URBAN DEVELOPMENT INSTITUTE/ONTARIO
FEDERATION OF METRO TENANTS' ASSOCIATIONS
DEVON CONSTRUCTION KINGBEACH CORP
CONTENTS
Sunday 6 December 1992
Metro Toronto Reassessment Statute Law Amendment Act, 1992, Bill 94
Bev Salmon
Urban Development Institute/Ontario
Neil McFadgen, chairman, taxation subcommittee
Philip Greey
Bob Shaw
Federation of Metro Tenants' Associations
Elinor Mahoney, law reform chair
Deborah Wandal, policy coordinator
J.N. Beal
Accountability
Rick McAfee, founder
Telpo Investments
Robert Cook, partner
Roger Middleton
John Sutt
Devon Construction; Kingbeach Corp
Julie DiLorenzo, president
Toronto Board of Education
Anne Vanstone, chair, education finance committee
Ron Trbovich, comptroller of finance
Dr Linda Grayson, associate director, operations and finance
Citicom Inc
Kim McKinney, manager, real estate
Bob Airey
Zygmuntt Uznanski
Chris and Noella Milne
Barbara Hall
Howard Moscoe
STANDING COMMITTEE ON SOCIAL DEVELOPMENT
*Chair / Président: Beer, Charles (York North/-Nord L)
*Acting Chair / Président suppléant: Owens, Stephen (Scarborough Centre ND)
Vice-Chair / Vice-Président: Daigeler, Hans (Nepean L)
Drainville, Dennis (Victoria-Haliburton ND)
Fawcett, Joan M. (Northumberland L)
Martin, Tony (Sault Ste Marie ND)
Mathyssen, Irene (Middlesex ND)
O'Neill, Yvonne (Ottawa-Rideau L)
*Owens, Stephen (Scarborough Centre ND)
White, Drummond (Durham Centre ND)
Wilson, Gary (Kingston and The Islands/Kingston et Les Îles ND)
Wilson, Jim (Simcoe West/-Ouest PC)
Witmer, Elizabeth (Waterloo North/-Nord PC)
*In attendance / présents
Substitutions present / Membres remplaçants présents:
Frankford, Robert (Scarborough East/-Est ND) for Mr Gary Wilson
Mammoliti, George (Yorkview ND) for Mrs Mathyssen
Mills, Gordon (Durham East/-Est ND) for Mr Martin
Perruzza, Anthony (Downsview ND) for Mr White
Poole, Dianne (Eglinton L) for Mrs O'Neill
Turnbull, David (York Mills PC) for Mrs Witmer
Also taking part / Autres participants et participantes:
Mills, Gordon, parliamentary assistant to the Minister of Municipal Affairs
Clerk / Greffier: Arnott, Douglas
Staff / Personnel: Richmond, Jerry, research officer, Legislative Research Service
The committee met at 1305 in room 151.
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.
BEV SALMON
The Chair (Mr Charles Beer): Good afternoon, ladies and gentlemen. I'd like to call this session of the standing committee on social development to order. It is Sunday, December 6, and we're gathered to discuss Bill 94, the Metropolitan Toronto Reassessment Statute Law Amendment Act, 1992.
Our first witness this afternoon is Metro Councillor Bev Salmon. I'd like to welcome you to the committee, Ms Salmon. Please come forward. Help yourself to the water. Perhaps we could just move that out of right in front of you. That way we'll be able, as they say, to have better eye contact. We thank you very much for coming on Sunday afternoon. While we're a few minutes late starting, we'll have full time for everybody. We have a copy of your brief. Please go ahead when you're ready.
Ms Bev Salmon: I appreciate the committee meeting on this important topic on the weekend. I think it shows just how critical this is, not just to Metro Toronto, but to the province as a whole. I represent North York Centre South. That ward is virtually south of Highway 401 to the Toronto city limits, which in places is Eglinton, and in others Lawrence Avenue. On the east it's Leslie Street and on the west it's Bathurst Street, but a significant portion also goes as far west as the Allen expressway.
My ward has about 64,000 constituents who are well aware of the issue. I circulated my newsletter, which is attached, to every household and business in my ward. Approximately 40% of them are entitled, under Metro's scheme, to decreases. However, I've had only a handful of people call to say that they disagree with my position. I'm strongly opposed. I've had hundreds of phone calls in strong support of my position.
I've been opposed to market value assessment for many years. I was a part of North York's task force that studied all types of known property methods of taxation during 1987-88. We studied market value assessment, unit value assessment, poll tax, income tax and Peterborough's site value assessment proposal. We concluded that a unit value assessment system based on square footage seemed to be the fairest. We asked the province to study that proposal. At the same time the city of Toronto had a committee that met independently, and it came to the same conclusion ours did. These were significant studies. Again, we're awaiting the impact study and hope the Fair Tax Commission will be doing in-depth studies on unit value assessment. I understand they already have done an initial study comparing market value and unit value as they pertain to householders' incomes.
The first part of my brief deals with the flaws in the process that Metro undertook. I think everyone agrees that the present system is not fair, but when Metro had its lengthy debates during 1989, the entire debate was based on using 1984 as the base year. It was the provincial government that suggested 1988 be used, and that was virtually rubber-stamped by Metro with very little information and certainly with no studies.
Metro's plan throughout has been hastily contrived. It's been proceeded with lacking any economic impact studies. If your government is hesitant in any way in commenting or doing anything other than rubber-stamping, I say the precedent was set when the previous government said to Metro, "You can't use 1984; you must go to 1988." That did make a significant impact.
At the time of first discussing this, I certainly voted against the interim plan. It was clear to me that those who were proponents of the plan were only looking at whether their own ward was having increases or decreases and that was only looking at the impact on the residential sector. There was no thought or consideration given to the severe impact on the commercial and industrial sector.
I'd like to dispel the myth that this is only a city of Toronto issue. The impacts for North York are very serious. Under Metro's present plan, there are over 2,799 businesses throughout North York that will have increases of over 100%. These are right across North York, in every single ward.
I'd also like to say that during the debate this past fall, we were given incorrect information about what the "other" category contained. We were told, as you will see in the report, that it was just railway lands, vacant lots and pipelines. However, I've included in my brief three pages of properties in North York that are in the "other" category.
I'll just read a few of them for you: the Jewish Family and Child Service of Metropolitan Toronto on Bathurst Street is going up 151%; North York Christian School on Drewry is going up 177%; the Black Creek Community Health Centre on Jane is going up over 300%; the Italian immigration centre on Lawrence Avenue is going up 44%; Loretto Abbey is going up 33%; City Centre Child Care in North York will be going up 1,866%; Goodwill Industries is going up 377%; the Juvenile Diabetes Foundation, Kids Say No Drugs Organization, Epilepsy Ontario -- these are all on this list. I can assure you this list is clearly not railway lands, vacant lots etc, as we were initially told.
As the commercial portion of the tax pie decreases -- because make no mistake about it, there will definitely be loss of jobs and businesses that in spite of the capping can simply not hang on; too many of them are borderline -- the residential section is going to have to expand to pick it up. Many of the taxpayers who today are thinking they will be getting decreases will find those decreases disappear, either through subsequent reassessments or through the fact that they're going to have to pay more for their goods and services.
I'd also like to point out that although 70% of the residents in both East York and the city of York were getting decreases under the 1984 assessment, when we went to the 1988 assessment, those decreases became increases. In the case of East York alone, 63% of those same residents will now be getting increases.
Metro is merely tinkering with the present situation. They're not bringing equity to the system through this plan. If you look at the table which is also presented in the brief, and it's at the back of my newsletter, the table shows what the current taxes are. The current taxes, in the first column, are just all over the map. People with $200,000 market values in some instances are paying more than people with $300,000. We know that's inequitable. This is within North York; this is not across Metro. The proposed taxes under pure market value admittedly would correct some of them, if you are a believer in market value assessment, which I'm not.
However, in the column where it says "Total 1993 Taxes Due To MVR," you'll see that it's not correcting the inequities. All it's doing is adjusting the present taxes, which everyone knows are inequitable, and just applying either the decrease or the increase due to Metro's plan, but not correcting. You still see people with $200,000 households within North York paying, in some instances, more than people with homes valued at $250,000. You have people with homes valued at $600,000 who will still be paying $2,000 more than people with homes valued at $700,000. It's just all over. It's clearly not correcting the situation. When you go to 1994 taxes, it again continues these same inequities.
We're looking at a plan put forward by Metro that is not going to correct the inequities and is going to create chaos for the business sector, which you've heard from, the arts and the non-profit groups. Why should the province look favourably on this, on a system that is counter to NDP policy, that is going to permit the large anchor stores in the shopping centres -- Yorkdale is a prime example. Yorkdale has a large anchor store that will be paying $18,000 in taxes. It's getting just a tremendous decrease, while the little business tenants are having huge increases. Where is the equity? There simply is no equity in this situation.
It is a provincial responsibility to do something about what Metro has put forward. It shouldn't just be a matter of housekeeping for the province. It's a matter of responsibility. The province really must demonstrate some foresight and accept responsibility for the decision you're now facing.
If your view is, "The large majority of municipalities within the province are on MVA, so what's wrong with Metro?," I'll say there is a lot different. Do you know of any jurisdiction in the province of Ontario that is now on MVA that has come forward and asked for an update based on 1988 assessments? I know of none. If you know of one, please inform me.
I would also like to say that the region of Halton just this past Wednesday has rejected market value assessment, and as you know, Hamilton rejected market value assessment. Although Oakville is on it, I believe they're based on 1980 values and certainly are not coming forward asking to be updated on 1988, the very peak of the real estate market. Yet what Metro is going to be doing will be putting new homes, new businesses, the railway lands and part of that "other" category and any resales of homes squarely on the road to full market value. They will be on market value right up front.
This not only skews the system for future reassessments, but it's against your own policy. It's what Metro won't do today. They will not go for full market value assessment today, in spite of the fact that many of the proponents believe it's there and equitable. I do not. They're afraid to do it today, but they're getting it in through the back door for these other major categories of properties.
These past few days I have been in Windsor at the Federation of Canadian Municipalities board of directors meeting, and I asked the clerk if he would circulate two important documents that came out of that meeting. The Ontario caucus had a deputation from the railways. This was pre-scheduled. It had nothing to do with Metro's market value assessment scheme. However, the railways, as you have heard in this past week, are going to be severely impacted. Also, GO Transit is going to be severely impacted and is going to have to increase the fares. The railways are going to have to lay off workers and also increase fares.
Now, we had a discussion about the way the railways are assessed and the copy of the motion that was passed yesterday by the Ontario caucus -- I will just read it out:
"The Ontario caucus of FCM requests that AMO" -- that's the Association of Municipalities of Ontario -- "raise in their December 11 consultation meeting with the Ontario Treasurer the concerns of FCM's Ontario caucus regarding the application of the Assessment Act as it relates to assessment and/or payment in lieu of railway lands and rights of way to ensure a fair and equitable treatment of railway lands according to their use or non-use as active railway rights of way."
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There was a lot of concern expressed in the Ontario caucus. Both Chairman Tonks and I were present and participated in those discussions. This motion was passed unanimously by the Ontario caucus on Friday and it was endorsed by the FCM board yesterday morning.
FCM also last Friday had a press conference and issued the communiqué that is before you. Their concern about the economic statement issued by Mr Mazankowski -- and they are saying it's bad news for home owners, that home owners will be hard hit by the budget that's being put forward and Mr Mazankowski's statement. The president of FCM, Margaret Delisle, stated that this is completely unacceptable.
The federal government has said it will not pay its fair share for municipal services. Local governments will be forced to transfer these costs direct to the average home owner. I think this is very significant that apart from the fact that Metro, in the depth of a recession, is going to put a serious burden on its taxpayers, we have on top of that the impact of the downloading from the federal government.
A lot of taxpayers may be of the impression that if what they were told by Metro -- some of the home owners were told for three years that Metro would not be increasing the taxes to the residential sector. Obviously, Metro has reneged on that promise. The businesses were told they would be given tax credits to ease the burden of Metro's plan. Those tax credits magically disappeared during the final debate and this was not pointed out to the deputants, to the hundreds of people who came to Metro to express concern about their plan.
Mr Chair, I'm sorry. I've probably run over on my time. I apologize.
The Chair: There may be some who want to ask questions. I want to allow a little bit if I can. The parliamentary assistant wanted to make one point and I'll begin with him.
Mr Gordon Mills (Durham East): Thank you, Ms Salmon. I just want to refer to page 4 of your brief, the last paragraph, "When information was provided" etc and then overleaf about vacant lands and "other" classes. Our legislation ensures that non-profit groups and the arts are not in the "other" category but are in the appropriate residential-commercial capped categories. I just want to make that clear.
Ms Salmon: Yes, I quite understand that.
Mr Mills: Okay.
Ms Salmon: However, even with the capping, many of these organizations are borderline right now. They come to us and to you for grants. So which level of government is going to increase grants to these organizations in order that they can meet their tax commitment?
Mr Mills: Thank you very much. I hear what you're saying.
The Chair: If I can just ask the cooperation of members, because of time, if we could just keep it to one question. I'll begin with Mr Turnbull, Ms Poole and Mr Mammoliti.
Mr David Turnbull (York Mills): Bev, thank you very much. I will just start out by saying that you and I have been fighting MVA together for an awful lot of years.
Just to encapsulate quickly what has transpired in these hearings while you've been away, the government caucus have constantly answered to all of the delegations we've had here that they recognize that market value reassessment is unfair, but they think it's less unfair than the existing system. That is their defence of this. Yet we know that the tax bills that are going to be sent out to all of the taxpayers, including the people who are having reductions, will show the full MVA reduction and then they will put the clawback.
It would seem to me that there's a great possibility that, one, some of the people who get that kind of tax bill are going to be clamouring for tax reductions for the full MVA, which the NDP claim this is not, even though there are uncapped categories which are getting full MVA; second, there is very real danger when people see those bills that they're going to only pay the amount which is shown as the full deduction and refuse to pay that. Could you comment on that, please?
Ms Salmon: You've raised a few points. First, for those who say the present system is unfair, I won't argue against that. I agree. But what they're advocating is market value assessment, which is the same system. All they're advocating is reshuffling the debt, but they're not advocating going and bringing the full impact and they know how devastating that would be to Metro Toronto.
It is true that the proponents also feel there needs to be change. Nobody disagrees with that. But we know that the full impact will come in at time of sale unless the government does something about that, that that will be. Their market value assessment will still remain. That's what they will eventually -- if the property changes hands, that will devaluate their property. The increased tax will devaluate their property.
Mr Turnbull: Another question, Bev: Do you not see a very real possibility of encouraging a tax revolt by people who perceive that they should get a larger reduction and may in fact withhold and only pay the amount that they would have got under full MVA?
Ms Salmon: I'm sure this is going to happen on both sides of the issue: those who feel that they are being overtaxed and those who feel they are entitled to a full decrease, and I think it's important to keep in mind that this Metro council cannot bind a future council. In two years the whole matter can be reopened. It can become an election issue and people can run on the platform, "I'm going to get your full decrease and we'll make sure that those others get their full increase." This issue will not necessarily end or be held just for a five-year interim.
Ms Dianne Poole (Eglinton): First of all, Bev, thank you for coming down on a Sunday to make your presentation. I never thought I'd see the day that under an NDP government the common pause day would be out the window and we'd be having committees on Sunday but, as you point out, it shows how important this issue really is.
Mr Stephen Owens (Scarborough Centre): With respect, your side is the one that requested Sunday hearings, you and your buddy sitting beside you.
Ms Poole: I would like to talk to you about provincial responsibility. You have made it very clear in your brief that the provincial government does have a responsibility to ensure that this plan is fair and is not devastating to Metro. So far, the provincial government has taken quite a firm stand that this is not its problem and this is not its solution. It's very much a hands-off approach. They are saying, "This is Metro's problem, Metro's baby, Metro's legislation."
Yesterday we had a presentation from Peter Tomlinson from the city of Toronto. He very clearly showed that there has been a matter now which is definitely provincial jurisdiction.
Two of the groups affected have been Ontario Hydro and, as you pointed out, the railways. If this plan goes through, it is estimated it will cost Ontario Hydro an additional $60 million per year and the railways over $40 million per year. Unlike the rest of the Metro plan, it has ramifications that go far beyond Metro. For instance, with Ontario Hydro, people from all over Ontario would be paying for that $60-million increase. With the railways, they have said they will have to cut services across Ontario, they will be laying off thousands of jobs.
In your estimation, given this new insight on the impact on taxpayers across the province outside Metro, do you see that the provincial government can continue to claim it is not its responsibility?
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Ms Salmon: No, it's clearly their responsibility. Metro is the engine that drives this province and any adverse impact on Metro, any plan that makes it less attractive to locate businesses in Metro or that, as this plan does, will drive businesses out of Metro, is going to affect this entire province. As I said, it's not just a city of Toronto issue, which the media has made it out to be. This is a very broad issue. It impacts on every taxpayer across Metro and it is a very critical issue for the province.
I was just in Detroit. I had an opportunity to go over for two hours yesterday. I lived in Detroit in the 1960s, when Detroit had a very healthy downtown area. It used to be really a pleasure and worthwhile to try to shop, to go to the major department stores in downtown Detroit. Detroit hasn't got a single department store and has no retail in the downtown area. It has the urban rot that many have referred to that's going to happen to Toronto with this plan, and there's no doubt in my mind that the changes I saw in Detroit in the time I lived there are to now take place if this scheme goes through. This will be irreversible.
Mr George Mammoliti (Yorkview): For the record, I've got better things to do on Sundays as well, and Saturdays. It was the Liberal, Dianne Poole, and the Conservative, David Turnbull, who ranted and raved and wanted this --
The Chair: Let's just focus on the question at hand and question the minister.
Mr Mammoliti: It's important for the record.
The Chair: Thank you very much, and your question is?
Ms Poole: Yes, George, you didn't want public hearings at all.
