Loading...
HomeMy WebLinkAboutECD 02-25 Report to Council Report Number: ECD 02-25 Date: February 24, 2025 From: Fiaz Jadoon Director, Economic Development & Strategic Projects Subject: Municipal Accommodation Tax and the Establishment of a Municipal Services Corporation - Implementation and Establishing Municipal Accommodation Tax and Destination Pickering - File: A-1440-001 Recommendation: 1. That the City of Pickering implement a Municipal Accommodation Tax (MAT) by -law in the form included in this Report as Attachment 1, establishing a MAT rate of 4%, effective May 1st 2025; 2. That staff be directed to formalize an agreement, and the Director, Finance & Treasurer or designate be authorized to execute an agreement between the City of Pickering and the Ontario Restaurant Hotel & Motel Association (ORHMA) to collect the MAT (revenue) from City of Pickering accommodation providers in a form satisfactory to the Director, Corporate Services & City Solicitor and Director, Economic Development & Strategic Projects; 3. That staff be authorized to act on the request for consent from the Regional M unicipality of Durham to incorporate a Tourism Municipal Services Corporation (MSC), named Destination Pickering, if available and that the Director, Finance & Treasurer be authorized to execute any supporting documents confirming consent; 4. That the following persons be appointed to the interim Board of Directors of Destination Pickering: two Members of Council, appointed by the M ayor; and three City staff members as follows: Director, Economic Development and Strategic Projects, Director Finance & Treasurer, and Director, Community Services; 5. That staff bring forward in the third quarter of 2025, three tourism industry stakeholders from a range of sectors, including, but not limited to: accommodations, meetings and conferences, attractions and retail, festivals and events, sports tourism , food and beverage to be appointed to the Destination Pickering Board of Directors, in addition to one M ember of Council, as appointed by the M ayor, and three City staff members; 6. That the Director, Economic Development & Strategic Projects, Director, Community Services, and Director, Finance & Treasurer be authorized to negotiate a service level agreement with the MSC on behalf of the City, in a form satisfactory to the Director, Corporate Services & City Solicitor; and that the Mayor and City Clerk be authorized to execute same; ECD 02-25 February 24, 2025 Subject: Municipal Accommodation Tax and the Establishment of a Municipal Services Corporation Page 2 CORP0227-07/01 revised 7. That staff report back to Council in the third quarter of 2025 on the progress of the MAT, including a review of its budget and any additional strategies; and 8. That appropriate City of Pickering officials be authorized to take the actions necessary to implement the recommendations in this report. Executive Summary: The purpose of this report is to seek Council's approval to implement a Municipal Accommodation Tax (MAT) for the City of Pickering at a rate of 4%, and to incorporate a Municipal Services Corporation, named Destination Pickering Inc. MAT is a local tax applied to the purchase of transient accommodations such as hotels and motels. Its primary purpose is to generate revenue to support local tourism initiatives. There are a number of municipalities across Ontario who have imposed the MAT, with the most common rate set at 4%. As per the Municipal Act, 2001, S.O.2001, c.25, as amended (the Municipal Act), municipalities must assign a portion of the MAT revenue (50% of the MAT revenues after deduction of the municipality's reasonable costs) to an "eligible tourism entity". Currently, the City of Pickering does not have an eligible tourism entity and staff are recommending the creation of a MSC to meet this requirement. The remaining 50% of MAT revenues (net of reasonable costs) would stay with the municipality. The City will benefit from the additional revenue, as the City plans to use 50% of the M AT funds to expand its tourism offerings, including art, music, sports, and cultural experiences. This funding will be introduced as part of the City's annual budget process starting with the 2026 Budget to support the development of programs, and for infrastructure related investments. At the Council M eeting of May 27, 2024, Council endorsed the Community Visitor Plan through Resolution #491/24. The Community Visitor plan is the first tourism plan for the City of Pickering and serv es as a guide to City staff, local businesses, tourism attractions, and regional partners in welcoming visitors to Pickering. The Community Visitor Plan is a four year plan that includes 5 c ore objectives: Enhance, Welcome, Develop, Distinguish, and Support, and includes 45 action items. The Community Visitor Plan was developed by a Tourism Steering Committee, led by Central Counties Tourism. The Committee included representatives from local businesses, attractions, residents, and City staff, and addresses the challenges and opportunities for visitor readiness across five key categories: attractions, businesses, infrastructure, customer service, and marketing/promotion. Several action items included in the Community Visitor Plan require funding, and consideration will be given to allocate some of the MAT funding to support implementation of this plan. In addition, Action Item 5.1.4 of the Community Visitor Plan is to explore the feasibility of a MAT, so the recommendations in this report are consistent with the implementation of the Plan. Short term rentals such as VRBO and Airbnb will be subject to the MA T as and when a Short- Term Rental by -law is adopted by the City. Cities of comparable size have reported MAT to ECD 02-25 February 24, 2025 Subject: Municipal Accommodation Tax and the Establishment of a Municipal Services Corporation Page 3 CORP0227-07/01 revised generate approximately $400,000.00 to $700,000.00 annually. The City of Toronto generates approximately $24 million annually through their MAT. The City of Pickering is recommending designating ORHMA as its agent, to collect the MAT from accommodation providers and remit to the City, starting May 1st, 2025 (see ORHM A Draft Agreement, Appendix 1). Once approved, a MAT webpage will be created with information and frequently asked questions for both accommodation providers and visitors. The MAT Report and by -law have been developed in partnership with staff from Economic Development & Strategic Projects, Finance, Corporate Services and Community Services Departments. Relationship to the Pickering Strategic Plan: The recommendations in this report respond to the Pickering Strategic Plan Priority to Champion Economic Leadership & Innovation. Financial Implications: Aside from property taxes and user fees, the City has limited revenue tools. Implementation of MA T allows for tourism initiatives and infrastructure to be implemented without an increase to property taxes. The City of Pickering is home to 1 hotel and 1 motel with approximately 421 rooms. To forecast the MAT revenues for the City, a calculation was done based on the existing number of rooms in hotels and an average price of $113.75 per night. As part of the forecast, an annual average hotel occupancy range of 50% and 73% was utilized. The table below provides a breakdown of the potential MAT revenues at the 4% rate based on two occupancy levels. Data provided by Central Counties Tourism shows the 2023 annual hotel occupancy rate of Durham Region was 73.7%. Estimated Gross MAT Revenues (12 Months) Occupancy 50% 73% 421 Rooms $349,588.00 $510,398.00 Based on these estimates, Pickering's annual gross MAT revenues could range between $349,588.00 and $510,398.00 based on 50% and 73% occupancy, respectively, with half of the net MAT revenue (adjusted for reasonable costs) to be allocated to an eligible t ourism entity whose mandate includes the promotion of tourism in Pickering and the balance retained by the municipality to help fund tourism or tourism related infrastructure investments. ECD 02-25 February 24, 2025 Subject: Municipal Accommodation Tax and the Establishment of a Municipal Services Corporation Page 4 CORP0227-07/01 revised As outlined in the table below, after deducting reasonable costs (currently only collection fees of 1.8%), it is expected that