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HomeMy WebLinkAboutFIN 10-20crry of DICKERING Report to Council Report Number: FIN 10-20 Date: July 27, 2020 From: Stan Karwowski Director, Finance & Treasurer Subject: 2020 Final Property Tax Due Date for Commercial, Industrial, and Multi - Residential Realty Tax Classes File: F-4200-001 Recommendation: 1. That Report FIN 10-20 of the Director, Finance & Treasurer be received; 2. That the Director, Finance & Treasurer be authorized to issue the final 2020 Property Tax Bills for Commercial, Industrial and Multi -Residential properties with a due date of October 28, 2020; 3. That the Director, Finance & Treasurer 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 as indicated in this report. Executive Summary: Adoption of the above recommendations and passing the attached By-law provides for the final 2020 property tax billing for non-residential realty 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 2020 property taxes for commercial, industrial, and multi -residential properties. This billing of final non-residential property taxes will raise approximately $33.5 million for the City, Region of Durham, and the School Boards. Tax bills for the residential tax classes were mailed during the first week of June, with due dates of August 27th and October 28th. FIN 10-20 July 27, 2020 Subject: 2020 Final Property Tax Due Date for Commercial, Industrial Page 2 and Multi -Residential Realty Tax Classes Discussion: In 1998, the Province introduced Current Value Assessment or CVA on a Province -wide basis to replace the old patchwork system (throughout the Province) where each municipality used a different base year for assessment purposes. The end result of CVA was that some businesses experienced property tax increases well above 100 per cent. 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 2020 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 cent 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 had 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 "cut-off date" of March 31, 2020. 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 consist of the following options: 1. Annual threshold increase of previous year's annualized taxes raised from 5 per cent to 10 per cent. 2. Annual threshold increase capped at 5 per cent of previous year's CVA taxes. 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 per cent in 2006. New construction properties are now fully phased -in at 100 per cent CVA tax. FIN 10-20 July 27, 2020 Subject: 2020 Final Property Tax Due Date for Commercial, Industrial Page 3 and Multi -Residential Realty Tax Classes The purpose of these tax tools was 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). Bill 144 — Legislative Enhancements to Capping Legislation In 2015, the Province provided additional enhancements to the capping program through Bill 144, the Budget Measures Act, 2015. Beginning in 2016, municipalities are able to increase the annual cap from its current level of 5 per cent of previous year's CVA level taxes up to a new maximum of 10 per cent. In addition, municipalities are able to move properties directly to CVA level taxes if they are within $500 of CVA level taxes, up from the current $250 threshold. The annual cap of up to 10 per cent of previous year's annualized taxes would be maintained. For 2020, the Region of Durham has adopted all of the tax tools and enhancements referenced above, which will reduce the potential remaining life of this program and the protection requirements. 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. Table One 2020 Billing Due Dates Feb. March April May June July Aug. Sept. Oct. Regular Interim Revised Plan Interim Interim Penalty Penalty Waived Waived Final Final As the above table indicates, Pickering is providing the non residential taxpayer an additional month to pay their property taxes in contrast to the traditional billing pattern. 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. Taxation staff are recommending that Council continue with the payment deferral for non-residential properties which results in only one final due date. It is staff's understanding, that Pickering is one of the few municipalities that provides the payment deferral for the business community. Communication Strategy In addition to mailing the tax bills, the City will advertise the tax instalment due dates on the City's webpage and in the Pickering News Advertiser prior to each tax due date. FIN 10-20 July 27, 2020 Subject: 2020 Final Property Tax Due Date for Commercial, Industrial Page 4 and Multi -Residential Realty Tax Classes Attachments: 1. By-law to Establish the 2020 Final Property Taxes and Due Date for the Commercial, Industrial and Multi -Residential Realty Tax Classes Prepared By: Approved 1 Endorsed By: AN ------- -- Mike Jones Supervisor, Taxation c -.-- Stan Karwowski Director, Finance & Treasurer Recommended for the consideration of Pickering City Council Marisa Carpino Interim Chief Administrativ fficer Attachment #1 to Report #FIN 10-20 The Corporation of the City of Pickering By-law No. XXXX/20 Being a By-law to Establish the 2020 Final Property Tax Due Date for the Commercial, Industrial and Multi -Residential Realty 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. 08-2020 to establish tax ratios, and By-law No. 10-2020 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. 11-2020 to set and levy rates of taxation for Regional Solid Waste Management, and By-law No. 09-2020 to set and levy rates of taxation for Regional General Purposes and set tax rates on Area Municipalities; and, Whereas an interim levy was made by the Council of The Corporation of the City of Pickering (pursuant to By-law No. 7730/19) 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 2020 Now therefore the Council of the Corporation of the City of Pickering hereby enacts as follows: 1. For the year 2020, 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 Schedule "A" of By-law 7752/20, the rates of taxation, for the City of Pickering, the Region of Durham, and for Education purposes on the current value assessment. 2. Where applicable, taxes shall be adjusted in accordance with the Continued Protection for Property Taxpayers Act, 2000, as amended and its Regulations. By-law No. Page 2 3. The levy shall be reduced by the amount of the interim levy for 2020. 4. The 2020 final tax capping calculations for the industrial, commercial and multi - residential realty tax classes are based on a freeze date of March 31, 2020. 5. The 2020 taxes owed for the commercial, industrial and multi -residential assessed properties shall be due in one instalment on October 28, 2020, 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 27th day of July, 2020. Kevin Ashe, Deputy Mayor Susan Cassel, City Clerk