Mr Mammoliti: That's right, I didn't want public hearings.
Interjections.
The Chair: Order, please.
Mr Mammoliti: But we can get into why I don't want public hearings at all in a second, if you give me a chance.
The Chair: Order, please. Let's focus. We've had a long week, I know, but our witnesses are here and the purpose of this meeting is to talk with the witnesses, so please go ahead.
Mr Owens: Come on, George, we have to go shopping.
Mr Mammoliti: I'm not going to go shopping in Detroit myself, but I'll shop here.
Ms Salmon, you said that, first of all, the previous government had told Metro to use the 1988 year as opposed to the 1984 year. You mentioned that earlier. I wanted to get that very clear, because we've been saying that not only had the previous government told Metro to do that, but the previous government gave the indication when it was the government that it was going to proceed with full market value assessment as well.
But I'd like to ask you a very, very specific question. I've said throughout these hearings that I don't believe it should have come to hearings. I've said throughout these hearings that it's not the provincial government's responsibility. My constituents are continually coming to me and saying: "Why do we need Metro level of government? Why don't we just abolish that level of government? The decisions they make frequently aren't for the benefit of Metro, or for the province, for that matter, and they drive a lot of the business away from Metro themselves."
If the province were to come up and make amendments and deal with the incompetent decisions Metro has made, from what we've heard, then wouldn't that set a dangerous precedent? Don't you think that there'll be more constituents, mine and yours perhaps, who will say: "What's the point in having a Metro level of government then? If they can't make any decisions and the provincial government is going to override or overturn their decisions, then what's the point in having them there?"
Ms Salmon: Mr Mammoliti, I'm sure you've realized that Metro cannot proceed with this plan without provincial government approval.
Mr Mammoliti: That's not the point here.
Ms Salmon: Metro and municipal governments are creatures of the province --
Mr Mammoliti: That's not the point here.
Ms Salmon: -- and we do not have full autonomy to proceed.
Mr Mammoliti: But they're the ones who recommended it.
Ms Salmon: But you do have a responsibility. It cannot happen without your government giving Metro the enabling legislation to let this go ahead. This is not a matter of rubber-stamping.
Mr Mammoliti: This is a dangerous precedent.
Ms Salmon: People are disenchanted with all levels of government. Metro has no monopoly on making poor decisions.
Mr Mammoliti: This is a dangerous precedent.
The Chair: I think Ms Salmon has answered your question.
Ms Salmon: It's not a dangerous precedent --
Mr Mammoliti: Sure it is.
Ms Salmon: -- to have a role and a responsibility, and all I'm asking is that you exercise your power and stop this insane scheme that is going to drive Metro --
Interjection.
The Chair: Ms Salmon --
Ms Salmon: Well, there's --
The Chair: Order, please, Mr Mammoliti.
Mr Mammoliti: That's something we should --
The Chair: We thank you very much for coming. I think there's simply a difference of opinion here and we would recognize it as such.
Ms Salmon: I would like to thank you. I appreciate the fact you're holding hearings. Metro held a 24-hour round robin, which was exhausting and not the way to hear such an important issue. I do appreciate the fact that you're taking the time, even though it's going over a weekend, to deal with this important issue.
The Chair: Thanks very much again for coming in today. We appreciate it.
URBAN DEVELOPMENT INSTITUTE/ONTARIO
The Chair: I call the representatives from the Urban Development Institute/Ontario, if they're with us, if they'd be good enough to come forward. We're distributing your brief. We welcome you to the committee on this cold afternoon, but in here at least it's warm. If you'd be good enough to introduce yourselves, then please go ahead.
Mr Neil McFadgen: My name is Neil McFadgen and I'm the chairman of the tax subcommittee of the commercial interest group of UDI/Ontario, and with me is Pam Macfarlane. She's the director of operations of UDI/Ontario.
The Chair: Welcome.
Mr McFadgen: Thank you. UDI/Ontario is a professional non-profit organization comprising over 200 firms of land developers, architects, city planners, investors, financial institutions, engineers, lawyers, economists, marketing and research agencies, all engaged in the development of lands in the province of Ontario.
UDI/Ontario and the Canadian Institute of Public Real Estate Companies, CIPREC, have been working together on the issue of market value assessment in Metro Toronto since April 1991 and have had throughout that period a number of discussions with a number of individuals within Metro.
In our position paper that was submitted to Metro Chairman Tonks in March 1992, we made the following points, many of which I think are still relevant today:
We recognize the need for a change in the current system and a need for fairness in whatever new system is adopted.
We believe the market value basis is the most fundamentally sound method for establishing the assessment amount and that taxes should be levied in proportion to the assessed values.
We acknowledge that because 75% of the taxes levied are related to Metro services, including education, a Metro-wide assessment policy is the most equitable.
To avoid the problems of using 1988 as a base year, we suggest 1990 would be more appropriate, and I think the previous speaker made reference to the same point.
To eliminate the harshness of implementation in the commercial sector, which at that time, under those proposals, effectively had no capping in it while the residential did: There is a huge discrepancy towards the commercial sector and many of the large buildings in the downtown core were going to be suffering increases of upwards of 50% to 60%. The new rules have changed that somewhat, but to eliminate the harshness of the implementation in the commercial sector and avoid the inequities and complexities introduced by the limitations and subsidies of the then current proposals, we recommend that a full market value assessment system be implemented in 1993, but phased in over a five-year period such that increases or decreases be limited to 20% in 1993, 40% in 1994, 60% in 1995, 80% in 1996 and 100% in 1997 and that throughout the period ownership changes would not affect assessment amounts.
Since this change in assessment practice will affect net rental rates and therefore the value of the related properties, there must be a commitment to utilize 1996 market values as the basis for taxation in 1998.
We recommend that the province mandate reassessment occur every three years commencing in 1998. In other words, what we didn't want was the same system we have today to duplicate into the future.
UDI strongly supports the concept of market value assessment, but believes its implementation should be modified such that it is phased in and applied to all classes of property on a consistent basis.
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On September 18, 1992, some of our members met with representatives of Metro Toronto and representatives of Revenue Ontario who were familiar with the 1988 impact study, which had just been released. We pointed out a number of minor inconsistencies in the plan at that time, but based on our review at that time, they were only minor concerns. At that meeting, there was no mention made of a fourth property class now referred to as the "other property class." The first time we were made aware of this class was in correspondence from Metro received on October 15, 1992.
Our concerns: We continue to be concerned that the implementation of the plan does not affect all classes in the same way. This situation is further compounded by changes to full market value on sale of property within the residential class over the five-year term of the proposal. In this respect, the current proposal is as badly flawed as the existing system.
Furthermore, because there is no phasing in of full market value assessment over five or 10 years. There is no formal structure in place to provide some suggestion that a more equitable system is ever contemplated. Why should Metro have to develop a whole new property tax system to take effect in 1997 when the current proposed scheme expires? Why not do it now? What evidence is there that the system adopted at that date will be equitable? We suggested before and repeat again that all classes should be treated the same and be phased in over a number of years in the same manner.
The other issue we're very concerned about is this addition of the "other property class."
Firstly, we believe the process of developing the proposal for market value assessment prior to the introduction of the "other property class" was fair and reasonable. However, the timing of the introduction of the fourth class, without discussion with the affected parties, was an irresponsible approach. We still do not have a list of such properties to ascertain what the effect of the change on this class would be in aggregate.
Secondly, to allow any increase in taxes arising on all other classes of properties to be capped at a maximum while not setting a cap on the other property class is totally discriminatory. I believe you heard yesterday about the effect on companies such as CN Real Estate and the size of the tax burden that will be absorbed by that company. I think one of the other ones that you likely heard from was Marathon Realty. Again, I'm not sure their submission talked about a specific number, but the cost to those entities is just outstanding.
Thirdly, we understand that the capping provisions will extend to land parcels which are presently occupied for business purposes and subject to the payment of business taxes. However, land which is incapable of generating this type of activity on December 31, 1992, due to zoning or development restrictions, will be severely penalized by virtue of provincial or municipal regulations. A number of our members have considered trying to go out and put mini-putt courses on their vacant land just to have them subject to realty taxes to avoid this problem.
Fourthly, we understand that this fourth property class will result in vacant land paying higher taxes than property with operating businesses, notwithstanding that such land does not utilize the same municipal services those other properties enjoy.
UDI urges the Ontario government to seriously consider whether the draft legislation on MVA is both equitable and progressive, concepts we believe are fundamental to the long-term health of our great city and province.
The Chair: Thank you very much. We have time for a few questions.
Mr Turnbull: First of all, I note two particular points in your presentation. Even though you're supporting the concept of MVA, you're saying that the current proposal is as badly flawed as the existing system and you also suggest that 1990 would be a much more appropriate year.
First of all, I will start out by saying that I'm fiercely opposed to MVA. I think it's inequitable, but there was a proposal yesterday by a gentlemen who said he was mildly in favour of MVA but suggested that if one were to have MVA, in order to have equity you would have to have the assessment based on the current use of the lands. I note that your clients, your members, are predominantly the large developers who have large buildings and who have tended to gain through this present MVA proposal. On the other side, they've got large tracts of land which have been seriously affected by this proposal. So you have this juggling act. I get out of this that there's a sense that you'd like to see MVA so long as you get the capping on your development land.
I would put it to you that if the proposal of this gentlemen yesterday were to be taken through, then the serious shift to small properties which occurred under the 1988 plan would balance itself out, because essentially it becomes obvious that highest and best use was applied to the 1988 values with respect to the small properties, because the cash flow from those properties could not possibly support those sorts of prices that are indicated by this assessment, whereas the large buildings were more based upon cash flow.
Notwithstanding the fact that we disagree on whether MVA is good or not, I would like you to comment on the fact that you're saying this proposal is badly flawed, the fact that it's the wrong year and also the question of a uniform approach to present use of a building or a property.
Mr McFadgen: First of all, I think we would favour the uniform approach to valuing property. Again, in terms of "badly flawed," I think what we would like to see is that you take 20% of all increases in the first year and 20% of all decreases and you spread it that way. We all realize the total pie is fixed; it's the shifting throughout the period and then effectively the stopping of the increases after two or three years, as the case may be.
With the other problem, the sale of residential, you go back up to market value, whereas in the other classes there's no shift back up to market value on sale of a property. That's what we consider to be the flawed aspect of this.
Mr Turnbull: Related to this is the study which was done with respect to Yorkdale shopping centre. It was identified that using the 1988 values, somehow they had come up with a scheme which reduced significantly the taxes paid by the landlord and the anchor tenants and significantly increased the taxes paid by the small tenants.
As you well know, anchor tenants already enjoy a significant benefit extended by the landlord to induce them to come in, but it seems unreasonable to me that the tax system should further bless that by saying that in some way the cost of servicing that is inherently different on a square-foot basis between the small and the large tenant. Perhaps you could comment on that.
Mr McFadgen: I guess that's an inequity that could be there; there's no doubt about that. That's the way anchor tenants are able to pay a small amount of rent, so if you go to a discounted cash-flow method of determining value, that's going to be inherent in the --
Mr Turnbull: With respect, as a commercial real estate broker and as such licensed to do appraisals, I would say that is inherently a flawed process. When you're doing an appraisal of a complex which is not separable, you would normally take the total cash flow and arrive at a value. You would not go to the various elements and arrive at separate values.
Mr McFadgen: Again, I guess that's a refinement that, if one wished, one could bring into the system.
The Chair: Excuse me. I'm sorry, we're going to have to move on to the next question.
Mr Turnbull: There hasn't been that refinement before, you see. It's always been on the total complex.
Mr McFadgen: True. It's always been on square footage, effectively.
The Chair: I'm sorry. We'll have to move on to the next question.
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Mr Mammoliti: Sir, I appreciate the submission and I compliment you for telling the absolute truth. I believe in what you're saying here. I've said that these hearings should not have come to Queen's Park. In your opinion, should we adopt the proposed Metro plan as is? If we don't, and decide to amend as you're asking, does that not create a dangerous precedent in terms of two levels of government and their responsibilities?
Mr McFadgen: There are two questions there. The first one I think I am competent to answer. As to the second one, I'm not an authority on government and the rules and regulations on which laws this body is responsible for implementing.
But certainly on the first one I feel very concerned that we need to implement capping in the other class. Quite frankly, I'm somewhat afraid of saying that, because I suspect that if the other class was capped, effectively the only way for Metro to recoup those revenues would be to change the capping levels on the commercial. In one sense we're robbing Peter to pay Paul, but it clearly seems inequitable that there is no capping on that fourth property class. From that perspective, I certainly hope that this committee would recommend --
Mr Mammoliti: But the proposed piece of legislation that's about to go through the Legislature allows for Metro to do just that. Why should the province have to do it?
Mr McFadgen: I'm a little concerned about what exactly Metro will do. My suspicion is that Metro is simply going to take this and go with what it has told the populace it is going to implement.
The Chair: I apologize, but I'm going to have to end this part of the discussion so we can move on to other witnesses. We thank you both for coming and spending time with us this afternoon.
Mr McFadgen: Thank you.
PHILIP GREEY
The Chair: I now call upon Mr Philip Greey. Welcome to the committee. We're pleased that you could join us this afternoon. Have some water, and please go ahead when you're ready.
Mr Philip Greey: Thank you, Mr Chairman, for my 10 minutes. I hope not to take too much of your time. We operate three food stores on Yonge Street and employ 30 people full-time and 16 people part-time. We lost money in 1990 and 1991, and we expect to lose money this year. We cannot afford increases in property taxes in 1993. Our sales are lower, and our prices are lower.
The bill before you talks about a 10% increase in 1993, the same in 1994, and 5% in 1995, but you and I know what this really means, at least you should know. The 10%, together with the projected increase in the mill rate, together with the increase in the business tax, which is one third of the property tax, really means closer to 20% in 1993, 20% in 1994 and 10% in 1995, if we're lucky, or a 50% increase in three years.
How could any business take MVA or Metro council seriously when it called for taxes to increase at rates that exceeded 1000%? We have an 18-foot strip of land which accommodates 10 cars. The new assessment calls for our taxes to increase from $4,500 a year to $55,000. Is this a joke? Apparently not. MVA is based on 1988 values. Do any of you think that 1988 values reflect the market today? If you do, why don't you talk to the Reichmanns?
Recently, Oakville, or Halton county, turned down MVA, because many home owners who would have received a decrease in their house tax asked their councillors to vote against MVA, because they didn't want to lose their jobs in Oakville. I'm sorry that Scarborough and Etobicoke councillors on Metro council didn't show the same common sense.
Mark my words: MVA tax increases are going to prove to be about as popular in Toronto as the poll tax was in England. It is poorly conceived, expensively implemented, expedited without adequate examination, with punitive damage to small business.
Government spending at the present time is totally out of control: 44% of the gross national product in Canada is debt, some $400 billion, compared to an average of 18% for the other top industrial countries like the US, Britain, France, Germany, Japan etc.
Ontario can't control its deficits. It might take the lead of General Motors, the CIBC and others and perhaps let a few civil servants go. Even Ontario Hydro has got the message. A recent survey in Canada clearly showed that any job completed by a government employee costs 25% more than if it was completed in private industry.
Last month Canada had a referendum. The Prime Minister and all the premiers, the Conservatives, the Liberals and the NDP, unanimously supported the Yes vote. Now, Mr Chairman and members of this committee, please tell me, I'd be interested to know: Did any of you learn anything from the results of that referendum or was it just another exercise on behalf of the voters to try to tell the politicians something?
In conclusion, the Treasurer of Ontario says we're suffering from tax fatigue, while the Premier simultaneously says he'll have to raise taxes. Well, it's not fatigue; it's tax intolerance. We're already the highest-taxed municipality in North America, yet you're going to allow a tax increase of 50% over the next three years for most businesses in Toronto.
Well, you may pass it, you may implement it, but read my lips: You won't collect it.
The Chair: Thank you very much for your submission.
Ms Poole: Mr Greey, thank you very much for appearing today. I certainly agree with everything you have said, and I hope some politicians have learned a lesson from the referendum, but I'm not convinced of it.
Looking at this particular MVA proposal, I have raised a number of times the fact that 41,000 businesses throughout Metro will receive the full 25% capped tax increase due to MVA, and that what this translates to in final tax dollars is probably closer to the 40% to 50% range within a three-year period. How many businesses do you know that can tolerate that kind of increase?
Mr Greey: You're asking me a question that obviously I can't answer. But I would turn your attention to the Fair Tax Commission report on this tax that should come out on Wednesday. I find it hard to believe that on Thursday somebody is going to shove the bill through the Legislature. What's the sense of having a commission if it gets a one-day hearing?
Ms Poole: That's a really valid point you raise; in fact, it has been raised by virtually every person who has presented to this committee. But Mr Cooke was quoted in a Toronto Star article this morning: "His government will seek to pass the bill by Thursday regardless of the tax commission's report. `I don't think the Fair Tax Commission in itself is an overwhelming reason to delay.'"
Mr Greey: But you can't believe everything you read in the media.
Ms Poole: Well, in this case, it concurs with what he has said in Hansard and what he has said consistently, that we probably can.
The Chair: Mr Greey, I want to thank you very much for coming before the committee.
Mr Greey: Thank you very much.
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BOB SHAW
The Chair: I call Mr Bob Shaw. Welcome to the committee. We appreciate your coming down this afternoon, and please go ahead when you're ready.
Mr Bob Shaw: Thank you very much. I'm here only as a concerned citizen. I live at 11 Nanton and have since 1986. It's a semi-detached town house; it's 12 years old. The current taxes on it are $8,759.
I've been 35 years in the food processing business. I've recently retired from Nestle and I've done a fair amount of travelling as one of its senior executives here in Canada.
I have no personal axe to grind, as the tax impact on me would be minimal. Being in a relatively new town house, I guess I personally have been paying a higher amount all along, because the increase is only 5%. But I am very concerned citizen. Frankly, it's the first time I've ever spoken out on an issue.