approximately $171,648.00 to $250,606.00 will be transferred to the MSC and the same amount is projected to be retained by the City to fund the implementation of the Community Visitor Plan. 50% Occupancy 73% Occupancy Projected Mat Revenues $349,588.00 $510,398.00 Collection Cost (1.8%) ($6,293.00) ($9,187.00) Net MAT (annual) $343.295.00 $501,211.00 50% Allocation to MSC $171,648.00 $250,606.00 50% Retained by City $171,648.00 $250,606.00 Based on these projected revenues, the MSC will prepare an annual budget that is separate from the City of Pickering's budget. The above financial projection excludes external audit fees. The City has established a MAT Reserve and 50% of the new MAT revenues will be transferred to the reserve and retained by the City. Discussion: The purpose of this report is to seek Council's approval to implement a MAT for the City of Pickering at a rate of 4%, and to incorporate a MSC, named Destination Pickering Inc. On November 23, 2017, the Province of Ontario introduced the Transient Accommodation Regulation 435/17, which came into effect December 1, 2017. This allowed for municipalities across Ontario to implement a MAT through a by -law in respect of the purchase of transient accommodation in the municipality under section 400.1 of the Municipal Act. The Province of Ontario developed the MAT as a funding source to support tourism and foster economic, social, and cultural development. The goal of the MAT is to generate revenue that enhances local tourism infrastructure and promotion, while encouraging longer overnight stays to boost economic activity. As a new funding option, the MAT will allow for the implementation of the Community Visitor Plan that was approved by Council in M ay 2024, with initiatives that support tourism, increase visitor spending, and strengthen the local economy without impacting the property tax -funded budget. The legislation states under Ontario Regulation 435/17 that once reasonable costs of collecting ECD 02-25 February 24, 2025 Subject: Municipal Accommodation Tax and the Establishment of a Municipal Services Corporation Page 5 CORP0227-07/01 revised and administering the tax are paid for, 50% of the remaining MAT shall be paid to an eligible tourism entity and a balance may be retained by the municipality . The City of Pickering does not have an eligible tourism entity and staff are recommending the creation of a MSC to fulfill this requirement. Many other municipalities have found themselves without an eligible tourism entity and have created an MSC to serve this purpose. The benefits of the City establishing the MSC include: • satisfying the Province’s requirement for an eligible tourism entity that utilizes a minimum of 50% of the MAT revenues • adopting a MSC model which provides accountability, corporate responsibility, and controls through the management role of the voting members • the City can have oversight over the tourism entity, as Council will approve the Board of Directors and endorse the annual budget; the Board will include a Member of Council, (appointed by the Mayor), City staff representatives and industry stakeholders, who will establish the governance framework for business plans, expenditures, and corporate policies • the ability to access additional resources like tourism specific grants The benefits of establishing an MSC extend beyond that of tourism development. MSC's are often more flexible when compared to traditional government structures. They can form partnerships with private businesses, other municipalities, and tourism boards allowing for innovative collaborations which in turn improve tourism services. The City proposes the creation of an MSC named "Destination Pickering Inc." (Corporation) if such name is available at the time of incorporation to serve as the eligible tourism entity in Pickering. Under Section 11 of the Municipal Act, Durham Region has exclusive authority over the collection and dissemination of information related to the promotion of all Durham Region local municipalities. For the City to create the Corporation, the consent of Durham Region is required. Once consent from Durham Region is received the Director, Finance & Treasurer will complete and execute supporting documents confirming this consent. A. Public Consultation Public Consultation was conduc ted through an online survey which was open to the public from October 26th, 2024, to November 28th, 2024. The survey asked respondents the following question: "Please share your thoughts and comments on the City's proposal to create a M unicipal Services Corporation named 'Destination Pickering,' which would serve as the Eligible Tourism Entity in Pickering.” A total of 22 responses were received with some in favor of the MSC and some opposing its creation. Respondents who opposed its creation suggested that the City should focus on other ECD 02-25 February 24, 2025 Subject: Municipal Accommodation Tax and the Establishment of a Municipal Services Corporation Page 6 CORP0227-07/01 revised matters, such as improving road infrastructure, public transportation, and increasing the number of schools within the City. One respondent noted, "You have 1 hotel in the whole city. Do we really want to have a tax to discourage other hotels from establishing themselves here?" Those in favor of the MSC stated that the creation of Destination Pickering would be transformative for the City and help it identify itself as more than just a suburb. Another respondent noted, "This should help residents participate in more in city -run events and festivals and draw people from surrounding municipalities and communities to Pickering for entertainment and fun." Overall, it was found that there is an interest in creating an MSC, but there is also a need for clarity on who is subject to the M AT. At the January 27, 2025 Council Meeting, Report ECD 01-25 was referred back to staff to allow further discussion with affected hotel operators with direction for staff to report back to Council on the discussions at the February 24, 2025 Council Meeting. Staff followed up with representatives of Durham Live and Great Canadian Entertainment (hotel operator at the Durham Live site), who reiterated their position of not supporting the implementation of the MAT in Pickering. Their concerns were notably around the potential negative impact on hotel bookings due to the introduction of the MAT, and if complimentary rooms are subject to the MAT. Staff advised the hotel group that complimentary rooms provided by the hotel, as well as any room bookings made prior to the MAT implementation date, are not subject to the MAT. Additionally, staff advised that the introduction of the MAT in Pickering would be consistent with the MAT already imposed on hotel operators in neighboring municipalities (competitors). More specifically, Ajax and Oshawa currently collect MAT at a rate of 5%, Whitby collects at a rate of 4% and Toronto collects at a rate of 6% MAT. Many municipalities across Ontario implement a MAT as authorized under the provincial 2017 Municipal Accommodations Tax legislation as an effort to boost funding to attract visitors and support a stronger tourism industry in their municipality. The following list of participating municipalities, based on 2021 Statistics Canada census data, represents approximately 40% of Ontario’s population, making up a significant portion of the province. This list includes, but is not limited to, the municipalities that have implemented MAT: Municipality MAT Rate Ajax 5% Barrie 6% Belleville 4% Brampton 4% Brantford 4% ECD 02-25 February 24, 2025 Subject: Municipal Accommodation Tax and the Establishment of a Municipal Services Corporation Page 7 CORP0227-07/01 revised Collingwood 4% (Effective March 1, 2025) Gravenhurst 4% Guelph 4% Hamilton 4% Huntsville 4% Kingston 5% London 4% Markham 4% Mississauga 6% Niagara Falls $2 per night of occupancy North Bay 4% Oakville 4% Orillia 4% Oshawa 5% Ottawa 5% Owen Sound 4% Stratford 4% Sudbury 6% Thunder Bay 5% Timmins 4% Toronto 6% Vaughan 4% Whitby 4% ECD 02-25 February 24, 2025 Subject: Municipal Accommodation Tax and the Establishment of a Municipal Services Corporation Page 8 CORP0227-07/01 revised Windsor 4% Subject to Council's approval, the City of Pickering will collect MAT at a rate of 4% with revenues being allocated to attract visitors