FAIR MUNICIPAL FINANCE ACT, 1997 / LOI DE 1997 SUR LE FINANCEMENT ÉQUITABLE DES MUNICIPALITÉS
NIAGARA SOUTH FEDERATION OF AGRICULTURE
BUSINESS IMPROVEMENT AREAS OF HALTON REGION
BUFFALO AND FORT ERIE PUBLIC BRIDGE AUTHORITY
CONTENTS
Thursday 17 April 1997
Fair Municipal Finance Act, 1997, Bill 106, Mr Eves /
Loi de 1997 sur le financement équitable des municipalités, Projet de loi 106, M. Eves
Wine Council of Ontario
Mrs Linda Franklin
Pembina Resources
Mr Larry Elliott
Mr Brian Boulton
Niagara South Federation of Agriculture
Mr Ted Augustine
Mr Gary Cook
Business Improvement Areas of Halton Region
Mrs Rachael Irvine
Miss Sandra Spudic
Mr William Brunt
Township of Wainfleet
Mr Andy Koopal
Buffalo and Fort Erie Public Bridge Authority
Mr Ron Lampman
Mr Thomas Richardson
Corporation of the Town of Huntsville
Mr Michael Garvey
Township of Bruce
Mr Howard Ribey
Mr Bob Waram
Mr Richard Bell
Mr Nick Mileni
Mr Coleman Bagu
Mr Neal Schoen
STANDING COMMITTEE ON FINANCE AND ECONOMIC AFFAIRS
Chair / Président: Mr TedChudleigh (Halton North / -Nord PC)
Vice-Chair / Vice-Président: Mr TimHudak (Niagara South / -Sud PC)
Ms IsabelBassett (St Andrew-St Patrick PC)
Mr JimBrown (Scarborough West / -Ouest PC)
Mr TedChudleigh (Halton North / -Nord PC)
Mr JosephCordiano (Lawrence L)
Mr Douglas B. Ford (Etobicoke-Humber PC)
Mr TimHudak (Niagara South / -Sud PC)
Mr MonteKwinter (Wilson Heights L)
Mr TonyMartin (Sault Ste Marie ND)
Mr GerryMartiniuk (Cambridge PC)
Mr GerryPhillips (Scarborough-Agincourt L)
Mr GillesPouliot (Lake Nipigon / Lac-Nipigon ND)
Mr E. J. DouglasRollins (Quinte PC)
Mr JosephSpina (Brampton North / -Nord PC)
Mr WayneWettlaufer (Kitchener PC)
Substitutions/ Membres remplaçants:
Mr MikeColle (Oakwood L)
Mr SteveGilchrist (Scarborough East / -Est PC)
Mr RosarioMarchese (Fort York ND)
Mr John L. Parker (York East / -Est PC)
Clerk / Greffier: Mr Franco Carrozza
Staff / Personnel: Ms Alison Drummond, research officer, Legislative Research Service
The committee met at 0945 in Port Colborne city hall.
FAIR MUNICIPAL FINANCE ACT, 1997 / LOI DE 1997 SUR LE FINANCEMENT ÉQUITABLE DES MUNICIPALITÉS
Consideration of Bill 106, An Act respecting the financing of local government / Projet de loi 106, Loi concernant le financement des administrations locales.
WINE COUNCIL OF ONTARIO
The Acting Chair (Mr Steve Gilchrist): Good morning. My name is Steve Gilchrist. I'll be sitting in the chair until Tim Hudak arrives.
We're here this morning to hold public hearings on Bill 106, an Act respecting the financing of local government. Our first presentation this morning will be from the Wine Council of Ontario, and I'd ask the presenters to come forward. Mrs Franklin, good morning. We have 20 minutes for you to use as you see fit, divided between presentation time and question and answer time. If there is time for questions, it will be divided amongst the three caucuses.
Mrs Linda Franklin: Good morning. I don't think I should take more than about 10 minutes, so there's plenty of time for questions anybody needs to ask.
Committee members, ladies and gentlemen, we really appreciate this opportunity to come and address your committee on an issue of fair taxation that we think is directly relevant to the bill you have in front of you, and that is the issue of winery assessments and their potential impact on wineries in the Niagara region and throughout Ontario.
As some of you may know, most of the estate wineries in Niagara -- and the bulk of wineries in Ontario are estate wineries today -- are located on land that's zoned agricultural. It makes good sense because most of these wineries have a very large farming component. In fact, many of them start out as grape-growing farms and become wineries. Because they're zoned agricultural, they don't have access to the kind of services that, obviously, heavy industry would have. Many of them don't have water service, electricity. They have to dig their own sewage systems -- fair ball, because they're agricultural.
This is far more serious in the escarpment-area lands. Wineries there are only allowed to be located there because they claim to be adjuncts to agriculture. No industry, as you know, with some minor exceptions, is allowed in the escarpment area, so our wineries have to be able to prove that they are an agricultural activity to be allowed on the escarpment. We accept all these restrictions because we think they are part of being operations rooted in farming.
Up until now the wineries have always been assessed as farming operations as well, for the purposes of property taxes, by provincial assessors. Earlier, though, mid-spring 1996, Niagara region went through a market value assessment process. Going through that process triggered a re-evaluation of wineries and other properties, obviously, in Niagara by provincial assessors. When the provincial assessors came out to our wineries, they told us that for tax purposes, the province was going to treat the wineries as though the winery building had been severed from the farms they sat on. They created a new roll for these severed winery buildings under an industrial assessment factor.
This apparently is not strictly allowed under the Assessment Act, but I think they did it out of fear that if they did what they thought the Assessment Act required of them in relation to our wineries, they would have had to have zoned the entire property industrial, which would have meant that some of these wineries were paying taxes higher than the SkyDome. Clearly, that's not acceptable, and I think wasn't to them.
But the end result of the decisions that were made is that a number of wineries in the Niagara region are facing really staggering tax increases today. In some cases the increase is thousands of dollars; in some cases it's tens of thousands of dollars. To give you a couple of examples, two of our estate wineries -- one that does no more than 3,000 cases of wine a year, their total production -- saw their tax costs go from $800 to $10,000, a pretty huge jump for folks that have no industrial services to rely on but are paying industrial tax rates.
We're really concerned about this. We think that not only might it be the difference between staying in operation and going out of business for some of the new wineries that are just starting to get established, with all the overhead costs that go along with that; we're also concerned that it's going to be a serious deterrent to anybody thinking about getting into our business. Right now, the wine industry in Ontario is on a roll: Our sales are up, there's lots of room for expansion, there's starting to be a booming tourism industry in touring estate wineries. We're concerned about stopping that growth in its tracks as a result of these assessments.
To give you a couple of examples, already one of the wineries in St Catharines, Henry of Pelham, has put plans to expand their winery on hold, because it's cheaper for them to rent offsite commercial space and truck things back and forth than it is to put up a new building on their winery which would be assessed industrial and cause their taxes to go through the roof.
Another winery, in the Beamsville area, DeSousa -- that just put a very large investment into infrastructure, built a very nice winery -- is moving their entire operation to downtown Toronto. It's cheaper for them to be located in commercial space in downtown Toronto and closer to the folks that buy their wine than it is to stay in the Beamsville area and pay industrial taxes on property that's mostly farm.
Another issue that is important for this committee to understand is that in talking to the assessors, their view is that the wineries are just the tip of the iceberg; that what's going to happen from here, particularly as 1998 comes around and all of Ontario gets reassessed, is that any farming operation that does value added on its property, involves itself in some commercial activity, is going to be subject to this industrial tax classification. The reason seems to be that there's been a court decision in relation to a cherry producer that says if you take a cherry grown on your farm, take it into a building and remove the pit, you're involved in industrial activity and therefore you're an industry.
I guess the wineries were the first ones that got targeted for a look after this court decision, and what is making us industrial, apparently, is the fact that the grape juice we take in ferments into wine, so there's been a change made in the product going from the vineyard to the winery. That makes us industrial. The only industrial equipment these estate wineries have onsite are tanks and bottling lines, but the change in the product has made it industrial.
That means, as we understand it, that anybody who changes a product on their farm will end up being classed industrial if there isn't something done to address this issue. Grape producers who process on their farms, maple syrup producers, anybody who's involved in any kind of farming activity beyond just farming the land, is going to end up industrial.
Our wineries are appealing their 1996 and 1997 tax assessments to the Ontario Municipal Board, but even if we are successful, because this process is going on and because a new Assessment Act will be coming in 1998 our belief is that even if we win at that level, we'll be starting at square one again in 1998 unless something is done fundamentally to change the way these operations are looked at.
To date, we've had an opportunity to brief all the municipal councils and the region of Niagara. We have supporting resolutions from all of those councils looking at a solution with the province.
We've also had a chance to meet with the Minister of Finance. He has expressed concern for this situation. He has directed staff in the Ministry of Finance to look at possible solutions. We are hopeful that a solution can be found in the near future that provides some assurance to the wineries and to those considering opening a winery that they won't be treated like General Motors for tax purposes. If you were a grape grower in Niagara sitting on a bunch of acres that you thought you might turn into a winery, you'd sure think twice about doing it if you realised your taxes would go up 1600%, and that's exactly our fear.
We're raising it with the committee today because we want to reinforce the fact that this is a significant problem in looking at taxation and assessment, particularly in relation to farming operations, and we think it needs to be addressed in addressing the bigger picture of assessment.
The Assessment Act right now doesn't have a way to recognize value added farming operations and commercial activities on farm, and we think there needs to be a way to address that somehow in legislation or policy. It's important to do that, because doing value added on farm has been a goal that the ministries of agriculture, both federally and provincially, have supported for a long time to try to keep family farms viable, keep agriculture viable, and of course this is a terrific disincentive for farmers to do any of those sorts of things.
We think that in moving to cut taxes for farmers by replacing tax rebates with new, lower property tax rates, this bill does seek to address one important aspect of the current assessment system for the farm community. But we'd submit to you that it's also critical to address this issue of commercial activity on farm properties, such as estate winery operations; otherwise, we think the new assessment system will be faced with the same quandary we face today, namely, that the only way assessors can classify this activity currently is to place farm commercial activity in the same industrial category as General Motors. Even they tell us that they're not comfortable with that decision, but they just don't seem to feel there's any other opportunity or avenue for them currently.
We don't know what the best solution is, whether it's a farm-commercial classification or some other way of addressing it in the act, but we'd ask this committee to look at possible solutions in your deliberations on this bill and work with the Ministry of Finance before Bill 106 becomes law. We think this is the best opportunity to address this before we're all in the soup in a year from now.
We appreciate your consideration. Thanks very much.
The Vice-Chair (Mr Tim Hudak): Thank you, Ms Franklin. That leaves us about three minutes per caucus for questions, beginning with the official opposition.
Mr Monte Kwinter (Wilson Heights): Thank you very much. You raise a very interesting question I'd like to pursue. We were in Chatham yesterday and had a substantial farm operator talking about this exact issue of value added. He outlined the issue that he grows mushrooms and packs them and ships them; he feels that is value added but should not affect the assessment. The minute he starts canning them, he's in a different issue.
I have a conflict of interest. My family are the largest breakers of eggs in Canada. To use your example, we take eggs and we break them. We don't change them; we just separate them and do everything else. We're a business. Our plant is in Etobicoke. By extension, if we were to move that on to a farm, we'd be saying: "We're just breaking eggs. We're not doing anything. We should not be paying the industrial assessment."
It's a very difficult situation, where people who are doing things in one section of the community are assessed as commercial or industrial, while others, because they happen to be doing it on a farm property but may be doing exactly the same thing, say "No, we're an agricultural assessment." How you reconcile that I really don't know. You raised the issue that some people say it's cheaper to move the bottling operation off the farm. That may be what you have to do.
Mrs Franklin: I think you're right. It is a difficult issue to reconcile. In thinking through this issue from our perspective, we would probably argue that for wineries or other operations like the ones you describe which sit on industrial land already, which have access to industrial services, it's fair ball to tax them as industry. Frankly, a lot of the estate wineries would say to you today, "If we could get the town to put water service into our winery, to dig the sewer systems, we'd pay the industrial taxes because it would save us money."
I don't think we'd argue for a minute that Andrés or Vincor or any of the wineries that are large operations that sit on industrially zoned land shouldn't be industrial; of course they should. But when you have a farm operation that has a barn they've turned into a winery retail store, has no services at all from the town, it looks like double taxation, in a way. They're paying the same rate as someone that has all these services, but they're also then paying to bring all the services to them. For us, that's the dividing line.
Mr Rosario Marchese (Fort York): Thank you, Mrs Franklin, for your presentation. Have you had a chance to look at the bill or have lawyers looking at the bill?
Mrs Franklin: No, we haven't looked at it in any legal way.
Mr Marchese: You obviously have a market value system here at the moment, since last year, and wonder whether there's anything in this bill that helps you out. Having looked at the bill, is there something that does that or nothing at all?
Mrs Franklin: We don't think there is. In talking to the assessors as well and some of the folks in the region who have been at seminars on how this bill will operate and how the new assessment system will operate, they don't believe there's a way of addressing it in the system.
One of the things that was initially suggested to us is that the new system might allow municipalities to make some of these decisions in terms of how properties are assessed. In fact, as we understand it, that's probably not true; the classifying of properties is probably going stay in the hands of the province. We think this is something the province is going to have to address in the big picture, and I don't think there's anything in this bill at the moment that would do that directly.
Mr Marchese: That's why you've had discussions with the Ministry of Finance -- not the minister, necessarily, but the finance people. They have assured you they are looking at it somehow?
Mrs Franklin: Right. We had a chance to talk to the minister directly a few weeks ago, and he has assured us that he'll have his folks take a look at it too.
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Ms Isabel Bassett (St Andrew-St Patrick): Thanks very much, Ms Franklin; nice to see you here. As you know, we in the ministry really appreciate the value of the wine industry to Ontario. As a drinker of it, I am always pushing Ontario wines. Congratulations on the job you're doing.
I know you've met with the minister and me and the ministry. The minister appreciates your concerns. I understand that right now nothing has been worked out, but we do have amendments that can come into the bill; we are working on it. I just want you to take that message away. It's very foremost on our list of things to be concerned with, because we realize how important it is to Ontario.
Mr Marchese: Hear, hear, for red wine.
Mr Douglas B. Ford (Etobicoke-Humber): Good morning, Ms Franklin. There's a fine line. My friend in the opposition was talking about cracking eggs. The same applies here, in that here you have one commercial winery in an industrial area and then you have yours on your farm, so to speak, and once the transition period comes into the barn or the stall or the factory you have there and you start processing, that's when it becomes another product.
Competitively, your wine goes on a shelf with the guy in the industrial area, so you automatically become a competitor. It would be rather unfair if you got dispensation on one hand and he had to pay on the other hand. Quite honestly, he would be complaining, "Hey, all these different farms" -- not only yours, but the 50 other people who were doing the same thing.
This is a fine line. When the assessor comes in, he looks at your property; he doesn't tax you on that vast vineyard you've got but on that little block you've got there that's processing. Probably that in some sense is a justification due to the competitive nature of the business. On the other side, the other big industrial guy is buying from the 50 other farmers their grapes, period. He's bringing them in and processing them, whereas you're doing it yourself.
Mrs Franklin: Interestingly enough, this issue came up at our board, obviously, because we represent the entire industry. We have the large producers, Andrés and Vincor; we have very tiny producers like Lakeview Estates. We have a consensus at our board to drive this forward, and that includes Vincor and Andrés.
They're quite comfortable sitting in an industrial assessment. They believe it's appropriate. They also agree that it's inappropriate for the small estate wineries to be taxed at the same level they are in the absence of the services they enjoy in the winery. It's awfully expensive to trek all the water into your property for wine-making purposes because you don't have waterpipes from the town. In terms of the wine industry, we don't have a problem differentiating. We don't, as an industry, believe the competitive disadvantage is so great that large wineries can't support estate wineries in this goal.
The other thing to bear in mind, though -- you're right. It's a very fine line we walk, and it's not walked with uniformity in the province right now. For example, there is a very large juice processor, Wiley's Juice, a block from Henry of Pelham winery. They have a farm assessment right now. We have maple syrup producers a couple of blocks away doing industrial activities, by the definition that has to be used under the Assessment Act right now, classified as farms.
You're right, it's a tough line to walk, but we're going to have to grapple with it. As I say, when the Niagara process hits the province, it won't just be wineries that are affected but all sorts of farming operations. It's something that'll have to be struggled with even though, I agree, it's going to be hard to figure out where to draw the line.
The Vice-Chair: Thank you very much, Ms Franklin, for your presentation to the committee today. Have a good day.
PEMBINA RESOURCES
The Vice-Chair: The next deputation is Pembina Resources. Gentlemen, welcome to the committee. Any time you choose to leave from your 20 minutes for your presentation can be used for questions from members of the committee.
Mr Larry Elliott: Good morning, ladies and gentlemen. I'm here today representing Pembina Resources. My name is Larry Elliott. I'd like to introduce the vice-president of our Ontario operations, Brian Boulton. We are here today to seek changes in the Assessment Act in regard to taxing offshore pipelines. Please refer to the handout we have provided.
This handout will describe who we are; our personnel requirements; our wage expenses; our operating and capital expenses; our purchasing and hiring policy; how we benefit the treasury of Ontario; the background to these offshore municipal taxes; our key concerns; our pipeline infrastructure; the municipal taxes we pay; and finally, our suggested changes.