I was born in Toronto, and I'm proud of Toronto's enviable reputation internationally as a progressive, clean and safe city. I've travelled enough to personally experience the expressions of envy around the world. I'm sure I bring nothing new to this debate, but I do strongly believe that moving ahead with MVA, even in a delayed and a staggered way, would be a serious mistake. Surely it is the life within Toronto, and particularly its core, that is vital to our success; "life" in the sense of many people living, working and spending leisure time, day in and night out, right in the heart of the city.
Until a thorough impact analysis is done on what effect MVA would have on this living, vital essence to Toronto, you will be guilty of mismanagement, in my opinion. It is my belief that it will seriously discourage people from living and carrying on small businesses in Toronto, particularly in the midst of Canada going through a major, fundamental economic restructuring and in a serious world recession. And using the high-water mark of 1988 for assessment is very questionable.
I'm sure the expectation is that there will be a total increase in tax revenue coming out of the city of Toronto. As the former speaker indicated, with this, in my opinion, there will likely be less. Again, I think an impact analysis is necessary to assess that.
In summary, this thorough assessment I think is very, very needed. We ought to be cautious about the impact on the lifeblood of commerce and vitality. I don't want to see Toronto turned into a city with a vacant, dangerous core, as is seen in so many cities south of us.
In my opinion, progressive thinking should see to it that the city of Toronto be possibly singled out for special consideration.
Finally, should some change be necessary -- repeating myself -- don't pick a serious recession and a fundamental restructuring as the time to do it, and do not use the volatility of market value assessment as a basis for determining equity. Thank you very much.
The Chair: Thank you. We have time for a question. Mr Turnbull.
Mr Turnbull: Mr Shaw, you said you won't be particularly badly harmed by this. Indeed, almost overwhelmingly the majority of the people who've been presenting have come and spoken against MVA. Some have said they will not be harmed; some have said they'll actually get reductions on their MVA. There are a few people who've come and spoken out and said that they believe MVA is right.
The underlying message has always been that the present system is inequitable. The suggestion is that this is not really MVA, and that we're not moving to MVA has been suggested by the government. But indeed the tax bills that will be sent out are going to show full MVA reductions. Do you not think it's almost inevitable that people are going to demand the full deductions, and people who benefit generally will be demanding full MVA?
Mr Shaw: I'm sure, knowing the nature of people, they will be anxious to see that their own wellbeing is taken care of. I think one of the problems we have as a nation, frankly, is that we are too selfish in what we're seeking. I think a bigger view of what's going on needs to be brought to the fore. I don't think individual complaining about the effect on individuals is what's at stake here. I think this is a city that could seriously find itself in big trouble if we don't allow the nature of the city as we know it today to carry on, and I think it's already under a lot of pressure.
Mr Turnbull: I'm particularly concerned about the impact on businesses, because we're in a world recession and we've seen major restructuring, and it seems absolutely inappropriate to increase the tax load on businesses that are barely getting by at the moment. Are you in business in some way?
Mr Shaw: No, I'm not in business right now. My experience has been working for a multinational in a business role. My observation would be that if business gets increased costs, be they taxes or whatever, they'll pass them on, and if the public won't pay the increased costs, they're going to find a difficult time staying in business.
The Chair: Thank you very much, Mr Shaw, for coming before the committee.
Mr Shaw: Thank you.
FEDERATION OF METRO TENANTS' ASSOCIATIONS
The Chair: We now call on the Federation of Metro Tenants' Associations.
Ms Elinor Mahoney: Are these the two mikes here?
The Chair: Actually, they all function, but perhaps you want to take the two in the middle, and have a glass of our fine Queen's Park water.
Ms Mahoney: I hope it's better than your fine Queen's Park coffee.
The Chair: Welcome to the committee. If you would be good enough to present yourselves, we'll proceed.
Ms Mahoney: My name is Elinor Mahoney. I'm the law reform chair of the Federation of Metro Tenants' Associations, and to my left is Deborah Wandal, who is our policy coordinator on staff with the federation. I'm going to be starting off.
Picture, if you will, a typical restaurant on a busy day. Some people sit at spacious tables in quiet nooks or by a window with a view of the city. Other customers sit at smaller tables by the door, near the kitchen or in the middle of the room. The restaurant is a good one, though, so all the tables are full.
Now, in most restaurants, the customers are treated equally, more or less. They choose from the same menu, are served by the same waiter and eat the same food. But this restaurant is different. In this restaurant, the people at the good tables are charged lower prices. The waiters give them more attention and service too. Meanwhile, the other customers are overcharged. Few notice, as they are not offered menus which explain the pricing policy, and therefore are unable to check the prices against their bills. They do notice, though, that they are getting less service, but they feel powerless to complain.
Why? Because this restaurant is the only restaurant in town. In fact, this restaurant is the town. It is every city and town in Ontario. The customers who are undercharged are the home owners in every municipality, and it is the tenants who pay disproportionately higher for proportionally less service from the waiters on city council.
How did this situation come about? Its origins date back to feudal times, when tenants were treated like chattels. It has only been within the last four decades that things have improved at all. Let me remind the committee that until the 1950s, tenants were not allowed to vote in municipal elections. Although they now have the vote, tenants are still systemically discriminated against by the province and by the municipalities.
For the past few months, much focus has been placed on the Metro government's MVA plan. The fact that Metro taxes rental residential property at a much higher rate than single-family homes is beginning to be publicized, and there has been a recognition -- finally -- that tenants pay property taxes too, through their rent. Slowly, tenants are realizing the inequities in a municipal tax system which charges them more while offering them less than the home owners.
No one can deny that the cost of providing water and sewage hookups for a 200-unit high rise costs much less than hooking up 200 homes in a subdivision. Many municipalities do not provide free garbage pickup for high-rise apartment buildings, either. While police regularly patrol residential streets, tenants are frustrated in their attempts to get their cities to enforce fire, safety and property standards in their buildings.
If tenants have been quiet in the past, it is because, like the customers in the restaurant, they have never been offered a menu with real prices on it. Unlike home owners, tenants do not get a detailed tax bill. This is sent only to the landlord. So although tenants pay more than their share for less service from their municipality, they have been in the dark until now. But as tenants struggle forth into the light, they are beginning to realize that municipalities are not solely responsible for this discriminatory treatment. The province is equally, if not more, culpable, and I'll explain how.
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In Ontario there are several types of property: residential, agricultural, commercial and industrial. Each type of property is treated differently by the provincial government when assessing its value for tax purposes.
First, it estimates the market value for each property. This is the province's best guess of how much the property would sell for on the open market. Then the province considers what type of property it is and the assessors apply a different percentage to each class of property to determine the assessed value of a particular property. The assessor multiplies the market value by the appropriate percentage to get the assessed value of the property. It is not until that time that the municipal government gets involved at all. Then the municipal government applies a tax or a mill rate to the assessed value and comes up with the tax bill.
At first, this approach sounds reasonable. It seems fair to assess different types of properties differently. However, the province does not treat all types of residential properties the same, and this is where the unfairness lies. The province divides residential properties into three classes: class 0, class 1 and class 2. Class 0 consists of all residential properties containing one or two units, class 1 is those residential buildings with three to six units, and class 2 contains all properties with seven or more units. Obviously, most home owners fit into class 0 and most tenants live in class 2, the second class.
The province assesses the value of class 0 buildings at 2.2% of the market value, but it assesses class 2 buildings at about 8% of the market value. The result? Tenants are paying property taxes through their rents at 3.5 times the rate of home owners. Make no mistake: This is anti-tenant discrimination and does not reflect a perceived difference in values between low-rises and high-rises. How do we know? We know because condominium high-rise units are assessed at the same rate as single family homes, at the 2.2% rate, not at the 8% rate.
The discriminatory effect becomes clear when we examine the following scenario: two identical buildings built side by side, each worth $15 million; one's a rental, one's a condo. The province would assess the value of the condo building for tax purposes at $330,000, but it would assess the value of the rental building at $1.2 million. As the taxes are levied on the assessed value, the tenants would have to pay more than 3.5 times the taxes that the condominium unit owners had to pay. We maintain that no rationale for this inequality exists.
Is the effect on tenants significant? You bet. City of Toronto studies show that about 30% to 35% of tenants' rent goes to pay their property tax. One reason that the annual guideline for rent increases is so high every year is because they have to factor in municipal taxes, which, as we all know, rise at a rate far higher than the rate of inflation. When we consider that tenants as a class earn far less than home owners as a class, the unfairness of the disproportionate tax burden is compounded.
Do the MVA proposals rectify this situation? No. Despite publicity that taxes will be reduced for a majority of Metro's rental units, the truth is that tenants as a class will not benefit at all. If some taxes go down, others will go up. All market value assessment does is to shift the tax burden from tenant to tenant. It smooths out the inequities within classes, not between classes, of properties.
It's like ensuring in a restaurant that a party of four divides the bill equally, while failing to acknowledge that the bill was padded in the first place. While it is fair to blame the waiter for deficiencies in service, it is the restaurant owner who must be held accountable for discriminatory price and practices. And I've got news for you: You're the folks who own the restaurant. You're the government. We think it's time for you to invite the tenants to the table, the same table each of you and the other home owners in the province are dining from.
Last year, with much hoopla, the current government created the Fair Tax Commission, which would investigate all forms of taxation and make recommendations for change. Now the province seems determined to push through this MVA legislation, which does nothing to eradicate the real inequities in property taxes, without hearing first from its own commission. Why the rush?
The Federation of Metro Tenants Associations remains unconvinced that passage of Bill 94, as it currently reads, is either necessary or advisable. We urge the province to withdraw this bill until such time as the Fair Tax Commission's recommendations on municipal tax reform can be considered, discussed and assessed.
The federation believes that all residential units ought to be assessed and taxed on the same basis and that the current discrimination by the province, which began many, many decades before and not with this government -- all three parties here have formed governments which continued this discrimination -- that we should end this discrimination and bring in a really fair tax system.
We also have serious concerns about how Bill 94 passes on tax increases and decreases to tenants, so in the time remaining, Ms Wandal would like to bring some of these to your attention.
Ms Deborah Wandal: Section 16 of Bill 94 amends section 113 of the Rent Control Act. We have real concerns regarding how this amendment will affect tenants and their right to the rent reductions that will be based on tax decreases.
I'll first address what section 113 of the Rent Control Act originally provided for. The Rent Control Act came into effect in August 1992, and at that time it was set out in section 113 what steps were to be taken by the two levels of government when property reassessments resulted in municipal tax reductions.
First, a municipal council was entitled to pass a resolution requesting the provincial registrar to decrease maximum rents. Then the province was entitled to choose to do a series of calculations: first, determining the reduction in the landlord's costs; second, calculating the reduction of maximum rents for affected units; and third, amending the rent registry information. Finally, the municipality would then send notification to the tenants of their new maximum rents, which were now recorded in the rent registry.
Before going any further, it's important to note that these rent reductions are tenants' rights. Section 113 was not designed to offer a giveaway of rent reductions to tenants. Tenants' rent payments are closely tied to landlords' municipal tax bills, and the rent revenue that's used by landlords to meet their operating costs includes covering municipal taxes, which generally constitute about 40% of a landlord's total operating cost component.
As a result, as Elinor Mahoney mentioned, about three to four months' rent from each tenant goes directly towards a landlord's municipal tax bill. As well, when tenants in the private rental sector pay the guideline rent increase each year, this has been calculated to cover inflationary increases in these same operating costs and takes into account all municipal tax increases. Therefore, tenants' rent increases directly reflect the increases in their landlords' tax bill. Accordingly, when landlords' taxes go down, so should the rents.
Under section 113 of the Rent Control Act, there was clearly a commitment that the municipality and the province would together assume the costs of passing the landlords' tax savings directly on to the tenants. One level of government would make the necessary calculations, using the information in its rent registry, and the other level of government, Metro, would assume the costs of notifying the tenants and assume all the mailing costs. Let's call this process that I've just outlined plan A, and that's what's in section 113.
The draft amendments to this section that are set out in section 16 of Bill 94 destroy this cooperative effort between the municipality and the province. The amendment which has been introduced by the province forbids any municipality to file a resolution with the registrar regarding decreasing maximum rents until municipal council and the minister have agreed on how the costs for this work will be divided between the two levels of government. It's our understanding that this government wants Metro to foot the entire cost of plan A; that is, they want the entire cost of amending the rent registry and notifying tenants to be absorbed by Metro.
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The estimated cost is about $6 million. The concern here is clearly money and who is to pay, and it's clear as well that now this government does not want to foot the bill for plan A. The question to ask then is, why did the government put this plan in the Rent Control Act to begin with?
The interesting answer is that it was actually financial considerations that prompted the government to include this plan in section 113 of the RCA. This government was concerned that the usual process for ordering rent reductions and amending the registry would be prohibitively expensive in this case. The usual process for making these kinds of orders for rent reductions -- let's call this usual process plan B and let's look at what plan B is. Plan B, under the Rent Control Act, requires tenants to apply individually under section 24 of the Rent Control Act for rent reductions when operating costs, such as hydro or municipal taxes, are reduced from one year to the next.
Requiring tenants to make these applications individually will cost this government a lot of money in administrative time and paperwork. The government will be required, according to the procedures set out in the Rent Control Act, to provide information to potential applicants, to provide application forms, to send notifications of receipt of applications, to send notifications of hearings if a hearing is requested, to hold a hearing if a hearing is requested, to accumulate the evidence and to send out the orders.
Some 180,000 tenants can apply for these rent reductions. This government has estimated that a few thousand landlords' applications for rent increases arising from reassessment of 120,000 units will cost about $5 million. Therefore, making 180,000 tenants apply individually will cost a minimum of $8 million.
It's clear that plan A under section 113 costs a lot less than plan B, which is the normal process of rent reduction applications, and it's also clear that section 113 was put in the RCA precisely because the government knew that the administrative costs of processing huge numbers of such applications would be truly prohibitive.
Why then at this time is the Ontario government not prepared to foot the bill for the procedures set out in section 113 and make the necessary amendments to the rent registry? It is here that this government's cynicism becomes apparent. We can only imagine that the government assumes that many tenants will not make these applications for their rent reductions which they have a right to make, and thereby this will save the government millions of dollars. We have to ask what the government is really counting on here.
Tenants are already recognized as a group that does not have equal bargaining power with landlords. There are many negative social and economic forces and influences that constantly act on and affect tenants, which put them at a disadvantage. It's never really been a surprise to anyone that tenants frequently don't stand up for themselves or their rights, given their limited access to information about those rights, their fear of their landlords or susceptibility to intimidation and the very economic harshness of their lives.
The government's cost-saving measures are really counting on tenants' disadvantaged position deterring them from applying and making them reluctant or unable to act on their own behalf.
We've seen that plan A is faster, it's more cost-efficient than plan B, and it also ensures that all tenants get the rent reduction they have a right to, but there is one other problem with plan B, which is the normal process.
The Chair: I'm sorry; there are some questions to be asked. We are getting tight. Could I ask you to just make it brief.
Ms Wandal: I'll very briefly then say that the second problem is that, as many of you know, tenants will not simply have to show that there's been a decrease in the tax bill of their landlord from one year to the next, but that it has been extraordinary, that it is 50% greater than the provincial average change in municipal taxes.
If we just use the example of MVA here, if you had a municipal tax increase across the province of 8% or 9%, a lot of landlords, because their properties were reassessed and they got a tax saving, might end up with only a 1% increase for a year, or a 0% increase, or 2%. But no tenant would be entitled to apply for any rent reduction because there would be no actual decrease in the landlord's costs. Even if there were a slight decrease, it would have to be 50% more than the provincial average.
A final point is that tenants wouldn't be able to make those applications until 1994, when a full year of the landlord's tax bill had been completed and the landlord had incurred those costs and been found to have a saving in his tax bill.
We really want this government to look at Bill 94, section 16, and reconsider holding out on tenants. We want the original section 113 put in place. We want tenants to have the opportunity to recover the rent reductions that they're entitled to and that would be available to them under the MVA. Thank you.
The Chair: Thank you. One of the awful things chairs have to do is to recognize time, but because in particular you're addressing a very specific issue, I wanted to make sure that each caucus had an opportunity to ask a question. I just ask the cooperation of members for one sharp question.
Ms Poole: Thank you both, Elinor and Deborah, for your presentation today. I think your analogy was superb and really puts the position of the tenants forward.
There were a number of main points in your brief, including the inequities between classes, which we actually have had some presentations on, where tenants in a high-rise building are paying three and a half times the tax of a home owner, and that's something we certainly urge the government to redress.
But I'd like to hone in on section 113 of the Rent Control Act, your other point. I've looked at section 16 of part III of Bill 94 and it seems to me that this does a couple of things. The first is that it says, "The registrar may decrease the maximum rent." It doesn't say "shall"; it says "may." When the government passed the Rent Control Act, section 113 was seen as a protection for tenants, that if the maximum rents were adjusted in the rent registry and tenants notified automatically, then tenants would not lose their rights.
What we have here in this new amendment to section 113 of the Rent Control Act is, first of all, that it only "may" decrease, not "shall." Then, secondly, it says that the municipality may pass a resolution that these records be adjusted, but then they put in a section which says that the municipality can't put forward the resolution unless it signs an agreement with the province as to the cost. What the province has done is put Metro over a barrel. They've said: "If you don't pay that $6 million yourself, then we won't allow you to pass the resolution. We won't enter into the agreement."
My feeling is that tenants are going to get shafted, and not only for the reasons that you cited but one that you touched on and didn't have a chance to explore in depth, and that is, how many of those 180,000 tenants out there will actually, first, know about it and, second, make that application? Do you feel that a large number of tenants will lose their right if this isn't done automatically?
Ms Wandal: Definitely we feel that the majority of tenants won't apply, and there are all kinds of reasons for that. It's generally the case that people have a difficult time taking that step and saying: "We know we're entitled to this. We're going to do this. We're going to make the application." That's why, when section 113 was put in place in the RCA, our concern was just whether or not, under section 113, the municipalities would actually make the resolution. We never imagined that, once the municipalities made the resolution, the province would not proceed to amend the rent registry.