to Pickering and increase overnight stays in Pickering hotels, while investing in municipal tourism infrastructure. The hotel operator expressed interest in becoming a board member of Destination Pickering. As a result of those discussions, the only change made in Report ECD 02-25 is the new implementation date as requested by Great Canadian Entertainment and Durham Live representatives. Ontario Regulation 599/06 requires municipalities to conduct public consultation and create a business case study (see MSC Business Case, Appendix 1). Both items have been completed as required and staff are prepared to move forward with the development of the MSC as outlined in this report. B. MSC Structure and Incorporation To establish the Corporation, the City must file articles of incorporation. These will be drafted and filed by the City's Corporate Services Department. Staff propose the following positions to be incorporators who will act as interim Directors of the MSC: a. two members of Council, as appointed by the Mayor b. Director , Economic Development & Strategic Projects c. Director, Finance & Treasurer d. Director, Community Services Interim Directors will have oversight and critical decision-making roles concerning the operation and setup of the Corporation. Staff will bring a report back to Council in the third quarter of 2025 with final recommendations relating to establishing the new Board of Directors, its composition, by -laws, budget, and other corporate matters. However, the City's Director of Finance & Treasurer will also be the Treasurer for this new Corporation to ensure continuity and compliance with the City's financial policies where applicable. New board members to be brought forward in the third quarter of 2025 will consist of three tourism industry stakeholders from a range of sectors, including, but not limited to: accommodations, meetings and conferences, attractions and retail, festivals and events, sports tourism, food and beverage to be appointed to the Destination Pickering Board of Directors, in addition to one M ember of Council, as appointed by the M ayor, and three City staff . ECD 02-25 February 24, 2025 Subject: Municipal Accommodation Tax and the Establishment of a Municipal Services Corporation Page 9 CORP0227-07/01 revised C. Collection of the MAT The City of Pickering is recommending designating the ORHMA as its agent to collect the M AT from accommodation providers and remit to the City. ORHMA works directly with the hotels and motels, and provides training to staff and providers. After processes are set up by ORHMA, it is the responsibility of the accommodation provider to remit monthly reports to ORHMA, who will then collect and remit funds to the City, minus an administrative fee of 1.8% of the fees collected from hotels and motels. There is a one-time fee of $3,000.00 which covers the MAT Reporting Portal and MAT information sessions with documents and support to all accommodation providers. D. Municipal Accommodation Tax Reserve It is recommended that the 50% of the net MAT revenues retained by the City be transferred to a new Municipal Accommodation Tax Reserve. Subject to the establishment of the MAT reserve, as part of the annual budget process, staff will recommend draws from this reserve to fund projects as presented in the annual budget that support directly and indirectly the development and expansion of existing and new programs and infrastructure investments aimed to enhance the overall visitor experience. Unspent MAT funds will accumulate in the reserve to be used in future years and may be used to fund larger infrastructure projects with higher costs. Staff will bring forward recommendations for the use of the reserve dollars by the third quarter of 2025. E. Future implementation of MAT for short terms accommodations such as Airbnb and VRBO Short Term Rentals (i.e. Airbnb and VRBO) will not be included in this phase of MAT. Legal Services, Municipal Law Enforcement and the City Development Department are currently working to create a regulatory framework and Zoning by -law amendments to regulate short-term rental acc ommodations and licensing in Pickering. F. Implementation Plan and Next Steps Upon approval of this report and the MAT by -law, staff will take the following next steps to meet the targeted MAT implementation date of May 1st, 2025, and set up the MSC: • implement the new MAT by -law (see By-law Municipal Accommodation Tax, Appendix 1), for the collection of a MAT; • obtain and act upon Durham Region’s consent to create the MSC; • establish a MSC under the name “Destination Pickering Inc.”, if available; • sign an agreement with ORHMA so they can begin training local hotel and motel staff in collection and remittance practices; and • create a separate financial account for the MSC through the Finance Department. ECD 02-25 February 24, 2025 Subject: Municipal Accommodation Tax and the Establishment of a Municipal Services Corporation Page 10 CORP0227-07/01 revised Attachments: 1.By-law Municipal Accommodation Tax 2.MSC Business Case 3.ORHMA Draft Agreement Prepared By: Approved/Endorsed By: FJ :as Fiaz Jadoon, Ec.D., CEcD, MPM, B.COMM Director, Economic Development & Strategic Projects Stan Karwowski, MBA, CPA, CMA Director, Finance & Treasurer Paul Bigioni Director, Corporate Services & City Solicitor Laura Gibbs MBA, MSc. Director, Community Services Azeem Shah, Senior Advisor, Creative Industries & Tourism Original Signed By:Original Signed By: Original Signed By: Original Signed By: Original Signed By: ECD 02-25 February 24, 2025 Subject: Municipal Accommodation Tax and the Establishment of a Municipal Services Corporation Page 11 CORP0227-07/01 revised Recommended for the consideration of Pickering City Council Marisa Carpino, M.A. Chief Administrative Officer Original Signed By: Attachment 1 to Report ECD 02-25 The Corporation of the City of Pickering By-law No. XXXX/25 Being a by -law to establish a Municipal Accommodation Tax. Wher eas subsection 400.1(1) of the Municipal Act, 2001, S.O. 2001, c. 25 (“Municipal Act”) provides that a local municipality may, by by -law, impose a direct tax in respect of the purchase of transient accommodation within the municipality; and, Whereas pursuant to section 400.1 of the Municipal Act and Ontario Regulation 435/17 (Transient Accommodation Tax) under the Municipal Act, Council wishes to establish a municipal accommodation tax rate to levy on the purchase of transient accommodation within the City of Pickering; and, Whereas pursuant to subsection 400.1(3) of the Municipal Act, Council may establish and use such enforcement measures as Council considers appropriate if an amount assessed for outstanding tax, penalties or interest remains unpaid after it is due. Now therefore the Council of The Corporation of the City of Pickering hereby enacts as follows: 1. Definitions 1.1. “Accommodation” means Lodging, and the right to use Lodging, that is provided for consideration, whether or not the Lodging is actually used. 1.2. “Books and Accounts” includes books, accounts, bills, receipts, invoices, financial statements, and records in any format. 1.3. “By-law ” means this by -law and any amendments made thereto. 1.4. “Establishment” means the physical location, a building or part of a building that provides Accommodation. 1.5. “Lodging” includes: (a) the use of a bedroom, a suite of rooms containing a bedroom, or the use of a bed within a bedroom, domicile, or other physical location; and, (b) the use of one or more additional beds or cots in a bedroom or suite. 1.6. “Multiple O ffence” means an offence in respect to two or more acts or omissions, each of which separately constitutes an offence and is a contravention of the same provision of this By -law. 1.7. “Municipal Accommodation Tax” means the tax imposed under this By-law. 1.8. “Person” includes an individual, a corporation, a partnership, a sole proprietorship, a trust, a joint venture, an association or any other organization or entity of any kind By-law No. XXXX/25 Page 2 and their respective heirs, executors, administrators, successors, assigns or other legal representatives of a person to whom the context can apply according to law. 1.9. “Provider” means a Person who sells, offers for sale, or otherwise provides Accommodation, and includes agents, hosts or any others who sell, offer for sale or otherwise provide Accommodation. Where a Provider cannot be easily determined, the owner of a property providing Accommodation is deemed to be the Provider. 