1999 Interim Levy By-law

The Strategic Policies and Priorities Committee recommends the adoption of the report (December 3, 1998) from the Chief Financial Officer and Treasurer.

The Strategic Policies and Priorities Committee reports, for the information of Council, having adopted the report (December 8, 1998) from the City Solicitor which recommends that it be received for information.

The Strategic Policies and Priorities Committee submits the following report (December3,1998) from the Chief Financial Officer and Treasurer:

Purpose:

To provide for the levy and collection of 1999 interim realty taxes.

Financial Implications:

The approval of the by-law will provide for the cash requirements of the City until the final 1999 operating budget is approved by Council in April 1999.

Recommendation:

Authority be granted for the introduction of a bill in Council substantially in the form of the draft by-law attached as Appendix hereto, providing for an interim tax levy in the amount permitted by statute, prior to the adoption of the estimates for 1999.

Discussion:

Section 370 of the Municipal Act, as amended (the "Act"), provides that a municipal council may pass a by-law, prior to the adoption of the estimates, to levy interim taxes for 1999. Similarly, section 447.30 of the Act provides that a municipal council may pass a by-law levying interim taxes for 1999, prior to the adoption of the estimates, on any property classes for which the municipal council adopted the 2.5 percent cap on tax increases for 1998, 1999, and 2000.

The 1999 interim rates as reported in the attached by-law will generate no more than 50 percent or less of the total 1998 revenue by property class, and are in the same proportion to one another as the tax ratios established by City Council in July, 1998. The 1999 interim taxes for the capped commercial, industrial and multi-residential property classes are levied by applying 50 percent of the adjusted 1997 mill rates to the assessment in the frozen assessment listing. Adjustments are made to account for the phase-in program (residential) and the 2.5 percent cap (commercial, industrial and multi-residential) adopted by City Council in July, 1998. Additional funds will be raised by provincial transfer payments, user fees, internal revenues sources and, if necessary, temporary borrowing.

The draft by-law attached hereto as Appendix "A" has been prepared in accordance with the foregoing and in accordance with the Act, as amended by Bill 79.

Bill 79 (the Fairness for Property Taxpayers Act, 1998), if enacted, will provide the authority to adjust the 1999 interim levy to account for the phase-in and capping programs adopted by Council in July, 1998.

The following two additional issues also affect the enactment of the interim levy by-law:

3:While Bill 79 specifically excludes the City of Toronto from the 10-5-5 capping provisions, as it currently reads, it also prohibits the council of any municipality (including the City of Toronto) from passing an interim levy by-law prior to January of 1999.

4:Section 447.21 of the Act appears to require the council of a municipality to levy the full 1999 levy on the multi-residential property class in the interim levy by-law, where the multi-residential property class is subject to the 2.5 percent cap.

Staff have been informed by Ministry sources that both issues are to be resolved by way of amendment to Bill 79 before third reading in early December 1998.

Bill 79 is scheduled to receive Royal Assent during the week of December 7, 1998. Provided the above-mentioned issues are resolved by amendment, and Bill 79 is enacted on schedule, City Council can enact a 1999 interim levy by-law, in substantially the form attached, at its meeting of December 16, 1998.

Conclusion:

The interim levy by-law will provide for the cash requirements of the City until the 1999 operating budget is approved by Council by March 1999. Council's authority to enact the by-law at its next meeting, in substantially the form attached, is dependant upon Bill 79 being amended and enacted prior to City Council's meeting of December 16, 1998.

Contact:

Giuliana Carbone, Director of Revenue Services, (416) 392-8065.

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APPENDIX "A"

Authority:

Intended for first presentation to Council:

Adopted by Council:

CITY OF TORONTO

Bill No.

BY-LAW No. [By-law number]

To provide for the levy and collection of 1999 interim realty taxes

and penalties for non-payment thereof

WHEREAS subsection 370(1) of the Municipal Act, as amended (the "Act"), provides that for 1999, the council of a local municipality, before the adoption of the estimates for the year, may pass a by-law levying a separate tax rate, as specified in the by-law (the "interim levy by-law"), on the assessment in each property class in the municipality rateable for local municipality purposes (the "interim taxes"); and

WHEREAS subsection 2(2) of the City of Toronto Act, 1997, provides that the City of Toronto is a local municipality for all purposes; and

WHEREAS section 370 of the Act, provides in subsection 3 thereof that the interim taxes are subject to the following restrictions:

1The rate on a property class must be set so that the total amount raised, when the tax rate is levied on the applicable assessment rateable for local municipality purposes, does not exceed 50 per cent of the total amount raised for all purposes for the previous year by the levying of tax rates on all properties that, in the current year, are in the property class,

