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Home My WebLink AboutCS 17/0013 6 \.�y OF P/C,� � �� REPORT TO COUNCIL FROM: Gillis A. Patcrson DATE: August 2, 2000 Director, Corporate Services & Treasurer REPORT NUMBER: CS 17-00 SUBIECT: 2000 Finnl Property Tnx Billing for Commercinl, Industrinl & Multi-Residential Propertics (Bill 79) RECOMMENDAT[ON: That it is rccommcnded that report CS 17-00 of the Dircctor, Corporate Scrviccs & Treasurer be receivcd for information anJ that: I. lhe Direclor, Corporate Scrvices & Treasurer bc aulhorizcd to issuc thc FINAL 2000 Tax Bills for commcrcial, industrial anJ mulli•residcntial propertics with a duc datc of October 13th,2000; 2. thc Dircctor of Financc & Trcasurcr bc auA�orizcJ to makc any changes or undcrtakc any actions neccssary, including allcring Ihc duc datc, in orJcr to ensurc thc tax billing proccss is complctcd; 3. lhc ncccssary Dy-Law altachcd to this rcport bc rcad thrcc times anJ npproved; and, 4. thc nppropriatc slaff of thc Ciry of Pickcring bc givcn nuthoriry to givc cffccl thcreto. ORIGIN: Dircclor, Corporatc Scrviccs & Trcasurcr AUTHORITY: The Municipal Act, R.S.O. 1990, as amenJed, and Regulations The Assessment Act, R.S.O. 1990, as amendcd, and Regulations The Education Act, R.S.O. 1990, as amended, nnd Regulations FINANCIAL [MPLICATIONS: The uttuched ByInw is for thc FINAL billing of property taxes for commcrcial, industrial and multi•residential properties. Taxation billing for the Bill 79 realty tux clnss wns dclaycd duc to the unavt+ilnbility of thc On-Linc Property Tax Annlysis (OPTA) datn which thc City rcquircs to process its final tax billing. This billing will raise npproximutely $17.1 in property tnxes for thc City, Durham Rcgion and School Boards. EXECUTIVE SUMMARY: Adoption of the ubovc recommcnd¢tions and paasing thc attached ByLnw providcs for the finnl 2000 tax billing for thc commcrcinl, industriel und multi-residcntinl propertics. � Report to Council CS 17•00 Datc: Auguet 2, 2000 Subject: 2400 F1NAL Property Tax Billing for Bili 79 Realty Class Page 2 13 �7 BACKGROIIND: Thc City of Pickcrin� wiil soon bc in a position to issuc thc final 2000 property tax bili in uccordonce with thc "10-5-5" capping Icgislntion (BiU 79) passed by the Province on Dcccmber 18, 1998 and implemented through variou; regulnlions. This Iegislation was put in place to limit assessment refortn related increases to 10% in 1998 and 5% in cach of 1999 and 2000 on commcrciul, industrial and multi-residential properties. Undcr this Iegislution, property owners facing incrcases due lo property assessment rcfortn had thcir increascs "capped" (reduccd). Conversely, those properties experiencing dccrcases werc limited to that pertnitted undcr thc Icgislation. This mcanl that taxcs havc to be "clawed back" from those experiencing dccreases to fund lhe loss of revcnue resulting Gom the cappcd incrcases. In 1999, the total tax bill for the Bill 79 really class was due on one installment on December 15'h. For this year, the City of Pickcring issued an interim tax bill to the Bill 79 rcalry class with two installmcnt dntes (Fcbruary 25ih anJ April 2G'".) The proposcd final installmcnt date of Ocrober 13'h, provides thc Bill 79 realry class wilh additional time to pay their tax bill in contrast to thc residential tax class which wcrc Juc in two installmcnts (Junc 29'h and Seplember 27'h.) The onc inslallmcnt datc will assisl thc City in managing its cash Ilow duc to thc facl a School Board paymenl of 59.8 million is rcquircd on 5cptcmbcr 30'h . Recommcndalion 2 will allow thc Dircctor of Corporatc Scrviccs & Trcasurcr somc latitudc, limilcd by Provincial Iegislation, in effecting whatever may be necessary in ordcr to ensure thc taxcs are billed properly and in a timcly Cashion. Any rcviscd duc date cstablishcd by