Transcription du comité 1992-déc-05 | Assemblée législative de l'Ontario

METROPOLITAN TORONTO REASSESSMENT STATUTE LAW AMENDMENT ACT, 1992 / LOI DE 1992 MODIFIANT DES LOIS EN CE QUI CONCERNE LES NOUVELLES ÉVALUATIONS DE LA COMMUNAUTÉ URBAINE DE TORONTO

Consideration of Bill 94, An Act to amend certain Acts to implement the interim reassessment plan of Metropolitan Toronto on a property class by property class basis and to permit all municipalities to provide for the pass through to tenants of tax decreases resulting from reassessment and to make incidental amendments related to financing in The Municipality of Metropolitan Toronto / Loi modifiant certaines lois afin de mettre en oeuvre le programme provisoire de nouvelles évaluations de la communauté urbaine de Toronto à partir de chaque catégorie de biens, de permettre à toutes les municipalités de prévoir que les locataires profitent des réductions d'impôt occasionnées par les nouvelles évaluations et d'apporter des modifications corrélatives reliées au financement dans la municipalité de la communauté urbaine de Toronto.

The Acting Chair (Mr Monte Kwinter): Ladies and gentlemen, I'd like to call the standing committee on social development to order. Today we are considering a continuation of the discussions on Bill 94, the Metropolitan Toronto Reassessment Statute Law Amendment Act, 1992. I'm Monte Kwinter, the MPP for Wilson Heights, and I am acting as Chair for this morning's session.

BILL LEW

The Acting Chair: Each presenter will be given 10 minutes. You may use that 10 minutes in any way you wish. Just keep in mind that if you would like some questions from members of the committee, that will come out of your 10 minutes. Would you please identify yourself for Hansard so that we can have a record.

Mr Bill Lew: I'm Bill Lew of B. Lew and Associates. I have an address outside Metro, but like many of the committee members, I was born in Toronto and grew up there. I was educated in the Toronto schools, went to the University of Toronto, did graduate work in business administration at York University, studied urban economics there under Dean Gillies, the founding dean. That was before he went to Ottawa. His interest was Metropolitan Toronto at that time.

I'm also a follower of the Richmond-Farmer school of international economics. I'm familiar with urban models outside of North America, particularly India, Japan, China and Korea. That's Barry Richmond's field. He's a Canadian and he's located in California. He studied out at McGill. His partner, Dr Richard Farmer, is interested in the Middle East, Abu Dhabi, and in Paris, London and Canada. That's enough about my background.

I can hardly pinch myself that MVA has gotten this far, especially in a depressed economy. Who would want MVA when values are low? I can hardly believe it. But market values are a little funny, I think. It reminds me of an incident some years ago. A husband went down to Florida with his secretary, and he wired back to his wife: "I'm eloping with Rosie, my secretary. Will you sell the house and my Jaguar and send me half of the proceeds?" The wife looked at it and said, "Well, fine." She advertised it, and along came a knock on the door. She looked at this person. Is he the right material for a Jaguar and the house? Yes. So she asked, "How much money do you have in your pocket?" "Well, $500." "Sold." Everyone was happy. She got her revenge. I think MVA is like this.

Has the committee looked at market models, studied market models? If it hasn't, I'd like to cover some of that this morning.

The Acting Chair: Mr Lew, you can cover anything you want.

Mr Lew: All right, fine. As legislators, you need to question assumptions and biases underlying market models or else you can do dangerous things. Witness the GST. Wrong assumptions about the economy have caused more people to commit suicide than were killed dead by bombs in the Iraq war. There have been more assets sold under power of sale than damaged in the euphemism, collateral damage, that the Americans have inflicted. These are shames that we do not care to admit. We keep them quiet. Then we cannot do as much damage to Canada as the way the GST was handled. These damned assumptions.

Fortunately, we can learn from the GST. I complained about the collateral damage done to Ontario to the Minister of Justice and Attorney General of Canada, Kim Campbell. I complained many times over a period of two years. As a result, she put into the referendum protection against future GSTs. Ottawa downplayed this, but Premier Rae carried the ball and did a valiant job, and the referendum passed in Ontario and went down elsewhere into the trash heap.

This morning I'm going to rescue from the trash heap this protection device from the referendum. I'm going to recycle it for your use in implementing MVA. I'm going to throw a lot of things at you, and if you don't like the minister responsible for these things, you can throw them back into trash heap, and the minister too. But don't do this to Kim Campbell. She's worth your weight in gold, bare shoulders and all.

This morning I want everyone to consider only Solomon. That's the code name for Justice Minister Kim Campbell. I'm going to ask my friend Doug Flutie to extend Solomon and Justice Minister Kim Campbell beyond this sitting this morning. It distresses me that Bill 94 is in third reading. You force me to go into my two-minute drill and do my magic. I'll need to be as agile as Doug Flutie. I'm going to throw Hail Marys at you, and I'll need your help and I'll need you to carry the ball over the goal line before the time elapses for third reading. Are you ready for the two-minute drill?

The first Hail Mary goes to an opposition member and it goes to the Deputy Minister of Revenue and his market model. Your job is to grill them on the market model. Do I have a volunteer from the opposition? Oh, fine, Ms Poole, and a female person too. This is excellent. It's a case study. I thank you. I'm going to throw this Hail Mary pass right at you.

The Acting Chair: Mr Lew, I just want you to know you have three minutes left.

Mr Lew: Oh, I only need two minutes.

The Acting Chair: That's fine.

Mr Lew: Here you are. Hail Mary number two.

Ms Dianne Poole (Eglinton): I got it.

Mr Lew: Doug Flutie needs to buy time. The ball goes to the Minister of Municipal Affairs. He's not here. Your job is to add the alternatives to Metro, three alternatives: full MVA, Ontario's MVA and no MVA indexed.

Okay, here's Hail Mary number three, and this is a key play. This is Solomon. This is the code name for Justice Minister Kim Campbell, and the ball goes to the Attorney General. Your job is to determine the fairness of Solomon.

First of all, no MVA: That means that 1940 values will be indexed to the consumer price index. Metro's MVA: I can't understand that and I'm not going to explain it. Full MVA: Well, that indexes the hot air of Metro councillors, and this would be the choice of the aggrieved wife. But trouble, well, it's going to cost Treasurer Laughren and the rest of Ontario a lot of money as well as grief for the city that they're in, grief for the city of Toronto, but the fault is in revenue markets and the Ministry of Revenue's market model.

I'd like to say something about cost benefit, because there is -- well, I've only got a couple of minutes left. Cost benefit is --

The Acting Chair: Mr Lew, I'm sorry. You don't have a couple of minutes left. You have no time left.

Mr Lew: Okay. I'll toss the rest of my Hail Marys at you then, Mr Chairman. Here they are.

The Acting Chair: Fine. Thank you very much for your presentation.

ED DOBRANSKI

The Acting Chair: I'd like to call on Ed Dobranski. Mr Dobranski, would you take a seat, please. Mr Dobranski, you will have 10 minutes, which includes the opportunity for questions from the committee. Would you please identify yourself for Hansard and then you may begin.

Mr Ed Dobranski: All right. I'm Ed Dobranski and I won't be using up the full 10 minutes. I wrote letters to five people, Premier Bob Rae, Treasurer Floyd Laughren, leader of the Liberal Party, Lyn McLeod, leader of the Progressive Conservative Party, Mike Harris and MPP for York Mills, David Turnbull, and I'm just going to read this short letter that I wrote to them.

"Market value reassessment is not a tax reform but simply an excuse to update an outdated, inappropriate and unfair tax system. Let us have true tax reform.

"As the Fair Tax Commission is still meeting, we insist that no decision should be made until the work of this commission has been completed, analysed and subjected to public review. The government should hold extensive public hearings before any final decision is made.

"Tenants of large apartment buildings are completely disregarded as they would still continue to pay three and one half times the tax rate of home owners. This is extremely unfair."

Also, my own taxes -- I'm a tenant and I found out the taxes on the property and they will be going up about $100. That is all. Thank you.

The Acting Chair: Mr Dobranski, thank you very much. Questions from the committee? Ms Poole.

Ms Poole: Mr Dobranski, thank you very much for coming before our committee today. Several presenters have come and made the same point that you have made. They took much longer to do it, and I compliment you on being able to state it very concisely.

Tenants right now pay three and a half times the taxes of the home owner. Metro council had, as part of the package it sent to the province of Ontario, sent a resolution asking the provincial government to redress this inequity between tenants and home owners.

When I asked the parliamentary assistant to the Minister of Municipal Affairs, and he's the minister who has carriage of this legislation, why they aren't doing something about this and when they intend to address this inequity, quite frankly, they didn't even know it was provincial jurisdiction and said Metro would have to take care of it.

I wish I could offer you some hope that it would be redressed right now, but that point you've made plus the point about the Fair Tax Commission are points both very well taken, and I thank you for coming to tell us that.

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Mr Dobranski: I just have one other comment. I received replies from the leader of the Progressive Conservative Party, Mike Harris, and the MPP for York Mills, David Turnbull.

Mr David Turnbull (York Mills): Ed, I'm pleased to see one of my constituents here. This is something I have argued for for some length of time, that there should be equity in the way that tenants are treated, because there's no doubt about it: You're paying, by an outrageous degree, an excessive amount of tax. The factor which is used for tenants is actually 8% of assessed value as compared with residential houses at 2.2%, so you get three and a half times the amount of taxes on that basis.

To summarize a little what I've found out -- and I've been fighting market value reassessment for a long time, along with the problems tenants have. It's a slightly different matter but it should be corrected now. It's quite apparent that market value will never solve the problem, because there will always be outrageous discrepancies.

The government has an opportunity at the moment to correct this. In fact, Metropolitan Toronto, when it sent what I believe is a totally flawed package to the province to ask for legislation, did attach a request that the province correct this imbalance. In this legislation we've got before us we can see that the government has done absolutely nothing to help tenants in this matter, even though it was requested by the municipality. I wonder if you could just comment on that.

Mr Dobranski: I think it's extremely unfair, as I mentioned, and I wish somebody would do something about it. I realize you are trying.

Mr Turnbull: I will keep on fighting for you, I assure you.

Ms Anne Swarbrick (Scarborough West): Thank you for the refreshment of the brevity of your presentation. I'd just like to put a little perspective on something and then ask you one question. In terms of the inequity that you are correctly pointing out between tenants and home owners, it's my understanding that that's clearly not part of the proposal Metro made to the province, because the amount of money you're talking about that would be part of the balance switch within this proposal would totally throw off the caps that were worked out as a compromise within Metro's proposal.

However, the province certainly hears the point you're making, that's really surfaced just lately with this recent controversy. It certainly is part of what we want to look at in the overall study we're doing over this next assessment period to make sure we really do develop a fair property tax system or a fair system of taxation for the things that are covered now under that.

What we've got planned for this next assessment period is to do a serious social and economic impact study along with Metro and the municipalities, including looking at what comes out of the disentanglement negotiations right now between the province and the municipalities around who pays for what services; as well as looking at the issue of education refinancing, which will come before cabinet in the new year; as well as looking at the report you're referring to that comes from the Fair Tax Commission.

I simply want to put the perspective that after the decades or centuries that have caused the present system to evolve, it's not something you can do a quick fix with. Of course, with the demands from the suburbs right now for some kind of change, Metro obviously felt forced to come up with some compromise, and that's what we're presented with right now for the short term.

In terms of that short-term solution, though, the question I want to put to you is that you refer to your rent going up $100 or your taxes going up $100 because of the change. Are you aware that, number one, there's the 5% cap on you under this compromise proposal; since your taxes consist of roughly 20% of your rent, that really means that it couldn't cause your rent to go up by more than 1%, but even if that 1% were to take your rent increase above the guidelines in this government's rent control legislation, then you'd be able to stop that from happening this year as well. Are you aware of that kind of protection for your rent increase?

Mr Dobranski: Well, there should be a deep cut rather than an increase.

Ms Swarbrick: For the long term, you're right, and that's what we have to address over this next assessment period.

Mr Dobranski: I live in a small apartment, and my taxes will be going up to close to $2,000 a year.

Ms Swarbrick: They won't be under Bill 94, because this compromise is not full MVA.

Mr Dobranski: Right now the taxes are $1,880 and they will be $1,974.

Ms Swarbrick: They would be under a full market value assessment proposal, which this is not. That's not what we're dealing with. Do you understand that?

Mr Turnbull: On a point of order, Mr Chairman: I just want to correct the record. Ms Swarbrick has suggested that taxes on apartments are 20%. They are typically 25% to 30%.

Ms Swarbrick: Excuse me, correcting the record is not a point of order, Mr Chairman.

The Acting Chair: That is a point of information. It's not a point of order. Mr Dobranski, are there any other comments you'd like to make to this committee?

Mr Dobranski: No, I don't.

The Acting Chair: We thank you then for your presentation.

Mr Dobranski: I want to thank everybody.

LYTTON PARK RESIDENTS' ORGANIZATION

The Acting Chair: I now call on the Lytton Park Residents' Organization. Could you please identify yourself? You will have 20 minutes, because you're representing an association.

Mr Don Stewart: My name is Don Stewart. I am the president of the Lytton Park Residents' Organization. I'd like to thank you for the opportunity to present our views on the issue of market value assessment and the legislation that's currently proposed. I will offer some comments on that and then I will offer some recommendations as to what we think should be done to address the implementation of something which we feel is unfair and unjustified.

Before I get into our comments, perhaps I should give you a quick overview of Lytton Park, as you may not be familiar with this. This may sound like a maiden speech in the House, but I'll keep it brief.

We're in an area of North Toronto, in the city. We're bounded by Yonge Street and Avenue Road and by Lawrence Avenue and Roselawn. That probably leaves you feeling that we are the fat cats, as we are often called in the press. I would suggest to you that our demographics suggest otherwise. We have some 2,000 households in total, and about one third of those are tenants. Yes, we have some large houses on large lots, 50-foot frontages and that sort of thing, but the majority of the houses in our area are on 25- to 30-foot frontages. So I'm not sure we quite qualify as the fat cats we're often portrayed to be. In addition, being part of North Toronto, we have an above-average number of seniors within our area.

What our organization is looking for is a property tax system that is fair, consistent and easy to measure and understand. In fact, we are prepared to pay more tax if necessary in order to get those things, because we see that as a long-term solution, providing it's implemented on a progressive basis.

I believe we must address MVA as a system and the proposed legislation together, as they are interconnected and will have a five-year term. We should not underestimate this five-year term of the legislation. To put it in perspective, that's approximately 12% of your working life, so that's a pretty significant period of time.

The MVA system, we believe, is not fair because it's based neither on services used nor ability to pay. We think both of those are factors in municipal taxation. The proposal will perpetuate for five years this kind of system, with some political compromises based on short-term voter appeal. It's really an attempt, we believe, to avoid the issue. In addition, it will not rectify the inequity between home owners and tenants that was just discussed.

An aspect that has not been emphasized is the fact that there is no clear plan for a tax system change. The government has suggested that MVA is not a long-term solution, but there's nothing out there for people to plan on, only these MVA projections. It certainly makes it very difficult for people to buy a home, and has an impact on the selling price of a home as well. People who live in well-off areas in Forest Hill are probably not too concerned about their property tax. They're probably more concerned about whether there's a pool or not. However, for first-time buyers, young families and the like, property tax is a critical issue. How can you possibly budget when you have no idea what the tax system is going to be? A five-year cycle to do that is certainly an awfully long time period in order to leave yourself at risk.

This kind of uncertainty, we believe, is probably the biggest factor in why people are upset with MVA and the proposed changes. Because there is no consistency in the plan, people find themselves looking at the likelihood of sudden major tax changes. Even if you're paying an excessive amount of tax, if you know it's coming, you can budget and plan for it. That impacts both home owners and businesses.

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MVA is driven by location and by trendiness; therefore it creates uncertainty, because the Metro marketplace, as we know, is a volatile market. The tax uncertainty in the proposal, with no clear future plan, only adds to that uncertainty. In fact, what we are seeing here is another form of legalized gambling; hardly one you want to do, where you've got your home on the line.

Finally, there's the issue of being easy to understand and measure. MVA uses confidential rules which are subjectively applied. Assessors claim to be accurate within 5% either way; that is their judgement of how accurate they are. To put that in perspective, consider this: Could I estimate my income tax within 5% this year or would sales tax within 5% be acceptable to the government? I don't think so. So how can we say this is a just system? We're asking people to take a subjective evaluation and pay hundreds of dollars based on that. We don't think that is fair and we don't believe that the Metro proposal addresses that.

A couple of other comments on MVA: We hear that 700 municipalities in Ontario have implemented MVA. First of all, I don't think they were given much choice. They were told, "Keep the old system or go to the new." Second, as we know, some have been bribed or forced. Finally, in an environment where there are stable property values and the relative differences stay the same, this system may work and may be representative of ability to pay and services used over the long term; however, that certainly doesn't apply in Metro.

We also hear that North America generally uses market value, but I think we need to look more closely at the basis for that. For example, in Vancouver and Quebec they use the purchase price of a home and limit increases to the level of inflation, which is certainly significantly different from what we have in Ontario and again would tie better into ability to pay and services used.

In summary, MVA fails. It's not fair, consistent or easy to understand and measure. The proposed legislation does not nothing to correct this and perpetuates it for five years. It keeps the unfairness to tenants, it adds uncertainty to both buyers and sellers of homes and hurts the lower-income earners the most.

We have some recommendations. We'd suggest that instead of a five-year plan there be a two-year plan on the following schedule -- and the onus would be placed back on Metro council, and you'll note that requires them to come up with a solution before the next election.

First of all, between now and March look at the different types of systems that could be used and select up to six of them. We would suggest that MVA based on 1992 as a comparison point and that unit value, which has been proposed by Toronto and North York, be two of those six.

Impact studies could then be done between 1993 April and 1994 March. That would allow April 1994 through September for public discussion and a Metro decision, and October to December for the passing of the necessary legislation. The new system could be in place by 1995.

In addition, we agree with the suggestion that houses sold in that time period not go to full market value but be maintained on the same basis as unsold homes. That's certainly reasonable for a two-year plan.

Third, while we would like to suggest that they freeze the system as it currently is today, we recognize that there's been a lot of manoeuvring and that people have projected based on the current increases and decreases. So we would suggest that for the first year, the projected changes be implemented. This would help calm the waters a bit and show that we're working towards a reasonable plan. Then in the second year, keep them at the same level as the first year, and then the following year we'd start implementing the new system.

The new system should be implemented over a period of 10 years. While logically the new system should be fairly consistent in some ways with what we have today, there will be changes, obviously, and some of them will probably affect more than others. By implementing it over a 10-year time period, it allows for planning and people can adjust to the change.

Finally, insist that the system that is implemented meets the criteria of fairness, consistency and being easy to measure and understand.

By doing these things, we will force Metro council to give it the necessary attention and to sell the new system. If we don't do this, we'll find that MVA and the tax system in Metro will continue to be a political football, because MVA is inherently wrong for the Metro environment.

The Acting Chair: Thank you, Mr Stewart. Questions?

Ms Poole: Don, thank you very much for presenting to our committee today. Lytton Park has certainly been active in the fight against MVA for as long as I can remember, for some eight years or so. One of the points you've raised in your brief I think is quite important, and that's the volatility of market value assessment as a plan. It seems that what has happened is that we've just shifted winners and losers and we've traded one set of inequities for another set of inequities, so I find your recommendations particularly helpful.

Yesterday, I think it was in Councillor Anne Johnston's brief, she talked about the decline in resale properties and the decline in value over the last couple of years. Her statistics showed that in North Toronto in the area that both you and I represent, the values had declined by 34% as opposed to declining by 9% in Etobicoke, and I think it was 13%n -- no, sorry, Etobicoke was 13% and the city of Scarborough only declined by 7%. Does that not put the lie to the myth that market value is a stable system and that market value declines at the same rate all over the area?

Mr Stewart: I would certainly agree with that. The other thing to consider is that the high end of the market has fallen more than the low end of the market or entry point into the marketplace, and so therefore the relative difference in values between the mythical house in Toronto and the mythical house in Scarborough has dropped. What will happen with the 1992 assessment is that the decreases that people in the lower end values thought they were getting are not going to come true, certainly not to the same extent, because they will now be faced with a smaller relative difference in the property values. Again, you've added this volatility factor. As I suggested earlier, it's almost a form of legalized gambling. It's a crap shoot.

Ms Poole: I'm quite intrigued by your proposal because it is a compromise, but a compromise that makes a lot more sense. You basically, I think, are saying, "Let's not put tax reform on hold, but let's have a specific schedule for when this is finally going to be resolved." One of the problems, though, with your proposal that this interim plan be for two years is that right now in Metro's plan there's a provision that homes would go to full market value at the point of sale. The way the government has claimed to address this is by giving leverage in the legislation so that Metro could change its mind on this; it has to pass a bylaw. I think you and I both know how many times Metro has passed that resolution saying that point of sale goes to full MVA, so I don't hold much credence.

I want to tell you that I am going to be tabling an amendment which would prohibit Metro from moving to full market value at point of sale. If that were done, I think your alternative proposal might well have a chance of success, in that people would see they would get some instant relief where they felt they deserved tax decreases, and yet people in the city would know that this system was not going to be maintained for an extensive period of time.

Mr Turnbull: I certainly agree with your recommendations. Let me try and summarize the views that I've had from the hearings so far. It is apparent that there are some significant inequities in the present system, and certainly all the people I have worked with for many years against market value have always recognized that to be the case. There have been some dramatic examples of people who felt they were paying too much. However, there have been more examples and there have been more people coming here and explaining how opposed to MVA they are. In fact, there have been relatively few presentations in favour of MVA.

The examples that have been brought by the people who are opposed to MVA have been quite dramatic. There was an example of a lady who presented yesterday, who lives in Scarborough, has a shop at Eglinton and Yonge and also has a shop in Scarborough, lives in a house on a ravine in Scarborough and pays a little over $3,000 a year in Scarborough taxes. At the moment there is a small, unfinished apartment above her shop at Yonge and Eglinton and the taxes on that are $6,000 a year. How anybody can possibly conceive that is fair -- and these are the very people who want to push a further burden on to the people in the centre of the city as a result of the values which the assessors attributed to buildings in 1988, which as you correctly pointed out, was the high watermark of all the increases.

Over and over again, we've had people suggesting that we need a more equitable system and a more stable system. The government vaguely says that this is just an interim plan and that it wants to see a better plan. They've conveniently pushed it off until way after the next election, when they quite clearly recognize they're not going to be the government, instead of having the will to do something about it now. We have a Fair Tax Commission which is about to make its report, and from the leaked information, it's already apparent that the Fair Tax Commission is fairly critical of Metro's market value plan. Yet this legislation is being hurried through immediately before the report of the Fair Tax Commission comes out.

My question to you is -- let me ask you first of all, what do you do for a living?

Mr Stewart: I'm a computer consultant.

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Mr Turnbull: Would you ever recommend to any of your clients that they would do something when a fairly significant report was about to come out? Would you recommend that they go ahead and maybe buy some computer equipment when the next week a report was going to come out that might change the whole ground rules?

Mr Stewart: Probably not.

Ms Swarbrick: Mr Stewart, I'm not going to play politics here by responding to some of the comments that were just made. I'd just like to say that you've presented a very thoughtful proposal. I think that especially coming from a city group with the interest that the city groups have, you've been particularly thoughtful, in your proposal, in recognizing that for the next couple of years it is important, probably, to let the Metro compromise proposal be in place and work towards what can follow that.

I would agree with the need for the government to try to move as efficiently and quickly as possible in consideration of all factors, to come up with a much more fair system. I think the proposals you have made of looking at a system based on ability to pay and placing residents on a common basis are very significant ones to consider.

There is one thing you put forward that is something I had been thinking of myself. I'm wondering if you would share with me the same concern that I ended up arriving at with it. You've proposed that we look at the use of the purchase price of homes if you're going to use a system that is based on assessment that way. I was thinking that too. Why don't we? Then I wondered, does that then allow room to be created for the same problem we used to run into, until the coming legislation, with the sale of cars, that people then somehow fixed the books and declared that the purchase price was less than what it was so they could avoid paying taxes?

Mr Stewart: In fact, we have not specifically recommended that. I merely pointed out that in other jurisdictions that is an approach they have taken.

Ms Swarbrick: I'm sorry; that's right.

Mr Stewart: Our submission to the Fair Tax Commission's property tax working group suggests a system based on unit assessment, where you take twice the area of the building and add that to the area of the property and use that as the basis for assessment, and put both home owners and tenants on the same basis, with tenants paying on their share of the space within the building.

We felt that the size of the building was more representative of your ability to pay, and the services used because we think services used have some element in a property tax system, because things like garbage collection, for example, are very much like heating and hydro, and therefore should be paid somewhat on a usage basis. By having that, you can get some elements where you'd encourage conservation by having pricing associated with that.

On the other hand, we clearly recognize that ability to pay is a critical factor and is part of any progressive taxation system, and what we tried to do was come up with a system that did that. You alluded to the possibility earlier of moving the education tax and possibly welfare as well on to the provincial tax base, and we could certainly see benefit in that as well, as it would take a lot of the heat off the property tax issue.

We believe the key there would be to make sure that the local municipal governments don't see this as an opportunity to slip through a big tax increase by saying, "Yes, we're giving you a decrease," but in fact socking you with a big increase in your municipal tax for all the little projects they've got on the back burner today.

Ms Swarbrick: You anticipated my other question to you as well. Thank you. I hope we can count on your continuing good input as we evolve towards a fairer system.

Mr Stewart: We would be happy to do anything we can to help get a fair system in place.

OAKVILLE CHAMBER OF COMMERCE

The Acting Chair: We now call on the Oakville Chamber of Commerce. Would you please identify yourself for Hansard. You have 20 minutes and that will include an opportunity for comments by members of the committee.

Mr John Hogg: My name is John Hogg and I'm president of the Oakville Chamber of Commerce. That organization represents some 1,000 businesses in the town of Oakville and I dare say I represent a majority of the people and residences from the town of Oakville.

Market value assessment is wrong, immoral and unethical. The value of property is not equal to the ability to pay. It is an indication of how long you have owned that property. Too often, seniors will be forced to pay more than 50% of their income on property taxes.

MVA will change the rules of budgeting for residences and businesses. MVA will raise the taxes and rents for businesses and residences all across the province. In the regional municipality of Halton, MVA caused much the same stir as it did here in Metro. We've been through quite a bit in the last couple of months since September 23, when the regional municipality of Halton imposed market value assessment.

On October 7, I stood before council and asked them to move a motion of reconsideration. I'll just go back to September 23, and explain how market value assessment was passed by the region. It was done right down municipal lines. The region of Halton is composed of Oakville, Burlington, Milton and Halton Hills. Oakville and Halton Hills represent 12 votes on council; Burlington and Milton represent 12 votes on council. Burlington and Milton voted for market value assessment. Oakville and Halton Hills voted against market value assessment. So we were faced with a 12-12 tie on that day and that tie was broken by the regional chairman, Peter Pomeroy, and he voted in favour of market value assessment.

We were imposed with market value assessment on that date, and then on October 7, I asked those people who were on the prevailing side of the motion to move a motion of reconsideration and that request, at that time, fell on deaf ears. We did some extensive lobbying and obviously we created awareness throughout the citizens of the entire region. Finally, just a week ago yesterday, prior to the meeting this past Wednesday, we were able to get a notice of motion of reconsideration put on the agenda, and that was done by the chairman.

Wednesday night's meeting lasted until 3:20 in the morning, very much like Metro's did, and we were able to have more or less a stay of execution until a year from now in 1994, when we will be imposed with market value assessment unless we can come up with an alternative solution. That's what I'm here for today, to try to set the ball in motion so that we can find that alternative solution prior to imposition imposing market value on January 1, 1994.

You have some background as to what has happened in Halton region and how it will affect not only Metro, but affect the entire province. When you're talking about market value assessment in a diverse region such as Halton, you have various factors that really come into play. For example, in the studies, they talk about this $200,000 house in Oakville, Burlington, Milton and Halton Hills. Because of Oakville's proximity to Toronto, the value of that property will always be greater than the similar value in other areas of the region. Consequently, a $200,000 house in Oakville might be the size of a matchbox, whereas on the other side of the coin in Burlington it might be a much larger place.

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We feel that market value assessment, especially throughout a diverse region, is not fair. It just doesn't address the issues of consumption of goods and services provided by a region, for example. So we got the motion of reconsideration, and we just feel that this committee could start the ball in motion to come up with a better solution to taxation. For instance, you heard the speaker before me mention moving the education levy to either the Income Tax Act, or why not the Retail Sales Tax Act. I don't know, maybe there are problems with that.

I'd like to entertain questions from each and every one of you. In that way, that will prove that we're actually trying to work together for a solution.

The Acting Chair: Thank you, Mr Hogg. Ms Poole.

Ms Poole: Thank you for taking the time to come and appear before our committee today. I think it's particularly helpful in a number of ways. One is that you don't have a vested interest in the Metro plan per se.

Mr Hogg: No, I don't. I don't have property in Metro.

Ms Poole: Most people presenting to us have not had that objective stand because we're all part of this inner battle.

Mr Hogg: I'd like to say that it's not a Metro problem; it's a provincial problem, and the Assessment Act has to be dealt with.

Ms Poole: That was going to lead to my second point. What your brief has basically said is that there's an attack going on right now on our cities, and particularly our inner cities, and what is starting to happen throughout the province is that market value is being imposed on the cities by the regions. We've just had a battle in Ottawa.

Mr Hogg: Yes.

Ms Poole: In fact, it was only at the last minute that it came about, because of various schemes, that all of the municipalities within Ottawa finally voted in favour. They had to do some manipulations there. We've had problems in Kitchener-Waterloo, Haldimand-Norfolk, going back a few years, but what you've told us about what's happening in Oakville shows that this is going to be happening all over the province.

The regional municipality's taking on a responsibility that up till then was being granted to the local municipalities, and part of the problem is I don't think the government really understands that that is what this is all about, and keeps saying, "Well, we're just doing what the local municipality wants." The local municipality, certainly under the terms of the Assessment Act, is the city of Toronto, the city of North York. The area municipality is the one they're granting these rights.

We, in Toronto, have had threats of a tax revolt if this goes through. I'm wondering, have you had that type of reaction in Oakville, because I suspect from what you've said that feelings are running pretty high there as well.

Mr Hogg: There's no question feelings are running extremely high. One of the considerations of some of the people is to set up a trust account to accept tax dollars and then send an audited statement to the municipality every month of what's in that trust account, and then just have demands attached to that statement. Upon meeting those demands, we'll release the funds.

Ms Poole: That would be, I think, a very valuable proposal, because I don't think a lot of people would have much patience with somebody who was refusing to pay their taxes just because they thought they were getting out of paying their taxes, but if the person has paid their taxes and yet at the same time made a statement, then perhaps that message would get through without some of these negative connotations of somebody refusing to pay their taxes.

