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10. UNCOLLECTABLE TAXES – SECTION 354 (1)(2)(4) OF THE MUNICIPAL ACT, 2001, S.O. 2001, c.25
TAXES NON PERCEVABLES, - ARTICLE 354 (1)(2)(4) DE LA LOI SUR LES MUNICIPALITÉS, 2001, L.R.O. 2001, C.25
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COMMITTEE RECOMMENDATION
That Council approve taxes and interest/penalties in the amount of $619,881.41 be struck from the collector's roll in accordance with the list, entitled as Document 1.
RECOMMANDATION DU COMITÉ
Que le Conseil approuve que les impôts et les intérêts/pénalités de 619,881,41$ soient retranchés du rôle de perception, conformément à la liste intitulée Document 1.
DOCUMENTATION
1. City Treasurer’s report dated 11 August 2011 (ACS2011-CMR-FIN-0048).
Report to/Rapport au :
Finance and Economic Development Committee
Comité des finances et du développement économique
11 August 2011 / le 11 août 2011
Submitted by/Soumis par : Marian Simulik, City Treasurer/ Trésorière municipale
Contact Person/Personne resource: Ken Hughes, Deputy City Treasurer Revenue/ Trésorier municipal adjoint - Recettes
Finance Department/Services des finances
613-580-2424 ext./poste13485, Ken.Hughes@ottawa.ca
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SUBJECT:
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UNCOLLECTABLE TAXES – SECTION 354 (1)(2)(4) OF THE MUNICIPAL ACT, 2001, S.O. 2001, c.25 |
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OBJET :
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TAXES NON PERCEVABLES, - ARTICLE 354 (1)(2)(4) DE LA LOI SUR LES MUNICIPALITÉS, 2001, L.R.O. 2001, C.25 |
That the Finance and Economic Development Committee recommend Council approve taxes and interest/penalties in the amount of $619,881.41 be struck from the collector's roll in accordance with the list, entitled as Document 1.
Que le Comité des finances et du développement économique recommande au Conseil municipal d’approuver que les impôts et les intérêts/pénalités de 619,881,41$ soient retranchés du rôle de perception, conformément à la liste intitulée Document 1.
BACKGROUND
In accordance with the provisions of Section 354 (1), (2) and (4) of the Municipal Act, 2001, this report recommends that outstanding taxes and interest/penalties in the amount of $619,881.41, which are deemed to be uncollectable, be struck from the collector's roll.
DISCUSSION
In accordance with section 354, the treasurer can remove taxes from the tax roll as a result of a prior tax relief under section 357 or 358 of The Municipal Act, 2001 such as the land has become exempt from taxation during the year or the preceding year; for a duplication of assessments/taxes relating to the same property or for any overcharges due to a gross or manifest error.
Subsections 354(2)(a) and 354(4)(b) provide that the treasurer of a local municipality shall remove unpaid taxes from the tax roll if, the Council of the local municipality, on the recommendation of the treasurer, writes off the taxes as uncollectable. Document 1, on file with the Deputy City Treasurer, Revenue, outlines the taxes deemed uncollectable. It includes 24 accounts including the two properties that are further described below.
3695 Kinburn Side Road
The property located at 3695 Kinburn Side Road is owned by a numbered company. The previous owner operated a bus company and an automotive repair centre on this site from 1965 to 2002. During the 1990’s, it was suspected the property was contaminated from the activities conducted on the site.
Around amalgamation the owners put the property up for sale but there was no interest due to possible hazardous waste conditions resulting from the previous business which operated at this site. The property was advertised for tax sale in November, 2003. There were no bids. City staff had contacted the Canadian Imperial Bank of Commerce (CIBC), the Ministry of Environment, the previous owners and the current owners. In April, 2004 the CIBC sold the property under Power of Sale. Property tax arrears remained on the tax account.
