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PROPERTY TAX RATIOS, RATES & POLICY

PROPERTY TAX RATIOS, RATES & POLICY. KAWARTHA MANUFACTURERS ASSOCIATION APRIL 21 ST , 2009. BACKGROUND. PROPERTY TAX. MUNICIPAL RATE. BET RATE. X. CURRENT VALUE ASSESSMENT. PROVINCIAL REFORM STARTED IN 1998. MUNICIPAL - CLASSES. TOTAL TAX LEVY DETERMINED BY THE CITY BUDGET

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PROPERTY TAX RATIOS, RATES & POLICY

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  1. PROPERTY TAX RATIOS, RATES & POLICY KAWARTHA MANUFACTURERS ASSOCIATION APRIL 21ST, 2009

  2. BACKGROUND PROPERTY TAX MUNICIPAL RATE BET RATE X CURRENT VALUE ASSESSMENT PROVINCIAL REFORM STARTED IN 1998

  3. MUNICIPAL - CLASSES • TOTAL TAX LEVY DETERMINED BY THE CITY BUDGET • THE LEVY IS DIVIDED BETWEEN THE DIFFERENT CLASSES – PRIMARILY RESIDENTIAL, MULTI-RESIDENTIAL, COMMERCIAL & INDUSTRIAL

  4. EDUCATION (BET) • CONTROL ASSUMED BY PROVINCE IN 1998 • STILL WIDE VARIATION ACROSS MUNICIPALITIES • CURRENT POLICY IS TO HAVE A COMMON RATE OF 1.52% BY 2014

  5. MUNICIPAL - ASSESSMENT • PROVINCE MOVING TOWARDS CURRENT VALUE ASSESSMENT SINCE 1998 • VARIOUS POLICIES IN EFFECT TO REDUCE LARGE, SUDDEN INCREASE • POLICY IS 4 YEAR MOVE TO 1998 CVA • REASSESS IN 2012

  6. THE TAX PROCESS CITY SETS BUDGET DETERMINES TOTAL TAX LEVY REQUIRED MPAC SETS CVA TOTAL BY CLASS CITY TAX POLICY SETS RATIOS WEGHTED CVA BY CLASS

  7. MUNICIPAL - ASSESSMENT • ASSESSMENT CARRIED OUT BY MPAC • INDUSTRIAL ASSESSMENT IS A DEPRECIATED REPLACEMENT COST AS REALITY DATA IS SPARSE • RESIDENTIAL BASED ON REALITY, COMMERCIAL ON RENTAL VALUE

  8. MUNICIPAL - RATIOS • RATIOS ARE USED TO SET THE WEIGHTED CVA • RESIDENTIAL IS 1, MCI SET AS MULTIPLES • FOR A CLASS, CVA TIMES THE RATIO IS THE WEIGHTED CVA WHICH DETERMINES THE LEVY

  9. MUNICIPAL - RATIOS • IN 1998 PROVINCE SET “RANGES OF FAIRNESS” FOR RATIOS • COMMERCIAL & INDUSTRIAL SET AT 0.6 TO 1.1 • REFLECTS MUNICIPAL COSTS DRIVEN PRIMARILY BY RESIDENTIAL CLASS

  10. THE TAX PROCESS TOTAL TAX LEVY WEIGHTED CVA RESIDENTIAL TAX RATE MCI RATES X RATIOS X CVA MUNICIPAL TAX BILL

  11. MUNICIPAL - RATIOS • RATIOS SHIFT TAX BURDEN FROM RESIDENTIAL TO MCI • 2008 RATIOS

  12. MUNICIPAL - CVA MultiRes Comm Ind MultiRes Ind Residential

  13. MUNICIPAL – WEIGHTED CVA MultiRes Ind Comm Residential 13% of the tax burden is shifted from Residential, Industrial more than doubles

  14. MUNICIPAL - RATIOS • RATIOS USED TO SHIFT TAX BURDEN FROM RESIDENTIAL TO MCI • 2008 RATIOS

  15. IMPACT POLICY: REDUCE MIR RATIOS TO 1.5 OVER 8 YEARS STARTING IN 2010 BUILDING ASSESSED AT $2.5 MM MOVING TO CVA OF $3.25 MM ASSUMING NO CHANGE IN RESIDENTIAL RATE (UNDERSTATES IMPACT)

  16. IMPACT

  17. NEXT STEPS • COMMERCIAL WOULD PAY $128K LESS THAN INDUSTRIAL FOR PREVIOUS EXAMPLE • COUNCIL WANTS TO REVIEW POLICYAS PART OF BUDGET FOR 2010 • CLOSE GAP WITH COMMERCIAL • FREEZE THE POLICY ONCE SET – ADJUST BUDGET, NOT POLICY

  18. APPENDIX

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