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FROM: Qillis A. Paterson
Director of Finoncc
REPORT TO COUNCIL
DATE: April 6,1998
REPORT NUMBER: TR i U98
SUBJECT: Proposed new shering errangement of Payments-in-Lieu of Taxes
under thc Feir Municipul Finance Act. (Pnliminery)
RECOMMENDATION:
It is recommended that this Report No. TR I 1/98 bc reccived by Cowcil for
infortnution.
ORIGIN: Director af Financc.
AUTHORITY:
Various Fedeml and Provincinl Swtutes.
FINANCIAL IMPLICATIONS:
Potentinlly a mnjor adverse impact on ►hc tnx rotc of the Town for lowcr-ticr purposes if
such a chnnge in the shnring artangements of puymcnt•in-lieu of inxcs is implemenlcd.
EXECUTIVE SUMMARY:
Pickcring and other mwicipalities receiving Payments (Gmnts) in Lieu of Taxes will
likely bc faced with new emmgements for sharing thesc payments with the upper ticr
municipnlity nnd school bonrds, beginning in 1998.
Originnl concems were that Pickering was going to lou as much as SS million in 1998
due to this change. It now appears we might lose 51.7 million to ihc upper tier only in
1998. We will, however, "gain" lhe bene►it of sharing in similor puymcnis to thc olher
municipalities in Dutham so thet the net loss is closer to SI million in 1998. It is
anticipated thet fiuther chnnges negadvely impacdng Pickering to the grcnter degmc will
become ellectivc in 1999.
BACKGROUND:
The purpose of this Report is to forewam thc Council of thc enticipatcd major finnncial
implications of this proposed new shnring azrnngemrnt for Pnyments-in•lieu of Tnxes
(P.I.L's) which wiil impact all eight of the constitucnt lowar-tier munlcipulides in thc
Regfon of Durhwn.
,
Report ro Cowcil TR 11/98 Apri16,1998
Subject: Proposed new shering arrongement of
Payments-in-Liou of Taxa under the
Fair Munlcipal Finuncc Act. (Prcliminary) pag� 2
In Report N98-F•13, dated Febn�ary 4,1998 to the Regionol Council through the Region's
Finnnce and Administredon Committce, thc Regional Commissioner of Finnnce provided
an updute on the Ontario Fair Assessment System, specificnlly the payment-in-licu of
taxes end the sharing of the paymrnts under the new Actunl Vniue Asscssment Systcm by
the loweo-tier and upper-tier mwicipalilies and local school bonrds.
Under Ihe eii�tinB aituatioo; Provincial and Fedcrnl govemment properties are exempt
from properly tnxelion. However, the Province and Fedeml govemments provide
payment-in-lieu of tnxu (PIL's) directly to lower-tier municipnlities as campcnsntion for
ihe loss of tnxution ihat result from govemmenl ownership of the applicable propeAies.
Currcndy, lhe area municipalities in Durhnm rcceivc approximntcly S16.1 mil�ion in
PIL's, based on 1996 dnta Approximately Sl.l million was ullocated to oCfset the
Regionnl levies; 51.8 million was ullocated to offset the levies of school bonrds nnd S13.2
million waa retained by thc aren municipulitics to oft'set ihe lower-ticr Inx levies.
Under ihc proposed full ahrdn¢ arrangement (re�ulntions to be cnncted under lhe Fnir
Municipnl Finance Act) and ussuming the sume omount of PiL's rcccived by the Arcn
Municipalities in Durhum (Si6.l million); npproximntcly 54.3 million would bc shnmd
with lhe Region (an incrcnse of S3.1 million); approximalely 57.6 million would tx
shnred with school boards (nn incrcasc of 55.7 million); nnd 54.2 million would bc
relained by the Area Municipulitics ( n decrcuse af 58.9 million), This, of course, would
bc lhc worst uenario for Arcn Mw�icipalitics, us propcAy lares for lowcr-licr
municipalities would go up and thosc for thc Region und school bourds would go down,
but all things being equnl, thc impact on thc taxpnycrs Rcgian wide, would bc nil.
