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HomeMy WebLinkAboutFIN 16-14 City cr0 Report To Executive Committee — PICKERING Report Number: FIN 16-14. Date: July 7, 2014 From: Paul Bigioni Director, Corporate Services & City Solicitor Subject: 2014 Final Tax Due Dates for Commercial, industrial and Multi-Residential Realty Tax Classes Recommendation: 1. That Report FIN 16-14 of the Director, Corporate Services & City Solicitor be received; 2. That the Director, Corporate Services & City Solicitor be authorized to issue the final 2014 Tax Bills for Commercial, Industrial and Multi-residential properties with a due date of September 26, 2014; 3. That the Director, Corporate Services & City Solicitor be authorized to make any changes or undertake any actions necessary, including altering the due date, in order to ensure that the tax billing process is completed and in order to comply with Provincial Regulations; 4. That the draft By-law attached to this report be enacted; and, 5. That the appropriate City of Pickering officials be authorized to take the necessary actions to give effect hereto. Executive Summary: Adoption of the above recommendations and passing the attached By-law provides for the final 2014 tax billing for non-residential tax classes (commercial, industrial and multi-residential). During the last few years, the City has billed the final non-residential taxes separately, mainly due to the additional steps that are required as a result of the capping legislation. Financial Implications: The attached By-law is for the final billing of 2014 property taxes for commercial, industrial and multi-residential properties. This billing of final property taxes will raise approximately $27 million for the City, Durham Region and the School Boards. Tax bills for the Residential tax classes were mailed on May 28, 2014 with due dates of June 26th and September 26th. 366 Report FIN 16-14 • July 7, 2014 Subject: 2014 Final Tax Due Dates for Commercial, Industrial and Multi- Page 2 Residential Realty Tax Classes Discussion: In 1998, the Province introduced Current Value Assessment or CVA on a Province-wide basis to replace the old patch work system (throughout the Province) where each municipality used a different base year for assessment purposes. The end result of CVA was the fact that some businesses were experiencing property tax increases well above 100%. To reduce the property tax increases, the. Province introduced capping legislation in 1998. The City of Pickering will soon be in a position to issue the final 2014 property tax bills in accordance with the capping provisions of Bill 140, Continued Protection for Property Taxpayers Act, 2000 and implemented through various Regulations. (Bill 140 replaced the original capping legislation of Bill 79 introduced and approved in 1998). 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. The funding of the capping protection is paid for on a Region wide-basis. The Region of Durham acts like a banker in this process. For example, the total cost of the capping protection for commercial tax class is paid for by the other commercial properties throughout the Region by having a portion of their property tax decrease withheld (clawed back). As part of the Region-wide process, the City of Pickering uses a Provincial database program called "Online Property Tax Analysis" (OPTA) to verify non-residential assessment data. Every municipality within Durham Region uses the OPTA system. Assessment Review Board decisions and Minutes of Settlement decisions have been incorporated into the capping calculations up to the "freeze" date of May 23, 2014. Bill 83- Legislative Changes to Capping Legislation In 2004, the Province passed Bill 83, Budget Measures Act, 2004, which provided for various optional tax tools that could be used for the non-residential tax class. In a two tier municipal government structure, the,upper tier has the option to select all or some of the tax tools. These tax tools consisted of the following options: 1. Assessment-related increase cap raised from 5% to 10%. 2. Minimum annual threshold increase of 5% of total CVA property taxation. 3. Billing threshold established whereby a property that is within the $250 of its CVA based taxation is required to pay its full-CVA property taxes. 4. The minimum CVA tax for new construction properties was 60% in 2006. New construction properties are now fully phased-in at 100% CVA tax. 367 Report FIN 16-14 July 7, 2014 Subject:. 