2. 2007 Tax Ratios and Other Tax Policies

COEFFICIENTS FISCAUX ET AUTRES POLITIQUES D’IMPOSITION DE 2007

Committee RecommendationS AS AMENDED

That Council approve:

1. The adoption of the following optional property classes in 2007:

· 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; and

· Professional sports facility class.

2. The adoption of the following tax ratios for 2007:

Tax Class	Ratios **
Residential	1.000000
Multi-Residential	1.800000
New Multi-Residential	1.000000
Farm	0.200000
Managed Forest	0.250000
Pipeline	1.543789
Commercial Broad Class	2.254348
- Commercial	2.146121
- Office Building	2.592757
- Parking Lots and Vacant Land – Commercial	1.406182
- Shopping Centre	1.785152
- Professional Sports Facility	N/A
Industrial Broad Class	2.574531
- Industrial	2.746772
- Large Industrial	2.358772

** 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 - 70.0% of the residential property class tax ratio and the corresponding tax rate percentage reduction for the awaiting residential, commercial and industrial property classes; and Farm lands awaiting development subclass II - no tax rate reduction.

4. That the tax rates for 2007 be established based on the ratios adopted herein.

5. a) That the 2007 capping parameters be approved at the higher of 10% of the previous year’s annualized tax or 5% of the 2006 CVA; and

b) That for 2007 capped/clawback properties whose recalculated annualized taxes fall within $250 of their CVA taxation be moved to their CVA tax for the year.

6. That the tax level for “new construction” properties be set at a minimum level of 90% of their CVA taxes for 2007 and 100% for 2008 and future taxation years.

7. That the property tax mitigation programs currently in place and detailed in this report be continued for 2007, including the Farm Grant program.

8. That the final tax bill due date by-law be amended to reflect the decision to advance the date to June 14, 2007.

9. That the Payment In Lieu of Taxation budget for 2007 be reduced, by the additional tax revenue generated from any assessment growth above the 2% already included in the 2007 budget, to reflect losses from the decreased clawback and that the final amount be reported to Council in the quarterly operating status report.

10. That the tax relief (deferral) program for low-income seniors and disabled be amended to allow those eligible for the program to defer their property taxes and that staff submit an IPD by June of this year to CSEDC on the measures necessary to implement this program and further, that staff report annually on the impact of this program.

11. WHEREAS in 2001, City Council enacted By-law No. 2001-276, which exempted branches of the Royal Canadian Legion within the City of Ottawa from taxation other than school taxes or local improvement rates for a period of ten years;

AND WHEREAS there is now a branch of the Royal Canadian Legion located in Barrhaven at 3023 Cedarview Road;

AND WHEREAS it is appropriate to provide the same exemption to this new branch;

THEREFORE BE IT RESOLVED that pursuant to Section 6.1 of the Assessment Act, R.S.O. 1990, c.A.31, as amended, Royal Canadian Legion Branch 641 located at 3023 Cedarview Road in the City of Ottawa be exempted from taxation, other than taxes or local improvement rates until 2011 as long as the premises are actually used and occupied by the branch of the Royal Canadian Legion.

RecommandationS modifiÉeS du Comité

Que le Conseil approuve :

1. L’adoption des catégories de propriété facultatives suivantes en 2007 :

· Centre commercial;

· Terrain de stationnement et terrain non bâti;

· Immeuble de bureaux;

· Grand industriel;

· Nouveaux logements multiples;

· Installation de sport professionnel.

2. L’adoption des coefficients fiscaux suivants pour 2007 :

Catégorie	Coefficient **
Résidentiel	1,000000
Logements multiples	1,800000
Nouveaux logements multiples	1,000000
Agricole	0,200000
Forêt aménagée	0,250000
Pipeline	1,543789
Commercial général	2,254348
- Commercial	2,146121
- Immeuble de bureaux	2,592757
- Terrain de stationnement et terrain non bâti	1,406182
- Centre commercial	1,785152
- Installation de sport professionnel	s.o.
Industriel général	2,574531
- Industriel	2,746772
- Grand industriel	2,358772

** 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 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 Commerciale;

· Terrains industriels non bâti 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 : 70 % 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, Commercial et Industriel; terres agricoles en attente d’aménagement, sous-catégorie II : pas de réduction du taux de taxation.

4. Que les taux de taxation pour 2007 soient basés sur les coefficients fiscaux adoptés par les présentes.

5. a) Que les paramètres de plafonnement de 2007 soient établis à 10 % des taxes annualisées de l'année précédente ou à 5 % de la VA de 2006, le plus élevé de ces deux montants étant retenu;

b) Que les propriétés plafonnées ou auxquelles s'applique un seuil de récupération fiscale en 2007 et dont l'écart entre les taxes annualisées recalculées et les taxes établies d'après la VA est de moins de 250 $ soient taxées d'après leur VA cette année.

6. Que le niveau de taxes sur les propriétés « nouvellement bâties » soit établi au niveau minimal de 90 % des taxes d'après la VA en 2007 et de 100 % en 2008 et pendant les années fiscales subséquentes.

7. Que les programmes d'allégement des taxes foncières actuellement en place et décrits dans le présent rapport, y compris le programme de subventions pour terres agricoles, soient maintenus en 2007.

8. Que le règlement municipal fixant la date d'échéance de la facture finale de taxes soit modifié en conséquence de la décision d'avancer cette date au 14 juin 2007.

9. Que le budget des paiements versés en remplacement d’impôts de 2007 soit réduit d’un montant égal aux revenus fiscaux supplémentaires générés par toute expansion de l’assiette d’imposition au-delà des 2 % déjà compris dans le budget de 2007 afin de rendre compte des pertes découlant d’une récupération fiscale amoindrie, et que le montant total soit présenté au Conseil dans le rapport d’exploitation trimestriel préliminaire.

10. Que le programme d’allégement fiscal (report d’impôt) pour les personnes âgées à faible revenu et pour les personnes handicapées soit modifié afin de permettre aux personnes admissibles au programme de reporter leurs taxes foncières; de plus, que le personnel soumette une information distribuée auparavant d’ici juin 2007 au Comité des services organisationnels et du développement économique sur les mesures nécessaires pour mettre en œuvre ce programme et enfin, que le personnel rende compte annuellement des répercussions de ce programme.

11. ATTENDU QU’en 2001, le Conseil municipal a adopté le Règlement municipal n^o 2001-276, qui exempte les filiales de la Légion royale canadienne de la Ville d’Ottawa des taxes autres que les taxes scolaires ou la taxe d’améliorations locales pour une période de dix ans;

ET ATTENDU QU'il y a maintenant une filiale de la Légion royale canadienne située à Barrhaven au 3023, ch. Cedarview;

ET ATTENDU QU’il est approprié d’offrir cette même exemption à cette nouvelle filiale;

IL EST DONC RÉSOLU QU’en vertu du paragraphe 6.1 de la Loi sur l’évaluation foncière, L.R.O. 1990, chap. A.31, tel que modifié, la filiale 641 de la Légion royale canadienne située au 3023, ch. Cedarview dans la Ville d’Ottawa, sera exemptée de toute taxe autre que la taxe d’améliorations locales jusqu’en 2011, tant et aussi longtemps que les lieux serviront à la filiale de la Légion royale canadienne et seront occupés par ladite filiale.

Documentation

1. Chief Corporate Services Officer's report dated 17 April 2007 (ACS2007-CRS-FIN-0009).

2. Extract of Draft Minute, 17 April 2007

Report to/Rapport au :

Corporate Services and Economic Development Committee

Comité des services organizationnels et du développement économique

and Council/ et au Conseil

17 April 2007/ le 17 avril 2007

Submitted by/Soumis par : Greg Geddes, Chief Corporate Services Officer

/Chef des Services généraux, Corporate Services / Services généraux

Contact Person/ Personne resource : Ken Hughes, Manager of Revenue

Financial Services/Services financiers

(613) 580-2424 x 13485, ken.hughes@ottawa.ca

City Wide

Ref N°: ACS2007-CRS-FIN-0009

SUBJECT:	2007 TAX RATIOS and other tax policies
OBJET :	COEFFICIENTS FISCAUX ET AUTRES POLITIQUES D’IMPOSITION DE 2007

REPORT RECOMMENDATIONS

That the Corporate Services and Economic Development Committee recommend Council approve:

1. The adoption of the following optional property classes in 2007:

· 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; and

· Professional sports facility class.

2. The adoption of the following tax ratios for 2007:

Tax Class	Ratios **
Residential	1.000000
Multi-Residential	1.800000
New Multi-Residential	1.000000
Farm	0.200000
Managed Forest	0.250000
Pipeline	1.543789
Commercial Broad Class	2.254348
- Commercial	2.146121
- Office Building	2.592757
- Parking Lots and Vacant Land – Commercial	1.406182
- Shopping Centre	1.785152
- Professional Sports Facility	N/A
Industrial Broad Class	2.574531
- Industrial	2.746772
- Large Industrial	2.358772

** 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 - 70.0% of the residential property class tax ratio and the corresponding tax rate percentage reduction for the awaiting residential, commercial and industrial property classes; and Farm lands awaiting development subclass II - no tax rate reduction.

4. That the tax rates for 2007 be established based on the ratios adopted herein.

5. a) That the 2007 capping parameters be approved at the higher of 10% of the previous year’s annualized tax or 5% of the 2006 CVA; and

b) That for 2007 capped/clawback properties whose recalculated annualized taxes fall within $250 of their CVA taxation be moved to their CVA tax for the year.

6. That the tax level for “new construction” properties be set at a minimum level of 90% of their CVA taxes for 2007 and 100% for 2008 and future taxation years.

7. That the property tax mitigation programs currently in place and detailed in this report be continued for 2007, including the Farm Grant program.

8. That the final tax bill due date by-law be amended to reflect the decision to advance the date to June 14, 2007.

9. That the Payment In Lieu of Taxation budget for 2007 be reduced, by the additional tax revenue generated from any assessment growth above the 2% already included in the 2007 budget, to reflect losses from the decreased clawback and that the final amount be reported to Council in the quarterly operating status report.

Recommandations du RAPPORT

Que le Comité des services organisationnels et du développement économique recommande au Conseil d’approuver :

1. L’adoption des catégories de propriété facultatives suivantes en 2007 :

· Centre commercial;

· Terrain de stationnement et terrain non bâti;

· Immeuble de bureaux;

· Grand industriel;

· Nouveaux logements multiples;

· Installation de sport professionnel.

2. L’adoption des coefficients fiscaux suivants pour 2007 :

Catégorie	Coefficient **
Résidentiel	1,000000
Logements multiples	1,800000
Nouveaux logements multiples	1,000000
Agricole	0,200000
Forêt aménagée	0,250000
Pipeline	1,543789
Commercial général	2,254348
- Commercial	2,146121
- Immeuble de bureaux	2,592757
- Terrain de stationnement et terrain non bâti	1,406182
- Centre commercial	1,785152
- Installation de sport professionnel	s.o.
Industriel général	2,574531
- Industriel	2,746772
- Grand industriel	2,358772

** 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 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 Commerciale;

· Terrains industriels non bâti 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 : 70 % 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, Commercial et Industriel; terres agricoles en attente d’aménagement, sous-catégorie II : pas de réduction du taux de taxation.

4. Que les taux de taxation pour 2007 soient basés sur les coefficients fiscaux adoptés par les présentes.

5. a) Que les paramètres de plafonnement de 2007 soient établis à 10 % des taxes annualisées de l'année précédente ou à 5 % de la VA de 2006, le plus élevé de ces deux montants étant retenu;

b) Que les propriétés plafonnées ou auxquelles s'applique un seuil de récupération fiscale en 2007 et dont l'écart entre les taxes annualisées recalculées et les taxes établies d'après la VA est de moins de 250 $ soient taxées d'après leur VA cette année.

6. Que le niveau de taxes sur les propriétés « nouvellement bâties » soit établi au niveau minimal de 90 % des taxes d'après la VA en 2007 et de 100 % en 2008 et pendant les années fiscales subséquentes.

7. Que les programmes d'allégement des taxes foncières actuellement en place et décrits dans le présent rapport, y compris le programme de subventions pour terres agricoles, soient maintenus en 2007.

8. Que le règlement municipal fixant la date d'échéance de la facture finale de taxes soit modifié en conséquence de la décision d'avancer cette date au 14 juin 2007.

9. Que le budget des paiements versés en remplacement d’impôts de 2007 soit réduit d’un montant égal aux revenus fiscaux supplémentaires générés par toute expansion de l’assiette d’imposition au-delà des 2 % déjà compris dans le budget de 2007 afin de rendre compte des pertes découlant d’une récupération fiscale amoindrie, et que le montant total soit présenté au Conseil dans le rapport d’exploitation trimestriel préliminaire.

EXECUTIVE SUMMARY

The purpose of this report is to present recommendations regarding 2007 property tax policy issues that the Municipal Act requires Council to deal with prior to April 30 of each year. These decisions determine the tax burdens on the various tax classes for the 2007 taxation year. During the budget exercise, Council approved advancing the final tax due date from June 21, 2007 to June 14, 2007.

The first tax policy that requires Council approval is the adoption of optional tax classes. In the past, Council has elected to employ all of the optional property classes including:

· Shopping Centres,

· Office Buildings,

· Parking Lots and Vacant Lands,

· New Multi-residential,

· Large Industrial, and

· Professional Sports Facility.

The use of optional tax classes allows for different levels of taxation within a class. Eliminating any of the optional tax classes would likely shift the tax burden among properties within the broad tax class.

The second policy that must be adopted by Council each year is the determination of tax ratios for various tax classes. Tax ratios are the tools that allow different tax burdens between the different property classes. As there was no assessment performed by the Municipal Property Assessment Corporation (MPAC) in 2006, there are no tax shifts to mitigate. Other than minor adjustments to accommodate the 50% levy increase limitation on some of the capped classes, the tax ratios are the same as 2006.

In 2006, Council adjusted the Multi-residential tax class ratio down to 1.800000 in an effort to achieve an equivalent property tax burden compared to similar residential properties. This ratio reduction initiative started in 2001. While there have been numerous studies conducted by the Multi-residential property owners and the City on this issue, there is no agreement as to what is the most effective measure of tax burden equity or inequity between the Multi-residential and Residential property classes. As Council achieved its stated objective of a 1.800000 tax ratio, no changes in the multi-residential tax ratio are recommended for 2007.

The report also recommends the continuation of the various tax mitigation programs including rebates to: charitable organizations; owners of vacant properties, and the deferral of taxes for low-income seniors and the disabled. After the approval of the 2006 Tax Policy submission Council approved a tax mitigation program for farmers because of the economic challenges they were facing. The Farm Grant Program (FGP) allowed eligible farmers to defer payment of their final tax bill (normally due in June) to December. While the take-up on this program was very limited in 2006, in response to rural concerns, the program is being recommended for 2007.

Commercial, Industrial and Multi-residential properties are covered by a mandatory capping program. This program limits the tax increases from re-assessment. Council has approved changes to the capping levels in 2005 and again in 2006. These changes were accepted by Council in prior years and are being recommended for 2007. These changes will accelerate the movement of capped properties to their actual taxes (based on CVA).

In 2006, Council directed staff to revise the property tax relief provided to Scotiabank Place. The new agreement is in place for the 2007 through 2010 taxation years. By 2010 the annual taxation will be increased to $1.6 million from about $700,000 in 2006. As per the terms of the agreement, Council cannot unilaterally decide to review the tax agreement before 2010.

There will be no re-assessment until the 2009 taxation year. The most recent Provincial budget announced changes to the processes around assessments for residential property owners. Assessment increases will be phased in over four years while assessment decreases will be passed on immediately. As a result, staff is not expecting to see the significant tax increases that occurred in prior years. Inter class tax shifts among the property tax classes will continue. Staff recommends that Council continue to lobby the Provincial government to ensure that the City has the tools to mitigate the tax shifts on a permanent basis and to ensure that the property tax system reflects the needs of municipalities.

RÉSUMÉ

Le présent rapport a pour objet de formuler, pour 2007, des recommandations concernant les questions de fiscalité foncière qui, aux termes de la Loi sur les municipalités, doivent être décidées par le Conseil avant le 30 avril de chaque année. Ces décisions détermineront le partage du fardeau fiscal entre les différentes catégories foncières pour l'année fiscale 2007. Au cours des délibérations sur le budget, le Conseil a pris la décision d'avancer du 21 au 14 juin 2007 la date d'échéance de la facture finale de taxes.

L'adoption de catégories fiscales de propriété facultatives est la première politique qui nécessite l'approbation du Conseil. Par le passé, le Conseil a choisi d'utiliser toutes les catégories de propriété facultatives, à savoir :

· Centre commercial

· Immeuble de bureaux

· Terrain de stationnement et terrain non bâti

· Nouveaux logements multiples

· Grand industriel

· Installation de sport professionnel.

L'utilisation de ces catégories facultatives permet de varier les taux de taxation à l'intérieur d'une catégorie générale. La suppression de l'une ou l'autre des catégories facultatives aurait vraisemblablement pour effet de déplacer le fardeau fiscal entre les types de propriété qui composent la catégorie générale.

La deuxième politique que le Conseil doit décider chaque année est la détermination des coefficients fiscaux à appliquer aux différentes catégories fiscales de propriété. Les coefficients fiscaux sont les outils qui permettent un fardeau fiscal différent pour les diverses catégories fiscales de propriété. Comme la Société d'évaluation foncière des municipalités (SEFM) n'a pas effectué d'évaluations foncières en 2006, il n'y a pas de déplacement du fardeau à rectifier. Mis à part quelques ajustements mineurs pour tenir compte de la limite de 50 % de la hausse des cotisations dans certaines catégories plafonnées, les coefficients fiscaux proposés sont les mêmes qu'en 2006.

En 2006, le Conseil a baissé à 1,800000 le coefficient fiscal de la catégorie Logements multiples dans le but d'atteindre un fardeau fiscal équivalent à celui de la catégorie Résidentiel pour des propriétés similaires. Cette initiative de réduction du coefficient a débuté en 2001. Malgré les nombreuses études réalisées par les propriétaires de logements multiples et par la Ville sur cette question, il n'y a pas de consensus sur ce qui constitue la meilleure mesure de l'équité ou de l'iniquité entre les catégories Logements multiples et Résidentiel. Comme le Conseil a atteint son objectif déclaré d'un coefficient fiscal de 1,800000, aucune modification du coefficient fiscal applicable à la catégorie Logements multiples n'est recommandée pour 2007.

Le rapport recommande également le maintien des divers programmes d'allégement fiscal, notamment les remises fiscales aux organismes de bienfaisance et aux propriétaires d'immeubles inoccupés et les reports de taxes au bénéfice des personnes âgées et des personnes handicapées à faible revenu. À la suite de l'approbation de l'exposé de la politique fiscale de 2006, le Conseil a approuvé un programme d'allégement fiscal à l'intention des agriculteurs en raison des défis économiques auxquels ils étaient confrontés. Le programme de subventions pour terres agricole permettait aux agriculteurs admissibles de différer jusqu'à décembre le paiement de leur facture finale de taxes (normalement dû en juin). Quoique le nombre de participants à ce programme ait été très restreint en 2006, il est recommandé de le reconduire en 2007 en réponse aux problèmes du secteur rural.

Les propriétés des catégories Commercial, Industriel et Logements multiples sont visées par un programme obligatoire de plafonnement, qui limite les hausses de taxes résultant d'une réévaluation foncière. Le Conseil a approuvé des modifications des niveaux de plafonnement en 2005 et de nouveau en 2006. Ces modifications, acceptées par le Conseil pour des années antérieures, sont recommandées pour 2007. Elles accéléreront le retour des propriétés plafonnées à leur niveau de taxation réel (basé sur la VA).

En 2006, le Conseil a demandé au personnel d'examiner le dégrèvement fiscal accordé à la Place Scotiabank. Une nouvelle entente est intervenue pour les années fiscales 2007 à 2010 qui prévoit que les taxes foncières annuelles sur cette propriété passeront d'environ 700 000 $ qu'elles étaient en 2006 à 1,6 million de dollars en 2010. Aux termes de l'entente, le Conseil ne peut pas décider unilatéralement de réviser de cette entente fiscale avant 2010.

Il n'y aura pas de réévaluation foncière avant l'année fiscale 2009. Le dernier budget provincial annonçait des changements aux processus régissant les évaluations des propriétés résidentielles. Les hausses de valeur foncière découlant d'une évaluation seront appliquées graduellement sur quatre années, tandis que les baisses seront appliquées immédiatement. De ce fait, le personnel ne s'attend pas à une répétition des fortes augmentations de taxes qui se sont produites par le passé. Des déplacements du fardeau fiscal entre les catégories de propriété continueront. Le personnel recommande au Conseil de poursuivre ses démarches auprès du gouvernement provincial pour faire en sorte que la Ville dispose des outils permettant d'atténuer de façon permanente les déplacements du fardeau fiscal et que la fiscalité foncière reflète les besoins des municipalités.

BACKGROUND

The Municipal Act requires that Council approve a number of tax policy decisions before April 30 of each year. This report details each of the required tax policies.

The property tax system is primarily driven from the assessed values determined by the Municipal Property Assessment Corporation (MPAC) based on provincial legislation. The City uses these individual valuations to determine the taxes for all properties. MPAC did not conduct a re-assessment in 2006. Accordingly, the assessed values with the valuation date of January 1, 2005, are to be used again in 2007. This means that there will be no shifts of tax burden in 2007 as there have been in past years.

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.

Staff recommends that Council continue to adopt all of the following optional classes:

i) New Multi-residential – an optional class within the Multi-residential class;

ii) Shopping Centres, Office and Parking Lots and Vacant Land – Commercial – optional classes within the Commercial broad class;

iii) Large Industrial – an optional class within the Industrial broad class; and

iv) Professional Sports Facility – an optional class.

Any changes to these optional property tax classes and their ratios would affect the tax burden on other properties within the tax class.

2. TAX RATIOS

The setting of tax ratios allows a municipality to distribute the property tax burden among the various tax classes. The proposed tax ratios are the same as 2006 with the exception of some minor adjustments to accommodate the budgetary increase levy restrictions on the Commercial property tax class. Municipalities are subject to limits on their levy increases for some tax classes where the tax ratio for the previous year was above the provincial threshold. A municipality can apply a municipal tax increase to those classes, but only by an amount that is no more than half of any tax rate increase applied to the residential class. This modification to the levy restriction policy provides the ability to share some of the burden of any municipal tax increase across all property classes, while continuing to reduce the gap between business and residential property taxes.

Table 1 -Tax Ratios and Provincial Thresholds

Property Tax Class	Provincial Threshold	2006 Ratios	Proposed 2007 Ratios
Residential		1.000000	1.000000
Multi-Residential	2.7400	1.800000	1.800000
New Multi-Residential		1.000000	1.000000
Farm		0.200000	0.200000
Managed Forest		0.250000	0.250000
Pipeline		1.543789	1.543789
Commercial Broad Class	1.9800	2.290024	2.254348
Commercial-Residual		2.175369	2.146121
Office Building		2.628093	2.592757
Parking Lots and Vacant Land – Commercial		1.425346	1.406182
Shopping Centre		1.809481	1.785152
Professional Sports Facility		N/A	N/A
Industrial Broad Class	2.6300	2.571873	2.574531
Industrial – Residual		2.746772	2.746772
Large Industrial		2.358772	2.358772

Table 1 shows that the 2006 tax ratios for the multi-residential and industrial classes were below the Provincial thresholds which means these tax classes and the residential tax class can bear all of the levy increase approved by Council. As the commercial class is above the provincial threshold, for 2007 the commercial property tax class may bear only one-half of any budgetary tax increase that is approved by Council. Only when the Commercial tax ratio is below the provincial threshold will the tax class bear the full Council approved budgetary tax increase.

Staff recommends that Council approve the tax ratios for all property classes.

A Council motion in 2004 directed staff to “develop a two-year phase-in to achieve a Multi-residential class ratio of 1.800000 (representing an equivalent property tax burden compared to similar residential properties) by 2006.” Council approved the 1.800000 tax ratio for the Multi-residential property tax class in 2006. Any reduction of the tax ratio for the Multi-residential property tax class would result in taxation increases in the other property tax classes. Accordingly, no change is recommended to the Multi-residential tax ratio for 2007.

There is still no agreement as to what an acceptable methodology is to analyze the taxation relationship because of the fundamental difficulty in analysing the results of two different assessment methodologies. If residential and multi-residential properties could be assessed on a basis that was more truly comparable, an averaging of the tax burdens might be more feasible and achievable. To do so requires action on the part of the Province to investigate methods of reaching more comparable assessments and implementing province-wide changes.

3. RATIOS – MANDATORY SUBCLASSES

There are two subclasses of farm land awaiting development. The first, farm land awaiting development subclass I, is defined as farm land currently used solely for farming but there exists an approved and registered subdivision plan on the lands yet no actual development has 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 land awaiting development, subclass II, currently receives no tax rate reduction and that practice is recommended to continue.

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 - 70.0% of the residential property class tax ratio and the corresponding tax rate percentage reduction for the awaiting 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 2007 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 for approval with applicable By-Laws at the May 9, 2007 meeting of Council.

Staff recommends that the tax rates be established based on the ratios established in this report.

5. CHANGES TO THE CAPPING REGULATIONS

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 land awaiting development;

· Provincial and municipal property that is subject to payments in lieu of taxes (PILTs). (However, commercial tenants in provincial or municipal owned properties would be protected by the limits); and

· Certain power generation and transformer facilities.

The limit does not apply to properties in the residential, farmland, managed forest, new multi-residential, professional sports facility 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, and 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 2007 are summarized as follows:

Capping parameter was increased from 5% up to 10% of Annualized tax - One of the major disadvantage of the capping program and a continuous cycle of re-assessments is that many of the capped properties within the City and the Province of Ontario will never fully 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. Council approved this change for 2006 in the 2006 tax policy submission. Staff recommends this change for 2007 as well. A decision not to implement this option each year would mean the capping parameter would revert to 5%.

Staff recommends that the capping parameter be 10% of the annualized tax in 2007.

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 have been 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.

Staff recommends that the capping parameter of 5% of the CVA taxes be continued for the 2007 taxation year.

$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 that 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.

Staff recommends that for 2007 (as in 2006) capped/clawback properties whose recalculated annualized taxes fall within $250 of their CVA taxation be moved to their CVA tax for the year.

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 generates the “taxation shortfall”. Council must approve this percentage, known as the clawback percentage. In 2007, the clawback will decrease. A recovery by-law to approve the final clawback percentages will be submitted for Council approval on May 9, 2007.

6. TAX TREATMENT FOR NEW CONSTRUCTION PROPERTIES

Previously, the tax responsibility 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 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 is to gradually move towards the maximum through a phase in. This phase in will be accomplished with the use of the following minimum tax levels approved by Council in 2006:

2007 – 90% of CVA taxes

2008 – 100% of CVA taxes

This option accelerates the progress towards the CVA taxes, which initially was the ultimate goal of the capping program. It is however important to note that for the properties reaching their CVA tax level, they would still continue to receive tax capping protection from ongoing re-assessment fluctuations.

Staff recommends that the tax level for “new construction” properties be set at a minimum level of 90% of their CVA taxes for 2007 and 100% for 2008 and future taxation years.

7. TAX MITIGATION PROGRAMS

A number of other mitigation programs have been established in prior years. It is recommended that these mitigation programs be continued. These programs include:

1) The provision of a 40% tax rebate to charitable organizations as defined and required in the legislation;

2) Tax rebate of:

(a) 100% to any church leasing space to houses of refuge and registered charities;

(b) 40% to Registered Canadian Amateur Athletic Associations; and

(c) 100% for non-profit, non-home based licensed child care centres for space occupied for child care purposes;

3) 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.

4) The provision of a tax relief (deferral) program for low-income seniors and disabled.

After the approval of the 2006 tax policy submission the Revenue Division 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.  The training sessions were well attended and well received. Many charities have indicated that they will be completing their own applications for 2007. The training sessions will be offered again for the next tax year and the application process has been simplified for 2007.

After the approval of the 2006 Tax Policy submission, because of economic challenges facing farmers, Council approved a tax mitigation program for farmers. The Farm Grant Program (FGP) allowed eligible farmers to defer payment of their final tax bill (normally due in June) to December. About 700 of just under 4,000 farm properties took advantage of the program. The program cost about $25,000 for printing, mailing and staff time. While the take-up on this program was very limited in 2006, in response to rural concerns, the program is being recommended for 2007.

8. FINAL TAX DUE DATE

Council had originally established the final due date for 2007 at June 21, 2007. During the budget setting exercise a budget solution of $150,000 was approved by changing the final due date to June 14, 2007.

Staff recommends that the final tax bill due date by-law be amended to reflect the decision to advance the date to June 14, 2007.

9. ADJUSTMENT OF THE PAYMENT IN LIEU OF TAXATION BUDGET

The decrease in the clawback percentage, while good news for owners of clawed back commercial properties also impacts PILT revenues. Since the decrease also applies to the PILT properties there will be a shortfall in PILT revenues. The 2007 operating budget was not adjusted for this reduction, as the value was not known at budget time.

In the 2007 Budget the assessment growth for 2007 was calculated at 2%. The actual growth for 2007 as of April 5, 2007 is 2.23%. This amount will decline as a number of Requests for Reconsideration and ARB decisions have yet to be entered into the system. When they are entered they reduce the total value of assessment. It is to the City’s advantage to process as many of these assessment adjustments as possible before the final billing to avoid taxpayer aggravation and to avoid having to issue refund cheques shortly thereafter. Only when the Revenue Division closes the billing system to generate the 2007 final tax bill will the true value of assessment growth be known. Staff expect that it will likely be above 2.1% but the precise number is not known.

Given that the capping system will result in reduced PILT revenues, staff recommends that the additional revenue from growth, above the 2% already included in the budget, be used to reduce the PILT budget.

Staff recommends that the Payment In Lieu of Taxation budget for 2007 be reduced, by the additional tax revenue generated from any assessment growth above the 2% already included in the 2007 budget, to reflect losses from the decreased clawback and that the final adjustment amount be reported to Council in the quarterly operating status report.

10. 2008 TAXATION

On March 22, 2007, the Ontario Government released the 2007 budget. Although all details were not provided with the budget, there were a number of significant property tax related proposals that will affect Ottawa taxpayers. Business Education Taxes (BET) are to be reduced to 1.6% over 7 years. This will mean a 12% cut in the BET for the Commercial property tax class and a 26% cut in the BET for the Industrial property tax class by 2014. The reductions will start in 2008. Annually this is a saving for commercial and industrial taxpayers of about $4 million. However, since the City keeps the BET on PILT properties, this reduction will reduce City revenues by about $1 million per year for the next seven years.

The assessment cycle will now be over four years, with the next assessment being done for the 2009 taxation year with a valuation date of January 1, 2008. Assessment increases for the residential, farm and managed forests property tax classes will now be phased in over four years. Any assessment decreases will be realized immediately.

The assessment appeal system will be modified. The Request for Reconsideration is to be the first part of the appeal process. The appeal process will have two stages with the final stage being the formal appeal to the Assessment Review Board. The filing deadlines will be sequential with improved information disclosure requirements.

11. TAXATION AT SCOTIABANK PLACE

In 2006, Council directed staff to revise the property tax relief provided to Scotiabank Place. An agreement was negotiated with the owners of Scotiabank Place that covers the taxation on the property until the end of the 2010 taxation year. The agreement increases the annual taxes from about $700,000 in 2006 to $1,600,000 in 2010 (subject to outstanding assessment appeals). As the agreement removed Council’s ability to unilaterally review and adjust the taxation of Scotiabank Place until the term of the agreement is over, there are no decisions to be made by Council this year. Taxes for Scotiabank Place will be $876,547 for 2007.

CONSULTATION

The staff of Financial Services have consulted with Legal Services, The Ministry of Finance, The Ministry of Municipal Affairs & Housing, The Municipal Property Assessment Corporation and The Eastern Ontario Landlords Organisation in preparing this report.

FINANCIAL IMPLICATIONS

The financial implications are identified in the body of this report.

ATTACHMENTS

Appendix A – Glossary of Terms

DISPOSITION

Finance will use the tax ratios and rates to calculate and issue the 2007 final tax bills.

Legal Services will prepare all applicable by-laws, and assist Finance staff as required.

Appendix A

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 no reassessment in 2005 but there will be one in 2006.

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). For residential properties, the value represents 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 commercial, industrial and multi-residential properties, the value is derived based on the income 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) a) the tax ratio is moved in one or more classes, or

b) b) the property classes do not all increase at the same rate as a result of reassessment.

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 reassessment 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, and

· · 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 on any budgetary tax increase to the property class (a budgetary increase of 50% of the total tax increase was allowed for 2004 and 2005).

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^st of the previous year.

2007 Tax Ratios and Other Tax Policies

COEFFICIENTS FISCAUX ET AUTRES POLITIQUES D’IMPOSITION DE 2007

ACS2007-CRS-FIN-0009 city-wide / À l’Échelle de la ville

Ms. M. Simulik, Director of Financial Services and City Treasurer, and Mr. K. Hughes, Manager of Revenue, spoke to a PowerPoint slide presentation, which served to provide the Committee with a brief overview of the staff report. A copy of their presentation is held on file with the City Clerk.

Responding to a question from Councillor Hume, Ms. Simulik explained that the Province had announced they would, over the course of the next 7 years, move the business education tax down to a rate of 1.6. This meant that each year, the City would receive a lower education tax rate to apply to the commercial class. For Ottawa’s non-PILT (Payment-in-Lieu of Taxes) commercial taxpayers, this would mean a reduction of approximately $33M over 7 years. With respect to the impact on the City, she explained that the municipality kept the education portion of the commercial taxes on all PILT properties, therefore the PILT budget would have to be reduced by an estimated $1M per year over the next 7 years.

Mr. Kirkpatrick noted this was not the only issue affecting the City’s PILT budget and suggested this would be a good time to brief Committee on the implications of the federal government’s move to sell and lease back properties.

Mr. Hughes explained that the federal government had decided they would sell a number of properties around the country, but that they would continue to occupy them. With respect to the subject properties located in Ottawa, he advised that the education portion of those PILTs represented just under $25M. He noted that, coincidentally, the federal government would be selling those properties over 7 years. So in addition to the aforementioned $1M annual reduction in the City’s PILT revenue from the business education tax, there would be a further reduction in PILT revenues because the federal government properties would go from exempt-PILT, where the City keeps the education portion, to taxable, where the education portion is remitted to the Province. In closing, Mr. Hughes noted that the 2 properties the federal government intended to sell in 2008 represented just over $3M in lost PILT revenue.

Ms. Simulik added that currently, the City of Ottawa kept about $80M annually in taxation generated from education taxes on commercial PILT properties, as regulated by the Minister of Finance. Across the province, the total was $160M, therefore, this was a particularly significant issue for the City of Ottawa.

Responding to a question from Councillor Hume, Mr. Kirkpatrick confirmed that staff had been discussing this issue, which represented a significant threat to the City of Ottawa’s bottom line, and would be coming forward to Council with a recommended strategy on that.

Councillor Hume posed a series of questions with respect to the only mitigation program that relates to home-owners; the low income seniors and disabled program. Responding to the Councillor’s questions, Mr. Hughes explained the parameters and advised that currently, there were 6 people on the program, though the uptake tended to fluctuate between 6 and 18. He noted that program currently applied only to assessment related increases greater than $100 and that Legal Services staff had indicated the program could be expanded to include all of the taxes.

Councillor Hume indicated he would be moving a motion in that regard at the appropriate time and that his motion would also ask for a report back on the measures necessary to protect the corporation and to protect the home-owners.

Responding to questions from Councillor Jellett for clarification with respect to the loss in PILT revenues the City would experience over the coming years as a result of provincial and federal government decisions, Ms. Simulik re-iterated that because of a Provincial decision to gradually reduce the business education tax over the next 7 years, the City would be losing $1M per year in revenue in each of the next 7 years. Furthermore, because the federal government was selling properties and those properties had $25M worth of education taxes attached to them, this represented a permanent loss of $25M in revenue to the City.

Responding to a further question from Councillor Jellett with respect to the reduction in the claw-back, Mr. Hughes indicated it was too early to estimate the impact, though he believed it would be more than $2M.

Councillor Jellett asked whether the measure proposed in recommendation 9 of the staff report would be enough to mitigate this. Mr. Hughes estimated that it would not be enough. Ms. Simulik advised that any shortfall would be brought forward as a budget pressure against the 2008 budget.

Responding to a further question from Councillor Jellett, Ms. Simulik indicated that at the end of 7 years, the aforementioned reductions in the City’s revenues could potentially translate into a 4% property tax increase.

Councillor Jellett asked for an update on the issue of a small business tax class. Mr. Simulik explained that the creation of a small business tax class would have to be done by the province. She indicated the Province’s position was that the City could already do graduated taxes within a class. She noted that Ottawa had adopted all adopted all of the optional tax classes within commercial and industrial. Therefore, until the City either got those tax ratios closer to each other or until it got out of capping, she submitted that the introduction of a graduated taxation system within the class would not make much difference, other than to make for another level of complexity in an already very complex taxation system. She indicated staff had discussed the issue with the Business Advisory Committee and would continue to discuss it with them. However, she was not recommending it at this time.

In response to questions from Councillor Jellett with respect to the 40% tax rebate to registered amateur athletic associations, Mr. Hughes confirmed that such associations were normally funded by the federal government and that the rebate program had been put in place at the former Regional Municipality prior to amalgamation. He did not have figures with respect to potential savings, should the City discontinue the program. However, he indicated he could provide same prior to Council.

Councillor Wilkinson posed questions with respect to the impact of phase-in for residential assessment increases and indicated she would submit a formal inquiry on same.

Councillor Wilkinson referenced Councillor Hume’s motion with respect to the mitigation program for seniors and the disabled and she wondered if the City could also mitigate part of the education tax. Mr. Hughes stated early indications were that the entire amount could be deferred. However, he explained that the City would still have to remit the education portion to the Province, regardless of whether or not it had been collected.

Councillor Wilkinson noted that Councillor Hume’s motion called for a report back. She asked that the report include an outline of how the program would work in that regard; whether it would mitigate only the municipal portion or whether other ratepayers would have to pay more to reflect the City’s remittance to the Province.

Responding to a question from Councillor Desroches, Mr. Hughes confirmed that Council had directed staff to contact the province and start discussions with respect to providing authority to the municipality to introduce criteria with respect to charitable organizations that apply for a rebate program. He indicated discussions were progressing and staff hoped to see changes within the next year or two.

Mr. J. Dickie, Chair, Eastern Ontario Landlord Organization, spoke to a submission circulated to Committee members with respect to multi-residential taxes and the issue of equal tax burden. He submitted that tenants ultimately paid the property taxes on the buildings in which they lived. He noted the report recommendation to maintain the multi-residential tax ration at 1.8. He referenced a KPMG study, which suggested that “an equal tax burden would require a multi-residential tax ratio somewhere between 1.2 and 1.78 and most likely between 1.4 and 1.55”. He recommended that the City adopt a multi-residential tax ratio of 1.59, though he felt that long-term, the City should be aiming for a ratio of 1.4. A copy of Mr. Dickie’s submission is held on file with the City Clerk.

The Committee also received the following submissions, which are held on file with the City Clerk:

• E-mail from David Mulholland dated 14 April 2007; and

• E-mail from Luigi Caparelli dated 16 April 2007.

Mayor O’Brien noted there were 2 motions before Committee: one from Councillor Hume with respect to expanding the mitigation program for seniors and the disabled; the other from Councillor Desroches with respect to the Legion Branch in Barrhaven.

With respect to Councillor Hume’s motion, Councillor Bloess suggested a friendly amendment with respect to the report being requested; that staff report annually on the impact and take-up. Mayor O’Brien further suggested that timelines be identified for the report to come back. Councillor Hume accepted both suggestions as friendly amendments to his motion.

Moved by Councillor P. Hume

That the tax relief (deferral) program for low-income seniors and disabled be amended to allow those eligible for the program to defer their property taxes and that staff submit an Information Previously Distributed (IPD) memo to the Corporate Services and Economic Development Committee (CSEDC) by June of this year on the measures necessary to implement this program and further, that staff report annually on the impact of this program.

CARRIED

Councillor Desroches referenced a municipal by-law that exempted Legions from property taxes for 10 years and proposed a motion that would see the new Legion in Barrhaven receive the same exemption.

Councillor Wilkinson noted that all other Legions would be reviewed in 2011 insofar as the property tax exemption. Therefore, she suggested that, rather than asking for a 10-year exemption, the Barrhaven Legion also be reviewed in 2011. Councillor Desroches accepted this as a friendly amendment to his motion.

Moved by Councillor S. Desroches

WHEREAS in 2001, City Council enacted By-law No. 2001-276, which exempted branches of the Royal Canadian Legion within the City of Ottawa from taxation other than school taxes or local improvement rates for a period of ten years;

AND WHEREAS there is now a branch of the Royal Canadian Legion located in Barrhaven at 3023 Cedarview Road;

AND WHEREAS it is appropriate to provide the same exemption to this new branch;

THEREFORE BE IT RESOLVED that pursuant to Section 6.1 of the Assessment Act, R.S.O. 1990, c.A.31, as amended, Royal Canadian Legion Branch 641 located at 3023 Cedarview Road in the City of Ottawa be exempted from taxation, other than taxes or local improvement rates until 2011 as long as the premises are actually used and occupied by the branch of the Royal Canadian Legion.

CARRIED

Committee then voted on the report recommendations, as amended by the aforementioned motions.

That the Corporate Services and Economic Development Committee recommend Council approve:

1. The adoption of the following optional property classes in 2007:

· 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; and

· Professional sports facility class.

2. The adoption of the following tax ratios for 2007:

Tax Class	Ratios**
Residential	1.000000
Multi-Residential	1.800000
New Multi-Residential	1.000000
Farm	0.200000
Managed Forest	0.250000
Pipeline	1.543789
Commercial Broad Class	2.254348
- Commercial	2.146121
- Office Building	2.592757
- Parking Lots and Vacant Land - Commercial	1.406182
- Shopping Centre	1.785152
- Professional Sports Facility	N/A
Industrial Broad Class	2.574531
- Industrial	2.746772
- Large Industrial	2.358772

** 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 - 70.0% of the residential property class tax ratio and the corresponding tax rate percentage reduction for the awaiting residential, commercial and industrial property classes; and Farm lands awaiting development subclass II - no tax rate reduction.

4. That the tax rates for 2007 be established based on the ratios adopted herein.

5. a) That the 2007 capping parameters be approved at the higher of 10% of the previous year’s annualized tax or 5% of the 2006 CVA; and

b) That for 2007 capped/clawback properties whose recalculated annualized taxes fall within $250 of their CVA taxation be moved to their CVA tax for the year.

6. That the tax level for “new construction” properties be set at a minimum level of 90% of their CVA taxes for 2007 and 100% for 2008 and future taxation years.

7. That the property tax mitigation programs currently in place and detailed in this report be continued for 2007, including the Farm Grant program.

8. That the final tax bill due date by-law be amended to reflect the decision to advance the date to June 14, 2007.

9. That the Payment In Lieu of Taxation budget for 2007 be reduced, by the additional tax revenue generated from any assessment growth above the 2% already included in the 2007 budget, to reflect losses from the decreased clawback and that the final amount be reported to Council in the quarterly operating status report.

10. That the tax relief (deferral) program for low-income seniors and disabled be amended to allow those eligible for the program to defer their property taxes and that staff submit an IPD by June of this year to CSEDC on the measures necessary to implement this program and further, that staff report annually on the impact of this program.

11. WHEREAS in 2001, City Council enacted By-law No. 2001-276, which exempted branches of the Royal Canadian Legion within the City of Ottawa from taxation other than school taxes or local improvement rates for a period of ten years;

AND WHEREAS there is now a branch of the Royal Canadian Legion located in Barrhaven at 3023 Cedarview Road;

AND WHEREAS it is appropriate to provide the same exemption to this new branch;

THEREFORE BE IT RESOLVED that pursuant to Section 6.1 of the Assessment Act, R.S.O. 1990, c.A.31, as amended, Royal Canadian Legion Branch 641 located at 3023 Cedarview Road in the City of Ottawa be exempted from taxation, other than taxes or local improvement rates until 2011 as long as the premises are actually used and occupied by the branch of the Royal Canadian Legion.

CARRIED as amended