10.  Report of the Task Force on Property Assessment and Tax Issues

 

             Rapport du groupe de travail sur les questions d’évaluation et de
taxes foncières

 

 

Committee Recommendations as Amended

 

That Council:

 

1. Approve recommendations 1, 2, 5, 6, 7 and 15 (to the Province of Ontario);

2. Refer to the 2002 Budget Process recommendations 9, 10, 11, 12, 13, 14 and 16 to be accompanied by a staff analysis;

 

3. Refer to the 2002 Budget Process recommendations 17 and 18 (re. Multi-residential property tax reform), to be accompanied by a staff analysis of the impact of a 2-year phase-in as proposed by the Task Force;

 

4. Refer recommendations 3, 4, 8, 19, 20, 21, 22, 23, 24 and 25 (to the City of Ottawa) to staff for a report back to Committee and Council;

 

5. Approve recommendation 26 regarding the circulation of the Task Force report; and

 

6. Approve that the staff report on the Task Force’s recommendations include an analysis of whether the significant property tax reduction to multi-residential landlords in 1998 has been reflected in lower rents.

 

 

Recommandations modifiées du comité

 

Que le Conseil municipal :

 

1.         approuve les recommandations 1, 2, 5, 6, 7 et 15 (effectuées au gouvernement de l’Ontario);

 

2.         soumette au processus budgétaire 2002 les recommandations 9, 10, 11, 12, 13, 14 et 16, auxquelles sera jointe une analyse effectuée par le personnel;

 

3.         soumette au processus budgétaire 2002 les recommandations 17 et 18 (ayant pour objet la réforme des taxes foncières sur les biens immeubles résidentiels), auxquelles sera jointe l’analyse du personnel sur les incidences d’une instauration progressive sur deux ans, telle que proposée par le groupe de travail;


 

 

 

4.         soumette les recommandations 3, 4, 8, 19, 20, 21, 22, 23, 24 et 25 (effectuées à la Ville d’Ottawa) au personnel afin que ce dernier fasse rapport au Comité ainsi qu’au Conseil municipal;

 

5.         approuve la recommandation 26 concernant la circulation du rapport du groupe de travail;

 

6.         approuve que le rapport du personnel sur les recommandations du groupe de travail comprenne une analyse visant à évaluer si les réductions importantes des taxes foncières octroyées aux propriétaires d’immeubles à logements multiples en 1998 se sont traduites par une baisse des loyers. 

 

 

 

 

 

Documentation

 

1. Task Force on Property Assessment and Property Tax Issues Chair’s report dated
21 November 2001 is immediately attached (ACS2001-CCV-TTF-0001).

 

2. An Extract of Draft Minute, 04 December 2001, immediately follows the report and includes the voting record.

 

3. City of Ottawa Task Force on Property Assessment and Property Tax Issues Final Report, 27 November 2001, was previously distributed to all members of Council and is held on file with the City Clerk.

 

 


Report to/Rapport au:

Corporate Services and Economic Development Committee
Comité des services organisationnels et du développement économique

 

and Council/et au Conseil

 

21 November 2001/le 21 novembre 2001

 

Submitted by: Chair, Task Force on Property Assessment and Property Tax Issues

Soumis par: Président, Groupe de travail sur les questions d’évaluation

et de taxes foncières

 

Contact Person:  Diane Blais, Advisory Committee Coordinator,

Corporate Services Department

Personne contacte :  Diane Blais, Coordonnatrice de comités consultatifs,

Services généraux

580-2424 x28091, diane.blais@city.ottawa.on.ca

 

 

 

ACS2001-CCV-TTF-0001

 

SUBJECT:

REPORT OF the TASK FORCE ON PROPERTY ASSESSMENT AND PROPERTY TAX ISSUES

 

OBJET:

RAPPORT DU GROUPE DE TRAVAIL SUR LES QUESTIONS D’ÉVALUATION ET DE TAXES FONCIÈRES

 

REPORT RECOMMENDATION

 

That the Corporate Services and Economic Development Committee recommend Council adopt the recommendations of the Task Force on Property Assessment and Property Tax Issues, as outlined in the attached report. 

 

 

RECOMMANDATION DU RAPPORT

 

Que le Comité des services organisationnels et du développement économique recommande au Conseil municipal d’adopter les recommandations du Groupe de travail sur les questions d’évaluation et de taxes foncières, telles qu’indiquées dans le rapport ci-joint.

 

 

BACKGROUND

 

At its 11 April 2001 meeting, Ottawa City Council passed a motion to establish a Task Force on Property Assessment and Property Tax Issues to conduct a public review of property assessment issues, of the appropriate role of property taxes in funding local services and provincially-mandated services, and of the appropriate use of provincial tax revenues to better enable municipalities to provide public infrastructure necessary for economic activity.  Furthermore, the Task Force was asked to report on the effects of a reduction in the multi-residential tax rate as per Council Motion No. 12/2 and Council Motion No. 12/3.  (see Document 1). Membership of the Task Force was approved by Council on 11 July 2001 (see Document 2).