Mr Hogg: We do not want to start a tax revolt. We would like a solution to market value assessment, but if we're backed into a corner, we may have to do something like that. I'm not saying that is the position of the Oakville Chamber of Commerce; I'm saying that's a position that a lot of people are thinking about.

Ms Poole: Thank you.

The Acting Chair: Mr Turnbull?

Mr Turnbull: Yes. Mr Hogg, you pointed out this aspect of a $200,000 home in Oakville, and $200,000 buys a lot smaller home in Oakville than a house, say, in Burlington.

Mr Hogg: Exactly.

Mr Turnbull: Do you not think by using the market value of a home, what people are trying to do in a very crude way is to try to have income redistribution, even though it might be a very modest house in Oakville, and it doesn't accurately reflect people's ability to pay?

Mr Hogg: Can I comment on that? There's no question that market value assessment does not equal the ability to pay. I know of one lady in town whose property taxes currently are $3,000, and they'll be moving up to about $6,500, as I understand it, under market value assessment. Her income consists right now of CPP, OAS and a little bit of income from a registered retirement income fund. She's 71 years old. Her total income will be about $12,000.

There is no banker in the world that will give you a mortgage that demands 50% of your income be paid to service that mortgage. To pass market value assessment is, in essence, telling this lady she has to move out of her house.

Mr Turnbull: Let me tell you what the proponents of market value would have you believe. They say, "Okay, there is a clause within the Assessment Act which allows a lien to be put on the house over the years for people below a certain income level." It appears to me that essentially what that is is recognizing that this is unrealized capital gains, and yet they want to have a piece of the unrealized capital gains every year, even if it's charged against the house. Could you respond to that?

Mr Hogg: Capital gains as per the Income Tax Act, or as --

Mr Turnbull: Well, no, to the extent that they're saying that that property has gone up in value; therefore you have --

Mr Anthony Perruzza (Downsview): On a point of order, Mr Chair: Have we got a set time per person?

The Acting Chair: Yes we have. What I've been doing, just so you'll know, I'm dividing the time remaining equally, and at the present time we are working on that basis.

Mr Perruzza: Okay, because we have so many deputants before this committee that we want to get as many people as possible in here to have their say.

The Acting Chair: I can assure you, there's a time allocation and we are adhering to it very strictly.

Mr Perruzza: Thank you.

The Acting Chair: Mr Turnbull?

Mr Turnbull: If you could just --

Mr Hogg: I understand what the question is, and now, by putting a charge against the property, that's in essence putting a mortgage on it, and people who are 71, our seniors, do not want to do that sort of thing.

Mr Turnbull: That was actually done in California, and the seniors resisted that. The seniors were furious, and we know what happened in California as a result of that. As a matter of fact, I brought in private member's legislation -- which was passed but the government wouldn't allow it to go to committee, so in essence it died -- to try to allow for citizen-initiated referendums, and it would have stopped this kind of nonsense.

Mr Hogg: Exactly.

Mr Turnbull: Last question: Do you think it's reasonable that tenants in a store should in some way have their taxes based upon a value that the building has got to at a point in time?

Mr Hogg: The value of a property has nothing to do with the consumption of goods and services received from a municipality. I don't understand why any --

Mr Turnbull: The tenants can't even take advantage of any increase in the property value. To the contrary, they're concerned about it, because at the time that their lease comes up, the chances are that it may increase the cost of the lease.

Mr Hogg: That's sort of a chicken-and-egg thing because the property will increase, but then the taxes will go up and the capitalization rate of the property will force the value down, so it's sort of a thing that's bouncing up and down like this all the time. It's so unstable.

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Mr Turnbull: And of course, that has an effect on the business taxes. Typically in Metro the business tax is 50% of the property value.

Mr Hogg: Exactly.

Mr Turnbull: Can you see that as being injurious to businesses?

Mr Hogg: Most definitely, sure. There's no sense of planning.

Mr Turnbull: Would that lead to loss of jobs?

Mr Hogg: Of course it would.

Mr Turnbull: Thank you very much.

Ms Swarbrick: Mr Hogg, first you were referring to the problem with seniors in terms of tax increases, if they were full market value increases, of course, not the kind of caps that are put on under the present system, and I'm just not sure --

Mr Hogg: Could I just make a comment to that? Because I feel that once you start altering a system, for example, with the phase-ins that have been proposed in Halton and the capping that is proposed for Metro, you're trying to fix something that doesn't work, and it's that simple.

Ms Swarbrick: I wanted to get to that, but first I was concerned about the example you gave. I wanted to make sure that you understood that, as I learned on this committee, under the Municipal Act, seniors who wish to can defer their taxes to be paid out of the estate. Did you realize that?

Mr Hogg: But that's not a solution to it.

Ms Swarbrick: No, I just wanted to make sure. You were using an example of somebody facing hardship and I wanted to make sure that people realized the potential solution that's there to help avoid that hardship. So if that's out of the way, I'll move on.

It sounds like you're opposing any kind of system based on assessed value of property; is that correct?

Mr Hogg: That's correct.

Ms Swarbrick: You'd rather see a system based on services and based on ability to pay instead; is that right?

Mr Hogg: Exactly.

Ms Swarbrick: You were referring to the witness before you referring to wanting to start the ball moving in terms of looking at education refinancing. Do you realize that, although the system of operating property taxes based on assessed value is what we've worked on so far from time ad infinitum in this province, in fact this provincial government has, since we were elected, initiated, for one, under Tony Silipo, having a solid report done on the issue of education refinancing which will be coming to cabinet in the new year; that in fact we have initiated the whole process with the municipalities of looking at how we can disentangle in terms of who pays for what services?

Mr Hogg: Right.

Ms Swarbrick: That we have introduced, of course, the establishment of the Fair Tax Commission with its property tax working group for exactly this purpose, because we recognize the inequities that exist and want to redress them and that of course we've now, because of the pressures from the current system, said we clearly are going to sit down with Metro and the municipalities also to look at a full study of the economic and social impact of property taxes.

I think you probably have enough grasp of the system to realize that looking at the implications of all of those studies means you can't redress the historical property tax system in Ontario based on assessed property value overnight. You do have to look at something that takes the serious study of those studies and, therefore, probably a couple of years at least to be able to let those kinds of studies work through.

My understanding, and I wanted to ask you about this, is that the Halton region treasurer has been instructed also to establish a Fair Tax Commission locally because of the controversy that's arisen out of the proposals there; is that correct?

Mr Hogg: Part of the resolution on Thursday morning was to set up a citizens' committee. That was one of my recommendations that we put into the resolution that was tied to the motion of reconsideration generally: that we have this committee set up.

I would envision that committee -- and I just talked to the chairman yesterday -- being made up of people from throughout the region of Halton, but also from across the province. I would hope that's how that would be set up: to bring in from Carleton, Kingston, Metro, the places that are having problems with market value assessment right now. That would possibly get the government to change the Assessment Act within the next 12 months and implement some of those things that may come out of the Fair Tax Commission. We don't know what's going to come out of that commission. We've got to find out now and we've got to get these things rolling, because we in Halton region only have 12 months to get rid of this unfair system and bring in a fairer one.

Ms Swarbrick: I'd suggest that you've now got a deferment of 12 months. Your final one would have to be relooked at within that 12 months, too. Would you not agree that in view of all of the --

Mr Hogg: No, I'm sorry. If we don't come up with a solution in the 12-month period, market value assessment will be effective January 1, 1994.

Ms Swarbrick: Hence, your point about how this is a province-wide problem that has to be looked into.

Mr Hogg: Exactly.

Ms Swarbrick: In terms of the immediate proposal from Metro, my colleague the member for Eglinton referred to her belief that there'd be a tax revolt within the city of Toronto if this plan goes through. Is it your understanding, as it is mine, that if it doesn't go through there'll be a tax revolt from people in the suburbs of Metro? That's what motivated Metro to have to look at an immediate compromise now, while the province then looks at a longer-term solution over the coming period.

Mr Hogg: What we have to go back to is my initial statement, and that is that MVA is unfair, immoral and unethical. That says it all.

I don't think politicians are going to get thank-you cards from those people who are going to see their taxes reduced, and neither would those people who are going to have their taxes reduced like to have that done to the imposition and detriment of other taxpayers.

The Acting Chair: I'd like to thank you, Mr Hogg. The time has expired. Thank you very much.

Is Henrik Pfisztner here? Cora Urbel?

CORA URBEL

The Acting Chair: Good morning, Ms Urbel. You will have 10 minutes, which will include an opportunity for members of the committee to ask questions. Would you please identify yourself for Hansard, and you may begin.

Mrs Cora Urbel: I'm Mrs Cora Urbel, and I live at 40 Yewfield Crescent, Don Mills, Ontario, M3B 2Y6. I'm also the president of Don Mills Residents Inc, a residents' association which has a mailing list of 4,200 homes. The boundaries are York Mills Road to the north, Eglinton Avenue to the south, the Don Valley Parkway to the east and Wilmot Creek to the west.

Mr Turnbull: On a point of order, Mr Chairman: This is incorrectly down. She is the president of an association; she should be granted 20 minutes.

Mrs Urbel: I registered as an individual. I'm just letting them know that I am the president, but I didn't have a mandate to appear from the residents' association.

I wonder what we're doing here today when it has already been declared by the Honourable Minister of Municipal Affairs that he intends to pass this legislation next week. I find it appalling that we're going through this charade.

Quite frankly, I'm here today simply because of a story I heard years ago about two little frogs who fell into a vat. They took a swim around and one said, "Oh my God, look at these walls," shuddered, gave up and fell to the bottom. The other one took a lick of the substance and found it was cream. So he said, "If I swim around here long enough and I agitate long enough, I'll have a nice little block of butter to rest on," and he survived.

So I'm here hoping that some bolt of lightning -- not bolt of lightning, some bolt of common sense is going to hit some of the members of the Legislature and that you will take up your responsibilities and stop the implementation of this scheme on Metropolitan Toronto. It's farcical. It's a sham.

I spent my working life at Bay and Bloor, but I opted for a suburban home life. When I got out of the office at 5, 5:30, I got into my car and I drove to Don Mills, where I'd bought a modest bungalow, three storeys. No way would I opt for living downtown, Bay and Scollard Street, 16-foot lots, and even if it's a semi-detached, you're sharing a driveway, you don't have daylight, you have fumes, you have noise. I love my suburb. When I moved to Don Mills, I knew I was paying more taxes. I was willing to pay more taxes for the privileges that I consider I have: a small bungalow, a nice big lot, lots of trees, lots of daylight, the sun comes in. I wouldn't live downtown or swap my little house for any property in the city of Toronto.

So we in the suburbs have lots of things that we do not have in the city, and we should be paying for it. I don't see why I, with a 65-foot frontage and 170-foot lot should be considered on a par, value-wise, with somebody who's living on a 16-foot lot, with his disadvantages.

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The sad story is that when we moved to Don Mills, it was the moondocks, not the city of Toronto. There was nothing north of York Mills except farms. I haven't moved my house, but unfortunately the city has moved around me, and I find that I am now in the centre of Metropolitan Toronto. Suddenly some faceless bureaucrat values my $23,500 bungalow at $400,000. "Mrs Urbel, it's your privilege now, because that house is worth $400,000" -- based on the location and inflation and trends in the area.

Let me tell you, the trends in Don Mills have been, up to 1990, speculators coming in, buying up our small bungalows, buying up our big lots, tearing down these perfectly good 30-year-old houses, sending them out to the dumps and building monster homes with five bathrooms. Whoever needs five bathrooms? That has been driving up the price of our houses as well as location. It's a trend that nobody can measure, but it's a trend that the tax department says, "Well, that's it." Don't ask me how we get there, but that's how we get there.

So as far as I'm concerned, I have had a capital gains tax. This raising the taxes for municipal services based on market value is actually capital gains; you're charging me capital gains tax. If I ever get $400,000 for my little bungalow that needs a new roof, I will not realize that asset until it's sold, whatever it's going to be.

So I ask this government to take the responsibility, once and for all, to put in a system of property tax or municipal taxes that could be simple, based on the square footage, the size of the lot, the size of the home. The person who has his 16-foot frontage will pay accordingly; the person who has a 65-foot frontage will pay accordingly. We should be getting a system into place that is going to cut down on bureaucracy.

We have in the city of North York, from Monday to Friday, five days a week, morning and afternoon, people from the assessment board sitting there listening to appeals and cases. We have a bureaucracy that you're now going to cement into place, if you accept it in Metropolitan Toronto, employing full-time people to push paper around every four years and say: "Oh, yes, 1992 is coming up. Your property is worth this, and the taxes will be that." Do we need it? If we had a system of tables set down, like two and two is four, four and four is eight, we wouldn't need the bureaucracy. We could be cutting down right there.

I am not going to take my 10 minutes, but I really am appealing: Like that little frog going around churning the cream, I'd like a nice little pat of butter to sit and rest on. I really hope that somehow this committee will be able to get through the right message to the legislation, not force this thing through before the 10th. We have the Fair Tax Commission coming up with its report. What are they going to say? Are we the government for the people? Thank you, Mr Chairman, for allowing me to speak.

Ms Poole: Cora, thank you very much for your presentation today. I think you raise a very valuable point, and that is that people choose their lifestyle. Over the years, I haven't heard a lot of people in the city of Toronto complaining about their 16-foot frontage or their 20-foot frontage. I haven't heard them complaining about the fact that the city of Toronto, for instance, heavily subsidized the city of Scarborough for schools. That was never a complaint because we felt, "Well, we share."

But I think what's got people angry right now is the very scenario you've described, where people have chosen a life in the suburbs, where generally they do have larger lots and larger houses, and yet they're now saying that those people in the core of the city should pay substantially more based on this esoteric principle called market value, which seems to float with the times. So I really appreciate you making that point.

You asked, if this is a fait accompli, then what are we doing here? The reason the opposition parties demanded public hearings was because there was no opportunity for public hearings after Metro came up with this final, last-minute plan, and we felt it was important that the government of Ontario understand exactly what it was doing by rubber-stamping this. I actually believed, up until yesterday, that there was a chance that public hearings would make a difference; that this government is not known for its flexibility but it is known for its unpredictability, and maybe this one time it would listen.

I don't know if you saw the Toronto Star article yesterday, but an NDP member of this committee said they didn't plan to have public hearings, they were bullied into it by the opposition, and they can't change their mind because it would mean a dangerous precedent. The question I have is very similar to yours: If the government has made up its mind that it's not going to change, why are we here?

Mrs Urbel: I hope, in spite of what we read in the newspapers, that there's going to be a little more sensitivity shown by the present government. I can't stress how really important it is to save the core city we have. I wouldn't be enjoying my life in Don Mills if I didn't have the Beaches to go to, if I didn't have Danforth Avenue to go to, if I didn't have Spadina. When I take visitors in from overseas, where do we go? To the Scarborough Town Centre, to the Don Mills Centre, to Mel Lastman's beautiful downtown uptown, a devastated area? We don't. We go down to the city of Toronto. We're actually only suburbs of the city of Toronto.

Mr Turnbull: Cora, thanks for the presentation. I would like to bring out for the committee's understanding that when you and I started fighting market value reassessment, you were going to get quite a reduction in your taxes as a result of market value and you were still fighting against it.

Mrs Urbel: Absolutely. I was not interested. The only thing in this world that comes down, as far as I'm concerned, is the rain. When they presented us with this beautiful scheme, the Ministry of Revenue and the Metro officials, "Oh, you're going to get a decrease," I wasn't interested.

What was a decrease in 1984, now, for no reason, on the same house in the same location -- as I say, it needs a new roof; it didn't need it four years ago -- suddenly is an increase of $600, which is not going to break me here or there. But if we have a system that's going to be floating around -- you're getting $400 less one year and four years later you're getting $600 more, it's a shift of $1,000 on a property that you've done nothing to. But it's employed somebody in an office in the government to say, "This is what you do in 1984 and this is what you're going to do in 1988."

Mr Turnbull: You correctly bring out the point about the volatility of this system. It's particularly volatile in your area because of, as you mentioned, the fact that you had a lot of developers who moved in and bought these little bungalows and knocked them down and built monster homes. I would suggest that you, the people who didn't sell, who didn't want to sell and didn't move, are being penalized for the profits made by the people who did sell.

Mrs Urbel: Exactly.

Mr Turnbull: The evidence we've had so far points to some examples where people are paying ridiculously low taxes. There have been a few examples brought out of $600 and $800 taxes; I would say clearly these people are paying too few taxes, because no house can be serviced for that amount of money. But I do believe they're aberrations.

At the same time, the government refuses to help the tenants, who are paying ridiculously high taxes because their taxes are based upon 8% of market value as compared with 2.2% for single-family residential.

Mrs Urbel: There's no doubt that the whole system is in a mess. As far as I'm concerned, perpetuating a system that has been in place and updating it does not clean up the mess. We have to go back to the drawing board.

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Mr Perruzza: Welcome to the committee, Cora. It's good to see you again. The last time was the Don Mills secondary plan, I think --

Mrs Urbel: Was it?

Mr Perruzza: -- when it was going through.

Mrs Urbel: Fighting to preserve our community.

Mr Perruzza: Exactly. Just one quick question: You know that the 1984 figures that were generated by the former Liberal government weren't actual assessments; they were just averages and the information that --

Ms Poole: On a point of order, Mr Chairman: I would just point out to Mr Perruzza, actually to reiterate his comment yesterday, that I don't want people in this audience to be misled. The 1984 values were actually from a 1982 reassessment brought in by the Conservative government.

The Acting Chair: Ms Poole, that's not a point of order; it's a point of information.

Ms Poole: It is a point to correct information.

Mr Perruzza: They weren't actual assessments and the averages that would --

Ms Swarbrick: On a point of order, Mr Chair: I'm wondering if there is any way we can take some action to prevent people from such abuse of points of order, because this has been happening consistently when I've been here.

The Acting Chair: Mr Perruzza, continue, please.

Mr Perruzza: Fine. Having said that, and not said that, you understand this isn't a system that was created by us, and we are currently on a market value system now.

In order to be able to effect any updates in the system or any changes to it -- we don't like market value. I don't think any of us on this side likes market value. It's not something we're completely insensitive to and something we want to shove down people's throats, but we've had almost 200 years of market value across the province of Ontario. The only difference between Metro and the rest of the province is that Metro hasn't received successive updates in the return of the rolls. We have rolls that we return to municipalities that are largely out of date.

Mrs Urbel: Mr Perruzza, I know it's a property value system that has been more or less in place for years. The poll tax is even older than that and Thatcher lost her job in England when she brought in the poll tax. There are all sorts of ways you can tax people, and it's very difficult to make taxing fair, but you have to realize that when you look at a small town and you look at Metropolitan Toronto, it's impossible to compare, really, with such vastly different types of communities.

The fact of the matter is that we all agree the system is no good. So what's to stop this new government in Ontario from saying, "Okay, it's no good, let's work on something different"? Just because it has been in place --

Ms Swarbrick: That's why we've got all those reports in action because we recognize --

Mrs Urbel: Yes, you have a Fair Tax Commission coming, and I applaud you for that and other things your government has done, but don't force this through just because Tonks has been goaded by the Toronto Star for the last years: "Stand up and prove you're a man. Do it." Where is the Toronto Star today? They've moved to Vaughan.

The Acting Chair: Your time has expired and I thank you for your presentation.

VERA DICKINSON

The Acting Chair: I'd like to call on Vera Dickinson, please. To the members of the committee, Mr Chipperfield is not going to be attending and I've added a few minutes to each of the last presenters to take up the time.

Mrs Dickinson, will you identify yourself for Hansard, please.

Mrs Vera Dickinson: I'm Mrs Vera Dickinson. I live in the heart of speculator heaven. In 1988, they were running fast and loose, buying. To this day, properties are owned by companies or real estate personnel sitting on properties. There are mythical values put on those properties. In 1988, it was millions; now they're down to $1 million, $2 million, whatever they get away with. They haven't sold a thing. On these figures, you're going to tax the person who's had property there and earned it and maintained it and paid for the maintenance? Somebody's being robbed here and it's the public and not the speculators. They're being subsidized.

They stay sitting on things. They put figures on the rolls where they said they paid that they never paid. They put mythical mortgages on mythical properties and all this goes down. That's fraud and we are being defrauded of our rightful property by these outrageous taxes that you propose, because 1988, which is the year I understand it's based on, was the height of the speculators' performance throughout Toronto.

Most of the section of Rosedale where I live has been speculated on with front persons by more or less one outfit, and they change. Yet the few people who remain who have had property and lived there and have children grown up are being penalized so that these bums should have even more money.

That's all I have to say for what it's worth, which is probably not very much.

Ms Poole: Just one question for you: You're familiar with Metro's plan that is now before the provincial government to approve?

Mrs Dickinson: Vaguely. I've just realized that I'm paying more than I should, that my taxes -- I have had the property for 26 years. The property tax has gone up in the regular manner, or irregular manner. There's not a year that it hasn't gone up. Now they propose draconian measures because they have let those speculators get away with murder, and the banks are right with them. You talk of mortgage rates going down? Try and get a mortgage.

Interjection: It's the Conservatives.

Mrs Dickinson: No, it's not Conservatives. It's the banks and every government is subsidized by the banks or plays with them or it can't survive.

Mr Turnbull: I think you point to a very important aspect. Bob Rae, when he was in opposition, used to always roar about speculators.

Mrs Dickinson: Who was that?

Mr Turnbull: Bob Rae, the Premier.

Mrs Dickinson: Oh, yes.

Mr Turnbull: He always used to be angry and say how awful the speculation was, and yet his government is allowing an assessment to go through based on 1988 values --

Mrs Dickinson: Right.

Mr Turnbull: -- which was the height of all prices and speculation, and so the people who did not sell their homes, did not take advantage of that speculative bubble --

Mr Perruzza: On a point of order, Mr Chairman.

The Acting Chair: There's nothing out of order.

Mr Perruzza: There is. There's plenty out of order, Mr Chairman, when one of the members is giving misinformation. The Bob Rae government didn't choose 1988.

The Acting Chair: Mr Perruzza --

Mr Perruzza: It was the Peterson government that returned the rolls for 1988.

The Acting Chair: Mr Perruzza, that is not a point of order. That's a point of disagreement and you can dispute that any other time.

Mrs Dickinson: Who will benefit from it, if not the Rae government? They don't have to exercise this option. They could alter it.

Mr Perruzza: We don't benefit from it.

Mrs Dickinson: Of course you do.

Mr Perruzza: Of course not.

Mr Turnbull: You're quite correct. Many of the Metro members campaigned on an explicit platform that they were against MVA. The ministers who are now in government, Frances Lankin, Tony Silipo, Marilyn Churley, Elaine Ziemba, all campaigned against MVA. They all voted for it on second reading and presumably will vote for it again --

Mr Perruzza: How did Chris Stockwell vote?

Mr Turnbull: The NDP member is talking about somebody in my caucus who voted for it. He's been consistent. He has always spoken for it, and one thing is very clear, in our party we are allowed to vote our conscience. We're not whipped into doing things we don't want to do. The majority of Conservatives voted against this, as did the majority of Liberals. The difference is that the government, every single one of them, voted in favour of this 1988 market value scheme, even though they had campaigned explicitly as being against market value.

My question to you is, can you have any trust in politicians who have one story when they thing they're going to be the opposition, and a completely different story that they have no choice but to pass this legislation for the municipality when they become the government? That's my question to you.

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Mrs Dickinson: Do you want an answer?

Mr Turnbull: Yes.

Mrs Dickinson: Well, I'll give it to you. I think most of them are crooks and that's why the country is in the mess it is in. Instead of working for a living and paying your due share, they just grab what you have earned and saved and paid taxes on, and it's a grabfest. Everybody takes what he can and walks because they're in for four years. The next bunch comes in, another grabfest --

Mr Turnbull: I have to say in fairness that I don't believe the government are crooks. I think that --

Mrs Dickinson: Not all but a good many of them.

Mr Turnbull: -- they're ill-advised.

Ms Swarbrick: I think history will ultimately show what this government does with regard to tax fairness.

Mrs Dickinson: Well --

Ms Swarbrick: Sorry, if I may -- with regard to tax fairness --

Mrs Dickinson: Like all history, they will write it the way they want it.

Ms Swarbrick: Please stay. I have a question I'd like to ask you.

Mrs Dickinson: Oh, do you?

Ms Swarbrick: Yes. You're pointing out your great concern with regard to the selection of 1988 as being the year. I know that I own my own home and at the time I owned a different home, which I later had to sell. The home I owned in 1988-89 was assessed at $300,000, although I had bought it for a lot less 10 years before, I'll tell you. When I had to sell it in 1990, it had decreased in value to $200,000, so it had decreased by one third of the value. That actually proves what you're saying, of course.

I wasn't worried about that in terms of selling because of course the same thing happened pretty well all round Metro, or basically it did. You might get the odd little fluctuation here and there in areas, but the house that I was buying then was also deflated by roughly the same, because effectively all homes pretty well went down by about a third. That was the average rule at the time.

What I'd like to ask you is, do you realize that whatever year is picked, the overall tax pool of dollars will stay the same? That's guaranteed by Metro, that the overall pool of tax dollars collected is not being affected by the selection of 1988 as opposed to any other year, and given that, all homes are adjusted by roughly the same. As I say, in that time period it was about a one-third drop that occurred in the values of all homes around Metro, but it really doesn't matter which year you pick. The question is, are you assessing everybody on the same relative market value or not?

Mrs Dickinson: I beg to disagree. Nineteen eighty-two was a very bad year for property. Take that as the real estate value --

Ms Swarbrick: But was it not a bad year for all properties?

Mrs Dickinson: -- and I hung in there and I maintained it and then the speculators come in and I've subsidized with tax money, and you can write that down in history and now you come and go after the property tax. For what? For whom?

Ms Swarbrick: I agree with you wholeheartedly on the speculation issue. Because I know it's upsetting you, I just want to try and clarify --

Mrs Dickinson: It's not upsetting me. It's disgusting that I, at my age, have to come here and make a scene for nothing because I'm well aware it's for nothing.

Ms Swarbrick: When you say that 1982 was a bad year for all property --

Mrs Dickinson: Yes, a very bad year.

Ms Swarbrick: -- do you believe that was the case throughout Metro?

Mrs Dickinson: Definitely.

Ms Swarbrick: Then, if the overall pool of tax dollars stays the same, is it not the case that everybody ends up paying the same relative tax dollars --

Mrs Dickinson: If you could hang on to your property, if you could pay your taxes, your maintenance, if you could hang on, yes, you have a little leeway, but there were lots of people wiped out. Who is compensating them for that?

Ms Swarbrick: Thank you, Mrs Dickinson.

TORONTO SOCIETY OF ARCHITECTS

The Acting Chair: Now I'd like to call on the Toronto Society of Architects.

Mr Lorne Cappe: On behalf of the Toronto Society of Architects --

The Acting Chair: Mr Cappe, would you please identify yourself for Hansard?

Mr Cappe: Sure. My name is Lorne Cappe and I'm chairman of the Toronto Society of Architects.

Mr Turnbull: On a point of clarification, Mr Chair: Could I just ask, is that covering Metropolitan Toronto or just the city of Toronto?

Mr Cappe: The Toronto Society of Architects' boundaries go up as far as Huntsville. We go quite -- a large area around Toronto.

Mr Turnbull: Thank you.

The Acting Chair: Mr Cappe, you will have 20 minutes, which will include the time for questions and comments.

Mr Cappe: Okay.

On behalf of the Toronto Society of Architects, I'd like to thank the members of this committee for the opportunity to present the views of our members, the architects in the Toronto area. The Toronto Society of Architects is a voluntary, non-profit organization established in 1887 to promote excellence in architecture, urban design and city planning.

The Toronto Society of Architects is adamantly opposed to the municipality of Metropolitan Toronto's proposed market value assessment program. We believe that MVA would lead to a dramatic deterioration and decay of the city of Toronto. The proposed tax system is so onerous, it will become impossible for many people to maintain their homes and continue their businesses.

Toronto's population is currently declining and will continue to lose more of its population base with MVA. The quality of the city will continue to be reduced with MVA as stores, businesses and homes are boarded up. With fewer people being able to afford city living, it will not be possible to adequately maintain urban services, such as transit, schools, parks and community facilities. The very tool Metro is using to raise funds for these programs will in fact be what makes it impossible to maintain these services. A weakened inner city with a reduced population and economic base is a fertile ground for slums, less activity and vitality and ultimately an unsafe and forbidding urban wasteland. We only need to look south of the border to see what those are like.

Market value assessment threatens the very vitality and health of Metropolitan Toronto's cultural and economic heart. Any program weakening that core will lead to the deterioration of the Metro area.

The TSA has focused its efforts on promoting a strengthened and revitalized city of Toronto. MVA would literally undo all of the strides we've made. For example, over the past year the TSA has been monitoring the city of Toronto's new official plan, entitled City Plan. Through careful review of their work, through countless meetings with planning staff and deputations to city council, we have offered suggestions on how to improve the plan. Our chief concern has been how new regulations might inhibit the growth and development of the city. We're currently working with the city in that regard. However, market value assessment is a much more serious threat to the health of Toronto. Any concern about planning legislation is insignificant when compared to the disastrous implications of MVA.

We have also been working with the city of Toronto over the past few years on the Housing on Main Streets initiative. This is a program sponsored by the province of Ontario. It's the province of Ontario's ministries of Housing and Municipal Affairs and the program would help increase the tax base in the city of Toronto by encouraging the construction of more buildings along Toronto's main streets. The concept is based on better use of city services. Market value assessment will remove any incentive to promote better utilization of the existing infrastructure.

More than 90% of the properties on main streets are owned by small business persons with very small parcels of land. Sometimes they're six metres wide, 12 metres wide, but the bulk of the properties, almost 94%, are less than 12 metres wide -- very small. Market value assessment will act as a major disincentive to redeveloping these small properties. This is a threat to the entrepreneurial component to Toronto. It'll basically kill the small business initiatives. Market value assessment would destroy any hope of intensification on main streets and force the small business person right out of the city itself.

The TSA has also made deputations before John Sewell's Commission on Planning and Development Reform in Ontario. Our goal again is to ensure that planning in Ontario contributes more to the growth and health of our cities. We have also worked with David Crombie's Royal Commission on the Future of the Toronto Waterfront offering our support to its work on bioregional planning for the area surrounding Metro. Market value assessment undermines the important work of both commissions.

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The TSA has been involved with these projects because we're concerned about the future of our urban area. In the past, Toronto has been internationally recognized as a "livable city" and a "city that works." Toronto successfully avoided the problems which plagued so many North American cities in the past few decades, particularly the abandonment of the inner city and the destruction of the rich urban fabric which once existed downtown. MVA will create the horrifying situation that Torontonians have been working so hard and so long to prevent.

