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HomeMy WebLinkAboutCS 23/01 -- REPORT TO COUNCIL FROM: Gillis A. Paterson Director, Corporate Services & Treasurer DATE: September 4,2001 REPORT NUMBER: CS 23-01 SUBJECT: 2001 Final Tax Due Date for Commercial, Industrial & Multi-Residential Realty Tax Class RECOMMENDATION: That it is recommended that report CS 23-01 of the Director, Corporate Services & Treasurer be received for information and that: 1. the Director, Corporate Services & Treasurer be authorized to issue the FINAL 2001 Tax Bills for commercial, industrial and multi-residential properties with a due date of October 29th, 2001; 2. the Director of Finance & Treasurer be authorized to make any changes or undertake any actions necessary, including altering the due date, in order to ensure the tax billing process is completed; - 3. the necessary By-Law attached to this report be read three times and approved; and, 4. the appropriate staff of the City of Pickering be given authority to give effect thereto. ORIGIN: Director, Corporate Services & Treasurer AUTHORITY: The Municipal Act, R.S.O. 1990, as amended, and Regulations The Assessment Act, R.S.O. 1990, as amended, and Regulations The Education Act, R.S.O. 1990, as amended, and Regulations FINANCIM, IMPLICATIONS: The attached By-law is for the FINAL billing of property taxes for commercial, industrial and multi-residential properties. This billing will raise approximately $15.4 million in property taxes for the City, Durham Region and School Boards. EXECUTIVE SUMMARY: - Adoption of the above recommendations and passing the attached By-Law provides for the final 2001 tax billing for the commercial, industrial and multi-residential properties. Report to Council CS 23-01 Date: September 4,2001 - Subject: 2001 Final Tax Due Date for Commercial, Industrial & Multi-Residential Realty Tax Class Page 2 BACKGROUND: The City of Pickering will soon be in a position to issue the final 2001 property tax bill in accordance with the capping provisions of Bill 140, Continued Protection For Property Taxpayers Act, passed by the Province on December 4, 2000 and implemented through various Regulations. 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. For this year, the City of Pickering issued an Interim Tax Bill to these realty property tax classes with two installment dates (March 12th and April 26th.) The proposed final installment date of October 29th, will not only coincide with the residential due date but provide additional time for staff and the printing service provider through the Royal Bank to finalize details in regards to the issuance of these bills. In addition, some property owners have been collecting interest from their tenants throughout the year in anticipation of the tax bill. The one installment date will assist the City in better managing its cash flow due to the fact a School Board payment of $9.8 million is required on September 30th . .- Recommendation 2 will allow the Director of Corporate Services & Treasurer some latitude, limited by Provincial legislation, in effecting whatever may be necessary in order to ensure the taxes are billed properly and in a timely fashion. Any revised due date established by the Treasurer would be governed by Section 399 subsection (6) of the Municipal Act that states that the due date is fixed as 21 days after the billing date. Bill 140 Statistics Bill 140 basically limits the 2001 tax increase to 5% (of the 2000 taxes) plus the municipal budgetary increase. In other words, Bill 140 puts a cap or ceiling on municipal tax increases. The capped increase is paid for by those property owners who have their assessment related decrease clawed back or with held. The cost of capping protection is funded with-in the same property tax class. This means that the capping protection provided to the industrial tax class is "paid for" by clawing back or with holding assessment related property decreases from industrial property owners. The Region wide claw back percentages for 2001 are presented below in Table One. Table One Region of Durham Comparison of Property Tax Claw back Percentages for 1998 to 2001 - Col. A Col. B Col. C Col.D Col. E 1998 1999 2000 2001 Change Property Class (Col.C D) Multi- 67.6% 66.5% 48.8% 100.0% N.A Residential Industrial 79.9% 66.7% 60.3% 29.6% 50.9% Commercial 74.2% 57.7% 45.9% 59.2% -28.9% For 2001, an industrial property owner will be able to keep 70.4% (1 - 29.6%) of their assessment related decrease. Report to Council CS 23-01 Date: September 4,2001 - Subject: 2001 Final Tax Due Date for Commercial, Industrial & Multi-Residential Realty Tax Class Page 3 The Multi-Residential realty tax class experienced a significant increase in assessment value as a result of the Province Wide Re-Assessment. (The re-assessment was based on the change in valuation dates from June 30, 1996 to June 30, 1999.) Multi-residential buildings are assessed using the income approach and with the change in rent controls, their incomes have increased and therefore, increased their assessment value. The higher assessment values increased the amount of capping protection required due to the fact municipal taxes were generally capped at 5% increase over last year. As a result of the higher assessment and 5% cap, there was a shortfall of approximately $2 million (Region wide) to fund the required capping protection. In order to decrease the amount of capping protection, the multi-residential tax ratio was reduced from 2.7103 to 2.4900. The lowering of the tax ratio translated into a lower tax rate that reduced the number of properties and dollar amount requiring capping protection. The multi-residential tax ratio was calculated to create a tax neutral position from a funding perspective between the capped and clawbacked properties. Therefore, the 100% clawback percentage as shown in Table One reflects the tax neutral position. For the industrial realty tax class, the municipal budgetary increase could not be allocated to this group due to the fact this tax class was hard capped. The term "hard capped" refers to the tax condition where the tax ratio ofrealty tax class is above the Provincial Average. For the 2001 taxation year, the Durham Region industrial tax ratio of 2.98 was above the Provincial average ratio of 2.63. Therefore, the budgetary increases of the Region of Durham and City of Pickering were allocated to the other realty tax classes. The end result is that less capping protection was required due to the hard cap that translated into a lower clawback percentage as reflected under Table One. .