Report to/Rapport au :
Finance and Economic Development Committee
Comité des finances et du développement économique
and Council / et au Conseil
22 March 2011 / le 22 mars 2011
Submitted by/Soumis par : Marian Simulik, City Treasurer/Trésorière municipale
Contact Person/Personne ressource : Ken Hughes, Deputy Treasurer/ Revenus municipaux, Trésorier adjoint, Recettes Finance Department/Service des finances
613-580-2424 ext./poste 13485, Ken.Hughes@ottawa.ca
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Ref N°: ACS2011-CMR-FIN-0016 |
SUBJECT: |
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OBJET : |
COEFFICIENTS FISCAUX ET AUTRES POLITIQUES D’IMPOSITION DE 2011 |
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REPORT RECOMMENDATIONS
That the Finance and Economic Development Committee recommend Council approve:
1. The adoption of the following optional property classes in 2011:
· Shopping centre commercial property class
· Parking lots and vacant lands commercial property class
· Office building commercial property class
· Large industrial property class
· New multi-residential property class
· Professional sports facility class
2. The adoption of the following tax ratios for 2011:
Tax Class |
Ratios ** |
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Residential |
1.000000 |
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Multi-Residential |
1.700000 |
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New Multi-Residential |
1.000000 |
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Farm |
0.200000 |
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Managed Forest |
0.250000 |
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Pipeline |
1.539861 |
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Commercial Broad Class |
1.956672 |
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- Commercial * |
1.863393 |
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- Office Building * |
2.251190 |
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- Parking Lots and Vacant Land – Commercial* |
1.220931 |
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- Shopping Centre * |
1.549976 |
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- Professional Sports Facility * |
TBD |
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Industrial Broad Class |
2.456381 |
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- Industrial * |
2.610968 |
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- Large Industrial * |
2.242152 |
* including new construction classes for BET purposes
** Subject to final minor revisions upon OPTA close-off
3. The adoption of the following tax ratios and by-laws for the mandatory property subclasses and the tax rate percentage reduction for farmland awaiting development:
· Commercial excess land (i.e. commercial, office and shopping centre tax classes) - 70% of the applicable commercial property class tax ratio
· Vacant industrial land, industrial and large industrial excess land - 65% of the applicable industrial property class tax ratio
· Farm lands awaiting development subclass I - 75.0% of the residential property class tax ratio and the corresponding tax rate percentage reduction for the awaiting residential, multi-residential, commercial and industrial property classes; and Farm lands awaiting development subclass II - no tax rate reduction
4. That the tax rates for 2011 be established based on the ratios adopted herein.
5. a) That the 2011 capping parameters be approved at the higher of 10% of the previous year’s annualized tax or 5% of the 2010 Current Value Assessment (CVA) taxes; and
b) That for 2011 capped/clawback properties whose recalculated annualized taxes fall within $250 of their CVA taxation be moved to their CVA tax for the year; and
c) That for 2011, properties which have reached their CVA during 2010 or crossed over from the clawed back category to the capped category remain at CVA taxes and be excluded from any further and future capping adjustments; and
d) That for 2011, properties that cross over from the capped category to the clawed back category remain subject to claw back adjustments.
6. That the tax level for “new construction” properties be set at a minimum level of 100% of their CVA taxes for 2011 and future taxation years.
7. That the property tax mitigation programs currently in place and detailed in this report be continued for 2011 including the charitable and vacancy rebate programs, the Farm Grant Program and the Low Income Seniors and Disabled Persons Complete Tax Deferral Program as previously approved by Council.
8. That the equivalent tax ratio for the Professional Sports Facility Class be adopted to reflect the final 2011 property valuation changes and the municipal levy increase for a total tax level of $1,625,000.
9. That a Special Service Area be established for tax levy purposes starting in 2012 pursuant to section 326 of the Municipal Act 2001, S.O. 2001, Chapter 25 for all of Kanata North, Ward 4 to finance the capital costs to bury hydro lines as approved by Council report ACS2010-CCS-TRC-0013.
10. a) Changes to the Urban Fire Special Service area for tax levy purposes pursuant to section 326 of the Municipal Act 2001, S.O. 2001, Chapter 25 as defined in the attached report to include properties within Document 1 – Fire Zone 46.
b) Changes to the Rural Fire Special Service area for tax levy purposes pursuant to section 326 of the Municipal Act 2001, S.O. 2001, Chapter 25 as defined in the attached report to exclude properties within Document 1 – Fire Zone 46.
RECOMMANDATIONS DU RAPPORT
Que le Comité des finances et du développement économique recommande au Conseil d'approuver ce qui suit :
1. L'utilisation en 2011 des catégories optionnelles de biens fonciers suivantes :
· Centres commerciaux
· Terrains de stationnement et terrains commerciaux vacants
· Immeubles de bureaux commerciaux
· Grand industriel
· Nouveaux immeubles à logements multiples
· Installations sportives professionnelles
2. L'adoption des coefficients fiscaux suivants pour 2011:
Catégorie fiscale |
Coefficient ** |
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Résidentiel |
1.000000 |
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Logements multiples |
1.700000 |
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Nouveaux logements multiples |
1.000000 |
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Ferme |
0.200000 |
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Forêt aménagée |
0.250000 |
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Pipeline |
1.539861 |
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Catégorie commerciale générale |
1.956672 |
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- Commercial * |
1.863393 |
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- Immeubles de bureaux * |
2.251190 |
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- Terrains de stationnement et terrains commerciaux vacants * |
1.220931 |
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- Centre commerciaux * |
1.549976 |
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- Installations sportives professionnelles * |
N/A |
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Catégorie industrielle générale |
2.456381 |
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- Industriel * |
2.610968 |
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- Grand industriel* |
2.242152 |
* y compris les nouvelles catégories de construction aux fins de la répartition des taxes scolaires
** sous réserve de révisions mineures finales à la conclusion de l'OPTA
3. L'adoption des coefficients fiscaux et des règlements municipaux suivants pour les sous-catégories de biens fonciers obligatoires et de la réduction procentuelle du taux de taxation pour les terres agricoles en attente d'aménagement:
· Terrains commerciaux excédentaires (c.-à-d. des catégories Commercial, Immeuble de bureaux et Centre commercial) : 70% du coefficient fiscal applicable à la catégorie Commercial
· Terrains industriels vacants et terrains industriels et grands industriels excédentaires: 65% du coefficient fiscal applicable à la catégorie Industriel
· Terres agricoles en attente d'aménagement, sous-catégorie I : 75 % du coefficient fiscal applicable à la catégorie Résidentiel et la réduction procentuelle correspondante du taux de taxation pour les terrains en attente d'aménagement des catégories Résidentiel, Logements multiples, Commercial et Industriel; terres agricoles en attente d'aménagement, sous-catégorie II : pas de réduction du taux de taxation
4. Que les taux d'imposition pour 2011 soient basés sur les coefficients fiscaux adoptés par les présentes.
5. a) Que les paramètres de plafonnement de 2011 soient établis à 10 % des taxes annualisées de l'année précédente ou à 5 % des taxes d'après l'ÉVA de 2010, le plus élevé de ces deux montants étant retenu;
b) Que les propriétés plafonnées ou auxquelles s'applique un seuil de récupération fiscale en 2011 et dont l'écart entre les taxes annualisées recalculées et les taxes établies d'après l'ÉVA est de moins de 250 $ soient taxées d'après leur ÉVA cette année.