 

The Task Force began its work in September 2001, meeting weekly to adhere to its November reporting deadline.  It held fourteen (14) meetings, including three (3) Town Hall meetings at which members of the public were invited to make presentations and express their views on the range of issues within the Task Force’s mandate. The Task Force heard from over 60 taxpayers as part of its activities, and heard presentations from the Municipal Property Assessment Corporation, as well as professionals involved in the property assessment and property taxation field.

 

This report summarizes the findings and recommendations of the Task Force on Property Assessment and Property Tax Issues. A full copy of the report has been distributed separately.

 

 

DISCUSSION

 

Property taxes are a function of property assessment, based on current market value as assessed by the Municipal Property Assessment Corporation (MPAC - an agency governed by provincial legislation), and the tax rate (formerly the mill rate) set for municipal purposes by the City of Ottawa and for education purposes by the Government of Ontario. Property re-assessment is now being conducted province-wide, and last year properties in Ottawa were re-assessed from 1996 values to 1999 values.

 

Last year’s re-assessment increased on average Ottawa’s residential property assessment by 4.6%. For non-residential properties the average increase varied from 20.5% to 31.3% depending on property tax class (however, commercial and industrial tax increases as a result of higher assessments were capped at 5% by provincial legislation). Increases in property values varied by City ward and by neighbourhood, due to local housing market conditions. As a result of increased property assessments, however, an estimated 83,000 residential properties in Ottawa were facing higher property taxes despite no increase in the City’s tax rate – indeed, the City’s residential tax rate was adjusted downwards to avoid a windfall gain to the City. Nevertheless, over 38,000 homes were facing a property tax increase of over 5% from the provincial re-assessment process alone.

 

As a result, many homeowners are expressing concern over property tax increases that they cannot afford on their homes, and that they cannot hold elected representatives accountable for. The lack of accountability for property tax increases as a result of higher assessments comes from the reliance on property sales as a means of determining property values, not from a vote by a democratically-elected municipal representative. This is particularly problematic in areas of high housing demand, where property values have increased in some cases by over 40% (i.e. the Glebe, Carlingwood, Crystal Beach-Lakeview, etc.). This can pose particular hardship for seniors living on retirement incomes, some of whom find it difficult to cope with property tax increases of these magnitudes.

 

These concerns are expected to be further exacerbated in the 2002 re-assessment, based on year 2001 property values, as Ottawa’s hot housing market that year sent up house prices by a reported 16%.

 

The problem of higher property taxes is compounded by the increase in responsibilities being passed onto municipalities (and therefore their taxpayers) as a result of the provincial Local Services Realignment initiative (commonly referred to as  ‘provincial downloading’), and the removal of previous provincial support for local infrastructure needs (i.e. roads, sewers, public transit, etc.).

 

There is concern that property taxes, originally designed to fund local property-related services such as fire and police protection, roads, sidewalks, parks, etc., are now funding provincially-mandated programs such as social assistance, social housing, and child care subsidy programs. These involve substantial income re-distribution to meet worthwhile social objectives, yet property taxes are not based on ability-to-pay principles. Currently such provincially-mandated programs take up over 20% of the municipal property tax load, rising to 45% of all the property tax bill when the provincial property tax for education is added in.

 

In its work the Task Force attempted to determine what criteria or principles might be most appropriate for evaluating the property assessment and tax matters before it. How do we measure a good tax system? All the goals compatible? Are some more important than others? And how do we balance competing goals?

 

To aid in answering these questions, the Task Force engaged the services of Professor Frances Woolley, from the Department of Economics at Carleton University, to develop a Primer on the Principles of Good Property Taxation, which is summarized below and which can be found in full detail in Appendix 6.5 of the report. In brief, among the principles against which the Task Force measured its work are the following:

 

·      Neutrality

·      Fairness

·      Stability

·      Flexibility

·      Accountability

·      Simplicity and Transparency

 

It was the view of many members of the public that the Task Force heard (and was reflected in the research of the Task Force itself) that the current property tax system fails most, if not all, of these principles.

 

The recommendations of the Task Force falls into 3 major categories: the role of property taxes (what it is and what it should do); property assessment; and making property taxes work fairer.


 

 

Property Taxes – What it is and what it should do:

The Task Force examined property taxes in the context of the principle of ability to pay, the benefit principle (i.e. paying for benefits received), and in terms the ability of municipalities to raise revenues to meet their fiscal responsibilities. The Task Force concluded that property taxes were appropriate to fund property-related services such as roads, police, fire protection, etc. (based on the benefit principle), but were inappropriate to fund such broad social/income-redistributive programs such as welfare assistance, education, social housing, child care subsidies, etc. – programs that the principles of fairness indicate are better funded from ability-to-pay taxes (which property tax – a regressive tax – is not). As a result the Task Force directs its recommendations in this area to the Province of Ontario.