Toronto underwent many challenges that could have undermined its integrity and success over the past few decades. Due to the intense pride in the quality of life that Toronto has always offered its citizens, the threats to high-quality, stable, downtown residential neighbourhoods were successfully challenged in the late 1960s and the early 1970s. As a result, Torontonians have lived in residential communities well served by public infrastructure, a highly acclaimed public transit system, a high-quality public school system, adequate parks and community services. Residential communities have been well served by local main streets located within easy walking distance. MVA is the biggest threat that Toronto has ever seen and undermines all the successes achieved in the past few decades.

It seems most inappropriate to put such a back-breaking tax system as MVA on the very citizens who are the most efficient and cost-effective to serve. Toronto's compact urban form has offered Torontonians a rich and culturally fulfilling lifestyle. It has also led to the most efficient and cost-effective form of urban living in the greater Toronto area. Due to a much higher density in the city of Toronto than the rest of Metro, the provision of city services and infrastructure is much more efficient. Torontonians live within closer proximity to one another, on smaller properties and within walking distance to city services, community facilities, shopping and transit facilities. This pattern of urban living is much more efficient to service than in any other municipality within Metro and the surrounding area. Market value assessment will make it unaffordable and much less desirable to live in this manner, to the detriment of the entire region.

The citizens of Toronto should not be penalized for choosing to live within a responsible environmental setting. Living in higher densities, within easy access to local and regional services, entertainment, shopping and institutions is the best environmental model. The ability to walk, to cycle, to take public transit during the course of one's daily routine is the most environmentally sound pattern of urban living. Living in the city is a much less automobile-dependent lifestyle and not only helps preserve our air quality but also improves the quality of everyday living. MVA will discourage this and promote the exact opposite, which is urban sprawl which needs greater infrastructure to service as it's more costly to implement public transit and all the other public infrastructure necessary to support development.

We believe that MVA encourages sprawl at the expense of the city, thereby undermining the most efficient urban pattern and forcing the loss of our agricultural and green areas surrounding Metro. We were under the impression that the current government, the government of Metro, was interested in the environment. This is a tax that will actually work against the environment. As an alternative to market value assessment, encouraging growth within the existing inner city would reduce the pressure to continue to use land in the most consumptive way and increase the city's tax base. MVA works against this concept.

We believe that there ought to be large incentives provided to citizens who live efficiently in an environmentally conscious way, instead of punishing them through programs like market value assessment. It's true that living within the city of Toronto has always been considered highly desirable and therefore has had more value attached to it. Some of the most desirable cities around the world have very high densities and are able to provide good urban services in an efficient and economical way. Their governments actually reward the citizens of those cities for their contribution to efficiency and environmental consciousness. Citizens of Paris, for example, have the lowest property taxes of anywhere else in France. Policies have actually been developed to promote the centre of Paris as the focal point of the region and the economic engine that drives the surrounding municipalities. There's a recognition that Paris is fundamental to the economic and cultural life of the surrounding region.

When the city of Toronto begins to decline and deteriorate, the Metropolitan area will undoubtedly follow. The city of Toronto is the heart and soul of the larger Metropolitan area. The success of the region is dependent on the health and life of the city centre. Market value assessment will eat away at the core of Toronto until it will become an empty shell and a less desirable place to live. With MVA, the same mistakes made by many other North American cities are about to be made here. Consequently, the same results will occur in Toronto. We support Jane Jacobs' opinion that MVA will result in a city for the very rich and the very poor. The working middle class will not be able to afford city living. Therefore, we predict that there will continue to be some well maintained neighbourhoods existing as islands surrounded by many more areas that will decay and deteriorate.

This is not the Toronto that we have always felt proud about, and we can't imagine that this is the kind of Toronto that people in the surrounding municipalities would like to live near and we can't believe it's the kind of Toronto that the governments of this region and the province would like to foster.

We have three recommendations. One is, obviously, stop market value assessment instantly. Number two is to continue to look at a true tax reform that will promote growth, as well as redress existing inequities. Number three, to investigate ways of increasing Metro's tax base by stimulating construction. We recommend supporting the province of Ontario's very own goals and initiatives to strengthen the existing urban areas through intensification, thereby building a better tax base. That's not happening. We should be luring business and residents to our city, not driving them away.

Let's begin to renew and rebuild Toronto, not dismantle it. Thank you very much for this opportunity.

The Acting Chair: Thank you. Ms Poole.

Ms Poole: Mr Cappe, I'd like to very much thank you for your presentation today. You have in a very articulate and fulsome way explained how Toronto will not be livable city if this plan goes through.

The main points I'm taking out of your brief are that if market value assessment and this plan go through, we will have large numbers of people migrating out of the city because it's more advantageous for them to live elsewhere; that small businesses will be quite devastated and there would be no hope of intensification on our main streets -- it would force many of our small businesses out of the city; the third point is that you're talking about going to the scenario where we have the very rich and the very poor who are subsidized because of the loss of our middle class; and fourthly, you've talked about the environmental impact of the encouragement of urban sprawl.

In your opinion, given how forcefully you've presented this viewpoint, do you see any other way that we can help preserve our city if indeed this plan goes through? Is there anything we can do to try to counteract this very devastating reality if the government passes this plan?

Mr Cappe: I actually cannot think of a way. If market value assessment goes through, the damage is done. I think this is a retrograde tax, obviously, from my presentation, but we need to look at other ways instead of market value assessment to deal with the inequities that exist, and we agree that there are inequities.

We also agree that there's a reduced tax base and that has to be dealt with, but this is not going to help. This is going to create more of a problem. So if market value assessment goes in, I don't see how -- the small businesses that we see, the small property owners are in a difficult situation as it is. There's an incredibly difficult general tax problem in this city and this province and this country, and the small property owner really wants to maximize his investment, and with all the layers upon layers of governmental regulation, it's impossible for him. It's impossible for a store owner to add a floor on top of his small building. He might have a two-storey building on Bloor Street. The rules and regulations don't permit it now, and market value assessment will continue to undermine that.

That's why the province of Ontario ministries of Housing and Municipal Affairs have looked at issues like that. They're coming up with proposals to change that, to actually make it a lot easier, and then once that's done and those changes are made to encourage that kind of initiative, market value assessment will wipe it out.

Ms Poole: Thank you.

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Mr Turnbull: Mr Cappe, thank you for an excellent presentation. The reason I asked the question as to what your area is at the beginning is, it's reasonable to say that your association does not represent narrow self-interest; it takes the perspective of the whole of Metropolitan Toronto and indeed beyond.

I take from your presentation the cry that this will lead to decay of the inner city, and you've asserted that. The inner city is more efficient; you said that. MVA removes incentives to redevelopment, and indeed that would mean that we could not move towards intensification, which has been the battle cry for the last few years. We've been talking about intensification, but zoning hasn't kept up with that, and I think this would tend to depress any possibility of that.

You also said that the inner city is more efficient to serve. I was most interested that you said this works against the environment.

I wonder if you could maybe expand on the two themes: that this will work against redevelopment and intensification and also that this will work against the environment.

Mr Cappe: In terms of the environment, as I said, the most efficient, environmentally conscious way of developing any urban area is through compact forms, through having people living closer together, where the services are easier and less expensive to provide. Obviously, if you have less distance to travel, pipes cost less. If you have schools that are able to take in a catchment area where students actually walk to school, it's cheaper.

We've put billions and billions of dollars into Metro's transit system; streetcar tracks and subways cost billions of dollars. Right now, we're losing population as it is, and market value assessment will make it even worse. It'll be less efficient to run the infrastructure we have. I can see a scenario where we'll have to start closing subway stations. It won't be efficient to keep them going, because if we continue to lose population -- and MVA will continue to do that -- it just won't be economically viable to run the subway, or at least not all the stations, and I think that's a serious problem.

In terms of the environment, if you're encouraging people to walk, to bicycle and to take transit, the only way that can really work is if you live within a reasonable amount of density. A lot of people go to other places in the world -- some people go to Europe and other places around the world -- where you see very dense populations and you see the ability to walk and ride and take transit in a very easy manner and an environmentally conscious way.

The opposite is sprawl, which means having people live very far apart, away from their infrastructure, not even being able to get a quart of milk without getting into a car and polluting the environment. That should not be considered the same way as living in close proximity -- with all the negative impacts: It's not always great to be living so tightly packed. There are downsides to it: It's a little noisier and a little dirtier at times. But the people who are living that way are living for the lifestyle, for the positive aspects, and it is also efficient.

In terms of redevelopment, as I say, it's difficult now to intensify. The zoning rules are changing -- very gradually, but they are changing -- but what's the point of changing the zoning rules if people won't be able to afford to pay their taxes, if people won't be able to sell their property so somebody else can come in and do a similar kind of intensification project? It wipes out the benefits of any kind of changes on the local level.

Mr Turnbull: We had an example yesterday of a lady who has a house in Scarborough, and she has a shop in Scarborough and a shop at Yonge and Eglinton. She stated that her house in Scarborough is backing on to a ravine with a view of the lake. She pays $3,000 a year and she's getting a reduction in her taxes. There's a little, tiny, unfinished apartment above her store at Yonge and Eglinton and the taxes now will be $6,000. She says it's just unrealistic.

Mr Cappe: Yonge and Eglinton is at a subway station, and the amount of money we all put in to build the public transit system and the subway is not being recognized. We should be encouraging people to live close to Yonge and Eglinton and Yonge and St Clair and Bloor and on the Danforth as well.

Mr Perruzza: You talked about how we should be encouraging people to live in the inner city, and that if market value goes through, everybody's going to move out. What you're saying is that there should be incentives and rewards for people living in a compact urban environment. So what you're saying is that we should build in inequities in our tax system that essentially reward some people and punish others, if I understood your argument correctly. What's fuzzy in my mind is where you would draw the boundaries. Where would you say, "This is where people should live, this is the geographic area in which people should get rewarded," and then if you lived on the other side of the street, beyond that geographic area, then obviously you should be paying more?

I think everyone here agrees with you that market value is probably not the best way to tax anybody. Certainly our party has always favoured the position that taxes should be based on ability to pay. You try to strive for that, but if you can't achieve that, I guess the next step down would be something similar to market value, because that also suggests to some degree, although it's not fully so, that some people can afford bigger homes or homes that are worth more, depending on when they bought them etc, and therefore there's some correlation to their ability to pay. Is that what you're saying?

Mr Cappe: First of all, how can you in all good conscience support any kind of tax system that you know isn't the best and isn't the right way to go? I don't understand how people who represent the people of this province and the people of Metro Toronto --

Mr Perruzza: We didn't create this system. It was the Conservatives, essentially, who brought it along.

Mr Cappe: I don't really care who created it. I'm talking about people who are in the Legislature now. If it's not the best system, don't put it in. It's a very simple way to do things and to think about it.

Mr Perruzza: But it's what we have now.

Mr Cappe: I'm not talking about punishing people. I'm talking about actual fairness. If it costs more to provide services outside the city of Toronto, in areas of very low densities, those are the people who should not be given the incentives. I'm not saying to tax them more, I'm saying that it costs more to service those areas, and if it costs more to service those areas, then they should be paying for the cost of those services. It costs less to service the people in the city. It's a simple issue of fairness.

Mr Perruzza: If you live on Post Road, you probably have one of the lowest densities around, but under our current system, by and large, those people get a break, and the homes are worth millions of dollars.

Mr Cappe: I agree there are inequities.

Mr Perruzza: I don't understand how that follows. In Downsview --

Mr Cappe: It follows because we're saying there are inequities in the system; we know that --

Mr Perruzza: Let me finish. In Downsview, we have a fairly compact urban environment. We have a lot of high-rises, we have a lot of small lots, we have a lot of semi-detached homes, and those people, essentially working class people, pay far more than they should be paying under our current system. You're saying to me, reward the people on Post Road --

Mr Cappe: I'm not saying that at all.

Mr Perruzza: Well, you're supporting the current system.

Mr Cappe: I did not say that. I was talking about tax reform.

Mr Perruzza: You're saying, "Support these guys on Post Road with these very low densities" --

Mr Cappe: Excuse me. You're putting words in my mouth, and I really resent that.

Mr Perruzza: I'm not putting words in your mouth.

Mr Cappe: Yes, you are.

Mr Perruzza: This is what you said. When we get Hansard, I'll send you the Hansard.

Mr Cappe: Can I actually state what I said so that you don't interpret it incorrectly? What I said is that there's a problem with the tax system as it is now. One of our recommendations is a true tax reform. I've never said that the status quo is appropriate for the people on Post Road.

I said there were inequities; it's in my third recommendation that there are inequities. I'm saying that this is not the system to deal with the inequities. This creates more inequities. What we're suggesting is to take a look at ways of taxing appropriately so the people on Post Road will not get the breaks they're getting. Maybe it's a tax based on size of property.

There are a number of things that should be looked at, but market value assessment is not the way. We realize there are inequities, but don't put in something just because it's here, it's on the table. It's wrong and it's not fair.

Mr Perruzza: So if the person on Post Road sells his house -- it doesn't matter what his income level is -- and moves into a 30-foot lot in the city of Toronto or in Downsview, for that matter, then that person should get a break and should be rewarded for having done that? Is that what you're saying?

Mr Cappe: If somebody owns a piece of property, it should be taxed on a fair system based on the cost of servicing the land. So if somebody's living in an area and it's very spread out and it costs a lot to service, he should be taxed on it.

Mr Perruzza: So farmers --

The Acting Chair: Mr Perruzza, I'm sorry. The time has expired. Mr Cappe, I want to thank you for your presentation.

Mr Perruzza: I've been watching my watch, Mr Chairman.

The Acting Chair: Well, I'm telling you that you've had five --

Mr Perruzza: Dianne got seven minutes. He got six and a half minutes, right? And I'm working on four.

The Acting Chair: No you're not. Mr Cappe, thank you very much. This meeting is adjourned until 1 o'clock.

The committee recessed at 1201.

AFTERNOON SITTING

The committee resumed at 1302.

The Chair (Mr Charles Beer): I now call the afternoon meeting of the standing committee on social development to order, Saturday afternoon, December 5. We're meeting to consider Bill 94, the Metropolitan Toronto Reassessment Statute Law Amendment Act, 1992.

JOHN S. WOODS

The Chair: I'd like to call John Woods, deputy city treasurer, the city of Toronto, to the table. Welcome, Mr Woods. Please go ahead once you're settled.

Mr John S. Woods: My name is John Woods. I'm deputy city treasurer for the corporation of the city of Toronto. City council, at its meeting on November 16, did move a motion requesting the mayor, members of council and appropriate city staff to make representations, if possible, to your committee.

As a first comment, I'd like to note that I'm in full agreement with the points raised by my colleague Wanda Liczyc, the treasurer for the city of North York, last night. There are a number of bureaucratic requirements in this legislation as proposed that should be changed or deleted.

At this time, Mr Chairman, Mr Minister and honourable members of the House, I do thank you for the opportunity to speak to you. The legislation before you is framed to implement the interim Metropolitan Toronto market value assessment plan. It is, however, my hope that the government and the House will be persuaded not to approve the legislation or, at the very least, to refer it for further study and review.

The bill seems to me to be being pushed through in an extraordinarily precipitate and hasty manner. It does have many features that would cause taxpayers and municipal councils and civic officials difficulty. If enacted immediately, it could cause serious harm to both the economic and social fabric of the municipalities in this region.

However, the need for reassessment is acknowledged across Metropolitan Toronto, just exactly as its chairman said in his remarks to your committee and as every statement from the city of Toronto indicates. However, this particular interim plan, as provided for in this particular legislation, is the wrong plan at the right time, in my view.

I have four instances to bring to your attention.

Mr Turnbull: On a point of order, Mr Chair: I just want a clarification. You just said, "wrong plan at the right time." Your text is --

Mr Woods: I didn't mean that at all.

Mr Turnbull: Okay. Perhaps Hansard could correct that.

Mr Woods: Thank heaven you said that. "It's the wrong plan at the right time." It's the wrong plan at the wrong time, in my opinion.

The Chair: Sounds like a song.

Mr Woods: In my first of four instances, the plan is being implemented too fast. There is no way for interim tax bills in 1993 to reflect the new plan. I mean, that's provided for, but it's an unfortunate situation. There is no way for Metro or any area municipality or for the school boards to meet the artificial deadlines to be imposed for adopting their budgets. In particular, ministry staff advise there is no way the Ministry of Revenue can meet the prescribed deadline for delivering the necessary assessment rolls that are an essential prerequisite for calculating 1993 mill rates. They cannot do it on time.

I respectfully suggest to your committee that you should inquire into these circumstances before supporting an effective date in this legislation of January 1, 1993. It's too early. There's insufficient information available to permit tax billing systems to be redesigned and related computer systems specifications drafted. Bill 94 requires essential information to be provided by regulations and by Metro bylaw, and these are not available now and may not be available for some time.

There is insufficient time to reconstruct computer files which have been built to provide for one single assessment figure or field and which would now have to allow for three different fields: the new market value, the new assessment and, for records purposes, the old assessment. It can't be done before 1993 tax bills must be printed. There is insufficient time to reprogram and to test all modules of existing systems so that all these modules will refer to new file locations.

This is a Metro council initiative, but it is the area municipal treasurers who are required to bill and collect taxes. I do respectfully suggest to your committee that you should check with each area municipality on whether they can have satisfactory systems in place in good time to reflect this legislation for 1993 tax bills.

In my second of four instances, I believe there are specific provisions in the legislation that are not fair or right, and some matters not included which should be.

For example, half the remaining partial graded exemption is being taken away from residential taxpayers in the city of Toronto by subsection 214.3(7). This is being done without discussion at Metro council, without discussion at Toronto city council or anywhere else. Why is this necessary when Toronto has already adopted a much gentler phase-out over five years?

Why is there no requirement for Metro to reimburse area municipalities for costs incurred only because of the complex and unusual provisions in their plan?

Why is there no requirement in the legislation for the Ministry of Revenue to reimburse area municipalities for costs, including lost interest revenue, that could arise from any late delivery of assessment rolls?

Why is there an April 1 due date for budgets set when, as far as I am aware, not Metro, no area municipality and no school board has set a budget by then in any of the last 10 years?

How can legislation be administered that is not clear in its definition of such important matters for the public as "1992 base tax" or "change of ownership"?

How can legislation be administered which does not clearly distinguish between commercial and industrial property?

I do respectfully suggest that your committee should require further information to be given you as responses to these questions.

In my third instance of problems, this legislation does not deal with business improvement area levies. That is a local levy, and in the city of Toronto we have some 27 business improvement area levies each year with some hundreds of business persons in each area. There is no provision for protection to business persons in such areas who would pay realty and business taxes on one basis, but any business improvement area levy on a wildly different basis.

I respectfully suggest that your committee should require much more information on this important matter.

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In my fourth instance, there are no enforcement or penalty provisions and no terms of reference included in the section of the act discussing a 1998 to 2002 Metro plan. You should be aware that the Metro council formally requested its chief administrative officer to bring forward a plan for developing such a further and final plan at the same time as the current interim plan was before it. This was not done, not even attempted to be done, which is unfortunate.

In the legislation with respect to this 1998 to 2002 Metro plan, there's no requirement for economic or social impact studies, nothing to require consultation with area municipalities and school boards, no requirement to study alternative assessment plans and nothing to make it certain a further plan will be brought out at all.

I respectfully suggest to your committee you should require a much fuller description in this part of the legislation of what is to be done.

At this point, I'd like to mention that the interim Metro plan before you is not a full MVA plan. In fact, a full MVA plan has not been described to Metro council or to yourselves. The last time some such plan was described was in the 1984 Metro impact study, and at that time there was a considerably different impact on my municipality, the city of Toronto.

I would suggest that you might like to obtain information on the difference between option A for the Minister of Revenue in this legislation of full market value assessment plan and option B, which is the only basis being considered by the interim Metro plan.

From a practical administrative point of view, this legislation does not seem possible to administer right away. From a public information point of view, there is considerable relevant information that needs to be obtained, distributed and discussed, in my opinion. From a tax impact point of view, there are large numbers of persons to receive tax increases in difficult economic times and a great deal of uncertainty created for them about possible future tax increases.

I respectfully suggest your committee should not support this legislation, and should at the very least recommend that it be referred for further study by the Ministry of Municipal Affairs.

Mr Chair, thank you for the opportunity to be here.

The Chair: We'll move to questions. Ms Poole?

Ms Poole: Thank you, Mr Woods, for your presentation today. You've raised a number of very interesting points. One of them is that you say that an April 1 due date for budgets set hasn't been done before by Metro, nor the area municipalities, nor in fact the school boards, yet why, suddenly, is there an April 1 due date set for this plan? My question to you is, do you believe that this legislation needs to be passed by December 31, 1992, in order for it to be implemented by Metro for next year's tax year?

Mr Woods: In response to the question, if it's to be adopted for 1993 taxation, certainly it would have to be passed right now. There's so much to be done by the Ministry of Revenue in terms of notices, open houses, clarification and roll returning, and there's so much to be done by systems changes.

Whether it should be done is another question, and I don't think it should be done this year, for two reasons, administratively. Number one, we aren't doing interim bills. We aren't starting from the beginning of the year with appropriate tax billing systems. There's going to be a horrendous impact at June 15 when the full impact of these increases hits quite suddenly. From my systems point of view, I'd like a lot more time to put things together and test them.

Ms Poole: A second question: You've asked why there's no requirement for the Ministry of Revenue to reimburse area municipalities for costs including lost interest revenue arising from any late delivery of assessment rolls. I can't answer that question for you, but it's a good one. But we have the Minister of Municipal Affairs here today and perhaps he could respond to this particular matter.

Hon David S. Cooke (Minister of Municipal Affairs): I've taken note of a number of the concerns you have. As you've indicated all along in your presentation, there are a number of questions that are essentially bureaucratic items that you've raised which I don't think you'd expect a policy person to have the response for. So I've already indicated that I want to go through your brief with the ministry officials from Revenue and Municipal Affairs on Monday morning.

Mr Woods: I appreciate those comments very much. It is a particular concern that if final tax bills are delayed past a normal date, say June 15 for the city of Toronto, there could be, given the volume of our billings -- 1.8 billion per year -- an extraordinary carrying cost incurred for our expenses. But I thank the minister for his comments.

Mr Turnbull: I won't reiterate the comments Ms Poole has made because I think they're very valid, but let me move on to the volatility of this plan. I believe that according to the 1984 market value studies which were done, it shows that if Metro had gone to pure market value there would have been a net reduction to the city of Toronto of some $20.5 million and there would have been a net increase to the city of Scarborough of $26.4 million. Is that correct?

Mr Woods: That is correct information from the 1984 impact study of Metropolitan Toronto, yes.

Mr Turnbull: And that's on pure market value.

Mr Woods: Based on 1984 market values using 1986 mill rates.

Mr Turnbull: In other words if, as has been suggested by some members of the government caucus, they would sooner see pure market value, the constituents they represent would in fact get increases under such a scheme.

Mr Woods: Yes, sir.

Mr Turnbull: So, conveniently, we have a situation where the city of Toronto is being forced to accept what used to be called a section 63 in order that the suburbs get reductions.

Mr Woods: That's perhaps the case. I'd like to comment that it was a clear decision of the Metro council a couple of years ago not to go with pure market value in requesting an interim reassessment, but I think it difficult that there has not been descriptive information put before Metro or this committee on what is the situation under what was section 70, a pure market value, if only to allow comparative information to be considered by the responsible parties.

Mr Turnbull: Am I correct in thinking that the assessment has not been completed for 1988 and in fact there may be some nasty surprises for Scarborough and North York?

Mr Woods: I think the Ministry of Revenue produced very complete information on tapes. What I don't think has happened is that all of us in the area municipalities or all of the responsible officials at Metro have had any time or ability to review all the individual circumstances. It's been a process all the way through discussion of this Metro interim plan that for individual properties in the city of Toronto there are unusual situations. We're aware of the La Scala restaurant and the motor dealer out in the west end. There must be similar situations in the city of Scarborough, and I refer you particularly to the golf course. But that's Scarborough.

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The Chair: We have to move on now.

Mr Robert Frankford (Scarborough East): On the problems you raise about implementing in a timely fashion, have you discussed these with your equivalent in the other municipalities?

Mr Woods: Yes, indeed. These have been discussed with the treasurers of the other municipalities, and in the subcommittee of the Metro staff task force. It's fine. There's a phrase about knocking your head on a brick wall. Written submissions about the difficulties with this plan have been made by city of Toronto staff and by North York staff, and I believe by other representatives of area municipalities through their representatives in the subcommittee. They have not been taken into account, in my view. All our concerns certainly haven't been resolved.

Mr Frankford: I represent Scarborough. Is Scarborough expressing the same concerns that you are?

Mr Woods: The treasurer, Mr Creech, is a member of the Metro task force and the manager of revenue for Scarborough. Estelle Lo is a member of the subcommittee. Each person has made appropriate representations at his level of these working groups to get his administrative concerns responded to. They too, for example, like Wanda Liczyk, like us, wanted draft legislation a long time ago and have not been able to obtain it, either to comment on it or to work with it. Yes, Scarborough staff have made appropriate representations on operational matters.

The Chair: I'm afraid we'll have to move on to the next speaker. Thank you very much for your presentation.

Ms Poole: I have a request for information.

The Chair: Yes.

Ms Poole: Earlier, when I asked the minister to respond to one specific question, I failed to make clear that I would like the ministry, and also the Ministry of Revenue, to respond to all six points made in Mr Woods's brief. This is in addition to the request I made yesterday from the city of North York treasurer. I might just add, I asked Mr Woods if the city of Toronto concurred with the city of North York yesterday on those administrative matters and he said, "Yes, 100%." I meant to ask him that question, but I did want that on the record.

The Chair: I believe he also indicated in his remarks that he agreed with the brief of yesterday. Your questions are noted.

AUDREY BIRT PETER TOMLINSON

The Chair: Would Audrey Birt come forward, please.

Ms Audrey Birt: My name is Audrey Birt. I'm the director of taxation and water revenue for the city of Toronto.I would like to thank you for this opportunity to come before you to speak on Bill 94.

There is no doubt that there are inequities existing currently in Metro, but instead of trying to find a long-lasting solution, Metro council chose to implement a plan that will worsen the problem for many low-income taxpayers across Metro. They made that decision based on the assumption that the information provided to them was accurate and a true reflection of the impact on their constituents.

The assessment information provided to Metro in August by the Ministry of Revenue was only a snapshot at that time and distorted the assessment picture for area municipalities, a picture that they could expect to see in 1993. The actual assessment figures for 1993 will look significantly different, affecting the area municipalities' share of the Metro levy, enough to remove many promised tax decreases in Scarborough and other municipalities. Although advised of the problem, Metro staff have continued to provide elected officials and the public with financial information on cost-sharing and projected tax changes based on the original impact data, rather than awaiting the update offered by the Ministry of Revenue.

Metro council was led to believe that administrative processes and systems were in place in area municipalities to accommodate the Metro plan. This was and is still not the case. Area treasurers and tax collectors continue to meet with Metro staff to try to obtain definitions and details of the proposed plan in order to determine the administrative changes necessary.

The last-minute changes recommended by Metro staff to Metro council and subsequently adopted were not discussed with the area municipalities or school boards beforehand. Staff of the school boards were not given the opportunity to participate in the administrative discussions of the plan, yet the school boards' share of the tax bill is in excess of 50%.

The Metro interim plan, with its last-minute changes, was not well-thought-out. The criteria adopted will continue the inequities currently in place and not move us closer to fairness. I have attached two charts that identify some of the inequities that the Metro plan will cause.

The area municipalities have recognized that they will require significant changes to their accounting and budgeting procedures as well as their tax billing and collection processes should this legislation go through. Bylaws and supporting policies will have to be reviewed and appropriate changes made to prevent court challenges. As yet, we do not have sufficient information from Metro to make these changes. The plan cannot be effectively implemented for 1993 taxation.

Facing a late return of the assessment roll and incomplete and untested transition processes, area municipalities will face high risks, which will result in taxpayers having to bear the full-year impact of tax increases in a six-month period. This will result in cash flow problems for many taxpayers and increased collection problems for area municipalities.

Local area municipal and school board budgets will be impacted by Metro's plan. There is insufficient time to identify all of the budgetary impacts and take appropriate action to prevent significant hikes in local area mill rates. To not do so may result in tax revolts in many areas. With so much unresolved and at risk, it does not make sense to legislate implementation in 1993.

The Metro interim plan, which may seem simple when presented in broad percentage terms, becomes complex and difficult to explain to taxpayers when applied to individual properties.

Metro is requesting permission to implement a plan that will cause significant tax shifts: shifts between classes of properties and between public and separate school supports. In addition, their plan will result in pooling of local area levies with respect to the local share of abatements and surcharges. Yet we are not aware of any school board that has been consulted on the impact of shifts between the public and separate school supporters and there is no record of the local area councils agreeing to that kind of pooling of the local levies. Accountability for elected officials may become a serious issue as a result.

Many of you may not see this as a problem, as other municipalities have phased in market value reassessment on a region-wide basis. But Metro is different. The majority of Metro council members are separately elected. They are elected to deal with Metro-related matters and do not sit on area councils. This legislation appears to allow them jurisdiction over tax matters and levies that are currently the mandate of the local area councils and school boards.

I have serious concerns about authorizing an upper-tier municipality with separately elected representatives to set tax policies that may impact negatively on the local area municipalities' ability to administer and collect taxes for their own needs and those of the boards of education. At a time when governments are striving to reduce bureaucratic red tape and help taxpayers acquaint accountability with their elected officials, why would you support legislation that will move us farther away from that objective?

The proposed legislation prevents us from levying for our own purposes or those of the school boards until Metro provides us with its figures. This may have a very negative impact on interest revenues and cause an increase in bad debts. This limitation in the legislation is unreasonable and unnecessary. It was never discussed with the school boards and area municipalities.

There is no requirement for Metro to reimburse the local area municipality for costs and losses incurred by its plan. Current legislation requires local area municipalities to pay the full cost of any phase-in that they wish to implement. Why is the province supporting legislation that does not require Metro to bear the costs of its plan, but expects the area municipalities to bear the financial burden?

The current economic situation in Metro is serious. To date, the city of Toronto has processed more than 5,000 applications to cancel business taxes due to business closures this year. More than $25 million in taxes in the month of November alone have been cancelled. Metro's interim plan may appear to be a gentle move towards equity, but I honestly believe that it will mean the demise of many more businesses throughout Metro. The resulting loss of jobs and neighbourhood decay will be the only measurable result of this legislation. Who pays the tab then, when there is no commercial base on which to draw?