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Even if just the rent registry were amended, the information about the reduced rents would just be a phone call away, at the very least, because it is easy enough for tenants to call up and say, "What is my accurate maximum rent now?" But without any notification and nothing in the rent registry, tenants have to go out on that limb. They have to make the application, they have to be concerned about possible repercussions for their tenancy. It puts them in a much more difficult situation.
Ms Mahoney: I'd like to add just one point to that, and that is that the Rent Control Act is the government's attempt at rent regulation. Traditionally, all parties have recognized that rent is for a variety of services that tenants pay for. The idea of regulation is, when the services go down, so does the rent. By the government not amending Bill 94, to refuse to do its part, which is to tie the services to the rent by reducing the rent automatically in the rent registry, essentially what the government is saying is, "Rent control in Ontario is dead."
Mr Mammoliti: Two arguments here, from what I've seen: The fact that our property tax system should be amended throughout the province so that those who would benefit would include tenants -- no question. I agree with that. Now, how is that relevant to market value assessment? The argument you're making in terms of market value assessment is that rent control, section 113, will pose a problem if market value assessment is implemented -- I'm sorry, if the proposed plan is implemented as is. We had a representative from the the Ministry of Housing a few days ago tell us that the automatic reduction won't be a problem.
Ms Mahoney: It won't be a problem, all right. It won't exist, it won't happen.
Mr Mammoliti: Hold on a second. In terms of the reductions happening, he didn't foresee a particular problem. Now if he is telling us the truth and if he's saying, "Yes, the automatic reductions are going to happen," what do you say to all of those tenants after you've made the recommendation not to allow this thing to go through on behalf of your federation? What do you say to all those tenants in my riding and in Etobicoke and in Scarborough who are going to receive that reduction?
Right now you're saying, "Don't pass it, because we don't believe it'll be beneficial." What if it is beneficial? What if the Ministry of Housing representative who was here the other day is accurate and says that these reductions are going to happen? What are you going to tell all of those tenants in the prospective areas who are waiting for this decrease to happen when they ask you, "Why did you make that recommendation?"
Ms Wandal: I think the problem with section 16 is that there is a contingency in there, and once it's in there, it's going to stay in there in all future instances of reassessment. The contingency is the municipality and the province have to agree as to costs.
Mr Mammoliti: The ministry said it's not going to be a problem.
Ms Wandal: But all you can say at this time is that it is not a problem in this specific instance as far as this specific reassessment goes. But once that section gets put in the Rent Control Act, it applies across the province. It applies in every instance of reassessment. If that particular municipality and that particular provincial government don't agree --
Mr Mammoliti: Mr Chair, if I can have one more minute, please. This is very important.
The Chair: Forty-five seconds.
Mr Mammoliti: I see the argument and, frankly, I sympathize. But in this particular case, if we were to listen to you and not implement this proposal, from what I've heard from the ministry, you're going to ultimately stop thousands of tenants from receiving their deductions.
Ms Wandal: No, section 113 will apply.
Mr Mammoliti: I understand you want rent control amended -- in particular, section 116. But in this particular case with the proposal from Metro it looks like the tenants are going to get the reduction, because there's going to be that flexibility at the ministry level. If it's going to happen, you're going to see thousands of tenants with a rent deduction. If we listen to you today, that would mean that they're not going to get that rent deduction.
The Chair: I think the question is clear.
Ms Mahoney: Mr Mammoliti, what we want you to do is -- in section 116, we want you to take out the offending contingency clause. That's all. I don't have the clause here. I think it's subsections 1(2),(3) and (4). That's all we want. The rest is fine.
The Chair: I think that is clear and we'll have to move now to Mr Turnbull.
Mr Turnbull: Thank you very much. Elinor, if I could just ride on your analogy. The only way they're getting away with charging higher prices in the restaurant to people who've got a small table by the door is because there are no prices on the menu they give to those people. There are prices on the other menus.
The discussion that just went on here with Mammoliti obviously shows he doesn't understand it. If the province doesn't insist that there be an equalization between tenants at this time when there's a general reassessment, it ain't going to happen. It's just that simple. We've got a problem that needs to be addressed and the government seems totally unwilling to address it, even though Metro passed a motion asking them to address this historic imbalance. The motion came to the government. They have it. They have absolutely ignored this issue.
I would like you to comment on that and I would also like you to comment on the fact that one of my pet schemes is I've always believed it was rather important that tenants be given a tax bill each year so they understand what component of their rent is taken up by taxes. One of the great problems at the moment and I think one of the reasons it has set landlords and tenants apart, is because tenants don't realize what a huge grab municipal taxes are taking. If they realized that taxes on apartments were often larger than some of the houses, they would be absolutely up in arms. So, if you could comment on those two --
Ms Mahoney: Yes. I'll comment on the last, first. That is to say, we agree with you. All tenants should get a tax bill. Just like they can figure out how much their provincial and federal income taxes are, they should be sent a tax bill by their municipality, or a copy of it.
Then to comment on your first point, last. Your first point I think was a two-pronged one. One saying that if the government isn't listening to our small suggestion today, chances are it won't listen to the larger suggestion that tenants need to be treated equitably in comparison with other residential property dwellers.
I would just say that essentially what we're arguing for today are two things: One is a general argument that tenants should be treated the same as other residential dwellers. That may be an issue for further study. The government of Ontario is responsible for that. It's a traditional practice of discrimination, one which has been inherited, and we're asking you to look to change it.
The second thing we're asking for in this small instance is, at least within dividing up the bill in the table, ensure that the tenants who are supposed to get the decreases do get the decreases. We feel the only way to do this is through an automatic rent reduction that is not contingent on an agreement that the municipalities pay the whole cost. We want those two offending clauses taken out of section 116, which otherwise is fine.
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The Chair: Thank you very much. You've brought forward a number of ideas for us to consider. We appreciate you coming today.
Oh, I'm sorry. The parliamentary assistant had one point he wanted to make.
Mr Mills: One point. Thank you very much, Mr Chair.
I heard your comments about property classes. I'm not here to shirk the responsibility on behalf of the government in that issue, but I would like to point out that on December 4 I tabled a letter here for all the committee members. I'd just like to read you a short paragraph, as it relates to Metro's responsibility.
"If Metro's proposal had suggested that some of the residential classes should be combined, the impact studies issued in the summer could have been incorporated in this feature, and if Metro council agreed to this consolidation, their desire could have been accommodated by reflecting this property class arrangement in the future regulation to be issued."
I'm saying that I'm not shirking our responsibility, but Metro had that opportunity.
Thank you very much for coming.
The Chair: Thank you.
J.N. BEAL
The Chair: If I could now call Mr J.N. Beal, if Mr Beal is here, if he'd be good enough to come forward. Following Mr Beal will be Mr McAfee and then Telpo Investments. Mr Beal, welcome to the committee. Thank you for coming out this afternoon and please go ahead.
Mr J.N. Beal: I'm here just on my own behalf with no written submission, just to make two or three points, if I may, in connection with this MVA issue.
I live in the central part of the city, so my interest is really against the proposed system because of the material adverse impact it's going to have on my own property tax position. I'm here to argue on principle, though, to back up my concern.
I guess where I'm coming from is that living in the central part of the city in a house that may -- I'm a property owner. I live in a house in this part of the city, which gives me about half the space and probably half the lot size here in the centre of the city that I would get in one of the outlying boroughs. The values of the properties are the same and, ergo, under the system, the tax that I would be required to pay would be the same either way. Yet the claims on the system, it seems to me, from the smaller property in the centre of the city are going to be much less than the claims on the system that the taxes are paying for than the larger house further away from the centre of the city, if for no other reason, for example, than the smaller house in the centre of the city can't accommodate as many people, children, for example, who may have a claim on the school system.
Similarly, on the same principle of two equal-sized houses, the one in the centre of the city is going to cost a great deal more and a person who wants to live in such a place in the centre of the city makes tradeoffs. He'll live there and pay the higher cost of owning that property, usually in the form of mortgage costs. He's prepared to do that because he's saving other costs. He doesn't need a second car, perhaps, to drive the longer distance if he were living farther away. He saves time in getting to his job if he works in the central part of the city, and time is also money, inconvenience and what have you. Those are costs he knows when he goes in and trades them off.
But the property tax doesn't really fit into that equation, because, again, the claims on the system are essentially the same. In fact they may be less living in the central part of the city. You don't need as much roadway to travel on because you're not travelling the same distance.
Where I'm getting to is that I don't have confidence that the market value system is an equitable or sensible basis for levying property taxes. Perhaps a good example is the TTC fare. It's the same fare regardless of where you live in the city. An attempt is made to try and rationalize and not penalize people who live in one part of the city versus another part, to try and smooth the thing out. Perhaps the property tax system should be somewhat along the same lines.
However, if the new system is going to go forward in that the 1988 values are going to be the basis for the new system -- and I'll just say I'm concerned about the 1988 values being used, as so many other people have already said, I'm sure, particularly in the central part of the city, where the values have collapsed perhaps more than anywhere else in the city. However, if that system is going to be used, all I ask is that the people who are living in the centre part of the city, who are going to be most adversely affected by this, should they sell their houses in the short term, not be put in the position that the buyer of the house is going to pay full bore under the new system, because in the last analysis it will not be the buyer who pays the shot under the new system; it will be the seller, because the buyer has only a fixed number of dollars to spend when he buys a property. For example, if my taxes go up $5,000, which they are scheduled to go up to under the new system, and money costs 10%, the buyer of the house will simply chop the price he's prepared to pay for my house by $50,000. So he will not end up paying the new taxes. It won't be a tax on the property, as it were; it'll be a tax on me as the vendor, which I will continue to pay through having had a $50,000 reduction on the resale value of my house. I'll end up in effect paying property taxes on that property after I've sold it, if you will. The tax will essentially be for ever on me as the current owner.
So I see that as the most serious flaw in the new MVA-based system that was brought in, and I would ask, if it is brought in, that that part of the provision not be brought in. Just let it float up over a long period of time, just the way the system is built up as it is now over a long period of time, so that those severe impacts on the value of people's houses in the central part of the city, who are going to end up selling them in the short term, are not as severely impacted as I know they will be if this provision is allowed to go through.
Thank you. Those are the particular points I wanted to make.
The Chair: Mr Turnbull, we've time for one question.
Mr Turnbull: I think you raised a very interesting point which has not been pointed out before, and that is, implicitly there is a subsidy to people who live in the outer regions of Metro by merit of the fact that there's a single fare zone for TTC. The fact is that relatively few people who live downtown work in the suburbs. They typically walk to work or bicycle to work. It's much more efficient.
But it's a question of fairness, and I don't think that the people in Toronto and in the close areas of North York have objected to any subsidy that has gone to, particularly, Scarborough. Scarborough has been the biggest recipient of subsidies by way of education subsidies and probably transportation subsidies, but there hasn't been an objection to that.
But, quite clearly, the present system is not working. We need to review it. We need to revisit it. The basic problem is that we have a report which is pending by the Fair Tax Commission. The property tax panel will report next Wednesday, and yet we have been told that this legislation will be passed by Thursday of this coming week; in other words, the day after the Fair Tax Commission property tax report comes out.
Now I would suggest that taxpayers everywhere, including the taxpayers of Scarborough who are so outraged that they feel they are paying too much taxes at the moment -- their provincial tax money is being spent on a tax commission report which has taken many months of preparation and had a huge amount of money invested in it, and that is not even being considered before rushing through this bill.
Also, I would suggest that the property owners who have small businesses --
Mr Anthony Perruzza (Downsview): Mr Chairman, he completely distorts everything that we have in front of us. Is that allowed?
The Chair: Order, please. Mr Turnbull has the floor and he's coming to a question.
Mr Turnbull: This, unfortunately, is the kind of propaganda we're hearing, with the suggestion that I'm distorting anything. I'm stating the facts, that the Fair Tax Commission will --
Mr Perruzza: The only fact is that you resent being given a tax increase in your community. That's what you resent.
The Chair: Order. Mr Perruzza, you do not have the floor. Pose your question, please, Mr Turnbull.
Mr Turnbull: Yes. One of the problems is that the NDP member insists on attributing motive to those people who oppose MVA.
Mr Perruzza: Parochial interests.
Mr Turnbull: And silly suggestions of parochial interests.
I wonder if you could just comment on maybe the outburst that you heard now and how you feel about the carriage of these hearings, which my party insisted on having. The government is even objecting to the fact that it was us demanding these hearings. They seem to suggest that there's something inherently wrong in the Conservative Party demanding public hearings of this.
Mr Beal: I cannot see why any legislative body or party should be afraid of hearing the issues and having them fully debated. This problem, if it's perceived to be that way, has been around for a long, long time. Market value assessment as a concept has been here for ever and the revision of it has been in the works for the longest time. Why suddenly the rush to get it through so quickly before all the issues have been aired?
I have never appeared before a committee before in my life and here I am, and if you don't think that tells you the depth of concern that the average person has, then they just don't understand the grass-roots concern over the whole issue. We're all looking for equity. Just to cut it off, they're all looking for equity. I'm not saying the market value system is wrong; I honestly don't know. That requires study, and I go back to my last point: If it turns out to be the basis that is used, please phase it in in such a way that the right people are paying the right burden of tax under that system.
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The Chair: Thank you. The final point, the parliamentary assistant.
Mr Mills: I heard you, sir, make some mention about the full tax impact that you'd have to carry when you sold your home, and perhaps you weren't here, but I addressed the hearing with a statement. I'd just like to read you what I said that first day:
"We are saying to Metro in this bill that we are not in favour of that part of the plan that requires a house to be taxed at full market value assessment once it's sold. They will now have to revisit that part of their plan."
That's what I said and this is what the government believes, and thank you, sir.
Mr Beal: That's better. I had not heard that before and I'm glad to hear that statement.
Mr Mills: Yes.
Mr Beal: But yes, that doesn't go to the core of the problem. All I'm saying is it's sort of a second-best solution if it comes down to --
The Chair: Mr Beal, thank you very much for coming before the committee. I hope that you will feel free to come before other committees in the future.
ACCOUNTABILITY
The Chair: Mr McAfee, if he is here. If you'd please come forward and have some water.
Mr Rick McAfee: Yes.
The Chair: Please go ahead.
Mr McAfee: My name is Rick McAfee. I represent a small organization I just started about two years ago. It's called Accountability. What we are here for today is to let the politicians know that we're not happy with the way this procedure is being followed. We've followed it through Metro and we're following it up here not only because it's an issue that's going to create a lot more unemployment, a lot more closures and a lot more people on the street. There are about 600,000 people now looking for employment in Ontario. This is just going to add to the burden.
I've listened to this hearing during the days it's been going on and I'm hearing the same arguments back and forth and nobody's really listening. I guess what we need is a little bit of reality to come in here because nobody's listening to what's happening out there. There are people looking for work constantly. Many of our members are on the verge of losing their business or losing their homes and this'll just be the last thing to push them over the edge. If you don't think that's going to happen, all you have to do is go for a little drive downtown, have a look around.
I keep hearing about how it's so unfair, how the people in Scarborough and Etobicoke are paying more than their fair share, but the reality is that many of those people work downtown and they take advantage of the TTC. They take advantage of all the benefits downtown. To me, to exchange my job for a few hundred dollars back from taxes just wouldn't make any sense.
What we're here to tell you is that we think that this MVA plan should just be scrapped. The whole situation should go back and be restudied and possibly a new plan come up, because all we can see is more unemployment, more foreclosures and a lot more of the recession we're seeing right now.
I think what we really are going to have to do, and we're doing this in the next election, is we're going to hold the politicians accountable. Right now, there's so much going on that you don't know where to start. There's so many things happening, but this is one issue we're going to definitely make sure the politicians are listening to us on.
The fact is that we've been before a couple of committees and it seems like no one's listening. I don't know why people have a hard time understanding what's going to take place. We're seeing the foreclosures and everything now. Why do we want to add to that? It just doesn't make a whole lot of sense to me why we go full tilt, why we can't wait for this Fair Tax Commission. It just doesn't make any sense at all.
That's my opening statement.
The Chair: I think we have some time for one question. Mr Perruzza.
Mr Perruzza: Where do you live and how much do you pay in property tax?
Mr McAfee: What's that got to do with it?
Mr Perruzza: That's what we're talking about.
Mr McAfee: Yes, I have a business in Toronto.
Mr Perruzza: That'll be my next question. Where do you live and how much do you pay in property tax?
Mr McAfee: I don't pay any property taxes. I'm a tenant. I imagine I pay somewhere in the rent I pay, but what's the point?
Mr Perruzza: Where do you live?
Mr McAfee: East York.
Mr Perruzza: Does East York have an address for the record? Do you have an address in East York?
Mr McAfee: Yes.
Mr Perruzza: What is it?
Mr McAfee: 1559-A O'Connor Drive.
Mr Perruzza: You're a tenant there?
Mr McAfee: Correct.
Mr Perruzza: Do you work?
Mr McAfee: I have a small consulting business.
Mr Perruzza: Thank you.
The Chair: There's time for one small, short question.
Mr Turnbull: I was actually going to ask where you live too.
Mr McAfee: Yes.
Mr Turnbull: One of the problems that we're having is the fact that we're setting up, unfortunately, a confrontation between the suburbs and the central older core of Metro. That includes parts of East York, the city of Toronto and parts of North York. I'm really concerned at the fact of the bad blood that will be caused by this.
Mr McAfee: I think you're going to see a lot of tax revolt. I know right now there's a couple of people talking about tax revolt, not even paying their provincial tax right now. But I'll tell you one thing right now that -- like a lot of people are not listening. The fact is, if you have a small business, you have a better understanding of what's going on. Most people are talking about, "This increase is not going to hurt." Most people aren't even taking a wage right now in a small business. So they're coming along and saying, "We'll just take 25%." That could represent somebody's wages, like an owner's wages or something. They're not listening to us.