 

The Task Force, in examining the benefit principle, determined that user fees would be more appropriate to fund some of the costs of municipal infrastructure than property taxes. In particular the Task Force, in reviewing the practices in other municipal jurisdictions, makes recommendations to the Province of Ontario to permit municipalities to access portions of the fuel tax and vehicle registration fees in order to help fund local transportation infrastructure. Similarly, the Task Force recommends that municipalities be permitted to levy a visitor room or hotel tax to recover some of the costs of municipal infrastructure to visitors.

 

 

Property Assessment:

 

The Task Force heard a great deal of frustration over the complexity, lack of transparency, and lack of accountability regarding the system of property assessment used in Ontario. Following considerable discussion, the Task Force is recommending to the Province of Ontario modifications to the method of current market value assessment to make the concepts more understandable and acceptable to property taxpayers. As well, the Task Force makes a number of recommendations to the Municipal Property Assessment Corporation to make its methodologies more open and transparent to taxpayers, and to the Assessment Review Board to improve its operations.

 

 

Making Property Taxes Fairer:

 

The Task Force was mandated by Ottawa City Council to review the issue of equalizing multi-residential assessment with residential assessment. As well, the Task Force heard and read evidence concerning the excessive burden for commercial and industrial property taxpayers relative to the benefits received, and discussed the special circumstances of heritage properties and small rural businesses.


 

The Task Force strongly believes that there is no justification for requiring tenants in multi-residential buildings to pay more in property taxes than their residential neighbours, and recommends to Ottawa City Council that this inequity be eliminated. Further, the Task Force makes recommendations regarding the process by which the unequal tax burdens of commercial and industrial tax classes may be addressed.

 

As well, the Task Force examined mitigation measures for residential property taxpayers as a result of excessive assessment increases, and recommends to the City of Ottawa measures applicable to seniors, the disabled, and low-income families.

 

And finally, because the Task Force believes that citizen participation in policy making is an important aspect of democratic government, the Task Force is recommending to the city of Ottawa have that its report be circulated widely not only to provincial and municipal decision makers, but that it be circulated to community associations and be made available to the general public in an accessible format.

 

A summary of the recommendations can be found in Document 3.

 

 

CONSULTATION

 

As noted above, in addition to its regular meetings, the Task Force held three Town Hall meetings on September 25, October 11 and October 22, at which time it heard from public delegations. As well, the Task Force received communications from taxpayers on the issues covered by its mandate.

 

As well, the Task Force received presentations from the Municipal Property Assessment Corporation, the Building Owners & Managers Association, the Eastern Ontario Landlords Organization, the Greater Ottawa Chamber of Commerce, the Rideau Chamber of Commerce, the Tenants & Landlords for Fair Taxation Coalition, and Rideau Assessment & Tax Evaluation Committee, and professionals in the property assessment and taxation field.


DOCUMENT 1

Task Force Mandate - City of Ottawa Council Motions:

(from the Ottawa City Council meeting of April 11, 2001)

 

MOTION NO. 9/14

 

Moved by Councillor Alex Cullen

Seconded by Councillor Shawn Little

 

Whereas residents of Ottawa and their elected representatives have expressed concern over significant property tax increases as a result of market value assessment, based on increased property values resulting from housing market fluctuations, despite no change in the City’s tax rates, despite no increase in City services, and unrelated to any change in to the homeowner’s income;

 

Whereas residents of Ottawa and their elected representatives have expressed concerns over the burden of property taxes, in particular the cost of contributing to provincially-mandated income re-distribution programs (social assistance, social housing, child care subsidies);

 

Whereas residents of Ottawa and their elected representatives have expressed their concerns over the limitations of property taxes upon the ability of municipalities to meet their responsibilities in providing public infrastructure (i.e. roads, sidewalks, transitways, water, sewers, etc.);

 

Whereas the City of Ottawa is urging the Provincial Government to begin a public review of property assessment issues, of the appropriate role of property taxes in funding local services and provincially-mandated services, and of the appropriate use provincial tax revenues to better enable municipalities to provide public infrastructure necessary for economic activity;

 

THEREFORE the City of Ottawa establish a Task Force to conduct a public review of property assessment issues, of the appropriate role of property taxes in funding local services and provincially-mandated services, and of the appropriate use provincial tax revenues to better enable municipalities to provide public infrastructure necessary for economic activity;

 

AND that this Task Force be composed of City of Ottawa ratepayers, City Councillors, and City staff, that it be empowered to hold public meetings to elicit public comment on these matters, and that it prepare a report for City Council’s approval by November, 2001, to be submitted to the Provincial Government;

 

AND that the Association of Municipalities in Ontario be requested to establish a similar Task Force at the provincial level.

CARRIED

 

(from the Ottawa City Council Meeting of May 23, 2001)

 

MOTION NO. 12/2

 

Moved by Councillor Jacques Legendre

Seconded by Councillor Elisabeth Arnold

 

WHEREAS tenants of units in buildings taxes in the MULTI-RESIDENTIAL property tax class have historically paid a disproportionate share of municipal taxes through their rents;

 

WHEREAS those who are economically-challenged or disadvantaged in our society are most frequently tenants;

 

WHEREAS 15%-20% of rents paid by tenants go directly to pay property taxes;

 

WHEREAS Provincial law requires that any savings generated through lowering property taxes be passed on to tenants;

 

BE IT RESOLVED THAT the reduction proposed by staff in 2001 for the property tax ratio in the MULTI-RESIDENTIAL property tax class be applied every year until parity with the RESIDENTIAL class is achieved.