2.The rates must be set so that the amount raised does not exceed any limit in a regulation under section 371 of the Act,

3.The rates on the different classes of property must be in the same proportion to each other as the tax ratios established under section 363 of the Act for the property classes are to each other,

4.For the purposes of calculating the total amount raised for all purposes for the previous year, if any tax rates were levied for only part of the previous year because assessment was added to the collector's roll during the year, an amount shall be added equal to the additional taxes that would have been levied if the tax rates had been levied for the entire year;

5.The total amount raised for all purposes for the previous year shall be adjusted in accordance with the following:

(i)the amount shall be decreased by the costs, for the previous year, of deferrals, cancellations or other relief to low-income seniors and low-income disabled persons under a by-law passed pursuant to subsection 373(1) of the Act,

(ii)the amount shall be increased by any taxes deferred by low-income seniors or low-income disabled persons under a by-law passed pursuant to subsection 373(1) that were due in the previous year; and

WHEREAS the total amount raised, when the tax rate for each property class set out in Column II of section 2 of this by-law is levied on the applicable assessment rateable for local municipality purposes, does not exceed 50 per cent of the total amount raised for all purposes in the 1998 by the levying of tax rates on all the properties that, in 1999, are in the property class; and

WHEREAS no percentages have been prescribed for the purposes of the section 371; and

WHEREAS section 370 of the Act, provides in subsection 4.1 thereof that if an interim levy by-law is passed before the tax ratios for the current year are established, the tax ratios for the year for the purposes of levying the interim taxes, shall be deemed to be the tax ratios for the previous year; and

WHEREAS section 370 of the Act provides in subsection 4 thereof, that if an interim levy by-law is passed before the assessment roll for taxation in the current year is returned the interim taxes shall be levied on the assessment according to the assessment roll for taxation in the previous year as most recently revised before the by-law is passed or a preliminary assessment roll provided by the assessment commissioner for the purpose; and

WHEREAS section 370 of the Act, provides in subsection 4.2 thereof, that an interim levy by-law may provide for the levying of tax rates on assessment added, after the by-law is passed, to the collector's roll for the current year that was not on the assessment roll upon which the tax rates are levied; and

WHEREAS section 370 of the Act, provides in subsection 7.1 thereof, that if the council of the municipality is of the opinion that the interim taxes levied on a property are too high or too low in relation to its estimate of the total taxes that will be levied on the property, the council may, by by-law, adjust the interim taxes on the property to the extent it considers appropriate; and

WHEREAS section 370 of the Act, provides in subsection 14 thereof, that the Minister may make regulations varying the application of section 370 with respect to 1999; and

WHEREAS no regulations have been made under subsection 370(14) of the Act;

WHEREAS subsection 447.30(1) of the Act, provides that the following rules apply, rather than section 370 of the Act, for the 1999 and 2000 taxation years, with respect to properties to which Part XXII.1 of the Act applies:

1.The council of a local municipality, before the adoption of the estimates for the year, may pass an interim levy by-law levying interim taxes on the assessment in the frozen assessment listing, as most recently revised, for property in the municipality rateable for local municipality purposes, which by-law may provide for the levying of taxes on assessment added to the frozen assessment listing after the by-law is passed and to which by-law subsections 370(2), (5), (6), (7) and (7.1) of the Act apply, with necessary modifications,

2.The interim taxes shall be determined by applying,

(a)a mill rate to the commercial assessment and business assessment as set out in the frozen assessment listing, which mill rate shall not exceed the prescribed percentage, or 50 per cent if no percentage is prescribed, of the adjusted commercial mill rate, determined under section 447.16 of the Act, that was applicable to the property for the previous year or that would have applied to the property for the previous year if Part XXII.1 of the Act had applied,

(b)and a mill rate to the vacant commercial assessment and non-business assessment, as set out in the frozen assessment listing, which mill rate shall not exceed the prescribed percentage, or 50 per cent if no percentage is prescribed, of the adjusted residential mill rate, determined under section 447.16 of the Act, that was applicable to the property for the previous year or that would have applied to the property for the previous year if Part XXII.1 of the Act had applied; and

WHEREAS no percentage has been prescribed under section 447.30; and

WHEREAS section 447.21 of the Act, provides in paragraph 5 thereof that, if Part XXII.1 of the Act applies to the multi-residential property class, the interim taxes levied on the multi-residential property class shall be determined by applying 50 per cent of the adjusted residential mill rate to the total assessment in the frozen assessment listing, rather than as provided under paragraph 2 of subsection 447.30(1); and