1.10. “Purchase Price” means the price for which Accommodation is purchased, including the price paid and other consideration accepted by the Provider in return for the Accommodation provided, including all fees and surcharges for additional occupants and beds, but does not include the harmonized sales tax imposed by the Government of Canada or by the Province of Ontario. 1.11. “Purchaser” means a Person who purchases Accommodation. “City” means The Corporation of the City of Pickering. 1.12. “City Solicitor” means the Director, Corporate Services & City Solicitor, or their designate. 1.13. “Treasurer” means the Director, Finance & Treasurer, or their designate. 2. Application 2.1. Subject to the exemptions set out in section 3.1 of this By -law, a Purchaser shall, at the time of purchasing Accommodation, pay the Municipal Accommodation Tax in the amount of 4% of the Purchase Price of Accommodation provided for less than28 consecutive days, but greater than four hours, provided in a hotel, motel, motor hotel, lodging house, inn, resort, or hostel. For greater certainty, the continuous period is not disrupted by the purchase of different rooms, suites, beds, or other Lodging in the same Establishment in the course of the continuous period. 3. Exemptions 3.1. The Municipal Accommodation Tax does not apply to Accommodation provided by: (a) the Crown, every agency of the Crown in right of Ontario, and every authority, board, commission, corporation, office or organization of persons a majority of whose directors, members or officers are appointed or chosen by or under the authority of the Lieutenant Governor in Council or a member of the Executive Council; (b) ev ery board as defined in subsection 1(1) of the Education Act; (c) every university in Ontario and every college of applied arts and technology and post-secondary institution in Ontario whether or not affiliated with a university, the enrolments of which are counted for purposes of calculating operating grants entitlements from the Crown; By-law No. XXXX/25 Page 3 (d) every hospital referred to in the list of hospitals and their grades and classifications maintained by the Minister of Health and Long-Term Care under the Public Hospitals Act and every private hospital operated under the authority of a licence issued under the Private Hospitals Act; (e) every long-term care home as defined in subsection 2(1) of the Fixing Long- Term Care Act, 2021 and every hospice; (f) a hotel or motel used by the City or its service providers for shelter purposes; (g) a treatment centre that receives private funding or provincial aid under the Ministry of Community and Social Services Act; (h) a house of refuge or Lodging for the reformation of offenders; (i) a charitable, non-profit philanthropic corporation organized as shelter for the relief of the poor or for emergency; (j) a tent or trailer site supplied by a campground, tourist camp or trailer park; (k) employers to their employees in premises operated by the employer; (l) a hospitality room in an establishment that may or may not contain a bed and is used for displaying merchandise, holding meetings or entertaining; or, (m) group bookings with contracts that are entered into prior to the date that this By -law takes effect. 4. Collection and Remittance 4.1. A Provider shall collect the Municipal Accommodation Tax from the Purchaser at the time the Accommodation is purchased. 4.2. A Provider shall identify the amount of the Municipal Accommodation Tax as a separate item on a bill, receipt, invoice or similar document issued by the Provider in respect of the Accommodation on which the tax is imposed and shall identify the item as “Municipal Accommodation Tax”. 4.3. A Provider shall be responsible for the collection and remittance of HST directly to the Government of Canada and/or the Province of Ontario. 4.4. A Provider shall, on or before the 15th day of the month, remit to the City, or its tax collection agent, the amount of the Municipal Accommodation Tax collected for the previous month and shall submit monthly statements in a form required by the City which details the number of Accommodations sold, the Purchase Price of each Accommodation, the amount of the Municipal Accommodation Tax collected and any other information as required by the City of the purposes of administering and enforcing this By -law. By-law No. XXXX/25 Page 4 4.5. The Treasurer shall charge a fee for all payment remittances that are not honoured by the financial institution upon which it is drawn in an amount as set out in the City’s Fees and Charges By -law # 7220-17, as amended. 5. Delegation of Authority 5.1. The Treasurer is authorized to administer and enforce this By -law, including approvals and collection, and to instruct the City Solicitor to take such legal action as may be considered appropriate. 6. Tax Collection Agent 6.1. The tax collection agent for the City under this By -law is the Person who is designated in an agreement with the City to collect the Municipal Accommodation Tax as an agent for the City. 6.2. The Treasurer, in consultation with the City Solicitor, may designate additional tax collection agents for the City and is delegated the authority to enter into agreements with such designated tax collection agents. 6.3. The tax collection agent(s) shall collect and administer the Municipal Accommodation Tax as an agent for the City in accordance with this By-law and the agreement between the City and that tax collection agent. 7. Liens 7.1. All Municipal Accommodation Tax, interest, and penalties that are past due will be deemed to be in arrears and may be added to the tax roll for any real property in the City of Pickering that is registered in the name of the Provider to be collected in the same manner as property taxes and will constitute a lien upon the lands, but such lien will not be a priority lien for the purposes of subsections 1(2.1), (2.2) and (3) of the Municipal Act and such lien will not have a higher priority than it would otherwise have in law in relation to other claims, liens or encumbrances. 8. Audit and Inspection 8.1. A Provider shall keep all Books and Accounts that are sufficient to furnish the City, or its representative with the necessary particulars of sales of Accommodations and the amount of the Municipal Accommodation Tax collected, payable and remitted, for no less than seven (7) years from the date of the sale of the Accommodation. 8.2. A Provider shall permit the City, or its representative, at all reasonable times, entry into any premises where any business is carried on, where any property is kept, where anything is done in connection with any business, or where any Books and Accounts are or should be kept and shall permit the City or its representative to audit and inspect all Books and Accounts of the Provider. A Provider shall produce copies of any Books and Accounts that may be required by the City or its representative for the purposes of administering and enforcing this By -law. By-law No. XXXX/25 Page 5 8.3. A Provider shall: (a) give the City or its representative all reasonable assistance with the audit or inspection; (b) answer all questions relating to the audit or inspection either orally or, if the City requires, in writing, on oath or by statutory declaration; and, (c) attend at the premises with the City or its representative for the purposes of giving reasonable assistance and answering questions relating to the audit or inspection. 8.4. A Provider shall comply with a written demand from the City or its representative for information or for the production on oath or otherwise of any Books and Accounts as the City or its representative considers necessary to determine compliance with this By -law. A Provider in receipt of such a demand shall comply with the demand within the time specified in the demand. 