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All of this for what? Equity? The proposed legislation allows Metro council to manipulate the tax burdens without an attempt at equity for all properties or an understanding of the economic impact on the communities in this metropolis. It requires no consensus or even consultation with the elected representatives on the area councils and school boards. Their plan discriminates against some home owners. This will happen regardless of whether reassessment at time of sale is allowed, as newly constructed homes in future years will be faced with taxes based on full market value.

Ease of administration? The proposed legislation allows Metro to impose requirements on area municipalities that will result in complex changes to procedures and systems and open us to costly court challenges.

Understandability? Metro staff have yet to be able to articulate the details of the capping provisions.

Accountability? The legislation further entangles the roles of elected officials in the municipal and educational fields. It will enable Metro council to make decisions that have significant financial impacts on area municipalities and school boards over which they have no jurisdiction. It involves them in the tax administration process that is the mandate of the local area councils.

Why change now? Many months of hard work have been carried out by the property tax working group of the Fair Tax Commission. I had the honour of participating in that process, and we have finished our report. It contains many sound recommendations for changes needed in property taxation. Why implement legislation at this time that does not consider the work of the Fair Tax Commission's property tax working group? Why implement interim changes that have a lifespan of five years when such changes have high pricetags to be borne by taxpayers, disruption of tax administration procedures and systems, and confusion and frustration for taxpayers as well as the obvious negative economic impact on the commercial sector?

Please vote down this legislation. Instead, step back, take a look at what really needs to be changed in the municipal property tax process, read the Fair Tax Commission's property tax working group report and then develop legislation that will really address the inequities and flaws in the current system. Allow sufficient implementation time periods to allow the area municipalities to provide for a smooth transition. Make changes that are meaningful and long-lasting, not ones that will kill the heart of this province. Thank you very much for the opportunity to speak to you today.

The Chair: Thank you very much for your submission and the table at the end.

Mr Turnbull: In view of the excellent points that have been raised by Ms Birt, I would like to defer my time. I believe Ms Poole would also like to defer her time to extra questioning of the next witness, who is from the same organization but has some extra expertise that can maybe be brought to this, if you don't mind.

The Chair: If the committee wishes, I can call the next witness and both can stay for questions. Is that agreeable to you? Then I'll call Peter Tomlinson. We have a copy of your submission; please go ahead.

Mr Peter Tomlinson: Rather than read it, Mr Chairman, I could try to boil it down to a few points, at the risk of maybe having to wince when I look at the transcript.

I think these hearings have been very useful in identifying issues and pointing to impacts that weren't properly understood when we began these hearings. These are the hearings that Metro never had. Metro had plenty of hearings on earlier versions of this plan, but the plan changed significantly after the last opportunity for public input, so this is the only opportunity here, over the last week and over the next couple of days, to have an in-depth look at this plan as it now is before you.

I think, of all the issues that have come out at the hearing, the one that is of most significance to the province of Ontario is what I'll call the spillover damage issue, the impacts that spill over the Metro boundary and stand to hurt people outside Metro. For power consumers all over Ontario, we heard yesterday it's $60 million. For railway workers in all parts of Ontario, we've heard from the unions and from the railways that there could be hundreds or thousands of jobs at risk outside Metro. The people who stand to be damaged here are not represented on Metro council. They're represented by you, the province, and only you can look out for their interests.

These spillover damages are traceable to one feature in this bill. They're traceable to the non-capping of rail, utility and vacant land properties, the properties Metro decided to exclude from the protection of capping. If Metro had capped everyone, we wouldn't be here talking about spillover damage. There would be plenty of issues for the hearing to look at, but most of what would happen as a result of this reassessment would be internal to Metro, at least arguably a local issue. The dollar impact of these spillover damages I'm talking about, the $60 million on Hydro, the $40 million on CN, all of that would be maybe 5% to 10% of what we're talking about here had Metro capped everybody.

So you have this feature of the plan, which I think is uniquely of concern to the province. Let me contrast it with another feature, the non-capping of single homes after they sell. You can say on that issue: "We don't like it. It's inconsistent with our compromise approach. It's a lot more consistent with transition to full MVA, but it's for Metro to decide whether it wants to do that. It's a local matter."

With the non-capped rail/Hydro/vacant-land properties, it's demonstrably not a local issue; people all over Ontario are affected. There are really only three positions you can take, now that that has been so clearly brought out at these hearings: the hundreds and thousands of jobs at risk, the tens of millions of dollars that gets shifted to people outside Metro in added burdens.

You can say, as the Hydro brief asks you to do, as the CN brief asks you to do, as the CP brief asks you to do: "We represent the people of Ontario as a whole. We will require Metro to cap everyone." That is one option that is certainly open to the province, and I'll talk about that later on.

A second option that's open to the province is to say: "We've looked at this. It's true that it's not consistent with our compromise approach, but we've decided it's fair. We've decided that people all over Ontario should pay some of the burden of this reassessment, even if it is tens of millions or hundreds of millions of dollars. We've looked at it, so we're putting the plan through now as it is. Having thought about that point, that's our decision."

If this bill now goes through unamended, implicitly or explicitly, that's what you're saying to the people of Ontario: "We've decided, even though all these burdens are going to get shifted to you across the Metro boundary, even though it's inconsistent with a compromise approach that we, the province, have taken, we've decided it's fair. Let's do it."

The third thing you can do, now that these spillover damages have been so clearly identified at the hearings, is say: "Let's take a more careful look at this. I think that would be the wisest course of action. Let's study it in greater depth." We don't need to talk about that option now, because that option would not be one we'd have to look at immediately.

But let's look at the second course of action that I suggested is open to the province, to say, "We've seen these negative impacts, these spillover damages that go outside Metro to all Ontarians, and we've decided to go ahead anyway." What that says is that the province has in effect bought into what Councillor Cavalier said yesterday, who is the principal architect on the political level, on Metro council, of the reassessment plan. He told you very candidly that it was a political decision: "We had to keep together 18 votes. We had to leave these properties uncapped and put the 200% and 400% tax increases on them because we needed the money. We needed the money so that residential taxes could go down $57.8 million in Metro, which is what is required if they're to have no more than a 10% increase and if they're to have only a 50% clawback of their decreases." Councillor Cavalier was extremely candid yesterday: "Why are these properties not capped? We made a political judgement. We needed the money. We had to hold together 18 votes. We needed the money to hold together those 18 votes."

So the province would in effect be buying into that political judgement and saying it is an equitable result for people all over Ontario to pay for this so that Metro's political balance can be maintained, so that we can have only a 10% increase cap on residential, even though other properties are capped at 25%, and so that we can have residential decreases clawed back only to 50%, whereas commercial is clawed back 75%. That's in effect what you'd be doing.

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I'd like to turn to the table at the end of my brief, if I could, which is from Metro and shows the interclass shifts of the reassessment; this table was also attached to Mayor Rowlands's submission. You see in the top row, residential properties, a decrease of $57.9 million. That is the effect of the reassessment, how the change in assessment vis-à-vis the vacant land, vis-à-vis the railway properties, affected those residential properties; plus an explicit subsidy, which Metro acknowledges it is paying, of $20 million, in order to have no more than 10% residential increase and in order to have a 50% clawback of residential decreases, which was critical to keeping those 18 votes together.

There were people on Metro council who said, "If we don't get at least 50% of the decreases, we're jumping overboard." There were other people who said, "If the increases are a penny more than 10%, we're jumping overboard." So as Councillor Cavalier told you yesterday, they had to have that $57.8-million drop in residential taxes to make this thing fly politically.

Where are they getting that money? Look on the table. Not from commercial; it's almost break-even. Not from industrial; that's another $20-million net reduction. It's coming from "other," which is vacant land; it's coming from pipelines and rights of way, the uncapped properties. That's why Councillor Cavalier told you yesterday, when you asked why they didn't cap everybody, "We made a political judgement and it's based on these numbers." These numbers are essential to holding together those 18 votes.

So those are the implications of going ahead now without amendment: "We're buying into the Metro political judgement and we're saying it's fair, implicitly or explicitly. To the people of Ontario, whom we represent, we're saying this is fair. Even though people as far away as Thunder Bay are paying for this, based on these political judgements, we think it's fair."

The second course of action that I suggested is open to the government, bearing in mind that the local issue spin, if I may use that word, is not available when we talk about the uncapped railway, vacant land and utility properties, because it's so demonstrably not a local issue -- in addition to going ahead without amendment, buying into the Metro political judgement, the first option I mentioned is to put the caps on, to say to Metro, "Cap everyone," as so many of the briefs that have come here have told you to do.

I have access to the Metro computer tapes; we got that under freedom of information, and that option could be accommodated within the plan. Instead of having the residential tax decreases allowed at 50 cents on the dollar, it would probably be only 20 to 25 cents on the dollar. It would certainly not be as politically attractive, but it could be done, you could have universal capping in this plan. Of course, it would fit much better the province's concept of this plan as a compromise, as a limited form of MVA. There would still be some tax decreases, albeit not as politically attractive as under the plan that's before you now. So that option is certainly available to the province, as so many of the briefs have asked you to do.

Let me try and sum up. The provincial government is the only political agency that can act on behalf of all Ontarians, so many of whom are negatively impacted by this reassessment. It's simply not open to you to pass the buck to Metro on the issue of the uncapped properties. It's demonstrably not a local issue. If you do say, "Let's hope Metro caps everybody; let's implore them to do it; let's give them the option," it's 99.9% certain that they will not take the option of capping everyone, because the political calculations that Councillor Cavalier so candidly told you about yesterday still hold. In fact, if anything, Metro's even more likely to do it this time. Now that they've learned how much of the burden they can shift outside Metro, they may say: "Hey, this is even better than we thought. Let's go ahead without the caps, because people all over Ontario pay for our reassessment."

You can't hand someone an option that they've already shown they'll take, that hurts people all over Ontario, that is now even more attractive to them than it was before, and then say, "We beg you not to avail yourselves of that option."

The Chair: Thank you very much. We'll begin questioning.

Mr Turnbull: Peter, if you don't mind, I'd just like to get your credentials on the record. Am I correct in thinking that you have your PhD in economics?

Mr Tomlinson: That's right, I do, from Johns Hopkins University in Baltimore.

Mr Turnbull: And I believe you lecture?

Mr Tomlinson: I'm a lecturer in urban economics at the University of Toronto, as I have been doing for the last 12 years.

Mr Turnbull: And I believe you're also a member of the Fair Tax Commission property tax panel?

Mr Tomlinson: I'm on the property tax working group of the Fair Tax Commission; that is correct.

Mr Turnbull: Thank you. I'd like to have a lot of quick responses, first of all. When is the Fair Tax Commission property tax panel going to report?

Mr Tomlinson: It will report on Wednesday next week.

Mr Turnbull: In other words, we're pushing this through before we see the results of the Fair Tax Commission?

Mr Tomlinson: If indeed we are pushing this through.

Mr Turnbull: It appears that way. Can you give me a sense of what the Fair Tax Commission thinks of Metro's MVA plan?

Mr Tomlinson: It believes that the transition elements, which are the capping and the interclass shifts that are reflected in the Metro plan, are inappropriate. That is the opinion of that report that will be released on Wednesday.

Mr Turnbull: Overwhelmingly, the people who have been coming here have been condemning this plan; in fact, I've never sat on a committee where the preponderance of people were against the bill. The Fair Tax Commission I believe looked at a comparative set of numbers, using Pickering as the model, of income tax by household, market value, unit assessment and various other plans. Can you comment on that?

Mr Tomlinson: What the property tax working group concluded, based on that study of Pickering, is that you don't need market value assessment to have a good ability to pay tax, a tax where the tax burdens fit household income or ability to pay. In fact, no property tax is very good in that respect. Market value assessment, unit assessment, which is based on the dimensions of your property, are all about the same. They all reflect ability to pay equally badly or equally well. So the working group said, "Let's take another look at unit assessment, let's have further study," because it avoids so many of the problems of market value assessment without being any worse in terms of ability to pay.

Mr Turnbull: Would unit assessment be less expensive to administer?

Mr Tomlinson: It would be far less expensive, because you only have to measure properties rather than value them, and you don't have the appeals.

Mr Turnbull: And you would have a one-time assessment and it would be stable.

Mr Tomlinson: Once you've gone through it once, that would be it. You wouldn't have to do it every four years as you do with MVA.

Mr Turnbull: I've heard it suggested that it's costing the province something in the region of $200 million a year, including appeals, to do assessments. Could you comment on that?

Mr Tomlinson: I wouldn't be surprised at that figure. You need the whole assessment function of the Ministry of Revenue, which is I think upwards of $100 million, and then in addition you've got the private sector costs of all these appeals: People have to hire lawyers at $400 an hour.

Mr Turnbull: This shift of money over to the uncapped areas, the railway rights of way, hydro and things like this, and it's going to hit Go Transit: You make a very compelling case that the costs are going to be spread right across the province, yet the government would have you believe that it has no choice but to pass this enabling legislation.

Mr Tomlinson: I think the government saw this as a local issue before the hearings started. The approach they took on the resale homes, that it's not a very good idea but if Metro wants to do it, it's for them to decide, I think they carried that same approach to the whole bill. But now in the hearings, we've learned about this spillover damage, the tens of millions of dollars that get pushed on to other people who aren't even in Metro, who aren't represented by Metro council. Given that, the government has a responsibility here, and I've identified the options open to them.

The Chair: Mr Turnbull, sorry, this is the last question.

Mr Turnbull: I think you've very well encapsulated the problem that Scott Cavalier exactly said, that this was a political judgement. Surely we should not be sanctioning something which is a political deal that's been cooked up. We should be looking at the best interests of Metro. Many presentations, particularly this morning from the Toronto Society of Architects, suggested that this could lead to a significant impact on the inner core of the city and would discourage redevelopment and intensification, which has always been encouraged in the past.

Mr Tomlinson: I wrote my brief the night before Councillor Cavalier gave his presentation, and I didn't dare say "a political judgement." I said "what some would see as a political judgement." When that question of "Why didn't you cap everybody?" was posed to Chairman Tonks, he wasn't nearly as clear as Councillor Cavalier, but he said it for me: They had to hold together 18 votes. They managed to hold together 20 -- even better; it gave them a bit of a safety margin -- by ensuring that residential got that favoured treatment. They needed the money from the uncapped properties to pay for that.

But what you mentioned about the Society of Architects does raise another provincial interest which I haven't focused on today: the planning interest, the intensification versus sprawl, which this government has been emphasizing so much.

If market value assessment is what this turns into after the caps are off -- and the pressure is certainly there in this plan to take the caps off -- once you look at your tax bill and see the surcharge to pay for other people to be capped, then I think full MVA would work very much against intensification of urban form, as the Society of Architects has said.

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And a lot of the insidious damage you would get with full MVA will happen even with the caps. If you're a business on Bloor West, you open your tax bill, you see that full MVA hit, then a temporary cap adjustment to bring you back down, what should you do? Obviously, get out of that area. The business will survive, but the commercial district will be red-lined just as surely as though a bank had done it.

Ms Poole: Thank you very much for your presentation. There has been a fair amount of debate on this committee about whether there was or was not a provincial responsibility vis-à-vis Metro's plan. The government has taken the position that this is Metro's plan -- in fact, Metro's legislation -- and that it should not interfere. I think you've given a very compelling reason why it is a provincial responsibility, a responsibility that the province must take up if it is to look after the interests of the people outside Metro.

I'd like to ask questions in two areas. The first area is to further your discussion about the deal that was cooked up at Metro which resulted in a shift between classes. When I brought this up with Councillor Cavalier yesterday, he said to me that preventing a shift between classes was not one of the goals of their assessment plan.

Yet I go back to Chairman Tonks's presentation on Monday night -- and this is a direct quotation from Hansard, at 1915-2 -- where he talked about the benefit of the public consultation process. He said, "The plan was modified to reflect" -- and then he named three concerns. The first is, "Capped tax increases should be funded with decreases from within the same property class."

The chart that you showed us this afternoon, it seems to me, very clearly shows that this indeed did not happen. I guess Councillor Cavalier has given the reason it didn't happen, that it was a purely political decision. Would you like to comment on that particular aspect?

Mr Tomlinson: I think what Councillor Cavalier said is, "There used to be a much bigger interclass shift, so you should be thankful it's only $57.8 million in this version of the plan." This table that shows the actual class shifts Metro published and then very quickly unpublished: It was not put on the Metro agenda, it was not shown to the board of trade, it was not shown to the Toronto economic advisory council. I'm sure if Metro were able to, it would find a way of walking away from it, but we have the computer tape and we can recreate that $57.9-million shift ourselves. It's there.

Roughly $37.8 million is that the reassessment process already reduced those residential properties vis-à-vis the vacant land and other properties that are uncapped; then on top of that, because they couldn't balance the books with a 10% cap on increase and a 50% clawback, they said, "We'll have to throw them another $20 million at the expense of commercial to make it work."

Ms Poole: My final question is related to your response to Mr Turnbull's question, where you mentioned that one thing you hadn't gone into in great depth was the impact on the urban core, the rot that might set in, that in fact it went against provincial documentation and provincial policy over the last number of years regarding intensification. A recent document put out by the Office for the Greater Toronto Area stated very clearly that the form of taxation chosen must support compact urban form, and it went into some detail on why this was important. In your opinion, does the Metro plan which is now before the government to make a decision upon comply with that provincial directive?

Mr Tomlinson: It definitely does not. The only defence that could be made of the Metro plan with respect to that compact urban form issue is that it's not full MVA. There are caps, so you don't get the kind of encouragement to sprawl and the kind of discouragement to intensification that you get with full MVA. But I believe that in all probability, if you have capped MVA, a dynamic is set in motion that turns it into full MVA. The pressure will be there every time people open their tax bills; they're going to see these decreases c1awed back. Whether it's this government or a later provincial government, the pressure will be there to take those caps off, and it's very hard to stop it from turning into full MVA.

The Chair: Thank you very much for your presentation. I'm afraid we've run out of time.

I would also like to indicate that Mr George Clarke, the commissioner of finance for the city of Toronto who was going to be a witness, was unable to come but has left a brief with the committee. I thank all the city representatives who have come before us.

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LORNA KRAWCHUK

The Chair: We now move on to Ms Lorna Krawchuk. Would you be good enough to come forward, Ms Krawchuk; welcome to the committee.

Ms Lorna Krawchuk: My name is Lorna Krawchuk. I am a councillor for ward 4 in the borough of East York within Metropolitan Toronto. I'm speaking in opposition to market value assessment.

We have been remarkably fortunate within Metropolitan Toronto to have a vibrant inner core. This is thanks to policies that keep a human scale so that small businesses and housing can coexist with major office towers. The economy is not particularly healthy right now -- an understatement -- and we should be extremely careful in whatever we do that might jeopardize that core. I believe that the implementation of any form of market value assessment undertaken without economic impact studies can be the equivalent of the straw that breaks the camel's back.

My ward covers the former town of Leaside, with a population of 12,000, and an apartment area of the same population called Thorncliffe Park.

Thorncliffe Park is mostly a tenant community. Tenants were promised that if there were decreases in assessment as a result of the reassessment, these would be passed on to them and not kept by the landlord. The mechanics for doing this have not been worked out by the province or Metro. The numbers are so confusing that it will take careful monitoring to ensure that these decreases are passed on. The one thing I can be sure of is that there will be a cost borne by some level of government for passing on these decreases, which means that indirectly either municipal or provincial taxes will go up.

Tenant representatives have known for years that large apartment buildings are treated differently -- ie, higher -- than single-family dwellings for assessment purposes. Market value assessment has done nothing to solve that inequity and this problem of inequitable taxation still needs to be addressed.

East York has the poorest ratio of industrial-commercial to residential assessment in Metro Toronto. The main industrial area is in Leaside. The borough of East York, recognizing that this industrial area, and a smaller one called the O'Connor industrial area in ward 1, need help, spent eight months consulting with owners, ratepayers and developers to come up with a strategy to keep current owners in place and provide incentives for new owners to locate here.

The major disincentive to staying or relocating here is the high level of taxation. The imposition of any form of market value assessment, again without economic impact studies, overshadows all the other positive measures we have tried to put in place. The fallout is already beginning. One small business that has been here for over 25 years on the edge of the Leaside industrial area is closing as of January 1. The increase in predicted rent for 1993 was the deciding factor in their decision to leave.

In this current round of discussion about market value assessment, a lot has been said and heard about its impact on business. When residential was discussed, the topic was usually the cliché anomalies in the present assessment system of the Rosedale mansion paying less in taxes than the relatively modest suburban house. What appears to have been forgotten is that no one is arguing that these anomalies shouldn't be corrected, but not by a method that penalizes people living nearer the city core on smaller lots.

For the impact on people living in East York, it is only necessary to look at the comparison figures when 1984 and 1988 assessments are used. With the 1984 figures, the major residential casualty was ward 4. With the 1988 figures, wards 2, 3 and 4 are adversely affected. What changed in these houses over the four years? Nothing, other than they got four years older. But by 1988 these relatively small houses close to the downtown were seen as desirable by potential owners and their selling prices rose.

East York has the largest proportion of seniors living in their homes to a higher age than anywhere else in Canada. A lot of these people are women on fixed pensions. What is to happen to them when the only way they can make the money they will need to stay in their home is by selling it? Are people to be penalized for not choosing to live in a newer, larger house, farther away from public transit?

Also adversely affected by MVA are the small businesses on the few shopping streets we have in the municipality. I know people from all over Metropolitan Toronto who choose to come to shop on Bayview Avenue because of the variety and excellence of the small businesses we have. Shopping on Bayview is like being in a small town. You see everyone in the course of your travels. These businesses will have difficulty in surviving the imposition of MVA. Those who own the buildings will be paying substantially higher taxes. Those who rent will have their rent increased to cover the shortfall.

How can this additional money be raised? A retail pharmacy can't charge more for goods because of location. A women's clothing store can only charge so much before outpricing the market. A hardware, fruit, meat or video store must remain competitive with prices charged elsewhere. The huge increases in assessment appear to be based on the value of the land if sold, not on the value to the community of having the present businesses in place.

The assessment figures that are the backbone of this plan became available in September. As a council, we in East York were given the set of raw figures for our own wards and a table of figures provided by Metro Toronto showing the impact across the borough.

The timing we were given from the outset was that Metro Toronto would be voting on this issue on October 28 so there would be sufficient time for the provincial government to put the necessary legislation in place for implementation with the tax bills in 1993.

As segments of the population became aware of what was happening, changes were made on the fly by councillors and staff of Metropolitan Toronto. This information was not shared with the local municipalities. The plan that was voted on and passed by the Metro council has just this week been provided to local councillors. The public has not had an adequate opportunity to make effective representation to either local councils or Metro council. The Metro solution is one that has as its only saving grace that there is a bit of pain and a bit of gain for everyone.

Most other councils within Metropolitan Toronto took a position on MVA. East York did not. I certainly tried from the outset, when the first figures were made public, to ensure that there would be an opportunity for debate on this issue at our council. The necessary background figures were not made available, so that when there was a meeting with deputants speaking on this issue, the motions passed were that East York council would withhold support of MVA until further information became available and requesting Metro to delay its October 28 vote, which, as you know, did not happen.

A change is necessary in the way assessment is done within Metropolitan Toronto. At the very least, since the Metro government in 1953 thought it prudent to use 1940 numbers, why are the 1988 numbers being used in 1992? Even this interim step of partial market value assessment is harmful. You've been hearing from various groups over the past week giving adverse impacts that had not been previously heard. Obviously, we will all share in paying for increased charges for hydro corridors and railway rights of way.

There is certainly no argument that a change is necessary, but MVA is not the solution. MVA sets up a permanent bureaucracy to be paid for by all of us to reassess every X years. Why can't we set up a system dependent upon lot size or frontage or something that does not change and work out a Metropolitan Toronto solution to this? We all gain, suburban or near-core, from the vibrancy of Toronto's core. We need to recognize this special contribution, not penalize it.

Assessment is done provincially for municipal use. MVA sets up a permanent bureaucracy for continuing reassessment. This means there will be an ongoing cost to all of us for this revenue-neutral system. Another cost of implementation within East York recently has been $150,000 in additional computer equipment and software. We have very small budgets and that hurts us.

For all of these reasons, I hope this committee does not recommend that Bill 94 be passed. In addition, there must be meaningful dialogue, consultation and study done on a more equitable solution to this Metropolitan problem. We all lose if the Metropolitan area decays. I thank you for listening to me this afternoon.

The Chair: Thank you very much. We have time for a question.

Mr Turnbull: Lorna, thank you very much. It may interest you that my wife operates a business inside your constituency, Photo Edge on Bayview Avenue.

The Chair: A little commercial.

Mr Turnbull: A little commercial, yes. Good rates. Excellent quality.

Ms Krawchuk: I'll say hello the next time I'm in there.

Mr Turnbull: I would like to explore two concerns with you. One is the question of tenants. This government was asked to address the historic imbalance between the amount of taxes that tenants in multiple-unit apartment buildings pay and single-family homes pay. Because time is so limited, I'll give you both questions together.

The other question I would ask you is, does it seem fair that small store owners and tenants should be penalized by the inflationary boom of 1988? Their income didn't go up, and those who resisted the temptation to sell -- in fact, tenants didn't even have any opportunity to take advantage of the inflationary boom. Does it seem fair to now be basing taxes on the silly prices which bore no relation to the cash flows from the rental buildings or, in fact, the income of the businesses.

Ms Krawchuk: On the issue of the tenants in apartment buildings, in a lot of cases, the value of the building has been reassessed to a lower value, which means that on the surface it looks good for tenants, because somehow something is going to be passed back. But the inequitable system in place before, that has the base rate for a tenant being different than for a person in a single-family house, has not been resolved. So while on the surface this doesn't look like a bad idea if you're a tenant, it really is not a solution, because those apartment buildings could go up in value again and they're back right on the treadmill. They're still sitting there with the inequity.

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The small store owners are definitely in a problem. In a place like Bayview, where most of the buildings are two storeys high, it's a lovely, desirable place if you sell. If you own the property and you sell it and something else goes in there, then this is lovely, but if you're the person who's making a business out of it, a bank certainly can't charge more interest on its money because it happens to be on a street where it has to pay a high rent or its taxes are high. It just doesn't make any sense at all. The only way you make any money is to leave, and then the whole community dissolves.

The Chair: Thank you very much and thank you for coming to the committee this afternoon.

Ms Krawchuk: Thank you very much.

JOHN H. FEELEY

The Chair: I call Mr John Feeley, if he'd be good enough to come forward. Please have a seat. Once you're settled, please go ahead. We'd like some questions at the end, if you'd just keep that in mind.

Mr John H. Feeley: All right. This is my brief, presented to the standing committee on social development.

Ladies and gentlemen, I appear before you today --

The Chair: Mr Feeley, if I might, just for the purposes of Hansard, would you identify yourself at the beginning?

Mr Feeley: I'm a private citizen.

The Chair: I'm sorry; I just meant your full name.

Mr Feeley: Oh, my full name? John H. Feeley. I appear before you today with a very heavy heart. Being born in 1922 and having grown up in the 1920s and 1930s, I have personal experience with the conditions we are going through today. As the third oldest of nine children, I can recall, as if it happened yesterday, the day my father came home and had to tell my mother that he no longer had a job.

Aware of the financial condition of the household, I started a newspaper route at age seven and with the exception of nearly three years in the RCAF, from 1942 to the war's end in 1945, I have been dealing with the public.

When I was retired from the air force in 1945, I went into the insurance business and have been self-employed ever since as a real estate and insurance broker. The asset I started out with was a 1946 Nash automobile, which was my gratuity, worth $1,600. From that day until this, I had to earn as I learned, and over the next 46 years, I have plowed my earnings back into my business.

At 70 years of age, when I should be able to retire, our municipal government is attempting to introduce a diabolical scheme to raise revenue, and is seeking your consent for its untimely action. For you to grant them this consent would be the biggest mistake you could possibly commit.

Forty-eight hours ago, the city of St Catharines received a cultural shock it will take years to get over. If you authorize Metro to proceed with MVA, you will create as much or more damage in Metro than has occurred in St Catharines, only in this case it could be even worse. Why? Because you are destroying the very people who, it is acknowledged, create 80% of employment in this country: small business people who are investing their life savings and working unbelievable hours to protect their investments.

Had you attended the meetings at the Metro centre, you would have seen with your own eyes the anger, disbelief and downright betrayal by the people who were entrusted to run the affairs of our city. What has made our country great up until now is the checks and cross-checks built into our society to protect us from unjust actions of this type. You are the level of government that is the check on the municipalities. If you abdicate your responsibility at this time, history will hold you responsible for the carnage.

Every time Metro considers a large expenditure, it does so by paying 20% to 25% of the total, and then looks to the province and federal government for the balance. I see this MVA proposal as a raid on the federal treasury and a further difficulty in our national government coping with the national deficit. As the federal government's ability to raise revenue is hampered by this kind of municipal gouging of its citizens, so is its ability to provide the province with its share of the federal tax.

The day is long gone when municipal governments can levy realty and business taxes and think the owners of this real estate or business can just pass it through to the consumer. Metro should be forced to bite the bullet and operate within the framework of the system we have operated on in the past.

The mill rates have increased annually for as long as I can remember, and all our taxes have gone up each and every year since the Second World War. If as property and business owners we are levied with the normal mill rate increase and on top of that are saddled with the additional increase caused by the MVA, then this is totally unacceptable and downright destructive.

The fabric of our society is very delicate and cannot cope with this kind of increase at this point in time. Had this manoeuvre been implemented during the high-flying 1980s, it may have been possible to pull it off, but this is definitely the wrong time to do it, especially when even a child knows that conditions in 1992 are not what they were in 1988.

Even if you kill this proposal right now, irreparable psychological harm has been done which will take years to rectify. The loss of jobs in the construction trades, hospitality industry and other businesses too numerous to mention will cause you problems you cannot now imagine. The devil you know is better than the one you don't know. So think very, very seriously before implementing this proposition.

Our existing system has served us for generations and will serve us for generations more if left alone. Make Metro live within its means, as each and every one of us has to do on a personal level. If the budget shortfall was spread evenly throughout every citizen within Metro, then we would not have any objections, but this proposition is levied against a small group of very vulnerable people, and it is totally unjust.

I hope the press is wrong in believing that the government members on this committee have already made up their minds and that this process is just a farce. When I put my life on the line to fight a dictatorial regime in Europe, I never expected that later in my life, in my own country, I would see parliamentarians putting me through a useless charade. Surely all the people who have paraded before you are not complete lunatics. If this is a good proposition, where are the people who support it? There is only a corporal's guard in favour, and even they would not be if they understood all the consequences. Please do us a all a favour and throw this mess on the scrap heap, where it belongs. Yours very truly.

The Chair: Thank you. We have time for one question.