c) Que pour 2011, les propriétés qui ont atteint l’ÉVA en 2010 et/ou qui sont passées de la catégorie de la récupération fiscale à celle des propriétés plafonnées en 2011 demeurent taxées d’après leur ÉVA et soient exclues de tout autre rajustement relatif au plafond.
d) Que pour 2011, les propriétés qui sont passées de la catégorie des propriétés plafonnées à la catégorie des propriétés de la récupération fiscale soit assujetties au rajustement relatif à la récupération.
6. Que le niveau de taxes sur les propriétés " nouvellement bâties " soit établi au niveau minimal de 100% des taxes d'après l'ÉVA en 2011 et pendant les années d'imposition subséquentes.
7. Que les programmes d'allégement des taxes foncières actuellement en place et décrits dans le présent rapport, y compris les programmes pour les organisations caritatives, propriétaires de biens-fonds vacants commerciaux et industriels, de subventions pour terres agricoles et de report d’impôts pour les personnes âgées à faible revenu et pour les personnes handicapées soient maintenus en 2011 tel qu’approuvé par le Conseil dans les années antérieures.
8. Que le coefficient fiscaux d’équivalence pour la catégorie des Installations sportives professionnelles soit adopté en vue de refléter les changements liés aux évaluations finales de 2011 des propriétés et les hausses de taxes municipales pour un niveau de taxes foncières de 1 625 000 $.
9. Qu’un secteur des services spéciaux soit établi aux fins de la perception de taxes à compter de 2012, conformément à l’article 326 de la Loi de 2001 sur les municipalités, L.O. 2001, chapitre 25, pour tout le territoire du quartier 4, Kanata-Nord, en vue du financement des coûts d’immobilisations d’enfouissement des lignes de transport d’électricité, tel qu’approuvé par le Conseil dans le rapport ACS2010-CCS-TRC-0013.
10. a) Que les changements au secteur des services spéciaux du service des incendies en milieu urbain aux fins de prélèvement d’impôt conformément à l’article 326 de la Loi de 2001 sur les municipalités, L.O. 2001, chapitre 25, pour l’inclusion des propriétés tels que définis dans le rapport ci-joint et dans le document 1 – Zone d’incendie 46.
b) Que les changements au secteur des services spéciaux du service des incendies en milieu rural aux fins de prélèvement d’impôt conformément à l’article 326 de la Loi de 2001 sur les municipalités, L.O. 2001, chapitre 25, pour l’exclusion des propriétés tels que définis dans le rapport ci-joint et dans le document 1 – Zone d’incendie 46.
The purpose of this report is to present recommendations regarding 2011 property tax policy issues that the Municipal Act requires Council to deal with each year. These decisions determine the tax burdens on the various tax classes for the 2011 taxation year.
The use of optional tax classes allows for different levels of taxation within a class. Eliminating any of the optional tax classes would shift the tax burden among properties within the broad tax class.
In April of 2007, City Council directed the Revenue Branch to implement a second property tax deferral program that would allow qualified seniors and people with disabilities to defer the total amount of taxes levied until the property is sold or transferred. This program would allow qualified low-income seniors and low-income people with disabilities the ability to stay in their homes longer and enjoy a better quality of life. As of the end of February 28, 2011 there were 72 taxpayers on the program. On average, the annual deferral is about $3,135. The amount of taxes deferred for those taxpayers in 2011 will be approximately $225,698. On February 28, 2011, the total taxes deferred amounted to $595,763. The income threshold for the 2011 taxation year will be increased to $37,325 as required by By-Law. There is no application deadline for first time applicants and for those already on the program, the renewal deadline remains at February 28 of the relevant tax year.
Council has approved report ACS2010-CMR-FIN-0049 in September 2010 phasing out the extension of the charitable rebate program to the Registered Canadian Amateur Athletic Association. This level would fall to 30% for 2011, 20% for 2012, 10% for 2013 and 0% for 2014 with savings being directed to the Recreation and Culture Fee Support Program.
In 2010, Council dealt with a property tax specific issue pertaining to the Scotiabank Place. The agreement was expiring with a tax level of $1.6 Million with pending assessment appeals on the valuation of the property going back to 2004. Council approved in Report ACS 2010-CMR-FIN-0009 a new multi-year agreement with a tax level for 2011 of no more than $2,000,000 or the lower taxes based on the commercial rates applied to the reduced assessment. It is proposed that the equivalent property tax class ratio be adopted to reflect the final 2011 property valuation changes and the municipal levy increase for the year for a total tax level of $1,625,000.
Changes are required for property tax purposes to special service areas to implement decisions previously approved by Council. The construction of a new fire station in the west Kanata/Stittsville area will increase the service level of many properties in that area for 2011 as identified in Document 1. In addition a new special service area is required for the 2012 taxation year for Kanata North Ward 4 to finance the capital costs for burying hydro lines.
SOMMAIRE
L’objet de ce rapport est de présenter des recommandations au sujet des politiques d’imposition foncière de 2011 dont la Loi sur les municipalités impose au Conseil municipal de s’occuper chaque année. Ces décisions déterminent le fardeau fiscal des diverses catégories de propriétés pour l’année d’imposition 2011.
L’utilisation des catégories de propriétés optionnelles permet d’établir différents taux d’imposition dans une même catégorie. Si l’on éliminait une catégorie optionnelle, le fardeau fiscal serait réparti entre toutes les propriétés de la catégorie générale.
En avril 2007, le Conseil a donné instruction à la Direction des Recettes de mettre en place un deuxième programme de report des impôts fonciers qui permettrait aux personnes âgées et aux personnes handicapées de reporter le montant total de leurs impôts fonciers jusqu’au moment de la vente ou du transfert de leur propriété. À la fin du mois de février 2011, environ 72 contribuables s’étaient prévalus de ce programme. En moyenne, 3 135 $ d’impôts fonciers annuels sont reportées. En 2011, le montant reporté pour l’année était de 225 698 $ pour un total des taxes reportées de 595 763 $ pour ces contribuables. Le seuil de revenu de l’année d’imposition 2011 sera augmenté à 37 325 $.