9. Determination of Amount 9.1. The Treasurer may determine an amount of the Municipal Accommodation Tax that is required to be remitted, together with any interest imposed upon any Municipal Accommodation Tax that is outstanding, if a Provider who is responsible for the payment or remittance of the Municipal Accommodation Tax fails to pay or remit as required by this By -law. 9.2. The Treasurer may impose an interest charge of 1.25% of the Municipal Accommodation Tax that is outstanding on the first day of each month and subsequent months until the Municipal Accommodation Tax is paid in full. 9.3. The Treasurer may assess or reassess for any Municipal Accommodation Tax that is payable by the Provider within three years from the day the Municipal Accommodation Tax was remittable, except that where the Treasurer establishes that a Provider has made any negligent or wilful misrepresentation or has committed any fraud in supplying, or omitting to supply, any information under this By -law, then the Treasurer may assess or reassess, for any time that the Treasurer considers reasonable, the Municipal Accommodation Tax payable. 9.4. A Provider shall pay the amount of the Municipal Accommodation Tax and any interest set out in the notice of calculation made under this section 9 of this By-law within 30 days from the date of mailing of the notice of calculation. 10. Offences and Penalties 10.1. No person shall: (a) make, participate in, assent to or contribute in the making of false or deceptive statements in a report, statement, form or other document that is prepared, submitted or filed under or for the purposes of this By -law; By-law No. XXXX/25 Page 6 (b) destroy, alter, mutilate, hide or otherwise dispose of any Books and Accounts in order to evade payment or remittance of any amounts owing under this By -law; (c) make, participate in, assent to or contribute in the making of false or deceptive entries, including omitting to enter an entry, in any Books and Accounts; (d) hinder, obstruct or interfere with any audit or inspection conducted by the City or its representative under this By -law; (e) willfully, evade or attempt to evade: i. paying the Municipal Accommodation Tax; ii. remitting the Municipal Accommodation Tax; or, iii. otherwise complying with this By -law; or, (f) conspire with any other Person to commit an offence described in subsections 10.1 (a) through (e) of this By -law. 10.2. Any Person who is guilty of an offence under this By -law is liable as follows: (a) upon a first conviction, a fine of not less than $500.00 and not more than $50,000.00 if the Provider is a Person other than a corporation, and not less than $500.00 and not more than $100,000.00 if the Provider is a corporation; (b) upon a second or subsequent conviction for the same offence, a fine of not less than $1,000.00 and not more than $100,000.00; (c) upon conviction for a continuing offence, a fine of not less than $750.00 and not more than $10,000.00 for each day or part of a day that the offence continues and the total of all of the daily fines for the offence is not limited to $100,000.00; and, (d) upon conviction for Multiple Offences, for each offence included in the Multiple Offence, a fine of not less than $750.00 and not more than $10,000.00 and the total of all fines for each included offence is not limited to $100,000.00. 11. General 11.1. If any section or portion of this By -law is found by a court of competent jurisdiction to be invalid, illegal, unenforceable or of no force and effect, then it is the intention of Council that all remaining sections and portions of this By - law continue in force and effect to the fullest extent possible according to law. 11.2. This By-law may be referred to as the “Municipal Accommodation Tax By- law”. By-law No. XXXX/25 Page 7 12. Effective Date 12.1. This By -law shall come into force and take effect on May 1, 2025. By -law passed this day of February, 2025. Kevin Ashe, Mayor Susan Cassel, City Clerk Attachment 2 to Report ECD 02-25 Business Case Study Tourism Municipal Services Corporation 1. Purpose The City of Pickering proposes to create a corporation named "Destination Pickering Inc." (“Corporation”), if available at the time of incorporation, to serve as the eligible tourism entity for the purposes of the Municipal Accommodation Tax and the promotion of tourism in Pickering. This Business Case Study provides relevant information on establishing the Corporation and proposed governance structure for the Corporation. 2. Background The Province of Ontario developed the Municipal Accommodation Tax (“MAT”) also known as the Transient Accommodation Tax as a funding source to support tourism in communities and allow growth in the sector so that tourism continues to contribute to economic, social, and cultural development across Ontario. Under Ontario Regulation 435/17 (Transient Accommodation Tax) of the Municipal Act, 2001 (Ontario), the City must share a minimum of 50% of revenues (less the City’s reasonable costs of collecting and administering the tax) with an entity that is designated as an Eligible Tourism Entity. Transient accommodation can be defined as accommodation for a continuous period stay of 29 nights or less. As of 2024, Pickering does not have an Eligible Tourism Entity as mandated by Ontario Regulation 435/17. Therefore, the City proposes the establishment of a Municipal Services Corporation (“MSC”) to serve as the Eligible Tourism Entity in Pickering. Ontario Regulation 599/06 requires the City to prepare a Business Case Study for the proposed corporation and obtain approval of the Business Case Study by Council Resolution. This Business Case Study is presented to achieve the requirements of Ontario Regulation 599/06. 3. Mandate & Objectives At the May 27, 2024 Council meeting, through Resolution #491/24, Council endorsed the Community Visitor Plan. The Community Visitor Plan is the first tourism plan for the City of Pickering. It includes five core objectives: Enhance, Welcome, Develop, Distinguish, and Support, and includes 45 action items. The Community Visitor Plan addresses challenges and opportunities for visitor readiness across five key categories: attractions, businesses, infrastructure, customer service, and marketing/promotion. It also provides framework for businesses, local government, and residents to leverage the visitor economy and grow Pickering as a visitor-ready and welcoming destination. The mandate of the Corporation (serving as the Eligible Tourism Entity in Pickering) will be the promotion of tourism in alignment with the Community Visitor Plan. The following objectives will guide the Corporation in decision-making throughout the Corporation's growth irrespective of changes in leadership, strategies and activities: • The Corporation will focus and expand tourism promotion and tourism product development in Pickering. • The Corporation will report to Council at least once a year or as otherwise required by the Corporation’s by -laws. • The Corporation’s annual budget shall be endorsed by Pickering Council. • The Corporation will complete work based on accountable and objective decision-making that ensures City -wide benefits. This business case aligns itself to the Pickering Strategic Plan Priority to Champion Economic Leadership & Innovation and encourage and support tourism as an economic driver. 4. Community Engagement Before establishing a corporation, the City was required to engage with the public about the proposal to establish the corporation (O. Reg. 599/06, s. 8). The City conducted two phases of community engagement in the recommendation of the MAT and establishment of an MSC. Phase 1: Public consultation in the development of the Community Visitor’s Plan. The Community Visitor Plan was developed through extensive community engagement and public consultation. A steering committee, consisting of local businesses, attractions, outdoor assets, residents, and City staff, led the process. To involve the broader public, a survey was made available on Let's Talk Pickering. The survey, open from June 1 – September 6, 2023 collected feedback on the local tourism industry, amenities, and features, receiving a total of 311 responses. Phase 2: Public consultation on the establishment of a Municipal Services Corporation (MSC). Public consultation on the proposed MSC was conducted through an online survey on Let’s Talk Pickering, from October 28 - November 28, 2024. The survey asked respondents to share their thoughts on the City's proposal to create a Municipal Services Corporation, ‘Destination Pickering,’ which would serve as the Eligible Tourism Entity in Pickering. A total