Mr Frankford: You are clear that this is a reassessment plan, that there are winners and losers? Are you aware that there are a significant number of people in the suburbs who will benefit from it and this is not an overall revenue-increasing plan?

Mr Feeley: Yes, I understand that, but if the province had wanted to deal with all the residents of Metro and just work the inequality of residential assessment out among residents, that would be acceptable. But what they have done is tamper with the commercial, which I am particularly involved in.

The inequalities are unbelievable. As a matter of fact, if the assessments in the residential field are as glaring as they are in the commercial field, then that is an absolute reason to throw the whole thing away, because in the commercial field there are inequalities that are so unbelievable a sane person couldn't even believe that they happen.

I happened to speak to the assessor who did my particular property, and he couldn't even give me an answer how he had arrived at my figure. He referred me to his boss in Whitby, whom I spoke to, and he didn't give me an answer either. So they can't even tell you, as the taxpayers, just what technique they used.

Mr Frankford: I thought I heard you say that the existing system has served us well, and I sort of don't think that has been the impression we've got listening here.

Mr Feeley: From what I can gather, certainly in the commercial field, and it probably applies in the residential field as well, if a house has been built in recent years, whether they adjust the figure backwards to meet the figure that was used on the older properties -- from what I can see, that is what they must have done, because there's no way you can build a building in the 1990s, and build it with the cost that it costs you to build it, and have an economic building when you're finished, whether it be residential or commercial.

The Chair: Thank you very much, Mr Feeley, for coming before the committee. We appreciate it.

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CLIVE RAYMAN

The Chair: Are there any representatives from the Corso Italia Business Improvement Area here? If not, I call Mr Clive Rayman. If you would come forward, Mr Rayman.

Mr Clive Rayman: Good afternoon, everybody.Clive Rayman. I live in Toronto, St Clair and Spadina Road.

I've listened to several people and I agree with Mr Feeley. I've heard how unfair it is to the suburbs and that they pay more taxes. Well, I came here in 1966, lived in Toronto, Lonsdale Road. My parents still live there. They're having to pay more taxes. Their neighbours are having to pay more taxes. The core of the city, those people who've been here for a long time, expanded from that to the suburbs, which are the newcomers to the country, immigrants. We've all paid our dues. I'm an immigrant, I've paid my dues. Let the newcomers also pay their dues and stop taking it out on the people who've lived here for years, who, like Mr Feeley, have gone out and fought for this country, and stop just letting them take it away from the core of the city.

You destroy the core of the city. It's like an animal. It's got a heart. That sickness spreads. It will spread to the suburbs, the businesses that you forced into bankruptcy. Those businessmen will go to the suburbs, and I hope if that happens, the businessmen in the suburbs are put out of business, the same way that the business people, the small businessmen in this city, in downtown Toronto, will suffer.

If the politicians don't see that, God help this country. That's all I've really got to say.

The Chair: Thank you very much for coming here and expressing your thoughts to us today.

J. WALLACE BEATON

The Chair: Is Mr George Booth here? If not, could I call Mr J.W. Beaton. If you'd be good enough to come forward, the clerk is distributing your brief. Welcome to the committee.

Mr J. Wallace Beaton: Thank you very much, Mr Chairman, members of this committee. First of all, I'd like to say that I don't live in Metropolitan Toronto and I don't have an interest in any property in Metropolitan Toronto. I am not here on behalf of anybody and I have no clients in Toronto whose interests I am representing or looking after. I have had clients in Toronto from time to time, but I think I have a reputation for massive neutrality and I work very hard to preserve it.

I'm a multidisciplined professional and I do a variety of things that I won't take your time with, but my curriculum vitae is in the second-last page of the brief, and I also have appeared on public issues from time to time before where I feel I might be of some help in the public interest or for the public good.

I've had 26 working years in the assessment field, along with a lot of related fields: real estate, real estate valuation, business and securities valuation, arbitration. Like Mr Feeley, I put my life on the line in the Second World War, but nobody had occasion to take me up on it. I was in the air force, where I was a pilot.

The reason I am appearing is that I wish to make my expertise available to you to whatever extent it may be of some assistance and, really, because I was, I think, the principal voice at the time we had total reassessment in what's now York region. My article in the Globe, which I must say I've included in the brief as an appendix, saved everybody an enormous amount of time and trouble because it told everybody what had happened to them and how.

One of your members, Mr Chairman, has said, with great respect, sir, that there are winners and losers in reassessment. I don't think that is quite so. I think that you have two kinds of people: people who break even and people who win. The people whose assessments have not changed relative to everybody else's have broken even. The people whose assessments are increased have been winners for years, but they're not going to be winners any longer; they're going to break even from now on. The people whose assessments have been reduced have been losers for years but their losing streak is ending.

I used to tell the municipal clerks when we had reassessment in York county, "You should put a banner above the doors of the municipal offices saying `Welcome, Winners'" because everybody who comes in on this one is a winner; not as much of a winner as they used to be in many cases, but everybody is, because properly administered assessment, reassessment, is a break-even deal. That's the purpose of my brief: proper administration.

I've called the brief The Riddle of Assessment Equity. I must say I didn't have the name of your committee in mind when I cribbed Stephen Leacock's title The Unsolved Riddle of Social Justice, but that is the counterpoint to my observations, the famous book by Leacock. Some of us studied it pretty intensely in our scholarly days.

I'm not going to read the brief, as it's much too long, but I would like to refer you to the overview on page 1. Perhaps I could go over this with you briefly and then invite any questions. I'm hopeful that there are a lot of things that will aid you and aid everybody in Metropolitan Toronto.

First of all, I have to say that we all forget sometimes that the purpose of municipal assessment is to provide a basis for the cost of sharing municipal services which is feasible but also fair and equitable. Now, what I've said at the beginning of the brief is that the current market value reassessment debate boils down to four questions: What is fair? What is wise? What is practical? Where there are conflicts, how can they be resolved? This, then, is the thrust of my submissions to you today.

The definition of "market value" set out in the Assessment Act does not achieve this purpose. It is a "highest and best use" definition, it sets aside the wisdom of the courts and it creates many unnecessary inequities. It's not a bad definition; it just isn't quite on target. When market value definitions came up under the old law, which was basically a construction cost assessment law, the Supreme Court of Canada said market value is a fair basis for owners to verify, to test the fairness of their equities, but market value in the current use, and that became the law of Canada when the Supreme Court said in "the current use."

Now then, the definition with the lawyers -- and I'm knowledgeable of the law but I'm not learned of the law. When you go to the definition of market value, this is not a definition that was written for the Assessment Act. This is a definition that was lifted lock, stock and barrel from the Expropriations Act, and it's the expropriations definition. If you've got a house that is worth more as an apartment site or as a conversion to a commercial building and your property is expropriated, you get its value for the highest and best of those three uses.

The definition of market value carries the implication of highest and best use. I've discussed this in 10 or 12 paragraphs in the brief, Mr Chairman, but highest and best use creates a lot of problems in the assessment field. The Supreme Court of Canada swept them away, but they came back by accident when the new law was written. It's a good law, it's a good act, but it does need a little bit of fine-tuning, and that is the most important thing I can say to you today. Take the law, apply it, but confine it to market value in the current use of the property. I can't urge you on this too strongly, and all the reasons are set out here.

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It does go a step further. There is another problem area that sits adjoining that one, and that is properties that are in a state of hiatus or transition but are not in use. The question is, should they be assessed at their highest and best use? In York county reassessment these were the farms, and of course we have special clauses in the act to say that a farm will be assessed at its market value in farm use. But the same principle applies with redevelopment property in the city of Toronto. If you don't do that, if you start assessing redevelopment value, you have a special problem, because you're no longer serving the purpose of municipal assessment, which is to provide a sharing for the cost of municipal services. You are in effect getting something more.

In some cases, and I'm sure people have been speaking to you about them, it can border on the confiscatory. We really don't need confiscation as part of our system. If taxes are excessive, they are confiscatory. It won't last very long. All property in transition gets developed and gets reassessed at a new actual use, and the system works well that way. But to interpose a highest-and-best-use tax on transitional land is damaging to the good order of the assessment system and of the economy and of society. I say it should be market value in the current use or, for transitional property, in the last previous use. That's my second point, the last previous use, and this is set out in paragraph 27, the small amendment to the act that I would urge you to consider.

While ratepayers have the right to test the equity of their assessment, it is no easy matter for them to exercise this right, and you've had echoes of this from other speakers here in this room, I know. "How do I appeal my assessment? The assessors know it all and I don't get enough information from them." This is the eternal cry. The owners are obliged to define their own sales, because market value means sales comparison, and to work out the best way of relating these data to the assessment levels prevailing.

There's a discussion of this. It goes under the general thrust of assessment to sale price percentages, the ASP percentage factors. There is reluctance on the part of assessors to tell people too much, because they have a duty to defend the roll and they have the problem of appearing in court or before the boards on behalf of the assessment department every time an assessment is appealed. The person who has to give you the information is the person you go against when you appeal.

We have new devices to get information. The freedom of information act applies, but it doesn't work as well as you think it's going to, because the assessors then say, "We haven't done the ASP percentages this year and we didn't do them last year. In fact, we've abolished ASP percentages," at least officially. All the ASP percentages can be calculated, but you can't get them out even with the freedom of information act, because it's my business to try, and I know the condition that exists in the assessment offices in many parts of Ontario.

So what we need to do, particularly at this point, with reassessment and everybody getting new assessments they don't understand, and what I urge you to consider is to make it easier for ratepayers to get information from the assessment board. This is a vital element in this process which you're dealing with at present. It's very simple. To correct this problem -- and not next year or the year after; really starting with the 1992 assessment roll for next year's taxes -- owners should be given access to the sales data and sale price factors or percentages for similar property in their vicinity as a matter of right.

That is the next thing which will make the system work well. While I've said to you that everybody wins, they don't if those assessments haven't been well done, so we need to refine the system and that is the way to do it. It isn't difficult. Those sales data can be put in the hands of the local assessment clerks, the municipal offices. They can be picked up by anybody who needs them. The ASPs can be put there. These data are all compiled everywhere. It is no difficult job to organize it so that the public can lay their hands on it. I urge this on you very strongly.

The third question is the base year for assessment, 1988. I've done studies in Toronto regularly -- I have clients -- but I have not done studies on commercial property in the city of Toronto in the last five years, so I don't have any fingertip information on the anomalies that appear to exist. But my feeling is that the 1988 year has created some of these problems with the commercial assessments, because this was a peak year in the cycle, and commerce rides the peaks, it really does. I suspect that if we substituted 1990 as the base year, those problems would be mitigated -- not all solved, but mitigated.

In any event, four years is too great a hiatus and it's unnecessary. In York region it was a two-year hiatus. We had reassessment in 1969 for taxation in 1970; the base year is 1967, just two years back. And they didn't have all the high-speed electronic data techniques as well refined 23 years ago as there are today, so it should not be a difficult matter to use 1990 as a base year, or maybe even 1991. Without being able to talk to the inside of the electronic data system in Toronto, I think there are some ideas there that should be helpful to you.

Those are my three main points. In addition to that, I have several things about the conflicts of interest that are created; I've made several observations about that. If you're going to phase in the system for those whose assessments have been greatly changed, I think you should consider the phase-in period as being one real estate economic cycle. When the economy is overheated, that's five years, and when it's not, it runs up to eight or nine years, so eight or nine years is probably the logical phase-in period. I give you that idea, for what it's worth, as well.

I'd be delighted to answer questions. I've done some studies in Toronto. If you're interested in the techniques of ASP percentage and its application, I can assist you, but those are my points. Thank you very much for your time.

The Chair: Thank you. We have time for just a question, I believe from Ms Poole. We very much appreciate the larger brief you've brought in, and also to have somebody who is in a sense from beyond the area most directly affected to come in and take the time to do this.

Ms Poole: Mr Beaton, thank you very much for your presentation today. You've certainly given us a lot of food for thought. While we can probably not agree on the premise that market value is a good system, there are certainly a number of points you've made that I totally agree with. One is that if you are going to be on a market value system, instead of using highest and best use as your benchmark, you should be using current use or real use. That was a very valuable suggestion.

However, one statement in the second-last paragraph of your overview said, "Similar changes between owners in Toronto and the suburban cities were also inevitable, as central city people have come to enjoy comparatively greater benefits of economic location and culture." In fact, we have had many discussions to the contrary, actually by people who were from the suburbs, who made comments about how people from the suburbs come in and enjoy Toronto culture.

We also had a number of presentations that highlighted the fact that if you have a store in Toronto and you have a store in Scarborough, you cannot sell more of your goods in the Toronto store just because you are in Toronto; you can't charge a larger price because your business is located in Toronto. In fact, one business person yesterday, who has a store in both the city of Toronto and in Scarborough, said that her taxes for a similar-sized property in Toronto are much higher currently than they are in Scarborough, that it is much more expensive for her to carry on business in the city of Toronto. I believe she made the exact opposite point you've stated here today, so I just wondered if you had any comment.

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Mr Beaton: There are three points that come to mind. The first one, by the way, is that I am not that strong an advocate for market value assessment, but what is good about it is that everybody understands it and everybody can function with appeals under it. Nobody can appeal actual value assessments, because working their way through building cost manuals is entirely a technical function for specialists; that is the only thing that tilts the scales for market value.

Building cost assessment is extremely fair. Riddled through my brief you'll find this term "ad valorem," which I'm sure you haven't heard. It's the American term for building cost. Ad valorem is what all assessors are called in the United States; they are called ad valorem appraisers. I have many friends and colleagues in the States in that category, and my brief is written so that they can read it too, which is why I have "ad valorem" in there. The ad valorem does work in the United States and it has worked here, but it's like any system: You have to stay on top of it. You have to keep it fine-tuned. You have to -- I don't want to say work overtime on it, because that's perhaps not a popular term in the public service, but nevertheless good things require good care and attention.

On the relative merits with commercial property, assessment is only one of many factors that affect commercial decisions, commercial operations. I have said at the end of my brief, page 11, "In a world of cause and effect, fair and equitable assessment can only be an effect." The assessment does not affect the economy or run the economy, if everything is fair. Unfair assessment creates distortions, like properties that haven't been assessed with sufficient competence.

But it's a minor point. The commercial decision -- whether you're going to open the store or close the store or move the store -- is taken on a lot of other factors. Sure, while every change in your costs, every change in your overhead, is a real thing in business, it is not the thing that controls it, although the point can be made and people have their examples. But they should perhaps be also looking behind their examples. They should perhaps be verifying how fair their assessments are in the city and in the suburbs in relation to other similar property in those vicinities.

Ms Poole: One last comment: I think you, in your last line, very correctly identified the problem. It is whether the assessments are fair. That's the rub. We get back to the beginning of the discussion, whether this particular system is the best way to do it. By the way, have you taken a look at the unit assessment proposal by the city of Toronto and the city of North York that was developed several years ago?

Mr Beaton: I've read all the studies, but I must say I haven't got them at the front of my mind today. I have gone through them all, yes, and I have a file of notes on them.

Ms Poole: If you read them within the next short while, if you did have any comment on the viability of that proposal for assessment purposes, it would be very helpful -- not to ask you to do anything extensive, just a brief comment.

Mr Beaton: To me, it sounded pretty close to the old actual value system, which is based on unit costs of construction. It is one variation of the ad valorem approach. There's nothing wrong with it, but you've got to have an awful lot of faith in the assessors, because you cannot see into the structure of the work they're doing. You really have to take it on faith.

Mr Turnbull: But surely you can test the unit assessment yourself, because it's based just on measurements.

Mr Beaton: You can check it out, yes, but most people won't or don't, and they're a little intimidated by it. Sure they can, but they don't all have the mental thrust or self-confidence to do that. That problem is out there.

The Chair: Mr Beaton, I want to thank you very much again for coming before the committee and for providing us with your brief. We'll look into that and, I think, a number of comments you've made that have been made previously.

Mr Beaton: Thank you, Mr Chairman. It's been a pleasure being with you today.

MANDY COLE

The Chair: I would like to call Ms Cole and, following Ms Cole, Mr Booth. Welcome to the committee, Ms Cole. Please have a seat. When you're ready, please go ahead. You have 10 minutes, and if you'd like to leave any time for questions at the end, please do so.

Ms Mandy Cole: Thank you. Good afternoon, ladies and gentlemen. I'm here as a private citizen. I live in the city of Toronto and have done so for 24 years. I've lived there as a tenant, as a landlord and now as a home owner in a single-family dwelling.

I live in the Annex, which is a very diverse area. It's not uniform ethnically, it's not uniform economically. We are full of tenants, home owners, people who've been there for 50 years, people who've been there for six months, university students.

I will have a substantial increase in my taxes, subject of course to the cap, under the current proposal, but that's not really why I'm here. I'm here because it would have a very negative impact on the neighbourhood. It wouldn't mean that I would have to sell my house. It would mean a bit of belt tightening, but I can survive.

But I spend a lot of time in my neighbourhood. I've lived there for a long time. I walk down to Bloor Street. I shop in the area. Local shopkeepers live in the area. I know the devastation it's going to do the local businesses. Also, there are certainly quite a few non-profit organizations in the area, Pollution Probe being a case in point. Again, if the cap weren't there, their taxes would put them out of business.

That's why I'm here, because I feel very strongly that Toronto currently is a livable city. I think it will become much less livable when the impact of moving towards full market value assessment is implemented. I recognize that the caps will cushion the blow. It will certainly put some businesses out of business, but it will cushion the blow. However, I don't see that it's a rationale to move to a system that's inherently flawed, just because there has been some tinkering with it to make it a bit more palatable.

This is supposedly going to be more equitable. I don't think it's necessarily going to do that. Market value doesn't have any relationship to ability to pay if there's no relationship to the size of the property or to the cost of providing services. I live in a house that's on a 25-foot lot. The taxes on my house currently are approximately the same as those of a coworker of mine who has a house in North York. Market value will make a substantial difference. His house is on a 75-foot lot. The cost of collecting garbage, as the cost of all municipal services, is higher for his house. Currently, we pay about the same taxes. I don't see where there will be equity when my taxes go up and his don't, and he doesn't see that either.

The assessments themselves seem to be heavily flawed. My house is assessed at $75,000 more than the house next door. They are the same age, both three storeys, both brick. They're not two peas in a pod, but they're essentially very similar houses. I don't really see why mine is assessed at $75,000 more than his, particularly considering that in 1988 my house was a dump. It was a rooming house. It's not a dump any more, but it's not exactly a palace. Their house has been well maintained because they've lived there for 20 years.

The house on the other side of me is virtually a clone of my house. It has three flats in it, and its assessment is quite a bit higher, so that certainly isn't going to help tenants. It's not going to help small landlords to have an increased assessment just because it's flats instead of single-family.

There are numerous example through the Annex, and I'm sure throughout all of Metro, of problems with the assessments themselves. I'm sure this will give rise to innumerable appeals. I certainly will be there appealing my assessment for the reasons I've cited. This is going to cost us all a lot of money.

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Student housing is going to be adversely affected. The University of Toronto is the biggest university and one of the best universities in Canada. As you know, with budget restraints, the help for students and funding to the universities is inadequate at best. Students are going to have that much more difficulty if they can't afford to live in Toronto.

In addition, the lack of having a cap on the utility rights of way and the railways is going to cause hardship far beyond the barriers of Toronto. I'm sure everybody's aware that hydro rates are going up and up and up. There are various municipalities in Ontario that have proposals to build their own electrical generating facilities because they can produce hydro so much less expensively than Ontario Hydro. The last thing Ontario Hydro needs is a $60-million, $100-million, whatever the number is, increase in its costs.

I work in a small health care facility in North York. I'm going to draw an analogy here. Workers' compensation is assessed on payroll, and the amount of assessment you pay for workers' compensation for your employees is based on the rate group you're put in. The Workers' Compensation Board for some years has been working towards getting a fairer system of assessments. They're going to have many more groups so that you can be placed in a group that more accurately reflects the nature of your operations and the risk of injury to your workers. These are going to result in huge increases for some employers and huge decreases for other employers, but it clearly is a much fairer system, which I may say is not so clear about market value assessment in Metro Toronto.

As an employer, we were going to see a very substantial decrease, and because we are provincially funded, we are in a time of strong fiscal restraint. We were very much looking forward to having the riskiness of our business, which is very low risk, reflected in a reduction of our WCB rates by more than 50%.

The good news for some employers is that the WCB has put a cap on that, 3%, period. So instead of having our WCB assessment go down by at least a half we're having it go down by 3%. That's because the WCB recognizes that in these recessionary times it would cause incredible hardship on the businesses that would have to fund the shortfall by paying reflective assessments.

If obviously a fairer system isn't going to be implemented because of economic hardship, I find it hard to see how a not obviously fair system of market value assessment is going to be implemented with caps of substantially more than 3%.

In closing, I would just like to say that as somebody who loves the city of Toronto and Metro Toronto, I don't see that it's an advantage to anybody to have the downtown core hurt so seriously by this proposed change in taxes. Even the people who live in the suburbs who may receive a decrease in their taxes presumably get some benefit from living in the suburb of a city that is thought to be one of the nicest cities to live in in North America.

I had a visitor from Europe recently who had been in Washington and Detroit on business and said that Europeans cannot understand how the Americans allowed their cities to die the way they have. Let's try and not inflict a blow like this on our own cities.

The Chair: Thank you very much. We have time for one question.

Mr Turnbull: Ms Cole, thank you very much. You correctly point to the danger to our city, which was very well encapsulated in the presentation this morning by the Toronto Society of Architects. If I could just sort of give you a sense of these hearings as I see them, so many people have come forward and said this is the wrong tax. The government has seen fit to staff the committee with exclusively suburban people who are getting reductions. Understandably, they are fighting for their constituents.

But by the same token there is overwhelming evidence that this is a very badly conceived plan. We know the Fair Tax Commission is going to report next week and yet we're hurrying through with this legislation. I wouldn't be at all surprised if this legislation is actually passed by the time the Fair Tax Commission report comes out.

You point correctly to the fact that the Workers' Compensation Board has concern about the impact of changes, even though they have decided there's something wrong with the system and they're going to phase it in. The problem the opposition parties are having at the moment is that the government seems determined to say: "Oh, this is strictly the responsibility of Metro. We have to give them this legislation." Yet it has been very well demonstrated by the overwhelming number of the presentations that this will have a very disruptive effect on Metro and in fact on the whole province because such things as hydro rates will be spread right across the province.

I guess my question to you -- because when you sit through these hearings the same things tend to come up. Can you say something to the minister and to the members of the government which would persuade them to take another look at this plan and take some responsibility for it, because indeed it affects all of the people of the province?

Ms Cole: Thank you for the question. I appeared before the management committee of Metro council. My time to speak came at 5 in the morning. By that point I had sat through nine hours of presentations. I paid much more attention than the councillors who were there. I was appalled by the fact that they weren't listening. They were occasionally snickering behind their hands. I mean, they were behaving in the way the citizenship judges who were turfed out were behaving. They seemed to be ridiculing the people who spoke before them. So forgive me if I'm a bit cynical about thinking that anything can be said to change the minds of people who made up their minds before they came.

I'm here hoping there are some open minds. I'm here because I felt I owed it to myself and to the city I love to stand up and be counted. I'm hoping that somebody's paying attention. For every one of me who's taking the time to come down here and speak, you realize that there are hundreds of people who either don't have the time or don't think they can do anything about it. There are lots of us out there. There are also lots of people who live in the suburbs and who realize that it's more than just seeing a few hundred dollars or a $1,000 off their taxes. This affects all of us. Please take another look. Find a better way.

The Chair: Thank you very much for coming this afternoon and making your presentation.

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GEORGE BOOTH

The Chair: I call Mr George Booth.

Mr George Booth: Mr Beer, greetings. Nice to see you. Thank you for this opportunity. Before I start, I would like to say that I got a call at quarter to 5 last night to appear here with 30 copies of my presentation -- impossible. I phoned on Tuesday to get on the list; if I had known, you'd have 30 copies of the presentation, so bear with me.

The Chair: I apologize.

Mr Booth: I could go back and do them when I have a secretary available, Mr Beer. I will be somewhat discombobulated, but I will try and articulate as best I can for you.

I own two pieces of property in downtown Toronto. The location is 12 Mercer Street, which is a four-storey building was built in the 1880s, and immediately adjacent is 18 Mercer Street, which is a parking lot. Mercer Street is a one-way street, one block long, that starts at the front door of the new Metro city hall on John Street and runs to Peter Street, halfway between King and Wellington, just north of the Dome. This property has been in our family business since 1915, so I know the area quite well. We've been there a long time; we are not land speculators.

To give you some idea of what has happened to this piece of property, our taxes as of this year are $17,229. Under the proposed tax scheme, the two pieces of property will increase to $93,435. Let's not talk about the caps or so on. It's the perception and the thrust that these people are trying to do. The value of the property in 1988 was roughly, according to the assessors -- and I must admit that the assessor who did the assessment was a community college student working part-time in the summer. The only person she talked to was the receptionist of one of my tenants on the second floor, who is now gone. All she asked was: "How long have you been here and how long will you be remaining here?" Those are the only questions this person asked, part of the assessment process that came up with the figures these large escalations were based on; a community college student who, in my estimation, did not do a thorough evaluation and did not talk to the land owner and made no attempt to talk to the land owner.

What does this mean, even at a 10% cap on our property? There are other inequities that are coming up in this situation. In trying to rent this old building, the first question of the few people we get to go through the building is not "What's the rent?" but "What's the tax increase going to be because of MVA?" It used to be, "What is the gross rent? What's the number all in? Is it $17, is it $12?" No, their first question, their first concern is, "Where is MVA going to hit us?" ie, the business tax and in the TMI in your gross rent. Interesting. The second most important question is, "Can you open the windows so we can have fresh air?" so you can understand where their priorities are coming from.

The taxes this year we pay on the parking lot are $2,049. They are going to go to $39,766. I'm lucky if I can get 10 cars in the parking lot at any given time for rent from tenants. That's about $10,000. If you think this is inequitable, it certainly is. There is no way we can survive, and I speak for my neighbours who are restaurants, small businesses -- well, there are only one or two small businesses left. The others just can't cope, and they'd gone even before this hit.

Five days ago, we got some paper from the city of Toronto, along with some paper from the regional assessor, that our taxes next year were going to be $4,688. There was a small amount in there for business tax and so on, but my understanding of the cap on $2,049 would be 10% on the parking lot, yet the increase on top of the $2,049 is $1,759. You phone the city of Toronto, they say, "Phone the assessment office." You phone the assessment office, the government of Ontario, and the assessment office said, "Well, if you don't like it, appeal." That's fine: two, three years to appeal. Meanwhile, I still have to keep paying the taxes, which I can ill afford to pay because I don't have the income to pay for the taxes, let alone break even.

This is happening up and down the street. The taxes of the parking lot to the east of my building, right in front of Metro Hall, which is some 2,500 feet larger than mine, are a third less, for some reason. It's a vacant lot. I don't understand it, can't figure it out. I know Ed Mirvish has three or four different pieces of property at the end of Mercer Street bounded by Peter and on King. He has four different rates per square foot for assessed taxes. It doesn't make sense. They're all in open areas, they're all adjoining, there's no separation, nothing.

The assessment process is incredibly flawed. As to the values they have on our property as of 1988, none of my neighbours who sold in that year got even close to the square foot prices for raw foot land; didn't even come close. Across the street, where an industrial commercial zoning for the new Metro Hall is, they got astronomical figures 200 feet away. Gut feeling: The assessors did a blanket coverage: "Two hundred feet away, well, it should be this." Wrong. We can't build a 26-storey building on our property, if we had the money. We can only build an 11-storey building. Big bucks difference, big bucks, when it comes to land assembly.

So the process back at the government of Ontario I think is basically flawed. I was very interested to hear the lady here before me. I went to all those meetings; I sat there till 5 o'clock in the morning. I cannot believe the arrogance of Alan Tonks and a number of members of Metro council. She was dead right on. Those people just didn't give a damn about those little people who can't speak English: They're Chinese, they're Portuguese, they're Italian. They're in serious trouble. They're in extremely serious trouble, and I'm no different. If this continues, I will board the building up and walk away. I don't know where the city of Toronto is going to get the taxes, because we can't afford to pay them because we cannot get the tenants. Happiness is cash flow, without question.

To try to find out information from the city of Toronto or the assessment office and get the arrogance we have all gotten in the Mercer-John area is just despicable. We pay the bills and we're not getting the answers. We're not getting fair hearings. To get called at quarter to 5 to say you're on here is terrific, but not to have a concrete, written proposal to leave with you fine people is not fair to the rest of us in the area or to ourselves.

It's just appalling, and I'm afraid that the backlash is going to be so expensive. Toronto's $269 million in debt because of back taxes, because we people can't pay them any more. We're not getting any more services. God forbid. In my parking lot I can look out the window two or three times a week and see a drug deal going down in my parking lot. We need more services to stop that sort of thing, but we're not getting them. I can't quantify what's been improved. We had a 15% hike last year from Metro Toronto, which was just ridiculous in these recessionary time.

So ladies and gentlemen, here we have increased taxes, no explanation, no recourse to a very quick appeal process. We're hung out to dry, and a lot of people in our area besides myself are going to go out of business. I can't get tenants. I had tenants in my building until the end of November; there were roughly 45 people in that building. They're gone. They'll never be back. They supported the core area of Toronto. They went to the restaurants, they went to Coles bookstore, they went here, there and everywhere; they used the services in the core area. Those 45 people are gone and they'll never be back, because they can't afford to pay the rents.

Is that what we want in this province, in this fine city? I don't think so. Somebody's referred to it as the hole in the doughnut. I think it's just the tip of the iceberg. It's going to be a mess, and you can see it now. Thank you.

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The Chair: Thank you very much. We have time for a couple of questions.

Ms Poole: Mr Booth, thank you very much for your presentation. I can tell you that your lack of a written presentation certainly did not flaw your presentation at all. It was extremely articulate.

And we apologize for the late notice, but we are trying, as you can see, by sitting Saturday and Sunday, to get as many people heard from as possible.

It's seems to me that two things stand out from your presentation. The first is that the process itself is deeply flawed, and the second is the volatility of the market that makes market value an inappropriate scheme for a volatile market such as Metro. You mention that you have two lots; one is a building and one is a parking lot. The building is assessed at commercial rates?

Mr Booth: I can't get an answer on that. That's a good question. I can't get a definition whether it's assessed on industrial rates, which it should be with the I2D7 coverage for that area. But when you phone and ask or want to go up and see them, they won't see you. We don't know whether it's commercial or industrial. We can't get a definitive number. Industrial by design, and Mr Sewell and his gang way back when, when they wanted to keep the blue-collar workers in downtown Toronto, depressed the prices but put in the industrial component, the threadneedle industry and so on.