 

APPENDIX

 

MULTI-RESIDENTIAL

 

YEAR                           TAX RATIO

            

                                                   (2.3359 is current ratio)

2001     2.1780

2002     2.0201

2003     1.8622

2004     1.7043

2005     1.5464

2006     1.3885

2007     1.2306

2008     1.0000

 

 


 

MOTION NO. 12/3

 

Moved by Councillor Alex Munter

Seconded by Councillor Rick Chiarelli

 

WHEREAS Council has already cut the multi-residential tax rate for 2001 and this motion seeks to repeat these tax reductions in 2002, 2003 and future years;

 

RESOLVED THAT this motion be referred to the Task Force on Property Assessment & Property Tax Issues for a report on this matter, which is to include:

CARRIED


(from the Ottawa City Council meeting of September 26, 2001)

 

AGRICULTURAL AND RURAL AFFAIRS COMMITTEE REPORT 6

 

1.             MOTION – SMALL RURAL COMMERCIAL BUSINESS TAX CLASS

 

That Council approve the following motion:

 

WHEREAS rural businesses experienced an unprecedented increase in their share of the total commercial taxes paid in Ottawa-Carleton for the 1998 taxation year;

 

WHEREAS that increase was attributed to two factors - the notable decrease in assessed value of inner-city commercial properties; and, the former provincial rule which specified that any "loss" in taxation within a class had to be made up within that class (i.e., the share of the overall tax burden could not be shifted between classes);

 

WHEREAS it was promised to rural businesses, should the relative weight of assessed values within the broad commercial class return to a balance comparable to pre-1998, that rural businesses would see that change reflected in a decreased share of taxes within the commercial class;

 

WHEREAS Council recognized this promise when it asked the Province, on 23 May, 2001 to create a special property subclass within the commercial tax class referred to as Small Rural Commercial Businesses" to allow municipalities the opportunity to reduce property tax burden in order to strengthen and sustain rural economic development";   

 

WHEREAS, as expected, the 2000 assessment noted a significant increase in the value of inner-city properties, particularly office properties;

 

WHEREAS, because the Province changed certain tax rules beginning with the current taxation year, making it possible to shift the tax burden between property classes;

 

WHEREAS the broad commercial class in the 2001 taxation year was required, by Council policy, to shoulder a greater share of the total tax requirement so that a lower tax rate could be created overall;

 

WHEREAS the result of this policy decision by Council is that small rural businesses did not receive the property taxation relief from a re-balancing of the assessed values within the commercial class as promised, and continue to pay considerably more than their fair share of the commercial tax burden;

 

THEREFORE BE IT RESOLVED that the Corporate Services Department report to the Agriculture and Rural Affairs Committee no later than the end of October 2001 on the negotiations with the Province on the creation of the Small Rural Commercial Business tax class, and in the absence of significant progress, recommend other strategies that would restore rural businesses to a position of fairness and equity within the commercial tax class, and;

 

THAT the Agriculture and Rural Affairs Committee recommend Council approve this recommendation and that it be forwarded to the Special Advisor to the Minister of Finance, responsible for review of the regulation that defines property classes under the assessment system, and to the Corporate Services and Economic Development Committee, and to the City of Ottawa Task Force on Property Assessment and Property Tax Issues for information.

CARRIED

 

(from the Ottawa City Council meeting of November 14, 2001)

 

Moved by Councillor Gord Hunter

Seconded by Councillor Rainer Bloess

 

That the City of Ottawa request that the proposed Municipal Act 2001 be amended to include a provision for the City to impose a visitor room tax on hotel, motels and similar establishments with all monies raised to be made available for reinvestment in the Tourism and Convention business.

CARRIED


DOCUMENT 2

 

 

Task Force Membership

 

Council Members:

 

Councillor Alex Cullen (Bay Ward) – Chair

Councillor Rick Chiarelli (Baseline Ward)

Councillor Clive Doucet (Capital Ward)

Councillor Janet Stavinga (Goulbourn Ward)

 

Appointed Members:

 

Lewis Auerbach

John Dickie (representing the business community and nominated by the Greater Ottawa

Chamber of Commerce and the Business Owners and Managers Association – (BOMA))

Gilles E. Girard

Glenn Lucas

John Ludington

Allan Maslove

Bev Millar (representing the Rideau Township Chamber of Commerce)

Len Potechin

 

Staff:

 

Diane Blais (Committee Co-ordinator)

Ken Hughes (Financial Services)

Dan O’Hagan (Office of Councillor Cullen)


DOCUMENT 3

 

Summary of Task Force Recommendations:

 

1.         The Task Force recommends to the Province of Ontario that property taxes should continue to form the basis of funding those municipal programs that are justifiably and closely related to serving property (land and buildings), based on the benefit principle. This would include (but not be limited to) police, fire protection, and infrastructure (roads, sewers, community facilities, etc.).

