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March 3/04 Report
1:40 to 2:40 pm
Committee members attending :
DiIanni - chair (arrived 10 minutes late), Jackson, Ferguson, Collins (out for two 10 minute periods), Merulla (arrived 25 min late), Kelly (arrived 30 min. late)
Also Attending :
Braden, McHattie, Whitehead (25 minutes), Mitchell (30 minutes), Horwath (15 minutes)
Press : Spectator: Chinta Puxley, CFMU: Maggie Hughes
Staff : Peace (acting city manager), Joe Rinaldo, plus four other managers
(I had problems getting my tape started, so I didn't get notes for the first 5 minutes because I was struggling with the tape player.)
2. Two changes to the agenda (and these were posted on the agenda on the website after the meeting, which is a new thing for the clerk's office to do).
- add to 4.1- Delegation requests:
- Additional Private and Confidential Verbal Update on Union Negotiations by the General Manager of Human Resources, Catherine Graham
4. Delegation requests: From Roger Couldry and David Braley of Orlick Industries to appear at the next Committee meeting.
7.1 " Preliminary 2004 Re-assessment Impacts (FCS0428). Presented by Staff: Joe Rinaldo. CATCH has a hard copy of the power point presentation. (not on line)
This is the link to the full report:
http://www.hamilton.ca/Clerk/agendas-minutes-reports/
Strategic-Planning-Budgets/2004/Mar03/Rep04-004.pdf
Report looks at impact of the re-assessment ONLY. Commonly misunderstood that basis of property taxation does not reflect services used. Few years ago "market value" changed to "current value", definition the same. In past assessments not updated regularly. Larger commercial assessment often appealed. Province is now keeping assessment up to date by reassessing annually. 8.6% (city wide). The significant one is the industrial class, down 2.3%. Issues between Stelco and MPAC and as a result the values were reduced. If every class was going up by 7.6% there would be no shifts between classes, but unfortunately multi-residential, Industrial, commercial are all growing at a much lower rate, and what that does is shift the tax burden to the residential and farmland classes. Shift of $6.5M (overall 1.7% impact) to the residential class, which we have no choice about, because we are below the threshold.
Provincial average is 13 %, which is why Hamilton will see a reduction in education tax rate, (we are below the average).
The increase in property values does not mean that taxes are increasing. Re-assessments are revenue neutral for municipalities (across all classes). We are prohibited by law to raise more tax revenues simply because of the re-assessment values. Before and after re-assessment we are required to generate the same amount of tax revenues (approx. $684M).
But, there will be significant change ward to ward in terms of shift of tax burden (including all classes. Every ward will have properties increasing greater or less than their ward average.
Shift of $6.5M to residential class and 1.9% to the farmland class (increases) from Multi-residential of $2.7M, Commercial $1.3, and Industrial $3.8M (decreases).
Because the property values change across the province, the Provincial Gov't sets a new tax rate. Hamilton's property values have not increased at the same rate as others across the province so we get a benefit in the education tax rate. Reduction to .3% expected (not announced yet, but expected to be using the .3 factor). All wards will benefit from this.
The net impact of the education tax reduction: overall impact on tax burden on the residential class because of reassessment is reduced by 1.1.
Can't arbitrarily change how we do things, tax policy and assessment legislation is determined not by MPAC but by Provincial Legislation.
Other issues, like tax ratios/range of fairness policies, to be dealt with in the next few weeks. Phase-in is still an issue. Other reports coming: charity rebates, low income, seniors tax credit.. Have to come back with area rating policy and the issue of the Business Tax Reduction plan.
Province says re: BTR indicates that if City still wants to do this, they will 'entertain' it. Have to put forward to the Minister for his consideration.
Ferguson : Phase-in from 01 (amalgamation), where are we at?
Rinaldo : We're required by law to do one more year phase in (2004). Can't show figures on this till Council sets tax rate, can't do the calculations. Hope that the impact of these will be minimal.
Ferguson : Slide 5 equation, where does education fall?
Rinaldo : his mic was off - missed answer.
Ferguson : Agricultural rate dropped from last year from 25 to 22.5. What do you see happening in 04?
Rinaldo : Coming back with that report. Not as much shift as last year.