We have a feeling that all of a sudden, somewhere, somebody up here has said: "Ah, a 26-storey building is right next door. It's commercial." But we can't load our buildings with commercial tenants. We're not allowed. We've got to have industry in there, so it's completely different basis points of assessment, in my estimation, but we can't get answers.

Ms Poole: If you are assessed as a commercial property, then the increase you talk about -- the 10% cap for the first year, 10% second year, and third year would be 5% -- that actually translates into a fairly substantial tax increase within the first 14 months. We've been told by experts from the city of Toronto that the first tax increases that will be felt due to the reassessment will be in June, in the second part of the billing system. That'll be the first 10%. January of the next year will be an additional 10% due to the cap, and in addition to that there will be increases due to the normal mill rate increases that Metro and the school boards and the city experience. So it is estimated that it will be a minimum of a 30% increase in that span of time. Can you survive?

Mr Booth: No, we can't.

Ms Poole: What will you do?

Mr Booth: I'll just walk away from it.

Ms Poole: I suspect you can't sell.

Mr Booth: We can't.

Ms Poole: So you just can't pay your taxes or you won't be able to pay your taxes.

Mr Booth: We'll just walk away, all of us. It'll look like downtown Detroit. I'm not using fearmongering or tactics. There's no way we can survive. You can go to Mississauga and rent for a quarter of what you can rent in our building, and people are willing to drive to come into Toronto. To service the core area, which would be an ideal situation for my building, some service type of organization, well, with the vacancy rates in the core areas, their customers are out in the east end or the west end.

Mr Turnbull: Thank you very much. Mr Booth, I know your street very well and, as you correctly say, it's I2D7 zoning. The fact is that most of the buildings on that street were built as small residences, and the assessment department claims that the assessment was not based on highest and best use. I would submit to you for your comment that it is absolutely based on highest and best use, because all the transactions that occurred in the 1988 boom were not based on the cash flow of the building. They were based on a development buildup potential; in other words, were I2D7, that you'd have seven times coverage. The only way you could have seven times coverage in the case of your building would be to knock it down and have an assembly. The massing of I2D7 dictates that you have a large floor base. Perhaps you could comment on that.

Mr Booth: You're absolutely right. My building is so far from being a residence it's a joke. It's a big, industrial building, basically. It's 45 feet wide by 80 feet deep and four storeys and a full basement. It is not a converted house, such as the property is next to my parking lot. The houses in the area that are on Mercer Street are all gone. They've all been torn down.

Mr Turnbull: There was an old Chinese gentleman who lived with his wife, who had cancer, for many years on the street and real estate agents always wanted to get the house listed and he said, "No, I want my wife to die in our home that we've had for many years," yet there were all of the development pressures on this and he wasn't taking advantage of those values.

The Chair: Mr Booth, I want to thank you for coming before the committee, particularly for giving such a specific example of the sort of problem you see. I think I could add that if there was anything else that you wanted to present to the committee in writing, if you could do that with the clerk, we would be happy to receive anything that you might have.

Mr Booth: Mr Chair, when is the deadline of going to the Legislature on this?

The Chair: That has not as yet been determined. There has been discussion in the newspapers about different possibilities. The House is supposed to rise on the 10th.

Mr Turnbull: Mr Chair, could I just pose that as a question to the Minister of Municipal Affairs, who is also the government House leader?

Hon Mr Cooke: If I had an answer for you, I'd be glad to give it. It's not all in our hands, as you know.

The Chair: All I can say is that the House is scheduled to rise on December 10.

Mr Booth: Hindsight is 20-20, Mr Chairman, but if I'd known on Tuesday, I would have had a document. I'm still busy trying to run the CIS, which has its hands full, as you know. It's going to be very, very difficult to do that.

The Chair: That's quite all right.

Mr Booth: The other underlying problem with all of us in the area, which is really a big concern, is this has taken so much time in the last five weeks, we've got to make a living in order to stay alive, even if we have to walk away from our properties. One gentleman behind us has had a heart attack over this. It's causing health problems and employee morale problems. It's mind-boggling in our own little community of restaurants and buildings and so on.

The Chair: Certainly everything that we've been discussing this afternoon is in Hansard, so we have all of that information.

Mr Booth: Thank you very much, Mr Chairman, ladies and gentlemen. I appreciate your time.

SUMMERHILL RESIDENTS' ASSOCIATION

The Chair: I now call the representative from the Summerhill Residents' Association. Welcome. I know we've had some scheduling problems, but we're glad that we could get you in today.

Mr Barry de Zwaan: I'm grateful for the accommodation; thank you.

The Chair: If you would be good enough just to identify yourself for Hansard.

Mr de Zwaan: Yes, I'm Barry de Zwaan, president of the Summerhill Residents' Association, and I represent them here this afternoon.

We are pleased to be able to present to the standing committee our views on Metro's proposals to base property tax on the assessed -- and Mr Chairman, every time I say "assessed" I do this, because it's an automatic reaction -- market value of the property.

Just before I start on my presentation, I'd just like to endorse what the two previous speakers said about the experience at Metro Hall. I've never come across such behaviour from public servants and people who are supposed to be leaders of the community. People were shut up by being told, "Your time is up." Mr Tonks tried that with me and I said, "I've had two minutes and 20 seconds and I thought everybody had five minutes," and his response was, "Your time is up," and that's all I ever got from him. I managed to finish, however. It was a really bad experience.

As far as the Summerhill Residents' Association is concerned, it is overwhelmingly and quite fiercely opposed to using the so-called market value as the basis for levying property taxes. I want to emphasize right up front that we are not opposed to property tax reform per se. We recognize that the present system is outdated, something should have been done a long time ago and that there are inequities, but we believe that MVA as a cure would be worse than the disease.

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Our opposition to MVA is firstly a practical one, based on our observation of what can only be called an unholy mess that has resulted from Metro's 1988 assessment, on which, in all seriousness, I understand, they are actually proposing to base property taxes, or were actually proposing to base their taxes for the foreseeable future. It's almost unbelievable.

Secondly, and just as importantly, we're concerned -- rather more importantly, actually -- for the social consequences we see as inevitably stemming from Metro's MVA proposal. I'd like, if I may, to deal with each of these separately.

First of all, the practical issues. I'm sure, Mr Chairman, that you've already heard -- and I know because I was in the Legislative building yesterday and I've heard already -- of some of the mystifying and absolutely mindboggling anomalies resulting from the Metro reassessment. I make no apologies, sir, for citing a few more.

Here's one. There are two houses in my neighbourhood. They're semi-detached houses that have the same floor area, the same lot size, they're currently assessed the same and are paying exactly the same property taxes.

The proposed tax increase for one of these houses is 50% more than the increase of the other. They're both substantial, but this one is 50% more. There is one difference between the two houses: One has a finished basement and the other does not. The house with the unfinished basement is the one with the higher tax assessment.

Who did these assessments? What qualifications did they have? The speaker before me has the advantage of us; he actually saw somebody doing an assessment of his building. There are half the people on our street who've never had anybody, and I never had anybody, come to the house at all to do the assessment. We waited for them to come; they didn't come. We didn't actually call and say, "Please come and assess our house," I have to confess, but they never came; nobody came at all.

What qualifications do they have? What were the guidelines? You will, I'm sure, have heard of the house on Madison Avenue -- the speaker before last referred to it -- which was assessed in 1988 by a qualified assessor at $650,000. It was actually sold for that amount, $650,000, in 1988. I would have thought, and so would anyone I've talked to, that that was the clearest indication of the 1988 value of that property: $650,000. It has been assessed for MVA at a 1988 market value of $2.1 million. How can anyone have any faith in the fairness of a system which comes up with results like these?

Commercial concerns are faring even worse, as I'm sure you've heard. There's a small family car repair business in our neighbourhood which sees its taxes going up from $30,000 a year to $130,000 a year. That must be highest and best use, but that's what it is, and they have just said, frankly, this will put them out of business. It's a woman and her two sons, and they've worked there for 30 years. They're just going to be put out of business.

Another example is a small high-tech business in downtown Toronto which attracts a lot of customers from the United States. They face a 500% tax hike; 500%. They're between a rock and a hard place. They can't afford to stay downtown, and if they move out of the city they know that they will lose all their American customers who just won't bother to go out of the city.

Many small businesses in our neighbourhood have told us the same thing. They will either have to go out of business or go out of Toronto.

In the 1950s and 1960s, high taxes killed the downtown areas of many US cities, and I've read about it quite a lot. Market value assessment will do the same thing to Toronto.

Before we hear yet again, Mr Chairman, that Toronto is currently being subsidized by the other boroughs, as was claimed yet again yesterday by a speaker who I thought would have known better, here are some actual facts.

Toronto's population is approximately 595,000, which represents only 29% of Metro's total, and they contribute 42% of all Metro taxes. The rest of Metro, 71% of the total, contributes 58%. In 1992 -- and I find this an alarming figure -- $316 million, a third of a billion dollars, were transferred from Toronto's education funds to the suburbs to help pay for the schooling of their children.

I'd like to put this in perspective. This means that $513 for every man, woman and child in Toronto went to help pay for the schooling in Scarborough, York and East York; $513 for every woman, man and child in Toronto, and this happens every year.

Yet Metro, in its determination to push through MVA no matter what, has refused to do a social impact study. Why? What are they scared of? I also can't get an answer to the question of whether, under market value assessment, taxes would come down if property values continue to decline as they have since 1988. I can't get an answer to that. Justice and equity demand that they do, but I can't get an answer. Is it any wonder, sir, that almost all of Toronto residents distrust Metro council's motives and have absolutely no faith in the fairness of the property tax proposals?

I want to tell you that they are quite right, because this brings us to the second reason why we in Summerhill are so strongly opposed to MVA. MVA is based on a totally false premise, a false assumption: namely, that the price someone else is willing to pay for one's house is a measure of one's affluence.

Of course the one does not follow from the other. In the 1960s, people bought houses in Cabbagetown because they couldn't afford to pay the prices anywhere else. Now Cabbagetown is fashionable and houses there are expensive. Now, does this mean that all the people who bought them 30 years ago are now wealthy, or that if they are not and they can't afford to pay their taxes, they should sell and buy something cheaper? Does this mean that older people must, in their retirement years, leave their neighbourhoods and relocate among strangers because "the market," which means other people, have decided that their home has become too expensive for them to live in? This is not just and it is not logical.

In all advanced societies that I know, the family home has always enjoyed what I would call privileged status. In many countries, mortgage payments are tax deductible, and here in Canada, profits made from the sale of the principal residence are not taxed.

Market value assessment as proposed for Toronto actually reverses this perspective. Market value treats the family home as an investment less privileged than any other, in that capital gains made on one's house, unlike any other capital gains, are taxed via MVA even before the gains are realized or the asset sold. You're paying capital gains each time your asset goes up, before you sell it.

Finally, with regard to residences, property tax based on market value tends to discourage home improvement and, in extreme cases, even proper maintenance. If each improvement is deemed to increase the value of the house and so attract more tax, people will think twice about improving their homes.

Turning to the commercial question, MVA is just as illogical when applied to commercial property, and it's even more destructive of the fabric of the city. Local shops are essential to neighbourhoods; walking to do the shopping is pleasant, it's healthy and it's ecologically sound. Destroy the shops and the neighbourhood becomes a dormitory, and shopping will have to be done by driving to malls somewhere else. Much of the attraction of living downtown disappears, and this is what we in Summerhill are most scared about. All the people up and down Yonge Street who have little stores -- and we know them all and we shop there all the time, they're part of the neighbourhood -- are saying to us, "My God, we don't know how we will make out."

Now, capping it for a time isn't going to take care of many of their problems, because many of them say, "Well, I'm just waiting for the axe to fall, and while I'm waiting for the axe to fall, I can't even sell the business because the buyer knows the axe is going to fall also at some point, and that is if market value assessment is implemented."

I was reading with great interest Metro's draft official plan, the one called The Liveable Metropolis, which I personally think is very forward-looking. Among other excellent proposals it calls for the intensification of the downtown, to increase the number of people living downtown, the density, without building a canyon city of skyscrapers. We were particularly interested in the main street concept of three- to four-storey to five-storey buildings on streets even like Yonge Street, with commercial at grade and two to three storeys of residential above.

The benefits to the city are obvious and I don't need to elaborate on those, but to make this happen, living downtown has to be affordable to medium-income families, and commercial enterprises will need encouragement to locate on these main streets. Implementing market value assessment as it is now, even with the cap, would have the diametrically opposite effect, discouraging downtown living in favour of going out to the suburbs.

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I suggest that the challenges are pretty clear. The challenge is to devise a property tax system which is fairer than the one we have now, but which is based on the cost of services, because that's what it's supposed to pay for; secondly, one that every residential or commercial property owner can calculate and understand for himself or herself and which does not rely on the judgement of any individual, particularly as we've heard today, some suspicion that the individuals whose judgement it is are hardly qualified; thirdly, and this is very important, that the basis of the tax is fixed unless the owner of the property does something which he or she knows will change it; fourthly, that any tax system is accepted as everyone as being fair; and finally, that the mill rate be the only acceptable mechanism for raising or lowering -- fat chance but I had to put that in -- property taxes.

You can't have two ways of raising property tax: the mill rate in one hand and market value assessment on the other. They go up like this and no one will know what taxes they have to pay from one five-year period to the next.

The province has the Fair Tax Commission already set up and I urge the government to ask the commission to tackle the challenges I've set out above, and in the meantime to hold off doing anything. The Fair Tax Commission can come up with something which must take into account all the problems that we see with market value -- that even Metro sees with market value; it's changed its plan about four or five times in the last three months -- and come up with something better.

Market value assessment, because of its inherent contradictions, which I have gone through, will never work in a property market which is as volatile as Toronto's downtown market is. It will be a continuing cause of dissension and resentment and a disincentive for people to live or set up businesses in the city. The taxpayers know it is arbitrary and basically unfair, and there will be no peace with MVA.

I want to end by repeating approximately what I said in a letter I wrote to Premier Rae, and what I actually said -- because there's some idea that he said and it was said again today, "This is Metro's problem and we must let it pass" -- was, "Mr Premier, you were elected the government of Ontario in order to make choices, to make decisions and to just say we're just going to let it pass, I don't think will do."

Thank you, sir, for the opportunity to allow me to speak. I'll answer any questions anyone has.

Mr Turnbull: Mr de Zwann, thank you very much for an excellent presentation; very thoughtful. I agree with everything you've got to say. The only thing I would say, in your recommendation number 4, I would suspect it's probably impossible for any government to get a system which would be accepted by everyone that's fair.

Mr de Zwann: I accept that and I'd say a majority, 51%. At the moment, it's about 10%, I suspect.

Mr Turnbull: The great problem we have here is that the government would have you believe that really this isn't MVA and that this is just a step towards fair taxation. I would suggest that the majority of people I have spoken to from both sides of the issue believe this is a step towards MVA, because every time people get their tax at the end of the year, if they were subject to a reduction, they're going to see the clawback and they're going to be pushing for full MVA implementation.

The great problem I have, and you've centred in on it, is the destruction of the inner cities that will occur as a result of this and the disincentive to intensification. There are very, very few things I can ever say I agree with the NDP on, but I used to agree with it on the fact that it wanted intensification of the inner city and revitalization of it. This seems to be doing in the opposite direction. Perhaps you could respond to that, particularly for the minister and maybe --

Hon Mr Cooke: I'm was glad to hear it. That's the first time I've ever heard you say you agree with us on anything.

Mr Turnbull: I almost choked, David, but I managed to say it, but you seem to be going in the other direction with this.

Mr de Zwann: I'll tell you that we've had some discussions on intensification and on the whole thing, the whole plan. Intensification seems to me and to many of us to make a hell of a lot of sense. More people downtown makes it a more liveable place. It makes the streets busier. That's good. I think there will be less crime. Above all else, it moves in the opposite direction from what I have seen and we all see in many of the cities in the northern part of the United States. I mean Detroit, Buffalo and you can go on, Cleveland, there's plenty of them, even parts of Chicago.

It seems to me that anything to do to intensify, to bring people downtown, to make it more attractive, to make it more busy -- you get a lot more taxes, for goodness sake, in the end -- to make the shops more viable -- that is more people down there -- and above all else, to reduce the travelling in and out from the outlying areas -- the more people you have downtown working there, the better; the less strain on the city's services there will be and the better the environment will be.

Somebody from the city told me the other day that if last year had been like the year before, and not so much rain, we would have had a real lot of trouble with pollution. They are saying they think it'll happen probably this year if we have a hot summer. All that will be taken care of.

Just let me comment on one thing on the capping, if I may, because the capping of course helps in the short term. Yes, you're not paying so much. It's not so gouging as it would be, but the fact is that it stultifies everything. It brings everything to a stop. Nobody's going to buy the property. They say, "What is the market value?" People have told me this because some of them have actually tried to sell their businesses on Yonge Street already and get out.

"What are the taxes?" You say, "Well, it's capped." "No, no. No, no. What are the proposed taxes in the end?" Nobody can sell them. There are a couple of people I know who are from the Far East and they've been here for many years, and they've been here as long as I've been in the neighbourhood, which is 15 years, and they are saying, "Our accountant tells us to get out," but they can't sell anything.

Ms Poole: Mr de Zwann, thank you very much for your presentation. It has been quite helpful in a number of areas.

I'm going to talk about the very touchy area of subsidization and two very competing theories on who is subsidizing whom. The suburbs for many years have been complaining that city of Toronto taxpayers are being subsidized by Scarborough residents. You pointed out the figure in your brief about having 29% of the population and yet the city of Toronto pays 42% of the moneys going into Metro's pot. When approached with those particular statistics, people from the suburbs would say, "Yes, but that's because city of Toronto businesses are subsidizing because you've got such a large business base."

Yesterday, I was handed a figure from the city of Toronto which said that the latest statistics are showing that Toronto has 27.9% -- close to 28% -- of the population and that city of Toronto home owners and tenants pay 29% of the moneys in the residential property class. If that is true, and I believe it is, it would mean that not only are we not being subsidized by the suburban taxpayers overall, but we are not even being subsidized in the residential class. Is that your understanding?

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Mr de Zwann: I hadn't heard those actual figures before, but yes, that could be.

Ms Poole: Neither had I, before yesterday, and I thought that quite illuminating.

Mr de Zwann: That would seem to follow, yes. I'm glad to hear that and I'm interested to hear that.

Ms Poole: It would be very interesting to take this one step further and see under the reassessment, under market value, what proportion the residential property owners in the city of Toronto would be paying then.

Mr de Zwann: Would be paying if there were no cap.

Ms Poole: I expect there's a dramatic shift-off. I think what this all points out is that the current system is indeed inequitable. Obviously, we've heard a few examples of properties that are paying $800 in taxes in the city of Toronto, and I submit they are aberrations.

Mr de Zwann: Certainly. I've got all the property tax figures for all of our neighbourhood. I've looked through them and there's no one paying peanuts. There are a couple of very small houses on Shaftsbury, right by the railway track. They wouldn't be able to sell those for anything. They've lived there for many years and they're paying something like $1,200. I haven't found lower than $1,200, and these are very small houses. Most of them are paying substantial amounts, though not as much as some of the people in the suburbs are paying.

The Chair: The last question, Mr Rizzo.

Mr Tony Rizzo (Oakwood): I just want to say a couple of words about the fact that this is a problem that belongs really to Metro, not to the provincial government. We have only been asked to pass enabling legislation, nothing else.

Let's consider what you are saying and the numbers you are talking about. This is not the first time we have heard about these numbers. We also were able to see other numbers from different sources. Some of them were telling us that properties that have been assessed the same amount of money, let's say, $250,000, in Toronto or elsewhere in Scarborough, some parts of York or some parts of Etobicoke, the difference between their taxes is over $2,000 or $3,000. Projected to 1988, the difference between those taxes would be $8,000; $7,000.

My personal position is that it's a problem for Metro, not for the provincial government, but even if we had the say on that, what do you think should be my position as a politician? What should we tell those people who have been paying thousands of dollars more for years and years and who will be paying more taxes in the future, in relation to all of us who have been paying less taxes for years and will still be paying less than we should in the future?

Mr de Zwann: I acknowledged at the beginning of my address that the situation isn't fair at the moment. To replace one unfair system with another unfair system just because you'll be unfair to a bunch of other people doesn't seem to me to be good government or good sense. There must be a way in which you can equalize the taxes -- I'm not talking about residential now; I'm talking about commercial -- without devastating Toronto's commercial downtown. By commercial, I mean small shops, many of them run by people who can hardly speak English. They're all terrific. They're immigrants and that's the only livelihood they have. What happens if they go off? They go on the welfare rolls.

I agree with you that it's not fair right now. Obviously, there are anomalies. The reason there are anomalies is that nobody's done anything about the taxes for years and years and years. No one says they shouldn't do something about the taxes. They should, but it shouldn't be this.

Mr Rizzo: Do you have any alternative to whatever we have, as of now? Forget about the Fair Tax Commission. It may take years.

Mr de Zwann: As of now? Yes. I would base it on the cost of services. That can be done quite simply, in my view, by looking at the lot size and the house size. It's as simple as this: A large house could contain quite a few people; a small house contains less. Okay, you may have 10 people living in the small house and three people living in the large house, but you can't take account of that. But you can say that a large house probably has more bathrooms, they use more water anyway, they use more hydro, they have more sewage and so on, and a large lot also contributes towards the cost of services.

When I didn't quite agree with this, one time somebody said to me: "Imagine that every single lot in Metro was double the size. You'd have exactly double the amount of roads at double the cost of roads." So large lots are more expensive to service than small lots, and I would base it on that.

This would encourage people to come into town and live in town rather than encourage them to move away from expensive market value property, which I will remind you is no fault of their own. They want to stay there. Somebody else says, "Your property's too valuable." That seems to me to be very unfair. What it will do is encourage people to come downtown and it will encourage the intensification in Scarborough and North York, because the more people you have per square hectare or per square mile, the lower the taxes of the individual will be.

The Chair: Thank you very much for coming before the committee this afternoon. We appreciate your time.

PETER PAPANICOLAOU

The Chair: I'd like now to call Mr Peter Papanicolaou. Welcome to the committee. Please make yourself comfortable.

Mr Peter Papanicolaou: Thank you very much. I'll try to do my best. I'm speaking for myself. I have a sports business along the Danforth, and I'm frustrated with the amount of taxes I'm paying since 1976 when I bought that property. I'm in the business since 1973. I relocated my business when my lease expired and I bought the property; at that time, I bought the property for $190,000. It was double the usual price in the neighbourhood, but I had to go there.

I was paying $4,384 in property tax. I filed a complaint with my lawyer to the Assessment Review Board and they reduced my taxes from $26,500; it was assessed for $23,500. Then I went down to city hall myself and compared my property with equal-sized or bigger-sized properties in terms of units, lot size and storeys. I discovered that other people paid at least one third of the price I was paying at the time.

The other day, with market value assessment, I called the assessment department and told them that now my property is worth $800,000 and my tax will go up 25% in three instalments, so now it's about $16,000.

In 16 years, the price of my property went from $190,000 to $800,000; the taxes from $4,384 until today they are $12,000. When I bought the property, my rents, full occupancy, were $24,000. The last five years, the average income of that commercial property is $33,000 and the average of the 16 years is $27,153, based on my income tax returns. Within 16 years, my rent went up $10,000 and my property taxes tripled.

The assessment department tells me, "Sell your property and go to a cheaper place." Who's going to give me $800,000 for a property that has a $33,000 income? Is that logical? Is there anybody here who is willing to give that type of money? I don't think so.

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Market value assessment now hits me double because it hits my tenants, it hits my neighbourhood; all my customers are affected by market value assessment. The present recession is the first year after 21 years that my sales went down. I started with $90,000 in sales in 1973, and I ended up with $750,000. This year my sales were $150,000 below, which means there is something -- I didn't change anything in my store, absolutely nothing. GST and the recession make people scared to spend their money. I have to reduce my staff from five full-time people and two part-time. I have to eliminate one full-time and one part-time to be able to pay my way.

I'm coming back to the overassessment of my neighbourhood. It's not only my property; it's all properties. My property was new when I bought it. That's why I was paying high taxes. I was expecting, based on what I hear on the television -- I'm not an expert, I'm not a politician. I work 16 hours a day, and I don't have the time to go to meetings. This is the first time in my life.

I had lots of fights with the assessment people. They told me: "Mr Papanicolaou, you are the only person from Broadview to Jones who complains that he's paying high taxes. Nobody has complained." I know they don't complain because they don't know how to speak well. I don't know how to speak myself; you are probably tired of listening to me. But I have here 12 letters signed by my next-door businessmen, all of them prominent members of our community. They don't approve under any circumstances of the market value assessment. I can guarantee you that if this law is passed, there's going to be a tax rebellion in our neighbourhood.

Let's go back to the way the assessment is being done. You have to find a similar property on the list to compare your property to in order to get a reduction. But paying that much tax and having that little income, it's not worth doing anything. Imposing market value assessment eventually hurts my tenants and myself, my business. Besides, hydro goes up 15%, so it hurts double.

The Chair: Do you want to leave a little time for questions?

Mr Papanicolaou: During the years 1988-89, quite a few people from Hong Kong came to our neighbourhood and bought high-priced properties, also some real estate speculators. Third, some specific-interest people wanted to build up business in the neighbourhood so they paid any price to get these properties to create specialty food business. Of course, if you make millions, you can pay millions for property. But for storekeepers and householders, we can't afford big business and attract more people. We pay for whatever speculators and foreigners did in our neighbourhood.

I would like to suggest that you postpone this market value assessment, have the province and city hall make more research and find a better way to assess people. I've got no objection to pay what is fair as a Canadian citizen. Thank you very much.

The Chair: Thank you very much. One question, Ms Poole.

Ms Poole: Thank you very much for presenting today. It's very important to us because, as you said, many people are not coming forward because they may not speak the language, because they may be intimidated by coming before a legislative committee, and it's very important that we hear what you have to say.

The area around Danforth and Jones is quite different from the part of the city of Toronto I represent, which is north Toronto, but there are certain similarities. I represent the small businesses up and down Yonge Street, a large stretch of them. They did a survey in September of the businesses along that stretch, and the survey showed that the average tax increase due to market value would be over 200% -- that was the average -- and that two thirds of the businesses would close down if that plan came in.

That was before they said there will be a cap, but when the upper Yonge business association was before us, it said, "Even with the cap, we are right on the verge right now, and we're going to have to close down." I suspect that may be true of a number of businesses along the Danforth as well, that they would have difficulty in paying additional taxes even with the cap. Would you like to comment on that?

Mr Papanicolaou: I agree 100%. I'm a businessman. I know how to make money. I came to this country without a penny in my pocket. Now I'm worth half a million or whatever. It's not fair to have a property which gives you $33,000 a year gross income pay $15,000 in taxes, pay another $10,000 to maintain and repair and stuff like this, and end up having invested $800,000 and getting back nothing. If you have a mortgage, you pay from your pocket. It's not fair.

Whoever did the assessment, it's not realistic. Certainly, if you've got a souvlaki store, they make so much every day. I don't. I'm working 16 hours a day. I don't think it's fair. If they force me to sell my property, I'll sell it. But I'll sell it, I'll make a trip around the world, and then I'll come back to go on welfare.

The Chair: Mr Papanicolaou, we want to thank you very much for coming before the committee. Did you want to leave those letters with the committee?

Mr Papanicolaou: By all means, you can have it; it's a copy. I sent the letters to the Premier of Ontario. That's a copy of the letter signed by the 11 businessman next to me.

The Chair: Thank you very much. We appreciate that.

Mr Turnbull: Before calling the next witness, could I make a motion that in view of all the evidence we've had which indicates that there is no relationship between -- this is by way of explanation; it isn't the motion. I'd like somebody from the assessor's department to attend to explain the methodology. By way of explanation, we've had so many people who are talking about the gross income is less than the total amount of money they're going to have to pay to maintain their property. It doesn't seem to make any sense. It has been claimed by the assessors that it isn't based on highest and best use. I want them to explain that, because I'm hard pressed to understand how they could otherwise arrive at these assessments.

The Chair: We'll work that out with the ministry so we can have a briefing on that.

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IRVING GROSSMAN

The Chair: May I call Mr Irving Grossman to the table, please. Mr Grossman, welcome to the committee. Thank you for coming. We have a copy of your submission. Please go ahead.

Mr Irving Grossman: For the record, my name is Irving Grossman and I'm speaking as an individual who is affected by MVA.

When I was a little boy my father worked at Tip Top Tailors down by the lakeshore as a sewing operator, and afterwards in the fur business sweatshops on Spadina. I used to help as a floor boy for 10 cents an hour. When my dad used to come home from work, he'd say, "Boy, when the CCF gets in, things are going to be better."

Later, when my folks bought a little tobacco store on St Clair West, where they worked 14 hours a day, seven days a week, they didn't realize that they'd now moved into the middle class, being merchants. They would still say, "When the NDP gets in, things are going to get better."

I'm starting with these words to simply let you know where I come from: Clinton Street Public School, Workmen's Circle Peretz Schools, Harbord Collegiate, the school of architecture, where I later taught for some years, and my private architectural practice since 1954. I've produced my share of social housing, such as the Crombie Park Apartments down at St Lawrence, numerous synagogues, schools and other community buildings -- committees, committees, committees, I might add.

I also managed to buy, a number of years ago, a 20-foot-wide house on a side street tucked in behind Bloor and Bay, where I used to live and where I've had my office to this day. The rest of the offices I rented out, which placed me now in the new category of being a landlord, with the questionable task of collecting rent, always feeling a little guilty with my childhood teacher's words against capitalism still audible in my ears. Over the next 15 years, I acquired the houses on either side. I paid my taxes as required and I watched the city change around me.

Now at age 66, with a very small consulting practice and an increasingly difficult economy, I rely more and more on the houses for my livelihood. I know there are thousands like me. MVA has shaken the foundations of this lifetime plan. I have chosen today to speak about my own particular situation as one on one, as opposed to making large, global statements about our city, which many people have made very well before me.

In my case, the proposed increase is, believe it or not, 800%. Yes, 800%, where the current tax, say on number 7, is being upped from $5,000 to $40,000. I'm rounding slightly. With the other two properties together, it means I have to find, should MVA go through with its figures, $120,000 for taxes on three, 20-foot-wide, little brick buildings on lots that are 90 or 95 feet deep.

I called expert appraisers for opinions, and I happily found out that the concept itself, in their opinion, was flawed. The numbers were just simply wrong, even accepting the year 1988, which as you have heard many, many times, was a very high year.

I examined my own figures for 1988 and they were revealing. Taking my income, deducting expenses, I was left with a figure, not including mortgage payments or anything, which, factored by the normal 10-times factor, I was advised resulted in a value of just under $600,000. MVA had the 1988 figure at $1,991,000. Mine was based upon cash flow, the classic way for such assessment, I am advised. How they got the MVA figure, I don't know, and nobody asked me.