Who is Pembina? Pembina Corp is a Canadian company incorporated in 1954. It's a member of the Loram Group of Companies, a privately owned major Canadian organization based in Calgary, Alberta. In addition to oil and gas, activities of the Loram Group encompass coal mining in western Canada, real estate and venture capital investments, the supply of railway maintenance services and the manufacture of heavy equipment for railway maintenance worldwide.
We began our operations in Ontario in 1976 with the acquisition of Western Decalta Petroleum. We grew even bigger in 1980 with the purchase of Anschutz Canada Exploration, which was an American company out of Denver. Finally, in 1994 we purchased Telesis Oil and Gas, which was a division of Consumers' Gas.
Our headquarters in Ontario are in Port Colborne, but we have facilities in Port Maitland, just south of Dunnville; the Nanticoke compressor station, near Port Dover; the Port Stanley compressor station, near London; the Morpeth gas plant, just south of Chatham; the Port Alma compressor station and the Renwick gas plant, near Leamington, Ontario.
Presently, we employ about 89 people per year, but this year we're going to do some extensive drilling, so our staff will grow to 147 people. Those 147 people are going to cost us in excess of $7 million this year in wages. Our operating expenses are estimated to be about $15 million, but because we've got some extensive drilling programs this year we're looking at another $25 million in capital expenses, so we're planning on spending $41 million in the province this year.
Where do we spend our money? We have a policy of trying to spend all our money in the areas of our facilities and do the hiring in these same areas. Provided prices are competitive and that quality and deliveries are acceptable, we will purchase as many goods and services as we can in the areas of our operations. If not available, we research the rest of Ontario and then Canada, and then, only as a last resort, the United States.
Pembina Resources strives to hire all the required seasonal employees from the areas of our operations. As an example, in 1997, 90% of all our seasonal and contract personnel were hired out of the Niagara and Haldimand-Norfolk regions. These seasonal and contract personnel will receive over $3 million in salaries. Salaries will be used to purchase goods and services in Ontario.
Other benefits from our activities in Ontario: We pay taxes in excess of $1.4 million; we pay royalties to the provincial government of Ontario in excess of $3 million a year; we pay royalties to landowners in excess of $2 million a year; we pay the province of Ontario for leases in excess of $200,000 a year; we pay landowners in excess of $60,000 for leases.
I'll give you a background to these municipal taxes for offshore pipelines. In the late 1940s the municipalities bordering on the north shore of Lake Erie were allowed to extend their boundaries to the United States-Canada boundary line. You can see those black lines on that chart that go right out to the middle of the lake; that's the extension of the boundaries. At that time there were few natural gas producers working on Lake Erie and very little pipeline. In fact, the pipeline was probably less than 10,000 feet in the lake in total. Taxes on the existing pipelines had little economic impact on the gas producers of that day. This situation has changed dramatically over the years.
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Pembina is the largest natural gas producer on Lake Erie. In fact, now we're the only one. New technology has allowed Pembina and other producers to drill wells further and further out into the lake. This has resulted in large pipeline systems, required to bring the product to the consumer. As a result, the municipalities now receive taxes on these pipelines in excess of $1.2 million per year without having to provide any goods or services.
The mill rates are set by each municipality, which means the rate against a piece of pipe could be anywhere from 0.455410 to 0.282859. The market assessment value for these pipelines is upgraded every four years, ensuring that the municipalities receive top dollar for their assessments. The assessed value does not reflect declining throughput in the lines and lower prices for natural gas.
The following are our key concerns.
Pipeline taxes for offshore gathering systems: In 1996, as I mentioned, Pembina Resources paid $1,238,118 in taxes to local municipalities for offshore pipeline systems. Although we pay this amount for taxes, we receive essentially no services for our costs. In most cases, the municipalities don't have to provide water, sewers, roads, police, fire departments; they provide nothing for us for this cost.
We are already paying the provincial government in excess of $3 million in royalties for the natural gas produced from the offshore wells, and we feel that the amount in municipal taxes is unjust. In addition, the mill rates differ from region to region, as do the decisions made by the assessment offices in each region. There's no continuity at all in the present system.
Regulation 25 of the Assessment Act: The present system does not reflect our declining gas production and gas prices. While the big distributors such as Union and Consumers' have increasing volumes in their pipeline system, our system has decreasing volumes due to declining volumes in the wells. Section 25 of the Assessment Act was introduced to regulate the big distributors. It does not reflect our business at all.
Another key concern is harbours and ports. All the harbours and ports along the north shore of Lake Erie are suffering from cuts from both the provincial and federal governments. Not only do we want to decrease the amount of taxes for our offshore pipeline systems, we would like to see these taxes more fairly dispersed so that local governments that oversee these harbours and ports would have more funds available to maintain the facilities we utilize in our offshore operations.
As an example, Pembina Resources will have to invest approximately $300,000 this year to dredge the harbour at Port Burwell, Ontario -- Port Burwell is just west of Long Point -- since there is no longer any funding to assist the community in this endeavour. This harbour is no longer dredged by the federal government. The water depth in the harbour is not deep enough to allow the navigation of our vessels nor larger recreational vessels or commercial fishing boats. The taxes we are paying could be better utilized in the maintenance and upkeep of these harbours and ports.
I'll tell you a little about the infrastructure of our pipelines. As I mentioned, in the late 1940s there was basically no pipeline in the lake. Right now, we have over 5 million feet of pipeline in the lake, approximately 983 miles of pipeline servicing over 900 wells. As you can see from the chart, all those lines are pipelines. There are over 900 wells offshore. The wells go into the pipelines and then to various compressor stations on the north shore.
The next insert gives you a breakdown of how we pay our taxes. I broke it down into offshore and onshore. I also did some research and got hold of the local communities and found out what their total tax revenue was for 1996 and compared that, as a percentage, to what we pay for our offshore. As you can see, it's less than .7%, so a decrease in our taxes offshore won't be a dramatic effect on these municipalities in terms of their taxes.
Suggested changes: We told you our problems, so we'd better come up with some ideas.
The first one is that we believe taxing offshore pipelines when there are no services provided is an unjust tax and should be discontinued. This could be accomplished with a change to the present legislation, found in the Assessment Act, which governs the taxes on pipelines. If the provincial government rejects the idea of a total discontinuance of the offshore tax, Pembina suggests two other solutions.
First, let the municipalities extend their boundaries one to three kilometres into the lake instead of all the way to the American border. Pipelines in this area would be taxed the same as they are being taxed now. The rest of the pipelines would then become a pool area, with a mill rate reflecting the lack of services, a total lack of services; 0.10 as an example. The revenue from this pool area would then be redistributed to the ports and harbours along the north shore of Lake Erie.
Another solution is to lower the pipeline assessment schedules for offshore pipelines. These assessment schedules were made for Union Gas, Consumers' Gas, to reflect their growing volumes through their pipelines. This change is justified by declining offshore production and lower prices, obstacles these large natural gas suppliers are not saddled with. High taxes result in less net revenue to producers for reinvestment and the creation of new jobs.
We have related to you who we are and how we do our business, how we benefit the province, how offshore taxes came about and, finally, our suggestions of how this situation could be rectified. That concludes our presentation, and Brian and I will try to answer your questions to the best of our ability.
The Vice-Chair: Great. I think the committee members will have some questions. We have about two minutes per caucus, beginning with the NDP.
Mr Marchese: Mr Elliott, thank you for your presentation. There's no doubt that you are making a contribution to the area and to the province by way of jobs. You talked about the provincial taxes you pay and the municipal taxes you pay.
Mr Elliott: We're not paying provincial taxes offshore, just municipal. Offshore, we pay royalties to the provincial government.
Mr Marchese: All right. You're concerned about the municipal taxation you're paying because you're saying you get no services from them. But isn't it a cost to the municipality to have whatever work you provide in the area, whatever trucks come by -- presumably there are trucks. Isn't there a cost to the municipality somehow?
Mr Elliott: No. For example, in the township of Norfolk, which encompasses Long Point, we have no buildings, nothing there at all. All we have pipelines offshore, out into the lake. The only time we go through Norfolk is when we're driving through there to go some place else, just like you would.
Mr Marchese: But with the fact that you have operations along there within this municipality, shouldn't the municipality have some money from the money you're making so that some of it can go back to that local economy to provide services for the area?
Mr Elliott: What kind of service do we get, though? We get absolutely none.
Mr Marchese: Isn't the fact that you operate in this area something that is granted to you?
Mr Elliott: But we're wondering why the municipalities have this area in the first place. Almost all inland waters and oceans are governed by the provincial or federal governments. Why the municipality can extend boundaries out to the American border and charge you for things on the bottom of the lake is a question in the first place. In many of these places we have nothing onshore, we don't have anything to do with those municipalities at all; all the infrastructure is offshore; we leave ports that aren't even in those areas. That's the answer to that.
Mr Brian Boulton: Where we have onshore facilities, we pay taxes. We're not disputing those at all. Where we have our gas plants on shore, we pay over $200,000 in taxes for onshore facilities.
Mr Jim Brown (Scarborough West): Thanks for your presentation. I don't know on the map where the pipeline is, but if it's far out into the lake, why wouldn't you take it into the other side, the American side? How would the costs compare for taxation there?
Mr Elliott: Right now there's a moratorium on the American side for drilling. The US Energy Board is having discussions right now to drop that moratorium, but it hasn't happened yet. Besides that, we're producing gas for the province of Ontario, not for the Americans.
Mr Jim Brown: But some of the gas wells probably transcend the border.
Mr Elliott: No, they can't. It's illegal to transcend the border. If you'll notice, where that line breaks up the lake in the middle, that's the US-Canada border; there are absolutely no wells on the American side.
Mr Boulton: We'd need an export licence to go into the United States for gas as well.
Mr Joseph Spina (Brampton North): Thank you for the presentation. We constantly learn as we go along with all these presentations.
There is a reference in the bill, but it's very small, with regard to changing the assessment level and the categories for pipelines, railroads and other utilities. From my understanding from the people in the ministry, I know this is under review. Would it be of any benefit if the pipelines and drilling services were separately categorized, in other words, if you had your own category and you were able to work with a particular mill rate attached to your category which would not be related to any others?
Mr Elliott: Yes, it would. As I mentioned in the brief, we have declining output through our lines. We're not at all like Union or Consumers' Gas, where they're having greater volumes; our volume has decreased. Then we have the responsibility of the maintenance of these pipelines offshore, and if we plug the well that doesn't produce any more, we're responsible for removing that pipeline. There are lots of expenses involved. Yes, a mill rate that reflected the goods and services we actually get for all those pipelines offshore would help us out immensely, because now we're spending a lot more money helping out the ports and harbours along the north shore because of the lack of funding there.
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Mr Kwinter: Mr Elliott, do all these pipelines that come out emanate from publicly owned lands or are some of them privately owned lands?
Mr Elliott: The pipelines offshore?
Mr Kwinter: Yes. As they come out from the land, do they abut on to public lands or do they abut on to private lands?
Mr Elliott: No. When they come out of the lake on to shore they come on to our property. We have what we call vaults; we've purchased that property and pay taxes on those vaults.
Mr Kwinter: So you own all the property that --
Mr Elliott: Where they come into shore. We'll pay taxes, though, for the pipelines on land. We're not disputing that at all, because we're getting goods and services from the regions in those areas.
Mr Boulton: Some of the land on shore we own, and some of it is leased land.
Mr Kwinter: The reason I'm asking is that under the law, there are riparian rights. These things don't go out indefinitely. Where people have jurisdiction over the land, there's a fixed limit on how far that goes into the water that abuts their property. It answers one of your recommendations that they have two or three kilometres they can tax and the rest gets pooled. I'm just curious, have you tested whether they have the jurisdiction to go out that far?
Mr Elliott: We've gone to get some legal advice; we're going that route just to check that out. I know it's been in the books, but nobody has actually come to tell us, "This is the way it is." We're showing the townships how they go out to the American border, and that's what's given to us from the province. I question that and always have, so we're hoping we'll get an answer to it.
Mr Kwinter: My advice to you is to check out the riparian rights, because there are definite limits as to how far out you can go.
My other question is, is there any consideration for the fact that this is a non-renewable, depleted resource, a formula so that your assessment reflects that?
Mr Elliott: Right now there isn't. Right now we're being assessed the same as Consumers' and Union Gas, under regulation 25 of the Assessment Act.
The Vice-Chair: Thank you, gentlemen, for your presentation on behalf of Pembina Resources, a very interesting presentation.
Mr Kwinter: Mr Chair, I'd like to recognize the former member from Niagara South, Ray Haggerty. Welcome, Ray.
Mr Ray Haggerty: Welcome to Port Colborne and to this area. It's perhaps unusual that we have an arm of the Legislature out into the public, and this is a very important committee, the economics and finance committee. I sat on it from the time it started until I wound up in 1990. It's a good committee, and I think it'll work well through the province of Ontario, particularly under the circumstances. Tim, I congratulate you for sitting up there today. If I have an opportunity later on, I may change my views a little bit.
The Vice-Chair: Thanks, Ray. Thanks for joining us today.
NIAGARA SOUTH FEDERATION OF AGRICULTURE
The Vice-Chair: Our next deputation is the Niagara South Federation of Agriculture, Ted Augustine. Welcome to the committee.
Mr Ted Augustine: It's nice to be here. To start with, I don't have a whole lot to say. My name's Ted Augustine, as Tim said. My brother and I work together out at Long Beach. We operate a dairy farm and we grow some crops as well. It's a family farm that's been in the family for five generations now. I'm representing Niagara South Federation of Agriculture, which I am president of.
For the most part, I think farmers would agree with the tax reform in the sector we're involved in. It eliminates what we think is a lot of paper shuffling, and we're pleased with the 25% of residential rate. The one big concern we have is for the rural municipalities; they counted on that rebate from the government. They counted on that tax money as a major source of income for the education, and with them not getting that, that's a major loss of revenue. That's the big concern.
The townships have done -- well, our township; I can only speak for ours. I feel the township of Wainfleet has done a good job keeping things under control. There's not a lot of extra fat to trim. You can only tighten your belt so much before it becomes a tourniquet, and that's not necessarily an advantageous situation. That's it.
The Vice-Chair: Very good. The members may have some questions for you. We have about five minutes per caucus, beginning with the government side.
Ms Bassett: Mr Rollins wants to start, since he is a farmer or was a farmer, continues to be a farmer.
Mr E.J. Douglas Rollins (Quinte): Thank you very much for your presentation to represent the farm community. As a government, when we looked at that rebate tax, the cost of sending that application in and sending the cheque out, we realized that money was a lot better in your pocket, in your bank account for you to use to put in crops in the spring and buy fertilizer and things along those lines, rather than your sending in the tax money, applying for it and getting it back. They claim it cost us about $49 a cheque for that bureaucratic red tape, that the money has to go in and back out again, so there's a saving there.
The minister has also suggested that the wash between that 25% and the moneys we give back on the tax rebate should come out relatively close. It's probably never going to be right dead-on to the last penny, but it's going to come out awfully close.
Do you have much problem with severing lots off your farm land for you or your father to retire on, or to build a lot on? How do you think those should be taxed?
Mr Augustine: Personally, we're not severing a whole lot of lots. My grandfather and his father took care of that. How they should be taxed? Personally, I'm not in favour of a lot of severances in farm lands. It leads to a lot of problems down the road. With retirement lots for retiring farmers, research has shown that if a farmer lives in his retirement home for more than five years, he's doing well, and then that house gets sold and that causes problems. I would prefer to keep severances out of farm land and concentrate more on hamlet areas, village areas.
Mr Rollins: One other thing that I know that the Minister of Agriculture is doing, maybe in this area, is putting in the right to farm, hearings for the right to farm. It's one of the areas that I know a lot of farmers have concerns with, because when these houses are sold, their interests generally aren't in farming and they don't appreciate you spreading manure or harvesting at 3 o'clock in the morning or making a lot of dust when the combine goes by. We do have complaints along those lines. That is in the legislation to --
Mr Augustine: We would like to see the right-to-farm legislation broadened a bit and strengthened.
Ms Bassett: Thanks for your presentation. It's nice to hear your comments about our moves in regard to the tax rebate for farmers. Several farmers have said it's very useful to them not to have to put a lot of money up front, that they can now use the money to build, buy a tractor or whatever they have to do that year, rather than wait for a year to get it back. Perhaps you could elaborate a bit on how you or the farmers in your group might use money they don't have to put up front.
Mr Augustine: How would we use it ourselves?
Ms Bassett: Yes. Can you always use it?
Mr Augustine: There are a lot of ways to spend money. My wife is doing the books today, and she made the comment that the cheques coming in are stacked this high and the bills going out are that high. There are a lot of ways to spend money.
Ms Bassett: The minister is very interested in any other suggestions you might have, if you have anything that you haven't put in your submission just now that you think is a good thing we might be looking at.
Mr Augustine: I think the reform is a good thing. As I said, the concern is the loss of revenues to the rural municipalities.
Ms Bassett: The $1-billion annual renewable fund will help spread over -- several municipalities have said there are ways they think they can find economies; those that can't will have the extra help.
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Mr Kwinter: Mr Augustine, I'm interested in your comments about the concerns about whether the municipalities are going to miss this revenue. Your suggestion earlier was that there really isn't a lot of fat to get out of their expenditures.