thc Trcasurcr would 6c govcmcd by Scction 399 subscction (G) of thc Municipal Ac1 that statcs that thc duc datc is fixcd as 21 Jays aRcr thc billing dalc. Btll 79 Stntlstics Bill 79 limits thc 2000 tax incrcasc to 20°/a (of thc 1997 taxcs) plus any municipal incrcase Gom 2000 and previous ycars. (Tl�c Region oj Durhu�n iucrcused Ibeir �ares jor /999.) . Thc "cappcd incrcasc" is paid for by property owncrs who havc thcir asscssmcnt relatcd dccrcasc cla�ved back. The Rcgion wide claw back perccntagcs for 2000 arc prescnled 6elow in Table Onc. Tablc Onc Comparison of Property Tax Claw back Pcrccntagcs for 1998, 1999 and 2000 For 2000, nn industriul property owner will be able to keep 39.7% (1 — 603%) of thcir assessment relaled decrcase. As the capping limit incrcascs (15% to 20%), fcwcr propertics require thc benefit of the cap and thereCore, less moncy is rcquircd from thc clnw bnck property owners to pay for the cnpping prolection, As the cnpped limit incrcases, fewcr propertics will requirc the hcnefit of thc cup and thereCorc. the clnw bnck perccntogc should continuc to dccreasc over time, For thc industriul rcnity cluss, n large nutomotive purts supplicr was succcssful in appcaling thcir asscssmcnt which trnnslated into fcwcr cluw back dollars uvnilnblc and thcrcforc, thc clnw back percentage did not dccrensc to the same dcgree as thc other two components. ' Report to Council CS 17-00 Dntc: Auguat 2, 2000 13 $ Subject: 2000 F[NAL Property Tax Biiling for Bilt 79 Rcalty Class Page 3 Within each reulty class therc nre tox rcductions and increascs due to Bill 79. Tablc Two provides u detuiled breakdown regurding tox shifts umong the various rcalty classcs. Tablc Two City of Pickering Breakdown of 2000 Tax AJjustments by Dollar Changes For the claw back propenies, the dollar changcs vary based on the assessed value of ihe property and the 19971arces pnid. The "shortfall" of S1,102,455 will bc provided for by a transfer of funds from thc Rcgion similar to 1998 and 1999 whcn residcntial propertics in Pickcring assistcd in funding shortfalls mainly in Oshawa and Whitby. Table Thrce provides a breakdown of the numbcr of 2000 tax adjuslmcnts by rcalty class. Tablc Thrcc Ciry of Pickcring Breakdown of 2000 Tax Adjustmcnts by Rcalry Class Numbcr of Propertics Col. A Col. 8 Col. C Col. D 1998 1999 2000 Incrcase (Decrease) Col. B — C Mulli-residcntial Claw back G G 7 I Cappcd Incrcasc 3 4 4 0 No Capping Effcct 0 I I 0 Commcrcial Claw back 220 245 249 4 Cappcd Incrcase 349 259 224 (35) No Capping Effcct 70 131 168 37 Industrial Claw back 40 40 3G (4) Cnppcd Increase 12G 103 84 (19) No Ca in Effect 38 47 G3 1G Table Thrcc indicates that thcre has been u shiR betwcen the capped incrcasc and no capping effect properties. Each year, as Ihe capping percentage increascs, the numbcr of propertics receiving capping protection should decrease. Currcntly, thcre are approximately 291 propertics who havc to pay an additional amount for thcir 2000 taxes. IYew Wrinkles for Bill 79 Realtv Class Thc significant decrcuse in the multi residenlial clnw back perccntage translated into property lax dccrcascs for thcsc propcAy owners. Undcr thc Tenunt Protcction Act (TPA), rcnts ure automntically rcduced if the municipal property taxes puid by the lundlonl have dccrcasal by nt Icast 2.49% Gom thc prcvious ycar's tnxes. Property taxcs for thc currcnt ycar nrc comparcYi to Ihe property taxcs from the pervious ycnr to dctcrtninc the perccntngc taxcs hnvc dccrcascd (e.g. 2000 taxcs compnrcd to 19991axcs.) If the colculntcd perccnt�gc dccrcnsc is morc than 2.49%, the property is cligiblc for a rcnt rcduction. Thc rcnt rcduction is calculutcd by multiplying thc � Report to Council C5 17-00 Datc: August 2, 2000 Subject: 2000 FINAL Property Tax Billing for Bill 79 Rcally Class Pagc 4 13 3 perccntnge