 

2.         The Task Force recommends to the Province of Ontario that property taxes should not form the basis of funding such income-redistributive social programs as education, welfare assistance, childcare subsidies, social housing, and public health; these programs should be funded from ability-to-pay tax revenues.

 

3.         The Task Force recommends that the City of Ottawa should move to the fullest use of user fees based on the benefit principle - where possible, where meterable, where it promotes efficient use of resources, and taking into account issues of access to these services by low income residents.  Further, the City of Ottawa should review the extent to which the benefit principle is being applied to City services through user fees and on any changes which could be made to more fully reflect the benefit principle in funding local services and programs.

 

4.         The Task Force recommends that the City of Ottawa develop or extend programs to ensure access for low-income residents for all existing and future City services funded by user fees.

 

5.         The Task Force recommends that the Province of Ontario amend the Municipal Act to permit municipalities to impose a visitor room tax on hotels, motels and similar establishments.

 

6.         The Task Force recommends that the Province of Ontario provide some portion of the fuel tax to municipalities, to be used to fund the provision of local transportation services (roads, sidewalks, public transit, etc.).

 

7.         The Task Force recommends that the Province of Ontario provide some portion of the vehicle registration fee to municipalities, to be used to fund the provision of local transportation services (roads, sidewalks, public transit, etc.).

 

8.         The Task Force recommends that the City of Ottawa, directly through its own provincial and federal representatives, as well as through the Association of Municipalities in Ontario (AMO) and the Federation of Canadian Municipalities (FCM), press for an ongoing funding program from both federal and provincial governments to support municipal infrastructure, based on joint priorities.

 

9.         The Task Force recommends that the Municipal Property Assessment Corporation, as a public agency, make the methods, parameters and technology upon which it calculates property assessment open, accessible and transparent to property taxpayers.

 

10.       The Task Force recommends that the Municipal Property Assessment Corporation, as a public agency, provide all relevant information (e.g. the subject property profile, etc.) used to calculate the assessed value of a property in its Notice of Assessment sent to the property owner.

 

11.       The Task Force recommends that the Municipal Property Assessment Corporation base its assessment of a residential property on the most recent sale price for a property (reflected in public land registry records), and indexed to average sales prices for that community, and adjusted for significant positive and negative changes to the property.

 

12.       The Task Force recommends that the Municipal Property Assessment Corporation investigate and consider adopting the pre-consultation process used for non-residential property in British Columbia and in Quebec, in order reduce disputes in valuations.

 

13.       The Task Force recommends that in cases where a successful property assessment appeal has general application, then the Municipal Property Assessment Corporation adopt as a policy that it will re-assess the relevant properties based on that general application for that tax year.

 

14.       The Task Force recommends that Assessment Review Board members should be given more training on assessment practices and administrative procedures, should be appointed to longer terms to increase their independence, and should be familiar with the area under their jurisdiction.

 

15.       The Task Force recommends to the Province of Ontario that the Assessment Act be amended to permit property assessment appeals up to 30 days after the due date of final property tax bills in a tax year.

 

16.       The Task Force recommends that the Assessment Review Board establish a policy to have the costs of a successful appeal by a property taxpayer be re-imbursed by the Municipal Property Assessment Corporation; further, filing fees for appeals should be refunded in situations where disputes have been successfully resolved prior to the ARB hearing.

 

17.       The Task Force recommends that the City of Ottawa, on the basis of fairness and the benefit principle, adopt a strategy to reduce the multi-residential tax ratio, beginning in 2002, to reach an equivalent tax burden for similar residential properties within two years.

 

18.       The Task Force recommends that the City of Ottawa provide sufficient resources to enable those tenants who qualify for a rent reduction as a result of the adjustment in multi-residential tax ratio, to be able to receive such a rent decrease.

 

19.       The Task Force recommends that the City of Ottawa review the issue of the viability of small rural businesses and develop a strategy to meet their special circumstances.

 

20.       The Task Force recommends that the City of Ottawa review the issue of the viability of heritage properties and develop a strategy to meet their special circumstances.

 

21.       The Task Force recommends that the City of Ottawa should use the benefit principle to determine the property tax burden on all property tax classes (residential and non-residential).

 

22.       The Task Force recommends the City of Ottawa commission a detailed study of municipal services accruing to the residential and non-residential property tax classes, and that the results of that study be used to guide adjustments in the tax ratios of the various classes, when and where appropriate.

 

23.       The Task Force recommends that, to the extent that the equalization of tax ratios between the residential and multi-residential tax classes is implemented without being financed by new revenues or re-allocation of responsibilities, then the City of Ottawa should adjust its non-residential tax ratios so that the tax burden on the non-residential sector is not increased by that equalization.