Ferguson : ."If we didn't get BTR, would that help industrial/commercial/multi-residential"?
Rinaldo : "Regardless of what happens to the BTR, this impact has to be shifted to the residential class, because we are one of the communities that are capped in terms of increasing taxes. A number of municipalities have approached the Province on whether or not to allow some shifts going to the Commercial/Industrial classes. ( Note* on March 15 the Province did indeed announce that tax ratios will be changed to allow each municipality to shift some tax assessment increases to these classes .) "The BTR really has no impact. If we do BTR the benefit to the industrial will be greater than shown on this chart."
Ferguson : Does this chart mitigate the BTR?
Rinaldo : "Well, they will get this tax decrease. .Industrial will see a $2.3M reduction in tax burden with or without BTR".
Ferguson : Residential 6.5% increase means that business/multi-residential will be the beneficiaries?
Rinaldo : That's correct.
Ferguson : So does that mitigate the commercial/industrial.?
Rinaldo : " That's a policy decision that Council can make. .proposal we had put forward to use anything above 1% as a way to introduce the BTR. . you're right, there is a significant reduction currently imbedded in the reassessment to these classes ( Note , after the March 15th announcement by the Province this may not longer be true - for the upcoming year - depending on how Council chooses to respond to the new freedoms to shift taxes onto those classes )."
Ferguson : If we don't do the BTR. Does this graph speed up our getting to the provincial average any quicker?
Rinaldo : "Absolutely. .(subject to setting final tax rate) the commercial class will actually reach the threshold in 2004. (The industrial is still far away), but that means we will gain access to the commercial class for 2005, possibly for part of 2004, because they will reach the threshold once."
Ferguson : "Multi-residential is already there?"
Rinaldo : Yes.
Ferguson : "Projection.how many years out for industrial? 2, 3?
Rinaldo : .I think 3-5 years. .report .will try to give you that information. .we've actually reached the commercial threshold .what we were talking about 3 years ago, and .industrial was 5 to 6 times when we started this process. It's also a function of how their values change".
Ferguson : "When we get the percentage increase I'd appreciate the equation as it appears on slide 5, rather than just the tax rate. Remember last year we agreed to a 3.8 and .I got an 8.9.. Rinaldo : The bottom line for your case is it's going to be 3.8% above what the budget increase is going to be, roughly speaking. .last year.they were looking at a 7 or more. You can expect that assessment will add 3% or so to all the properties in your ward.
Ferguson : One last question, did you see this coming is that why you moved out of Ancaster?? (laughter etc)
Merulla : I noticed that under the actual reassessment revenue neutral it reads -2.3, and then that changes to .3. Is that because we're not including other taxation, like education taxes.
Rinaldo : You weren't here.(explains revenue neutral).
Collins : Can I get a flavour for the commercial areas that are experiencing.like the maps you showed us last year.concentrations re neighbourhoods or blocks.do you have any idea who the beneficiaries are?
Rinaldo : We haven't done that specific an analysis yet.
Collins : .hear from people who are interested in investing in the core that taxes are too high. BIA's have been very consistent in their approach. .who are the beneficiaries of this reassessment, in addition to the BTR and other initiatives that we have?.come back with the geographic specific numbers for the downtown?
Rinaldo : Yes.. I suspect that downtown it's across.I'm just speculating.(DiIanni interrupts)
DiIanni : Lets wait until we get.
Jackson : .Are separate reports coming on rebate programs March/April.and how will that figure into the 04 budget? Are these policy decisions of whether we continue, alter, or end these?
Rinaldo : Budget .assumed same programs.
Jackson : Ok, not factored in reductions..unlike the 85 and the 63 - good. Why are they appearing now.coming up after a 3 year time (after amalgamation)?
Rinaldo : .every time .do reassessment we review the policies.
Mitchell : One sector worse than downtown: agriculture. Last year we were able to lower the rate from 25% to 22.8%. .option is still available?
Rinald o: Yes.
Mitchell : Coming back with that March April.
Rinaldo : March/April coming back with the recommendations, farmland values increased on a par with residential, I don't expect to see the shifts that we saw last year to the farmland class.