Le Conseil a adopté en septembre 2010 le rapport ACS2010-CMR-FIN-0049, qui prévoit l’élimination progressive de l’application du Programme de remboursements offerts aux organismes de bienfaisance dans le cas de l’Association canadienne de sport amateur. Le niveau de remboursement passerait à 30 % en 2011, à 20 % en 2012 et à 10 % en 2013, avant d’être supprimé en 2014. Les sommes ainsi économisées seraient affectées au Programme d’aide financière pour les activités sportives et culturelles.
En 2010, le Conseil a
traité une question de taxes foncières qui se rapportait à la Place Banque
Scotia. À la fin de l’entente, les taxes se situaient à 1,6 million de dollars
et l’évaluation de la propriété avait fait l’objet d’appels qui remontaient à
2004. Le rapport ACS 2010-CMR-FIN-0009, que le Conseil a adopté, prévoyait une
nouvelle entente pluriannuelle en vertu de laquelle les taxes pour l’année 2011
ne devaient pas dépasser 2 000 000 $ ou un montant moins élevé
basé sur les taux commerciaux appliqués à l’évaluation réduite. Il est proposé
d’adopter le coefficient fiscal de la
catégorie de taxes foncières équivalente, pour tenir compte des modifications
finales à l’évaluation de la propriété pour 2011 et de l’augmentation des taxes
municipales pour l’année pour un total de 1 625 000$.
Aux fins des taxes foncières, des modifications sont requises aux
secteurs de service spécial afin d’assurer la mise en œuvre de décisions
approuvées antérieurement par le Conseil. La construction d’une nouvelle
caserne de pompiers dans le secteur de Kanata-Ouest/Stittsville fera augmenter
le niveau de services de nombreuses propriétés de ce secteur pour 2011, comme
l’indique le document 1. De plus, un nouveau secteur de service spécial est
requis pour l’année d’imposition 2012 concernant le quartier 4 (Kanata-Nord),
afin de permettre le financement des coûts d’immobilisation liés à
l’enfouissement des lignes de transport d’électricité.
BACKGROUND
The Municipal Act requires that Council approve a number of tax policy decisions each year. This report details each of the required tax policies.
DISCUSSION
1. OPTIONAL PROPERTY TAX CLASSES
To provide maximum flexibility to Council for tax policy decisions, the City of Ottawa has, in previous years, adopted all the optional tax classes. These optional tax classes, if adopted by a municipality, represent subsets within the broad commercial and industrial tax classes and through the use of different tax ratios impose different tax burdens within the broad tax class. Any changes to these optional property tax classes and their ratios would affect the tax burden on other properties within the broad tax class.
Staff recommends that Council continue to adopt all of the following optional classes:
· Shopping centre commercial property class
· Parking lots and vacant lands commercial property class
· Office building commercial property class
· Large industrial property class
· New multi-residential property class
· Professional sports facility class
2. TAX RATIOS
Since 1998 and the passage of the Ontario Fair Assessment System, the two mill rate system and the business occupancy tax was effectively replaced with multiple tax classes, sub-classes and variable tax rates. The proportion by which the class and sub-class tax rates differ from the residential class and its own ratio of 1.000000 is known as the ratio for the corresponding class. In 1998, each municipality in Ontario inherited transition ratios equivalent to the previous 1997 tax level with a range of fairness target set by the Province.
The goal was to reach ratio parity for all classes with the exception of farmland and managed forest. However, most municipalities and Councils faced such parity decisions knowing the impact would be a tax increase on the Residential Tax Class. In Ottawa, it is estimated that this ratio parity would result in a 21% tax increase or $161 million in additional tax burden to the residential class during a time of significant budgetary pressures on the tax base.
At every reassessment cycle, changes in valuation may trigger potential tax shifts among the tax classes and among the properties within a tax class. In order to provide relief and some stability to annual reassessments, the Province deferred the annual reassessments scheduled for 2007 and 2008 and adopted a four year phase-in of assessment changes for all tax classes. The increase between the valuation periods of January 1, 2005 and January 1, 2008 would be phased in equally for the upcoming taxation years 2009 to 2012. While it does not avoid changes in valuation and its associated tax impact, it does spread the increase over four years. This provides taxpayers with some stability and knowledge of how they will be impacted during this period.
In 2003, only the City of Ottawa saw a significant residential valuation increase over and above the other classes that resulted in a tax shift of $21 million and an equivalent 6.5% tax increase from the other classes to the Residential\Farmland classes. In 2004, when this change in tax burden was experienced more broadly at the provincial level, municipalities and various municipal associations pressed the new government for a tool to offset these tax shifts. The Minister then passed a special regulation allowing municipalities to adopt “neutral” ratios to preserve the existing tax levels and thus eliminate any inter-class tax shifts. The City of Ottawa has adopted the neutral ratio option for each of the two previous reassessment cycles of 2004 and 2006 and the first two phase-in years of this new cycle in 2009 and 2010.
In the fall of 2008, staff reported the assessment changes for the first year of reassessment. Table One has been updated to show the valuation changes by class for 2011 and the total change over the four year period. While the City does not benefit from any changes in valuation, annual shifts between classes would occur depending on how they differ from the weighted average increase of approximately 4%.
The tax shifts between classes are estimated for 2011 in Table Two below. Similar effects would occur in the last year 2012 unless neutral ratios are adopted next year.
Financial staff are therefore recommending that neutral ratios be adopted for the taxation year 2011.
This recommendation is being made for the following reasons:
· inter-class tax shifts are eliminated
· this would be consistent with prior assessment cycles 2004, 2006 and for 2009/2010
· neutral ratios have accelerated the movement of the tax ratio for the Commercial broad class below the 1.98 provincial threshold resulting in a lifting of the 50% levy restriction for that class.
The ratio history by class is demonstrated in Table Three below, including the recommended neutral ratios shaded in grey.
The neutral ratio for the Multi-Residential (MR) class is 1.702438. It is the only ratio that would increase slightly over the 4 years as part of setting neutral ratios. Keeping the ratio at the same level of 1.700000 as adopted last year results in a small shift of $129,300 to the other classes.
As demonstrated in Table Three, the MR ratio has decreased 22% over the years from a level of 2.1780 in 2001 and 27% from 1998 when the ratio was 2.3359. The impact of this decrease on the average home in 2010 was estimated at $86 on an annual basis. Some of the challenges in establishing the MR ratio relate to the different assessment methodology, unpredictable changes during reassessment cycles and the limitation of comparative models with the Residential class. This issue is compounded by the fact that non-homogenous property types are grouped by a handful of broad classes leaving Council with little flexibility to correct real or perceived inequities by the use of a single ratio applied to the MR class or others.