 

24.       The Task Force recommends that, in the event that the Province of Ontario adopts recommendation #2 concerning the funding of social programs, recommendation #5  concerning a municipal hotel tax, recommendations #6 and #7 concerning fuel taxes and vehicle registration fees, then the City of Ottawa should re-examine the relative tax burdens of its tax classes, based on the benefit principle and the findings of the detailed study suggested in recommendation #22.

 

25.       The Task Force recommends that the City of Ottawa develop mitigation measures for residential property taxpayers based on the following factors:

·      The amount eligible for mitigation is the amount by which tax increase is above 5% in any given year;

·      The mitigation would be in the form of a tax deferral financed at some reasonable rate of interest (for instance prime plus 2 percentage points); and

·      The mitigation would be available to seniors whose annual incomes are below the median income line for seniors in Ottawa, those with disabilities, and those who fall below the Statistics Canada Low Income Cutoffs within the City of Ottawa.

 

 

 

26.       The Task Force recommends that, due to the need for greater public understanding of the importance of the issues of property assessment and property tax issues, the City of Ottawa circulate copies of this report to the Ontario Minister of Finance, Minister of Municipal Affairs & Housing, appropriate opposition critics, area M.P.P.s, the Association of Municipalities of Ontario, and the Municipal Property Assessment Corporation, and to community associations and taxpayer groups in the City of Ottawa, and that copies be distributed to Ottawa Public Library branches.



  REPORT OF THE TASK FORCE ON PROPERTY
ASSESSMENT AND TAX ISSUES

   RAPPORT DU GROUPE DE TRAVAIL SUR LES QUESTIONS D’ÉVALUATION ET DE TAXES FONCIÈRES

ACS2001-CCV-TTF-0001

 

Councillor A. Cullen, Chair of the Task Force, introduced the report.  He provided a PowerPoint presentation on the report highlights and the Task Force recommendations.  (Copy of the PowerPoint presentation slides are on file with the City Clerk.)   Members of the Task Force present were Gilles Girard, John Luddington, John Dickie, Glenn Lucas, Councillor J. Stavinga and Councillor R. Chiarelli.

 

Subsequent to the Task Force  (“TF”) Chair’s presentation, the Committee received the following public submissions.

 

Mr. Luigi Caparelli and Mr. Marcus Hotz, Eastern Ontario Landlord Organization.  Mr. Caparelli stated their agreement with the direction the Task Force had taken with regard to taxation of multi-residential apartments.  He noted the insufficient justification for the present rate of taxation, being twice of that on a unit of equal value in the single-family home category.  With respect to the Task Force Recommendation nos. 17 and 18, Mr. Caparelli supported this direction as indicated in the Task Force report.  Speaking to the multi-residential sector, Mr. Caparelli argued that it was actually a more cost efficient means of housing, noting the cost to the municipality was less to provide services in high density areas   In addition, he stated the current legislation required property owners to past any tax reductions through to tenants which provided an immediate impact to all tenants. 

 

In closing, Mr. Caparelli hoped Council would recognize the need to make the shift as recommended by the Task Force.  He stated the EOLO would continue to work with City staff to ensure that landlords and tenants were aware of the property tax situation and that all effected tenants receive their rent reductions promptly.  Mr. Caparelli thanked the Task Force for recognizing the current inequity and recommending the move towards tax fairness.   (Reference:  Press Release entitled “EOLO applauds major step toward tax fairness for tenants”, dated 4 December 2001 and on file with the City Clerk). 

 

Councillor Munter agreed with the principle of equalizing the taxation, but noted the question regarding if it will be passed through to the tenant.  He acknowledged the Provincial legislation requiring this, however, noted other legislation provided mechanisms to increase the rent at the same time.  Councillor Munter referenced 1998 when the Provincial Government equalized taxation on multi-residential and single family homes, and the impact was that the average single family home saw the taxes go up and there was a decrease for multi-residential landlords.  The Councillor inquired if an analysis or assessment had been completed to demonstrate that in 1998, 1999 and 2000 that rents were in fact lower as a result of the significant cut in property taxes that landlords received.

 

Mr. Caparelli confirmed that rents were lower.  He stated shortly after the tax reduction came into effect, many landlords immediately issued rebates to 1,000’s + tenants usually in the form of a rent reduction on the following rent payment.  Mr. Caparelli stated the effect of this was that the base rent was in fact lower so any subsequent increases would have been calculated on the lower base after the rent decrease.

 

Councillor Munter referenced vacancy decontrol in Ontario and the effect of increased rents due to the ability to raise the rent upon vacancy.   The Councillor stated the need to determine what the effect was from the 1998 legislation as a means to ensure a subsidy was not actually being provided to the landlord rather than the tenant.    Mr. Caparilli stated he was not aware of any study on this issue since 1999.  He acknowledged that rents did respond to market forces, however, the tenant was protected providing they remained in the unit.

 

 

Mr. Franco Falbo and Mr. John Dickie, Building Owners and Managers Association (BOMA) Ottawa.    Mr. Falbo reported that BOMA was the voice of the commercial real estate industry with 480 members.  He stated BOMA represented the members’ interests through advocacy, identification of issues and trends, education, promoting the highest industry standards and by being the source of information to media and government. 