Mr Augustine: I wouldn't think there is. I'm pretty pleased with the way our township runs things.
Mr Kwinter: So there's going to be a shortfall. Ms Bassett just said that the government is going to put up this $1-billion renewable resource. That's going to have to go a long way.
There seems to be a perception that the government just makes money, but that's tax money. What is really happening is that that $1 billion that's going to be spent is one group of taxpayers subsidizing another group of taxpayers. It's all coming out of tax dollars. That's the revenue governments have, tax dollars. What is really happening is that it's being portrayed as this great panacea: "We're going to be able to solve your problems because we have this $1-billion tax fund." They don't call it a tax fund, they just call it a fund, but it really is taxpayers' money to pay other taxpayers, because the government has removed revenues from the actual municipality. Do you have any comments on that?
Mr Augustine: You lost me a couple turns ago.
Mr Kwinter: What I'm saying is this: They're saying, "This is going to be a great benefit for the farmers because we're going to -- "
Mr Augustine: It makes a big paper shuffle. You put it out here, and then you get it back here, nine months later. I get lost in the finances. I have trouble keeping the finances on the farm straight.
Mr Mike Colle (Oakwood): Mr Augustine, I appreciate your looking at the whole picture. I know you are a farmer and are very concerned about the Niagara South Federation of Agriculture, but I appreciate the fact that you are concerned about the impact of this change on the rural townships. You mentioned one rural township. What was its name again?
Mr Augustine: Wainfleet township.
Mr Colle: Do you have any idea of what the impact of this change in the rebate might be on them? Have they mentioned a figure or percentage to you?
Mr Augustine: They mentioned it, but I couldn't quote it off the top of my head. There's a representative coming in later today, Mr Andy Koopal. He's a town councillor and could give you more accurate information.
Mr Colle: I want to thank you again on behalf of everybody, because it is the province as a whole, and you have certainly demonstrated that you care about your neighbours and where you live. I think you should be commended for that approach.
Mr Marchese: Thank you, Mr Augustine, for coming today. I suspect a lot of farmers, like you, don't mind the new way of your getting your money back. As you say --
Mr Augustine: Well, it's not that we're getting it back; we aren't giving it away in the first place.
Mr Marchese: Okay, and you all appreciate that, no doubt about it. But one of the concerns I heard from the ROMA conference, rural communities meeting to discuss a number of problems they've had, is the same one you have touched on: the loss of revenue to the townships. They were asking for assurances of the various ministers who were there. The Minister of Municipal Affairs was not there that day, but they were asking for assurances that somehow that money would find its way back to those townships for what they're losing. Of course they weren't getting any assurances.
Ms Bassett, you just heard, said: "Don't worry. There's a $1-billion renewable fund and money will find its way back through this fund." But a lot of the farming community people who were there were very worried that the money's not going to get back and they were asking for assurances. I suspect you're equally worried about that.
Mr Augustine: Yes, it is a concern. I was talking to Andy last night, and he was saying there aren't a lot of details in the plan. As with anything new, it develops as you go.
Mr Marchese: I appreciate that, but the real problem, as you said, is that the community or the township had a pile of money coming in that it was using, obviously, to serve the people in its area. All of a sudden, there's going to be a loss of that revenue. They've got to deal with that. Yes, it's a new system and it's a problem, but if you have less money coming into the township, I suspect it's going to be a lot harder for that township to provide services it's been providing for many years.
Mr Augustine: That's part of the reason we have meetings like this, to have a look at situations as they develop and see problems that might arise. The people who have the say, I feel, will work solutions out that'll see to it. That's what I'm hoping, anyway. Being a farmer, I'm a man of great faith -- or a fool. I'm not sure which.
Mr Marchese: You and I, because I am usually an optimist, but I tell you, the way we're seeing cuts in the system in a variety of different areas, I'm not sure a solution is going to be found that's going to work for people, unless they're willing to accept less, which is what I think we're being asked to do.
Mr Augustine, I thank you for coming, and I hope your optimism is a good one and that it will be the right kind of optimism.
Mr Augustine: Are there any other questions?
The Vice-Chair: Mr Augustine, that's about the extent of our time. Thank you very much for a very straightforward --
Mr Colle: He's just getting going. He wants to go on.
The Vice-Chair: You could join Andy, maybe, for the Wainfleet presentation later on.
Mr Augustine: I thought maybe somebody was going to ask me how the cows are doing. We'd be here for hours.
Mr Colle: When is spring coming?
Mr Augustine: Hopefully before summer.
The Vice-Chair: Thank you very much for the presentation. Glad you were here.
GARY COOK
The Vice-Chair: Our next deputation is Mr Gary Cook. Welcome.
Mr Gary Cook: My remarks are quite limited and very general.
Mr Chairman, before I go to the comments I came to make, I heard an interesting comment from your panel, that the minister is considering right-to-farm legislation. I earn my living as a consultant to a client base mainly from the agricultural community throughout the region of Niagara but extending up into Hamilton-Wentworth and in some instances up into middle Ontario. I'm not a farmer, but I come from a farming community and grew up on a farm, so I have a working knowledge of some of the problems faced by the agricultural community.
I sincerely believe that if our government was to adopt right-to-farm legislation, that one stroke would cure a great many problems for the very thing Mr Augustine referred to, and that is that sometimes there are differences of opinion when you have a lot in a rural area and you have a farmer who wants to farm and there is this conflict that occurs from time to time on the very things Mr Augustine mentioned. I see it and I hear about it constantly. I believe it can be fixed in one stroke: Simply say that those who wish to live in the rural area may do so, if they can find a place to live, but having done that, they really can't expect to put the farmer out of business because they don't like how he conducts his affairs. I strongly suggest and recommend the government do that. That's a very worthwhile project that I think would cure a great many sore spots.
The comments I want to make are very general and I'll keep them brief. I don't consider myself any kind of expert on taxation but I recognize the advantages, in my mind, of Bill 106. My comments extend to the issue of the new assessment system to put real values on property and tax it on that basis. In my own little community I know very well the examples I hear about, of my neighbour who has a home that's taxed at a rate different from mine. His house was built in the same week as mine and has the same number of square footage of floor space. Beyond that, the differences are so minimal as to be meaningless, and he pays less tax than I do on an almost totally identical property. I don't think he created that. I think the assessment system we have had created that.
I think it's unfair to the community and I commend the government for attempting, at least, to level the playing field, to assess each of us the same, according to the value of our property, and to keep it that way. At least there will be no perception that someone's getting an advantage or a disadvantage because the assessment is out of kilter. I believe that is an excellent concept, one we have waited for a very long time. I hope this legislation goes forward without further delay. It's a very useful piece of legislation.
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I like the idea, as I've learned about, that the values that will be established will be kept up-to-date and won't be allowed to sit. Property values change, houses are improved, changes take place, and assessments therefore should keep pace with that. As I understand it, the provisions of Bill 106 will deal with that. I think that's a great idea.
Two basic components I believe are inherent in this new legislation. One is that there will be amendments to the assessment and the manner in which assessments are conducted, and from that of course the manner in which property taxes are collected on property. Perhaps I'm at risk of repeating myself, but that's the nut of the problem that exists and the legislation appears to correct that. I believe it's a very useful exercise.
The annual updates, the usual housekeeping on these that must be done, are all needed. There's not much point in reassessing only to find that five or six or 10 years from now the assessment is out of whack again because no one bothered keeping the database up-to-date with values. We've done that in the past and it's not a very useful exercise in the long haul. The system needs to be brought up to modern times in terms of assessment and needs to be kept up, and I believe the legislation the government is proposing does that.
The business of averaging the increases so that no one is going to be damaged unfairly or unreasonably by a sharp increase in property taxes as a result of the reassessment is a very useful exercise as well. There are many people in the community who really can't afford a major jump in their property taxes. The concept of levelling the field a little so there are no significantly large increases in any one year as a result of reassessment is commendable. Those who can least afford it will get the best benefit from that. I commend the government for that idea in this legislation. There will be many people who will thank you for that.
I like the idea of the change in the system where eligible forests will be treated differently. There's a great deal of paperwork that takes place, and we talk about that problem from time to time with some of my rural agricultural clients. The legislation is going to eliminate a great deal of what I call red tape, if I can borrow from Frank Sheehan's book, and it needs to be done. A forest that could be looked at as being that, a managed forest -- there are lots of them around -- needs to be treated that way. They really aren't, in the pure sense, farm land, although they are owned by farmers, and they are harvested; there are things that come out of the forests that we all use. I believe that change is going to eliminate what I call unnecessary red tape.
The current system -- I have some personal friends who are assessors and my father-in-law is a retired assessor. I understand the basics of how the property assessment system has worked in the past. One difficulty we've had is that the rules are different in one part of a community from another; the book values used to establish property values differ. We all know that. If we could come to a common denominator across the entire community, even at the municipal base, it would accomplish a great deal, so that, as I said at the beginning of this, I don't end up paying more than someone else in my community for property of like value. I don't think that's fair. It happens. It's the reason, as I see it, for this legislation, and it'll fix it. I want to repeat myself, because I came here with that in mind, and that is, thank you very much. That's good work and I commend you for it.
The only other comment I want to make is that a great deal of time and effort is spent taking appeals to the Ontario Municipal Board on matters related to property tax assessment. The Ontario Municipal Board is a very busy place. For those who have had to do business with the board, you'll find it takes a very long time to be heard on a matter within the mandate of the board: an appeal on an official plan amendment or on a zoning amendment or on a plan of subdivision. It takes a long time to be heard. The delays are killers. Business stops because they can't get the approval they need. They may not get it, but if it takes 15 or 20 months or more to obtain the approval because of an OMB hearing, that ties up a great deal of money that could make the economy move forward.
If you're relieving the OMB, as I see it here, of this task of hearing assessment appeals, you're going to free up a fair bit of time. It follows, in my mind, that the board will then have more time to deal with the stuff that really matters; that is, the things that deal with the development of property, matters related to land development. If that happens, you will also have created a real advantage to the people who are builders and developers, to the municipality and to the economy, without necessarily contributing more money to the operations of the OMB. You will simply free up some time.
I don't think that the people who wish to be heard on a property tax appeal are going to be the losers because of that. My view is that there are provisions in here that will still protect property owners who are not happy with the property tax assessment they have. I believe that the removal of the OMB from that process is useful, not harmful, and will serve a very good purpose.
Those are my comments.
The Vice-Chair: Thank you, Mr Cook. That leaves us about four minutes per caucus for questions, beginning with the official opposition.
Mr Kwinter: Mr Cook, thanks for your presentation. I appreciate your comments.
One of the things you mention is that you felt this new law, Bill 106, would really equalize and make it a fairer assessment. Are you aware that there is a provision where municipalities have the option of using either current value or current use? What that really means is that you can take a look at a property and say, "The highest and best use of this property is this, and as a result, regardless of what it's being used for, this is what the assessment is going to be based on." The other one is current use, which says, "Yes, this property could be used for a much higher use and a higher value, but the particular use now is much lower and we're going to assess that."
You have a situation where, in some municipalities that opt for the current use, you'll be paying much less in your assessment than someone in another municipality where they have opted to do current value. You'll have properties that are virtually identical, virtually the same square footage, the same acreage, assessed at different levels. How do you feel about that?
Mr Cook: I am aware of that and I understand the basics of it. I live in the town of Lincoln. In that municipality the council will make that determination, as I understand it. I have access to them at the ballot box if I don't like what they're doing. I also have the right to go to a council meeting and be heard. I can get an audience if I'm not happy with the results of this.
I believe the elected officials in the two municipalities -- let's pretend for the moment Grimsby and Lincoln -- the two councils, are probably not going to create such a variation in the two systems as that business will move from one place to another simply because the taxes are so manifestly different. I don't think that's going to happen. I tend to think differences will occur between municipalities, and I expect that. I don't think the differences will be that great. I don't think the elected officials will allow that to happen.
I don't forget the fact that I, and the people who aren't happy with that system, can go to the council chamber and be heard. I think the elected officials will do what they do, and that is, if they hear enough legitimate concerns about that question, they'll deal with it and redress it. I believe they can make the distinction, but I think they can correct the distinction, and I don't see that to be a serious problem.
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Mr Kwinter: I should tell you that for several of the deputants who have come forward, particularly businesspeople, one of their grave concerns is that all politicians really respond to the people who have the power to elect them. Usually businesses don't have a vote and homeowners do, so they feel councils favour the homeowner as opposed to the business and as a result load up the taxes on the businesses, that they make these determinations based on that particular provision. As a result, you do have the situation where people say: "I'm not going to that municipality because the taxes are too high for business. We're going to go somewhere else."
The ability of the municipality to do that is a concern that's been raised by several people. I understand you're saying that you think politicians in various municipalities are going to do the same thing, but this act provides specifically that the municipality has the option: They can do one or the other.
Mr Cook: Mr Kwinter, I understand the basics of your comments, I understand the elements, but I think constantly of all the time and money and effort that's being spent by municipalities; the city of Port Colborne is a good example. They're spending large sums of money to attract business to their community because business is what makes the system run in the end and creates employment.
With due respect to your comments, I don't think there are too many municipal councils around -- that I know of, at least, and I've been in the business I'm in for more than 30 years -- that are going to knowingly and wantonly do something that's going to chase business out of the community. These elected officials are very mindful of the fact that they need the business in their community.
That's what makes me say what I said, that they're not going to let things get out of whack to the point that a business in my own community will move to the next community because the property taxes are out whack. I don't think that's going to happen. Too many dollars are spent by the elected officials on trying to attract the business into their community. I think that will be the levelling factor. That's my response to your comment.
Mr Marchese: Thank you, Mr Cook. You would appreciate Mr Kwinter's concern. You're saying, "It's not likely to happen." He's saying, "But it can." The legislation permits for those differences to take place, and politics of each community will vary depending on the culture of that particular area, so there's potential for these divisions to happen. You will be probably agree with that.
Mr Cook: Yes, sir, I do agree with that.
Mr Marchese: Mr Cook, you talked about your neighbour paying less than you do with a similar type of property, same building, more or less the same dimensions. You must have appealed your property taxes, knowing that, and you probably won.
Mr Cook: As a matter of fact, I did not, being the foolish man that I am.
Mr Marchese: Oh, you haven't appealed?
Mr Cook: I haven't appealed it. It isn't a truly significant sum of money, but it is a difference, and I haven't appealed it. I feel a bit like the cobbler's son. I help other people with their appeals and I haven't looked after my own business.
Mr Marchese: That's what I was thinking. As a consultant, I thought you surely would have had access to this knowledge and you would have done it already.
Mr Cook: I understand how that works and I simply admit I've done nothing with it.
Mr Marchese: Okay. The other question is the whole matter of impact studies. You probably are aware that the government has done impact studies and that there are impacts as a result of these changes, and some people feel they have a right to know what those impact studies indicate.
The commissioner on information and privacy just this morning has ruled that the Premier should release that information, and the Premier said this morning that he hoped the commissioner would change his mind. We feel, as a public, we have a right to have access to that information. Do you agree that those impact studies should be released by the government?
Mr Cook: I'd like to answer your question in a very, very general sense. I've worked in and for and around government all of my career. I believe that at no point in time should anything be withheld from the people who are paying for it. If we want the information, we should be entitled to have it without argument. I take very strong issue where my tax dollars are being used to create information, data, what have you, and I'm not permitted to have a look at the final product.
I must say, though, sir, that there are lots of times that the data should be released, but lots of times it can't be released because of other valid reasons and supportable reasons. I think we have to recognize that. Sometimes government feels it's necessary to manage the information database, and I think that's acceptable.
Mr Marchese: I agree. Mr Cook, you would also like to know the reason information is being withheld, as opposed to: "We're withholding it but we're not going to tell you why. There may be reasons but we're not going to tell you what they are." You'd like to know them, wouldn't you?
Mr Cook: I think that's a fair comment. Yes, I'd agree with that.
Mr Marchese: Thanks for coming, Mr Cook.
Ms Bassett: Thank you for your presentation. I appreciate the comments that you've made.
I just want to talk about the impact studies. As you know, the government wants to make sure the property tax reform is dependent on and based on new, 1996 assessed values. The decisions made by municipalities of course have to be based on accurate figures. We are in the process. We are right on schedule with our reassessment. That's why, in answer to my friend Mr Marchese, we have not been able to release figures, but by midsummer there will be figures there, and they will be up to date. It's no use giving you figures that are going to be out of date, and that's the reason.
Mr Cook: That's the very thing I was reaching for in my response to Mr Marchese, that there are times when information isn't available. Perhaps it's incomplete; the government hasn't done all the things they need to do with it before they release it. There are times it is not appropriate at that moment in time to release it. I understand that and I accept that.
Ms Bassett: Thank you very much for clarifying that.
Mr Rollins: I have a couple of things and one is about those impact studies and consulting fees. I think we've all sat and listened and watched governments consult and consult and consult and then not do anything. I think we might better go the other route and get something done. When those numbers are available, we will certainly make sure we share them with everybody.
Also, another change in the system is that we're going to probably change to a percentage of the assessment, which is a lot easier to understand than going to the old mill rate, because when you get your assessment you've only got 30 days to appeal it. "Well, my place is worth a lot more than $3,000." Then when you get your tax bill and you see it up by $300, "Well, why didn't I holler?" It's too late, and it just goes on like that. I think we'll put that into a place where it's more understandable to most of the people who get that tax bill. I think that's something we need to be able to put out to the public.
