Fair Tax Policy for Ethno-Cultural Centres

and Similar Organizations

The Policy and Finance Committee recommends the adoption of the Recommendation of the Assessment and Tax Policy Task Force embodied in the following communication (September 24, 1999) from the City Clerk; and, further, that the Chief Financial Officer and Treasurer be requested to submit an annual report in regard thereto to the Policy and Finance Committee:

Recommendation:

The Assessment and Tax Policy Task Force recommends the adoption of the report (September 15, 1999) from the Chief Financial Officer and Treasurer.

Background:

The Assessment and Tax Policy Task Force, on September 22, 1999, had before it a report (September 15, 1999) from the Chief Financial Officer and Treasurer respecting Fair Tax Policy for Ethno-cultural Centres and Similar Organizations, and recommending that:

"(1)one time funding in the amount of $4.3 million (City share) be provided from the Tax Deficiencies account of the 1999 Operating Budget to cancel rebate property taxes without penalty to December 31, 1997, in accordance with the authority provided by private bill legislation, and to rebate the 1998 and 1999 property taxes without penalty pursuant to the Small Business and Charities Protection Act taxes, 1997, for the seven organizations shown under heading (A) of Table 1(a) who have received the support of the former Councils regarding Private Bill legislation, which has been enacted, and for whom the property taxes have yet to be cancelled/rebated;

(2)one time funding in the amount of $130.0 thousand (City share) also be provided from the Tax Deficiencies account of the 1999 Operating Budget to rebate the 1998 and 1999 property taxes without penalty pursuant to the Small Businesses and Charities Protection Act, 1997, for the four organizations shown under headings (B) and (C) of Table 1(a), subject to the organization meeting the eligibility criteria respecting property tax rebates for ethno-cultural organizations proposed in this report and attached as Appendix A;

(3)a corporate expenditure program of "Property Tax Rebates - Ethno-Cultural and Similar Organizations" be established in the 2000 Operating Budget for the purpose of property tax rebates as provided for under the Small Business and Charities Protection Act, 1997 and the eligibility criteria, and ongoing conformity requirements, respecting requests for property tax relief by Ethno-Cultural and Similar Organizations, as embodied in this report and attached as Appendix A, be adopted;

(4)funding in the amount of $1.0 million be transferred from the Tax Deficiencies budget line to a new budget line "Property Tax Rebates - Ethno-Cultural and Similar Organizations" in the new 2000 operating budget for the program described in (3) above; and

(5)the appropriate City officials be authorized and directed to introduce the necessary bills and to take the necessary action to give effect thereto."

The Task Force's recommendation is noted above.

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(Report dated September 15, 1999, addressed to the

Assessment and Tax Policy Task Force from the

Chief Financial Officer and Treasurer)

Purpose:

To provide a fair tax policy for Ethno-Cultural Centres and Similar organizations.

Funding Source, Financial Implications and Impact Statement:

The cancellation/rebate of current and retroactive property taxes to December 31, 1999, in the amount of $4.4 million (City share), pursuant to the motions adopted by the Councils of the former Metropolitan Toronto and the former local municipalities, will be funded from the Tax Deficiencies account for the nine cultural organizations that have received the support of the former Councils regarding Private Bill legislation, and for whom property tax relief has yet to be provided, and for two additional organizations that would be eligible under the eligibility criteria embodied in this report and who have also requested similar treatment.

Adoption of a fair tax policy for Ethno-Cultural Centres and Similar Organizations, as embodied in this report, will require funding in the amount of $1.0 million for the City share of taxes to be transferred from Tax Deficiencies in the 2000 Operating Budget for the purposes of continuing the new program of Property Tax Rebates for Ethno-Cultural and Similar Organizations for the above organizations.

Recommendations:

It is recommended that:

(1)one time funding in the amount of $4.3 million (City share) be provided from the Tax Deficiencies account of the 1999 Operating Budget to cancel rebate property taxes without penalty to December 31, 1997, in accordance with the authority provided by private bill legislation, and to rebate the 1998 and 1999 property taxes without penalty pursuant to the Small Business and Charities Protection Act, 1997, for the seven organizations shown under heading (A) of Table 1(a) who have received the support of the former Councils regarding Private Bill legislation, which has been enacted, and for whom the property taxes have yet to be cancelled/rebated;

(2)one time funding in the amount of $130.0 thousand (City share) also be provided from the Tax Deficiencies account of the 1999 Operating Budget to rebate the 1998 and 1999 property taxes without penalty pursuant to the Small Businesses and Charities Protection Act, 1997, for the four organizations shown under headings (B) and (C) of Table 1(a), subject to the organization meeting the eligibility criteria respecting property tax rebates for ethno-cultural organizations proposed in this report and attached as Appendix A;

(3)a corporate expenditure program of "Property Tax Rebates - Ethno-Cultural and Similar Organizations" be established in the 2000 Operating Budget for the purpose of property tax rebates as provided for under the Small Business and Charities Protection Act, 1997 and the eligibility criteria, and ongoing conformity requirements, respecting requests for property tax relief by Ethno-Cultural and Similar Organizations, as embodied in this report and attached as Appendix A, be adopted;

(4)funding in the amount of $1.0 million be transferred from the Tax Deficiencies budget line to a new budget line "Property Tax Rebates - Ethno-Cultural and Similar Organizations" in the 2000 operating budget for the program described in (3) above; and

(5)the appropriate City officials be authorized and directed to introduce the necessary bills and to take the necessary action to give effect thereto.