So the realty tax based on 1988 was flawed, and since then, of course, the net income has dropped some 33% on the properties. You've heard this story numerous times. There are hundreds, if not thousands, who have had the same complaint. Think of the appeals that will flow, the delays, the aggravation and, I predict, the ultimate tax revolt.

What would hurt me even more was that the same eight-times factor was being used on the business taxes of each tenant in my buildings, all small businesses like myself: a travel agent, a writer for the CBC, a children's book designer, an economic consultant for Third World countries -- a charming Egyptian person -- all jumping from a few hundred dollars per year to several thousand. They all came to me in great alarm, and I told them that the caps are going to be in place, that this is all a big mistake, it's history, not to worry.

But do they believe this? Do I believe this? I'm not really sure, especially when I heard just a few days ago that the legislation makes no mention of the caps, from what I was told, which will be handled by regulations, regulations which can be overturned by the whims of Metro council and, again, further lobbying in this room.

I understood that MVA had not been approved at Metro, but simply that a capped set of increases had been approved, which were indeed punitive, but nowhere near the 800% figure that would devastate me. My tenants have believed the same. Now I understand that the realty and business tax bills will indeed show the MVA insane figures, modified by an "abatement," I was told, to get down to the 10% increase promised on commercial increases.

This is not exactly no MVA. This will all create uncertainty, and you know well what the tenants are thinking. I've already received, three days ago, notice from one, a film financial consultant who's been there two years and is no doubt going back to Don Mills, where he lives. This could indeed be the beginning of the end for me.

The details may bore you, but the story for me is tragic, and for countless real people. It is not necessary, this tragedy. I heard said in this room this morning, and indeed you said it just now, that some of you agree it is a flawed system and that, furthermore, the NDP itself has been against MVA, but Metro has asked for it, and the reduced version is better than the present inequitable version. I've heard that stated more than once.

This is the crux of the problem. You do not have to accept a flawed system. As an architect, I've been at numerous Ontario Municipal Board hearings where chairmen have taken various municipalities to task for inappropriate actions -- poorly prepared reports, insufficient data, insufficient impact studies, illegal motions etc -- and where the rights of citizens who were being wronged have often been the basis of their evaluation.

This is the role of the province. Cities are creatures of the province, as you well know, and you clearly have the right to defer any action on this matter until Metro answers any questions that you may request: any additional studies, anything. It happens all the time at the OMB. Why not here?

Especially the NDP government: How can you approve a flawed system, admittedly flawed? As an architect, how can I approve flawed foundations and allow a building to be built on top? Of course, I can't. There would be a stop-work order immediately and nothing going ahead until the problem was solved. You must do the same, surely.

There are so many repercussions to your decisions, of which you've heard much, especially by the Toronto Society of Architects this very morning, the Citizens for Property Tax Reform and previously, I heard on TV the other day, the taxpayers' alliance and others. Much, much good material has been given to you, many positive suggestions. You are not dealing here with a small group of vested interests. It is a groundswell that crosses a wide spectrum, many hundreds of people and organizations that are pleading for survival.

I don't believe any government can appease some of its citizens, who indeed may be overpaying taxes, as in the suburbs, by acting in a manner that traumatizes many other citizens into serious financial difficulty and destroys the core of the city at the same time. This is not a solution. This is surely not the NDP way. I don't understand.

We all agree that there's a need to address this balance. Let's be positive.

(1) Don't pass MVA; it's flawed.

(2) Be responsible statesmen and do not mix into the city-suburbs conflict. Stay above it as a provincial agency.

(3) Demand more data on what MVA will do, with proper economic and environmental impact studies. We haven't had those.

(4) Demand more data on an alternative tax approach which equalizes the admitted inequalities of the present system. No one has said that it's a fair system now.

(5) Demand that these actions be fast-tracked. There's no need to say, "Oh well, our suburban people are upset because they're going to have to wait eight more years for answers." There's no need to wait eight more years. You make it fast-track, the way they go out and tender buildings now. They hire the architects, fast-track it and are excavating within months compared to the usual two- or three- or four-year periods. You just demand it. It can be done, especially with communications technology. Make a time limit of one year, that's it, for this to be presented. This is an emergency. We're dealing with the life of our city.

(6) Allow for such a new system -- I had this idea coming here -- to be retroactive, perhaps, in order to help those who right now have been able to prove they're paying too much. Maybe there's a way to benefit the injured parties so they don't feel outraged that you're delaying it -- probably for ever, they're going to think -- if there's some way of addressing that. It's not easy; I know that. Don't accept a flawed system, a flawed approach for political reasons. Do it right, now.

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The Chair: Thank you very much, Mr Grossman, for your presentation. We have time for two questions.

Mr Perruzza: I had a question in mind. If I can recall it, I will ask it too. We don't like market value. I'm supposed to be one of the winners under the system because I represent a district that has essentially been paying too much for a long time, but Metro has a right to ask for this plan, as do all the other municipalities in Ontario. Quite frankly, I think the overwhelming majority have been granted market value. This is not a system that was invented by us and it's not liked by us.

Mr Grossman: I understand.

Mr Perruzza: But if Metro went back and essentially asked for pure market value, we as a committee would not be dealing with it. The Legislature as an entity, as a government, would not be dealing with it. They would just simply get rolls returned to them, as every other municipality in Ontario gets.

If push came to shove and this plan was somehow scuttled and the rest of it and we did nothing, Metro -- and quite frankly the ratepayers in the suburbs have been educated enough on this that if they applied, conversely, the same amount of pressure that has been applied by the stock market value side, I think they'd be able to muster the votes to push for full market value. I think 61% or 62% of the properties in Metro would actually receive a reduction under full market value. That 800% you're fearing could actually be eventualized if something like that were to happen. I caution that because it's their right, as it is every other municipality's right.

Mr Grossman: I know what you're saying, and that's why I suggested on my own cognition, without any advice from anyone, that you've got to give something now to the people who are being wrongly hurt. You don't want them to feel that they've been scuttled with this, "Oh well, eight years from now."

Mr Perruzza: Where do you get it?

Mr Grossman: You make something whereby whatever is arrived at, say, within the year is retroactive to the year, so that they know that down the line there's going to be an equalizing, and if they're entitled now, somehow they'll get it. They're not losing the year is what I was trying to come up with. I know it's tricky to write that type of law; it's got to be filled with thorns, but you have --

Mr Perruzza: Where do you get the money?

Mr Grossman: The money would be when this system that's proper is worked out. I guess what I'm saying is that you've heard endless times. I understand what you're saying and I'm not an economist. All I know is that they did something in Kitchener and now, apparently, the wheel's rolling around and those people who got the benefits are now paying the extras and those people who were paying the extras are now being the critics.

It's a crazy system. It doesn't have any record. The track record is dreadful. Detroit is apparently on MVA, and look at the downtown. The answer is, don't jump hastily. At the OMB -- I've been there -- if things aren't properly documented, if they find some errors in the arithmetic: "Goodbye. Come on back with proper figures." You just can't carry on with improper figures. It's Mickey Mouse to do that.

Mr Perruzza: Just getting back to --

The Chair: Excuse me, Mr Perruzza. I'm afraid we're --

Mr Grossman: Am I getting carried away?

The Chair: Not at all.

Mr Turnbull: Mr Grossman, I know you've sat through a great deal of these hearings and you've heard a lot of the presentations. You correctly have picked up the fact that over and over again we hear the NDP saying, "This is a flawed system. We know it, but there's going to be something better." I've got a couple of questions within one. If, as is suggested, they're going to come forward with something better, then why on earth are the tax bills going to show the potential reductions that the people are getting, less the clawback, which is going to just have people screaming for MVA? I suggest that the mere fact that that is going to be on the tax bills puts a lie to the suggestion that we're not going to get full MVA, that we're going to get some revolutionary tax scheme.

The other question I would like to just bounce off you for you to comment on is the fact that it's quite apparent from this scheme that in fact the large office buildings were treated on an estimate of income basis to arrive at that value, whereas the smaller buildings have been assessed on highest and best use. Perhaps you could comment on both the question of this truly being the beginning of MVA by going on the tax bill and also the approach to the assessment of --

Mr Grossman: Well, I only heard about the bills showing MVA. Up until a week ago, I thought: "Well, it's a bad scene, 25%. Things are worth 33% less now than they were just a short while ago. It's a mess in terms of having a building."

Somebody coined a joke the other day: Another definition of child abuse is to leave your children property. It's really very unpleasant out there.

When I heard, I figured, "Oh, well, it's the best we can do; at least it's not 800%," and I wasn't in total distress. When I heard this information just Monday or Tuesday of this week, that from what I understand it's all set up as an MVA deal, less a bit of an abatement, I thought: "The intentions are very clear. This is just a kind of manoeuvre."

I think everyone is going to feel totally shocked when that information becomes public and when people begin in fact receiving these bills, if this ever happens, especially, which is not emphasized a great deal, the business tenants, because the business tenants are my income at the present time to a great degree, as they are all over.

These little people who have come up with two-storey buildings have a store in the bottom where they work 16 hours a day and upstairs they may have a tenant or two who's covering the mortgage or who knows what. All those people, when they get these increases in their business tax, are going to say, "We'd better go elsewhere," and that kills the man below, aside from his realty tax. That's the double-edged thing that isn't emphasized enough. So I think you're right, that when they see that on the bills, there's going to be -- especially among people who don't understand the language too well.

The question about certain businesses being done on income and others not --

Mr Turnbull: I was suggesting that it appears by the approach used on the large office towers that it seems to be based on income, whereas the small buildings -- I'm talking about commercial at the moment -- seem to have been assessed on highest and best use, in other words, knocking it down and a big development going in.

Mr Grossman: I didn't have a chance to check all the statistics with the printout. I've got dozens and hundreds of them, but I didn't have time to dwell on them. I looked through the Yorkville scene, which is close to me, and certainly they're all in the several hundreds. I didn't see many at 800%, which is unbelievable, although I met somebody who has a large warehouse commercial income property down on Front Street who told me he was up 1,000%.

I also heard that the major shopping centres in the Metropolitan area were being treated in a very interesting way where the owners -- this is hearsay -- literally have no tax gain. In fact, there's a tax reduction, because they're the owners and they're paying to themselves, as opposed to the tenants who are the shopkeepers within. But I don't have verification on that.

Mr Turnbull: In fact that is correct. In Yorkdale they've found that the ownership and the very large tenants are getting reductions, and the small tenants, who are already paying higher rent per square foot than the large tenants, are getting significant tax increases.

Mr Grossman: All right, my last 30 seconds, Mr Perruzza and Mr Rizzo and the others. We're dealing here with little people, thousands. I may own three properties in behind Bloor and Bay, but I'm a small potato compared to the big scene, and it seems to me that there's a huge responsibility to cater to the small people as well as the big, and if there's something wrong, you hold it. You say to those people, "You're right, you're right, no one's arguing with you, but the present system isn't right and we're going to get a good system," and that's the only choice you have. You must get a better system.

The Chair: Thank you very much, Mr Grossman, for coming before the committee today.

I call now Mr A.J. Diamond. I believe Lenore Kessler is here, and she would be the next witness.

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Ms Poole: I'm sorry to interrupt, but just before we go to the next witness, we've now had four presentations just this afternoon which have talked about the flawed assessment process. When the Ministry of Revenue is asked to appear before our committee, I wonder if we could also ask them to prepare some data on the methodology, on who assessed these properties, because there were details brought forward that they were college students. We would like to know the difference in assessing small businesses as opposed to the large office towers. If they could make sure, when they come, that this type of data would be available to us, it would be very helpful.

Mr Turnbull: Perhaps the qualifications of all of the people involved in the assessment -- the whole range of them.

Mr Perruzza: When does the member propose to have this happen, that the Minister of Revenue is going to appear and assessors and everything else?

The Chair: I think it was the ministry -- just information that would be prepared on paper to help us in understanding some of these questions.

Mr Turnbull: I actually made a motion to that effect.

The Chair: We'll submit that to the -- this is a normal way --

Mr Perruzza: Oh, so just get information from them, not that --

Mr Turnbull: I wanted officials from the Ministry of Revenue to attend these hearings.

The Chair: We had discussed as a committee that when we had completed that, there would be time for a further discussion with officials because of questions that had arisen.

A.J. DIAMOND

The Chair: Mr Diamond, sorry, we can proceed now with your presentation.

Mr A.J. Diamond: I'm not going to read you my paper, which is very brief -- it's a page and a quarter -- but what I would like to do is highlight the points so that if you have questions about them we might have time to discuss them.

Before really launching into it, I've been interested in the hearings, in the discussion about equity. No doubt it is curious as to what's driving the whole issue. Is it to raise more revenue or is it a question of equity? I think that for those who are disturbed, as Mr Perruzza appears to be, about the question of equity --

Mr Perruzza: I'm not disturbed about it. I seek --

The Chair: Mr Perruzza --

Mr Perruzza: Well, he mentions me --

The Chair: Allow the witness -- you have an opportunity to question.

Mr Diamond: I think that's a very short term view about equity because it's my contention that the long-term effects of this apparent correction of the imbalance will in fact be counterproductive.

It is my view that the cure is much worse than the disease. So the question of the impacts of redressing apparent inequities at the present time are extremely serious and those impacts for those who are pushing it from this direction might be something they will live to regret. Therefore, the question of their impacts is vital for both those who are concerned about the immediate question of equity and the other larger questions which I'd like to address.

The first one is that if indeed the considerations of those who see a negative impact of the MVA system are the social costs, you only have to look at American cities to see that. Indeed, when you lose the natural social policing and the natural systems in operation in a city, there are no taxes that can pay for their correction.

One of the impacts of the depopulation of the city, of the loss of its diversity, of the reduction in the small businesses that have a symbiotic relationship with the large ones, of a full spectrum of residential uses -- those are not going to be compensated for by a higher generation of taxes because they themselves are at the present time self-policing and self-organizing. That is one of the really serious impacts that I suspect ought to be looked at.

If I'm wrong, I'd be delighted to know it. One of my problems is that it hasn't been demonstrated that these fears are groundless. I think you ought to be concerned about these kinds of fears that have been raised because, if they prove to be true, passage of this bill will in fact be extremely harmful to those who are using it to try and improve things.

The reason that Toronto is as admired as it is in North America, and indeed in the world, is that for whatever reason, governments have been good about seeing to it that there are mechanisms to make it affordable to a full spectrum of residents. That's one of its great strengths. It's not left to the very rich and the very poor alone, but there's a full spectrum, all ages and all incomes. If we lose that, you have the kind of erosion of that fabric which is very difficult to stop. Clearly this is going to happen, in my view.

One of the questions and problems about equity is that you pick a time in which you assess at 1988, whether it's a good or a bad year in economic terms doesn't matter. There are pendulum swings about the value of residential in suburbs and the residential in downtown. I've lived, and not that long a life, but even during the time I've lived I've seen the swing between when housing was cheaper in the suburbs or when housing was cheaper in the city. Whatever point you pick, because these things are in dynamic shift, it will always be inequitable, and therefore taxation ought not to be looked at only in terms of equity, it ought to be looked at in terms of an instrument of larger public policy.

I want to point out that Toronto's not simply another larger urban area. It has a critical mass and diversity that puts it among the most important urban -- what are called in the jargon -- conurbations in the world. You can look at southeast England, you can look at Silicon Valley in Los Angeles, and it is very important.

I'm sure nobody in this room, or very few people in this room, wanted Toronto to have to suffer the impacts of free trade, but we have it whether we like it or not, and if we make Toronto less competitive, the suburbs will suffer as much as the city if it becomes less competitive.

One of the problems with the taxation system we have is that if you peg it on a market value assessment and it's fixed and rents are driven down by economic circumstance and you can't change the taxation because somebody picked an arbitrary year, it means you've rented those commercial enterprises uncompetitively.

If you look at the Economist that did a survey of Canada, it said that Toronto is among the most expensive commercial real estate centres in the world. We've got a real problem, because we could be attracting headquarter companies as well as small companies, North America and worldwide. Right now we can't because of the taxation business, which is going to be exacerbated. Right now it's a problem. Imagine when it becomes exacerbated.

You would understand that Toronto has 75 million square feet in a closely knit area, which allows high-level transactions to take place, face-to-face contact, which is very important in this kind of a special urban conurbation. It's only exceeded in North America by New York and Chicago. If you count Washington and all the government stuff, it's also exceeded by Washington, but it's not exceeded by Washington in terms of what I'm talking about. It does so, unlike Washington and New York, in a safe condition.

We have a very powerful competitive instrument here, but it's going to be hamstrung by this system and everybody will suffer, because it is not simply the same market share that we ought to be arguing about. It's extremely narrow to be doing that. We ought to be looking at the market share we could have if we in fact see to it that this instrument is a sharp one.

I find the greatest contradiction in this whole system is that the province has been encouraging every municipality to have as a statement in its official plan -- the preamble to the official plan is intensification and consolidation. Clearly market value assessment, in its present structure at the point in the economic pendulum that's been picked, is absolutely in favour of decentralization and sprawl.

The costs of sprawl are huge. I've been preaching this for 15 or 20 years. It's now coming to be a point of understanding, but I feel that I am in the same position on MVA as I was about sprawl 15 years ago. I'm telling you it's serious, and I don't think you can cop out by saying this is a Metro problem.

You could have argued that the Spadina Expressway was a city problem or a transportation problem. The fact is that there was an enormous step in. I wasn't a Davis supporter or a Conservative supporter, but I can say that Davis's stature rose extraordinarily because he took a step that cut across his own constituency but was ultimately to the benefit of the city.

My final point is that indeed tax reform is needed. There is no doubt. Remember, for the NDP to exacerbate a regressive tax -- real estate is a regressive tax as a foundation, and you guys are going to allow it to be exacerbated -- seems to me to be the most extraordinary inequity possible. What a contradiction. What an irony. What a joke.

There is tax reform needed, there is no doubt about it, but you're not going to do it by the kind of horse-trading that's going on at Metro level, driven by local considerations, and expect to come out with an instrument which is indeed better than the one we've got. Therefore, it's incumbent upon you, in my view -- and when you vote for this bill, remember, really think about the consequence of what might happen -- I think it's absolutely imperative that you have a proper tax investigation and come out with a design that works and that we understand to work, because right now nobody understands whether this will or won't work.

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The Chair: Thank you. We have two questions. Mr Turnbull and Mr Perruzza.

Mr Turnbull: Jack, I think it's worthwhile pointing out to this committee that you were one of the leading people in this city in terms of taking old buildings and renovating them and giving them new life, rather than just knocking them down and building faceless towers. It alarms me, the suggestions as to what we're doing to our city with this proposal. I suppose that it could be suggested that it's a scare tactic that's being used, but I don't think so. You stated in your submission that taxation should be an instrument of public policy.

Mr Diamond: Precisely.

Mr Turnbull: It seems to me that you should maybe expand upon that a little bit and also expand on the fact that the government is essentially doing a Pontius Pilate and saying, "This is municipal."

Mr Diamond: It's not going to wash. Politically it's not going to wash, as well as the fact that the municipalities are a creature of the province, and everybody knows that.

Hon Mr Cooke: You're not allowed to say that.

Mr Diamond: What's that?

Hon Mr Cooke: Well, I've learned since I've been Minister of Municipal Affairs that you're not allowed to say that.

Mr Diamond: But it's really true, and the fact of the matter is that it isn't going to wash because right now it's before the province, and whatever happens on this bill, the province will be blamed for it. So whatever step you take, you're going to have to live with that.

But in terms of the taxation as a question of policy, we understand that in the income tax system we use it to redress social inequalities. We use it in certain industries to encourage -- for example, in the oil industry we have used it as an instrument of encouraging exploration.

I think the problem is, at its very foundation, that I don't think people understand the importance of a healthy city and how delicate the balance that Toronto has struck is. The analogy I've used in my paper is a forest ecology. If you cut the undergrowth in a forest, it isn't simply cleaning the forest. The trees die. They need one another. It may be a rather simplistic analogy, but the fact of the matter is that they are, all of those small businesses and big businesses that work together -- let me give you an example. Printing is very important for a headquarters city. Printing establishments normally can't afford high rents. They have to be near the city centre; they don't have to be in it. There are a number of service industries which require to be near it. Once you dislocate those, you really dislocate the industry quite significantly. You add cost to it, but you really make it ineffective. Cities that work, economies that work, have a series of vectors that are working together for a common end and become very powerful.

Those dislocations are really quite serious, and there is already a loss of service industry from the city. There really is a loss. What we need is an instrument in which to correct that. In fact, there needs to be a kind of reverse market value in order to see to it that there is sufficient diversity and there are sufficient support systems in order to keep the city so vitally alive.

So it's my view that, as I said, the question of equity is a kind of simplistic issue which might sell in a suburb today, but watch out about the effects, if they are as I suggest. I'm not being alarmist, because I've seen cities that this has worked in.

Mr Turnbull: Briefly, the other question I have is that it appears, from all of the examination that I've made of this assessment, that the approach that has been taken to maybe the big bank towers has been an income approach, and that the smaller properties have run afoul of the great speculative boom of 1988. There's no way the cash flow of the small businesses is reflected, because they didn't have the ability ever to generate that kind of cash flow.

Mr Diamond: In fact, the review that you and Mr Rizzo asked about -- you asked, "What suggestions do you have?" Not only do we not need this MVA system, which I think is a crock -- I mean, I really think that it's becoming more of a crock as there are going to be exceptions to the rule and there are going to be caps on it and it's going to be manipulated in order to try to satisfy some particular interest against another, as will be inevitable. But the present system is poor.

Let me give you an example of how different-sized enterprises can accept or not accept the fluctuations in the market. The taxation system on commercial real estate at the present time taxes empty space. Non-revenue-producing space is taxed, I think it's 10% less, as if it were full. Can you imagine what that's doing? The system is lousy now.

Mr Turnbull: Yes. One last quick question: The assessment department claims that it wasn't based on highest and best use. Can you believe that the values that occurred with small businesses in 1988 could be anything other than highest and best use? Is there any other justification?

Mr Diamond: No. In fact, you have to fight every taxation officer, and there will be arguments about why -- look, the object of a tax appraiser is to gain the highest revenue for the city. That's really their hidden agenda. The agenda out front might be questions of equity and fairness, but in fact it's to see to it that you're paying the biggest shot you can. I understand that.

So the very fundamentals of the way in which we tax -- in fact, real estate as a basis of taxation is suspect. It's regressive. It has market fluctuations. I know it's cheap. That's one of the reasons that real estate is taxed. It's a very cheap method of raising tax, and you can't get away with it; in other words, you can't pocket it and run. So there's a certain security to real estate as a basis of taxation, but that's about it. Those are about the benefits. After that, in my own view, if you're really looking for an equitable system, clearly income ought to be a basis and, as is suggested, simply a question of service costs.

But I don't want to proffer and I don't want to get drawn into a discussion about what would be a good system. It's precisely my pitch that that should be the subject of the best minds in the province, looking at it from every aspect -- the question of equity, of public policy, of impact and the need to keep Toronto an extremely healthy, competitive place. That's crucial.

Mr Perruzza: You referred earlier to my position on equity. I had the pleasure to be able to introduce in the Legislature, as a private member, a resolution to remove education from property taxes. That happened, I'd say, about three weeks ago. In fact, the resolution was supported overwhelmingly by our party. As I recall, Ms Poole spoke against it.

Ms Poole: That is actually not true. I supported you.

The Chair: Mr Perruzza, can we focus on the question?

Mr Perruzza: I essentially believe that property taxes are an awful thing. I've always believed it.

Mr Diamond: I'm glad to hear it.

Mr Perruzza: I believe that what you should try to do is roll back and base it as you said. Any tax that you try to impose on people should be imposed on ability to pay, on wealth, on those kinds of issues, not based on where one lives.

Mr Diamond: And larger questions of policy.

Mr Perruzza: Precisely. But when the decision before us is essentially the one that's been placed before us, to make a decision on whether you take a little step towards achieving some form of equity within the current system -- we didn't create the market value system we have. We have a market value system that is essentially 40 or 50 years out of date and it's been perpetuated and rolled forward.

I represent a community that is essentially, by and large, going to benefit from that little step forward. It's not a great benefit to any degree, but they've been overpaying under our current market value system.

Now Metro is legally entitled to ask for what it's essentially asked for and we've returned updated rolls to, I believe, somewhere around 280 other municipalities across Ontario. Why should we treat Metro differently in this particular case? You make a very strong argument. In fact, everything you've said may be realized; I don't know. Only time will tell.

Mr Diamond: Hopefully not.

Mr Perruzza: Hopefully not.

Mr Diamond: Hopefully we can devise a system that you don't have to worry whether I'll be right or wrong.

Mr Perruzza: Yes, absolutely.

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Mr Diamond: But in answer to your questions, if I might, you're the government, and therefore in power, it seems to me --

Mr Perruzza: No, I'm a member of --

Mr Diamond: You're a member of the government.

Mr Perruzza: I'm a member of the governing party. As I'm often told, the government is the executive, the cabinet.

Mr Diamond: You're a member of the governing party, and obviously, why would we be having hearings if we can't affect the outcome? Are you saying that there's nothing we can do, that in fact you're powerless to change anything? Is that what you're saying?

Mr Perruzza: No. What could happen is, I guess we could essentially do nothing and Metro could have the debate all over again and --

Mr Diamond: But the implication is that: "There's nothing we can do. It's not our business and we can't change it."

Mr Perruzza: Well, no, here's what could happen. We could essentially do nothing. Metro could ask to have the rolls updated under full market value, as 280-some-odd municipalities in Ontario have done, and receive it.

Mr Diamond: And, of course, destroy the city --

Mr Perruzza: We would just give --

The Chair: Allow Mr Diamond to answer the question. I'm afraid we're going to have to move along. Mr Diamond, if you --

Mr Perruzza: That's the law. That wasn't constructed by us; that was the Conservatives.

The Chair: Mr Perruzza, allow the witness to respond.

Mr Diamond: I wanted to say that I have to reiterate the reason why -- there are three parts to your question. The first one was, I was interested to know whether there is any power at all in this hearing and whether any changes are possible, and the answer, I take it by inference, is yes. The second one is, why is Metro different? I tried in my paper to demonstrate why it is different. The third question was the inequities of the taxation system now and whether, if it went back to Metro, it were to simply impose a full market valuation, everybody's taxes would go up such a huge amount.

I have tried, if you were listening to what I was saying, to say that yes, of course it is wrong now. Nobody is saying that it isn't. What we're saying, and what we think it is in your power to do, is to have a proper investigation and devise a system that takes these factors into account.

Mr Perruzza: You're saying Metro didn't conduct a proper investigation.

Mr Diamond: I'm absolutely saying that.

The Chair: Thank you very much for coming before the committee today. We appreciate your presentation.

LENORE KESSLER

The Chair: I now call on Mrs Lenore Kessler, if you would be good enough to come forward, and for those awaiting to appear, next will be Mr Henry Feith and Mr Michael Clarke, who are appearing together, and then Miss Danielle Mascall.

Ms Poole: Mr Chair?

The Chair: Excuse me, just before we begin. Ms Poole?

Ms Poole: I apologize, but I did want to just correct one thing. It is 735 municipalities across Ontario that have requested reassessment under market value, not 260.

The Chair: Thank you for that clarification. Welcome to the committee, Miss Kessler, and please go ahead.

Mrs Lenore Kessler: Thank you. I didn't think I was going to have the privilege of speaking here until yesterday at 4:30 pm when I got a phone call, so I am not as prepared as I would like to have been. But here I am, and I do have something to say, and as this is a very disturbing emotional issue to me at this time, I'll sort of refer to my notes that I drew up this morning.

Something about myself so you have the picture: I was born and educated in Toronto, but my entire professional career was spent in the United States. I elected an early retirement in order to return to my roots and bring my husband with me. We decided to buy a home, and that would be our very first home -- rather late first-time buyers -- as a hedge against inflation and to provide a sense of security for our senior years. As neither of us drive, it meant buying a house in an old established residential area in the city of Toronto with access to the subway and in the downtown core, also because we had lived in Manhattan and that's the type of living we were used to.

We pretty quickly found out this meant paying twice the price we had originally intended, and we were advised to buy a new house because we didn't know much about a house -- we'd lived in apartments all our lives -- being penalized when we bought the new house, we found out pretty fast, by having to pay much higher realty taxes than other people in the area. We sort of accepted that, because that seemed to be the name of the game.

When I first heard about market value assessment, it was presented as a means of establishing fairer realty taxes and more equal spread of the tax burden. I would think this should have benefited people such as my husband and myself who were already paying taxes on a 1985 property value. Instead, the inequity has been further compounded by MVA.

Our 1992 realty taxes on a row town house, one of seven houses, 14 feet wide by 76.73 feet deep, with no backyard and a postage stamp front, were $4,131, which will be increased in 1993, by the information available, by $637, plus all the other increases inherent in taxes: mill rate, education, what have you.

Then I hear about the 5% and 5% proposal. What fairness is there in that proposition for a person already paying two, three and even four times the realty taxes of some in the same neighbourhood in older homes? The inequity becomes even greater year by year. With my knowledge of mathematics, if the system persisted, instead of paying double, triple and quadruple what some others were paying, we'd end up paying four times, six times and maybe even more, if it's perpetuated.

To my understanding, market value means the price a buyer is willing to pay for a home. The use of 1988 is appalling, but if you're going to use 1988, there's one thing I do not comprehend: If 1988 is the year MVA has chosen, why would anyone's taxes anywhere be reduced, no matter where in Metro the house was located, unless it was bought and built in 1988 or 1989? Any home anywhere purchased in 1970, 1980 or any time prior to the boom year of 1988, as far as I know, would have a much higher market value using 1988 figures.

For some people to tell me my home's worth more because of its location than a similar home in another part of Metro is no logical explanation. We're not comparing houses; we're comparing values. Be it a little house or a big house, if they cost the same and they sell for the same, it remains, as far as I can see, that they both have the same market value. One sacrifices luxury and size of the house and lot for the more expensive location and land value.

Also, I've looked over the market value reassessment sheets and I can't believe what I'm seeing. All I have to say is, did the assessors willy-nilly assign a house to a value or perhaps pick a number or amount out of a hat? Even the proposed assessments on the new town houses -- these are the Baker's Row town houses near Summerhill subway, just west of Yonge -- are inaccurate and completely irrational.

There were, I believe, 75 town houses built over a period of four or five years, beginning about 1980. Most of them were on Alcorn Avenue, the street on which I live, but some were on Walker Avenue and some on Birch. A few are detached, some are semidetached and some are row houses. They're all vastly different sizes and have vastly different amenities and features.

Our house was built at the bottom of the scale, as far as size, amenities and price are concerned. No other Baker's Row house has such a tiny kitchen as we have. Do your assessors think that kitchens aren't important? Are balconies, backyards and such demand features irrelevant? They certainly were relevant as far as the purchase price was concerned. It wasn't the house of our choice; it was the cheapest house. There are houses that have taxes higher than houses on your new assessment.

