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.