To:Strategic Policies and Priorities Committee

From:City Clerk, Assessment and Tax Policy Task Force

Subject:Capping of Business and Realty Taxes for BIAs

Recommendations:

The Assessment and Tax Policy Task Force recommends that:

(1)the provincial government be requested to amend legislation in order that individual BIAs may create their own tax policies on BIA levies, at the individual discretion of each BIA; and

(2)TABIA be advised of the City's request to the provincial government, in order that it may inform its members.

Background:

The Assessment and Tax Policy Task Force, on September 29, 1998, had before it a report (September 22, 1998) from the Chief Financial Officer and Treasurer respecting Capping of Business and Realty Taxes for BIAs, and recommending that this report be received for information.

During consideration of the foregoing matter, the Task Force also had before it the following communications:

-(September 11, 1998) from Mr. Norman Bergstein, President, Yonge-Bloor-Bay Association Inc., addressed to the Minister of Finance, requesting the Minister of Finance to place a cap on the BIA assessment as part of the legislation extending the time for appeal; and.

-(September 14, 1998) from Mr. I.R. Wookey, President, Seniority Investments Limited, addressed to the Minister of Finance. requesting the Minister of Finance to consider a cap on business and realty taxes for BIAs, at the same time as the introduction of legislation for the extension of the appeal period.

The Task Force's recommendations are noted above.

City Clerk

Frances M. Pritchard/

980929.15

September 22, 1998

To:Assessment and Tax Policy Task Force

From:Chief Financial Officer and Treasurer

Subject:Item 15 - Capping of Business and Realty Taxes for BIAs

Purpose:

To provide information regarding capping of Business Improvement Area (BIA) levies in response to a letter from Mr. I.R. Wookey, President, Seniority Investments Limited to the Minister of Finance requesting that BIA levies be subject to the cap on tax increases on commercial/industrial properties.

Recommendation:

It is recommended that this report be received for information.

Comments:

Prior to 1998, BIA levies were billed to business tenants. With the elimination of the business occupancy tax, BIA levies have become the responsibility of property owners. The BIA program is governed by provincial legislation, is administered by the municipality but is funded and carried out by the members of each BIA.

Council of the City of Toronto adopted a plan whereby assessment related tax increases for 1998 for commercial and industrial properties be capped at 2.4 percent over their 1997 total taxes (realty taxes plus business occupancy taxes). Provincial legislation that provides municipalities with the authority to cap tax increases due to reassessment, excludes BIA levies as eligible for the cap. Sections 447 (14) and (15) of the Municipal Act includes a provision for the determination taxes and that can be capped and include only taxes for "municipal and school purposes". BIA levies are a special charge for the purposes of the BIA, and, therefore, not subject to the cap.

The Board of Management of the BIAs vote on their own budgets and spending. Therefore, it is within their control to decide whether to maintain the spending at consistent levels from one year to the next. In 1998, majority of the areas have maintained their budgets at 1997 levels with very few areas having increases.

Given the shift in assessment due to CVA, it may be that shifts of BIA levies also occur as the levy is based on property assessment. For example, the decrease in office values with in increased offset to retail may impact those retailers with higher BIA levies. A cap on BIA levies, would reduce the amount of funds available to the BIA for its approved budget unless funding was obtained from another source.

Without a change in provincial legislation, current BIA levies are not subject to the cap. Should the Province review the capping provisions for BIAs, funding requirements would also need to be reviewed to ensure full approved budgets are available to BIAs.

Contact Name:

Paul Wealleans, 397-4208