WHEREAS the mill rates set out in section 4 hereof do not exceed 50 per cent of the adjusted mill rates as determined in accordance with section 447.16 of the Act;

The Council of The City of Toronto (the "Council") HEREBY ENACTS as follows:

1.In this by-law:

"1998 Assessment-Related Tax Increase" means a "1998 Assessment-Related Tax Increase" as defined in By-law No. 472-98;

"1998 Assessment-Related Tax Decrease" means a "1998 Assessment-Related Tax Decrease" as defined in By-law No. 472-98;

"area" means the part of the City of Toronto which was the geographical area of an "area municipality" as defined by the Municipality of Metropolitan Toronto Act, as it read on December 31, 1997 and each such area is referred to by the name of the former municipality;

"Tax Collector" means any person who was a collector or tax collector appointed, pursuant to the provisions of the Act, by by-law of a former area municipality in force on December 31, 1997, or any person subsequently appointed by Council to hold that office, and

"Treasurer" means the Chief Financial Officer and Treasurer of the City of Toronto; and

2.Before the adoption of the estimates for 1999, there shall be levied as taxes on the assessment of all property in the City of Toronto rateable for local municipality purposes according to the assessment roll as most recently revised before this by-law is enacted, in amounts calculated for each property class set out in Column I, by applying the interim tax rate set out in Column II to the assessment set out in the assessment roll as most recently revised and on any assessment added to the collector's roll for 1999 after this by-law is passed that was not on the assessment roll as most recently revised:

Column IColumn II

(Property Class/Subclass)(Interim Tax Rate)

Residential/Farm0.629851%

Multi-Residential2.323420%

Commercial3.821376%

- Vacant Units and Excess Land2.674951%

- Vacant Land2.674951%

Industrial5.3320015%

- Vacant Units and Excess Land3.465791%

- Vacant Land3.465791%

- Farmland Awaiting Development0.220448%

Farmlands0.157463%

Pipelines1.7836535%

3.(a)The interim taxes levied by section 2 hereof on all real property in the residential/farm property class for which there is a 1998 Assessment-Related Tax Increase are deemed by City Council to be too high and shall be adjusted by subtracting therefrom 50 per cent of the amount of the 1998 Assessment-Related Tax Increase remaining, if any, to be phased-in in the 2000, 2001, and 2002 taxation years pursuant to subsection 3(2) of By-law No. 472-98; and

(b)The interim taxes levied by section 2 hereof on all real property in the residential/farm property class for which there is a 1998 Assessment-Related Tax Decrease are deemed by City Council to be too low and shall be adjusted by adding thereto 50 per cent of the amount of the 1998 Assessment-Related Tax Decrease remaining, if any, to be phased-in in the 2000, 2001 and 2002 taxation years pursuant to subsection 3(2) of By-law No. 472-98.

4.(a)Before the adoption of the estimates for 1999, notwithstanding section 2 hereof and in accordance with Part XXII.1 of the Act and By-law No. 473-1998, there shall be levied as taxes on the assessment of all property in the City of Toronto in the commercial and the industrial property classes (including the vacant units and excess land, vacant land, and farmland awaiting development subclasses) rateable for local municipality purposes according to the frozen assessment listing as most recently revised, in amounts calculated within each of the areas set out in Column I by the application of,

(i)the appropriate commercial mill rate set out in Column II, opposite the area in which the property is located, to the commercial assessment and the business assessment set out in the frozen assessment listing as most recently revised (based on 1997 assessments adjusted in accordance with the Act) and to any commercial assessment and business assessment added to the frozen assessment listing after this by-law is passed; and

(ii)the appropriate residential mill rate set out in Column III, opposite the area in which the property is located, to the vacant commercial assessment and the non-business assessment set out in the frozen assessment listing as most recently revised (based on 1997 assessments adjusted in accordance with the Act) and to any vacant commercial assessment and non-business assessment added to the frozen assessment listing after this by-law is passed:

Column IColumn IIColumn III

(Area)(Commercial Mill Rate)(Residential Mill Rate)

PublicSeparatePublicSeparate

SupportSupportSupportSupport

East York283.075282.700240.620240.295

Etobicoke262.690263.250223.285223.760

North York264.755264.830225.035225.100

Scarborough272.560272.225231.675231.390

Toronto278.455276.762236.685235.246

York295.690296.240251.335251.805

(b)Before the adoption of the estimates for 1999, notwithstanding section 2 hereof and in accordance with Part XXII.1 of the Act and By-law No. 473-1998, there shall be levied as taxes on the assessment of all property in the City of Toronto in the multi-residential property class rateable for local municipality purposes according to the frozen assessment listings as most recently revised, in amounts calculated within each of the areas set out in Column I by the application of the appropriate residential mill rate set out in Column II, opposite the area in which the property is located, to the total assessment in the frozen assessment listing, as most recently revised (based on 1997 assessments adjusted in accordance with the Act) and to any assessment added to the frozen assessment listing after this by-law is passed:

Column IColumn II

(Area)(Residential Mill Rate)

PublicSeparate

SupportSupport

East York240.620240.295

Etobicoke223.285223.760

North York225.035225.100

Scarborough231.675231.390

Toronto236.685235.246

York251.335251.805

5.(a)The interim taxes levied by section 4 hereof on all real property in the commercial, industrial and multi-residential property classes for which there is a "1998 tax increase phase-in" as determined in accordance with section 447.19 of the Act, are deemed by City Council to be too low, and shall be adjusted by adding the following thereto:

(0.5 x percent tax increase in 1998) x 1997 level taxes as determined in accordance with section 447.17 of the Act

(b)The interim taxes levied by section 4 hereof on all real property in the commercial, industrial and multi-residential property classes for which there is a "1998 tax decrease phase-in" as determined in accordance with section 447.19 of the Act, are deemed by City Council to be too high, and shall be adjusted by subtracting the following therefrom:

(0.5 x percentage tax decrease in 1998) x 1997 level taxes as determined in accordance with section 447.17 of the Act

(c)Notwithstanding clauses (a) and (b), the interim taxes levied by section 4 hereof shall not be adjusted so as to exceed 50 per cent of the taxes levied on the property in the 1998 taxation year.

6.The taxes levied by sections 2 and 4, as adjusted by sections 3 and 5 hereof, shall be paid in three installments which shall be equal or as nearly equal as practicable, and shall be due and payable on or before the respective dates set out below:

Installment 1 - February 15, 1999

Installment 2 - March 8, 1999

Installment 3 - April 6, 1999

7.The payment of taxes, or any instalment thereof, may be made, in respect of property situated within each area listed in Column I below, at the location for payment set out opposite such area under Column II below:

Column IColumn II

(Area)(Location for Payment)

East York850 Coxwell Avenue

Etobicoke399 The West Mall

North York5100 Yonge Street

Scarborough150 Borough Drive

Toronto100 Queen Street West

York2700 Eglinton Avenue West

8.Taxes shall be payable to the Treasurer, City of Toronto.

9.When not in default, the payment of taxes, or any instalment thereof, may also be made at any financial institution permitted by the Act, and the Treasurer is hereby authorized to determine, in accordance with the provisions of the Act, the financial institutions where payment may be made.

10.The Treasurer or Tax Collectors may mail, or caused to be mailed, all notices of taxes required in accordance with the provisions of the Act, to the address of the residence or place of business of the person taxed pursuant to this by-law. Notices will not be mailed to tenants. It is the responsibility of the person taxed to notify and collect taxes from tenants or other persons.

11.The Treasurer or the Tax Collectors shall be and they are hereby authorized to accept part payment from time to time on account of any taxes due, and to give a receipt for such part payment provided that acceptance of any such part payment does not affect the collection of any percentage charge imposed or collectable under section 12 in respect to non-payment of any taxes or any class of taxes or of any instalment thereof.

12.A penalty for non-payment of taxes shall be added at the rate of 1.25 percent on the 1st day of default, and on the 1st day of each calendar month thereafter in which default continues, but not after December 31, 1999.

13.The Treasurer or the Tax Collectors shall add interest at the rate of 1.25 percent per month on the 1st day of each calendar month from the 31^st day of December, 1999 until the taxes are paid.

14.Except in the case of taxes payable under sections 33 and 34 of the Assessment Act, as amended, the percentage charge imposed by section 12 as a penalty for non-payment of taxes and monies payable as taxes shall be added to every tax or assessment, rent or rate or any instalment or part thereof remaining unpaid on the first day of default and on the first day of each calendar month thereafter in which such default continues but not after December 31, 1999; and it shall be the duty of a Tax Collector, immediately after the several dates named in section 6 to collect at once, by distress or otherwise under the provisions of the applicable statutes all such taxes, assessments, rents, rates or instalments or parts thereof as shall not have been paid on or before the several dates named as aforesaid, together with the said percentage charges as they are incurred.

15.In respect of taxes payable under sections 33 and 34 of the Assessment Act, as amended, the percentage charge imposed by section 12 as a penalty for non-payment of taxes and moneys payable as taxes shall be added to every amount of taxes so payable remaining unpaid on the first day after twenty-one days from the date of mailing by the Treasurer or a Tax Collector of a demand for payment thereof and on the first day of each calendar month thereafter in which default continues but not after December 31, 1999; and it shall be the duty of a Tax Collector immediately after the expiration of the said twenty-one days to collect at once by distress or otherwise under the provisions of the applicable statutes, all such taxes as shall not have been paid on or before the expiration of the said twenty-one-day period, together with the said percentage charges as they are incurred.