In March 2010, Council re-approved the existing multi-residential ratio of 1.700000 in report ACS2010-CMR-FIN-0013. The report looked at several factors including a review of the inter-municipal ratios across the Province, the tax per square foot level between an average MR apartment and condominium unit and a percentile comparison between the 2 groups. The inter-municipal comparison showed that the City of Ottawa had the lowest ratio in the province with the exception of the Region of York and some very small municipalities. The tax per square foot of an average MR apartment was 10% lower than the average condominium. The analysis also indicated that the 50% percentile level of the MR unit paying the equivalent of $1,260 in municipal property taxes was paying at a level lower than the smallest and most modest condominium units at the 10th percentile level of $1,330. Based on these findings, staff recommended that the MR tax ratio remain at its level of 1.700000. Change to the MR ratio is limited in its ability to target reductions for a specific type of property or housing within the class.
At the April 14, 2010 meeting of Council Councillor J. Harder, seconded by Councillor Holmes moved a motion (Motion no. 87/4) requesting the Province establish a Task Force to examine and provide recommendations with respect to a fair ratio of municipal property tax on rental property to property tax on owner-occupied property; whether this should differ based on the different circumstances of each municipality; and how that fair ratio of municipal property tax should be achieved. To date the province has not responded to this request.
Annually, Multi- Residential properties have to pass on rent reductions when the taxation level drops more than 2.49% of the previous year's tax level. It is estimated that the ratio for this class would need to drop to 1.60 in order to achieve this target and result in a shift of $5 million in taxes on other property classes or just below a 0.5% tax increase to all taxpayers. As Council in the past has identified that the objective of adjusting the tax burden for multi-residential is to help tenants, any reduction to the ratio for the multi-residential class that does not trigger rent reductions is not recommended.
Further, staff have always indicated that using the MR ratio to attempt to provide relief to those tenants most in need is too general with no guarantee that it will actually provide assistance. A more targeted approach would be to provide rent subsidies as they provide specific relief on housing costs to those most in need. As part of the 2011 Budget, Council has invested $10 million in Housing and Poverty Reduction initiatives which may include rent subsidies to low income tenants in private sector accommodations.
Options to Adopting Neutral Ratios
Getting the commercial tax ratio below the provincial threshold has removed the restriction that only allows the Commercial class to be subject to 50% of any budgetary increase. This restriction has been in effect from 2004 to 2010. The benefit of this restriction is that the commercial class has been able to avoid full tax increases over the years which have had to be borne by all other classes including the residential class which is the largest. Not adopting neutral ratios would result in $4.6 million of taxes being shifted off of the residential property class to the commercial property tax class but would extend the 50% levy restriction for 2011.
There are two subclasses of farm lands awaiting development. The first, farm lands awaiting development subclass I, is defined as farm land currently used solely for farming where there exists an approved and registered subdivision plan on the lands prior to actual development taken place. Ontario regulation 383/98 provides direction on the calculation of the tax rate for these types of farmlands while permitting a move of 10% in either direction. In practice, this type of property is held as speculative land and is seldom registered as a subdivision for extended periods of time prior to development.
The second category of farm lands awaiting development, subclass II, currently receives no tax rate reduction and that practice is recommended to continue.
Financial staff recommends the adoption of the following tax ratios and by-laws for the mandatory property subclasses and the tax rate percentage reduction for farmland awaiting development:
· Commercial excess land (i.e. commercial, office and shopping centre tax classes) - 70% of the applicable commercial property class tax ratio;
· Vacant industrial land, industrial and large industrial excess land - 65% of the applicable industrial property class tax ratio;
· Farm lands awaiting development subclass I - 75.0% of the residential property class tax ratio and the corresponding tax rate percentage reduction for the awaiting residential, multi-residential, commercial and industrial property classes; and Farm lands awaiting development subclass II - no tax rate reduction.
4. TAX RATES
Tax rates are determined through calculations which involve the budgetary tax levy requirement approved in the 2011 budget setting exercise, the total current value assessment by class and the effects of the setting of tax ratios within this report. The resultant tax rates as calculated by staff will be submitted to Council at a later date for approval with applicable By-Laws.
Financial staff recommends that the tax rates for 2011 be established
based on the ratios adopted herein.
Subsequent to the change to the current value assessment process in 1998, the Province imposed mandatory limits on assessment-related property tax increases over 1997 taxation levels for commercial, industrial and multi-residential properties. In December 2000, the Continued Protection for Property Taxpayers Act, 2000 was enacted which legislated that for 2001 and subsequent years, all municipalities are required to limit the assessment-related property tax increases on commercial, industrial and multi-residential properties to 5% of the previous year’s annualized taxes. For 2005 and subsequent years Council can increase this limit to 10%.
This limit is generally referred to as the “tax cap” and is calculated each year based on the previous year’s taxes. The “tax cap” will remain in place until properties reach a property tax bill based on its current value assessment (known as CVA tax). Municipal levy changes (essentially changes to the tax rate as a result of budget decisions) are then applied in addition to the limit.
The limit applies to all property in the commercial, industrial and multi-residential classes, subject to the following exclusions:
· Farm lands awaiting development;
· Provincial and municipal property that are subject to payments in lieu of taxes (PILTs). (However, commercial tenants in provincial or municipal owned properties would be protected by the limits);
· Certain power generation and transformer facilities.
The limit does not apply to properties in the residential, farmland, managed forest, new multi-residential, and pipeline property classes.
The individual properties that are protected by the tax cap generate a “foregone revenue or taxation shortfall”. This “taxation shortfall” is the difference between the amount of taxes that the current value assessment would generate and the cap over the previous year’s taxes. This uncollected amount has to be recovered from other taxpayers. A mechanism that is available, which has been chosen by Council each year since 1998, is to “clawback” some of the decreases from those individual properties within the property class that are experiencing a decrease in taxes. In other words, taxpayers who would be entitled to a reduction in their taxes pay the tax not being paid by another taxpayer because of the capping limit.
In order to address some of the limitations associated with the capping regime and to reduce the number of properties not paying full CVA taxes, and taking into account the prolonged period required for some properties to reach full CVA taxes, the Minister introduced new capping options in Bill 83, the Budget Measures Act, 2004. Although these new options will not address all inequities inherent in a program that limits some properties from paying their full share of taxes, they will nonetheless accelerate the move towards more properties attaining full CVA taxes more quickly.
The capping options for 2011 are summarized as follows:
Capping parameter to be 10% of Annualized tax – The major disadvantage of the original capping program and a continuous cycle of re-assessments is that many of the capped properties within the City and the Province of Ontario would never reach their full CVA taxes. In order to rectify this situation, the Ministry has provided flexibility to Council to increase the 5% parameter up to 10%. Council provided notification in the 2005 tax policy submission that this change would be implemented for 2006 and subsequent years. Council has approved this change for each year since 2006 as part of the tax policy submission process. Staff recommends this change for 2011 as well. A decision not to implement this option each year would mean the capping parameter would revert to 5%.