of 22 responses were received, with some in favor and others opposed to its creation. Overall, the survey did indicate support for the creation of the MSC but highlighted the need for clarification on who is subject to the Municipal Accommodation Tax. November 11, 2024 Page 2 of 4 MSC Business Case Study 5. Analysis The benefits of the City establishing the MSC include: • satisfying the Province’s requirement for an Eligible Tourism Entity that utilizes a minimum of 50% of the MAT revenues; • adopting an MSC model, which provides accountability, corporate responsibility, and controls through the management role of the voting members; • the City can have oversight over the tourism entity, as Council will approve the Board of Directors and endorse the annual budget. The Board will include a Member of Council, (appointed by the Mayor), City staff representatives and industry stakeholders, who will establish the governance framework for business plans, expenditures, and corporate policies; and • the ability to access additional resources like tourism specific grants. MSCs are more flexible when compared to traditional government structures. They can form partnerships with private businesses, other municipalities, and tourism boards allowing for innovative collaborations. 6. Governance Structure & Incorporation To establish the corporation, the City must file articles of incorporation. These will be drafted and filed by the City’s Corporate Services Department. Once incorporated, the Board of Directors will have oversight and critical decision-making roles concerning the operation and setup of the Corporation. Staff will bring a report back to Council in Q3 2025 with final recommendations relating to establishing the new Board of Directors, its composition, by -laws, budget, and other corporate matters. However, the City’s Director of Finance & Treasurer will also be the Treasurer for this new Corporation to ensure continuity and compliance with the Corporation’s policies and articles of incorporation. 7. Funding, Budget, and Collection of MAT Funds a. Financial Impact of MAT It is anticipated that the MAT, levied at 4%, would generate approximately $350,000 to $500,000 in annual new revenue to the City. The total generated collections will be divided equally between the City and the new Corporation (less the costs of collecting and administering the MAT). This revenue has the potential to grow in the long-term if there are new hotels and with the introduction of licensed short-term rentals such as Airbnb and VRBO. b. MAT Reserve With the implementation of the MAT, staff will ask Council to approve the establishment of a Municipal Accommodation Tax Reserve to receive the City's portion of the MAT revenue. November 11, 2024 Page 3 of 4 MSC Business Case Study c. Corporation Annual and Current Budget The Corporation will be funded from 50% of the proceeds of the MAT revenues, less the cost of collecting and administering the MAT. The Corporation’s Board of Directors will be responsible for creating and managing the annual budget. The City will develop, adopt and maintain a Policy to guide the transfer of assets to the Corporation (O. Reg. 599/06 s7). d. Financial Accountability Agreement The Corporation will enter into an agreement with the City to ensure that amounts paid to the Corporation are solely used for the purposes of promoting, developing, and improving the tourism landscape and tourism products in Pickering. The agreement will also include that the new Corporation shall develop financial policies that are based on the City’s Financial Control Policy and Purchasing Policy that serve as models of good governance, and develop any other financial polices as directed by the Director of Finance & Treasurer. The City’s financial policies have served the City well and would be an asset for the Corporation in the management of its financial affairs. The Corporation will report its audited financial statements to Council at its annual meeting with the City’s annual financial statements. The City will develop, adopt and maintain a Policy to guide the transfer of assets to the Corporation (O. Reg. 599/06 s7). e. Collection of Funds Licensed accommodation providers are responsible for the collection of MAT revenues. These funds will then be remitted to the Ontario Restaurant Hotel and Motel Association (OHRMA), acting as the collection agent for the City. Costs of collecting and administering the MAT will be deducted from the total MAT collected by ORHMA before remittance to the City. The City will then deduct its reasonable costs for other MAT administration costs such as accounting, payroll processing, external audit fees and other overhead allocations. The residual amount will then be allocated equally between the City and the new Corporation as per the requirements of Ontario Regulation 435/17. f. Accountability and Reporting The City’s Community Visitor Plan will serve as a guiding document for the Corporation. This new Corporation’s financial records will be subject to external audit review and the results of the audit will be presented to Pickering Council. Reporting to the City by the Corporation will take place at minimum, once a year or as otherwise required by the Corporation’s by -laws. 8. Conclusion The Business Case Study for a new municipal services corporation mandated to promote tourism, in alignment with the Community Visitor Plan, is established based on Ontario Regulation 599/06 and Ontario Regulation 435/17. The Corporation will allow the City of Pickering to improve its leadership role in establishing itself as a tourism destination. November 11, 2024 Page 4 of 4 MSC Business Case Study Attachment 3 to Report ECD 02-25 Municipal Accommodation Tax Collection Agreement This Municipal Accommodation Tax Collection Agreement ("Agreement") Dated this 1st day of May 2025 between the City of Pickering("City") and the Ontario Restaurant Hotel & Motel Association ("ORHMA"). WHEREAS the City has passed by -law XXXX/25 imposing a Municipal Accommodation Tax ("MAT") pursuant to section 400.1 of the Municipal Act, 2001. WHEREAS the City deems it desirable to retain ORHMA to act as its collecting agent for the MAT. NOW THEREFORE THE AGREEMENT WITNESSETH THAT in consideration of the mutual covenants and agreements set forth, the parties covenant and agree, to and with each other, as follows: Definitions “Accommodation” means Hotel Accommodation and Short-Term Accommodation “Hotel Accommodation” means the purchase of accommodation in a hotel, motel, inn, resort, and hostel for a period of a minimum of 4 hours and a maximum of 30 consecutive days. “Hotel Accommodation Provider” means a person who receives payment in consideration for Hotel Accommodation and includes agents, hosts or others who sell, offer for sell or otherwise provides Hotel Accommodation. Where the Provider cannot easily be determined, the owner of a property providing Hotel Accommodation is deemed to be the Hotel Accommodation Provider. "Municipal Accommodation Tax" or "MAT" means the tax imposed under the City of Pickering's Municipal Accommodation Tax By -law. “Provider” includes a Hotel Accommodation Provider and a Short-term Accommodation Provider. “Short-term Accommodation” means a temporary accommodation in all or part of a Dwelling that is provided for 30 consecutive days or less in exchange for payment, and includes a bed and breakfast, but does not include a hotel, motel, inn, resort, hostel, lodging house, or rooming house. “Short-term Accommodation Provider” means an individual who, for compensation, makes available Short-term Accommodation, but does not include a short-term Accommodation Broker. For the purposes of this definition, this does not include a corporation or partnership. “Short-term Accommodation Broker” means any individual, partnership, or corporation that, for compensation, markets and brokers the booking, reservation or rental, of a Short-term Accommodation on behalf of a Short-term Accommodation Provider by a means of a website or digital application. Services 1. ORHMA will collect the MAT on behalf of the City on the date specified in the City's Municipal Accommodation Tax By -law. 2. Providers must remit the MAT to the ORHMA by one of the following methods: electronic transfer, cash, certified cheque or by any other method proposed by the ORHMA and deemed acceptable by the City Treasurer. 