September 2, 1998

TO:Corporate Services Committee

FROM:Chief Financial Officer and Treasurer

SUBJECT:Arm's Length Municipal Office - Assessment Appeals

Purpose:

To report on the "arm's length" municipal office requested by Council to assist taxpayers in appealing their property assessment.

Funding Source, Financial Implications and Impact Statement:

None.

Recommendation:

It is recommended that to meet Council's intent to help taxpayers, that Option 3 be adopted where the City will maintain a listing of outside firms that could be provided to taxpayers who require assessment appeal services.

Reference/Background:

At its special meeting of July 21 and 23, 1998 (Strategic Policies and Priorities Committee Report 13, Clause 1), City Council adopted, among others, a recommendation that "an arm's length municipal office be set up immediately to help the City's taxpayers to appeal their property tax assessment".

Comments:

During its meeting on July 21 and 23, 1998 regarding the setting of the 1998 tax rates and other tax policy initiatives, Council adopted the motion that an arm's length municipal office be set up immediately to help the City's taxpayers to appeal their property tax assessments. As Council is aware, the Ontario Ministry of Finance, through its Regional Assessment Offices is responsible for property assessment across the province and completed the recent Current Value Assessment which was implemented this year.

The defense of the assessment base against appeals also lies mainly with the Province. In certain instances, municipalities - including the former City of Toronto - have become actively involved in appeals. However, in most instances, the municipality was involved in ensuring that the assessment level was not reduced. It should be noted that any assistance that results in a reduction of the assessment of properties will have a negative impact on the City's overall assessment base and put further pressure on the operating budget.

Existing Situation Since Council Resolution - City Assists Taxpayers in Appeal Process:

While Council had requested that an arm's length municipal office be set up immediately, the City Solicitor has advised that the City could not establish such an "arms length" office within its existing powers and would require special legislation. However, in the interim, City staff have previously, and continue to provide taxpayers with assistance in appealing their property assessment. Any local tax office will provide the necessary address of the Assessment Review Board and filing fee to appeal. In addition, two of the brochures that were included in the final tax bill mailed in August 1998 included information regarding the process to appeal as well as a sample letter that could be used as a guide.

Taxpayers that are appealing their assessments because their assessment is too high are also advised that the onus is on them to show the Assessment Review Board that similar properties in their neighbourhood have lower assessments. The four Regional Assessment Offices in Toronto continue to provide five comparable properties for any taxpayer who requests them in order to better review their assessments. The Assessment Offices will also provide taxpayers with the details of how the assessment for their own property was determined. In March 1998, binders containing individual property listings for every property in the City, by City ward, were made available to all Councillors, tax offices and many libraries across Toronto. In addition, the assessment rolls are available in each of the Civic Centres where taxpayers can compare their assessments with other properties in their neighbourhood. These sources of information are still available for use by taxpayers to assist them in determining whether to appeal their assessment and are provided free of charge.

Council's recommendation on July 21 and 23, 1998 is specific in that an "arm's length municipal office" be set up which would ensure that civic staff not be actively involved but rather a separate organization operate and carry out the functions of the office. It is assumed that the primary function of the arm's length municipal office would be to assist residential taxpayers in appealing their assessments. Set out below are options that could be used to achieve this.

Option 1: Establish Arm's Length Municipal Office as a Separate Corporation

The City Solicitor has advised that it is a basic premise of municipal law that a municipality may exercise only those powers which have been specifically given to it. Those powers are generally contained in the Municipal Act. Except in very limited circumstances such as are contained in sections 112.1 and 112.2 of the Municipal Act (community economic development corporations, community development corporations), a municipality has no ability to incorporate a corporation. In the absence of such a specific authority, a municipality must apply for special legislation. Special legislation may permit the municipality to incorporate a corporation under the Business Corporations Act or alternatively, the legislation may by its nature create a statutory corporation.

Subject to the City receiving special legislation, it is envisioned that such an arm's length corporation would actively participate in taxpayer appeals by representing the taxpayer at the appeal tribunal. In order to recover costs of operating and carrying out the functions of this office, taxpayers would be charged a fee. It should be noted that there are existing outside firms that already provide this type of service for a fee.

The primary objective of this office would be to achieve assessment reductions for taxpayers, which would contradict the City's objective to protect its assessment base. It would also be disputing assessments determined by the Regional Assessment Office, which will soon become a new assessment corporation, funded by municipalities with municipal representation on its board of directors.

If Council wishes the City Solicitor to apply for special legislation in this case, it will be necessary for a further report on the structure for such a corporation so that draft legislation can be prepared.

Option 2: City Contract with Outside Firms to Assist Taxpayers

Another option to assist taxpayers with their appeals would be for the City to establish a contract with an existing outside firm. The City would issue a Request for Proposal for these services, maintain a listing of taxpayers who are referred and monitor the progress of the appeals. Under this option, the City would pay the outside firm for the services provided, and would recover these costs from the taxpayer.

It would be very important for the City to limit its responsibility under this option by advising taxpayers that assessment reductions are not guaranteed and the City is not responsible for any decision made at the assessment tribunal.

Option 3: City Provides Taxpayers with List of Outside Firms

Under this option, where the information already provided by the City and the Regional Assessment Office is still not sufficient and the taxpayer requires additional assistance, the City would provide a list of existing outside firms that provide assessment appeal services. However, the taxpayer would be responsible for their own determination in choosing an outside firm as well as entering into their own contractual arrangements, including payment of the fee. The City would not make any representation with respect to any of the outside firms and would provide the list as information only.

Conclusion:

Although an arm's length office has not been established for the reasons noted above, Council should be aware that taxpayers have been, and are still, provided with assistance to appeal their property assessment. If Council wishes the City Solicitor to apply for special legislation in this case, it will be necessary for a further report on the structure for such a corporation so that draft legislation can be prepared.

As noted above, there are existing outside firms that already provide this type of service for a fee. It is recommended that to meet Council's intent to help taxpayers, that Option 3 be adopted where the City would maintain a listing of outside firms that could be provided to taxpayers who require assessment appeal services. The taxpayer would be required to make their own evaluation as to which firm to use in order to limit the City's responsibility where an appeal is not successful.

Contact Name:

Paul Wealleans, 397-4208

W.A. Liczyk,

Chief Financial Officer and Treasurer