 

The speaker expressed BOMA’s support for the report stating it was a principled and measured report that addressed the key funding and service issues for the City and all Ontario municipalities.  He hoped the Province of Ontario and Federal government would respond positively to the funding issues identified.

 

Mr. Falbo commended the Task Force for their recommendation regarding the recognition that the tax burden on the commercial and industrial property classes was substantially more than the tax burden on the residential class.   BOMA concurred that a study of the benefits received by businesses and residents and how those benefits relate to the respective tax burdens would be beneficial.  With respect to the recommendation regarding the reduction in the tax burden on residential tenants, Mr. Falbo commended the Task Force for the careful manner in which the reduction was to be implemented.  In closing, Mr. Falbo requested the Committee and Council to adopt the report.

(Reference:  Press Release entitled “BOMA Ottawa Supports Property Tax Task Force”, dated 4 December 2001 and on file with the City Clerk). 

Mr. Dick Brown, Ottawa Hotel Association (OHA).   Mr. Brown referred to recommendation no. 5 regarding the request to amend the Municipal Act to permit municipalities to impose a visitor room tax on hotels, motels and similar establishments.  He noted that the report acknowledged that the businesses were overtaxed, however, went on to recommend the addition of a hotel tax to the hotel industry.  Mr. Brown stated the OHA supported a marketing levy to be added to the room bill for visitors to Ottawa provided such funds were directed towards destination marketing (to promote Ottawa as a tourist centre).   Mr. Brown stated the industry was currently under-funded in that regard.  He pointed out that the practice of a room tax was not new, referencing the recent introduction in Hull, Quebec on October 1st.  In regards to the Hull situation, Mr. Brown stated the Outaouais Tourist Authority had 3 – 4 times more funding available for destination marketing than the Ottawa centre.  In closing, Mr. Brown stated the majority of the OHA members were willing to work jointly with the City to request authority to implement a marketing levy, provided such funds were directed at destination marketing and not other City priorities.

 

Prior to discussion on the report, Mayor Chiarelli reviewed the Motions he had received as follows:

 

Moved by Councillor R. Chiarelli

 

That the Task Force recommendations be referred to staff for analysis and presentation to the 2002 Budget Process and that the report be circulated as recommended for discussion purposes.

 

 

Moved by Councillor J. Stavinga

 

That the Corporate Services and Economic Development Committee recommend Council:

 

1. Approve recommendations 1, 2, 5, 6, 7 and 15 (to the Province of Ontario);

2. Approve recommendations 9, 10, 11, 12, 13  (to MPAC) and 14 and 16 (to the Assessment Review Board);

 

3. Refer to the 2002 Budget Process recommendations 17 and 18 (re. Multi-residential property tax reform), to be accompanied by a staff analysis of the impact of a 2-year phase-in as proposed by the Task Force;

 

4. Refer recommendations 3, 4, 8, 19, 20, 21, 22, 23, 24 and 25 (to the City of Ottawa) to staff for a report back to Committee and Council;


5.             Approve recommendation 26 regarding the circulation of the Task Force report.

 

 

Councillor Meilleur referenced recommendation no. 17 regarding a strategy to reduce the multi-residential tax ratio and the cost of approximately $30 per household per year.  The Councillor inquired how this cost was calculated.   TF Chair Cullen, in reference to page 54, reviewed the example and calculations provided.  He pointed out it was the Task Force’s recommendation that this be referred to the 2002 budget consideration, at which time Council would have the opportunity to move forward with a two or three year phase-in.   Councillor Meilleur stated the need to review the staff analysis on the impact of this recommendation.

 

Councillor Munter commended the Task Force for their work and report, noting the beneficial discussion of the principles through the media.    Further to the Councillor’s previous comments, he inquired if the TF Chair was aware of any study, evaluation or assessment of the significant tax reduction to multi-residential landlords in 1998 and whether it did translate into lower rents. 

 

TF Chair Cullen confirmed he was not aware of any such study, but noted that the recommendations were developed to ensure the tax reduction was passed onto the ultimate taxpayer  (the tenant) and this was fundamental.   He agreed that there was no benefit to reducing taxes if it was not going to assist the tenant.  Councillor Cullen indicated that they had received a commitment from the Eastern Ontario Landlords Association that they, in partnership with City staff, would ensure that the tax reduction was passed onto the tenant.  However, with respect to recommendation no. 18, it was to ensure fairness for those that were not part of the EOLA and stated there may be a need to rely on the Tenant Protection Act provisions.   Councillor Munter acknowledged the protection to the tenant, however, he referenced the Act and the ability to also implement rent increases.   Councillor Munter moved an amendment to the Motion to request a staff report include an analysis on the significant tax reduction provided in 1998.

 

Moved by Councillor A. Munter

 

Approve that the staff report on the Task Force’s recommendations include an analysis of whether the significant property tax reduction to multi-residential landlords in 1998 has been reflected in lower rents.