2014 Final Tax Due Dates for Commercial, industrial and Multi- Page 3 Residential Realty Tax Classes The purpose of these tax tools is to accelerate the movement of non-residential taxpayers to full CVA taxes (such that taxes are calculated using Current Value Assessment multiplied by the corresponding tax rate). The Region of Durham adopted all of the tax tools referenced above. Under the Municipal Act, Subsection 343(1), the tax bills must be mailed 21 days before the due date. Taxation staff are cognizant of this legislative requirement and design the tax billing process to meet this requirement. The coordinated efforts between OPTA and Durham Region municipalities have accelerated the capping calculation process over the last few years, allowing the capping `freeze' to be completed earlier in the • year. This has provided an opportunity for the City to set an earlier tax due date for non- residential property tax groups. Table One 2014 Billing Due Dates February 27 April 29 June 26 September 26 Instalment Dates Residential X X X X 4 Non-residential X X X 3 As the above table indicates, the residential taxpayer has four instalment dates and the non-residential taxpayer has three dates. In the past, the City has provided indirect cash flow assistance to the non-residential taxpayer by providing them the advantage of skipping the June instalment date, and by having the final instalment due in the fall. This year, taxation staff are still recommending that Council continue with the June 'payment holiday'. Attachments: 1. By-law to establish the 2014 Final Tax Instalment and Due Date for the Commercial, industrial and Multi-Residential Tax Classes. Prepared By: Approved/Endorsed By: Donna DeLong Stan Karwowski Supervisor, Taxation Division Head, Finance & Treasurer 368 Report FEN 16-14 July 7, 2014 Subject: 2014 Final Tax Due Dates for Commercial, Industrial and Multi- Page 4 Residential Realty Tax Classes Paul Bigio Director, Corporate ervices City Solicitor Recommended for the consideration • of Pickering City Council 00totg. 20, 20/4 Tony Prevedel, P.Eng. Chief Administrative Officer • • • 369 The Corporation of the City of Pickering I TOREPORT#I'1►4 By-law No. XXXX/14 Being a by-law to establish the 2014 Final Property Taxes and Due Date for the Commercial, Industrial and Multi-Residential Tax Classes • Whereas it is necessary for the Council of The Corporation of the City of Pickering, pursuant to the Municipal Act, 2001, S.O. 2001, c.25 as amended, to pass a By-law to levy a separate tax rate on the assessment in each property class; and, Whereas the property classes have been prescribed by the Minister of Finance under the Assessment Act, R.S.O. 1990, ch.A.31 as amended, and its Regulations; and, Whereas it is necessary for the Council of The Corporation of the City of Pickering, pursuant to the Municipal Act, 2001, S.O. 2001, c.25 as amended, to levy on the whole rateable property according to the last revised assessment roll for The Corporation of the City of Pickering; and, Whereas the Regional Municipality of Durham has passed By-law No. 13-2014 to establish tax ratios, and By-law No. 15-2014 to adopt estimates of all sums required by The Regional Municipality of Durham for the purposes of the Durham Region Transit Commission, and By-law No. 16-2014 to set and levy rates of taxation for Regional Solid Waste Management, and By-law No. 14-2014 to set and levy rates of taxation for Regional General Purposes and set tax rates on Area Municipalities; and, Whereas it is necessary for the Council of The Corporation of the City of Pickering pursuant to the Municipal Act, 2001, S.O. 2001, c.25 as amended, to levy on the whole rateable 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. 7331/14) before the adoption of the estimates for the current year; and, Whereas sub section 342 (2) of the Municipal Act, 2001, S.O. 2001, c.25 as amended, permits the issuance of separate tax bills for separate classes of real property for year 2014. Now therefore the Council of the Corporation of the City of Pickering hereby enacts as follows: 1. For the year 2014, The Corporation of the City of Pickering (the "City") shall levy • upon all Property Classes (Residential, Commercial, Industrial and Multi- residential) as set out in By-law No. 7358/14 of Schedule A, the rates of taxation, for the City of Pickering, the Region of Durham and for Education purposes on the current value assessment. 370 ' By-law No. Page 2 2. Where applicable, taxes shall be adjusted in accordance with Bill 140, as amended and its Regulations. 3. The levy provided for shall be reduced by the amount of the interim levy for 2014.. 4. The 2014 final tax calculations for the industrial, commercial and multi-residential realty tax classes is based on a freeze date of May 23, 2014. 5. The 2014 taxes owed for the commercial, industrial and multi-residential assessed properties shall be due in one instalment on September 26, 2014, 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 instalment 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 pursuant to subsections 345 (1), (2) and (3) of the Municipal Act 2001, S.O. c.25 as amended. The Treasurer shall collect by distress or otherwise under the provisions of the applicable statutes all such taxes, assessments, rents, rates or instalments or parts thereof as shall not have been paid on or before the several dates named as aforesaid, together with the said percentage charges as they are incurred pursuant to sections 349, 350 and 351 of the Municipal Act 2001, S.O. c.25 as amended. 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 is to come into effect on the date of its final passing. By-law passed this 14th day of July, 2014. David Ryan, Mayor Debbie Shields, City Clerk . I 371