When my husband and I purchased a new town home bearing such high, inequitable realty taxes, we became aware of the realty tax grant for seniors, because my parents told us about it. We counted on that as a buffer as we grew older and taxes grew larger. Now I understand the realty tax grants have been rescinded. That's a point I haven't read much about or seen anything about. No consideration has been given to those whose taxes will increase and, in actuality, increase even more because of the loss of this long-standing benefit.

The impact of the 1988 market value in the city of Toronto is disastrous to people like my husband and myself. We bought the home as a hedge against inflation and will find, under MVA, that the house is unaffordable and difficult to sell due to the exorbitant taxes. I just want to say that my husband and I are not snowbirds. We don't cross-border-shop. We live in Toronto 12 months of the year, paying the GST, provincial sales tax, buying food, furniture, clothes, services, everything locally, perhaps some of it as a loyalty, because we have access to American money and everything else and could cross the border easier than some other people. But I believe you buy, you do your business, where you live.

However, I'm beginning not to feel that way any more. We contribute much to the economy and take away nothing, because we don't even occupy a job. So I would like to know what you're going to gain from gouging people like us. You'll eventually drive us out of the city, you'll drive us out of Metro and out of Ontario, because when I pack up to leave, I'm leaving. We're just forced to contemplate that.

Now, I would have had more to say, but I was told I had 10 minutes.

The Chair: That leaves us a little bit of time for a few questions.

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Mr Perruzza: You mentioned the tax grant to seniors. Is yours being eliminated?

Mrs Kessler: Tax grants are being eliminated to all seniors.

Mr Perruzza: No, we haven't eliminated, we've essentially made them a little more progressive. We've raised it for low-income seniors marginally, and the way they're being changed is the way the money is being delivered. We no longer will refund it through a cheque, but you'll be able to claim it on your income tax; that is, the province of Ontario will pay it through the income tax.

Mrs Kessler: Excuse me, but I read about that in the paper the other day and it says very clearly -- it was stated that people of low income. So it's the same old story, isn't it? It's not going to be $600.

Mr Perruzza: I think you lose all of it when you reach about $50,000 a year income. Somebody correct me if I'm wrong. You lose all of it when you're up around the --

Interjection: Around $52,000.

Mr Perruzza: -- $52,000. So if you're income is $52,000, yes, you will lose it.

Ms Poole: I think it's $27,000.

Mrs Kessler: Did you say $27,000?

Hon Mr Cooke: That's the break-even.

Ms Poole: After $27,000, you're making less than you did before, under the old system.

Hon Mr Cooke: It's about break-even till about $24,000 or $25,000.

Mrs Kessler: Anyway, I don't care what it is; it will eventually, I'm sure, just fade away.

Mr Perruzza: I just wanted to clear up for you a little bit that it isn't being eliminated; in fact at the low end it's being increased. Between, I guess, $22,000 and $25,000 or $26,000, you're at the same thing: $600 a year is what you'll get. Above that, it begins to scale back. That's what's being done to the tax grant. You lose all of it when you reach, I believe, around $50,000, $51,000, $52,000. Then it will be phased out, it will be eliminated, so you can't claim any of it. Just to clear that up for you, okay? Below $22,000 or $23,000, it goes up to $700. I believe you can collect as much as $735.

Mr Rizzo: Up to $1,000.

Mr Perruzza: Up to $1,000? Then it begins to scale back, okay?

Ms Poole: Thank you very much for taking the time to come down and present to us today. Near the beginning of your comments, you talked about the reason you decided to buy a house when you came back to Toronto. You said it would be a hedge against inflation and security in your senior years.

The city of Toronto has a disproportionate share of seniors. In fact, I think we're something like 50% above the provincial average. The seniors I've been talking to no longer feel secure with the plan that's coming in. Judging from the 1988 year they're using for values, what is your home on Alcorn Avenue worth today, approximately? What are they selling for today, compared to what they sold for in 1988?

Mrs Kessler: I would say for one third less, maybe even more. They're difficult to sell too, because there are a lot of people who don't want attached houses, semi-attached houses. They don't want town houses that have narrower stairs and no land, so they're difficult to sell. On top of that, the prices are high. You know that when you buy, nobody puts a gun to your head and forces you to buy a house, and the values went very high on those houses in the boom.

Just before the boom, I happen to know as an instance, that for one of the town houses someone I know paid -- I don't know whether it was 1986 or 1987 -- about $527,000. It was bought as an income proposition, not a house. They didn't live in the house; they rented the house. Well, it became evident what was happening, and last spring they just unloaded the headache for $399,000. Today I don't know whether you'd get that.

Ms Poole: I think that would reflect the general situation in the city of Toronto statistics that Anne Johnston, a Metro councillor representing the city of Toronto, presented yesterday. She said there had been a decline in values of approximately 34% for city of Toronto properties. I think in Etobicoke it was 13%. It was very obvious that the suburban properties had declined much less in value than the city of Toronto. So for people who say, "Oh, it doesn't matter that 1988 was taken as the base year; it doesn't matter because market value treats everybody fairly," I think it does matter.

Mrs Kessler: I think so. I know that just in our street and area, it was almost like some sort of a contagious disease. I couldn't believe sometimes what was happening on the street with people buying houses and what they were paying.

If you want to hear about something else which touched me but really doesn't now, my father is now in a nursing home, somewhat in the same area, but he was more west of Avenue Road but within walking distance. One reason why I wanted to be in that area is because my parents were alive. My mother and brother have since died, but my father is now in a nursing home.

The headache was, in the bust, to sell the house, not only because -- this is something that is somewhat pertinent -- it was a triplex and those houses in good areas which were touched by rent review -- the realty taxes on the house in 1992 were about $6,000, but an apartment was being rented in the house for less than $500, so it was a loss. I was very happy that somebody wanted to buy the house no matter what, with the loss of certainly a third maybe, in the crazy span when people seemed to be all of a sudden caught buying anything, in 1988 and early 1989. But it was pretty tough and you had to just resign yourself.

I would suspect that we took maybe more than a third less than we would have got in the boom. But when I hear what's going on now -- because that would be on the old basis in Metro, $6,000 in taxes -- boy, am I glad I don't have to sell a triplex with rental units and try to rent them with about, from what I hear, triple taxes, about $18,000. Because the basis of thinking on the thing was that it was an income house and it was taxed way back when, in former years, when having an income house was a benefit; you did have an income.

The Chair: Mrs Kessler, I want to thank you very much for coming before the committee. Despite the fact that you said at the beginning that because of the time of notice it would be difficult to get your remarks together, I think you've made your case quite clearly. Thank you again for coming.

MICHAEL CLARKE HENRY FEITH

The Chair: I'd just like to remind members that we have three witnesses to come as the clock strikes five. First of all, Mr Henry Feith and Michael Clarke, if you would please come forward, gentlemen, and then Ms Danielle Mascall and, last but not least, Mr Bernard Tsui. Please go ahead.

Mr Michael Clarke: We come before this committee --

Mr Henry Feith: I think we have to identify ourselves.

Mr Clarke: I'm sorry. Excuse me. This is Mr Henry Feith, a property owner in Rosedale. My name is Michael Clarke, the same. We come before this committee today essentially as home owners. We don't have a particular political agenda. We don't want to have any agenda other than as individual home owners.

We did want to get some points down on record in front of this committee, and that's really why we're here today. Obviously we wouldn't be here if we were not opposed to the scheme that's been proposed, the MVA scheme. Essentially we're opposed to it for the following reasons.

(1) First of all, of course, is the onerous choice of a base year of 1988, a year in which it was widely recognized that speculation and property flipping had escalated property values, especially those downtown, far beyond their current market value, and it's just completely unfair. It sets the value for all property at far too high a level. We have a couple of suggestions in that regard.

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Mr Feith: Maybe you should wait until he signs his cards.

Mr Clarke: Are you signing your Christmas cards?

Mr Perruzza: Yes.

Mr Feith: You're not listening, are you?

Mr Perruzza: Absolutely, every word.

Mr Feith: Interesting.

Mr Clarke: Very interesting.

We could try basing the assessment of market value on actual value in the current year and change the rates annually -- computers can do that -- or we could base the taxation on the last actual selling price of the house. Anything else than choosing a base year of 1988. We feel that's very inappropriate.

(2) The infrastructure that is a major constituent of our taxation load has been paid for long ago in Toronto by historical years of taxation. Our tax dollars are now paying for infrastructure way out in the burbs, and this too is simply unfair, in our view. Let the suburbs pay for the construction of their own infrastructures by setting their own rates appropriately. The days when Metro was required to support that construction, we feel, were over long ago.

(3) Taxation impact on individual home owners is one thing, and obviously that's a major concern, but there's another problem, an associated one; it's really a social problem. All the shops and other retail amenities, the commercial infrastructure, would be placed under a burdensome tax load under the current proposal. Again, that's got nothing at all to do with the supporting services those people use. It reflects other financial loadings, such as this infrastructure construction in the suburbs.

Many of these people in these commercial-retail businesses are on the border line now because of the recession, and any significant tax increase will destroy their businesses and cause major vacancy increases in commercial retail areas. That's the kiss of death, of course, for the remaining merchandisers. This is obviously and patently wrong, and it's going to change the face of our downtown environment by eliminating the small pockets of retail-commercial infrastructure that we depend on. It's going to change the core into something more resembling what you see in many large American cities, and I don't think Toronto wants that. I don't think anyone in Metro wants that, either.

This is critical, because the commercial side really anchors the residential neighbourhoods such as our own. If we're going to be forced to travel farther afield to buy our household goods every week, our costs will go up, pollution will go up and our own neighbourhoods will start to deteriorate as the retail-commercial component dies.

(4) This is associated with point 3 above. We're worried that as these shops and commercial institutions are forced out, jobs will be lost, jobs that could well be taken by people who live in the suburbs. Take the case of a sales clerk working at a downtown store but living in Scarborough. Although this person might be a short-term winner in gaining a property tax reduction or the advantage of same through a rental rate reduction, whatever, or stabilization, under the proposed MVA scheme, if the person loses his or her job as a result of the downtown deterioration, he or she becomes a long-term loser.

(5) We have both checked with our neighbours what the approximate taxation we would pay under this current scheme would be. Effectively, in my particular case, it's almost doubled; in Mr Feith's case, it's more than doubled; in my next-door neighbour's case, on the other side, it's almost doubled. This proposed scheme will impose irreparable damage on the value of our homes as a result of this by making them far less attractive to a purchaser, if we can sell them at all under these circumstances. Simply delaying the application of the scheme, as is being proposed with this 5% plus 5% implementation plan, is not enough. This proposal itself must be abolished in its current form.

(6) This has to do with rushing into this thing. The Fair Tax Commission is close to tabling its final report. At the same time, no extensive economic impact studies of the proposed MVA implementation have been done to date. Why are we rushing into this now? We feel that more study is required before an accurate assessment on the proposal can be achieved. We're rushing into this thing too fast, without really knowing what the actual economic impact of this is, and it has social impact too. It takes studies to find out these things.

(7) I think you've heard this one just from the previous presenter. The downtown area contains many people who are retired and/or are on fixed incomes. The economic impact of the proposed scheme on these people would be devastating, just as the destruction of their neighbourhoods that the proposed scheme would bring about would socially devastate them.

(8) As to the 5% plus 5% implementation plan -- residential only, of course -- there is no provision in Bill 94 to prevent Metro from putting the entire provisions of the proposed scheme in effect at their own will or as their particular needs may arise, needs which are in themselves highly suspect. The proposed implementation is far too open, too flexible, with no real controls. Five plus five doesn't do it.

(9) That 5% plus 5% also penalizes those people who are or wish to be mobile, who want to move. This constitutes a wealth or mobility tax. God knows, we already have enough of those in place today. It also penalizes older people who want to realize the value of their residences when they sell to pay for their retirement. The current proposal forces these people to become prisoners of their own homes by virtually reducing their mobility.

(10) There is a recognized need for a new taxation scheme. Property tax reform by itself is probably not a bad idea. There are obvious inequities in the current implementation and these should of course be addressed, but they must be addressed without sudden financial or social impact on any particular group.

(11) We fully endorse the concept of Toronto dropping out of Metro, as our own mayor has suggested. It's a desperation move, but the original purpose of Metro is largely over and done with now and has been so for quite some time. It's almost as if we don't know how to stop it, having started it. We feel that the suburbs should start paying their own way, both for schools and for infrastructure, because they are now established to the point that they can carry this load. Something must be done to prevent the suburbs from being able to gang up on Toronto in the way they have on this current issue, and the best way to do this is to let each municipality or borough go its own way by abolishing the concept of Metro.

(12) Houses across Metro should be taxed at the same rate per square foot of house and also at the same rate per square foot of property: lot size for lot size, house size for house size, with no exceptions.

(13) Thanks to the city of Toronto for advertising this opportunity to submit our views opposing this current scheme to this committee. Thank you.

The Chair: Thank you very much for your submission. We have a number of questions.

Mr Frankford: As a Scarborough member, I would like to muse a bit on your suggestion about getting rid of Metro. With respect, we've had Metro since 1953. I guess there's a fundamental question there: Is it a failure? Are we not all better off having it? To go from that, what would the implications be? I respectfully assume that your suggestion here is thought out and not just an emotional reaction. What would we expect in Scarborough, a city of 500,000, if this went through?

Mr Clarke: I don't know what you could expect, but let me start off with the first part of your question, which basically related to the viability of getting rid of Metro in the first place. I believe Metro has outlived its usefulness. It was useful; there's no question it was useful. It established what happened in Toronto and the outlying areas, and I think it was very effective in doing that. I think it's outlived its usefulness. I think we simply don't know how to get rid of it in any fair and equitable way; I'm not sure how to get rid of it myself. But when I see the results of it, with this type of proposal, I think it's time to consider getting rid of it.

I can't really tell you what Scarborough could expect under such a scheme, but Scarborough's a big boy now and can stand on its own two feet, I'm sure.

Mr Frankford: The conventional wisdom really was that people lived in the suburbs and worked downtown. I think we've been seeing that, only more so. Think of the GTA: Metro itself might well think that people live in Durham and work in the GTA.

Mr Perruzza: That would bring Woodbridge in and then equalize across Woodbridge too. That'd be good.

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Ms Poole: Thank you for the brief you have submitted today. In a very articulate way, you have outlined a number of the concerns that people in the city of Toronto have with this plan. As a city of Toronto member, I will avoid the temptation of talking about the subsidization issue. Instead, I will ask you about item 12, which is the unit assessment proposal endorsed by both the city of Toronto and the city of North York, which has never actually been studied. It just was dismissed out of hand by Metro.

One of the things we are told is that people in the city of Toronto are opposed to any type of reform. No matter how many times we say, "We believe there's a need for property tax reform and to redress the inequities," I think people still don't believe it. Am I right in assuming that if we went to a unit assessment, which is based on the size of the lot and the size of the building, that your taxes on Crescent Road would probably go up?

Mr Clarke: I don't know what effect it would have, I really don't. They could well go up.

Ms Poole: I don't know your specific houses, but that area generally has larger houses and larger lots than the 14-, 15- and 20-foot lots we've been hearing about at these hearings from people living in the rest of the city of Toronto. Let me put it this way: If your taxes went up because we went to unit assessment, could you accept that?

Mr Clarke: I could, absolutely. I believe Mr Feith is indicating that he could too. It's a matter of fairness. Let's apply the same restrictions to everyone. Sure, you get smaller houses, larger houses, worth more, worth less. Of course you're going to find that. Everybody buys a house that's roughly according to what he have in the way of income etc, and that's to be expected.

Mr Feith: You also have larger properties in Scarborough. There may be a smaller house but a larger property.

Mr Clarke: All of those things come into effect. I think the underlying reason for many people being upset, ourselves included, is the business of not applying a fair and equitable standard throughout. If taxes were to go up because of a fair implementation of a property tax reform, who could argue with that? Who could possibly argue with that, because everyone would be on the same square footing.

Ms Poole: And that's all you're asking for.

Mr Clarke: I'm not asking for special treatment for downtown, although it may well deserve it. I'm not asking for anything special, other than fairness.

The Chair: I want to thank you both for coming before the committee this afternoon. We appreciate it.

DANIELLE MASCALL

The Chair: We have two witnesses left. Ms Danielle Mascall, would you be good enough to come forward and take a seat. We welcome you to the committee and appreciate your taking the time to come down and make your presentation.

Ms Danielle Mascall: Unlike many people here, I didn't have that much time to prepare a speech because I didn't realize that I would be talking here. I received a call quite late last night, so it was short notice.

My name is Danielle Mascall. I am 15 years old and I attend St Joseph's College School, which is just across the road from here. I feel very strongly about this issue and was given the opportunity to speak at the Metro Hall deputation on October 15. As I will be one of the future citizens of this city, it is my duty to speak up again to plead for the delay, to stop the tax increase resulting from market value assessment.

I know we all have to pay our fair share of taxes. During the recession years, with the decline in business and employment, it is a most inappropriate time to increase taxes. After strong opposition by citizens, especially in the city of Toronto, MVA has been modified by Metro council. But this compromise does not go far enough and is still unfair, particularly with the deepened recession. Small businesses are finding it hard to keep their businesses going, and some have to close up altogether. Even big businesses are on the edge of bankruptcy. More stores are being boarded up every day, and I see these stores on my way to school.

Toronto has one of the highest office vacancy rates, and building maintenance is getting worse all the time. There are more and more vacant, eyesore lots where a few years ago there would have been buildings and they would have been booming.

I've heard that a few of the large hotels in downtown Toronto are also close to receivership and that CN may be closing its downtown operations. Where is it all going to stop? How depressing for my generation to see this great city going downhill and feeling our world is deteriorating around us. I cannot speak for the business sector, but there is an old saying: Don't overtax the ones who have; otherwise there will be no one to help the ones who don't have.

The city core provides a majority portion of jobs and the New Democratic Party professes that its goal is for people's welfare. But how can this be so if they support an unfair tax system that takes away people's livelihood? Many of these city jobs are also for the people who come in from the suburbs. What about the young people coming out of school who want jobs? Does this situation give us any hope for those who will be the future taxpayers? Don't let us lose faith in the government.

People expect the elected government to work on our behalf. Metro would get more money from increasing taxes temporarily, but if businesses cannot pay and have to close, then this would seem like a broken merry-go-round. The provincial deficit is bad enough without increasing the welfare payment. The people living in the suburbs may have some short-term benefit from tax decrease, but this is short-sighted and their politicians are doing them an injustice. For in their greed for voters, they are not explaining the long-term disadvantages of the unfair MVA program. Where will they be when their constituents find that they have been laid off from their downtown Toronto job because the business couldn't pay its taxes and closed up? Who will then pay their suburban taxes?

People move to the suburbs by choice of lower house prices, larger lots and clearer air. For whatever other reason, they did so with their eyes open, knowing that for all the new services the taxes would be higher. They should not expect to have a bonus tax cut at the expense of older people and Toronto homes and businesses that have paid their fair share of tax already. They are only sacrificing their own opportunities of benefits from being close to a large city.

There is a ripple effect that affects all areas, including suburbs, when the city dies. The local politicians know this and should explain, not simply go along with what seems like political gain. What will happen to those people who moved to Toronto when they were young and are now old and finding it hard to keep up with their houses? They are finding it very difficult to sell, because the buyers are scared of paying 300% to 400% in an increase in taxes.

MVA is hard on the housing market. We need a boom, not a bust. History tells us that people have always revolted against taxes, from Robin Hood to the Boston Tea Party and our own William Lyon Mackenzie rebellion. Now there is talk that the people in the city of Toronto will rebel against the Metro government. Is it really necessary? I think it is if we are to grow as a successful metropolitan community. The present course is suicide for Metro.

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I read the brochure from Councillor Bossons that Toronto wants out of the perverted Metro system and that even the suburban majority shows a clear dislike for the original goal of partnership. I was born and raised in the city of Toronto, and it has been a joy for me to see it grow on its way to becoming a world-class city. I see it now stalled in its destiny. I've been fortunate to visit London, Paris, New York and Hong Kong, and my mother has always told me, "Danielle, by the time you grow up, Toronto will be just as big as these world-class cities." We lost our chance to host the Olympics, and many of the big trade expos have passed us by for the lack of facilities and small-time political wrangling. We obviously need to attract new investment, but the present MVA program will do nothing for this growth. No other city in Metro Toronto will benefit if Toronto becomes a ghost town. When the heart stops, the rest of the body dies.

Ladies and gentlemen, please think of tomorrow and us, the younger generation, as your insurance policy, as the taxpayers of the future. But we must be given the opportunity. The fight for MVA will go on, and please remember, it's not over till it's over. I thank you for allowing me this time to speak.

The Chair: Thank you, Danielle, for coming down. We have a number of questions, if you'd be good enough to stay with us. We'll begin with Mr Turnbull.

Mr Turnbull: Danielle, I want to congratulate you on an excellent presentation.

Ms Mascall: Thank you.

Mr Turnbull: I think it's most important that we don't pile up debts and we don't destroy our cities for our young people. There's a lot of hope for the future when there's people like you who are prepared to get involved at your age; and stay involved, please. We need you.

I don't know if you're aware of the problems the Metropolitan Separate School Board is having and the actual reduction of taxes it's going to have as a result of the MVA. Are you aware of that?

Ms Mascall: No, I'm not.

Mr Turnbull: Okay, I won't ask you a question on that then, but it is a fact that they're actually going to get a reduction.

Ms Mascall: The thing is, though, I won't be staying in school for all my life, but I know people will have stores and property in the city, and those taxes will go up more than -- I'm not concerned majorly about the school board. I'm more concerned about the property within the city.

Mr Turnbull: A great deal of people will be driven out of their homes because they won't be able to afford these taxes. It's been suggested that this is not MVA. It certainly is MVA. There are some classes of property that actually will not get any capping under this scheme, and if anybody sells their home, the capping goes. It will depress values in neighbourhoods because people will discount the value of the house according to the increase in taxes.

I just want to thank you for a super presentation. Your parents can be extremely proud of you.

The Chair: I've got Mr Perruzza and Ms Poole.

Mr Perruzza: First off, a comment and then a short question. That was an excellent presentation, and it's not often you see people your age come out and take an interest in these kinds of issues. They're rather dry.

Just with the separate school comment, I had an opportunity last night to meet just very briefly with the chairman of the separate school board. In fact, although the brief that was submitted yesterday by the individual who made representation to us -- and, by the way, it was confirmed by the chairman of the board last night to me that he was here exclusively as a trustee and not in any official way as a member of the board -- indicated that under full market value they in fact would lose roughly $1.4 million, I believe; with the 40%, obviously that would come down substantially. I also proceeded to point out to the chairman that while Metro now loses close to $60 million a year in property tax appeal, if those property tax appeals were to come down, the separate school board in fact would gain under market value and not lose. I just wanted to clear that up very briefly.

A very short question: Danielle, if you lived, say, in Downsview, at Keele and Wilson, and somebody was to demonstrate to you that under our current system, under our current market value system -- and that's what we have today -- you were paying, say, $1,000 more a year in property taxes than what you should be paying, how would you feel about that? Would you feel that was a good thing for a government to have you do, pay more than your share?

Ms Mascall: No, I wouldn't feel it's a good thing.

Mr Perruzza: So you'd want to seek to pay your fair amount, right? You'd want it rolled back by $1,000, right?

Ms Mascall: Yes.

Mr Perruzza: Well, we're not going to be rolling it back $1,000, hypothetically. We're only going to be rolling it back $100. It's not full fairness, but it goes part of the way.

Ms Poole: Danielle, thank you for coming down to present to us today. I made a comment earlier about the calibre of the presentations, but I must say yours has been truly outstanding. If you're a sample representative of the young people of today, then I think we are in good hands. You've been intelligent, articulate and thoughtful.

You made one comment in your brief about the impact on business and when you walk down Yonge Street and see them closed. Perhaps it would be in answer to Mr Perruzza, who talked about the people in different parts of Metro who feel they deserve a tax decrease. Perhaps one answer to him might be that if we're going to have property tax reform, it shouldn't be at the devastation of the city of Toronto and our downtown core. I'd just like to repeat what you said, "When the heart stops, the rest of the body dies." Thank you very much.

Ms Mascall: You're welcome, thank you.

The Chair: Danielle, thank you again for coming before the committee this afternoon.

BERNARD TSUI

The Chair: I'll now call our last witness for today, Mr Bernard Tsui, if I've pronounced that correctly. Welcome. Good of you to be with us at the end of a Saturday, but we're interested in your presentation. Please identify yourself for the purposes of Hansard and then go ahead with your presentation.

Mr Bernard Tsui: Thank you, sir. It's my pleasure to be here. I am a property owner and I represent a few other property owners, too. I have no political alliance with any party at all. I would like to mention, in October I wrote to about 20 Metro councillors who were supporting the MVA and only three of them replied to my message. Even these three councillors, they replied to my message only out of courtesy. They don't even answer my questions or show any concern of my issues. I was very disappointed at those Metro councillors, since I spent about a week to prepare my message and I throw my guts out, and that is all I got from them. But judging from what I've seen just now, I have high hopes on this committee that they would consider my message and our fellow citizens' messages more responsibly.

I oppose MVA for the fact that evaluating market values is very expensive and yet highly submissive to errors, omissions, and even frauds. Say, an erroneous, overly high-valued assessment would be brought to attention through an appeal procedure, and people know about it, whereas a fraudulent, under-valued assessment which brings about unfair low taxation would be carried through unnoticed because nobody brought it up.

However, we may use property square footage and gross floor areas in place of market value for the assessment value. The facts are: square footage does not change with time; even laymen can check and calculate square footage; evaluating square footage costs much less than appraisals, saving taxpayers millions of dollars, and I'm not exaggerating dollar amounts. I just employed an appraiser to appraise one property. He charged me $3,500. Why, if I can only use the square footage for the same purpose, it would only cost me $35.

The second main reason I am opposed to market value assessment is for the fact that it bears no relationship to how the tax dollar is spent. It therefore cannot generate a fair and equitable system over the current system.

To tie a relationship between the distribution of the tax dollar and property tax payment, I propose that there should be weight factors on various political ridings who may have differential interests. These weight factors vary in magnitude and in direct relationship with the distribution of the tax dollar. Say, ridings that have smaller expenditure on the tax dollar should have smaller weight factors. Ridings that have higher expenditure on the tax dollar should have higher weight factors. Naturally, one pays on what one spends and this is fair, isn't it?

For those who believe that commercial property owners should pay a little bit more tax than residential owners, it is only fair that that little more tax should be distributed to the residential in the same ridings. Other ridings have their own commercial to rely on.

I propose:

(a) Employ square footage as the basis for assessment values. The square footage would be the cost and quality control factor of a new tax system.

(b) Employ weight factors on various ridings to calculate the realty tax actual payments. The weight factors would be the key to a fairer system, due to the fact that the weight factors would be designed to reflect the character of the riding's tax dollar expenditure.

1730

Mr Turnbull: Your opening comments suggest that you hope this committee would see the light. I would certainly have had that hope, but the Toronto Star quoted one of the NDP members who was sitting on this committee last week as warning "it would set a `dangerous precedent' if the province tinkered with Metro's tax plan, he said the Rae government was bullied into holding the public hearings." I can tell you that the Conservative Party was the one that bullied them into holding these hearings, and I'm pleased we did.

It's appropriate that there be scrutiny of this. The majority of both the Liberals and the Conservatives voted against this bill on second reading. We very clearly said, "This is a very bad plan." Notwithstanding that we've got the hearings that we bullied them into, now we have a member of the NDP caucus, somebody who sits on this committee -- he's not here today -- prejudging the hearings, which just shows what a waste of money government is if it's not listening to the people. It just becomes a sham.

How patently unfair that several cabinet members of the NDP government who are inner-city members voted with the government -- all of the government voted in favour of this plan -- even though those people had campaigned in the last election as being against market value assessment. There's the first problem I have.

While I understand your frustration and I agree with the general thrust you have, I don't agree with you on weighting by provincial riding according to the costs they have. I'll tell you, there are some poor ridings where there is a need for more social services, so there's more money spent there. It would set a very dangerous precedent if we were to burden them with more taxes because there are more services used. The Progressive Conservative Party would not be in favour of that kind of move.

Mr Tsui: May I elaborate on my point? Since we have the weight factor in place, it would be up to management of the committee or councillors to put values on it. For those ridings that need more money, a weight factor is designed to do such a thing. Then it would come into the hands of the management of Metro council. Weight factors can be adjusted on an annual basis depending on the needs and expenditures. There's always a balance there. This is the expertise of the Metro council that it should display in these issues.

Mr Turnbull: There's a dangerous precedent there. I think we should be looking at a system which is more responsive and more reflective of cost of services, but it is important that we should not design a system which attempts to be an income tax system or something which will tax people more heavily for the particular social reason that a riding needs more services, things like community centres, which can actually lead to lower crime rates.

I'm sympathetic to what you're saying, but I think we could more appropriately move the burden on to provincial income tax for an element, part of the education cost, which would be more appropriate, and in that way it would reflect people's ability to pay.

Mr Tsui: Actually, I bring that out to answer some of the supporters of MVA that they are paying for other persons, that they're paying more money than they should. If we deal with those issues, how the tax dollar is spent, then they would know who is spending the money and who is paying it.

Mr Turnbull: Just let me explain. I represent a very wealthy riding, much scorned by the NDP; they're very jealous. If we were to adopt your system, it would end up with my riding paying very little because it doesn't consume many services like community centres and things like that, and I think that would be unfair.

Representing a wealthy riding, I am saying that it is appropriate that we have this on the ability to pay and that we should reflect it. But recognizing that not all of the people in my riding have the ability to pay, it gets down to ability to pay. That's why I'm saying we must design a better system. I think the unit assessment system would be better. It would be much more fair.

The Chair: Mr Tsui, I'll give you the last word and then I'm afraid we're going to have to close off the hearings this afternoon.

Mr Tsui: Furthermore, I read from a reply of one of the Metro councillors that about 80% of municipalities in Ontario are already employing MVA. I hope this committee will not use that as a reason to employ the MVA, just to copy what other municipalities are doing. We have our own peculiar material facts, we have our own particular situation. We have to get to the root of the problem and not just be copycats.

The Chair: Again, thank you for coming out this afternoon.

Just before adjourning, I note for members of the committee that tomorrow our session will be from 1 o'clock until 5 o'clock, but we will be back in room 151 in the Legislative Building. There may be the odd children's story lurking around there, but I'm told that most of the kids have left by now. They seem to have had a good day over there. We'll conclude our proceedings today and reconvene tomorrow at 1 o'clock in room 151.

The committee adjourned at 1740.