~ The increase in the commercial clawback is mainly due. to the change in the vacancy methodology and recent Assessment Review Board decisions. Prior to Bill 140, any business property or unit that was classified as vacant received a reduction in their tax rate of 30% for commercial or 35% for industrial. For the 2001 taxation year, all commercial and industrial properties are reflected as fully occupied and therefore, attract a higher tax rate and require more capping protection. (Property owners have to apply for the vacancy rebate.) The increase cost of capping protection requires more funding from the clawback property owners. Within each realty class there are tax reductions and increases due to capping protection. Table Two provides a detailed breakdown regarding tax shifts among the various realty classes. Table Two City of Pickering Breakdown ofl001 Tax Adjustments by Dollar Changes Realtv Class Claw back Decrease Net Chan!!:e Multi-Residential $0 $ (109,239) $ (109,239) Commercial 1,422,836 (2,298,099) (875,262) Industrial 36.688 (580.992) (544.303) Total $1.459.524 $(2.988.330) $(1.528.804) - For the claw back properties, the dollar changes vary based on the assessed value of the property and the 2000 taxes paid. The "shortfall" of $1 ,528,804 will be provided for by a transfer of funds from the Region similar to 1998 and 1999 when residential properties in Pickering assisted in funding shortfalls mainly in Oshawa and Whitby. Report to Council CS 23-01 Date: September 4,2001 ,- Subject: 2001 Final Tax Due Date for Commercial, Industrial & Multi-Residential Realty Tax Class Page 4 ATTACHMENTS: 1. 2001 Final Tax Rate By-Law for Commercial, Industrial & Multi-Residential Realty Tax Classes Prepared By: Approved / Endorsed By: ~~ . i Stan Karwowski, V v Manager, Financial Services y~ --Gillis A. Paterson Director, Corporate Services & Treasurer GAP:vw Attachment Recommended for the consideration of Pickering City Council ,- Thomas J. Ouinn, Chief Administrative Officer - AITAJ!M:: ;',.--:.- 'C REPOl\T#.......o....:>-: THE CORPORATION OF THE CITY OF PICKERING - BY-LAW NO. Being a by-law of The Corporation of the City of Pickering to levy the FINAL commercial, industrial and multi-residential taxes for the year 2001. WHEREAS the Regional Municipality of Durham has passed By-law No. 47-2001 to establish tax ratios and By-Law 42-2001 to adopt estimates of all sums required by The Regional Municipality of Durham for the purposes of the Regional Corporation and By-Law 45-2001 to set and levy rates of taxation for Regional Solid Waste Management and By-laws No. 44-2001 to set and levy rates of taxation for Regional General Purposes and set tax rates on Area Municipalities; and, WHEREAS Provincial Regulations reqUIre reductions III taxes for certain classes and or subclasses of property; and, WHEREAS the Regional Municipality of Durham has passed By-law No. 65-98 opting to have the optional property classes consisting of the office building property class, shopping centre property class and large industrial property class within the Region of Durham; and, WHEREAS the City of Pickering passed By-Law No. 5856/01 to establish the tax rates for the levying of taxes on all properties and, - WHEREAS it is necessary for the Council of The Corporation of the City of Pickering pursuant to the Municipal Act, to levy on the whole ratable 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. 5802/01) before the adoption of the estimates for the current year; and, WHEREAS sub section 392(4) and (5) of the Municipal Act, as amended, permits the issuance of separate tax bills for separate classes of real property for year 2001. NOW THEREFORE THE COUNCIL OF THE CORPORATION OF THE CITY OF PICKERING HEREBY ENACTS AS FOLLOWS: 1. For the year 2001, there shall be levied and collected upon the commercial, industrial and multi-residential assessment the rates of taxation per current value assessment for general purposes as set out in By-Law No. 5856/01. 2. The levy provided for shall be reduced by the amount of the interim levy for 2001. 3. The 2001 final tax calculations for the industrial, commercial and multi-residential realty tax classes is based on the data as of July 31,2001. 4. The decrease retained percentage for the realty class is outlined below: - Multi residential Commercial Industrial Zero 0.407326 0.703279 5. The 2001 taxes owed for the commercial, industrial and multi-residential assessed properties shall be due in one installment on October 29, 2001 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 installment 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 but not after December 31 of the year in which the taxes become payable, and it shall be the duty of a Tax Collector, immediately to collect at once, by distress or otherwise under the provisions of the applicable statutes all such taxes, assessments, rents, rates or installments or parts thereof as shall nbt have been paid on or before the several dates named as aforesaid, together with the said percentage charges as they are incurred. .- 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 comes into force on the date of its final passing. BY -LAW read a first, second and third time and finally passed this day of September, 2001. Wayne Arthurs, Mayor ",... C. Anne Greentree, Deputy Clerk .-.