One other thing I can guarantee you is that the right to farm -- maybe you were here for the previous presenter, Mr Augustine. I mentioned that it has already been studied. Harry Danford, the parliamentary assistant to Noble Villeneuve, the Minister of Agriculture, has just done a tour of the province on the right to farm, had hearings across the whole province on the concerns around the right to farm, with the smell of manure, air pollution, light pollution and dust pollution. Those are the things that, when a strip of houses is built in front of a farm and then the farmer starts putting on pig manure or something like that, the town councillor gets all those calls on.
It's the same with the use of farmers. We had one in yesterday that had a lot to do with poultry. He said he had a group of people in saying that it was inhumane to lock that little chicken or that little bird into a cage and look after it. He said: "Walk into my barn and hear them clucking, hear how happy they are, and we feed them and look after them well. If I don't look after them well, I don't eat well. It's my business; I've got to look after it right."
I think that right to farm is -- well, as you say, it is; I'm pretty near positive that it will be in this spring.
Mr Cook: Again, I think it's going to cure a great many problems, so thank you for telling me about that.
The Vice-Chair: Mr Cook, thank you very much for your presentation before the committee today.
Mr Cook: Thank you for inviting me. I appreciate the opportunity to be here.
The Vice-Chair: Members of the committee, I'd like to introduce you to a couple more people who have joined us today. In the back of the room on our right-hand side is the mayor of the city of Port Colborne, Mayor Neal Schoen, accompanied by one of the councillors, Sonja Smith.
On behalf of the committee, I'd like to thank you both for letting us use this room today. It's been great for our purposes.
BUSINESS IMPROVEMENT AREAS OF HALTON REGION
The Vice-Chair: Our next deputation is the business improvement areas of Halton. If I misspoke your title, I'd ask you to please introduce yourselves and the group you represent.
Mrs Rachael Irvine: My name is Rachael Irvine. My compatriot here is Sandra Spudic, who is the manager of the Downtown Oakville Business Improvement Area. With your kind permission, I shall commence.
Good morning all, Mr Chairman, members of the standing committee, ladies and gentlemen. As I've already explained, my name is Rachael Irvine. I am here this morning representing over 1,200 businesses operating through six different BIA groups within Halton region. These areas comprise one group each for the city of Burlington and town of Milton, and two each for the towns of Oakville and Halton Hills. As well as being a board member for the Downtown Oakville BIA, I also own and operate a retail store.
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While we of course understand the need for you to eliminate the business occupancy tax in its present form, we are deeply concerned about the proposed shifting of the BIA levy from direct pay by business owners to property owners.
In the beginning, BIAs, as a brainchild of the provincial government, were designed to counteract dying downtowns and older business sections all across Ontario. It was felt that by offering various incentives such as PRIDE, the program for renewal, improvement, development and economic revitalization, and CAIP, the commercial area improvement program, these business-oriented groups could commence to rebuild what were fast becoming ghost towns. As well, many of these areas contained historic buildings and were located usually in the heritage core of the community.
In addition, a 1990 document from the Ministry of Culture and Communications outlined the following points as part of Ontario's heritage goals:
(1) To foster awareness that our heritage is vital to our success as a people.
(2) To empower Ontario communities to undertake high-quality heritage conservation.
(3) To stimulate private sector involvement in conserving and developing Ontario's heritage.
Since the inception of the BIA, these business communities are now responsible for continued economic viability, preservation of historic landmarks, aesthetic improvements to the streetscape and organization of community events.
Today there are approximately 227 established BIAs in Ontario, ranging in business memberships from 25 to 2,000. BIAs are an organized means of representation for small business owners, with a voice in local affairs. As well, they are the only means by which mature commercial areas can sustain economic viability. BIAs in Ontario do not cost the government one red cent. In fact, they are completely self-funded.
We believe the proposed shifting of the BIA levy from business owners to landlords will most definitely impact BIAs. This change will afford property owners the same, and in some cases more, say in the running of the BIA than the business owners, who have supported it, incidentally, financially, materially and emotionally since its inception. Absentee and out-of-country landlords pose a grave threat, with little knowledge of or interest in a BIA's work. We believe these landlords may simply choose to opt out.
As a result of all this, many business owners who currently sit on boards of management could be bumped, thereby eroding the voice of small business operators. The bottom line is that business owners, who in fact pay the levy, should oversee the BIA operations, and not landlords.
Without the ongoing support and impetus of the BIAs, Ontario may once again witness the erosion of its downtown cores. Also, there would be loss of a primary tax base, loss of community jobs and a real estate recession. We believe that whereas less successful malls can be rezoned for industrial, institutional or residential uses, without a BIA, downtowns can die.
Following, we are presenting you with recommendations in two areas. I believe you have copies, and I will read them for the record.
The first area concerns Bill 106 and specifically relates in that bill to the BIA levy:
(1) That the province or the municipality continue to track assessments of businesses within a BIA's boundaries.
(2) That the BIAs themselves be allowed to offer assistance by tracking current tenancy within their boundaries.
(3) That the BIA levy remain a separate tax and apply to each business owner of a BIA.
The second area relates to the Municipal Act and has to do specifically, again, with BIA legislation:
(1) That legislation allow municipalities and BIAs to develop arrangements that best suit local circumstances.
(2) That local councils have the authority to decide with a two-thirds vote to maintain BIAs as they currently exist without vote of the property owner.
(3) That there be a transitional phase-in of legislation to flow taxes down to avoid bankruptcy by landlords and a withdrawal from the BIA membership of the tenant.
(4) That there be a two-year cooling-off period between attempts to disband a BIA.
In closing, we believe that continued support, understanding and consideration for BIAs would be further indication of the provincial government's commitment and focus on strong economic growth.
The Vice-Chair: Miss Spudic, any further comments from yourself?
Miss Sandra Spudic: Not at this time.
The Vice-Chair: Then we'll divide up the rest of the time among committee members for questions, beginning with the NDP, about four minutes each.
Mr Marchese: Thank you for coming, Ms Irvine and Ms Spudic. Thank you for the presentation. You've raised some important points that haven't been raised today. I want to tell you that there have been many good examples of business improvement areas across Ontario -- I'm from Toronto -- and we've had good work with a lot of them in terms of urban renewal kind of ideas that come forth from their work. So you're in good company with many.
One of the concerns we have around the business occupancy tax is that the whole amount involves $1.6 billion. That's a lot of money. In Metro it's $600 million that they would lose and have to recover in some way. You're worried about how that shifting will happen and you've raised some interesting points about some of the worries you've got about that, not just in terms of where the money's going to come from, but the effect it will have in shifting from those who rent and those who own property. I understand that.
My worry is that the government is shifting this whole responsibility down to the municipality. They've done the good deed and said, "This is a very outdated tax that was imposed in 1905," I think it was, and that might be a good thing, but they're leaving the municipality to do the dirty work of having to figure out where this money is going to be made up, because if it's taken away, you have to make it up somehow. So someone's going to be taxed in some way or other and the municipal politician is going to have, in my view, a hell of a time trying to make up that difference and trying to satisfy the various constituencies of that. You must believe that's a problem.
Mrs Irvine: If I may, we understand that somebody has to pay. I think we're saying here we'd like to continue to pay.
Mr Marchese: Yes, I understood that.
Mrs Irvine: I understand what you're saying in terms of downloading to the individual communities. If I may read something that was prepared by the town of Oakville: "That the assessment office continue to track tenancy and allocate realty assessment to tenants so that the municipality has the information required to build the BIA levies on the business operators on behalf of the BIAs." We're not asking for leniency on taxes; we're asking for the opportunity to continue to pay in the same fashion.
Mr Marchese: I understood you.
Mrs Irvine: And I understand what you're saying. It's a mammoth problem, which is why in the beginning I had acknowledged that we understand what you're doing and we concur, but somehow I would hope we could work together with the government to establish perhaps, in our opinion, a more fair way of handling this so that we don't run the risk of losing what we've worked for so many years to provide for the citizens in each area where a BIA is.
Mr Marchese: I understood you very clearly. I wasn't disagreeing with you, necessarily. I was just making the argument that government makes by saying: "This is outdated. We need to reform it." They seem to be committed to this, the elimination of the business occupancy tax. So you've got a problem already, because it means those people are not going to be paying it; somebody else is.
You're saying, "We don't mind it, because we think it's the right thing to do," but I think government has already passed you by in this regard and I'm not sure they are going to come back and say, "We'll leave it the way it was." I'm not sure how you're going to deal with that.
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Mrs Irvine: We are here this morning because we believe as Canadians we have the right to make a comment and we did apply to make a comment. In fact, we don't believe we've been passed by. We believe we have been afforded the opportunity to make some very succinct comments from 1,200 people who are saying, "Hey, maybe you haven't thought of this." That perhaps is the motivation of these comments this morning. The BIAs, I suppose, in the big picture of the provincial government would be a fairly small numerical amount, so we're here to say: "Hey, don't forget about us. We're taxpayers too. We'd like to continue to do what we've been doing." I don't know whether any of you have visited downtown Oakville or get the occasion to?
Interjection.
Mrs Irvine: Thank you, Madam. You will know the kind of money that is expended there. Certainly we are very active in all areas, not only the making of money: obviously streetscape, where we provide the plants, we provide the lampposts, we provide the Christmas lights, we hire people in the community and all these other sorts of things. We don't want to lose control of that.
Mr Spina: Thank you, Ms Irvine and Ms Spudic, for coming this morning. We appreciate it. I have been very involved with the BIA in Brampton. First of all, just before I ask my question, I want to assure you that our objective is that this be a fair property assessment bill.
I also wanted to assure you of a couple of things with regard to your recommendations. You asked that legislation allow the municipalities and the BIAs to develop arrangements that best suit local circumstances. That is clearly one of the things we are attempting to implement as part of this bill, so the municipality will have the authority to work with you more directly, without the provincial government interfering in that process.
Secondly, the business occupancy tax is separate from your BIA levy. Is that not correct? We are not intending to remove that BIA levy under this current legislation, from what I understand.
Mrs Irvine: It's my understanding, according to a document I have here, "transfer responsibility for payment of the BIA levy from the business owner-operators to the property owners."
Mr Spina: Where did that come from, may I ask?
Mrs Irvine: Proposed Legislative Framework, from the province of Ontario, I believe.
Mr Spina: That's a surprise, because I know we are addressing the business occupancy tax issue, but it was my understanding that the BIA levies would be considered separate.
The last point I wanted to make was that you're not being ignored as a BIA, or all the BIAs. We had half a dozen groups that pulled together for one presentation in Ottawa and put forward a very clear case. I had a little misunderstanding -- not a misunderstanding; I guess it was something that was a little different in their presentation than you had. I just wondered if you could clarify it before I turn it over to the others. That is that you're asking that the property owners not sit on the BIA board of directors, if I understood you correctly, but on the other hand, these others insisted that the absentee landlords be part of the BIA in order to ensure that they have the interests of the BIA and the downtown area in mind, at the forefront.
Mrs Irvine: I think the issue is very basically that if you have one landlord owning six different properties or 10 properties or 20 properties in a downtown and your membership is perhaps 100 or less, the issue of who's controlling what could become a very acrimonious issue. Again, it depends on whether your rent is gross rent or net rent. If it's net rent, then of course the man at the top, as in landlord, passes on, passes on, passes on, which is fine, and as we understand it, based on this and the other information we were able to obtain, it would be okay. But if that didn't happen or there was a gross rent in effect, then it would mean that landlords, if they wanted to and couldn't be bothered with the BIA, weren't civic-minded, were absentee -- it would wipe us out.
You're familiar with BIA, so you'll understand. BIA is beyond having a budget which is approved by the membership and the town, of course. We operate 90%, if I can say, on volunteers. Are we going to get the same amount of input and volunteers if we've got kind of a divided BIA that could be voted out without our wanting it to be? I think we're looking for consistency here and the opportunity to go on building small-town Ontario the way that we have since the inception many years ago.
Mr Jim Brown: A very quick question. I noticed that you wanted a two-year cooling-off period before one can disband a BIA. I sense that some small guys might think that the BIA levy, which they can't opt out of, is just another form of tax, and a tax for something the municipality should be doing. When you said a two-year cooling-off period to disband the BIA, I am sensing from the fact that two years is a long time that maybe there are a bunch of people who might not want to belong. I'd like to get a feel for how many people have expressed that they don't like this levy and they'd rather do their own thing and that the municipality should be paying the bills.
Mrs Irvine: Not at all. The reason that was put in there is simply that -- we had a number of meetings, by the way, to come up with a composite of everybody's concerns, which led to my presentation this morning, so there are quite a number of people's thoughts in here. One of the thoughts that came to the table when we had our last meeting, last Wednesday night, was simply that we don't have a problem in Oakville with it certainly, and I don't think anybody else did either, but it was felt that if that point wasn't made, dissenters in the future could possibly gang up and they could be going to council to try and disband it every six months. We felt that would be a frivolous waste of everybody's money and the municipality's time.
Certainly I can assure you wholeheartedly that among the groups that I represent this morning and in fact the entire region of Halton, to my knowledge, there is nobody who is trying to shut down their BIA. If they are, I'm certainly not aware of it.
Mr Kwinter: Perhaps I can just follow along on this discussion, because I think it's very interesting. The thrust of the government and the reason they are removing the BOT is that they found there are just too many delinquent tenants who take off, close down, and they have no way of collecting it, so municipalities are left holding the bag with a lot of unpaid business occupancy taxes.
The idea is to take that, transfer it to the landlord and put it really as a lien against their property by blending it in. But you raise the question -- it's a very valid one -- that lots of these landlords are offshore, foreigners or absent, whatever it is, and their main concern is getting their rent and having as little involvement as they can, just as long as they can be assured of their rent.
I think you're going to find it very difficult to get some landlords involved in the BIA, and the municipalities are going to say: "We're not getting this money; the money is going to the province. You go to the province and talk to them about the BIA." So you've got a situation where the actual merchants or businesses that are really interested in sponsoring and promoting their BIAs will participate, others won't, and it does leave you in a very vulnerable position. I understand where you're coming from, but I'm just wondering, is there some way that you can organize the various BIAs so that they are participating and there is some participation by the municipality, regardless of the fact that they're not collecting the business occupancy tax, because of the value they get from the commercial activity that's generated by the BIAs?
Mrs Irvine: I'm taking a deep breath. If you go through the comments that we've made this morning again, I think it takes about four readings before you'd get everything that we tried to say in about a seven-minute period.
I believe the municipalities would like to have the authority to collect that business tax, the BIA part. That's what I think. I can understand what you're saying certainly, and we're so scared I can't tell you. We're so scared that we're going to lose everything that we've spent so much money on and given of ourselves to for so many years.
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For example, already in downtown Oakville in our BIA, which incidentally has over 350 members within our area, our manager, Sandra, and her staff take an active hand in making sure that we know who the tenants are and things like that. Perhaps, Sandra, you could explain very briefly how your office goes about tracking tenancies and things.
Miss Spudic: Essentially it comes from walking around: going into the buildings, walking into people's offices, introducing ourselves and taking down the information. That's basically how we keep track.
Mr Kwinter: What I am trying to get at is that maybe if you restructure to the point where it really becomes an association where all of the members of that BIA pay an annual association fee and you get a municipal subsidy as well so that the BIA can function and do its Christmas decorations and do its plantings and all that, so that it isn't tied directly to a tax, and as a result, you would have greater control -- I don't know if that would work or not.
Mrs Irvine: Whatever form it comes in, I think it's our feeling and our belief that it should come from the municipality in some form, but it cannot be, "If you want to." I think we've all had experience with business associations that said, "Throw in 50 bucks if you want, and if you don't want, that's okay too."
Mr Rollins: It doesn't work.
Mrs Irvine: No, it doesn't. This is something that we're trying to preclude. It was in downtown Oakville long before BIAs were thought of, and I understand it was rather a disaster. It has to be consistent, it has to be ongoing, it has to be fair, and in the final analysis, whatever can be established to make sure the business owners are the masters of their own fate. I understand what you're coming to and I understand what your thoughts are, and we talked about a lot of that as well.
The Vice-Chair: I thank you, Mrs Irvine and Miss Spudic, for coming down to Port Colborne today for your presentation. Have a safe trip home.
Mr Colle: On a point of order, Mr Chair: I wondered if we had a copy of that document that Mrs Irvine referred to for our information.
The Vice-Chair: If you want to submit the document to the clerk, please do so.
Mrs Irvine: Which? The one that I read that came from the government?
Mr Colle: The reference, yes.
Mrs Irvine: Sure.
The Vice-Chair: The clerk will collect that document as part of the presentation from the BIA group. Again, thank you for your time. Good evening.
WILLIAM BRUNT
The Vice-Chair: The next deputation is Mr W.R. Brunt Jr. Mr Brunt, welcome to the standing committee on finance and economic affairs.
Mr William Brunt: At the outset I would like to thank the committee for coming to the boonies, so to speak. I am happy we finally have a government that is prepared to get out of the ivory tower at Queen's Park and is prepared to travel around the province and obtain the views of citizens in all areas.