In January 2006, the City registered a new Tax Arrears Certificate on title. Revenue staff met with representatives for the new owner, a numbered company in May 2006. The business provides service, maintenance and inspection of propane oil tanks and had been operating since May 2004. In the meeting, it was brought to the City’s attention that Phase 1 and 2 environmental studies have been done and the estimated cost for clean up was approximately $2 million dollars. The company has also employed the services of a Tax Consultant to appeal the property assessment. Meanwhile, the company agreed to make lump sum payments and monthly payments to reduce the debt. From May, 2006 to April 2009, these payments totalled $38,500. It was the company’s decision in May, 2009 to stop making payments and seek tax relief from the City because the property tax arrears were a heavy burden on a company which was trying to stay in business.
Current owners who operate the numbered company are in process of remediation and cleaning up the property at considerable costs. When the business started in 2004, they were in the business of service, maintenance and inspection of propane oil tanks. The business has since expanded to the repair of heavy trucks and certification of buses for road safety. They have approached the City seeking relief from the property tax arrears as the cost of remediation well exceeds the tax arrears. In addition, the property assessment as set by MPAC far exceeds the market value. The current balance of property tax account includes arrears from 1997 to 2011 and totals $383,271.61. Unfortunately, the property assessment appeals only covered a couple of the years in accordance with legislative timeframe limitations. Therefore, all years cannot be adjusted to reflect the value of the contaminated property. The current owners have agreed to pay $50,000 towards the arrears in consideration of the cost of remediation and value of the contaminated property.
Staff are therefore recommending that the remainder of the taxes be struck from the roll.
135 Rivington Street
In November, 2005, the City was contacted by the president of the Corporation which occupied this location and which operated a feed business at this location until July, 2004. The owner of the property filed for bankruptcy in 1995. The Corporation that occupied this location paid the property taxes until July, 2004 when it went out of business.
After the Corporation vacated the property in July, 2004, the building remained unoccupied. Over the years, the City had to board up the property on several occasions due to various vandalism acts as well as becoming unsightly. The property standards costs were added to the tax roll.
In accordance with municipal tax sale legislation, the City registered a Tax Arrears Certificate on title in April 2007. The property was advertised for Tax Sale in November 18, 2009 and there were no bids. Due to escalating safety concerns the building was condemned. The City demolished 135 Rivington Street in August, 2010 at a cost of $130,823.61. This amount was added to the tax roll in November, 2010.
Since there are likely environmental issues, the cost of cleanup may exceed the present value of the property. From the end of 2004 to 2011, the outstanding balance is $316,115.94. Staff are therefore recommending to reduce the outstanding taxes to $92,883.91.
There are no rural implications.
COMMENTS BY THE WARD COUNCILLOR(S)
N/A
LEGAL IMPLICATIONS
There are no legal impediments to approving the recommendations in this report. The Municipal Act, 2001, Section 354 provides Council with authority to approve these cancellations.
There are no risk implications of this report.
There is no impact to the Department’s financials as sufficient funds were provided to the City’s Allowance for Doubtful Taxes Receivable and the Provision for Allowances, Tax Remissions and Exemptions. The share of uncollectable taxes for the School Board is recovered back in the same proportion as the taxes are levied in the year the account is deemed uncollectable. Interest/penalties on uncollectable taxes are charged to the City Wide Tax cost centre as interest/penalty write-offs.
ENVIRONMENTAL IMPLICATIONS
There are no environmental implications of this report.
TECHNOLOGY IMPLICATIONS
There are no technological implications of this report
CITY STRATEGIC PLAN
There are no implications to the City’s Strategic plan.
SUPPORTING DOCUMENTATION
Document 1 is’ Confidential’ as it contains information relative to personal matters about an identifiable individual.
Document 1 – Report #1 - Realty Taxes (1994 to 2011) total Write-off Report in the amount of $619,881.41. (Distributed Separately and held on file with the Deputy City Treasurer, Revenue)
Upon approval of Council, staff of Revenue Branch will strike the outstanding taxes and interest/ penalties deemed uncollectable from the collectors roll.