 

Councillor R. Chiarelli referenced the recommendations directed to MPAC and suggested there may be cost implications to the City.  Councillor Cullen explained there would actually be cost savings to the taxpayer organizations that support MPAC due to the simpler system proposed by the Task Force.

 

Councillor Stavinga referenced the public delegation and comments on the proposed hotel tax.  The Councillor inquired if the recommendation precluded the position advanced by the OHA.  TF Chair Cullen did not believe there was a direct conflict and reminded Committee of the recent Council Motion regarding a hotel tax in relation to the new Municipal Act.  He reviewed that Motion and its reference that the monies raised were to be made available for reinvestment in the Tourism and Convention business.  Councillor Cullen stated the Task Force did not specifically endorse this concept because the visitors to the City, in using and consuming City services, should be prepared to contribute back.  He added how Council decided to expend that revenue remained with the purview of Council.

 

Councillor Bellemare commended the TF Chair and members for the fine work on a complicated issue.  He noted the number of problems associated with how municipal services across Ontario were funded, as highlighted in the report.   Councillor Bellemare stated the report had raised the level of consciousness of both elected officials and the public on the issues. 

 

The Councillor referenced recommendation no. 26 with respect to the need for greater public understanding and the importance of the issues; he commented on the proposed wide circulation of the report.  The Councillor expressed his disappointment that the document was not made available in both official languages, and inquired if that was the intent.   TF Chair Cullen stated it was their expectation that the report would be translated according to the City policy.  He noted the documentation available at the town hall meetings were translated in both languages and the recommendations were also available in both languages.  

 

Councillor R. Chiarelli withdrew his original referral motion and moved an amendment to the Stavinga Motion, specifically amending recommendation no. 2 from “approve” to “refer” recommendations 9, 10, 11, 12, 13, 14 and 16 to the 2002 budget process.  The remaining 4 recommendations of the Stavinga Motion remained as presented.

 

Councillor Stavinga hoped Committee would not support the Chiarelli amendment, noting the tremendous amount of work completed by the Task Force.  She did not believe there would be any value added in referral to City staff for further review, pointing to the extensive involvement of Financial Services staff throughout the process.  Councillor Stavinga indicated staff were comfortable with her Motion as originally presented.

 

Councillor Kreling echoed his appreciation to the TF Chair and members for their time and efforts.  The Councillor expressed his support for the Chiarelli Motion.  Speaking to each set of recommendations, Councillor Kreling commented the items to be referred to the Province concerned issues that had been before Council in the past.   With respect to the recommendations to be referred to MPAC, Councillor Kreling stated they were relatively new concepts and believed a benefit could be gained from staff review during the budget process.  In closing, he expressed his support for the Munter Motion.

 

The TF Chair reviewed the recommendations to be referred to MPAC and did not believe they required further staff analysis, but held merit for support at this time.  He indicated staff expertise was available through the process and believed it was appropriate to proceed now rather than impede the process. 

 

Councillor Meilleur echoed her appreciation for the Task Force work and report.  However, she stated she was not prepared to completely endorse it at this time and looked forward to staff analysis and advise.

 

Councillor Chiarelli reiterated his appreciation to the Task Force, commenting on the dedication shown by the Task Force Chair.  He congratulated the group for the comprehensive report that identified the large range of important issues.  However, Councillor Chiarelli believed there may be costs to the City that were not evident at this time, and the City may be required to cover.  He stated further analysis was required and would be beneficial, adding the budget process was only a few months away.  In closing, Councillor Chiarelli concurred that the report required public circulation and discussion.  However, he suggested it was best that it be kept intact as a unit for this public distribution, which would allow for debate on all the issues once Council had received public feedback.

 

With respect to the circulation of the report as outlined in recommendation 26, Councillor Stavinga suggested a cover letter accompany the report that would explain to the public the status of the report and the 26 recommendations  (which had been advanced to the Province and which remained with staff for review and further debate).   The Committee concurred with this direction.

 


 

Moved by Councillor R. Chiarelli

 

That the Corporate Services and Economic Development Committee recommend Council:

 

1. Approve recommendations 1, 2, 5, 6, 7 and 15 (to the Province of Ontario);

2. Refer to the 2002 Budget Process recommendations 9, 10, 11, 12, 13, 14 and 16 to be accompanied by a staff analysis;

 

3. Refer to the 2002 Budget Process recommendations 17 and 18 (re. Multi-residential property tax reform), to be accompanied by a staff analysis of the impact of a 2-year phase-in as proposed by the Task Force;

 

4. Refer recommendations 3, 4, 8, 19, 20, 21, 22, 23, 24 and 25 (to the City of Ottawa) to staff for a report back to Committee and Council;

 

5. Approve recommendation 26 regarding the circulation of the Task Force report.

 

CARRIED as amended

Councillors A. Munter and J. Stavinga dissented

 

 

Moved by Councillor A. Munter

 

6. Approve that the staff report on the Task Force’s recommendations include an analysis of whether the significant property tax reduction to multi-residential landlords in 1998 has been reflected in lower rents.

 

                         CARRIED