Capping parameter increase to 5% of CVA tax – With the annual restriction applying the capping parameter to the previous year’s annualized taxes only, any property that has a significant disparity between their annualized and CVA taxes would be capped for an extensive period. In order to alleviate this situation, a new capping option was provided for these properties to have their taxes increased by up to 5% of their previous year’s CVA tax (prior to levy change). Only a small number of properties that pay a fraction of their CVA taxes (less than 50% of their CVA taxes) would be affected. This would reduce by half the length of time required to reach their full CVA taxes.
Financial staff recommends the 2011 capping parameters (as in 2010) be approved at the higher of 10% of the previous year’s annualized tax or 5% of the 2010 Current Value Assessment (CVA) taxes.
$250 Threshold Option - Administratively, several of the small businesses and Multi-residential properties were being capped or clawed back by very small amounts due to the fact there was no minimum threshold established. A new option was provided allowing municipalities to pass a by-law to move capped properties whose recalculated annualized taxes fall within $250 of the current year’s CVA tax to their CVA tax for the year. This means that if the differential between the CVA taxes and the tax limit is between $0 and $250 (higher or lower) the taxpayer is automatically moved to their CVA tax.
Financial staff recommends that for 2011 (as in 2010) capped/clawback properties whose recalculated annualized taxes fall within $250 of their CVA taxation be moved to their CVA tax for the year.
Clawback Recovery - In order to determine how much taxation has to be “clawed back” from those taxpayers in the class whose taxes were decreasing, a percentage is calculated which when added to their taxes, finances the “taxation shortfall”. Council must approve this percentage, known as the clawback percentage. In 2011, the clawback requirement will decrease (see discussion of new capping option for properties at CVA tax level below). A recovery by-law to approve the final clawback percentages will be submitted for Council approval at a later date.
New capping option for properties at CVA tax level - Since 1998, the capping program has offered protection for any assessment related tax increases to certain classes. While there was significant tax impact on certain properties at the time, the Province anticipated that after a few years, the new values would be fully integrated and taxes would be at their full CVA tax level. Significant progress was made in the earlier years but had reached a plateau in the last few years. The goal of a property to pay its share of taxes based on a simple formula of valuation applied to a ratio driven tax rate had remained elusive for most municipalities in Ontario.
In order to finance the protection provided to properties with large increases, other properties are denied their full tax decrease by a clawback mechanism (see Clawback Recovery discussion above). Historically, the number of clawed back properties can be several times the level of properties being protected. This would imply that a smaller number of large properties benefit from the protection relative to a larger number of smaller properties being denied their lower taxes. Experience had demonstrated that whatever gains are made during a non-reassessment year could be lost during a reassessment year with new properties being brought into the protected category. If a property is significantly undervalued in any given year and subsequently corrected, it will not only have benefited from lower taxation for all of the previous years, but will also be protected for many years to follow.
The Province has acknowledged these concerns and while it will not support a full exit of the program in the foreseeable future, it enacted several new options in 2005. The options previously discussed included:
· doubling the increase parameter from 5% to 10% of the previous taxes
· 5% of the current CVA taxes
· a $250 minimum threshold
In 2008, the Province went further and introduced a new option for 2009 more in line with the intent of the original program that was to bring properties paying their full CVA tax level over a short time period. Municipalities now have the option to exclude any properties that reach CVA taxes in the previous year and/or crossover during the current year between the clawed back and capped categories. In addition, the combination of the four-year phase-in of the multi-year change in value from January 1, 2005 to January 1, 2008 with the 10% annual increase parameter has significantly reduced the pressure on existing properties requiring additional capping protection.
The impact on the protected commercial and industrial classes is significant. The multi-residential is less affected due to the fact that its base has been more stable and closer to full CVA in previous years than any other class. Not only do the new options prevent new properties with valuation issues to enter the capping/clawback program, it also significantly curtails the capping requirement, increases the properties at CVA and allows more of the tax reductions to the properties in the clawed back category. The following results by class are detailed below.
Multi-Residential Class
The chart in Table Four below shows the increase in the capping required at each of the earlier reassessment cycles. The phased in assessment changes for 2009 to 2012 will prevent any such large increase during this cycle. The original capping protection was $1.4 million in 2001, which decreased in non-reassessment years but increased in the reassessment years of 2003 and 2006.
With the new option to exclude properties at CVA tax level, the number of properties requiring capping protection will eventually drop to zero. The program would see 7 properties requiring $62,375 in protection for 2011. Properties denied their full tax decrease total 134 or 10% to self-finance the program.
Commercial
The chart in Table Five shows the slow progress towards CVA of the earlier reassessment cycles for the commercial class. The effect of phasing in assessment over a four-year cycle prevented a large increase in capping in 2009 for this class. The original capping protection provided to this class was $57 million in 2001 and was down to $13 million in 2007 but up to $16 million in 2008 due to assessment shifts between sub-classes triggering an increase in the requirement. The capping program would see 183 properties requiring $3.1 Million for 2011. Properties denied their full tax decrease to fund this requirement are 1,157 or 12%.
Industrial
The chart in Table Six shows the impact earlier reassessments have had on the amount of taxes subject to capping. Again, the impact of phasing in assessment over a four year period smoothes the impact in 2009 and beyond but does not eliminate it altogether. The original capping protection provided in 2001 was $4.9 million which diminished but then increased in both 2003 and 2006 with almost no gain in reduction. The regular capping program would see 177 properties requiring $0.9 Million in protection for 2011. Properties denied their full tax decrease total 81 or 7%.
In summary, the option to exclude properties that have reached CVA or crossed over from the clawed back to the capped category will continue to significantly reduce the capping requirement for all classes for 2011 and the next year. This reduced capping requirement will relieve some of the pressures on the clawed back properties by allowing more properties to pay only their CVA tax level. The clawback % has yet to be finalized and varies by year based on the annual requirement and the number of properties left in the program. As such, all numbers are preliminary and will be finalized over the next few weeks as part of the Ontario Property Tax Analysis (OPTA) cut-off procedures.
The new option of excluding properties at or crossing over from the clawed back to the capped category is therefore recommended to be continued. This accelerates the progress towards attaining the goal of more properties reaching their CVA tax level and decreasing the number of properties burdened by the claw back mechanism.
Financial staff recommends that for 2011 (as in 2010) properties which have reached their CVA during 2010 or crossed over from the clawed back category to the capped category remain at CVA taxes and be excluded from any further and future capping adjustments.