Attnchmenl 1(which is n copy of an nttnchmcnt I of Report N98•�-13 of the Regional
Commissioner of Finnnce dnted Februnry 4, 1998) illustralcs Uwt ull things orc not cqunl,
and Pickering's nnd Clerington's locnl tnxpnyers would cxperience m m�jor impact from
that changc in sharing.
It is wderstood, however, that the full sharing armngements with school buards shown in
Attachment 1 will not occur in 1998, r.o doubt due to Ihc chnnge in funding amingement
for schools implemented by the Province last ycar.
T6e °moat Ilkely" ah�rinQ arronQement t� providcd on Attnchmcnl 2. lt assumcs thnt
full shnring of PIL's for school bontds will not bc done in 1998, ut least, and this rcduccs
the impact on Aren (Local) Municipalities dramntically.
Under this nrtungemcnt, Area Municipalities will losc 53.1 million in PIL's aa comparcd
to 58.9 million under the full sharing scennrio. In Note 4 of Attac6ment 2, it b
Indlcated that t6e eetimated net tinancial impaci tor loal ta:pryen io Plckeriag
will be a a6ortfdl ot S1.08 mWton under thb mo�t Ilkely eharing artaogemeot tor
1998. This has been calculntcd aa a net reduction in Regional Mill Ratc rcquircments of
5620,U00 nnd u net increase of S1.7 million for local requirements.
Tho ubove•notai ostimetcd imoucts to Pickering's taxpuyers doal with thc impacts of thc
chnnge in shering ertangements far PIL's and do not tekc into aceount Ihe chengcs from
Provinsial downloading ond the new AVA syatem. In other words, thc impacts providcd
above and in the attachments should be tnwted with wudou. In addition, no rcRUlntiom
have lxen passed at 1h(s dnte govemIng the trcatmmt of PIL'a and so this report is
" re�P tminery„ only
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�.� Repoct W Council TR 11/98 "° April 6,1998
Subjat: � Proposed new s6erlag ertnngemont of
Paymeats-in•Lieu of Texes wder thc
FaIr Municipel Finance Act. (Prolfminury) Page 3
ATTACHMENTS: (1) Attachment t
(2) Attactunent 2
Prepared By:
Gillis A. Paterson
dAP/md
Attachments
Copy: (ienerel Meneger
Approvcd/Endorsed By:
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09HAWA
AJNf
CLARINOTON
PICNERINO
NhItTBY
BROCN
SCUG00
UXBRIDOE
TOTAL
Nalea:
REGIONAL MUNICIpALIT� OF DURHAM
1998 PAYMENTSdN-LIEU BY MUNICIPALITY
OOOs
E7(IST1N6 SHARINO ARRAN6EMENT POSSIBLE FULL SHARINO ,
� tl Iwr. n
Shared Shared RaWlnad 31ured Shared ReWlnad
With With By Wlth Wllh By
Reglon Schoois Looal TOTAL Repion Sehoois Lowl
t : o ai•z•o e e �
524.0 395.7 1,840.8 2,7f40.4 737.1 BB3.1 1,1402
34.6 82.8 370.0 487.7 112.5 2332 141.4
11.8 23.8 2,348.0 2,389.7 487.9 1,397.8 488.1
414.1 1,088.6 8,58tl.3 8,OB9.0 2,O7B.9 �,4772 1,532.8
64.8 92.1 1,832.0 1,778.7 878.5 339.2 781.1
33.7 67.9 37.1 128.7 33.7 67.8 37.1
18.9 41.7 1�3.0 201.6 L3.0 80.0 58.4
35.8 91.8 1b2.4 278.9 78.8 131.0 70.4
1,125.4 1,874.2 13,109,5 18,109.1 4,270.1 7,699.4 4,238.6
1 Inlortnatbn provlded by Treouron of Area MunklpalHbe.
2 AAocatbn ol PIL9 b boud upon Ihe �hero of loal taze� rebed 6y ihe Laal
munklpdMy� Ilw ReGbn ond Uro Sdi»I Boerd�.