dccrcase in property tanes for the building by 20%. Thc rcnt rcduclion factor of 20% is uscd becausc, on nvcragc, taxcs rcpresent 20%of Ihc Inndlord's totnl rcnt. Exnmplc: 1999taxcs $146,767 2000 tnxcs $141,841 Pcrcentnge decrease in taxes for thc building is: $146,767-$141,841 X 100= 335% 5146,7G7 Pcrccntagc rcnt reduction for all units in thc builJing is: 3.35% X 20% = 0.67% Therefore, u tenant that pays SG00 per month in rcnt, a�oulJ receive a monthly rcduction of $4.02 for n tolal ycarly savings of 548.24. Thcrc are six multi residcntial properties in Pickcring that have a tax dccrcasc that is greatcr than 2.49°/a. Thc dccrcascs rangc from ].35% to 3.83°/a. Thc Act, rcquires thc municipality to scnd reduction noticcs first to thc landlord thcn to tenants. Thc noticc is duc to thc IandlorJ by Septcmbcr IS'" anJ Dccembcr 15'h to thc tcnant. Thc notication stcp cnsures that tax savings arc passcd on to both landlords and tenants. 611179 Speed Bumas — New Construction Thc existing 10-5-5 capping program (iniplcmenreJ on Jununq• J, 1999 jor /998 nnJ c.rprri�ig on December JJ, 1000) incluJed nca�ly constructeJ propertics. Properlies thal did not exist in the base ycar of 1997 wcrc included in the capping calculation by reslating thcir asscssment as iC thcy existcd in 1997. In thc 1999 On�ario Budgct, thc Provincial govemmcnt madc a commitmcnt to Icvcl thc playing ficld bctwccn nc��ly constructcd business propertics and thosc that cxislcd prior to lhc introduction of thc caps. Thc Provincc fulfilled its commitmcnt by passing thc "Alorc Tnr Curs jor Johs, Gro�rl6 onJ Prosperilr Acl " in Dccembcr 1999, to changc thc tax trcatmcnt of ncwlyconstrucicJ busincss propertics undcr lhc 10-5-5 cap. The ncw tulcs only apply to ncw buildings und not lo propertics that havc undcrgonc rcnovalions. Undcr thc rcviscd rules, taxcs for ncwly built Bill 79 propcnics will bc thc lowcr of: • Curmnt value asscssment of thc ncw property is adjusted to 1997 property valuc (by using n Provincially regulated "ne�+� caislnrclion Jnclor') anJ taxes are then calculated by using the 10-5-5 mcthodology. • Thc avcragc levcl of nsscssmcnt of up lo six comparablc property's (adjuslcd to 1997 property valucs) is comparcd to the adjusted 1997 property valuc of thc ncw construction. If the avcrage Icvcl of assessment is lower, that uverage factor is thcn used for thc new property. As indicated abo��e, Bill 14 was introduced in late Decembcr 1999 and applies to new construction for the ycar 2000. Howevcr, thc ncw rcgulation also applics to ncw propcnics constructcd in 1998 nnd 1999. Taxation staff urc curtcntly investigating whcthcr any tar rcbatcs are rcquired for thc years 1998 and 1999 duc lo thc ncw rcgulation. Onc of thc morc intcresting aspects of Bill 14 is thc up to six comparablc propertics comparison. Thc local asscssmcnt officc (OPAC) wns responsiblc for dctcrtnining thc compurablc propcnics. Under Bill 14, thc City of Pickaring must provide owners of ncwly constructed propertics �vith n list of thc comparnblc properlies used. Thc property owncr hns up to nincty days to oppcal tlic asscssmcnt office list of compamblc propertics to Ihc Asscssmcnt Rcvicw Baard nnd can rcqucst that altemntivc propertics to be used for thc comparison. ' � Repori to Council CS 17-00 Date: August 2, 2000 14 � Subjcct: 2000 FINAL Property Tax Billing for Fiili 79 Realty Class Page S ATTACHMENTS: I. 2000 Tax Billing By-L,Aw For Commcrciul, Induslrial anJ Multi-Rcsidcntial property owncrs. Prcpareci By: Approvccl / Endorscd By: /� _ \ // Stan Kanvowski, Gillis A. Patcrson, Munagcr of Financc Dircctor, Corporatc Scrviccs & Trcasurcr GAP:vw Attachmcnt Rccommcnded for thc considcralion of Pickcring Ciry Council — ' �� 60 iomas 1. 