Financial staff also recommends that for 2011 (as in 2010) properties that cross over from the capped category to the clawed back category remain subject to claw back adjustments.
6. TAX TREATMENT FOR NEW CONSTRUCTION PROPERTIES
Previously, the tax burden for eligible “new construction” properties was established by comparing the average tax level of comparable properties (up to six) to the CVA taxes of the eligible property. Under this regime, the maximum tax level for the new property can only be at the CVA tax level (i.e. current assessment value times the applicable tax rate). However, no minimum tax level had been set, occasionally resulting in abnormally low taxes for a new property. This only served to continue the distortion caused by the capping program. In 2005 legislation was introduced to establish a minimum tax level (%) of the CVA tax liability for the eligible new construction properties. The minimum tax level was increased gradually towards the maximum through a phase in. This phase in has now been completed with new construction properties paying at their full CVA tax level since 2009. The following would be in effect for:
2011 – 100% of CVA taxes
2012 – 100% of CVA taxes
Staff recommends that the tax level for “new construction” properties be set at a minimum level of 100% of their CVA taxes for 2011 and future taxation years.
A number of other mitigation programs have been established in prior years. It is recommended that these mitigation programs be continued. These programs include:
· The provision of a 40% tax rebate to charitable organizations as defined and required in the legislation
· Tax rebate of:
a) 100% to any church leasing space to houses of refuge and registered charities;
b) 30% to Registered Canadian Amateur Athletic Associations for 2011, 20% for 2012, 10% for 2013 and 0% for 2014; and
c) 100% for non-profit, non-home based licensed child care centres for space occupied for child care purposes;
d) 100% of education portion for properties used and occupied by the Royal Canadian Legion and The Polish Combatant’s Association of Canada, further identified in Schedule “A” of By-Law no. 2007-476 as amended
· The provision of a vacancy tax rebate program with the rebate rate set at 30% of the tax attributable to the vacant space in commercial buildings, and 35% of the tax attributable to the vacant space in industrial buildings
· The provision of a tax relief (increase deferral) program for low-income seniors and disabled persons
· The provision of a complete tax deferral program for low-income seniors and disabled persons
· Farm Tax Grant Program.
After the approval of the 2006 tax policy submission the Revenue Branch was asked to provide a training session for the eligible charities on the tax rebate program. The purpose of the training session was to assist the eligible charities in completing their applications to maximize the benefit to the charities. This program returns almost $3 million of taxes to eligible charities. After offering this training and pre-filling the applications for the charities, staff estimate that almost all charities complete the application themselves. This allows the charities to keep the entire rebate. The training sessions will be offered again for the next tax year.
Council has approved report ACS2010-CMR-FIN-0049 in September 2010 phasing out the extension of the charitable rebate program to the Registered Canadian Amateur Athletic Association. This level would fall to 30% for 2011, 20% for 2012, 10% for 2013 and 0% for 2014 with savings being directed to the Recreation and Culture Fee Support Program.
In April of 2007, City Council directed Revenue Branch to implement a second property tax deferral program that would allow qualified seniors and people with disabilities to defer the total amount of taxes levied until the property is sold or transferred. This program would allow qualified low-income seniors and low-income people with disabilities the ability to stay in their homes longer and enjoy a better quality of life. As of the end of February 28, 2011 there were 72 taxpayers on the program. On average, the annual deferral is about $3,135. The amount of taxes deferred for those taxpayers in 2011 will be approximately $225,698. On February 28, 2011, the total taxes deferred amounted to $595,763. The income threshold for the 2011 taxation year will be $37,325. There is no application deadline for first time applicants and for those already on the program, the renewal deadline remains at February 28 of the relevant tax year.
Financial staff recommends that the property tax mitigation programs currently in place and detailed in this report be continued for 2011 including the charitable and vacancy rebate programs, the Farm Grant Program and the Low Income Seniors and Disabled Persons Complete Tax Deferral Program as previously approved by Council.
The professional sports facility, first known as the Palladium, opened in January 1996. It was subsequently renamed to the Corel Centre and then Scotiabank Place in 2005. With the Club experiencing financial difficulties prior to amalgamation, the City of Kanata and the Regional Municipality of Ottawa-Carleton opted to use the new Professional Sports Facility (PSF) class to reduce the property tax burden. Over the years, 4 multi-year agreements have been approved by Council increasing the tax burden from $700K per year to $1.6 Million in 2010 and up to $2.3 Million by 2014. Each agreement stipulates that should the taxes in the commercial tax class be lower than the agreed taxes the lower amount would apply.
The current value assessment (CVA) of the property has not seriously been examined for a very long time. Although the current value of $124 Million would appear to generate a much higher commercial tax level, its value has been appealed each year since 2004. The property owner, MPAC and City staff have been working at determining a revised assessed value over the last year. Some of the challenges in determining a value for such a unique property includes the lack of comparable properties within or outside the municipality, these properties are often not sold for prolonged periods and when sales do occur they frequently include both the property and the professional sports team (as was the case with Scotiabank Place).
The reduced value currently being considered would generate commercial taxes equivalent to the 2010 tax burden of $1.6 Million as adjusted by the municipal levy increase for this year for a total tax level of $1,625,000. With a mix of building and parking lots, staff can calculate the equivalent ratio for the PSF class for Council approval
Financial Services staff recommends that the equivalent tax ratio for the Professional Sports Facility Class be adopted to reflect the 2011 property valuation changes and the municipal levy increase for a total tax level of $1,625,000.
On May 26, 2010, Council approved the burying of the hydro lines along Kanata Avenue where overhead lines were originally planned, roughly from the Goulbourn Forced Road to the Richardson Side Road (report ACS2010-CCS-TRC-0013). Estimated costs were $2.5M, to be funded from debt and repaid to the City through a special service levy against all properties in the Kanata North Ward 4. Pursuant to the Municipal Act Section 326, the Special Service Area must be established to finance these capital costs starting in 2012.
The burying process involves the prime contractor for the capital project installing the underground ducts and chambers for Hydro Ottawa, as well as the additional cost to purchase streetlight poles that were previously going to be hung on the hydro poles. Utility costs for this assignment include relocation costs for Bell, Rogers, Atria and Enbridge as well as additional costs for the City’s Public Works Department.
Project progress to date includes the installation of temporary overhead hydro lines, and the underground ducts. In addition, the streetlights have been installed and energized with temporary overhead power. All utility companies should have their cable installed in the ducts by the end of summer 2011. Final costs will be determined upon project completion.
Financial Services staff recommends that a Special Service Area be established for tax levy purposes starting in 2012 pursuant to section 326 of the Municipal Act 2001, S.O. 2001, Chapter 25 for all of Kanata North, Ward 4 to finance the capital costs to bury hydro lines as approved by Council report ACS2010-CCS-TRC-0013.