7 Numhen m�y nol b+lanca W the dollu due to rouMinp.
CHANGE
Increase or (Decrease)
TOTAL Raglon Schools Lacal
e.s.e.r aai iwa� u.ra
2.790.4 213.1 487.4 Q00.4;
407.1 78.0 150.8 (228.8;
2,383.7 478.1 1,373.8 (1,&18.9;
8,088.0 1,884.9 3,388.8 (5,053.�;
1,778.7 823.9 247.1 (871.0;
128.7 0.0 0.0 0.0
201.5 48.2 38.3 (84.5;
278.9 42.7 39.3 (82.0;
18,109.1 3,144.7 5,725.5 (B,B70.0;
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OSHAWA
AJAX
CUIRINOTON
PICKERINO
WHRBY
BROCK
SCUG00
UXBRIDOE
TOTAL
RE�IONAL MUNICIPAUTY OF DURHAM
1998 PAYMENTBaN•LIFU BY MUNICIPALITY
OOOs
EXI9TINa SHARINO ARRAN6EMENT POSSIBLE SHARINO ARRAN6EMENT • 1898 CHAN6E
(FullBhatinp Not Dona wllh 9chools)
pa. �I Mm»
Shared 8harod Ratalned Shared Shared Ralalnad Increasa or (Oecreoaa)
With Wllh By Wlth Wllh Py
Reglon Schaol� Loul TOTAL Reglon Schools Local TOTAL Reglon Schoola Locat
� a o aimo � e r as.ea r•si �o-o �nro
624.0 395.7 1,840.8 2,780.4 737.1 995.7 1,827.8 2,780.4 213.1 • (213
34.5 F2.8 370.0 �87.1 112.5 82.8 292.0 �87.1 78.0 • QB
11.8 2:i.9 2,348.0 2,383.7 487.9 23.9 1,871.8 2,389.7 478.1 • (478
414.1 1,088.6 8,689.3 8,080.0 2,078.9 1,088.5 4,921.8 8,009.0 1,884.8 - (1,G81
64.8 8<.1 1,&72.0 1,778.7 870.6 92.1 1,008.1 1,778.7 B23.fl - (829
33.7 b7.9 37.1 128.7 39.7 67.9 37.1 128.7 - • •
18.8 41.7 1�3.0 201,6 8�.0 �1.7 88.0 201.6 482 • (�A
35.8 81.8 162.1 278.8 78.8 81.8 109.7 27B.B �2.7 - N�
1,125.� 1,97I.2 13,108.6 78,108.1 �,270.1 1,87�.2 9,tiB4.8 18,108,1 3,1M.7 - (3,141
� � Nolet: t Infamalbn DrwWad hy Tna�unh d Mea MunldpdNMf.
� 2 Nbullon ol PIL'� p bued upon the �hara ol bul laxe� nbad by Ihe Loal .
�, . munkipally, iha Repbn md Ne SdwolBOaM�. However, N b aa�unad Ihal PILY Por tdioob xrould be
� � opacalad based on ihe eaL+Una ehaAna artenoemenl lor 1998 aa tupqeeled by cerlein Prmindal aletl.
� J Numben mry nol betence lo Ihe doAar due lo roundinp.
� �€ilimeled Imoad on Pkker4w ef o ruiutl ol tM chanae in eheArq erronoemanl� lor PIL'S
� � Aesumolbn� • FuA SharMU ol PILY nol done M 19981or Wroob ae �uaneeted M cedoin Prwlndal OfAClels,
�� (�) We aro aasuminq Ihtl Pkkednp'� sharo ol lhe Repbn'� requiromenle aro 40%.
.� (b) We oro Ipnakp IM I�U Ihd equh:abnt aseaumenl (or PIL's b a4eady �aken Inlo oceounl In eekut�Unp Ihe ollocalbm 1a.
� . rtpbnalpuryosee
. . - � (e) pkke�lfq's Repbnd Mill Rete RequdemenU wld reduce by epproxFneley 5820,000, I.e. 40%of lhe Inueue In Repbnd
��. . Revenue� ol 5�.1 miNmi • SBi0,000.
-. . . Comersely, Iha Town'e reaWromenU lor bcal ouroosea wlll be Inaec►ad by 51.7 millloa.
� � � The eetMneted net Imopd IAnandaMlla bal laxaaven witl be o ehoAleA ol S1 OB mlllbn
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