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WHEREAS thc Regional Municipality of Durham has passed By-law No. 9-99 to limit lax reform related property tax increases to ]0% in 1998, a furlher 5% in 1999 and a furthcr 5% in 2000 for industrial, commercial and multi-residcntial properties in the Region of Durham as provided for under Division B of Part XXII.2 of the Municipal Act; and, WHEREAS Provincial ReEulations require reductions in tuxes for certain classes and or subclasses ofproperty; und, WHEREAS the Rcgiunal Municipality of Durham has passcd E3y-law No. 65-98 opling to have Ihe optional properly clnsses consisling of lhe otTice building propedy class, shopping cenlre properly class and largc industrial property class wilhin thc Rcgion of Durham; nnd, WHEREAS thc City of Pickcring passcd By-Law No. SG83/00 to providc for thc icvying of taxcs on all properties as per Schcdulc A attachcd; anJ, WHERLAS it is neccssary for tlu Council of Thc Comoralion of tl�c City of Pickcring pursuant ro thc Municipal Act, to Icvy on thc w�holc ratablc property according lo thc last rcvised asscssmcnt roll for Thc Corporation of thc Ciry of Pickcring thc sums scl forih Cor various purposes set out in Schedule A, for lhc current ycar; and, WHEREAS un inlcrim Icvy was madc by lhc Council of Thc Corporation of thc City of Pickcring (pursuant to Dyluw No. SGIO/00) before thc aJoplion of lhc cslimates for lhc currenl year;and, WHEREAS sub seclion 392(4) and (5) of lhc Municipal Acl, as amcnded, pemiits the issuance of separale lax bills for separatc clnsses of rcal properly for ycar 2000. NOW THERE�ORE TH� COUNCIL OF THE CORPORATION Of THE CITY Or PICKERING HEREBY ENACTS AS FOLLOWS: For thc ycar 2000, lhere shall bc levied and collected upon thc commercial, industrial and multi-residential asscssment the rates of taxation per currcnt value asscssment for gencral purposcs as set out in Schcdulc A, attached hcreto. 2. The levy provided for shall bc reduccd by thc amount of thc interim levy Cor 200U. 3. The 2000 final tnx calculations for thc Bill 79 realty classes shall bc on the frozen nssessment listings as ofJuly 7, 2000. 4. The decreasc rctuincd perccnlage for thc Bi1179 realty class is outlincd below: Mulli residcnlinl 0.5122G1 Conunerciel 0.541 I G9 industrial 0.39G958 5. The 2000 tnxcs owcd for lhe commercinl, industrial and multi•rcsidcntial a.esessed properiiea ehall bo due in ano inatallment on Octuber l3, 2000 or as adjustnl by the Treasurcr. ' ' � 143 6. Except in lhc casc of laxcs payablc unJer Scclion 33 nnJ 34 of U�c Asacasmcnt Act, R.S.O. 1990, c.A31, ns amcndat, thc percenlagc chazgc ns a penalty for non•paymcnt of tuxes and monies payablc as laxes ahall be udded to evcry taz or esscsamcnt, rent or rate of any installment or pn�t thercof rcmaining unpaid on thc first day of defaull and on lhc � first day of cach calenJar monlh thcrcuRcr in which such dcfault continucs but not aRcr I Dcccmber 31 of t,he ycar in which the twces become payablc, and it shall bc thc dury of a Tux Colleclor, immcdintely to colicct nt once, by distress or othenvise undcr thc provisions of the applicable slututes ull such lnxes, assessments, rents, ratcs or instnllmenls or pa�is the,-cof as shall not have becn paid on or before thc scveral Jales named as nforesaid, together wiU� the said percentage chargcs us thcy ure incurtcd. 7. IC any section or portion of this By-law is found by a couri of competent jurisdiclion to be imalid, it is the intent of Council for The Corporation of thc City of Pickcring that all remaining sections nnd portions of this By-law continue in force nnd efCect. 8. Tuxes shall be payable to the Treasurcr, City of Pickering. 9. This By-law comes into Corcc on thc dalc of its final passing. BY-LAW rcad n 6rst, sccond and Ihird timc and finally passcd ihis day of August, 2000. Wnync Arllwrs, Mayor C. Annc Grccnlrcc, Dcpury Clcrk i'