Mr Turnbull: Yes.
Mr McAfee: It's always the same thing. I think if you look at it from the situation where you have something invested in a small business, it would be a whole different story. I think what they should do is wait for this fair tax thing to come along and start over again, because this is going to kill a lot of business and a lot of jobs.
The Chair: Mr McAfee, thank you very much for coming before the committee today.
TELPO INVESTMENTS
The Chair: If I could now call on Telpo Investments. Is Mr John Sutt in the room? If not, Mr Roger Middleton will be after Telpo Investments.
Welcome to the committee. If you'd be good enough to introduce yourself for Hansard and please go ahead when you're ready.
Mr Robert Cook: I'm Robert Cook. I am a partner in Telpo Investments and I'm here because Telpo Investments owns a small restaurant called Hemingway's. We own the restaurant and we also own the land at 142 Cumberland Street.
Like the gentleman before me, I also have never been to a committee like this. I've only come out here because I guess my financial existence depends upon it. I also went and spoke at Metro council, the management committee there, and I was there because my financial existence depends upon it. I must say that here I think the people listen and ask questions. There, I didn't seem to have that same sense.
I think Mr Tonks was appalled by the behaviour of the members against market value assessment. I think it's because he didn't understand how desperate we are. We're the backbone of this community. I employ 70 people. Next year, I'll probably employ nobody unless we get some relief.
If fully implemented, our realty taxes would increase from $11,956 to $57,000. That's realty taxes and business. This increase would put us out of business, plain and simple. It's ironic too because some of our salaried employees, some of our higher-paid employees, like our chef and sous-chef, come from the suburbs, so their taxes would go down. Maybe their taxes on their houses will go down $1,000. There would be real equity there. They'd feel a lot better, but they'd be out of a job. But we're just one case. There are thousands like us. I'm sure that you've heard other people like me speak like this.
Thousands of businesses would close, all in the name of tax equity. Jane Jacobs spoke at Metro and she said that it will destroy the business community, destroy the thing that makes us different from the American cities.
Our business has about 1,900 square feet of retail on the ground floor. That's our restaurant area. At 1,900 square feet, $57,000 in business and realty taxes represents $30 a square foot. I'm not an expert on tax, but I know that's not equitable. We can't afford it. No other restaurant I know could afford to pay $30 a square foot in business and realty taxes. There's something inherently wrong with this. I don't know what it is, but I know what's proposed doesn't work and it will put many of us out of business.
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I went to the suburbs when this first came out and talked to some other restaurants that were getting increases of 100% or more, but their taxes are going up from, say, $10,000 to $20,000 and yet the restaurants were bigger than ours. How can we use more garbage, how can we use more police protection than these people whose taxes would only go to $20,000? If we're taxed based on our services, there's something wrong with this. There's something inherently wrong with the whole system.
We appreciate the efforts made at Metro council to compromise, particularly the suggestion that the cap go to 10%, 10% and 5% for a total of 25%. We particularly appreciate the recommendation that there not be full MVA upon the sale of a building. If we got in trouble with our bankers and the bankers power-of-saled on us, then our own houses would go because we personally guaranteed this. We'd be wiped right out.
So this is a very, very serious matter, but the compromises don't work because what we have now is a cap. It's a promise not to do anything for a while, and yet that full assessment that would bring $57,000 in taxes against our property is still sitting there kind of pregnant. It's a little bit like the sword of Damocles or a bit like a stay of execution. For us, it doesn't work.
We're struggling to make it work through this recession. Should we put more money into this business now? What's going to happen in five years? We don't know, so the compromises, as well-meaning as they were, that were set out by Metro don't give business certainty. None of us have certainty. The banks won't lend money, partners won't want to invest. There are things we could do -- we could expand a rooftop patio -- that may make the business more viable today, but they take money and we don't know what to do, because clearly if market value assessment was brought in in 1998 or whatever the date was, we'd be finished.
So what we need is certainty. I don't know how you do that, but we could live with the 25%. If the assessment went up by 25% instead of just having a cap at 25%, we could live with that. Personally, we'd like to see it scrapped. We think the system is so inherently flawed, we'd like to see the whole thing scrapped.
I think I may stop there and take questions, if you want.
The Chair: Fine. We have a couple of questions, beginning with Ms Poole.
Ms Poole: Thank you very much for your presentation today. Earlier in your presentation you made a comment about the impact on your business if MVA came in. You said that your chef and your sous-chef lived in Scarborough, so, yes, they may get a decrease in their taxes but they may well be out of a job.
I think what you were alluding to in that particular statement is that we're not just talking about the health of the city of Toronto; that the health of Metro and, for that matter, the health of the province of Ontario relies on a healthy city in Toronto.
Mr Perruzza: Point of order.
The Chair: Mr Perruzza, I think we'll just continue to ask the questions of the witness. We don't need to keep interrupting.
Mr Perruzza: Just a quick point of order.
The Chair: No, I'm sorry. No, I'm sorry. No. Ms Poole, please go ahead.
Ms Poole: Is it your estimation, if this plan goes through, even with those so-called protective caps, that it will really be irreversible? Is there anything that you can think of that would help save the downtown core when it's obvious that so many businesses would just close their doors?
Mr Cook: Yes, I think there is, Mrs Poole. If instead of placing an assessment against the property that results in a $57,000-a-year tax bill but it's capped, the assessment went up by an amount that would allow the tax to be 25% so that we know we have certainty, we'll live with a 25% increase. If we know that's a certainty and it's not out there that if the cap is removed by Metro in five years or four years or whatever, it comes back here and is removed -- it's like a stay of execution. This is like a stay of execution. If we could have the assessment only go up by 25% so that the taxes only go up by 25% and that was kind of a certain thing, we could live with that. We would invest. I think our bankers would understand that.
Mr Owens: There are some fairly bizarre aberrations that we've heard about as we've gone through this particular set of hearings. One of the things that I'm concerned about as a member who represents a Scarborough riding is that fairness is an extremely perceptual issue, and some of the perceptions we've had from the city of Toronto folks with respect to fairness do not exactly match the perceptions of those in my constituency.
My question is, if this particular plan is not a "fair" plan in the general sense, what type of plan would you recommend, especially for a person like yourself who is in an extremely volatile business? I mean, one week you're a hot restaurant. Two weeks later, after an unfair or a bad review, your business drops off exponentially. What kind of system would suit a business person like yourself?
Mr Cook: I'm not sure I can answer. I guess if there was an easy answer to that, Mr Owens, somebody would have come up with it before now. When I was at Metro I found appealing the idea of a per-unit tax where a 2,000-foot restaurant would be taxed the same anywhere in Metro, because I guess they'd haul away about the same amount of garbage and have the same amount of police protection and whatever.
I think the other thing that is really necessary for fairness is certainty. Here what we have, what we're passing -- it's such a compromised situation that we don't know where we'll be. With the assessment resulting in a $57,000 tax, clearly we'd be out of business, so we've got a bit of a reprieve. But you can't do business on reprieve. Businessmen need certainty. There's enough risk out there in the economy and in business itself without having government throw in another big risk that could be fatal.
The Chair: Thank you very much. I'm sure we'd all want to say we hope that a year from now we can still go to your establishment.
Mr Cook: Well, I hope you do.
The Chair: Thanks for coming. We appreciate it.
ROGER MIDDLETON
The Chair: Could I call Mr Roger Middleton, please, to be followed by Mr John Sutt and then Devon Construction. Mr Middleton, welcome to the committee, and please go ahead when you're set.
Mr Roger Middleton: Mr Chair and honourable members, my name is Roger Middleton. I live in North Toronto. I haven't as yet received my assessment notice, but I expect that when I do and I find out what my taxes will be, they will go up. I wouldn't object to that if I felt that the basis upon which my taxes were levied would be fair and the basis was also sound, but having watched these proceedings, I'm not sure that I've changed my opinion that in fact they're not. But I must admit I'm much better informed.
The Metro economy is in trouble. The present system of property taxes doesn't work. It hasn't worked for years, and everybody has known about that. Yet it's bizarre that we as Canadians wait until times are tough before we air our differences. The constitutional debate demonstrated to the world at large that we as a nation have not got our act together. Now we in Toronto are doing the same.
Municipalities across North America are gearing to be competitive. They want to attract business. They want to attract people. Yes, they have divisive issues to settle. They do it quickly and quietly. Let's get this done quickly and quietly so we can get on with focusing on the real job, which is getting this economy moving again.
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I'm concerned that this debate could be divisive. It also could be healing. If we do this constructively, creatively and openly, as these hearings indicate we're doing, then it could be most healing. But if we get mired in disruptive debate, there's no doubt about it: It's going to be extremely damaging to the economy. Let's get on with focusing upon getting to a solution.
It would seem to me that we're debating this issue of property taxes without defining our goals and aspirations. It's almost as though we're putting the cart before the horse. In fact, we do have a plan. The draft plan, entitled The Liveable Metropolis, was issued in September of this year by Metro council. It also defines the goals.
The particular goal we need to concern ourselves with here is what we're going to do about expansion. It says that the council supports the GTA initiatives that discourage expansion of the urban envelope and thereby encourages the effective use of lands already committed to urban development. In other words, we're trying to stop urban sprawl. We want to focus our energies on concentrating on areas which are already developed and not make inefficient use of our resources. That's a clear plan.
It's a well-constructed document, but it doesn't mention education, which seems to me to be quite strange, seeing this is a major area of concern for all of us. It also fails to stress the unique character of each of our municipalities.
If we can agree that urban growth should proceed along the lines of the Metro plan, it follows that the method of property tax assessment should be in harmony with that plan. This is, after all, Metro's own plan. But in fact it's inconsistent. The proposed plan assumes that properties valued the same wherever they are in the Metro area should be taxed the same. This flies in the face of the avowed intention to concentrate. It means that a 20-foot semidetached property valued at $200,000 in downtown Toronto is considered to be exactly the same as a $200,000 detached home on a large lot on the outskirts of Etobicoke, North York or Scarborough.
Much confusion, however, has arisen over this issue. Many speakers have talked about this situation, but they've all failed to differentiate between inequities among assessments within a municipality and assessment inequities across municipalities. One speaker talked of a flat above Yonge and Eglinton which has a $6,000 tax bill likely. She said that she worked there but she had a home in Scarborough on a ravine that would be taxed at $2,900. Councillor King talked about Cabbagetown residences with taxes of $600 to $2,000. She referred then to Seaton Street, North York, with a much higher tax. These are real issues, but let's look to each municipality to solve them.
My concern is more about getting equity between Eglinton and Yonge and Cabbagetown first before we worry about what happens in Toronto and what happens in North York. For that case, we want to consider that properties of the same value within a municipality ought to attract the same tax. There's a consistency there. There's not necessarily a consistency across municipalities.
With this in mind, it's quite possible that a modified form of MVA could work as long as it is applied only within a municipality. If we want to get equity across municipalities, we should look to the tax rate because, after all, there are two elements informing the amount of tax you pay: the assessment and the rate at which the assessment is fixed.
I'm also somewhat surprised that 1988 was fixed as the date for assessment valuation; 1988 was the peak year of the real estate market madness. I don't think I or anyone else needs to be reminded of what we bought our houses for or what we could have sold them for each time we received our annual tax assessment notice. If it's going to be MVA, let's keep it current and iron out the volatility by using the average of a number of years, starting with the 1990s. With computers and Real Estate Institute of Canada statistics, surely we can work something out.
If you agree with this proposal, I would therefore recommend that each municipality, in its own best interests, should right now proceed to determine how it proposes to correct the inequities and anomalies within its own borders and advise its findings to the Metro council and the government of Ontario by the end of this year. Let's get going and let's get something happening so we can at least get justice within each municipality. Once that has been done as a first step, we can look at the intermunicipality issue. Let's do one thing at a time.
If we're going to look at this intermunicipality issue, we have to look at the balance of power in Metro council. Within Metro council, the balance of power now lies with the three outer municipalities, Etobicoke, North York and Scarborough. The inner municipalities, York, East York and the city of Toronto, are outvoted. If the greater Toronto area is taken into consideration, the issue of the real balance of power is more uncertain. In this situation I believe it is important that a grand strategy to promote fairly the interests of all constituent parts is agreed, and maybe the Metro plan is a good move in this direction.
However, because of the population involved -- it's now 4.2 million in the GTA and 2.3 million in Metro -- and the growing decentralization of power in this region, it is increasingly important that the provincial government take on the role of mediator and, if necessary, arbitrator.
Council members most always tend to vote in the interests of their constituents. It would be unreasonable to expect them to do otherwise. Accordingly, I am not sure that in these circumstances I can agree with the minister's view that he should not, as a matter of course, interfere with the decisions reached by the democratically elected members of the Metro council.
Accordingly, once the issue of valuation inequities in each municipality has been resolved, I would then propose that the government of Ontario, in conjunction with all councils in the GTA, seek to harmonize the entire region's property tax structure to ensure both the efficient delivery of education and other social services, as well as the orderly growth of the region as per the Metro plan's basic reurbanization concept.
In conclusion, I would like to say that the free trade agreement has created a continental municipal competition for business. This is not a time to create uncertainty in investors' minds. There is already enough to go around. Let's get this solved quickly. Let's take one step at a time. Let's focus our energies on increasing the size of the pie rather than dividing the one we now have.
A creative resolution of the present tax impasse may require that any property tax structure that is put in place should be in harmony with the overall goals agreed by all councils in the GTA, encouraging and rewarding those that add value to the region by their actions. It should assist in job creation possibilities with existing businesses. It should support those enterprises, promoting and building the skill levels of GTA residents. It should support the creation of new and the attraction of existing business and cultural activities into the region.
The task here is to seek to unite ourselves in community to face a hostile world and to ensure that the greater Toronto area stays the best urban environment in which to live, work and play. If we can focus our minds on the broader goals and have a much clearer idea about the things we can all agree upon, it becomes much easier to resolve the issues that divide us. After all, we're all in this boat together.
The Chair: Thank you for your presentation. Two questions, if I could just ask that they be short and sharp. Mr Owens and Ms Poole.
Mr Owens: This is not a question, just a quick comment, Mr Middleton. Thank you for your thoughtful and cogent presentation.
The issue with respect to irregularities within municipalities is one that I've found passing strange myself, that there's been no attempt at resolution of these issues. I look at my own street. I pay somewhere in the neighbourhood of $2,600 a year in property taxes in Scarborough, but a person across the street with a similar-sized lot, same number of bedrooms etc pays $1,600. This is an issue of equity, in my view, as well. I appreciate the most positive way that you've brought this issue to this committee.
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Ms Poole: Mr Middleton, a particular welcome to the committee since I believe you are my constituent. I very much appreciated your thoughtful and constructive approach here today.
You've brought up an issue not too many people have, which is that we really have inequities within a municipality right now. I do believe there are people in Scarborough who are paying too much tax. I also know this is true of other municipalities as well.
Mr Perruzza: There are people in the city of Toronto who are paying too much tax.
The Chair: Order, please.
Ms Poole: Yes, there are people in the city of Toronto who are paying too much tax.
I would bring two things to your attention. The first is that I believe it was in 1989 the previous government made an offer to the municipalities within Metro that if any of the municipalities wished to go ahead and do an individual section 63, they could.
Scarborough, for instance, would have had that opportunity but did not want to, and the reason is that, even more contentious than the inequity within municipalities has been the issue of apportionment, what should each municipality contribute into the Metro pot?
I think that's where the real rub is, that solving the problems and the inequities within a municipality would not increase the amount a certain municipality would put into the pot, and some municipalities believe the city of Toronto should be paying more than we are right now.
Mr Middleton: I think the answer to that is, first, let's solve the inequities within each municipality by using a market value assessment basis and let's run it from 1990 onward. The issue of how much each municipality subscribes to the needs of other municipalities can best be resolved by adjusting the rate at which properties are assessed.
In other words, let each municipality decide what's fair within the municipality, but the council and the provincial government can ultimately override a municipal council on the issue of the rate. That will certainly change the amount of taxes that are supplied to the system by each municipality.
The Chair: Thank you very much for coming before the committee this afternoon and for your suggestions in the presentation.
Mr Middleton: Thank you, Mr Chair.
JOHN SUTT
The Chair: I now call Mr John Sutt, and after that Devon Construction, and if he's here, Mr David Moll would be after that. Mr Sutt, welcome to the committee.
Mr John Sutt: Good afternoon. Mr Chairman, distinguished panel, my name is John Sutt. I'm looking in front of me and wondering what I'm doing here. I have a bad cold, a head cold. What I had originally written I don't have because I was sick in bed for four days and the person who had my deposition I can't get hold of.
I rewrote something this morning, and actually, as I was watching the news on CBC this morning, I saw that 12,000 businesses in the past year closed down in Canada. It occurred to me, why should I strain my brain to rewrite another deposition to go to deaf ears? Anyway, as I said, 12,000 businesses in the past year went bankrupt.
The Chair: Mr Sutt, could I just ask you -- we're going to recess for just a few seconds. We're having a problem with the mike and we just need to --
Mr Sutt: Do you want me to move over to the next one?
The Chair: No, we'll just hold on for a sec here. There, by the miracle of modern technology, I think we're okay now. Please, if you want to just start your text.
Mr Sutt: Anyway, as I said, after all, only 12,000 businesses in Canada in the past year went bankrupt.
To save some time I'm not covering or questioning how the assessments were done, whether they're right or wrong, the year chosen, how it affects real estate or how it affects one's equity or whether MVA is the right system or not; instead, on how our belief in our system of democracy is put to question in that a large proportion of Metro does not understand how MVA will affect them. It's hard to believe, but it's very true, and with no impact study done to see how this new tax proposal will affect the many communities which make up Metro, and, to boot, we are not waiting for the report of the Fair Tax Commission, which was enacted by the NDP to study taxes.