Mitchell : .System is taxing seniors right out of their homes. We do have programs to help.. hope that this committee would ask for a report of expanding these.. properties and values don't correlate.special attention to where there are extreme changes in CVA. Councillor Whitehead ..asked me to ask about education tax inequities. .(what's that about?)
Rinaldo : Inequity is seen in industrial and commercial classes, not residential, but when the Province was matching us in the BTR,. they were actually reducing the education tax rate to these classes.. narrowing but .long way to go .competitive in reducing the gap between ourselves and the surrounding communities.. I do believe though, that there should be a uniform tax rate for all classes , not just the residential.
Mitchell : Windsor asked us to lobby the Province on some correction factors on this CVA. Where's that at?
Rinaldo : In process of reviewing and will come back with a report soon.
Mitchell : Bruckler, Pearson and myself meeting with MPP Mossop. Unofficially put in a request that CVA be related to services provided as well as land values. Keep up pressure re this.
McHattie : Ward one, residential up - to do with student housing investors (people buying properties for more than listed, driving up the values). Wants to meet with MPAC.
Rinaldo : Will set up meeting. But policy changes are made by Minister.
McHattie : Total industrial down - Ward one figure? Camco not closed.what does the 15% mean then?
Rinaldo. MPAC will tell you that.
McHattie : On HABIA (Hamilton Association of BIA's?). Commercial down without BTR. Can now raise taxes on commercial?
Rinaldo : Policy decision council can make. If threshold reached, may be able to this year.
McHattie : But from assessment perspective - can report to HABIA that their taxes will go down 1.3%?
Rinaldo : Yes.
Kelly : When you meet with MPAC ask about criteria. Real estate values not correlating with assessment. Good luck with getting answers from them, not successful so far. ... Gov't likes us to come up with programs outside the box and present them (e.g. 10 year holiday on business taxes in Ireland with benefits reinvested back)... DiIanni with the gov't.discussed ideas like that?
DiIanni : .somewhat.discussion re education tax inequity.more revenue generating ideas than policy.
Rinaldo : Discussions with gov't on uniform tax rate etc. they will look at these things.has a task force looking at assessment related policies.to make them simpler..
Kelly : Niagara having similar problems with industrial.etc (other communities). Local municipalities get together to come up with innovative policies.the ball's in our court.?
DiIanni: Will take that under advisement. Meeting with mayors.west of us already connected to GTA. Also, LUMCO (large urban mayors caucus) .AMO (Association Municipalities Ontario) tabled about 30 ideas.get in touch with them to bring forward to share with you.
Kelly : .do this - be innovative etc. Gov't not going to on own.
Rinaldo : "I just wanted to recognize that Council has taken a very significant initiative especially in the last 3 years, over the BTR, .large industry had significant reductions, some of them as much as 50% in tax burden.. I think Council in going with the BTR has, within it's limitations, gone a long way to help our large industrial tax payers. I want to recognize that you had the will to do it.and you have in fact reduced the burden significantly".
Kelly: Feel happy about that too. Heartened to hear they haven't said no yet . Keep the pressure on.
Motion to receive the report: Carried
General comments:
Ferguson: Rates set at lowest common denominator.shouldn't stereo type our constituents by category or geography.every ward has seniors and poor people. Would like to try an affordability and accessibility reserve, funded by small proportion of user fees. Would be applied for using a means test. .we wouldn't have to set the HSR rate for fear of discriminating against seniors. There are some very wealthy seniors.and not all poor people live in the inner city. Hockey rates for kids.
DiIanni : Accessibility reports comes to us at budget time?
Rinaldo : There's a sub-committee. Can refer to them.
Kelly: Chaired last term. Not met recently. Wanted to reconstitute. No money left. ($500,000 from future fund used up)
Ferguson: Would be self perpetuating.
Jackson : Motion to look at or do? Has comments on doing.
DiIanni : Only on looking at.
Motion : Staff were directed to explore and report back to Committee on the
following: Establishment of an Affordability/Accessibility Reserve funded by a
percentage of all user fees (i.e. water rates), requiring a needs assessment for access to the fund. Carried
Motion : To go in camera to receive an update on union negotiations. Collins/Jackson Carried
In camera 2:40 - 3:20 p.m. No motions following.
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