nbt have been paid on or before the several dates
named as aforesaid, together with the said percentage charges as they are incurred.
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7. If any section or portion of this By-law is found by a court of competent jurisdiction to
be invalid, it is the intent of Council for The Corporation of the City of Pickering that all
remaining sections and portions of this By-law continue in force and effect.
8. Taxes shall be payable to the Treasurer, City of Pickering.
9. This By-law comes into force on the date of its final passing.
BY -LAW read a first, second and third time and finally passed this
day of September, 2001.
Wayne Arthurs, Mayor
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C. Anne Greentree, Deputy Clerk
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