The reason the NDP is in power is the voters believe that we should give you the opportunity to prove that fairness prevails. But, as we see, the usurpers always choose times of panic to enact, in the atmosphere of general panic, laws which the public would never adopt when passions were cool.
Mr Perruzza: On a point of order, Mr Chair: I'd like to know what "usurpers" means.
The Chair: We will have a period for questions. You can ask then.
Mr Sutt: Usurpers are when you've got groups of people like --
The Chair: Mr Sutt, there will be time for questions, if you want to make your presentation, please.
Mr Sutt: I guess one of the surest ways of distinguishing the work of a lawgiver from that of a tyrant is to note the moment he chooses to give the people its constitution.
Any questions you want to ask me?
The Chair: Have you concluded your remarks?
Mr Sutt: Yes. That's all I have to say.
The Chair: Okay. Mr Perruzza?
Mr Sutt: Everything else has already been said. We know the figures. We don't need to regurgitate that any more.
The Chair: Fine.
Mr Sutt: The reason we have people here is because obviously justice was not done in Metro council and isn't about to be done there.
The Chair: Fine. We have time for one question. Mr Perruzza?
Mr Perruzza: Just to lay out my position, I agree that market value is not the fairest form of taxation, because obviously it bears no relevance to ability to pay. But because we have a market value system now, I have to tell you I completely and totally disagree with opposition to this plan. I believe that it brings some fairness across Metropolitan Toronto.
Yes, some people in North York will see property tax reduction; yes, some in Scarborough; yes, some in the city of Toronto. There are unfairnesses in the city of Toronto now with the newer properties, the properties that have come on line. That's the issue. The issue is old versus new, and to me it makes no difference. We all live in this metropolis. We should all, under the current rules, pay as fair a tax as you can possibly get.
Under a market value system, Metro has taken a very courageous decision and a little step forward, and I support that courageous decision and that little step forward. So I disagree with you, and I'm not going to ask you what "usurper" means.
The Chair: Thank you, Mr Perruzza. Mr Sutt, do you wish to just have a concluding word?
Mr Sutt: Well, a concluding word is that any time there's a tax increase on a population, especially the time when we call it a recession -- this is not a recession. Some people say it's going to correct itself in the next year. I have my own doubts on that for a lot of reasons. I have doubts on why it won't correct itself.
You know, 1990 was the year of the end of the cold war. Some 50% of the western world's production was geared towards the cold war, and we haven't made that adjustment yet in the western world. So all those production facilities -- people say, "The recession is over." The recession is not over. It's far from over. To make that adjustment, you're talking at least eight or nine years in readjusting all those factories that were producing equipment for the western world for the cold war.
To come in with a tax at a time when you've got a depression in the city of Toronto -- those retailers, the ones who are still in business, are just hanging on there with their teeth. I've probably talked to about 4,000 of them.
Mr Perruzza: It's happening everywhere.
The Chair: Okay. Order, please. Order.
Mr Sutt: Yes, it's happening everywhere.
The Chair: Mr Sutt, if you'd just be good enough to conclude your comments.
Mr Sutt: My comment is it's a bad time; it's the wrong time.
The Chair: Thank you very much for coming before the committee this afternoon.
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DEVON CONSTRUCTION KINGBEACH CORP
The Chair: I now call on the representative from Devon Construction, Kingbeach Corp. Welcome to the committee. You've been waiting patiently.
Ms Julie DiLorenzo: Thank you so much for the opportunity to speak.
The Chair: If you would identify yourself for Hansard, please.
Ms DiLorenzo: My name is Julie DiLorenzo. I've run a construction development company for the last 11 years in the city of Toronto. I'd like to start by reading a letter that I've distributed to various members of Parliament, which will give a brief overview of the concerns I have regarding --
The Chair: Excuse me, do we have a copy of that letter?
Ms DiLorenzo: No, you do not. I will fax one tomorrow morning. It will give a brief overview of concerns I have regarding market value assessment and jobs and other intrinsic circumstances that'll result.
The implications of market value assessment on the abovenoted lands -- in particular, it's 56,000 feet of land at St Clair and Yonge Street -- will impair permanently the viability of development. The 1988 values ascribed are ridiculous and without foundation, even for 1988. Case in point: there is not one development that has been successful in the city of Toronto whose end value is based on 1988 land values.
These projects, lands, have either been repossessed by the lender, with the result that the developer and the institution are in serious financial trouble, or the price of the land purchased in 1988 in the city of Toronto prohibits a viable project today and, most likely, for the next five to seven years. So any lands purchased in 1988 will not be able to create jobs because they will not be economically viable, I predict, for the next five to eight years, and there's substantial research to give credit to that statement.
The development on the abovenoted lands, without exaggeration, would create, directly and indirectly, thousands of jobs in the construction industry starting in the spring of 1993. Moreover, this project would provide approximately 270 housing units, of which 70 units would be non-profit cooperative units, 25% of the remaining units would be affordable and the balance would be free-market condominiums. Importantly, it is a city of Toronto landmark site. The effects of the tax assessment under market value assessment will cause abandonment of projects like ours. It would create ghettoization in a prominent, important focus point of an international city.
The cultural, sociological, short- and long-term implications are profound. De-urbanization, similar to the existing situation in Detroit, would occur. The city of Toronto would be habitable only by the rich and the very poor. This is unacceptable.
In June of this year I was invited to and attended an international urban marketing conference in Turin, Italy, where world cities battled for their place in the future, both culturally and economically, by showing that their cities were the place to work, live and play.
Has anyone noticed that the city of Toronto's cultural institutions are suffering? Events which would be successful in other cities of international stature are not being attended to capacity, while the suburbs are creating their own new forums. Market value assessment will prohibit future growth and intensification in the city of Toronto by stopping the development of vacant land.
The city of Toronto, small at 635,000 people compared to Winnipeg at 616,000 people, cannot work as a city without intensification. Existing businesses will close, not only because of the direct impact of market value assessment, but because the necessary threshold of viability supported by population will not exist, as intensification will not occur and our existing residential population will destabilize. The basic service infrastructure, such as public transit, will be strained further. This will also have serious effects on the environment and other areas.
Again, I reiterate that market value assessment will kill this development. The proposed tax increases on this vacant land are exorbitant, and we do not have the facilities to pay them and no income to offset against. There are very few projects at this time which have the ability to proceed and create work in the city of Toronto, and the loss of this project would add further to the tragic work situation in the construction industry at this time. I'm sure everyone is aware that the construction industry is the second-largest employer in Ontario.
It is completely false to say that vacant land has value based on its potential, as the recession of 1990, 1991 and 1992 has made it clear that potential is a vulnerable and precarious state. You must work towards saving the city of Toronto and eliminating the effects of market value assessment on vacant land.
I'd like to further proceed by quoting from various papers which were given in Turin, Italy, in April of this year at the urban marketing conference. Some of it will be philosophical and some of it will be technical.
Critical to the success of a prime city and its surrounding boroughs and cities is perception and image of the status of the life. Its dynamics, its workings, its ability to provide a good living environment, work environment, and avenues for recreation are fundamental to the stature of that city. I argue that the damage to these elements by market value assessment will accelerate the dog-eared image of the city of Toronto resulting already from this severe recession.
At the urban marketing conference in Turin, Italy, every paper or discussion given discussed the promotion of its city. In almost every paper, the issue of tax burdens was discussed and the overwhelming conclusion was that tax burdens hinder prosperity, growth and development.
I quote from Wilfried Kaib in a paper entitled Urban Marketing: "The concept of urban marketing brings into focus the city as a product: not only the built city -- its buildings, materials and infrastructures -- but also its image; besides the valuation of its history, cultural and aesthetic values.... Perceived in this way, the city gives the cultural identity to the region and its inhabitants."
I argue that the damage done to the city of Toronto, with boarded-up businesses, with land that remains vacant in prominent sites, will have effects to the peripheral areas, not only to the city of Toronto. So the areas that may benefit from tax reductions will be hurt by a sick prominent city.
The world, because of vastly improved communications, must be viewed as an international entity. I quote from a paper by M. Lyons and A. Parsa: "Fierce competition for the role of leading financial centres has evolved."
Image is critical. We often receive letters from mayors of American cities offering preferred tax status or no tax status to relocate in their cities and build in their cities. The message here is different. Urban marketing and development of cities means the cooperation of public and private sectors.
I quote from Professor Gastone Ave, from the politecnico of Turin, who gives an example of promotion of cities to businesses internationally:
"Outside Europe, I would just highlight the case of Virginia in the United States. The governor's office has created a department of economic development which runs two branches, one in Brussels and one in Tokyo. This department aims to `effectively serve people on a worldwide basis' and yet promises individual assistance in describing `candidate Virginia locations as well as the necessary procedures associated with establishing a facility'" in its cities. The department is pursuing a one-to-one approach. The importance of this is that they're promoting their cities to the world in order to gain investment from an international market.
I'd like to discuss the precarious nature of potential; "potential" is how they are gauging the value of these lands. The 1988 value in particular of these lands, at 56,000 feet, is $30 million. I would be most pleased if someone would come and pay me $30 million for these lands.
Potential is a very precarious state. I quote from Barry Lyons, who writes a book called Urbanation, and it's the edition of October 1992. "The overall market remains in state of uncertainty and imbalance.... Prices of new units continue to decline. The city of Toronto is down 8%, suburban markets down 4%."
I quote these two figures, because it shows that the sales values that were being earned in the city of Toronto are down substantially, proportionate to the decline in the values in the suburbs, and the earliest losses were much more severe in the city of Toronto. The decrease in prices is proportionately more severe in Toronto.
I quote again. He says, "The downward adjustment in new sale prices will render many proposed projects uneconomic, minimizing new projects."
Another quote I give you regarding the precarious nature of potential is: "A common mistake is to think that one can first produce a good design plan, then in the later stage implement it. But what is the implementation of a plan if not the successful search of households, business firms and institutions willing and able to invest in a given city?"
Therefore, although the market value assessment may value this land at $30 million, unless I can sell condominiums, it's very difficult to sustain a value of $30 million. I argue that in 1988 if the value was $30 million, the price per foot of the condominiums should have been $600. Not one sale ever occurred in that price range, and condominiums that were selling for between $300 and $400 are now reselling at $180 per foot.
I quote again from Professor Gastone Ave: "The image of cities is more and more related to the quality of the urban environment as well as to the presence of cultural traditions and technological centres.... The historical heritage of most European cities is extremely rich and diversified, so that it forms the basis for a high-quality environment which can be viewed as a marketable asset."
If the city of Toronto continues to have the dog-eared image if businesses begin to close, it would no longer be an asset to attract investment, not only to Toronto but to the peripheral area. I quote from Wilfried Kaib, another professor who attended the conference: "We must also...anticipate the needs of the later users, as the potential difficulties in the process of realization are great." Therefore, potential on development cannot be gauged at its raw land value.
I'll give you an example. The planning application for the rezoning of this site began a year ago. During the year, we had enormous costs of carrying the land -- a substantial amount of money goes to paying consultants to design projects that are viable -- and after a year we got a negative planning report. If I had had the burden of a $500,000 tax due to a $30-million value based on 1988, which was not even realistic, I would not have been able to proceed as far as this year. I will definitely not be able to proceed next year.
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In summary, the difficulties in redevelopment are many. The lack of success of the previous stars of the industry proves this. The process is as follows: land acquisition, design, the hiring of consultants -- in particular, I'd like you to note that we are a small developer, and last year, we received a letter from a very prominent architectural firm that went something like: "We hear you're the only active participant in the market. Will you give us a chance for work?" This is a reflection of the environment. Then there's the rezoning process, the marketing, the financing, the construction and the occupancy.
Each of these areas has its own parameter of risk. For example, a rezoning process is long and includes enormous expenses of legal fees, design fees etc, and all the while carrying costs continue. The added burden of a $500,000 cost is just not bearable.
If one sells a product, then there are the risks during construction. After construction, there is the risk of the realized purchaser. Many of the units that were sold in 1988 and 1989 are not being closed by purchasers and remain vacant. The burden of taxes without income while the land is non-producing and in fact costs the owner vast sums of money is inappropriate and unfair. Case in point: the lands we own were valued at $30 million for 56,000 feet. Even in 1988, it would have meant that condominiums would have had to be sold at $600 per foot.
If the province of Ontario is interested in jobs, eliminate the tax assessment based on 1988 values on vacant lands. If the province of Ontario is interested in the health of Ontario, review the serious impacts of market value assessment on the fabric of the city of Toronto. Experts over and over again understand that the economic wellbeing of the city of Toronto will reflect on the surrounding areas and the rest of southern Ontario like an insidious illness. Thank you.
The Chair: Thank you for both the philosophy as well as the technical comments. We have two questions. Mr Perruzza and Ms Poole.
Mr Perruzza: Thank you for the very well-put-together brief you've submitted here today, both on some very interesting planning principles and on your own particular situation. I think what I heard from you -- please correct me if I'm wrong -- is that there's something wrong with our property tax system and with property taxes in general, if I can expand the issue a bit and make it a little broader. Is that what I heard?
Ms DiLorenzo: I'm not arguing that there are inequities right now in the system. What I am arguing is that the impact, particularly of something that affects us, will hinder the creation of jobs for a project that is viable today. Actually, it will end the whole process of the development, so the effects of market value assessment on this land, if implemented, will stop the development dead in its tracks.
Mr Perruzza: Do you think property taxes should be reformed in general?
Ms DiLorenzo: I'm not an expert on property tax assessment. I do realize that there are inequities in the system. What I do know -- again, I reiterate -- is that the impact of market value assessment on this vacant land will stop the project.
What I'd like to add to that is that this project would not need any government financing, unlike many of the projects that are on the way right now. Again, to show you how unequal the value is, if you take the 1988 value, the Ministry of Housing has a certain amount it pays per unit for Ministry of Housing developments. The price is very consistent, whether it's in the city of Toronto or in the suburbs, which would argue that the value of vacant land is not dissimilar in the city of Toronto or the suburbs. That's based on the precedent of prices that the Ministry of Housing is paying today.
Ms Poole: Thank you very much for your presentation today. I hope you can hear me over my cold. You raised the issue of the project that will be killed because of Bill 94. The reason that project will be killed is because vacant land has not been subject to the same cap as other commercial or industrial properties.
Ms DiLorenzo: That's correct.
Ms Poole: Just for your information, I wanted to tell you that we had Metro Councillor Scott Cavalier, who's one of the architects of the Metro plan, before us on Friday. One of the questions I asked him was the rationale for not extending the cap to vacant lands, railway rights of ways, transportation and utility corridors and those having grants in lieu. The answer he gave me was that there was no rationale other than that it was a political decision: "We needed to find extra money somewhere in order to cobble this political plan together." As to having a rational reason, or any type of reason, the only reason was political.
If this affordable housing development is killed, how many jobs will be killed with it?
Ms DiLorenzo: Again, it's not just the affordable housing component. There will be 270 units in an affordable range, which will promote people who have never been able to live, for example, in this area; it will be very affordable prices. So many jobs, I would argue thousands of jobs, because the offshoot of the direct construction in, for example, the production of materials is enormous. One project of 100 units, for example, could easily employ 500 people directly over its life; indirectly, it amplifies enormously.
The reason, possibly, that no argument has come forward against the tax on vacant land -- and as you said, there has been no rationale -- is that quite seriously I've been, like most developers, fighting very hard for survival, trying to create work. As I mentioned, an architectural firm wrote to us saying: "You're one of the only people trying to create work. Give us a chance." I haven't had a chance yet to fight this, and now I find it of very critical importance. It will stop all the work I've done so far in its tracks.
Ms Poole: So it's your opinion that if Bill 94 goes through, there will not be new construction, there will not be a development on those vacant lands, that they will remain vacant?
Ms DiLorenzo: That's correct. Our case in particular is that we are a small to mid-size developer. Possibly the impact has been ignored because other entities that own vacant land are enormous and possibly are corporations that are publicly owned. The impact to small developers and mid-sized developers will be severe.
The Chair: Thank you very much for coming out today. We appreciate it.
TORONTO BOARD OF EDUCATION
The Chair: I now call the representatives from the Toronto Board of Education. Welcome to the committee this afternoon. Would you be good enough to introduce the members of the delegation.
Ms Ann Vanstone: Yes, I will. I'd like first of all to bring the apologies of our chair, David Moll, who wasn't able to shift his schedule at the last minute. I'm Ann Vanstone, chair of the education finance committee at the Toronto Board of Education. This is Linda Grayson, our associate director in charge of operations and finance, and this is Ron Trbovich, our comptroller of finance.
The Chair: Welcome all.
Ms Vanstone: We do appreciate the opportunity to come this afternoon and the fact that you people have given up a Sunday afternoon to deal with what is for many of us a very difficult issue.
The Toronto Board of Education appreciates the opportunity to appear before the committee and present its views on Metro council's market value reassessment proposal, the enabling legislation for which is proposed in Bill 94, the Metropolitan Toronto Reassessment Statute Law Amendment Act, 1992. Beyond this, the Toronto Board of Education seeks this committee's consideration and support for three amendments to Bill 94 in the knowledge that, in spite of the significant and valid opposition to this reassessment scheme, the NDP government has declared its support for it and will ensure its passage into law next week.
Rest assured, as just an off-the-cuff comment, that the Toronto Board of Education, as one of the taxing partners in the city of Toronto, seriously objects to this reassessment scheme which leads to a reapportionment of taxes that shifts to the city of Toronto a considerable reapportionment and punishes the city of Toronto because it has a higher density than the other cities in Metro have chosen to have.
Also recognize that the city of Toronto has struggled as a board of education for some years to ensure that its downtown schools remained viable and delivered very good education to the children in the city of Toronto, so much so that people visit from all over the world, most particularly from large cities in the United States, whose inner cities have died largely, I think, because they've been based on a market value assessment thing. All of that, we want you to take as given. What we wanted to come today to talk about is some specific, technical amendments that for us are extremely important.
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The Toronto Board of Education has two specific concerns, one of which bears on the unfairness of taxing property on the basis of market value, and the other of which involves a transfer of governance to the Metro council level and the impact of that on our city and its communities.