10. URBAN/RURAL FIRE SPECIAL SERVICE AREAS
While the Transit Special Service areas has been defined for decades by the former Regional Municipality of Ottawa-Carleton and the current City of Ottawa, the special service and areas for fire-fighting purposes were set at the time of amalgamation. At that time, it was recognized that the urban/suburban municipalities received a superior level of fire-fighting and emergency response services from fire stations operating 24-7 with full-time firefighters. On the other hand, the 4 former “rural” municipalities offered volunteer services with a corresponding lower tax burden. The Urban and Rural Fire Service Areas and Levies were established in 2001 with very few changes to these zones since then.
Over the last 10 years, many of the suburban growth areas have expanded with a requirement to consider the construction and location of new fire stations. Most properties in these development areas will benefit from a slightly improved urban response time already in place. However some properties in the former “rural” municipalities will start receiving an urban\suburban service level. As part of capital projects approved by Council, two new Fire Stations are scheduled to open in 2011. Station No. 46 in the West-Kanata/Stitsville area on Iber Road should open in early 2011 while No. 47 in the South Barrhaven area is scheduled to open later in 2011. These stations will provide full-time 24/7 response to some areas currently serviced by volunteer fire stations.
A good portion of the Stittsville area and a small portion of rural West-Carleton will benefit from the increase in service level to be provided by Station 46. With a volunteer station No. 81 currently operational within the existing village, one of the challenges by the Fire Department has been to model the optimum response time. Factors such as distance, traffic patterns and road network have been taken into account. The availability of volunteers at different times of the day can also have an impact on service delivery. For example volunteers may or may not have employment within the vicinity of the volunteer station during the day vs availability in the evening, week-end or holidays from volunteers residing close to the station.
While Station No. 46 is scheduled to open in the spring of this year, full-time firefighters have already been hired in late 2010 and are currently undergoing training. The full costs of these new fire-fighters are included in the 2011 Budget as part of the Urban Fire Area Levy. It is estimated that approximately 60% of the Stittsville area will get superior first response from the new fire station. The area delineating the service level is presented on Document 1 – Fire Zone 46 for Council approval. The Emergency & Protective Services Department will monitor the response level over the next couple of years and may recommend minor changes to the service areas as required.
A small number of rural properties (approximately 100) formerly in Rideau Township south of Barrhaven close to the 416 Interchange will also receive an increase in service level later in the year or early next year related to station No. 47. The small change to that zone will be brought forward by staff as part of next year’s Tax Policy Report.
The 2010 urban fire service levy for the average homeowner amounted to $271 vs $127 for the average rural fire service levy. Since a significant portion of the rural area assessment was tied to the Stittsville area, a shift of some of these properties will result not only in an impact of the properties in the affected area but also on the remainder of the “rural” properties left to finance the rural service area. While the 2011 taxes have yet to be established, for 2010 the equivalent impact would have seen an increase of $144 for the properties benefitting from a higher urban service level and an increase of approximately $10 for the average property in the remainder of the rural fire service area.
Financial Services staff recommend changes to the Urban Fire Special Service area for tax levy purposes pursuant to section 326 of the Municipal Act 2001, S.O. 2001, Chapter 25 as defined in the attached report to include properties within Document 1 – Fire Zone 46 and changes to the Rural Fire Special Service area for tax levy purposes pursuant to section 326 of the Municipal Act 2001, S.O. 2001, Chapter 25 as defined in the attached report to exclude properties within Document 1 – Fire Zone 46.
The Ontario legislature passed Section 441.1 of the Municipal Act in 2010. This section allows municipalities to transfer uncollected Provincial Offences Act fines to individual municipal property tax accounts. This change represents an additional collection tool and the City of Ottawa was one of the first Ontario municipalities to pilot this option. Now that the process has been piloted and is in place, taxpayers who fail to pay parking tickets, speeding tickets and a list of other fines issued under the Provincial Offences Act (POA), could see those fines added to their municipal property tax accounts. A taxpayer can avoid this action by making arrangements to pay their outstanding fines.
Now that Revenue staff have analyzed the returned roll from MPAC, it has been determined that the anticipated assessment growth of $24 million will not quite be realized. As this is likely the result of delays in additions to the roll, the minor shortfall of about $1 million should be realized during the year from increased supplementary billings. Accordingly, the budgets for assessment growth and supplementary billing will be adjusted by that amount.
The 2007 and 2008 Provincial budgets have introduced significant changes to the property tax assessment system in Ontario. The education tax rate for the residential, farm and multi-residential properties is set at the provincial level. A drop in the rate for 2011 is based on a provincial assessment change of between 19% and 20% phased in over the 4 years versus a City wide average change of about 14%. The estimated annual benefit of the education tax shift away from the Residential Class in the City of Ottawa is estimated at $2.0 million or about $8 for an average single-family dwelling. The benefit of this annual shift to the Multi-Residential class is estimated at $179,000.
The Business Education Tax (BET) Rates are also reset for the commercial and industrial class to factor in annual reassessment values. Although this process does not result in any education tax reductions, the Province also passed in 2007 a graduated decrease towards a provincial rate of 1.60% in 2008 which has been restated to 1.52% for 2009, 1.43% for 2010 and 1.33% for 2011. This rate applies immediately to new construction in those classes and will result in savings of $225,000 for these properties but is expected to escalate as new buildings are assessed. The BET rate reductions also targeted existing rates for minor reductions in the first few years towards the lower universal provincial rate and the final large reduction in 2014.
Since municipalities in Ontario retain the BET on PILT properties, this amounts to a compounded reduction in City revenues of approximately $170,000 per year from 2008 to 2012. The impact will be accelerated in 2013 and 2014 for a total annual reduction of $8.8 million in City Revenues. The Province has agreed to find a solution to this loss of taxes for municipalities with PILT properties.
New assessment notices were sent to all property owners in late 2008 and to any new owners in 2009 and 2010. Assessment increases are to be phased in over four years. Any assessment decreases were realized immediately.
The assessment appeal system has also been modified. The Request for Reconsideration is now the first part of the appeal process (large commercial properties will not be required to first file a Request for Reconsideration) with the final stage being the formal appeal to the Assessment Review Board. The filing deadlines are March 31 of each year or 90 days after the Request for Reconsideration decision from MPAC.
RURAL IMPLICATIONS
N/A
CONSULTATION
Finance staff have consulted over the last year with Legal Services, The Ministry of Finance, The Ministry of Municipal Affairs & Housing and The Municipal Property Assessment Corporation in preparing this report.
COMMENTS BY WARD COUNCILLOR(S)
N/A
LEGAL/RISK MANAGEMENT IMPLICATIONS
Part VIII of the Municipal Act, 2001 provides that Council must deal with various property tax policy issues on an annual basis. These decisions determine tax levies for various tax classes in the relevant taxation year. There are no legal/risk management impediments to implementing the recommendations of this report.