I believe the present government in Ontario deserves a bouquet for tackling an area that is long overdue for revision. Previous governments have recognized the need for changes in municipal taxation but have not had the intestinal fortitude to do them.
I have come to believe that a good law is probably one that pleases no one. That may sound like a contradiction, but legislation that is popular with one group and hated by another is probably slanted too much to one side. When everybody is unhappy, you probably have a bill that is positioned correctly between the opposing views and will be good for the province.
A classic example of this philosophy is the GST, which was universally hated. It corrected the problem with the manufacturers' sales tax which it replaced. The manufacturers' sales tax applied to Canadian-made products but did not tax imports. While opposition parties condemned it, in the end no government will abolish it. They may change it in name, but that is really no change at all.
Now to the subject at hand, Bill 106, which makes changes to the way municipal taxes are levied. There are several good features in the bill. The first good feature is the repeal of the business occupancy tax. This tax was paid by business owners and not levied on the property. It was a problem for municipalities to collect. Many businesses went into arrears on this tax on their way to bankruptcy and left municipalities with unpaid taxes. This just shifted the burden to the remaining municipal taxpayers.
I am no municipal tax expert and I will concede that municipal taxes, like income tax, are becoming a field for experts. This means that all you're getting today are the views of a reasonably intelligent citizen, not an expert. I have yet to find someone who can explain to me the logic used to set the rates for the business occupancy tax. It has been around since 1905, and I believe the rationale for it has been lost years ago.
Another good feature of the bill is the setting up of property classes. This will provide municipalities with the flexibility they need in levying their tax base. By establishing these property classes, it is then possible to do other things.
One of the things possible under the property class is to get rid of some duplicate effort. I have long objected to programs, such as the old-age pension system, where the government spends money to issue a cheque to everyone and then spends more money collecting it back from the more fortunate.
Collecting full taxes on farms and then sending 75% back as a grant was a waste of time, effort and money. Under Bill 106, farmers will just pay their municipal taxes at the reduced rate and no grant will be received. Their capital will no longer be tied up in a bureaucracy that serves no one, except perhaps CUPE. Putting woodlots in with farms is correct, as trees are just another crop. Again under the property classification system, conservation areas will be exempt from taxes, rather than having municipalities collect the tax and the government paying it back to the conservation authorities.
A uniform assessment system across the province is a fair scheme for everyone. Using current value assessment is as fair an approach as any. To anyone who has undergone market value assessment in recent years, there will be little change.
The assessment appeal process has been streamlined in a logical manner. By extending the period for an objection, it provides time for the property owner and the assessor to review the assessment and reach an agreement. It is less costly to everyone if disagreements can be settled at this level. If agreement cannot be reached between the owner and the assessor, then an appeal process is provided.
The appeal process has been modified to keep assessment disputes out of the Ontario Municipal Board and the courts. The courts can still be used to rule on a point of law, but this is different from having to rule on other matters as well. Our judicial system is facing enough of a backlog as it is.
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As I understand it, current value assessment is defined as the value a property would have in an arm's-length transaction between a willing buyer and a willing seller. If this is truly the case, then anyone who feels that his current value is too high should be prepared to sell the property on the open market at that price.
An interesting way of settling a disputed current value would be to put the property on the market for 90 days at its assessed value, and if a buyer is found for the property, the owner would have to sell. If a property owner was not prepared to do this, then he would have to accept the assessment. In the case of multiunit, commercial and industrial property, the period would have to be longer, say six months, because of the more limited marketability of such properties. If a property did not sell, then the assessment would be reduced to a figure at which the owner was not prepared to put it on the market. If it sells then, the current value is established.
In addition, sales of properties should be used to update the current value assessment. If a property sells for less than its current value assessment, its assessment should be reduced; conversely, if it sells for more, its assessment should be raised. How would the assessment office market properties, as we certainly do not want the government to get into the real estate business? Properties could be assigned to real estate companies in the area on a rotational basis to those firms that wanted to try to market the property.
The only drawback to current value assessment is that it discourages an owner from improving or maintaining his property. Improving the property raises the assessment. Maintaining the property maintains the assessment. Letting it go to ruin lowers the assessment, and hence the municipal taxes, once the rolling averages start.
I do agree with the provision allowing municipalities to grant relief to seniors and the disabled for any tax increases that may occur from the current value assessment. The increase can be deferred, with the taxes and interest accruing until the property is sold. It does have the drawback of tending to trap these people in their existing properties. Perhaps there should be a provision for these people that allows them to sell one property and to use the proceeds to buy another property, with any surplus on the sale being used to pay down unpaid taxes and interest. The remaining unpaid tax and interest would then accrue on the new property.
The requirements of seniors and the disabled may change as they grow older. Another factor the bill does not address is what constitutes a low-income senior. The rules should be the same across the province. Perhaps the criteria could be that any senior receiving the old-age supplement would be considered a low-income senior. For disabled people, the same criteria could be applied to their income. That is, if they were a senior and their income is such that they would qualify for the old-age supplement, then they would qualify for relief.
Finally, it must be recognized that the cost of living is not the same in midtown Toronto as it is in Crystal Beach. Therefore, a factor needs to be applied to the old-age supplement figure to adjust for the region in which they live. This adjustment could be based on the cost of the average home in, say, Niagara region versus the average home in Toronto. Just some radical ideas to promote thought.
Since some assessments are many years out of date, the feature that allows for significant increases in assessment causing large tax increases to be phased in is a good one. However, I believe it should only apply to the majority of homeowners and small commercial or industrial operations. It should not apply to residences that cost over $500,000. If you can afford that kind of home, you should be able to absorb the tax change. In commercial and industrial properties, a limit could be set based on net profit. If your net profit is over a certain figure, you do not get the privilege of having the tax increase phased in. You may say this is not fair. Anyone who thinks taxes in Canada are fair is dreaming. Canada taxes its citizens based on their ability to pay.
On the subject of allowing different tax rates on the same class of property, I find I have very mixed emotions. I would have thought the difference in current value assessment would have provided the needed differential required between small commercial offices and strip malls and the large commercial developments that may be subject to a higher tax rate. As I just said, I must be dreaming to think taxes would be fair.
I am glad the bill recognizes the importance of the development of Ontario airports. The federal government is in the process of getting out of the airport business. When the federal government owned the airports, the municipalities could not tax the land, as it was crown land. Since municipalities did not receive any municipal taxes, the federal government adopted a policy of giving the municipality a grant in lieu of taxes. With the airports being sold at a nominal figure or given to airport authorities, it is virtually impossible to set a current value assessment on them. In Canada, there is not a market in airports to establish an assessment. I am sure some municipalities would be willing to try, but if they did, we might not have very many airports.
The idea of setting their municipal taxes at the same level as their grant is a good one. What is not clear to me is whether this levy of tax is in perpetuity or if there is an adjustment involved to take care of inflation and the possible growth that may occur at an airport. I would suggest that the taxes could be set at the grant level for, say, three years and then they would increase based on the number of passengers the airport handles or, in the case where there are not many commercial flights, it could possibly be based on the number of flights in and out.
This leads me to an interesting subject that is very contentious at the moment in Fort Erie and the municipality of Niagara. Between Fort Erie, Ontario, and Buffalo, New York, we have a bridge that spans the Niagara River. If anyone ever wonders what that bridge contributes to the Ontario economy, then one should look at the amount of trade that crosses the bridge. The bridge does more for the economy of Ontario than many of the airports in the province. The bridge, with its associated requirements, is by far the largest employer in Fort Erie. Without the bridge, customs and immigration, the customs brokers and the trucking facilities, Fort Erie would become a ghetto of unemployment.
However, this bridge is different from a lot of other bridges in this sector. The bridge is operated by the Buffalo and Fort Erie Peace Bridge Authority, which was formed under a charter issued by New York state and the federal government. While many of the international bridges between Ontario and the United States are under a provincial charter and hence fall under provincial law, the Peace Bridge is an exception. For many years the lands used by the bridge authority were treated similarly to crown land, and the bridge authority gave the town of Fort Erie a grant in lieu of taxes. In order to keep a harmonious relationship on the board of directors, composed equally of Americans and Canadians, a similar grant was given to the city of Buffalo. Now the town of Fort Erie and the region of Niagara want to assess the bridge property and levy taxes on it. This poses some interesting problems.
The first practical one is, how do you set a current value on bridge facilities? I do not know of any that have been bought and sold in recent years in Ontario or elsewhere.
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The Vice-Chair: Mr Brunt, you have about a minute left, if you wanted to wrap up your comments.
Mr Brunt: Basically what I'm asking for here is: The town and the region are proposing to assess and tax the bridge, and if they do this, they will basically put the bridge out of business. The town and the region have gained the employment and the benefits of the expansion of bridge facilities on the Ontario side, and therefore I think an amendment should be made to the act to consider the bridge the same as an airport. Thank you.
The Vice-Chair: Thank you very much, Mr Brunt. A very thorough presentation, a lot of suggestions, and the committee definitely will benefit from it. I regret it's exhausted our time so we don't have time for questions.
For the interest of the committee members, we will be hearing from the Buffalo and Fort Erie Peace Bridge Authority at 1:20. I think it's the first time that the bridge issue has been introduced, so we'll hear more on it later this afternoon.
TOWNSHIP OF WAINFLEET
The Vice-Chair: Our next deputation is Mr Andy Koopal, representing the township of Wainfleet. Welcome to our committee. We have 20 minutes together.
Mr Andy Koopal: Thank you, Mr Chairman, fellow politicians. I will keep my comments brief and to the point.
Tax reform is overdue, and as a dairy farmer I am pleased that the educational taxes will be removed from farm land. This is what the federation of agriculture lobbied for for many years. Also, I agree with the government that streamlining things is important. However, there are still a few questions which have be answered before I can give my blessing to this act.
To put the rate at 25% of the residential rate seems to be fair to me. Is this 25% figure a guarantee for us for the future, or can future governments change it overnight?
Now as a politician: Who is going to pick up the shortfall to the municipalities? For instance, in Wainfleet's case, the property tax rebate paid to farmers in the year 1994 was $570,000. If and when farmers are going to pay the township 25% of the residential taxes, who is going to pay the township this $570,000 it will not have coming in? Do we have to raise the residential taxes to cover this shortfall? If so, the residents will be on our backs. They don't want to have to pay for it. Also, if the residential rates go up, so will the 25% portion on the land. Are we being taken for a ride?
Our municipality does not have any more reserves to dig into. We run a lean ship, especially next year, when we are going to lose another $405,000 in block grants from the province. Or is this the province's way of killing/starving the small municipalities? Bigger is not always better. In our township there is no place for user fees unless we can put a tollbooth on Highway 3 to raise funds.
I hope you can provide me with some answers today. Thank you very much for your time and coming to Port Colborne. Respectfully submitted by Andy Koopal.
The Vice-Chair: Thank you very much, Mr Koopal. Your position with the township of Wainfleet, for the information of the committee?
Mr Koopal: Alderman.
The Vice-Chair: This leaves the members of the committee with about four minutes per caucus for questions, beginning with the government side.
Ms Bassett: I have a quick one before my colleagues, who sure want to talk. Thank you very much for your presentation. It's wonderful to be here in Port Colborne.
I just want to say that, as you know, people have been lobbying for ages for us to remove the education tax from residential property, and with the farm land paying now 25% of the residential tax, as you say, you're worried how the municipalities are going to pick up the shortfall. If you can't make any savings, which, as several people have pointed out, they may not be able to do, the province is having a $1-billion annual community reinvestment fund that will be divvied out annually among the municipalities that need it. I want you to rest assured that that will be there. I'll turn it over to my colleagues.
Mr Rollins: Thanks for your presentation. I know we've had quite a few with a farm background appear before this hearing, most of them with the same concern. It would be nice to be able to write in stone that the 25% will always stay there, but I think you're asking for a day's rain and sunshine and everything else at the same -- a guarantee, and it can't happen.
However, as my colleague Ms Bassett said, there is that fund particularly for municipalities that have a large portion of their assessment based on rural farmlands, and it will be able to allow them to readjust that income. However, there is a legitimate concern that there is going to be a shortfall for those communities or those municipalities that have a lot of assessment in the farm land. I think that's one more reason that we've got to look at some type of amalgamation, to make sure we can get a big enough picture in there so that then those amalgamations can hopefully have some more savings to pass down.
I know each township and each municipality comes up and says, "We're mean and lean now." But over the last two years, as well you know, you look across this province of ours and there are a lot of municipalities that haven't increased taxes and yet they have been able to sustain the cutbacks in those grants. I know it's getting down to the part of doing things a different way, but I think that's what has to be done.
Mr Koopal: In answer to your comment, for Wainfleet we kept our taxes at zero for the last six years for our portion. The school board and the region is a different story.
Amalgamation: Who wants a township that's going to lose this kind of money? We work as partners with Pelham and with Lincoln, and maybe in the future we could join as municipalities, but we don't save a whole lot of money because we as politicians don't make the $70,000 that the big cities do. We make only $7,000, so you don't save a whole lot of money.
Mr Rollins: No, you don't on savings for yours, but you do on maybe your municipal buildings and some of the other shared resources that you can share with your neighbours to save that. But I think it's an ongoing thing that we've got to continue to look at ways of saving, because I'm sure that like a lot of other people, you don't want the taxes to go up. Most people don't. Thank you for your presentation.
Mr Colle: I think you represent literally hundreds of towns and cities across Ontario with the same problem. You have been mean and lean and you've not raised taxes in six years, and now all of a sudden you're going to have to make up $570,000 overnight. What the government has said to you is that they have this, as I call it, $1-billion begging fund. Why wouldn't they just do it right and allow you to govern as you have been governing? Instead, they are going to have you go on your hands and knees every year begging to meet what criteria? Have they given you criteria yet in your town in terms of how you will access the begging fund?
Mr Koopal: No, they haven't, and that isn't in the legislation either. That is where we have so many questions.
Mr Colle: I guess what it's going to be like is, if you behave and if you meet certain government criteria and if you amalgamate and if you put up tollbooths and if you put up user fees, then I think they'll let you access the begging fund. That is what I think the government is setting you up for.
As you know, the government's basic other agenda -- you mentioned it -- is they want big governments all across Ontario. They don't have any more room for the Wainfleets of this world. They want big governments so they can download and unload their responsibilities because, like you said, why would another municipality, adjoining municipality, pick up a municipality that's got debt problems or got financial shortfalls? What kind of candidate, what kind of marriage would that be? Who would want to get married with that municipality?
Have you looked at alternatives? Has the government given you any ways of making up this shortfall? Have you looked at ways? Any idea as to how you're going to do it?
Mr Koopal: We don't have any ideas. The only way is to raise taxes unless they are going to give us a part of the school board taxes that they told us they're going to scrap. The province is going to look after the school boards, so maybe we can dip into that fund.
Mr Marchese: God bless.
Mr Colle: Have you had any discussions? Has the government sent you any details on the impact of the changes on your municipality in terms of the dollars and cents as a result of all the changes?
Mr Koopal: No. That is the whole trouble with this bill. I talked to Tim's office many times this week trying to find information to back things up. They haven't been able to find it either for me.
Mr Colle: Basically they're saying, "Trust us."
Mr Koopal: This meeting is to make some changes to this act, so hopefully --
Mr Colle: I thank you for bringing that forward, because I think you're speaking on behalf of so many small communities across Ontario who find themselves in the exact same circumstance you do. Thanks for coming.
Mr Marchese: Thank you, Mr Koopal, for coming. You've raised many concerns that other people have raised before too. The difference between you and Mr Augustine is that he appears to be very optimistic about finding a solution. I am less optimistic because I see the functioning of the government here and I don't see the answers coming in the way that some of you are optimistic about. You've been looking for answers and you're not getting them.
Ms Bassett has tried to reassure you about this $1-billion fund. I know that you know that it's there, at least they say it's there, but some of you don't feel that the money is going to be forthcoming even if you beg. I'm not quite sure whether or not that's really there. You're probably worried about that; is that correct?
Mr Koopal: We are worried about it, yes.
Mr Marchese: You're happy about the fact that the government has taken the education portion out of property taxes. They're happy too. In fact, when they talk about it, they say -- I remember the Minister of Municipal Affairs saying that seniors are going to be really very happy that we've done that, but he forgot to say in the same breath that, as he's taking that away, he's about to give you welfare, he's about to give you housing, he's about to give you child care, transportation and so many other things, ambulance services, nursing homes, long-term care. You're happy because your association has long advocated for this, but all of a sudden they bring to you a whole whack of other services that you're going to have to pay. How do you feel about that?
Mr Koopal: Scared. Some of the services will be provided by the region, like welfare is looked after by the region of Niagara, so that's not a direct concern to Wainfleet. As chairman of finance, I know what the financial picture looks like in Wainfleet. Even this year, we tried to keep a zero budget but it's going to be awful tough.
Mr Marchese: I'm sure it's going to get tougher as you go along.
Mr Koopal: It's going to be tougher. That is why I hope Ms Bassett's comment will be written in stone that we can tap into this $1-billion fund.
Mr Marchese: I hope you can too. Thank you for coming.
The Vice-Chair: On behalf of the committee, thank you, Mr Koopal and the township of Wainfleet for appearing here today. Have a good afternoon.