The committee has heard many reasons why this reassessment scheme is untimely and simply wrong. At this late hour of the day, I'll spare you the pain of enumerating the valid arguments and facts that underscore the unfairness of this reassessment scheme on the ratepayers of our city.
In terms of governance, however, Bill 94 represents a radical and strategic shift in power from the area municipalities to the Metro level of government. This reassessment scheme, as proposed in Bill 94, impacts on the economy of our city, the land use policies of the city of Toronto through the manipulation of property tax class burdens, and the financing and ultimately the delivery of local services to people and property. In the Toronto Board of Education's view, this governance issue has not been addressed. The citizens of our city have not been consulted in this matter. Their locally elected councillors and trustees have not been given any opportunity to comment on the future governance of their city.
Indeed, Bill 94 does not provide the Toronto Board of Education nor any other school board in Metro the opportunity for any input on future reassessments, even though the Toronto Board of Education and other boards are property taxing authorities. Recognize that of all property taxes raised in Metropolitan Toronto, the education system uses 52% of it. As taxing authorities, we have not been consulted on this whole issue.
The Toronto Board of Education recommends that Bill 94 be deferred for one year pending a review of the matter of governance within Metropolitan Toronto.
In this regard, it is expected that the working group on property assessment and taxation of the government's Fair Tax Commission will be reporting its findings this week, some of which will have direct relevance to the proposed Metro-wide reassessment scheme.
Given the intent of the NDP government to pass this bill, the Toronto Board of Education recommends that subsection 241.1(5) under section 8 of the bill be amended to provide for the involvement of all property taxing authorities within Metropolitan Toronto, including school boards, in the development of a reassessment plan for the Metropolitan area for the years 1998 to 2002, inclusive.
As you are aware, section 8 of Bill 94 includes amendments to the local levy provisions afforded area municipal school boards. It should be noted that the Toronto Board of Education has been the only board within Metropolitan Toronto to impose a local levy of 2.5 mills on its ratepayers. That's a legislative cap on our ability to levy locally. This local levy is additional to the education mill rate that is struck by the Metropolitan Toronto School Board.
The Toronto Board of Education's local levy has been used to hire additional elementary school teachers to address the special education needs of Toronto children in their formative years and to provide additional funding to Toronto secondary schools to help students stay in school to complete their education. As well, the local levy --
The Chair: There are some glasses on the side. This room is particularly dry and I think all of us have been coughing during the course of -- Mr Turnbull is coughing in empathy.
Ms Vanstone: I'm really sorry. I've probably got the sorest throat in the world.
The Chair: That's quite all right.
Ms Vanstone: The local levy has also been used to fund the high cost of maintaining Toronto high schools. You'll recognize as you drive along our streets that they're among the oldest in Ontario.
The Toronto Board of Education recommends that section 6 of Bill 94 be amended to provide for the increase of the local levy provision from 1.5 mills, elementary panel, and 1 mill, secondary panel, to 1 equalized mill for both panels.
An equalized mill would significantly increase the Toronto Board of Education's local levy tax capacity, although its application would be prudently constrained to meet specific objectives consistent with our ratepayers' objectives.
In support of this request, it should be noted that the amendment would greatly enhance the Toronto board's ability to raise funds locally for community-based school programs, an example of which is our financial commitment of more than $500,000 to school nutrition and breakfast-lunch programs in selected elementary schools. While our board is committed to expand this program to all elementary school children, it cannot do so within the constraints of a very limited local levy.
The local levy provision of 2.5 mills was enacted 25 years ago, at which time the amount it would generate was deemed sufficient. In the 1970s, it was further constrained in its application to the number of non-formula Metro teachers who could be funded for local purposes.
The Toronto Board of Education is not requesting that the limitations around the number of local levy teachers be amended. Rather, the board is seeking additional flexibility to fund programs not recognized for funding purposes at the Metropolitan Toronto School Board. Beyond this, it should be noted that our request for this amendment would not preclude the sharing of more than 30% of the proceeds of Toronto's local levy with all other public area school boards, as well as ensuring that this provision will not adversely impact on other ratepayers in Metropolitan Toronto.
As the committee members know, subsection 241.9 under section 8 of Bill 94 provides for the explicit sharing of revenues from payments in lieu of taxes among the Metropolitan corporation, the area municipalities and the school boards. What committee members may not realize, however, is that this section of the bill does not provide for fair sharing of these revenues with school boards.
Specifically, where area municipalities apply the education mill rate to federal properties, and they have been doing this since the 1950s, this bill does not obligate the area municipalities to remit the education portion of these revenues to school boards. In other words, municipalities collect money from the federal government in respect of education and do not remit that money to school boards.
In this way, area municipalities have for years been able to understate their respective mill rates by offsetting revenues generated by school board mill rates on federal properties. This practice is unfair and undermines full disclosure of mill rates raised by locally elected officials and their accountability for the same to their ratepayers.
These federal payments in lieu for school purposes are in fact part of the school board's assessment tax base. Currently, the shortfall has to be made up by higher education mill rates. In the city of Toronto this does not affect total property taxes raised. Rather, it overstates education taxes and understates municipal taxes.
The Toronto Board of Education recommends that sections 241 and 241.9 under section 8 of Bill 94 be amended to require area municipalities to share federal payments in lieu with school boards where an education mill rate is applied in the payment.
It was most unfortunate that the Toronto Board of Education was not consulted in drafting this bill. We wrote to the minister, the Honourable Tony Silipo, on November 18, 1992, to advise him of our request for changes to the local levy provisions contained in this bill and the fact that we had not been consulted in its drafting. To this date, the Toronto Board of Education has yet to receive the minister's reply to its request, although we are confident of the minister's support.
In conclusion, the Toronto Board of Education strongly recommends that Bill 94 be deferred so that a review of its implications on governance can be fully addressed. If the government is intent on its passage into law, then the Toronto Board of Education requests the committee's consideration of our recommended changes to Bill 94.
I might mention, in addition, that the provincial government pays no property taxes in respect of education to municipalities on the grounds that it pays a provincial grant in respect of education. As you are aware, I'm sure, in Metropolitan Toronto the provincial government pays no grants in respect of education. Therefore, I think at some point in the future or at some point in any case, we should be looking at that.
We feel, as a school board, that we pay provincial taxes on all our supplies. We have no relief. Since we have no grants from the province for education, perhaps it's time they started looking at provincial payments in lieu.
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The Chair: Thank you very much.
Ms Vanstone: Sorry for my coughing but I really have got just the worst sore throat.
The Chair: That's quite all right. At different points in the hearings, we've been having those problems. Thank you for your presentation and also for the interesting thought at the end. I'm sure it will warm the hearts of all treasurers. If we could move to questioning, Ms Poole.
Ms Poole: Thank you very much for your presentation today in bringing forward a whole new --
Ms Vanstone: I thought it might be.
Ms Poole: -- problem with the assessment. I'd just like to start by saying that if the Toronto Board of Education can't get a reply from Tony Silipo, then I don't know who could, since I believe he was former chair of your board.
Ms Vanstone: Yes, indeed.
Ms Poole: We hope he's going to bat for you. I have two questions. First of all, would other boards of education within Metro agree with the three amendments you have proposed?
Ms Vanstone: Certainly they would agree with the one around federal payments in lieu. There should be no reason for them not to agree with the equalized mill. Although Toronto has a larger tax base, the legislation that we deal with equalizes the tax base in respect of this for all school boards in Toronto. This has not been discussed by the Metro board, although the federal payments in lieu have been discussed; the rest of it hasn't.
The equalized mill: It took a long time. It's a difficult situation that we're in because whenever the Education Act is changed for certain reasons, for it to apply to us there has to be companion legislation in the Municipality of Metropolitan Toronto Act. The equalized mill, in respect of building capital projects in the province of Ontario, applied to all school boards, starting, I think, in about 1981 or 1982. They didn't put companion legislation in place for Metropolitan Toronto until 1987. What we're saying now is that there also should be the amendments to that act that give the local boards the ability.
Ms Poole: Mr Chair, before I go to my second question, perhaps I could make a request of the Ministry of Revenue that it give us an analysis of these particular amendments and what the impact on municipalities would be and the viability of including them in the legislation.
The Chair: So noted.
Ms Poole: Thank you. My second question is for Mr Trbovich who's led a very interesting life, being one of the bright lights within the Ministry of Revenue for many years, and then shifting over to try to figure out finances in the Ministry of Education.
Interjection: Actually, he was shedding his light in Education only.
Ms Poole: Oh. I thought he was the guiding light also in Revenue before then, but maybe he wouldn't define himself in those terms. Now he's with the Toronto Board of Education in a capacity of -- Ann repeated it twice. I think it was finance director or --
Ms Vanstone: Comptroller.
Ms Poole: Comptroller. That sounds even more important.
Ron, with your background in assessment and dealing with education financing, all these various aspects, when you look at Bill 94, does it bear any resemblance to what the provincial governments over the years, whether it be Conservative, Liberal or NDP, have asked for in future?
Mr Ron Trbovich: Thank you for the question. It does in only one respect, in that it uses market value as the basis for the scheme. Beyond that it is very much a departure from anything that has been contemplated previously -- or introduced, for that matter.
You may recall that back in 1979 this measure was introduced at the local municipal level as a stopgap measure, clearly a temporary one, to address the more glaring inequities one finds within a municipality. The extension of it to a Metro-wide basis was a development that had most application in those regional or county situations in which there was a uniformity of property types. In other words, in Muskoka it was primarily residential cottage country; in Grey and other areas it was primarily farming communities.
Here in this city, in a large urban context, we have the first example of trying to impose this kind of scheme in this dynamic. Beyond that I don't wish to comment, because I have not studied the specific impacts, mostly because the Toronto Board of Education, being a significant taxing authority, has never received that kind of information or briefing or interest from either the Ministry of Revenue or the Metro corporation.
Mr Robert Frankford (Scarborough East): Thank you for coming. Of course, it's very important to look at the educational aspect because it does take 50% of the tax revenue. Could you elaborate on the input, or lack of input, that you and the other school boards have had with Metro in the preparation of the bill?
Ms Vanstone: The city of Toronto had a property tax reform group and invited the Toronto Board of Education to send a representative to that. I think that's been in existence, Linda, for three years, maybe?
Dr Linda Grayson: Even longer.
Ms Vanstone: So we have had a representative on that. At Metro there has been no representative, and there has been no representative of the Metropolitan Toronto School Board; I'm also a member of it. There has been no representation from that school board on any property tax reform. The city of Toronto had a member of our board on the drafting of this legislation.
There are some very specific changes, quite dramatic changes, that have to do with the way taxes are collected by school boards in Metro Toronto. There has been no consultation with the local boards of education. I believe the director of the Metropolitan Toronto School Board was shown a draft two days before it was brought to the Legislature. He made some recommendations. He had no ability to consult with his trustees, nor was there any consultation with the local boards of education. We find this quite a dramatic shift, and one of our very real fears in governance is that there will only be one board of education recognized in Metro Toronto. We don't think that would work.
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Mr Turnbull: Ann, good to see you, as always.
Ms Vanstone: Good to see you, David.
Ms Poole: Doesn't politics make strange bedfellows?
Mr Turnbull: We're almost joined at the waist in this matter.
Ann, I know you personally have been opposed to MVA for a long time, and I'm pleased to see this brief. You've brought out some excellent points that I was not aware of.
I would like to bring out a little more background on the question of provincial payments to the Metropolitan Toronto School Board. I would say the Conservatives gave a rather moderate amount of money to the metropolitan school board, then the Liberals took it away completely, and the NDP campaigned that they were going to significantly increase the amount of money the province would pay, but they haven't delivered on it. So now we've established that we're all bad.
Can you just talk a little more about the fact that you said the province is not paying anything in lieu for its buildings in the municipality, yet at the same time is giving no tax benefits to Metropolitan Toronto for education?
Ms Vanstone: I'd first like to say that I would not like to be charged with being partisan politically in an answer to this statement. I believe any party in power at Queen's Park at this point in time would find itself in the same position that the present government does.
The assessment base in Metropolitan Toronto is such that when the province tells school boards that they have to assign a certain mill rate to their tax base as their part of the general legislative grant, their part of the cost of educating kids -- or what the Ministry of Education has deemed the cost of educating kids, which I believe everyone in the province says is too little -- when it's applied to the assessment base in Metropolitan Toronto, it does not leave room for grants; it produces, indeed, a negative number.
We believe that negative number occurs because all of the school boards in Metropolitan Toronto, like all other school boards in the province, are trying to deal with a general legislative grant that is far too low, considering the programs that have been imposed on school boards. So the boards of Metropolitan Toronto get no grants, not even for their special programs like English as a second language and special education.
We did leave a bundle of briefs for you, didn't we? In that you will see that in Metropolitan Toronto public schools, we have almost all of the ESL in the province, or at least a large percentage of it, and special education and inner-citiness. Metro Toronto receives 62.6% of the new immigrants to Ontario. It receives an estimated 55,445 new immigrants a year: 97% of those immigrants are unable to speak, read or write English.
Mr Turnbull: Did you say 97%?
Ms Vanstone: Yes, 97%, and we are required to provide English as a second language instruction for those people.
Mr Turnbull: So we're getting virtually no immigration of English-speaking people?
Ms Vanstone: Not at the moment.
Mr Turnbull: And 67% of Ontario's are coming to Metro Toronto?
Ms Vanstone: Of the new immigrants to Ontario, 62.6% come to Metro Toronto. Mississauga receives 6%, Ottawa receives 4.8%. Of the total of 55,445 new immigrants a year, 97% are unable to speak, read or write English.
Mr Turnbull: Could you answer this? Do you have any indication as to the total dollars that are entailed in the federal payments in lieu that are made to the various municipalities of Metropolitan Toronto with respect to education?
Ms Vanstone: It's in the millions, Mr Trbovich says. We don't know. There is one thing you should know, that this year, for the first time, there is a program called LINC -- which stands for Language in New Canadians, maybe? I don't know. In any case, for the first time the federal government has recognized that there is an edge to the ESL problem that is theirs, so for the first time we have received some money, an infinitesimal part to what we pay.
The only money we got last year from the province was for students who enter our hospitals and institutional schools, who are educated under that program, who are non-resident in Metropolitan Toronto. In other words, it's almost a purchase-of-service arrangement: The Toronto Board of Education provides programs for the province in hospitals and institutions. We went to them with a legal problem we had a few years ago that said we had a legal difficulty using Metropolitan Toronto tax dollars to educate non-resident students. I gather that the province's lawyers agreed with that position, so they are now giving us that money.
I will leave for you the actual apportionment of education dollars in Metropolitan Toronto. I know Dianne Poole's office had phoned me for these, so I thought I'd bring them over today.
The Chair: We'll make those available to all the members of the committee. Thank you all once again for coming out.
Ms Vanstone: Thank you.
CITICOM INC
The Chair: I now call our next witness, a representative from Citicom Inc. If you would be good enough to introduce yourself for the purposes of Hansard, please go ahead.
Mr Kim McKinney: My name's Kim McKinney. I'm employed by and represent a local developer here in Toronto. The owner also operates one of the largest parking management companies in Canada.
The Chair: Just for the record, you are here representing the company?
Mr McKinney: Yes. We also operate one of the largest parking management companies and employ over 3,000 people across Canada. The company has been in business in Toronto since 1934, and currently manages over 100 parking lots here in Toronto. In addition to managing parking lots, we also own a number of properties which are operated as parking lots across Canada. We have developed over $1-billion worth of commercial property in the last decade. Today we have no active developments on the go, which is similar to most real estate developers. We're simply trying to manage and maintain our existing portfolio of properties.
We strongly disagree with the proposed market value assessment plan, and believe it is ludicrous, irresponsible and borders on fraud. We are already taxed to death and cannot afford any more taxes. The well is dry.
I would like to give you one example of why we think MVA should not be passed. We have heard many times before that the assessors may have used students to establish market value, who would not have had the experience or expertise to establish what fair market value is. My example is a property owned by Wentworth Properties, which is an affiliate company.
The property is located at 29 Camden, which is just west of Spadina between Richmond and Adelaide Streets. The property was purchased in 1952 when the city was pleading for parking lots to remain in the downtown core to keep it vibrant, after the suburban malls were being built and the downtown business district was being eroded. The property is 11,300 square feet in area. Under market value assessment the property was said to have a market value of $2.8 million; this equates to $250 per square foot.
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Under MVA, as originally proposed, 1993 realty taxes would have been $60,500 with an additional $15,000 for business taxes. It would have given a total tax bill of $75,700. I have here the operating statements which show gross revenues of $52,000 projected for 1992. The operating expenses to manage and run the parking lot will be approximately the same, $52,000, therefore leaving nothing to pay the current taxes. The current realty taxes are $8,375, the business taxes are $2,093 for total taxes of $10,468.
With the capping provisions that have been introduced, the taxes will increase by the 25% in three years to $13,085. Combined with the realty tax and business tax, we also pay a commercial concentration tax of $6,768, which gives a total tax burden of $20,000 for 1995. As you can see, there are no revenues to pay for these taxes as it is today, let alone another 25% increase.
I mentioned that the property was valued at $2.8 million or $250 per square foot. We are developers, and I think we have a fairly good idea of what market values are. I can say from my experience that that property was never worth $2.8 million and probably never will be. If you know the area, it's just west of Spadina in the garment district, and there will not be a First Canadian Place built on that property. The actual value is more like $200,000, and the owner today would gladly take any offer approaching that number. There's no development potential for this particular property for at least 20 years, and probably not in my lifetime.
As we have heard previously, developers are just trying to survive today, and most are struggling to stay in business, as witnessed by the likes of Bramalea and O&Y. I personally don't want to join the 11.8% unemployment rate here in Canada. As you can see, the market value assessment system is flawed and should not be passed, even with the 25% caps. The operative phrase in real estate today is, "Survive till '95," and I ask that you assist us and other developers to do the same. Thank you.