16.Nothing herein contained shall prevent the Tax Collectors from proceeding at any time with the collection of any rate, tax or assessment, or any part thereof, in accordance with the provisions of the statutes and by-laws governing the collection of taxes.

17.Where the sum of the total annual taxes for which any person is chargeable in the year 1999 for municipal, school, local improvement and other purposes, upon any real property assessed in one parcel to the same owner would according to the assessment thereon be less than $10.00, the sum of such taxes shall be deemed to be $10.00 and shall be so entered on the collector's roll and the difference between the sum that would have been entered but for this section and the sum of $10.00 shall form part of the general funds of the City of Toronto and such levy shall be deferred to the issuance of the final tax bill.

18.Where tenants of land owned by the Crown or in which the Crown has an interest are liable for the payment of taxes and where any such tenant has been employed either within or outside the municipality by the same employer for not less than thirty days, such employer shall pay over to the Treasurer or Tax Collectors on demand out of any wages, salary or other remuneration due to such employee, the amount then payable for taxes under this by-law and such payment shall relieve the employer from any liability to the employee for the amount so paid.

19.This By-law shall come into force on the 1st day of January, 1999.

ENACTED AND PASSED this day of, A.D..

MayorCity Clerk

The Strategic Policies and Priorities Committee also submits the following report (December8,1998) from the City Solicitor:

Purpose:

To provide an update on the status of Bill 79, and the amendments required thereto prior to the enactment of the 1999 interim levy by-law, as referred to in the report from the Chief Financial Officer and Treasurer dated December 3, 1998.

Recommendations:

It is recommended that this report be received for information.

Comments and/or Discussion and/or Justification:

In her report dated December 3, 1998, the Chief Financial Officer and Treasurer (the "Treasurer's Report") outlined the following two problems with the statutory authority for the 1999 interim levy by-law:

(i)Bill 79, as it read on first reading, precluded the council of any municipality (including the City of Toronto) from passing a 1999 interim levy by-law prior to January, 1999; and

(ii)Where the multi-residential property class is subject to the 2.5 percent cap (such a cap is in place for the multi-residential property class in the City of Toronto), the Municipal Act required the raising of the full 1999 levy for that property class in the interim levy by-law.

Amendments to Bill 79, which corrected both of the above-mentioned problems, were introduced and approved by the Standing Committee on Finance and Economic Affairs on December 7, 1998.

Bill 79, as amended, is expected to receive Third Reading and Royal Assent prior to December18,1998.

As there is now no bill before the legislature which, if enacted, would prevent City Council from passing its 1999 interim levy by-law in December, City Council has the authority, pursuant to section 370 of the Municipal Act to enact the 1999 interim levy by-law at its December meeting.

However, Bill 79, as amended, provides the authority to set and collect the 1999 interim levy for the multi-residential property class in the same manner as is required for the other capped property classes, and provides the authority to adjust the interim levy to account for the phase-in and capping programs adopted by City Council in July. Consequently, the enactment of Bill 79 is still required to provide City Council with the necessary statutory authority to pass the 1999 interim levy by-law in the form attached to the Treasurer's report.

City Council can pass the 1999 interim levy by-law at its meeting of December 16 and 17, 1998, provided the sections of the by-law which set the interim levy for the multi-residential property class, and which adjust the interim levy to account for the phase-in and capping programs, do not come into force until Bill 79 receives Royal Assent. This change will be made to the 1999 interim by-law prior to its introduction at City Council's meeting on December 16, 1998.

Conclusions:

Bill 79 has been amended to address the two issues identified in the Treasurer's report.

As there is now no bill before the Legislature which, if enacted, would prevent City Council from passing its 1999 interim levy by-law in December, City Council has the necessary statutory authority to enact the 1999 interim levy by-law at its meeting of December 16 and 17, 1998.

However, as the authority for the multi-residential levy and the phase-in and capping adjustments are dependent upon the enactment of Bill 79, and as Bill 79 may not be enacted prior to December 17, the sections of the draft 1999 interim levy by-law, as attached to the Treasurer's report, which set the multi-residential levy and which adjust the levy for phase-ins and capping cannot come into force until Bill 79 has received Royal Assent. The necessary change to the 1999 interim levy by-law will be made prior to its introduction at the meeting of December 16 and 17, 1998.

Contact Name:

Christina Hueniken, 392-8429.