3. ORHMA will require Providers to remit the MAT in accordance with the City's By -law, and may include other requirements and forms established and maintained by the ORHMA. 4. Hotel Accommodation Providers will make remittances of the MAT on a monthly basis to ORHMA, within 15 days of the end of each calendar month for the month prior. Short-term Accommodation Providers will make remittances of the MAT on a quarterly basis to ORHMA within 15 days of the previous quarter for the quarter prior. 5. The ORHMA will distribute information, notifications and communication materials to Providers by mail or in electronic format. All such materials and communications will be developed by the City, and/or jointly with the ORHMA, as it concerns the collection of the MAT. All communications and materials distributed under the MAT program must be approved in advance by the City Treasurer or designate without exception. 6. The City may issue its own mailed or electronically transmitted communications, correspondence or other notifications as deemed necessary under the program for its own purpose. 7. ORHMA will remit the MAT collected from Hotel Accommodation on a monthly basis within 30 days of the end of each calendar month for the prior month. ORHMA will remit the MAT collected from Short-term Accommodation on a quarterly basis within 30 days of the end of the prior quarter. 8. ORHMA will be responsible to collect any unpaid MAT remittances, penalties, and applicable interest for a period of 90 days on overdue accounts. 9. ORHMA will advise the City of any unpaid Provider amounts over 90 days. 10. ORHMA will submit a monthly report to the City for the Municipal Accommodation Tax collected on Hotel Accommodation with each remittance indicating: a. the average number of rooms available for taxable (MAT) occupancy at each Provider; b. the average daily rate; c. the total room charges for the month; d. the total MAT collected and remitted; e. an aging report of overdue accounts; f. the number of rooms that were exempt under the by -law; and g. any further details relating to the MAT as required by the City Treasurer. ORHMA will submit a quarterly report to the City for the Municipal Accommodation Tax collected on Short-term Accommodation with each remittance indicating: a. the average number of rooms available for taxable (MAT) occupancy at each Provider; b. the average daily rate; c. the total room charges for the quarter; d. the total MAT collected and remitted; e. an aging report of overdue accounts; f. the number of rooms that were exempt under the by -law; and g. any further details relating to the MAT as required by the City Treasurer. 11. The City shall be responsible for remitting any amounts of the MAT collected by the ORHMA to the appropriate eligible tourism entity. Privacy and Confidentiality 12. ORHMA acknowledges and agrees that in providing services under this Agreement it may acquire proprietary, confidential, personal and/or private knowledge and information of the City's operations, employees and other confidential documents and information. 13. ORHMA will at all times comply with the requirements set out in the Municipal Freedom of Information and Protection of Privacy Act, R.S.O. 1990, c. M. 56 ("MFIPPA') with respect to the use, maintenance, retention and collection of personal information, documents and records, communicated to and acquired, collected and created by it under this Agreement which in all cases shall be treated in accordance with MFIPPA. 14. ORHMA shall treat all information, documents and records communicated to and acquired, collected and created by it in the course of providing the services as confidential and shall not release or disclose the same to any person at any time during or following this Agreement without the express prior written consent of City, except as required by law and subject to MFIPPA and the Municipal Act. 15. ORHMA shall enure that all necessary steps are taken to protect all confidential information, documents and records by making all necessary security arrangements against any and all risk including without limitation to unauthorized access, use, disclosure, publication or dissemination or destruction and to enure that the said information, documents and records do not fall into the possession of unauthorized persons, in accordance with MFIPPA . 16. Should ORHMA retain the services of any third party, it shall ensure that the third party enters into a written agreement that satisfies both ORHMA and the City's obligations under MFIPPA with respect to the use, security, maintenance, retention and collection of any information it acquires through its services to ORHMA or the City. ORHMA shall ensure that the written agreement with any third party include a confidentiality clause that satisfies its obligations to City with respect to the confidentiality of any information it acquires through its services to City. Financial Reconciliation 17. The MAT collected by the ORHMA will be held separately from the ORHMA's revenues and expenditures and deposited into a designated City of Pickering liability account(s) until a payment is created and the funds are remitted to the City. 18. ORHMA will perform daily financial reconciliation of amounts collected. 19. ORHMA will investigate any financial anomalies, rectify any financial anomalies and report any financial anomalies to the City in a timely basis. 20. ORHMA will perform a payment transfer to the City (all payments of MAT, penalties, interest on late payments etc.) on a monthly basis for Hotel Accommodation within 30 days of the end of each calendar month for the prior month, via cheque/electronic funds transfer, to the City’s designated account(s). ORHMA will perform a payment transfer to the City (all payments of MAT, penalties, interest on late payments etc.) on a quarterly basis for Short-term Accommodation within 30 days of the end of each quarter for the prior quarter, via cheque/electronic funds transfer to the City’s designated account(s). Refunds 21. The City shall be responsible for the administration, approval and issuance of any efunds collected under MAT. 22. Refunds of amounts where necessary will be paid by the City. 23. The City shall be responsible for the documentation of any refunds and any adjustments flowing from such refunds. Reporting 24. ORHMA will provide the City with monthly reports for MAT collected for Hotel Accommodation, quarterly reports for MAT collected for Short-term Accommodation and an annual report to support the City functions related to the MAT including reconciliation, refunds, verification and auditing. 25. Reports shall be prepared using the ORHMA's accounting software or systems and provided to the City in a format compatible with the City's electronic systems. 26. The following reports will be produced by the ORHMA and made available electronically to the City. a. Monthly Reconciliation Report for MAT collected on Hotel Accommodation: Detailed reconciliation report identifying the number of transactions and MAT revenue collected by the ORHMA and submitted to the City. The report will contain information to substantiate amounts collected, including name and identifier of taxable entity, summary of room revenues, applicable exemptions or deductions, guest refunds, adjustments, MAT payable and total amount due, etc. b. Quarterly Reconciliation Report for MAT collected on Short-term Accommodation: Detailed reconciliation report identifying the number of transactions and MAT revenue collected by the ORHMA and submitted to the City. The report will contain information to substantiate amounts collected, including name and identifier of taxable entity, summary of room revenues, applicable exemptions or deductions, guest refunds, adjustments, MAT payable and total amount due etc. c. Audit Reports: All audit findings, reports and summaries shall be provided, unaltered and completely, to the City. Liability 27. The ORHMA agrees to assume liability for its failure to report, and/or remit the correct amount collected of the MAT, and the City shall impose such penalties for such failure as the City Treasurer may determine to be appropriate. ORHMA shall not be liable to the City for any unremitted MAT funds owed by providers that remain unpaid. ORHMA will collaborate with the City to pursue collection methods as directed by the City Treasurer, to collect any funds that remain unpaid. Audit Requirements 28. ORHMA shall engage an auditor to undertake an internal audit concerning ORHMA's MAT financial operations with respect to MAT collected on behalf of the City of Pickering. The audit shall be undertaken annually following ORHMA's year end. The costs of conducting the audit shall be at ORHMA's expense. 