CITY STRATEGIC PLAN
N/A
TECHNICAL IMPLICATIONS
N/A
FINANCIAL IMPLICATIONS
The financial implications are identified in the body of this report.
SUPPORTING DOCUMENTATION
DOCUMENT 1 - Glossary of Terms
DISPOSITION
Finance will use the tax ratios and rates to calculate and issue the 2011 final tax bills.
Legal Services will prepare all applicable by-laws, and assist Finance staff as required.
document 1
GLOSSARY OF TERMS
Assessment Base: The total current value assessments of all property within a municipality.
Assessment Update/Re-assessment: The process of updating current value assessments on all the properties in a municipality to their value as of a date specified by the Province. There was a re-assessment in 2008 co-ordinated by MPAC. These values are phased in for taxation years 2009 through 2012.
Capped Tax Increase Parameter: The percentage that the taxes can increase each year for properties in the commercial, industrial or multi-residential classes. The percentage is established under provincial legislation and is applied before the levy change (budget increase) for the year is added to the taxes.
Commercial Broad Class Ratio: The broad class ratio is the average ratio for commercial properties if the municipality elects to use any optional classes.
Current Use: The actual current use of the property, excluding any consideration of a potential or future use.
Current Value Assessment (CVA): Represents the value assigned to all properties by the Municipal Assessment Corporation (MPAC). The value is based on the price a property might reasonably be expected to sell for if sold by a willing seller to a willing buyer after appropriate time and exposure on an open market. For residential properties the value is derived by using a sales comparison approach and for commercial, industrial and multi-residential properties, the value is based on either the income or the cost approach.
Current Value Assessment Taxation (CVA Taxes): The taxes derived from multiplying the current value assessment of a property and the applicable tax rate for the tax class, for any given year.
Education Tax: A tax collected on the property, which goes to the Province/school boards for the provision of education services. The Province sets the tax rates that generate the education taxes.
Farm Land Awaiting Development: A sub-class that is defined as farmland used solely for farming but where there exists an approved and registered subdivision plan on the lands and development has yet to take place.
Income Approach: One of the approaches used to value property. The income approach is based on the theory that income-producing properties are bought and sold based on their income-earning potential.
Industrial Broad Class Ratio: The broad class ratio represents the average ratio for industrial properties if the municipality elects to use any optional classes.
Inter Class Tax Shift: When a portion of the total tax burden of a property class is transferred to other property classes. This type of transfer happens when:
a) the tax ratio is moved in one or more classes, or
b) the
property classes do not all increase at the same rate as a result of
re-assessment.
Multi-Residential Property Class: Property that contains seven or more self-contained residential units (e.g. low rise and high rise apartment buildings, townhouses etc.). This property class also includes vacant land zoned for multi-residential development. An optional class within multi-residential is New Multi-residential which are units built since 2000.
Municipal Property Assessment Corporation (MPAC): MPAC is a non-share capital, not-for-profit corporation. Every municipality in Ontario is a member of the Corporation. It is governed by a Board that is appointed by the Minister of Finance. Its mandate is to administer and deliver a province-wide assessment system that is based on current values, in accordance to the legislation and regulations set by the Provincial Government.
Neutral Tax Ratios: Updated tax ratios during a re-assessment year applicable to each property class (excepting residential, new multi-residential, farmland and managed forest property classes) which maintains the previous year’s relative tax burden between property classes to eliminate any inter-class shifts.
Optional Tax Classes: In order to have greater tax flexibility municipalities can opt to have optional classes in the commercial, industrial and multi-residential property classes. The current optional classes available are the office building, the shopping centre, the parking lots and vacant commercial land, the professional sports facility, the large industrial and the new-multi residential property class.
Property Assessment Notice: A notification from MPAC, to all property owners to advise them of their property’s current value assessment. The Notice also contains the property’s classification and school support designation.
Property Classes: Defined classes in the Assessment Act are
· residential,
· multi-residential, (seven or more self-contained residential units)
· commercial, (The default class for all real property and vacant land that is not specially included in any other property class.)
· industrial, (Property used for manufacturing, producing or processing anything. It also includes the research and development, the on-site storage and the on-site retail sales associated with manufacturing. Vacant land zoned for industrial development and other industrial type of activities like mining, quarrying, oil and gas or anything extracted from the earth are also included in this property class.)
· pipeline,
· farm, and
· managed forests property classes.
Property Classification/Tax Class: A categorization of a property or a portion of a property according to its use, each category representing a different tax class (e.g. residential, farm, commercial, industrial).
Provincial Threshold: Threshold established by the Province in 2000 for the ratios of the commercial, industrial and multi-residential property classes. Any municipality with ratios above the threshold is prevented from passing the full budgetary tax increase to the property class (a budgetary increase of 50% of the total tax increase is allowed for the property tax classes above the threshold).
Range of Fairness: A range of tax ratios for each property class as determined by the Province. Any municipality that is above the range of fairness can only adopt ratios that are no higher than the previous year or move toward the range of fairness (unless authorized by provincial regulation).
Rural Fire Service Area: Geographically defined area outside of the urban/suburban area that receives a volunteer firefighter as a first response.
Rural Levy: Municipal and education property taxes levied in the rural area to fund citywide and special area services applicable to the area and the property.
Sales Comparison Approach: One of the approaches used to value property. This approach is based on the theory that the current value of a property is directly related to the sale price of similar properties.
Subclasses of Property Classes: For the purpose of providing tax reductions, three subclasses of real property classes are defined:
· farm land awaiting development,
· commercial and industrial vacant land, and
· commercial and industrial excess land subclass.
Tax Burden: The amount of property taxation, in any year, that a class of properties is billed. The total property taxes billed to all classes, in any year, represents the taxation required for municipal purposes (as determined through the budget setting process) and for education purposes (as determined by the Province).
Tax Ratios: Tax ratios express the relationship that the municipal tax rate for each property class bears to the tax rate for the residential property class. In doing so, tax ratios determine the relative tax burden of each property class in relation to the residential property class. Council has the ability, on an annual basis, to adjust tax ratios and consequently the relative burdens of property taxation for municipal purposes between classes.
Urban Levy: Municipal and education property taxes levied in the urban/suburban area to fund citywide and special area services applicable to the area and the property.
Valuation Date: A date established by the Province that represents the point in time at which a property’s assessment value was based. Starting in 2006, the valuation date in Ontario will be January 1. For taxation years 2009 through 2012 the valuation date will be January 1, 2008. Assessment increases will be phased in over four years. Assessment decreases were effective in the first taxation year of the phase-in 2009.