Council Reference:

At is meeting of July 21 and July 23, 1998, during consideration of Clause No. 5 of Report No. 13 of the Strategic Policies and Priorities Committee - "Property Tax Rebates for Charitable and Similar Organizations", Council further moved that the Chief Financial Officer and Treasurer submit a report to Council, through the Strategic Policies and Priorities Committee, on a fair tax policy for ethno-cultural centres.

Background:

At present, there are nine cultural organizations for which a decision of Council is pending respecting property tax relief. Prior to the amalgamation of the municipalities, these organizations had previously sought and received the support of the Councils of the former upper (Metro) and the respective lower tier municipalities for support for the introduction of private legislation in the Provincial Legislature. Private legislation was enacted by the Province in late 1997 for seven of these organizations, which legislation authorized the municipalities to cancel taxes by by-law under the rules in existence at that time. With the changes in provincial legislation and policy respecting Private Members bills in late 1997 and 1998, the other two organizations missed the window of opportunity for enactment of private legislation. Since then, two additional organizations have come forward seeking similar treatment.

The total current value assessment (CVA) of the subject properties is estimated at $66.0 million. The property taxes that would otherwise be payable by these organizations amounts to approximately $1.4 million per year under full CVA, of which the municipal portion would be approximately $0.8 million per year. Table 1(a) shows the outstanding requests by ethno-cultural and similar organizations for property tax relief.

Insert Table/Map No. 1

table 1a

The private bills for 4588 Bathurst (Bathurst Jewish Centre) and 750 Spadina Avenue Association provides for the municipality to continue with providing property tax relief for the former Jewish Community Centre at these two facilities, as a name change arising from their reorganization negated their tax exempt status provided by their private bill of 1951. The private bills for the Japanese Canadian Cultural Centre and for the Korean Canadian Cultural Association provides for the municipality to continue providing property tax relief to these organizations, as a change of location negated their tax exempt status provided by their private bills of 1982 and 1993, respectively. The private bills for the National Ballet of Canada, Chinese Canadian Cultural Centre of Greater Toronto Foundation, and the Jamaican Canadian Cultural Centre provides for the cancellation of taxes on properties that are presently taxable. The request by the Tamil-Eelam Society of Canada is for tax relief on a taxable property owned by the organization, for which no private bill has been enacted. The request by the Armenian Community Centre is to extend tax relief to an additional adjacent property owned and used by the organization that is presently taxable. The requests by the Cypriot Community of Toronto and the First Portuguese Canadian Cultural Centre are post-1997 requests for similar treatment for properties owned and occupied by these organizations for ethno-cultural purposes.

In their support of the application for Private Members bills, the Councils of the former lower tier municipalities passed resolutions to cancel the local portion of taxes, subject to the enactment of the relevant bills by the Province, and requested that Metropolitan Toronto and the Metropolitan Toronto School Board pass resolutions to cancel their share of taxes. The Metro level of government, in its support of the application for Private Members bills, authorized the cancellation of the Metro portion of property taxes payable to the end of 1997, also subject to the enactment of the relevant legislation by the Province. Given the late timing of the private bills being enacted and the end of the term for Council, the local portion of taxes payable to the end of 1997 were cancelled for only two organizations, located in the former City of Toronto (the National Ballet of Canada and 750 Spadina Avenue Association). The Private Members bills that were enacted provided for retroactive cancellation of taxes to the date that the subject properties became taxable. Given Councils support of the Private Members bills, there may have been an expectation by some of the organizations that the taxes would be cancelled retroactively, and as such, in certain cases taxes were not paid. Table 1(b) shows the estimated total tax arrears, penalties and interest owing, notwithstanding the retroactive cancellation of taxes.

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Table 1(b)

Estimated Taxes Paid, Arrears, Penalties and Interest Owing

* based on retroactive dates pursuant to the respective private legislation

Councils support for Private Members bills for cultural organizations was generally on an ad-hoc basis, although the former Toronto and Metro followed a broad criteria that support only be provided to "unique, one-of-a-kind facilities in the opinion of Council".

With the amalgamation of the former municipalities, there is no longer a distinction between the local and Metro portions of the tax bill. During 1998, the new Council's priorities included property assessment and taxation reform, which included consideration of property tax relief for charitable and similar organizations. The legislation with respect to the latter evolved during 1998, culminating with the enactment of the Small Businesses and Charities Protection Act, 1998 (Bill 16). In the end, Council adopted a capping provision for the commercial/industrial property classes, negating the necessity for a policy to protect charities and similar organizations from the impacts of assessment and taxation reform. Consequently, no new policy respecting property tax relief for cultural centres was established in 1998.

Property tax relief for cultural and similar organizations falls into three categories: exemptions, cancellations, and rebates. Prior to 1994, organizations such as ethno-cultural centres that were not eligible for the specific types of exemptions listed in the Assessment Act could seek to obtain tax exempt status through private legislation, which were being approved on an ad hoc basis by the Province's Private Bills Committee and then enacted by the Provincial Legislature. To date, staff have identified twenty-nine organizations occupying forty-four property locations that have been granted tax exempt status through private bill legislation, as shown in Table 2(a). The total CVA of these exempted properties is estimated at approximately $167.0 million. It is estimated that the tax implication for these exempt properties amounts to approximately $7.4 million per annum (based on current tax rates), with the municipal portion being $4.2 million, as shown in Table 2(b).

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Table 2(a)

Existing Private Bills Providing for Property Tax Exemptions in Toronto

*Tax exempt status subsequently negated as a result of a name or address change; see Table 1(a); not included in calculation of total.

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Table 2(b)

Estimated Tax Implication of Tax Exempt Properties