Mr Steve Gilchrist (Scarborough East): Mr Chair, just before you adjourn, a point of order. Very briefly, the clerk has been kind enough to hand out a copy of the sheet to which the presenters from the Oakville BIA referred. Mr Colle, when he made his request, characterized it as a government publication. I would suggest there is no reference anywhere on there that it was published by the government; in fact, just the opposite. It appears to be a third-party compilation, summary, of a number of bills that are currently before the Legislature. I just want the record to reflect that. Thank you.
Mr Colle: I'm just not sure. Listen, I heard from the deputant that it came from some kind of government --
Mr Gilchrist: Mr Colle, she did not say that. She did not know where she --
Mr Colle: Okay. Could she clarify where it came from then? That's all I want to know.
The Vice-Chair: We could check Hansard when it's published to see what she said, but the deputations can bring forth whatever material they wish for the committee's benefit, and that's why I asked them for a copy.
Mr Colle: It's just that Mr Gilchrist implied that somehow I was trying to --
Interjection.
Mr Colle: I just got this from the deputant. I just wanted the information. Where did it come from?
Mr Marchese: In Mr Colle's defence, he simply asked for the document that the deputant introduced for the record. She indicated it might have been a government document. We don't know. Now we have it and we're looking at it. We don't know what the source of that is.
Mr Gilchrist: I merely sought to clarify the record. Mr Colle had characterized it as a government document when he made his request. Thank you.
The Vice-Chair: All members of the committee now have a copy of this document from the deputation.
Any further business before we adjourn for our lunch? Seeing no further business, this committee is recessed for lunch. We will come back at 1:20 pm.
The committee recessed from 1155 to 1321.
BUFFALO AND FORT ERIE PUBLIC BRIDGE AUTHORITY
The Vice-Chair: Our first presentation this afternoon is the Buffalo and Fort Erie Public Bridge Authority. Before you begin, please introduce yourselves for the purposes of Hansard and then begin when you're ready.
Mr Ron Lampman: Thank you, Mr Hudak. It's Ron Lampman. I'm secretary-treasurer of the Buffalo and Fort Erie Public Bridge Authority, better known to residents of the Niagara Peninsula as the Peace Bridge. With me today I have Thomas Richardson of the law firm Sullivan, Mahoney, and we'll be doing the presentation. I believe the briefs have been distributed to all of the members of the committee and we'll proceed in accordance with our plan at the present time.
Mr Thomas Richardson: Mr Chairman, there are two booklets. The thinner one is entitled "Presentation to the Standing Committee" and the thicker one, the one with the tabs on the side, is the exhibits, which I'll refer to during the course of the presentation, if I could.
The purpose of this submission is to address two matters which do not presently appear in Bill 106 but which are directly related to the assessment of land and to municipal taxation as they affect international bridges in the province of Ontario generally, and specifically the Peace Bridge located in Fort Erie.
We wish to address two issues. The first issue is the assessment of international bridges in the province of Ontario, commencing on January 1, 1998. The second issue is outstanding tax arrears presently owed by the Peace Bridge and other international crossings to the local municipality in which the structures are located.
I know neither of these issues are in the act presently. We have, as I will indicate in a minute, an anticipation that at least one of these issues may be addressed by the government through amendments to this legislation and for that reason we wish to address you.
The second matter, the assessment and taxation, we understand is still a matter the government proposes to deal with before January 1, 1998, so we've taken this opportunity, if we might, to speak to you briefly about that as well.
I'd like to address first, then, the assessment of international bridges. By letter, dated November 8, 1996, Mr David Crombie, chair of the Who Does What advisory panel, reported to the Honourable Al Leach, Minister of Municipal Affairs and Housing. His letter is contained in tab 1 of our exhibits. I know the committee is very familiar with it. The portion dealing with international bridges and tunnels is found on page 5.
The panel acknowledged the following:
(1) Existing inconsistency in taxing practices with respect to the international structures;
(2) Problems associated with the enforcement of tax obligations. The Municipal Tax Sales Act cannot be applied to an international bridge as it falls under federal jurisdiction; and
(3) Federal cooperation is essential to enforce payment.
The panel made the following recommendations:
(1) That the rental income and bridge tolls be used to set the assessed values of the related land, buildings and bridge span or tunnel and thereby subject to full assessment of property taxation;
(2) That international bridges and tunnels remain in the commercial property class.
The recommendations of the panel have not been incorporated into Bill 106. The method of assessment and taxation of the international structures continues to be a matter of deliberation by the provincial Ministry of Municipal Affairs and Housing, the Ministry of Finance, the federal Department of Transport and the various authorities operating the international structures.
The report of the Crombie panel does not refer to the circumstances which, in the opinion of the Buffalo and Fort Erie Public Bridge Authority, should be taken into account in any determination as to how the bridge structure will be assessed.
First, the structures are not subject to taxation on the American side at all. Secondly, the facilities to house the Canada Customs and Canada immigration operations at the Peace Bridge, as is true in most other facilities, are provided without rent; that is, these facilities must be provided by the bridge if it's to operate as an international structure, but it receives no rent for those structures. So we find ourselves in the position of being taxed for a structure that we must provide for nothing.
On the American side, the reverse is true: While they do not pay any tax for the municipal structures, the federal authorities pay rent to house the American customs and American immigration facilities. I can tell you that this anomaly will become even more striking shortly.
As you may be aware, in a protocol signed by President Clinton and Prime Minister Chrétien last week, the American commercial customs operation at the Peace Bridge, that is, the portion which deals with all these transports you see going up and down the highway, is to move to Canada. We anticipate that the Americans will pay rent for their facilities in Canada; the Canadian government does not. We'll then be faced with that anomaly in terms of the taxation which I'm trying to address here today.
In addition, in the instance of the Peace Bridge, the legislation which creates the authority states that the bridge is subject to municipal assessment and taxation on the Canadian side. It also provides that the Peace Bridge must pay to the American authorities an amount equal to the amount of the municipal tax paid in Canada. These are specific provisions in the Peace Bridge legislation which do not apply to other bridges along the Niagara River. Consequently, the tax liability of the Peace Bridge must be doubled in order to determine the true impact on the finances of the bridge authority.
The provisions of the Buffalo and Fort Erie Public Bridge Authority Act are not, however, the only inequity, as referred to by Mr Crombie. The International Bridges Municipal Payments Act, which I've included at tab 4, provides a specific method of calculating taxes which applies to the three bridges of the Niagara Falls Bridge Commission and to the Blue Water Bridge in Sarnia. The bridges of the Niagara Falls Bridge Commission, as you'll be aware, are the Queenston-Lewiston Bridge, the lower bridge or the Whirlpool Rapids Bridge, and the Rainbow Bridge. The tax on all of those bridges are regulated by this act passed in 1981. In the schedule, you will find there are formulas which fix the amount of assessment for taxation purposes and how the amounts will increase. The results are shown in tab 5 and I wish to refer to those for a moment.
In 1995, the Queenston-Lewiston Bridge, which is a bridge, I would say, 30 years younger than the Peace Bridge, paid taxes of $133,000. The Peace Bridge has negotiated an amount with the town of Fort Erie at $296,000. If we paid the amount of taxation generated by the assessment proposed by the province, we would have paid $1,073,000. That is 10 times what is being paid on a bridge half the age of the Peace Bridge down the river.
In 1996, with the implementation of market value throughout the Niagara region, the Queenston-Lewiston Bridge tax went down to $80,000. The Peace Bridge has paid $241,000 to date, and on our assessment we would have paid $830,000. The actual assessment for those years, as I'll indicate to you in a moment, is the subject of appeals before the Ontario Municipal Board, but I use those figures to indicate the inequity which applies locally, where one of the four bridges used in international trade on the Niagara River is assessed to pay taxes substantially higher than those that are fixed by provincial legislation in the International Bridges Municipal Payments Act.
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It has been the position of the international crossings represented by the Niagara Falls Bridge Commission, the Blue Water Bridge Authority, the International Bridge Authority in Sault Ste Marie and the Buffalo and Fort Erie Public Bridge Authority that all of the structures represented by these authorities should be included within this International Bridges Municipal Payments Act. Only in this way will the Peace Bridge then be on an equal footing with its three sister bridges lying downriver on the Niagara River as well as with the Blue Water Bridge in Port Huron and the International Bridge at the Sault.
The Buffalo and Fort Erie Public Bridge Authority agrees with the statement of Mr Crombie that there are inconsistencies in taxing practices which cause concern for both municipalities and bridge authorities. Any resolution, in so far as the Peace Bridge is concerned, must also take into account the special circumstances of the legislation which created the Buffalo and Fort Erie Public Bridge Authority and which obligates the authority to pay to American authorities an amount equal to the taxation imposed on the Canadian side. To our knowledge, this provision is not applicable to any other international crossing in Ontario.
The Buffalo and Fort Erie Public Bridge Authority also acknowledges that the proposal to include the structures of the commissions and authorities named above in the International Bridges Municipal Payments Act may not provide a province-wide solution. If the government is not prepared to pursue that resolution then we strongly urge that the industry be consulted at length before legislation is introduced to address the assessment and taxation of these international structures. These structures play a major role in the international trade between Canada and the United States. Any resolution of these issues concerning assessment and tax, we submit, must take into account the vital role which these structures play.
I'd like to provide to you some statistics with respect to the Peace Bridge to exemplify that vital role played by these structures. The Peace Bridge was constructed and is maintained with no public funds. The Buffalo and Fort Erie Public Bridge Authority is a non-profit corporation and must fund its work through the issuance of bonds and the payment of those bonds through toll and rental revenues. The Peace Bridge represents, if I might, a form of privatization that's now over 60 years old; privatization in the sense that a public bridge is provided, as you see in the name of the authority itself, and maintained without government funds of any kind.
The Peace Bridge is a vital international link between the United States and Canada. The Peace Bridge is one of the busiest Canada-US border crossings, second only to the Detroit-Windsor border crossing.
According to the Assessment of Border Crossings and Transportation Corridors for North American Trade, a report to the American Congress in 1992, more than $20.8 billion worth of trade crosses the Peace Bridge each year. I've included the page from that report at tab 6. That report was dated 1992. It was projected that by the end of 1996 the trade would increase to $30 billion annually or more than $80 million per day crossing that bridge.
The total value of land trade across the border between Canada and the United States in 1992 was $150.3 billion. This represents 71.4% of the total North American trade between Canada, the United States and Mexico. Of the $150.3 billion in trade which crossed the Canada-US border, $104.4 billion, or 69.4% of the Canada-US trade, crossed in Ontario. Ontario represents almost 50% of all of the North American land trade.
In 1992, $35.8 billion worth of trade, or 23% of all land trade, crossed on the Niagara Frontier; that is, the four bridges that I've referred to. This amount represents 16.9% of the total North American land trade. Of the $35.8 billion worth of trade, $20.8 billion, or 58%, crossed at the Peace Bridge. The trade crossing the Peace Bridge represents 13.8% of all land trade across the Canada-US border.
In 1996, the Peace Bridge carried 61.6% of all commercial traffic on the Niagara Frontier. In other words, our share is increasing from the figures we've given you in tab 6. In 1996 alone, the commercial traffic increased by 5.3%; between 1990 and the end of 1996, commercial traffic had increased by 43%. In 1996, we estimate 1.207 million trucks will use the Peace Bridge. We estimate that this volume represents the $30 billion which was projected back in 1993.
In 1992, the Niagara Frontier US-Canada Bridge Study was prepared by Parsons Brinckerhoff for Transport Canada, the Ministry of Transportation for Ontario, the New York State Department of Transportation and the New York State Thruway Authority. The final report made the following conclusions:
"The recent economic growth of the Niagara Frontier is linked very closely with international commerce. Continuing economic growth is tied to accessibility and reasonable travel times across the border and on the regional highway network serving the bridges.
"Several factors related to recent growth have had significant influences on bridge traffic volumes. These factors include:
"The United States-Canada free trade agreement;
"The continued rapid growth of Toronto and its surrounding Metro area that has stimulated economic development activity in southern Ontario and western New York;
"Regulatory reform in the transportation industry; and
"Consumer price differentials."
In the last five years, the Peace Bridge has expended nearly $75 million on capital projects. Two of these projects were the commercial vehicle processing centre and the Canada Customs facility. Both were designed to expedite the flow of commercial trucks across the bridge. It has recently been announced that the American Customs commercial facility will be moved to Canadian soil for the same reason.
The Peace Bridge has recently announced that it will twin the facility by the construction of a second span, thereby increasing its capacity from three lanes to six lanes. Provincial traffic projections indicate that this capacity will be required as early as the year 2001; that is, four years from now. The present estimate of the cost to twin the bridge is $64.5 million. An additional $17.1 million is to be spent redecking the existing structure.
In determining the method of assessment and taxation of the international bridges, there must be recognition of the important role which these structures play. The Peace Bridge is a non-profit corporation providing a vital link between Canada and the United States. The method of assessment and municipal taxation imposed upon it will play a major role in determining whether the Peace Bridge authority can meet the demands anticipated to be made upon it.
Our request to the committee today is this: That before any legislation is introduced with respect to the assessment and taxation of international bridges and tunnels, members of the industry as well as the federal department of transport be consulted in order to ensure that the legislation is fair to the authorities who are attempting to deliver a public service without publicly funded cost.
With respect to tax arrears, I'd like to make these brief submissions. As acknowledged in the report of Mr Crombie's panel, the collection of tax arrears from international bridge structures is problematic. Tab 7 is a news clipping taken from a St Catharines newspaper indicating that the township of Edwardsburgh recently wrote off nearly $1 million in tax arrears as it was incapable of collecting those tax arrears from the Ogdensburg Bridge.
In Fort Erie, the Peace Bridge authority and the town of Fort Erie historically entered into an agreement each year fixing the amount of taxation. For the years 1956 through 1976, these agreements were authorized by provincial legislation. I have included one example at tab 8. This is the last act that was passed as the Town of Fort Erie Act. The most recent Town of Fort Erie Act set out the method of establishing taxation for the years 1970 to 1976. With the expiration of this legislation, the town and the bridge authority continued to negotiate agreements up to and including 1994. At tab 9 I've included the agreement for 1994 which reflects the type of agreement entered into in previous years.
However, the assessment commissioner has indicated that the agreements, without statutory authority, are unlawful. Consequently, the Peace Bridge authority has been forced to appeal its assessment for the years 1993 through 1997 because of the tax implications which I set out earlier in tab 5. The Peace Bridge authority and the town have agreed on the amount of taxation which should be paid for the years 1993, 1994 and 1995. Agreement has yet to be reached with respect to 1996 and 1997. However, without the agreement of the regional assessment commissioner, the agreements between the town and the bridge authority are of no effect.
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Consequently, the bridge authority and the town of Fort Erie are facing lengthy hearings before the Ontario Municipal Board. In addition, the method of assessment changed in 1996 with the imposition of market value, thereby necessitating consideration of assessment for 1993, 1994 and 1995 under one assessment regime and for the years 1996 and 1997 under a separate assessment regime. As the committee is aware, Bill 106 will then bring in a new assessment regime starting January 1, 1998.
The town of Fort Erie has indicated it is amenable to seeking a statutory authority to negotiate the amount of taxation to be imposed for these years. The resolution of the town council is found at tab 10.
We believe the government will shortly bring forward a proposal which would include such a provision as an amendment to Bill 106 applicable to the Peace Bridge and other international structures. As noted earlier at tab 5, the Peace Bridge has for many years faced the inequity of being excluded from the International Bridges Municipal Payments Act. The negotiated settlements with the town have meant that the tax payments actually made by the Peace Bridge are only two to three times greater than that paid by the Niagara Falls Bridge Commission on the Queenston-Lewiston Bridge rather than the 10 times greater which is shown in our chart.
This legislation is urgently required in order to permit the town and the bridge authority to resolve those outstanding arrears. For this reason, we are requesting the committee's support to amendments which, we understand, may shortly be submitted to you by the government. Thank you for permitting me to make this submission.
The Vice-Chair: Perfect timing. Mr Lampman, we have about 30 seconds left. Do you have any final comments to make?
Mr Lampman: No, I don't, Mr Chairman.
The Vice-Chair: That exhausts the time for this presentation, gentlemen, I regret; no questions from the committee. Thank you very much for your presentation and we will read through the booklet as well.
TOWN OF HUNTSVILLE
The Vice-Chair: The next deputation is the corporation of the town of Huntsville. Gentlemen, welcome to the standing committee on finance and economic affairs.
Mr Michael Garvey: Good afternoon, Mr Hudak, committee members and other attendees. My name is Michael Garvey. You should have before you a package of material that we have provided. There are two tabs. At tab 1 you'll see there's reference to the individuals attending, one being myself and one being Don Kerr, who is the director of finance and the treasurer for the town of Huntsville. At tab 2 you'll find the submission which I'll be making to you this afternoon.
First of all, we'd both like to thank you for the opportunity to attend before you today in order to make submissions. By way of background, I would indicate that the town of Huntsville, as I'm sure you know, is situated in the Muskoka area of the province. It is the most populous of the six area municipalities which make up the district municipality of Muskoka and it has a full-time population of approximately 18,000, which is approximately 35% of the entire district's population.
From a land area perspective, Huntsville covers an area of almost 69,000 hectares -- that translates to 170,000-odd acres -- and is the second-largest of the six area municipalities in the district. To give you some sense of the size, the land area of Huntsville is not much smaller than the areas covered by some of the regional municipalities within southern Ontario and is larger than that covered by the municipality of Metropolitan Toronto.