29. All audit findings, reports, and summaries shall be provided, unaltered and complete, to the City within 10 days of receipt by the ORHMA. 30. Any independent audits of the individual providers subject to the MAT, will be at the discretion and cost to the City of Pickering. 31. In all instances, the City reserves the right to engage an independent auditor for its purposes, to audit, without limitation, the ORHMA's operations as they concern the MAT, the collection of the MAT by the ORHMA, the designated City of Pickering liability account, and/or the compliance of providers subject to the MAT with the City's Municipal Accommodation Tax By-law. Fees 32. ORHMA agrees that its fee for services under this Agreement shall not exceed: (1) A one-time fee of $3,000 plus HST; (2) Quarterly fee in the amount of 1.8% of the monthly remittance to the City on Hotel Accommodation; and (3) Quarterly fee in the amount of 5% of the quarterly remittance to the City for all Municipal Accommodation Tax collected directly from Short-term Accommodation Providers. The above fees shall include labour, profit, other overhead, materials, equipment, licences, analysis, travel, accommodations, communication, compliance with audit requirements under this agreement, transportation, and delivery costs (courier, long distanc e charges), staff time, meetings with the City (as deemed required by the City), insurance costs, disbursements and any/all other operational costs and fees associated with the services. The City shall not be responsible for any additional costs. Labour or direct expenses incurred by the ORHMA over and above this amount shall not be charged to the City. 33. Any additional fees or expenses must be pre-authorized in writing by the City Treasurer before the ORHMA undertakes any additional work. 34. The City will reimburse the ORHMA for approved disbursements made as required in order to undertake its responsibilities, at the ORHMA's cost, with no mark -up. The total amount to be paid for disbursements is included in the total amount above. 35. ORHMA will invoice the City for its quarterly fee as set out above, on a quarterly basis, using forms designed for this purpose. 36. The City shall pay the amount of the invoice within 30 days of receiving ORHMA's invoice. Indemnity 37. ORHMA shall indemnify and hold the City harmless from and against all liability, claims, demands, losses, costs, damages, suits and proceedings, including legal fees, occasioned wholly or in part by any negligence or acts or omission by ORHMA, its officers, agents, employees or other for whom it is responsible in law, arising out of its obligations under this agreement. Insurance 38. Throughout the term of this agreement, ORHMA shall obtain and maintain the coverage shown below and shall provide that the following insurance will not be cancelled or permitted to lapse unless the insurer notifies the City in writing at least thirty (30) days prior to the date of cancellation or expiry: a) Third party general liability insurance covering all claims for negligence, nuisance, property damage and bodily injury, including death, arising out of the use of the premises by ORHMA. Such policy shall include the City as an additional insured with respect to this Agreement and be in an amount not less than two million ($2,000,000.00) dollars including personal injury liability, broad form property damage liability, contractual liability, owners and contractors’ protective liability, non-owned automobile liability, contingent employer's liability, and shall contain a severability of interests clause and cross liability clauses. b) Standard all risk property insurance covering the property of ORHMA including leasehold improvements, in an amount not less than the full replacement cost value with a deductible of no more than $5,000.00; such policy shall include a waiver of subrogation in favour of the City. c) Standard all risk tenants legal liability insurance covering the Premises in an amount not less than one million ($1,000,000.00) and such other liability insurance extensions as may be required by the City from time to time. d) ORHMA shall not do, omit to do, or permit to be done or omitted to be done on or at the Premises anything that may increase premiums or void coverage under the property insurance policies carried by the City on the Premises described in this agreement. e) The insurance described in a) through c) above will not be cancelled or permitted to lapse unless the insurer notifies the City in writing at least thirty (30) days prior to the date of cancellation or expiry. Evidence of such insurance shall be delivered to the City promptly at inception of this agreement and thereafter prior to the insurance renewal date. Failure to satisfactorily meet these conditions relating to insurance shall be deemed a breach of this agreement. f) The City reserves the right to request such higher limits of insurance or other types of policies appropriate to this agreement as the City may reasonably require from time to time. Event of Default 39. The City may declare in writing that an event of default has occurred when ORHMA has not complied with any obligation or term in this Agreement. Each and every one of the following events is an "Event of Default" (1) The failure to comply with an obligation or term in this Agreement. (2) The failure to deliver a report required in this Agreement; (3) The failure to make a remittance to the City in accordance with the terms of the Agreement; (4) The failure to complete an internal audit as required in this Agreement. Remedies on Default 40. If the City has declared that an Event of Default has occurred under section 41, after 30 calendar days from ORHMA's receipt of the notice of an Event of Default, it may immediately terminate or suspend its obligations under this Agreement if the Event of Default has not been cured to its satisfaction. . Waiver 41. The failure by the City to exercise a remedy it is entitled to exercise under this Agreement shall not be construed to be a waiver of such right and, furthermore, partial or limited exercise of a right conferred upon the City shall not prevent the City in any way from later exercising any other right or remedy under this Agreement or other applicable law. Assignment 42. Neither party may assign this Agreement without the prior consent in writing of the other. Successors and Assigns 43. This Agreement shall enure to the benefit of and be binding upon the successors and assigns of the parties hereto. Severability 44. If any provision or portion of any provision in this Agreement shall be held by a Court of competent jurisdiction to be unenforceable, invalid or illegal, such provision or such portion of the provision shall be severable, but all other terms and conditions of this Agreement will continue to be valid, binding and enforceable. Governing Law 45. This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and laws of Canada applicable in Ontario. Headings 46. The headings in this Agreement are for convenience and reference only and shall not form part of this Agreement. Time of the Essence 47. Time shall be of the essence in the performance of obligations pursuant to this Agreement. Term 48. This Agreement commenced on May 1st, 2025 and continues in full force and effect for five years. Upon the expiry of the five year term, the City at its absolute sole discretion has the option to renew the contract for a further two one-year periods. Termination 49. Either party may terminate this Agreement without cause by providing not less than 120 days' written notice of its intention to terminate. IN WITNESS WHEREOF the City and ORHMA have hereunto affixed their respective corporate seals, attested by the hands of their respective officers duly authorized in that behalf. THE CITY OF PICKERING Per: Per: ASSOCIATION ONTARIO RESTAURANT HOTEL & MOTEL Per: Per: