City of Toronto Submission Regarding the Review of Property Tax Classifications (Phase 2 of the Province's Review of the Assessment System)

CITY CLERK

Clause embodied in Report No. 12 of the Policy and Finance Committee, as adopted by the Council of the City of Toronto at its meeting held on October 2, 3 and 4, 2001.

(City Council on October 2, 3 and 4, 2001, amended this Clause by adding thereto the following:

“It is further recommended that a copy of the Clause be forwarded to the Association of Municipalities of Ontario (AMO), with a request that AMO support City Council’s position in this regard.”)

The Policy and Finance Committee recommends:

(1) the adoption of the report (September 11, 2001) from the Acting Chief Administrative Officer and the Acting Financial Officer; and

(2) that City Council request the Province of Ontario to amend assessment legislation to require property owners, claiming vacant status for commercial and industrial buildings, to notify the municipality at the beginning of the period to be claimed, to enable the municipality to confirm the vacant status of the property.

The Policy and Finance Committee submits the following report (September 11, 2001) from the Acting Chief Administrative Officer and Acting Chief Financial Officer:

Purpose:

To provide a submission to be presented to Mr. Marcel Beaubien, M.P.P. for Lambton-Kent- Middlesex, to be considered within the context of the second phase of the Province’s review of the assessment system.

Financial Implications:

None

Recommendation:

It is recommended that:

(1) the submission presented in Appendix C of this report be adopted; and Toronto City Council 2 Policy and Finance Committee October 2, 3 and 4, 2001 Report No. 12, Clause No. 5

(2) this report be submitted to Mr. Beaubien for the provincial government’s second phase review of the assessment system.

Background

Initial Review of the Assessment System:

On December 12, 2000, Finance Minister Ernie Eves announced the appointment of Mr. Marcel Beaubien, M. P. P. for Lambton-Kent-Middlesex, as a special advisor to conduct a review of the Ontario Property Assessment Corporation (OPAC). Mr. Beaubien’s initial review, conducted between December 2000 and March 2001, examined the relationship between OPAC and the Province; the operational structure of OPAC, including the composition of the Board of Directors; and the current regulation that establishes property tax classes in Ontario.

At its meeting held on March 6, 7 and 8, 2001, City Council endorsed, as amended, a report (March 5, 2001) from the Chief Financial Officer and Treasurer entitled “City of Toronto Submission Regarding the Provincial Review of the Ontario Property Assessment Corporation (OPAC)” (now known as MPAC – Municipal Property Assessment Corporation). The City’s submission made three important points regarding the general relationship between OPAC, the province and municipalities:

(1) the importance of responsive and accountable service on the part of OPAC to its municipal stakeholders must be the single most important aspect of the Province’s review. Even though the Province is undertaking the review, OPAC is fully funded by its municipal members, and was established to meet their needs and the needs of municipal ratepayers. The parts of the review that focus on the Province’s relationship with OPAC and the composition of the Board of Directors should not attempt to diminish OPAC’s primary accountability to its municipal stakeholders, nor the decision-making powers of the municipal representatives on the Board of Directors. Should the Province seek to expand its role or influence within OPAC’s corporate structure, it must be prepared to contribute financially to the corporation’s operation;

(2) the Province, in their role of setting policies, must endeavour to ensure that legislation and regulations do not further erode the municipal tax base. As the tax base represents the primary component of municipal revenue, provincial policies must not constrain or arbitrarily reduce revenues that are derived from the assessment of property; and

(3) the review must also seek to reaffirm that OPAC continues to meet the needs of municipal ratepayers, and that OPAC’s processes and valuations are fair, equitable and understandable.

The City’s submission also provided detailed comments focusing on three main areas:

(i) quality of product and service;

(ii) accountability; and Toronto City Council 3 Policy and Finance Committee October 2, 3 and 4, 2001 Report No. 12, Clause No. 5

(iii) Ministry of Finance issues.

Appendix A, attached, lists the recommendations that were adopted by Council at its meeting of March 6, 7 and 8, 2001 and submitted to Mr. Beaubien in March 2001.

On April 2, 2001 Mr. Beaubien reported on his review of the property assessment process in Ontario. A copy of Mr. Beaubien’s final report (April 2, 2001) entitled “Final Report: Review of the Property Assessment Process” (attached as Appendix B) was distributed to Mayor and Members of Councillors, by the Chief Financial Officer and Treasurer, on May 2, 2001. Mr. Beaubien’s final report contains 19 recommendations, some of which address longstanding positions of Toronto Council (identified within the City’s submission), and others that capture Toronto’s concerns more generally.

Phase Two Review – Property Tax Classifications:

The property tax classification issues that were raised during Mr. Beaubien’s initial review of the assessment system were so extensive that Mr. Beaubien recommended further review and consultation on this issue. On July 18, 2001, Finance Minister Jim Flaherty announced that Mr. Beaubien’s appointment as a special advisor, had been extended to facilitate a further review of the regulation that defines property classes under the assessment system. The issues to be considered during the second phase of Mr. Beaubien’s review include:

(i) the number, scope and definition of property classes and sub-classes;

(ii) the assessment methodology applied to unique properties such as hotels, farms, and linear properties; and,

(iii) the linkages between assessment classifications and related public policy objectives of the Government of Ontario.

Mr. Beaubien will be consulting with individual taxpayers, industry organizations, municipal associations, and the Assessment Corporation. He plans to conclude this second review and report back to the Finance Minister in October 2001.

Comments:

The issues to be reviewed by Mr. Beaubien during this second review of the assessment system in Ontario include:

(i) the number, scope and definition of property classes and sub-classes;

(ii) the assessment methodology applied to unique properties such as hotels, farms, and linear properties; and,

(iii) the linkages between assessment classifications and related public policy objectives of the Government of Ontario. Toronto City Council 4 Policy and Finance Committee October 2, 3 and 4, 2001 Report No. 12, Clause No. 5

As the largest municipality in Ontario, it is appropriate that the City of Toronto provide input to this second review.

Appendix C, attached, provides a proposed submission to Mr. Beaubien with respect to property tax classifications and public policy objectives. Many of the issues identified in Appendix C were presented to Mr. Beaubien as part of the City’s first submission in March 2001. Of the 21 recommendations submitted by the City to Mr. Beaubien in March 2001, five pertained to the issue of property tax classifications and one pertained to the issue of assessment policy.

In May 2001, as part of the 2001 Ontario Budget, the Province announced its intentions to address two of the six recommendations submitted by the City with respect to property tax classification - specifically property tax relief for heritage property owners, and the extension from 8 to 35 years for the period during which newly constructed multi-residential buildings may be taxed at a lower rate. The regulations required to implement these two announced changes have yet to be filed by the Province, however City of Toronto staff are currently consulting with provincial staff on the development of eligibility criteria for a heritage property class/sub-class.

The City’s second submission provides comment and input with respect to the following seven topics:

(1) Linkages between Assessment Classifications and related Public Policy;

(2) Telecommunication Infrastructure within Railway Rights-of-Way;

(3) Public Hospitals, Universities and Colleges and Corrections Institutions;

(4) Commercial Establishments Operating in Hospitals;

(5) Parking Lots – Commuter, Municipal, Private and Railway Lands;

(6) Ability to Combine Tax Classes; and

(7) Optional Sub-Classes or New Tax Classes.

Given that the Province has recently announced plans to introduce a separate property tax class or sub-class for heritage properties, and to extend the period during which newly constructed multi-residential buildings may be taxed at a lower tax rate from 8 years to 35 years, the City’s second submission to Mr. Beaubien does not include these issues.

The following is a summary of the key recommendations contained in the City’s second submission (attached as Appendix C):

Recommendation No. 1:

The Province must have regard to the revenue implications for municipalities of changes in provincial assessment and taxation policy, and undertake not only to repeal certain constraints Toronto City Council 5 Policy and Finance Committee October 2, 3 and 4, 2001 Report No. 12, Clause No. 5 but further, to not introduce new measures that erode the municipal tax base or constrain tax revenues.

Recommendation No. 2:

The Province amend the method of assessment of railway rights-of-way to exclude any and all portion of these lands that are utilized for telecommunications infrastructure to a width of one metre on either side of the cable installation, and to provide that lands so excluded be taxed at the commercial or industrial rate to reflect their business use.

Recommendation No. 3:

The Province be requested to increase the “heads and beds” tax rate on health, post secondary and correctional institutions so that, at the very least, increases in inflation are reflected.

Recommendation No. 4:

The Province be requested to increase the “heads and beds” tax rate over a period of time so that universities, colleges of applied arts and technology, correctional institutions, public hospitals, mental health facilities and Provincial education institutions pay the equivalent of property taxes (i.e. “assessment” times “tax rate”).

Recommendation No. 5:

The Province be requested to amend paragraph 6 of subsection 3(1) of the Assessment Act to clarify that all businesses, regardless of ownership, carried on within a public hospital that have no connection to patient care, are assessed as taxable.

Recommendation No. 6:

The Province amend Ontario Regulation 282/98 to separate parking lots from railway lands in the determination of property within the vacant land sub-classification.

Recommendation No. 7:

Municipalities be permitted to establish sub-classes within the parking lot property class to distinguish between commuter parking lots, municipal parking lots and private commercial lots.

Recommendation No. 8:

The Province amend assessment legislation to permit municipalities to combine tax classes for the purposes of taxation at a single rate. Toronto City Council 6 Policy and Finance Committee October 2, 3 and 4, 2001 Report No. 12, Clause No. 5

Recommendation No. 9:

The Province amend assessment legislation to permit additional optional property classes and/or sub-classes for assessment and taxation purposes, including neighbourhood commercial, charities/non-profit and affordable housing.

Conclusions:

This report and the attached submission (Appendix C) to Mr. Beaubien present nine recommendations with respect to the issues of property tax classification and the linkages between assessment classifications and related public policy objectives.

Staff will continue to monitor the progress and recommendations that emerge from Mr. Beaubien’s phase two review of the assessment system. Council will be advised of any proposed changes to assessment legislation and /or property tax classifications.

Contact Name:

Giuliana Carbone, Director of Revenue Services, 392-8065

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Appendix A

(2) OPAC ensure that all changes in property (5) Within six months of its reconstitution, value or tax status on the assessment roll the OPAC Board should implement a are correctly and completely coded to complete program of quality service indicate the reason for the change, and the standards based on the government ISO effective date of any change, and that this 9001 registration. information be included on the annual assessment roll. Toronto City Council 7 Policy and Finance Committee October 2, 3 and 4, 2001 Report No. 12, Clause No. 5

City of Toronto Recommendations (March 2001) Beaubien Final Report (April 2, 2001) – – Submission Regarding the Provincial Review of Recommendations that Directly or Indirectly the Ontario Property Assessment Corporation Address the City’s Recommendations (OPAC) (3) OPAC review its procedures for updating (5) Within six months of its reconstitution, ownership information and seek the OPAC Board should implement a improvements to ensure that ownership complete program of quality service changes are reflected in a timely manner, standards based on the government ISO and that OPAC explore methods of 9001 registration. providing updated ownership information to municipalities in electronic format on a regular (e.g. weekly or more frequent) basis, or by a direct electronic feed. (4) OPAC seek to reduce the reliance on (5) Within six months of its reconstitution, Section 442 and 443 adjustments to the OPAC Board should implement a correct errors to the assessment roll, complete program of quality service through enhancements and improvements standards based on the government ISO to quality assurance procedures, and 9001 registration. through education of OPAC staff, that would eliminate errors on the returned roll and the need to make subsequent corrections. (5) OPAC seek improvements to the (5) Within six months of its reconstitution, scheduling and processing cycle for the OPAC Board should implement a supplementary/ omitted amounts, and link complete program of quality service this process to the issuance of occupancy standards based on the government ISO permits by municipal building 9001 registration. departments, to ensure that any in-year value changes (e.g. improvements or new construction) are captured and communicated to the municipality as soon as possible after the change becomes effective. (6) OPAC undertake to improve (5) Within six months of its reconstitution, communications with municipalities, and the OPAC Board should implement a that procedures be developed that would complete program of quality service require OPAC to formally notify standards based on the government ISO municipalities of any programs that may 9001 registration. result in value changes, and that such notification include a summary of such changes, an explanation of the rationale for the changes, and a list of affected properties. Toronto City Council 8 Policy and Finance Committee October 2, 3 and 4, 2001 Report No. 12, Clause No. 5

City of Toronto Recommendations (March 2001) Beaubien Final Report (April 2, 2001) – – Submission Regarding the Provincial Review of Recommendations that Directly or Indirectly the Ontario Property Assessment Corporation Address the City’s Recommendations (OPAC) (7) OPAC develop protocols to notify (5) Within six months of its reconstitution, municipalities of pending assessment the OPAC Board should implement a appeals that may have significant impacts complete program of quality service on municipal finances, and to verify that standards based on the government ISO ARB Decisions correctly reflect the 9001 registration. court’s determination. Further, that OPAC establish procedures to provide assessment appeal information to municipalities in electronic format on a monthly basis. (8) OPAC further explore methods to ensure (5) Within six months of its reconstitution, that reconsiderations are dealt with in a the OPAC Board should implement a timely manner, and that this process complete program of quality service incorporate a deadline of no more than standards based on the government ISO 120 days for a response by OPAC, and 9001 registration. that OPAC, in consultation with municipalities and the Assessment Review Board, adopt measures to further streamline the appeal process to eliminate delays in scheduling, communicating decisions and processing tax adjustments, and that the appeal deadline be after the OPAC process of reconsideration is completed. (9) OPAC develop means to ensure that (5) Within six months of its reconstitution, property records are updated to reflect the OPAC Board should implement a previous assessment reductions, or complete program of quality service revised property information, and that this standards based on the government ISO information is taken into account in the 9001 registration. determination of assessed value in subsequent re-assessments. (10) OPAC review the current composition of (1) The OPAC 14 member Board of the corporation’s Board of Directors and Directors should be reconstituted to methods of appointment, and implement improve accountability to property means to ensure the Board composition taxpayers and create a balance of reflects representation based on a municipal, property taxpayer and proportionate share of provincial provincial interests, with seven population and/or assessable units. municipal representatives, five property taxpayer representatives and two provincial representatives.

(2) The Minister of Finance should invite the Association of Municipalities of Ontario to nominate 14 potential Board members from whom seven should be appointed to the Board. Toronto City Council 9 Policy and Finance Committee October 2, 3 and 4, 2001 Report No. 12, Clause No. 5

(4) Two provincial representatives on the OPAC board should be a senior executive of the Ministry of Finance and a Member of the Provincial Parliament. (11) The Province contribute a share of (9) Any alternative to the current OPAC OPAC’s costs proportionate to its funding formula proposed by the OPAC representation on the corporation’s Board Board of Directors should be subject to of Directors. the approval of the Minister of Finance. (12) OPAC formalize measures of fiscal accountability to its municipal stakeholders that would see municipalities financially compensated by the assessment corporation for tax revenue losses that are directly attributable to errors or omissions on the part of OPAC, where such tax revenue losses cannot be recovered through legislative means. (13) OPAC seek to make information on individual property characteristics and assessment methods, including factors that may affect a property’s market value, accessible to both municipalities and municipal ratepayers. (14) The Province must have regard to the revenue implications for municipalities of changes in provincial assessment and taxation policy, and undertake not only to repeal certain constraints but further, to not introduce new measures that erode the municipal tax base or constrain tax revenues. (15) The optional New Multi-Residential tax (19) Amend O. Reg. 282/98 to expand the class that taxes newly constructed rental eligibility period of the new multi- buildings at a reduced rate for an eight- residential property class to at least 25 year period be changed to allow for a years. The application of a lower rate for permanent tax rate reduction for this a longer time span would provide greater class. certainty to developers and lenders and should offer a meaningful inducement to construction of new rental housing. Toronto City Council 10 Policy and Finance Committee October 2, 3 and 4, 2001 Report No. 12, Clause No. 5

(15) When defining the new sub-classes under O. Reg. 282/98, it is recommended that property would be eligible for inclusion in the sub-class if it is designated under the Ontario Heritage Act as being of architectural or historical value, and if the building is designated in its entirety (i.e. the maintenance of an old façade on new building would not render the new building eligible for the sub-class). (17) The Province amend the method of assessment of railway rights-of-way to exclude any and all portion of these lands that are utilized for telecommunications infrastructure to a width of one metre on either side of the cable installation, and to provide that lands so excluded be taxed at the industrial rate to reflect their business use. (18) The Province amend the Act to separate parking lots from railway lands in the determination of property within the vacant land classification. (19) Municipalities be permitted to establish sub-classes within the Parking Lot designation to distinguish between commuter parking lots, municipal parking lots and private commercial lots. (20) Appointments to the OPAC Board of (2) The Minister of Finance should invite Directors be made by municipal the Association of Municipalities of stakeholders, rather than by the Province, Ontario to nominate 14 potential as at present. Board members from whom seven should be appointed to the Board. Toronto City Council 11 Policy and Finance Committee October 2, 3 and 4, 2001 Report No. 12, Clause No. 5

(4) Two provincial representatives on the OPAC board should be a senior executive of the Ministry of Finance and a Member of the Provincial Parliament. (21) OPAC, in undertaking assessments, be requested to consider the impact of property taxes on the assessment, and adjust the assessment accordingly.

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Appendix C (Draft Submission)

October XX, 2001

Mr. Marcel Beaubien, M.P.P. Room 115, Legislative Building Property Tax Classification Review Queen’s Park Property Tax Policy Branch 7 Queen’s Park Crescent Ministry of Finance Toronto, Ontario 10th Floor, 777 Bay Street M7A 1A8 Toronto, Ontario M5G 2C8

The purpose of this submission is to provide input to your review of the regulation that defines property classes under the assessment system, including the linkages between assessment classifications and related public policy objectives of the Government of Ontario.

Toronto City Council has in the past made a number of recommendations to the Province on issues related to property tax classifications and tax classes. These recommendations were summarized and presented to you as part of the City’s March 2001 submission. Of the 21 recommendations submitted by the City during your review of the Ontario Property Assessment Corporation (OPAC), five pertained to the issue of property tax classification and one pertained to the issue of assessment policy: Toronto City Council 12 Policy and Finance Committee October 2, 3 and 4, 2001 Report No. 12, Clause No. 5

Recommendation No. 14:

The Province must have regard to the revenue implications for municipalities of changes in provincial assessment and taxation policy, and undertake not only to repeal certain constraints but further, to not introduce new measures that erode the municipal tax base or constrain tax revenues.

Recommendation No. 15:

The optional New Multi-Residential tax class that taxes newly constructed rental buildings at a reduced rate for an eight-year period be changed to allow for a permanent tax rate reduction for this class.

Recommendation No. 16:

The Province create an optional tax class or sub-class for Heritage Properties, to enable a reduced tax rate to apply to properties within the class or sub-class.

Recommendation No. 17:

Recommendation No. 18:

The Province amend the Act to separate parking lots from railway lands in the determination of property within the vacant land classification.

Recommendation No. 19:

Municipalities be permitted to establish sub-classes within the Parking Lot designation to distinguish between commuter parking lots, municipal parking lots and private commercial lots.

The Province has recently announced its intentions to address two of the six recommendations submitted by the City with respect to property tax classification – specifically the creation of a property tax class or sub-class for heritage properties, and the extension from 8 to 35 years for the period during which newly constructed multi-residential buildings may be taxed at a lower rate. The City of Toronto is supportive of these proposed changes and encourages the Province to consult with municipalities in developing appropriate criteria and to identify implementation issues.

The following represents the City’s submission with respect to your review of property tax classifications and linkages to public policy objectives. Given the Province’s recent announcement with respect to heritage properties and newly constructed multi-residential buildings, we have not included these recommendations in our second submission. Toronto City Council 13 Policy and Finance Committee October 2, 3 and 4, 2001 Report No. 12, Clause No. 5

Linkages between Assessment Classifications and Related Public Policy:

As mentioned previously, the City of Toronto feels strongly that the Province, in their role of setting policies, must endeavour to ensure that legislation and regulations do not further erode the municipal tax base. As the tax base represents the primary component of municipal revenue, provincial policies must not constrain or arbitrarily reduce revenues that are derived from the assessment of property.

As a case in point, the provincial rate used to determine the “heads and beds” payment-in-lieu amount (used to calculate the taxes paid by the Province for public hospitals, university and college residences and correctional institutions), is far below the amount that would be received if these institutions were taxed according to normal tax rates, or in relation to comparable property. A similar situation is being proposed for the determination of payment-in-lieu amounts for airport authorities, where these amounts will be determined by a provincially-set rate based on passenger totals, rather than taxation at existing tax rates. This will also likely have the effect of reducing tax revenues that are derived from airport authorities.

The taxation of railway rights-of-way is a further example, where provincially established rates are used to determine the taxation of railway lands. The tax revenue received from these lands in Toronto has been reduced each year since 1998, as the Province moves towards uniform rates within geographic regions. Again, the provincial rates are considerably lower than would be the case if taxation were based on the average value of abutting lands, as was the case in the past. This has lead to continuously declining revenues from railway lands in Toronto.

Recommendation No. 1:

The Province must have regard to the revenue implications for municipalities of changes in provincial assessment and taxation policy, and undertake not only to repeal certain constraints but further, to not introduce new measures that erode the municipal tax base or constrain tax revenues.

Telecommunication Infrastructure within Railway Rights-of-Way:

Currently, Railway rights-of-way (ROW) are assessed on a per-acre basis, and are taxed at rates prescribed by the Province each year. Telecommunications infrastructures within these rights- of-way, however, are not taxable, regardless of whether the railway company receives financial compensation for the use of these lands from the telecommunications firm. Although railway companies benefit financially through the lease of railway corridors to telecommunications and cable companies for commercial purposes, the commercial use of these lands is not reflected in the levy of property taxes. Not only is the assessment of railway lands not reflective of such commercial use, but it would appear that railway ROWs subject to such leases are in fact exempt from taxation pursuant to subsection 368.3 of the Municipal Act.

In the Province of British Columbia, commercial property taxes are levied on telecommunication cables, wires, poles and towers that run along both railway ROW and regular motor roadways. This levy is separate from a per acreage levy imposed on the ROWs. Toronto City Council 14 Policy and Finance Committee October 2, 3 and 4, 2001 Report No. 12, Clause No. 5

Toronto Council has requested that the Province amend the method of assessment of railway rights-of-way to allow lands utilized for telecommunications infrastructure, to a width of one metre on either side of the cable installation, to be taxed at the industrial tax rate, rather than the railway tax rate. It is appropriate that lands used for a business enterprise be taxed at a rate that reflects this use.

Recommendation No. 2:

Public Hospitals, Universities and Colleges and Correctional Institutions:

Under the Assessment Act, universities, colleges of applied arts and technology, correctional institutions, public hospitals, mental health facilities and Provincial education institutions are exempt from property taxes. However, Section 157 of the Municipal Act allows municipalities to annually levy up to a maximum of $75.00 for each provincially rated hospital bed (public hospitals), each full time student (universities and colleges) and for each resident place (correctional institutions). The capacity figures for these institutions that are used by municipalities for this levy are determined by the Province. The Provincial Government pays the grants. The rates are specified in the Municipal Act, and were most recently changed from $50 to $75 in 1987.

If the City of Toronto were able to use a standard assessment times tax rate calculation, the amount of tax generated would be substantially higher. If the exempt assessment were considered residential, and were multiplied by the City’s portion of the tax rate, the amount generated for 1998 would have been $27.4 million (compared to the $9.8 million generated using the $75 “heads and beds” rate). In order to raise an equivalent amount of tax and PIL under the “heads and beds” formula, the current rate of $75.00 would have to be increased to $208.50.

Recommendation No. 3:

The Province be requested to increase the “heads and beds” tax rate on health, post secondary and correctional institutions so that, at the very least, increases in inflation are reflected.

Recommendation No. 4:

Commercial Establishments Operating in Hospitals:

Paragraph 6 of subsection 3 (1) of the Assessment Act exempts land used and occupied by a public hospital but not any portion of land occupied by a tenant of the hospital. The council of a municipality may levy an annual amount upon public hospitals not exceeding the amount of $75.00 for each provincially rated bed as determined by the Ministry of Health. According to OPAC and within the interpretation of this subsection, commercial establishments who are tenants of a hospital would not be exempted. They would be classified and assessed as commercial with tax bills being issued to the hospitals where these establishments are located.

However, there is an area of contention with respect to franchises wholly owned and managed by the hospital. Within the meaning of the above subsection, franchises wholly owned and operated by a public hospital may qualify to be exempted as land used and occupied by a public hospital. This grants a tax advantage to the hospital franchises that would be in direct competition with similar franchises located in a taxable environment or similar franchises located as tenants of a public hospital. It is unlikely that when this paragraph was amended, the Provincial policy makers had envisioned such a business arrangement that would handicap franchise businesses not owned and operated by a public hospital.

City Council, at its meeting on July 27, 28, 29 and 30, 1999, requested the Ontario Property Assessment Corporation (OPAC) to review the assessment files of all public hospitals to ensure that any rateable business establishment (coffee shop, pharmacy, convenient stores, etc.) on the property is being assessed for taxation. Council further requested the Province to amend paragraph 6 of subsection 3 (1) of the Assessment Act to clarify that all businesses regardless of ownership, carried on within a public hospital that have no connection to patient care, are assessed and taxable.

Recommendation No. 5:

Parking Lots – Commuter, Municipal, Private and Railway Lands:

The assessment of parking lots should appropriately reflect the income-producing potential of these properties. While technically vacant land (with the exception of collector’s booths), parking lots produce a revenue stream that can be used to determine an assessed value using the income method of valuation. This would differentiate these properties from truly vacant land that is not used to produce revenue, or vacant land that is subject to taxation at a fixed rate, such as railway land. It is therefore recommended that parking lots be assessed differently than railway lands when used to determine assessed values within the vacant land classification. Toronto City Council 16 Policy and Finance Committee October 2, 3 and 4, 2001 Report No. 12, Clause No. 5

It is further recommended that sub-classes be established within the optional Parking Lot and Vacant Land tax class, to allow different tax rates to apply to private commercial parking lots, commuter parking lots and municipal parking lots, where a municipality has adopted this class. This would allow the taxes on each of these types of properties to reflect the different income levels derived from each type of operation, and would help to control pricing and facilitate the operation of municipal and commuter parking lots that provide a broader benefit to municipal ratepayers.

Recommendation No. 6:

The Province amend Ontario Regulation 282/98 to separate parking lots from railway lands in the determination of property within the vacant land sub-classification; and

Recommendation No. 7:

Municipalities be permitted to establish sub-classes within the parking lot property class to distinguish between commuter parking lots, municipal parking lots and private commercial lots.

Ability to Combine Tax Classes:

It may be beneficial to combine certain tax classes, such that tax rates are consistent across a broad range of properties. For example, the combination of commercial and industrial classes with a single applicable tax rate may make it easier to distribute the effects of reassessment, and so achieve equity sooner. A larger “grouped” tax class would allow tax caps to be financed over a larger number of properties, and so may reduce the magnitude and duration of claw-backs required within both property classes. A single class would also tend to reduce historically high industrial tax rates, making them more consistent with other Canadian and U.S. jurisdictions.

Recommendation No. 8:

The Province amend assessment legislation to permit municipalities to combine tax classes for the purposes of taxation at a single rate.

Optional Sub-Classes or New Tax Classes:

Bill 140 requires a minimum of one commercial and one industrial property class and allows for several additional optional classes and sub-classes. The optional tax classes that have been available since 1998 include separate classes for large industrial, office buildings, shopping centres, and vacant land / parking lots.

New optional sub-classes or new tax classes may be utilized for specific property types to more equitably tax certain specialized property uses, or where some form of preferential tax treatment is consistent with the objectives of local Councils, including strip retail (neighbourhood commercial), charities/non-profits, and affordable housing. Toronto City Council 17 Policy and Finance Committee October 2, 3 and 4, 2001 Report No. 12, Clause No. 5

Recommendation No. 9:

Conclusions:

Toronto City Council remains committed to working with the Province and the Ontario Property Assessment Corporation to continue to improve Ontario’s assessment and taxation system for the benefit of all taxpayers. This submission presents nine recommendations that are intended to improve upon the current system of tax classifications, while preserving flexibility for local Councils and ensuring fairness for property owners.

On behalf of Toronto Council, I extend our best wishes for success in this important undertaking. Our staff are available to discuss this submission in more detail, or to answer any questions you may have. We trust that our comments are helpful.

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The Policy and Finance Committee reports, for the information of Council, having also had before it the following communications, which were forwarded to all Members of Council with the September 20, 2001, agenda of the Policy and Finance Committee and a copy thereof is also on file in the office of the City Clerk, City Hall.

- (April 2, 2001) Appendix B, being a copy of a letter from Marcel Beaubien, MPP, Lambton-Kent-Middlesex addressed to the Honourable James Flaherty; and

- (August 30, 2001) News Release from the Association of Municipalities of Ontario, responding to Mr. Marcel Beaubien’s Property Tax Classification Review.