In the case of the district municipality of Muskoka itself, like other upper-tier municipalities, it too covers a very large area. Due in part to this fact, and what I suggest is important to note for the purposes of this submission, the district also has significant geographic and demographic differences within its limits. In this regard, it is different from regional municipalities within the greater Toronto area, which are much more homogeneous in terms of their current land use, their expected future land uses and population distribution. As an example, the downtown areas of the two next most populated lower-tier municipalities in the district, those being Bracebridge and Gravenhurst, are between 40 and 50 kilometres from the downtown area of Huntsville, which happens to be the next closest significant urban area encountered when travelling north along the highway that connects the two, Highway 11, from Bracebridge. This 40-to-50-kilometre stretch of highway is, for the most part, through undeveloped forested area and creates a significant separation or buffer between the urban areas.
Unlike undeveloped areas within the greater Toronto area, these undeveloped areas will not be developed or infilled in a way which would effectively link Huntsville to these other centres and create a more homogeneous development pattern between them. The topography, the existence of the Canadian Shield and the sheer distance are factors which work against this occurring. The separation and distinctions between these communities will inevitably continue. Just to give you another sense, I can tell you that it's a long-distance call from Huntsville to either Bracebridge or Gravenhurst. So I think that gives some sense as to the distance between the two.
As a result of these circumstances, the delivery of services across existing lower-tier municipal boundaries is often impractical, if not impossible. Given the physical separations which do exist between the more heavily populated pockets within the district, and having regard for the clear thrust of the proposed legislation to create local-level decision-making in the areas of municipal assessment and taxation, we would submit that it is important to ask, what is a "locality," certainly in the context of Muskoka, and perhaps very well in other portions of the province.
The final point I'd make by way of background is that based upon the 1996 assessment for the 1997 taxation year, Huntsville has the second-largest total assessment base and the largest commercial assessment base of the area municipalities which make up Muskoka. These facts, coupled with the fact that Huntsville has a diverse range of property types, means that Huntsville will likely be significantly affected by the proposed legislation, including the regulations, some of which we now have in draft form.
Making some general observations with regard to Bill 106, we know that it obviously contemplates a significant revision to the province's property assessment and taxation systems.
It is recognized at this time, in the absence of certain of the regulations proposed to be made under the final product of the draft legislation, it is somewhat difficult to assess with precision what the actual final impacts and implications will be for not only taxpayers but also municipalities. However, the direction proposed by the draft legislation is clear, as are many of its details, and it is for that reason we have asked to make this submission.
At the outset, I would indicate that the town of Huntsville is generally supportive of the legislative amendments proposed in Bill 106. The town concurs that there is a need for change with regard to property assessment and taxation as the system currently in place in the province is outdated in many respects. The creation of a single consistent approach across the province with respect to the assessment of property is long overdue.
Most important, the principle of providing local municipal governments with more decision-making powers vis-à-vis assessment and taxation is both logical and appropriate. Allowing municipal governments, which have the most direct links with taxpayers, to address the concerns and priorities of their constituents through the municipal taxation system, and being able to determine what the appropriate distribution of tax liabilities should be within a municipality, is a positive step in the right direction.
Notwithstanding the town's general support for the fundamental principle of facilitating local decision-making and other principles which underpin the proposed legislation, there are certain aspects of Bill 106 which the town respectfully suggests should be modified in order to better implement the principle of local decision-making and to improve the legislation.
The town's primary concern with respect to the proposed legislation relates to the distinction made between upper-tier and lower-tier municipalities with regard to several aspects. As well, the proposed legislation has implications for business improvement areas, one of which has been created within the town of Huntsville, so this too is a concern.
Beginning first with the upper-tier/lower-tier distinction, I'd like to touch upon the issue of establishing tax ratios. As I have noted, the town of Huntsville is within the district of Muskoka and therefore it is a lower-tier municipality. Like all lower-tier municipalities in the province, the town of Huntsville has for years set mill rates based upon the forecasted needs and expectations of the town and its residents and obviously in doing so has had regard for the requirement of the 15% differential between the residential and commercial/industrial rates of tax.
While the difference which must now exist between residential and commercial/industrial tax rates is statutorily mandated, the proposed legislation would have the effect of creating a degree of flexibility with respect to both the actual number of tax rates created and the differences or variations that can exist between them.
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The town of Huntsville agrees that the discretion to make decisions utilizing this flexibility should rest, to a significant extent, with local municipal governments. In our respectful submission, given the municipal makeup within the district of Muskoka and the physical and demographic characteristics described earlier, the level of government in the district having the decision-making power to determine the variations between tax rates, ie the tax ratios, should be the lower tier.
We appreciate that the potential for lower-tier municipalities to have this authority does exist in the proposed legislation. The draft legislation proposes that the establishment of tax ratios be done by an upper-tier municipality, except in cases where a bylaw delegating such powers to all lower-tier municipalities has been passed by the upper-tier municipality; second, all lower-tier municipalities consent to the delegation proposed by such bylaw; and third, a regulation has been passed designating the upper-tier municipality as one capable of passing a bylaw delegating the power to establish tax ratios to lower-tier municipalities.
We also note that, as drafted, the proposed legislation would require that this delegation to lower-tier municipalities take place on an annual basis. In other words, a delegation in one taxation year would not guarantee a delegation for the following year or years.
In the absence of a delegation of the tax ratio establishing power, lower-tier municipalities, although capable of creating their own tax rates, would have those tax rates effectively determined by the upper-tier municipality establishing the tax ratios. Consequently, it would be the councils of upper-tier municipalities which would, for each lower-tier municipality, determine how the tax liability is to be apportioned among the various classes of property. This, we submit, does not fully achieve one of the desired goals of the proposed legislation in that it has the potential to lessen the accountability of lower-tier municipal politicians and councils to their taxpayers.
While there would be elected representatives from Huntsville on district council, those members currently make up only four of the 23 members of district council. Thus, the tax liability between classes of property in Huntsville and the resulting tax rates imposed by the lower-tier municipalities would not be created solely by elected officials from Huntsville. In fact, Huntsville representatives on district council could be opposed to, and have voted against, a tax ratio approved by the district council but because of the composition of the district council, that would be defeated.
As well, recognizing that the assessment bases of various municipalities within a tiered structure can be quite different in terms of the splits between, and amount of assessment base attributable to, the various property classes, we would suggest that it would be more appropriate for lower-tier municipalities to determine how tax liability is to be distributed among the property classes within their own jurisdictions.
In this regard, we would also note that in the official statements released when the draft legislation was introduced in January, and in the materials which were publicly released on April 7 in Toronto at the outset of these standing committee hearings, there were references to the proposed legislation making local decision-makers more accountable to taxpayers and to creating choices for local governments. Again, the question arises, particularly in the district of Muskoka, as I have alluded to, what is "local"?
In this regard, it is interesting to note that the current Municipal Act itself seems to attach some significance to the word "local." It currently defines the term "local municipality" as a "city, town, village and township," in other words, a lower-tier municipality. While Bill 106 proposes to introduce new definitions to the Municipal Act for the purposes of its amendments, the current in-force version of the Municipal Act, at least as it pertains to municipal taxes, refers throughout to "local municipalities."
In our respectful submission, if one objective of the proposed legislation is to provide local governments with certain decision-making powers -- and that clearly is an objective -- then serious consideration should be given to having the lower-tier municipalities be the recipients of those powers, including the ability to determine tax ratios. We believe this to be particularly so within the district of Muskoka, having regard for the lay of the land, as I've described earlier.
Turning to the potential for the delegation of authority to establish ratios, the town's concern with respect to the approach proposed is that before the town could obtain any ability to establish the various tax ratios on its own, three things must happen. I identified them briefly earlier. There is first the need for an upper-tier delegating bylaw; there would, second, need to be the consent of the lower-tier municipalities to that bylaw; and then, third, there would need to be the regulation from the province designating the upper-tier municipality as one having the ability to delegate the tax ratio establishing power.
In the town's respectful submission, the process by which a lower-tier municipality might obtain the ability to establish its tax ratios is too onerous and restrictive and could be simplified in a way which would assist in achieving the desired goal of having matters controlled more at the local level. Thus, in the town's submission, amendments to the draft legislation would facilitate more accountable decision-making at the local level. We believe that there may areas within the province, and we submit the district municipality of Muskoka is one such area, where lower-tier municipalities should have an as-of-right power to establish tax ratios.
The existence of numerous pieces of municipally related legislation with regard to regional municipalities, district municipalities and other municipalities is unquestionable evidence that not all areas of the province should necessarily be treated in the same manner. For a number of potential reasons, treating certain areas of the province and certain municipalities within them in different ways could be warranted. In this regard, we would ask that legislative amendments be considered and introduced which would allow lower-tier municipalities within the district of Muskoka, if they choose, to determine their own tax ratios.
Turning to the second topic within the upper-tier/lower-tier distinction, I would refer to the phase-in and tax deferral provisions that are contemplated. The proposed legislation would allow upper-tier municipalities to pass bylaws with respect to the phasing in of the tax increases or decreases flowing from assessment-related changes. Currently, lower-tier municipalities have the authority to pass bylaws relating to the phasing in of tax increases or decreases resulting from a change in assessment. As the town of Huntsville has a relatively current assessment, the proposed phase-in provisions may not have significant implications, but at this point it's difficult to know with absolute certainty.
However, recognizing the intention of the legislation to have decisions made at the local level and to have locally elected officials accountable for such decisions, we would recommend that lower-tier municipalities, at least within the district of Muskoka, be given the power to pass bylaws relating to phase-in programs.
Our comments in this regard are equally applicable to the power to pass bylaws deferring taxes for low-income seniors and low-income persons with disabilities where there are assessment-related tax increases.
Turning to the second major heading, the issue of business improvement areas, we would note that within municipalities such as the town of Huntsville the role of a business improvement area and related board of management is significant. Unlike other municipalities within the province with much larger and more diverse commercial presences, the downtown commercial enterprises, relatively speaking, are more significant in urban centres such as Huntsville, as they are the primary commercial nodes.
In accordance with the proposed elimination of the business occupancy tax, it is proposed that there be consequential changes to the Municipal Act provisions pertaining to business improvement areas. Whereas the legislation currently authorizes the levying of special charges upon persons in the area assessed for business assessment, the elimination of business assessment will change this. The proposed legislation would have the levying of the special charges made upon the rateable property in the area that is in a prescribed business property class. Consequently, the levying of special charges in relation to business improvement areas is to be imposed upon landowners, as opposed to persons carrying on businesses.
While the legislation contemplates amendments which would allow landowners to sit on BIA boards of management, one must recognize that it is the business operators, who are not always the landowners and often have leasehold interests, who rely upon the benefits derived from the existence of a business improvement area and its promotion in the community. It is possible that landowners may not be particularly interested in the activity within a business improvement area or may be absent landlords not living in the town, the province or perhaps even the country. To ensure that the continued existence and operation of business improvement areas are not undermined, continuing to have business operators as the parties required to pay special charges would be preferred.
While we recognize that leases existing between landowners and business operators may allow for the passing on of such special charges to the business operator, that may not always be the case.
The Acting Chair (Mr E.J. Douglas Rollins): Excuse me, Mr Garvey, you've got about one minute to wrap up.
Mr Garvey: Thank you, sir. Accordingly, the town would request that consideration be given to amendments which would effectively maintain the status quo of having businesses pay special charges levied in connection with an existing business improvement area, as opposed to land owners.
The final two topics which are addressed in the submission relate to managed forest property classes, and we note that the draft regulation that was introduced on April 7 indicated that there had not yet been a final determination made with respect to managed forests. As you can appreciate, in Huntsville there are significant forested areas, so the town certainly looks forward to receiving the final proposed contents of that regulation.
With regard to the assessment function, the announcement has been made that that function will, as of January 1, 1998, be transferred to the local level. We understand that the transition teams are working on that aspect right now and we believe the involvement of lower-tier municipalities is important to that process. We'll continue to monitor that.
This concludes the presentation. We thank you for the opportunity to appear before you.
The Acting Chair: We thank you for presenting. You've used up your time so there won't be any time for questions, but thank you very much for the presentation.
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TOWNSHIP OF BRUCE
The Acting Chair: At this time we call the deputation for 2 o'clock from Bruce township.
Mr Howard Ribey: First I'd like to introduce myself. I'm Howard Ribey. I'm the reeve of Bruce township. With me today is Bob Waram, our clerk. We have a submission to make. We also have one from the county of Bruce in support of our submission and we'll just leave it with you. We hope there will be some time for questions at the end.
On behalf of Bruce township council, I would like to thank you for the opportunity to appear before you today to make our rather unique situation known to your committee.
Bruce township is a small community on the shores of Lake Huron with a population of approximately 1,700 people. Our municipality is rather unique in that it receives about 26% of its total own-purpose revenues under the provisions of the Power Corporation Act.
We are concerned for all the latest changes to municipal financing and how they will affect our municipality. We are trying to understand the impact of the changes, and there certainly are a variety of interpretations available.
Section 68 of Bill 106 proposes to change the Power Corporation Act, and we would like to suggest: (a) an amendment be made to the draft legislation to exempt us from the legislation currently being proposed until impacts are understood; or (b) senior ministry staff now establish a working group to consult with the authors and others affected to explain the issues and the impacts to us and help to work to an appropriate solution; possibly an amendment to this or future legislation.
Copies of section 68 of Bill 106 and the corresponding sections of the Power Corporation Act are attached.
In the background, the current Power Corporation Act provides for payments to the host municipality at full commercial rates for all levied taxes -- that's the school, county and local. It currently provides for property assessment and business assessment of 60% of the property value. The Power Corporation Act fixes the property assessment on generating stations to $86.11 a square metre and a maximum payment not to exceed 50% of total tax payments levied from all purposes. This 50% amount includes the gross receipt tax levied.
In Bruce township the 50% rule applies because of the very large size of Ontario Hydro assessment compared to all the other assessment in the township, and you can look at the attachments in the back.
The township is required to pay the county their share of Ontario Hydro PIL, payment in lieu, based on the percentage of the county levy to the total tax levy. The township benefits from the education tax levy, as we currently retain the education portion of the payment in lieu for township purposes.
The act requires no payment of the school portion to the school board, so when we collect approximately $1.5 million for taxes -- all purposes including gross receipt taxes -- Ontario Hydro pays 50% of this amount to the township: $750,000, as a payment in lieu. We in turn, according to the current act, pay the county their share, approximately 13% or $100,000, and we retain the balance of approximately $650,000. The township's share in 1996 was $665,000. Note the township's own share of taxation was $345,000 in 1996 and total sources of revenue were $2,515,000. So our share of the PIL represents 192% of own-purpose taxation and 26% of total township revenues.
Issues related to section 68 of Bill 106. There are four issues of key importance which are not addressed properly in this legislation: The major change appears to be the removal of the business assessment of 60%; the 50% rule; $86.11 a square metre fixed assessment appears unchanged; and Bill 106 continues to refer to the education portion. We interpret that to mean that whatever rate the province asks us to levy on commercial property for education purposes would still be part of the payment-in-lieu calculation and the township would still retain this portion. We would like to know what amount the province plans to levy on commercial properties and would we still retain the education levy under the Power Corporation Act?
We question the logic to retain the 50% rule and the $86.11 a square metre for Ontario Hydro assessment when this would not apply to any other business. No other industry enjoys the benefit of a 50% rule and we question the fairness of the 50% rule for one industry. If the Bruce nuclear power development operation was in a larger municipality, they would pay significantly larger amounts to the host municipality. The 50% rule is becoming more important to us now as we appear to be losing the benefits we received from the education portion of the payment in lieu.
The $86.11-per-square-metre assessment on generating facilities is equivalent to $8 per square foot, and the calculation is only done on the ground floor area. These specially engineered buildings with their special features and high ceilings are six to eight stories in height and valued at about one tenth the value of an average bungalow. A single-storey bungalow would be valued at about $80 per square foot based on one floor. A generating station is valued on $8 a square foot as if it only has one floor, and in reality it has many more.
At the Bruce nuclear power development the ground floor area of the generating facilities is 2,603,780 square feet and is valued at $8 a square foot, or $20,830,240. We estimated the cost of these buildings would be approximately $2 billion and this would equate to an assessment of 1% of the cost.
We are not looking to make a huge tax grab but to protect the revenue sources we currently receive. While we believe the current system is not perfect, we believe it is much fairer to our municipality than what we understand is being proposed.
How do we collect the lost revenues on farm land, business taxes and payment in lieu? We are not comfortable with the long-term outlook and a short-term provincial commitment to pay the shortfalls. We also expect large local tax increases from the county as they pay substantially more for welfare, social programs and other downloading.
Our concerns are that the provincial savings will not be as much as the local increases, particularly for the farm tax rebate program, the removal of education tax, the effect of the Power Corporation Act, payment in lieu and the loss of business assessment.
We understand (a) our farm lands are assessed at $10 million and will only have to pay on one quarter of their assessment; (b) we will not collect gross receipts tax; (c) we will not collect education taxes on residential; and (d) we will not collect business taxes. This all has a double effect on our township as it would reduce Hydro payments in lieu which are limited to 50% of our tax revenues. Is this fair?
This is further complicated by policing costs, assessment costs and other downloading. The township is unique as a farm community, with 1,700 residents and a 4,500-person workforce at the Bruce nuclear power development Ontario Hydro site. The demands of this workforce and other traffic to the Bruce nuclear power development to provide services to the site put a lot of demands on the roads and policing, as this workforce and other traffic all come in and out of our township every day. Is it fair that they pay a decreasing share of costs while our costs go up for policing, roads and assessment changes?
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In summary, we are here today to raise awareness of our issues and their potential impacts on our community. We had hoped to be able to draft an amendment to the proposed legislation to present to you today for consideration. However, no one clearly understands what is being proposed as it affects us, and we have too many unanswered questions to be able to offer a solution. This is because we do not understand and cannot clearly assess the impact.
All we could suggest today is (a) that an amendment be made to the draft legislation to exempt us from the legislation currently being proposed until impacts are understood; or (b) that senior ministry staff now establish a working group to consult with the authors and others affected to explain the issues and their impacts to us and help to work to an appropriate solution; possibly an amendment to this or future legislation.
We have attached as schedules our current assessment summary and some possible effects to our municipal revenues. We would welcome any questions you might have. All of this is respectfully submitted. Thank you.
The Vice-Chair: That leave us about three minutes per caucus for questions, beginning with the official opposition.
Mr Kwinter: Thank you very much for your presentation. You raise a very interesting situation where you only have 1,700 people who you can actually tax, and without the tax that you get from the Bruce generating station, you're really in a big problem.
Mr Ribey: That's right.
Mr Kwinter: We've already had another anomaly, and that is the offshore gas lines into the lake. I think there's a provision in the act that allows for new categories to be established. The problem I see in this is that you're a unique situation, but there are probably other unique situations, and then you get some real problems in being fair and equitable.
At the present time you depend for a great deal of your revenue under the Power Corporation Act, and with this new situation you may not have access to that. They may be assessed differently, and because you've got this whole business of the 50% of your tax revenues, you have a problem.
I don't have an answer for you, quite frankly. It's going to be fairly complex to come up with something that's going to be fair and equitable and is not going to be setting a precedent for a lot of other people to say: "Why them? Why not me? We have another situation where we have a one-industry town and this one industry is the thing that really creates our financial base, so we need an exemption as well."
I wish I could offer you some suggestions but I really can't at this moment other than to share your concerns on the fact that with the reduction of the business occupancy tax and with the removal of the educational portion from the municipal tax rolls and putting it on to the province, you are going to have some problems.
Mr Ribey: We're quite aware of it.
Mr Kwinter: Hopefully, the government members will listen to it and come up with some resolution to address it. I thank you for sharing that with us.
Mr Ribey: If I could just make one comment, there are only two other municipalities in Ontario that are in the same situation we are, that haven't got nearly enough assessment to recoup what Ontario Hydro would have to pay if they were totally taxed as any other industry is, one being Mattawa. The other one escapes us right now, but I understand it's up on the Ottawa River, just east of Ottawa. There are only the three municipalities in the province where this has the same effect.
Mr Marchese: Thank you both for coming and making this presentation. It's always important to hear from a variety of different groups that come before the committee because each group brings their own particular perception and problem. You've indicated here, "We are trying to understand the impact of the changes, and there certainly are a variety of interpretations available." That's part of the problem really. Have you contacted your MPP or ministry people or the Ministry of Finance or Municipal Affairs or anyone to get a sense of what some of those interpretations might be?
Mr Bob Waram: We have actually written to the Honourable Norm Sterling, and Municipal Affairs, the Honourable Al Leach. We've sent copies to our MPP. We've sent copies to AMO. We've circulated fairly widely but we haven't got any answers back yet. Everybody we talked to, including the ministry staff, aren't sure what the interpretations are of this.
Mr Marchese: But you got some letter that says, "We received your concerns; we don't have an answer yet," or did you not get any reply at all?
Mr Waram: We haven't got a response to letters we sent yet.
Mr Marchese: I certainly support parts of your recommendations. We've been asking for the impact studies. You weren't here this morning. Ms Basset said there's a reason why they're withholding those studies. We don't clearly understand why. We think we should see them, because those impact studies might relate to a whole sector of the population or municipalities or individuals. People should see them because I think we would have a better understanding of them.
I'm not sure whether it might address your particular situation but I think we need information. I think we have a duty as a government, or the various people in charge of this issue, to respond to these concerns.
Mr Waram: That's what we're hoping for, yes.
Mr Marchese: You're hoping you might get an audience from someone here today or someone responding back to this after --
Mr Waram: We've asked for audiences with two different ministries, yes.
Mr Marchese: You haven't gotten that?
Mr Waram: That's correct.
Mr Marchese: I think it's clear that you, as a municipality, have a problem. They got rid of the education portion out of property taxes for a reason, but they're now going to impose other problems, which means you'll still have the same burden, if not more, but with the education levy taken out, some of that funding that you normally would have had is taken away. Not only do you have that portion eliminated but you're going to have another burden to bear without possibly any support whatsoever. You have reason to worry.
Mr Gilchrist: Thank you, gentlemen, for coming forth here today. I can't speak to the correspondence you may have sent to others, but I do want to give you some comfort. In fact the issue facing you and the other two townships in Ontario that are in a similar situation has been discussed right at the cabinet level these last couple of weeks. We've had a few other things taking place at Queen's Park that have slowed some of the cabinet discussions, but in all seriousness, the issue of the payments in lieu is before them.
Hydro itself has come forward and said that it's very conscious of this and it wants the payments to be maintained. Right now the question is how the mechanism is changed. Do we change the 50% rule or just make a special exemption for those three municipalities? Given that it's such a small percentage of the 815 municipalities in Ontario that are affected, it may be easier to make an exemption that way.
You raised another question in your presentation on the second page. As timely as just two hours ago, a press release has just gone out that the business education tax review panel has just been put together by the minister, chaired by Cedric Ritchie, who is of course the former president of the Bank of Nova Scotia, and a number of other individuals. They will be going out and holding consultations and looking at the various models to address specifically your questions about how the education aspect of commercial assessments impacts your community and the others across Ontario.
I will certainly undertake to forward a copy of your presentation to them, but you can rest assured that as they get up and running they will be sending out an invitation to municipalities across Ontario. Again, you may wish to refine your comments specifically to that task, but I'll make sure that this gets forwarded to them as well, I'm sure well before anything changes at the start of next year.
Their first meeting is going to be tomorrow. They're heading off immediately and there will be public consultations and certainly consultation with municipalities as part of their work. I appreciate you raising these questions with us here today.
The Vice-Chair: Thank you, gentlemen, on behalf of the committee for your presentation. I'm pleased you had this chance to raise a unique issue that we hadn't heard. The committee will take it into consideration. Thanks also for the trip down. Have a safe trip on your way back home.
1420
The scheduled 2:20 appointment is Edward Feirtag. Mr Feirtag cannot attend. I have a suggestion to the committee. I'd like their advice on this. I've been approached by three people in the gathering today who've asked for about five minutes to make their own presentations. My suggestion is to allow them those five minutes, but without questions, because members have to get back to their ridings.
Mr Gilchrist: Do you need a motion?
The Vice-Chair: I would appreciate a motion to that effect.
Mr Gilchrist: I move that we grant five minutes' hearing time to anyone in the assembly who has expressed an interest in appearing.
The Vice-Chair: The motion's on the floor. I need all-party agreement. Are all parties agreed? Agreed.
To make it clear, there are three individuals by the names of Richard Bell, Nick Mileni and Coleman Bagu, in that order. That's part of your motion, Mr Gilchrist?
Mr Gilchrist: That will be fine. Thank you.
The Vice-Chair: All-party consent? Very good.
RICHARD BELL
The Vice-Chair: Mr Bell first, followed by Mr Mileni and then Mr Bagu. I'll give you five minutes' time. In the interest of the members getting back to their ridings in time, we won't have any questions about your presentations. Just get your feelings on the record.
Mr Richard Bell: If I read real fast within the five minutes, could anybody ask me a question?
Interjections: Sure.
Mr Bell: "The finance committee re Bill 106, the Fair Municipal Finance Act.
"Dear members:
"Please send me all the necessary information regarding the proposed changes that could affect me in any way regarding my assessment and the resulting taxes. I do not at all understand the methods used. As a result, I find it very hard to comment. The changes that are coming from all levels of government are in a sense made to look like the taxpayer is the person who will get the break or reduction or whatever you want to call it.
"My innermost feeling tells me to ask what this all means to me if the changes made result in an increase. Will it pull back in the delivery of services? Is this really fair to me? I have observed many large industries close down in the Niagara region. The tax burden has shifted, with reduced spending, reduced services, the hospital dilemma, but our population has increased. To me, we need some of these services more than ever, but can we count on them?
"I believe land in unserviced areas that had a direct tax increase from market value assessment was unfair. As you might wonder why I should say this, I have a rural lot and the taxes went up two and a half times. Many people are forced to drive out of the region to work, with hours either on the highway or stopped because of traffic etc. They did not even get a chance to really enjoy the comforts of their home or family. Should we have a system that is the same all over the province? I do not know or can fully respond at this time because until I have the information with a proper explanation, it's very tough to come to a conclusion.
"Transit, access to education, subsidies, grants and a number of other ways in which our province was set up to run should all be factored when tax reforms are being considered. I will conclude and thank you for allowing me to voice my concerns."
Signed myself and my address.
I must say in this area also, if you went around the lake, we have inflated values on some properties because they're very desirable areas; some of them are. The American people come in, they have a dollar that's worth 40% more, so you have inflated values. If you happen to be a person who's been living there for many years, all of a sudden your property taxes were driven up, and you want to stay there.
I heard a gentleman earlier today say that maybe people should test it on the market. I think that's totally ridiculous. I think a man or a family who's been there, especially for many years, should have the opportunity to remain there and not be forced to pay these exorbitant taxes just because other people are willing to pay premiums to live there. I'll conclude with that. Thank you very much. I appreciate being allowed the time.
The Vice-Chair: Very good, Mr Bell, I'm glad you had the time to present. That will not leave us enough time in the five minutes for questions. Actually, the original motion said no questions.
Mr Bell: I will follow this up. I told the clerk that I will follow this up when I --
Mr Gilchrist: Actually, Chair, if it's of any assistance, I've just asked one of the ministry staff to photocopy the press releases and some of the background notes to be able to give a copy to this gentleman. It has on there the phone number to solicit any further information you would need. She'll be back in just one second. She's just making a photocopy.
Mr Bell: Thank you very much.
NICK MILENI
The Vice-Chair: Mr Mileni?
Mr Nick Mileni: Thank you, Mr Chairman, members of the committee. I don't have any handouts to give but I'm sure that as I look in front of me and I see the young faces, your memories are very good and you're not having this little Alzheimer disease that I'm suffering from perhaps.
The reason that I'm here today is that I'm a citizen of the town of Fort Erie and I want to go on record as saying that I approve of the actual market value assessment in the name of fairness and equity throughout the province of Ontario. What I do not approve of and what disappoints me, because of the name of the fairness and equity, is taxes in lieu of. Taxes in lieu of is not a fair system, particularly within our municipality, and I'm talking of the Peace Bridge authority. The Peace Bridge authority has had the privilege in past years of having to deal with the town of Fort Erie in taxes in lieu of.
What they didn't tell you today, and what I've heard is, every piece of property that they purchase -- they have purchased in the last five years numerous properties, which has reduced the tax base of the town of Fort Erie. When they pay in lieu of, we lose that tax base and someone has to pick up that tax base. The only other person who ever picks up a tax base -- I remember very vividly that Mr Bill Davis used to stand and say, "There's only one place that the tax dollar comes from and that's from your pocket and my pocket." Well, I'm a little tired of paying, and someone else in lieu of.
You've heard today that in the year 2000 the Peace Bridge expects to have a $30-billion revenue, paying $275,000 in lieu of. Wouldn't we love to have a business that generates a $30-billion revenue a year? If we happen to be fortunate enough to have an industry in Fort Erie that generates $30 billion a year or even a couple of billion dollars a year, you can rest assured their taxes wouldn't be $279,000. Someone has to be picking up this particular tax base.
In the year 1998 it is predicted that because of the downsizing, municipalities are going to have to find their own way of generating revenue. Well, one way of generating revenue is being fair and equitable, and fair and equitable to the taxpayers of this particular region is that the Peace Bridge authority pay their fair share.
The Ambassador Bridge in Detroit -- and this information came from the assessment office in St Catharines -- pays $2 million a year in taxes. That's a far cry, and the Peace Bridge is saying or predicting that they are number two as far as traffic is concerned. In fact, in the year 2000 they hope to be number one, yet they only pay the share of what a normal small business would pay.
Unfortunately, and it is my opinion only, the town of Fort Erie as far as the elected officials are concerned is not doing what it proposed to do and that's keeping the welfare and the interests of the citizens of the town of Fort Erie.
I say this, ladies and gentlemen, not only so that I can pick on the Peace Bridge authority; I also maintain that the Niagara Parks Commission is not paying their fair share. In fact, I'm not sure whether they pay any at all. The Niagara Parks Commission also has land within the cities of Niagara-on-the-Lake, Niagara Falls and Fort Erie. Somewhere along the line somebody's got to pick up the bill. Somebody has to take care of the taxes. If we allow the Peace Bridge authority to go in lieu of, that represents about $30 per household in the town of Fort Erie.
I make the recommendation to you -- and I know the five minutes is up -- that hopefully when you go back, your recommendation to the committee is that all international bridges crossing from Ontario to the USA will pay not in lieu of but pay revenue-generated. Thank you, ladies and gentlemen. I thank you for giving me the time.
The Vice-Chair: Thank you, Mr Mileni. I'm glad you had a chance to get on the record.
COLEMAN BAGU
The Vice-Chair: Coleman Bagu? Welcome to the committee. By our all-party motion, you have five minutes for your presentation.
Mr Coleman Bagu: Mr Chairman, my member of Parliament, thank you very much for accepting me here.
Honourable members, I'm on the same subject as Mr Mileni. I've been harping on this for a long time. I wrote a little bit and I left most of it with the clerk and I hope the clerk will give you copies of another one.
I've put down here that Ernie Eves is being asked to circumvent the OMB and continues to allow the PBA and local councils to continue to negotiate the pittance in lieu of taxes instead of letting the Ontario Municipal Board decide on the Niagara assessment levy of $1.1 million. It certainly appears that this undue pressure by the Peace Bridge commission on a weak mayor and council could again cheat our taxpayers of about $800 a year.
By the way, I also live in Fort Erie and pay taxes there and I also live in Port Colborne. I was mayor back in the 1960s. Another subject that I'd like to mention to you is the fact that back in those days municipalities carried a large percentage of the welfare, and in your downloading I want you to think of this seriously because it did affect Crystal Beach very much. The municipalities in the Niagara Peninsula -- at that time I was welfare chairman myself -- I'm ashamed to say it but they all sent their welfare people as soon as they could to Crystal Beach because there were empty cottages there that were summer cottages. Business was bad and the owners wanted them filled up, so all they had to do was put some bales of straw around the outside and they stamped it "Okay." I'm just afraid that if the municipalities are going to carry most of the burden of welfare, this could happen again: unfortunate circumstances like Crystal Beach, where there's a lot of summer cottages, that they'll approve them as okay and the municipalities will again start to send them. I know we had people move down here from Toronto, because at that time you were responsible to pay them for six months only and then it became the responsibility of the municipality.
I'd just like to say be careful in your downloading and keep that in mind. Perhaps you can afford that some way, perhaps by stressing the time as to when they could leave a municipality, and the burden on the other municipality. As you know -- you're experienced politicians -- when it comes to welfare, it's not just one generation. I can see the effects of it today in Fort Erie and the Crystal Beach area. It's a burden because there are about four generations. Thank you very much.
The Vice-Chair: Thank you, Mr Bagu. I appreciate you taking the time to make a presentation.
Mr Bagu: As I say, I'm ashamed to mention that I was part of that. From Port Colborne I used to send the welfare down there too, just so in six months we can just write them off.
The Vice-Chair: Thank you for your presentation.
Also to the committee members, I've been passed a note from the mayor of Port Colborne, who would ask for a couple of minutes to thank the members for visiting Port Colborne today. Would somebody move a motion to that effect?
Interjection: Agreed.
The Vice-Chair: All-party agreement? Agreed.
NEAL SCHOEN
The Vice-Chair: Mayor Schoen, welcome to the committee.
Mr Neal Schoen: Thanks for making my speech for me. Just very shortly, I apologize I couldn't be here this morning to welcome you here to beautiful Port Colborne. I'm happy that you're pleased with the building and the facility. We're hearing a lot of good comments, both from you and from the people who have come to make delegations to you.
I just want to again say thank you. I appreciate the fact that you've come to town here, and think about us next time. We're definitely open for business and looking forward to having you come as many times as you'd like. I know you have lots of issues. I've got my little "Save the hospital" button on for all those who are so inclined. It's good to hear about Tim's new appointment. Again I just want to say thank you. Thank you for paying for one third of this building, by the way, with the infrastructure dollars. We did appreciate that. It's good to see you come back and use it and pay some rent on top of that. So thanks again. We appreciate your being here.
The Vice-Chair: Thank you, Mayor Schoen. There being no more business before this committee, I remind all members that the next meeting will be May 1 at Queen's Park beginning at 10 am. Until that time, this committee stands adjourned.
The committee adjourned at 1434.