The Acting Chair (Mr Stephen Owens): Thank you, Mr McKinney. We have time for some quick questions.
Ms Poole: Thank you very much for your presentation today. You mentioned that right now your taxes, including both the business tax and the realty tax, are in excess of $10,000, and at this particular point in time, let alone with the 25% cap, you're having trouble making any profit and it's difficult for you to pay the taxes. Have you calculated what your parking rates would have to go up to in order to compensate for this additional tax you'll be paying?
Mr McKinney: No, I haven't personally, but right now the daily rate is $5 for a day, and I would say it would have to go up at least 10 times that to compensate for that increase in taxes. The market cannot bear that, but that would be the result.
Ms Poole: So it appears that if Bill 94 goes through in its present form, you will really drive yourself out of the business. You can't compete at the rates you'd have to charge in order to pay your taxes.
Mr McKinney: That's right. Unfortunately, we would shut the parking lot down, but with vacant land there would be no cap. So we're caught between a rock and a hard place: Obviously we don't want to shut it down and be impacted by the full reassessment, so we're going to continue to operate it and try to cut down on expenses.
The one thing we may look at is that we currently have someone employed on the lot, and with computerization and so forth we may be able to put a machine on the lot instead of having someone employed. Again, that would force the unemployment rate to go up, which is another tax burden. With the current taxes, it's tough enough to get by, let alone with more increases.
Ms Poole: You're really in a catch-22 situation. You can't close it down because then it'll be vacant land, you can't operate it as it is at a viable rate because you're not making any profit, and third, you can't sell it because who is possibly going to buy it with those taxes in that situation?
Mr McKinney: That's right. Today in the real estate industry, as you know, there are very few commercial properties being traded in downtown. The ones that will probably first rebound are buildings like First Canadian Place, because it's prime property. The last to rebound will be land. People today who are investing in Toronto and in Canada are looking for a return on their money; if people can't get a return on a parking lot, then they're not going to pay anything for it. I had mentioned $200,000, but that might even be stretching it, because no one's going to get a return. They would be buying the property to eventually develop it, hopefully, but as we've seen, properties even closer to the core might not be developed for 20 years.
Mr Turnbull: Did you say the land is valued, according to the assessment, at $250 a square foot?
Mr McKinney: Yes.
Mr Turnbull: That's incredible. Let me try and put this into perspective. Let's say it was built out as a building, recognizing the conditions we have today. If you got a mortgage at 9.5% compounded semi-annually, you're going to be paying the equivalent of $25 a square foot per year just to maintain that. So per square foot, depending on the density you had, that's what you'd have to attribute to the rent before you'd done anything, without any cost of building.
Mr McKinney: Exactly.
Mr Turnbull: You raise some significant points. One of the things that is coming through, apart from the fact that market value is obviously a totally flawed system, is that even if you like market value, this assessment was very incompetently done. We've had testimony that some college students who were on summer holidays did some of these assessments. We know we have buildings next door to each other, which are virtually identical, with radically different assessments. The proponents of market value will simply say, "Yes, but you can appeal your assessment." But does it seem reasonable to put forward a system that has so badly managed the assessment?
Mr McKinney: That's right. I think the assessors are going to have their hands full. We're definitely going to appeal every property, and we do that as a procedure. I don't know where they're going to get the time to hear all the appeals. Why not start from a system that is fair and equitable to begin with, rather than bring in a system like this and force everyone to spend time and money? You have to pay for lawyers and property tax consultants to appeal your taxes, or you do it yourself, if you have the time.
But you also brought up another point about financing. This property's not financed; it was bought in 1952. The owner is very fortunate that he doesn't have any financing on it, because as I mentioned, it doesn't produce any income before taxes.
Mr Turnbull: So you're certainly not speculators, if you bought it in 1952.
Mr McKinney: That's right, and I don't think too many developers or land owners can say the same thing. They probably financed it, leveraged it to the hilt, and I don't know how they're surviving.
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The Acting Chair: Mr Mammoliti, one very short, sharp question.
Mr Mammoliti: Thank you, sir, for coming out. First of all, what do you expect from the provincial government? I think I can assume what you expect, solely because of your presence here today, but are you aware of a precedent that might be set if the province were to amend any piece of legislation that pertains to this, in terms of a particular decision Metro council has made? And if you're aware of that, do you think it's right that the province would do that? Understand as well that the precedent it would set would mean, in my opinion, that in any future decisions made at the Metro level, negative or positive, that would reflect on your particular business, the province could, at any time, say, "It's wrong, it's incompetent, and we're going to change it?" For that reason, I think it's unfair. Would you be willing to take that chance, by coming here today and asking the province to intervene? Because ultimately that's what people are asking us to do.
Mr McKinney: Sorry. Would I be willing to take a chance on --
Mr Mammoliti: On the province intervening and setting this precedent I'm telling you about.
Mr McKinney: I just think, why try to ram it through so quickly? Why not take a look at the system, wait for the Fair Tax Commission that's going on and see what it has to say? I don't see the urgency of passing legislation on this system when it's flawed from the beginning.
Mr Mammoliti: The fact that it's going to set a precedent is the argument I'm using. If the province were to do that and then ultimately make changes to Metro's proposal, it sets a dangerous precedent. Frankly, I'm not prepared to do that myself. But you, as a representative of a business here in Toronto, will know that if that precedent is set, you could get affected at any time in the future if the province decides to just change anything Metro recommends.
The Chair: I think we're going to have to move on at this point. Thank you very much for coming before the committee.
Mr McKinney: Thank you.
BOB AIREY
The Chair: I'd now like to call Mr Bob Airey. Welcome to the committee, Mr Airey. Please make yourself comfortable and go ahead when you're ready.
Mr Bob Airey: I don't normally do this sort of thing, so we'll see how it goes. Thank you very much for having me here.
The Chair: That's what these are for, and we just want to make you feel welcome.
Mr Airey: My name is Bob Airey. I was born in Scarborough and I live in downtown Toronto. I've been selling real estate throughout downtown and Ontario for over 15 years.
My first concern is for elderly people who are on fixed incomes and trying to stay home instead of living off of other people. One of the concerns that has been brought to my attention specifically is that if somebody, say Mrs Jones, is holding a property in trust for a juvenile within her family and some time after January 1, 1993, she decides it's time to put this property into this family member's name, this family member would then be hit with the full effect of the 1998 tax. I do not see this as being fair. There is recognition of a surviving spouse not to pay the full tax, but why not a family member? Is a family member not as close as a spouse would be?
The fact that you're using 1988 as the date for market value assessment is also quite offensive. The government invited various offshore peoples to come to Canada and get citizenship by spending their money on new businesses. Instead, they speculated in real estate and the values were driven up, and then they left. It has taken years since the market passed away in March 1989 for values to fall to sensible levels, and they are still dropping. There are vacant floors in the TD Centre and properties on streets like Queen Street that aren't even selling under power of sale -- that's with the existing taxes being applied.
Now people who wish to sell their houses after January 1, 1993, are being asked to market their property to a market group which will base its opinion of value on your market value assessment figure for 1988 and then reduce the value to what it perceives is today's value, which everyone knows must be a lot less than it was in 1988.
This false value of 1988 never was based on true market value and now you wish to tax us on these market values and you want to penalize people who wish to sell their homes over the next five years by forcing them to negotiate with someone who says: "The city says your house was worth $250,000 in 1988. It must now be worth approximately $150,000." If they buy that house, they pay a tax on $250,000, so they'll be asking these vendors selling their homes to reduce their prices accordingly to allow for this extra tax rate.
A lot of people travel in and out of downtown Toronto, and parking for some of our downtown business owners has been reduced and restricted. We are being asked to pay equivalent taxes, yet not to have equivalent parking facilities.
It's taken a lot of years to get the neighbourhoods in downtown Toronto up to a standard we can be proud of. Overtaxing is not the answer to maintain this and keep people wanting to visit and work here in Toronto.
That's basically what I have to say.
The Chair: Thank you very much for your presentation. Mr Turnbull, we have time for a question.
Mr Turnbull: I'm pleased you raised the question of speculation. I remember very well watching television, reading and hearing on the radio, when Bob Rae was in opposition, he always used to be going crazy about speculators. You've talked about the people who came from overseas, speculated in real estate and then left. The government is blessing this speculation by accepting 1988 as the assessment year.
If you've heard any of these hearings you'll know I'm against MVA as a method of taxation but, as a real estate specialist, can you tell me, would it not be correct to say that there were various areas of Metro that went up in 1988 disproportionately to others and actually came crashing down relatively further than others since 1988?
Mr Airey: Yes, that would be true. That's tied to market demand, which is tied to people with money and people without. Consequently, you'll have certain areas rising in value based on speculative activity more so than others, and when that demand is no longer there, they'll drop accordingly.
Mr Turnbull: Are you a commercial real estate broker?
Mr Airey: Both.
Mr Turnbull: It appears to me that the approach used to the value of small commercial buildings was to take it based upon trades in 1988, which may not have been sustainable -- in fact we know those prices weren't sustainable -- and we're now penalizing the people who retained their buildings and in fact penalizing the tenants in those buildings by high taxes --
Mr Airey: Exactly.
Mr Turnbull: -- whereas we're seeing many of the large buildings get tax reductions because it appears they took the approach of income flow in those buildings. Does it not seem incompatible that you would use two different approaches to valuing these different properties?
Mr Airey: I don't know that I could answer that question truthfully and know what I was saying, but I would say that a lot of the properties I deal with, which are smaller, main street properties, commercial businesses and so forth, currently have taxes on average of, say, $3,000 to $4,000 and are seeing major increases immediately upon this taking effect.
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Mr Turnbull: Are the kind of values that were attributed to small buildings in 1988 in any way reflective of the kind of values you can get for those small buildings today?
Mr Airey: No.
Mr Turnbull: Perhaps you could tell us, what sort of percentage have they dropped by?
Mr Airey: About 50%.
The Chair: Thank you very much for coming before the committee today.
ZYGMUNTT UZNANSKI
The Chair: Could I next call Mr Zygmuntt Uznanski, please, if you would be good enough to come forward? Welcome to the committee. If you would please just identify yourself for Hansard.
Mr Zygmuntt Uznanski: My name is Zygmuntt Uznanski. I speak as a private citizen. I am opposed to market value assessment. In my mind, market value assessment is what we have back home where I come from. It's called wealth tax. They say, "If you have lots of money, we're going to share it with you."
However, I was listening to some of your program and now I'm going to say to the people who are proponents, they tell me that in Scarborough, North York and Etobicoke they can buy new houses cheaper than the old houses in the city of Toronto, which is true in a way. During my time, I remember, when I wanted to buy a home in Scarborough, I couldn't qualify for it because my wages were too low. This thing ran for a long time.
The question is, why are the new houses outside Toronto where it's so cheap? It's because of the cheap labour. I am one of those people who was working cheap labour before I retired. I'm going to compare for you. In 1960, I had to work two days for what the construction worker made in one day. That's just a comparison. Now do you see why the houses were so cheap? On this thing, I think we should wait for the Fair Tax Commission to submit whatever it has.
I also remember the proponents were crying that they have to wait 10 years to bring the new law in. So I was thinking, I will volunteer to work for six months for $1 to bring this new legislation, fair market assessment, into force. When I'm going to work, I can assure you that I'm going to do this as fast as you did with the labour bill, maybe even faster. I hope you agree with me on this.
I have a question to this member. I don't know if you can answer this question, but if you cannot answer this question, I will ask my member of Parliament to ask it during question period. I see that Metro is a corporation.
Mr Mammoliti: Who is your member?
Mr Uznanski: Tony.
Ms Poole: Tony Silipo?
Mr Uznanski: Ruprecht. He's good.
The Chair: Please go ahead with your question.
Mr Uznanski: The Metropolitan corporation passed a resolution for market value assessment, but I don't know that it has a mandate to do so. I cannot understand why. My understanding is that with such a mandate, the resolution could be passed when all the municipality comes together and agrees to it, not just one part or another part. This is my question to the ministry.
Further, I will ask if the minister knows that before he does something -- he can pass the legislation, the laws, the statutes, everything else, but he cannot amend on his own without first amending the act. I don't know if he has amended this act or passed this special legislation to amend this Metropolitan corporation act to act on my behalf. So this is my question. If you can answer, it's good.
Now I'm going to tell you that sections 22 and 36, I think, or whatever it is, do not apply to the residential properties. That's what I think, but that's how they come to it. Those sections do not apply. Furthermore, I see that -- somebody gave me this thing -- section 65 will not be enforced. It says, "Power to appeal market value reassessment." So I think who will give those powers to the Minister of Revenue to say, "No, you cannot appeal under that section," without amending the act? You have to amend the act and then say, "No, you cannot do this." This is my question. Thank you.
Mr Mills: I think, sir, that you've asked a multiple of questions. Just leave us a minute and we'll try to come up with an answer. Just bear with us, okay? You've asked a few things.
Mr Uznanski: Can I go now?
Mr Mills: Just wait a minute.
The Chair: Just give us a couple of moments. We've got the first two answers and we'll have the third one in a moment. We have the answers.
Mr Mills: We're ready. The first question: What happens is we've had a number of municipalities, like the region of Halton, Elgin, I think there are about 13, and it doesn't take all of the various municipalities in agreement. I think in Halton there were four that were against market value assessment, but nevertheless it carried, and that goes on and I think that's in line with most municipalities. You never get total agreement, sir. You've always got some municipalities that are against it. Likewise in Metro, you have, I think, 21 for it and 13 against.
Mr Uznanski: Twenty for it.
Mr Mills: Twenty? Well, that's normal.
In regard to your second question, yes, the minister does have sufficient authority to make amendments. He does have that authority.
Mr Uznanski: Yes, I know he's got the authority to make amendments. My question was -- you don't understand this thing. I directed a question about the municipality of Metropolitan Toronto.
Mr Mills: Yes.
Mr Uznanski: In Halton they are under a different act.
Mr Mills: Yes.
Mr Uznanski: They are a region, this is a municipality.
Mr Mills: Yes.
Mr Uznanski: So it's a completely different setup, a completely different act. So here is a gentleman from Metropolitan Toronto, I don't know him, I only know that once he complained he cannot buy enough spaghetti for $10. He wants it for me, but I'm opposed to this. I don't want him to tell me what to do. He never consulted me. I live in a democracy. This is a democracy. There is no more Dominion of Canada and we are no more colonials.
Mr Mills: I suppose a democracy centres around you electing people to make decisions for you --
Mr Uznanski: Yes.
Mr Mills: -- and they've made those. So, really, the democracy centres around the next election.
Mr Uznanski: But acting under the law. They're acting to have the statute passed by this government and this government didn't give them the right to go out and tell me that he wants market assessment.
Mr Mills: That's just a difference of opinion, sir.
Mr Uznanski: That is not different. You're telling me --
Mr Perruzza: They have that power.
Mr Uznanski: I know what power you have. You don't have to teach me this.
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Mr Mills: You're talking about appealing your taxes. What you're talking about is -- and it's a little technical; maybe we can get you a paper so you can take it away and read it. You're saying you want to appeal the 1992 assessment and we haven't taken into account the cap. It's a little difficult for me to put it in so many words, but perhaps one of our people will give me a sheet that you can take away and you can understand it. What you're trying to say is that you want to appeal something that hasn't really happened, because of the cap.
Mr Uznanski: No. Metro has put the cap ahead of time. First I appeal, then they put the cap. They're doing the opposite. That is wrong. The cap you put after, not before; before you cannot cap anything. You pass the legislation and we work with it. We go to the municipal board and we tell them that this man complained.
Mr Perruzza: This is indicative of the misinformation that has been spun and perpetuated out there with people. We really should develop a brief newsletter which explains how this is going to work. I've listened to some of the people here as well just extend yarns of untruths. Maybe that's what we should do.
Mr Turnbull: On a point of order, Mr Chairman: I've just heard Mr Perruzza pointing towards us and saying that we've been extending yards of untruths. I would request that be immediately withdrawn. It's unparliamentary language.
The Chair: Mr Perruzza, perhaps you might phrase your comment in a slightly different way.
Mr Perruzza: I'll rephrase it just because we're at the end of the day. Having sat on this committee for a number of days, the verbal insults that have been hurled at each other --
The Chair: I think we've had a pretty good day.
Mr Perruzza: The yarns of misinformation, I guess. That's really what many of us have been perpetuating on this issue, and it's confused a lot of people out there.
The Chair: That's fine. I think there have been some questions, and it may be that some other information can be provided.
Mr Mills: Sir, we'll get you a written explanation of that particular --
Mr Uznanski: You're going to give me all the legal explanations so I can go to my lawyer and he'll explain to me what you said you're doing, how this works? I know how the act works. I went through the municipal bill a few times before; I'm a little familiar. I don't know everything, but I know this is not in the proper manner. The municipality of Metropolitan Toronto doesn't have anything, no mandate whatsoever, to reassess us. This I would like to know in writing. I would like to have this in writing, what you tell me. I would like to have this on paper so I can read it and go to my lawyer and he will explain everything to me.
The Chair: Mr Uznanski, information will be provided. Thank you very much for coming today.
The Chair: I'd like to invite Chris and Noella Milne, if they're here, to please come forward.
Ms Poole: On a point of privilege, Mr Chair: An accusation was made against a member representing the city of Toronto and a member representing the city of North York that we have been providing misinformation. I would ask the member who made that accusation to document, in writing, specifics of that allegation, including where misinformation has been spread. The information we have been providing has come from the city of Toronto, in many cases, or Metro council.
Interjections.
The Chair: Order, please. Order, Mr Perruzza.
We have witnesses who are here to present their views and we are going to conclude this afternoon by listening to the witnesses. There will be plenty of time for debate in the House. Order. I don't want any more comments back and forth. We are here to listen to the witnesses and to pose questions to them.
CHRIS AND NOELLA MILNE
The Chair: I'm sorry, Mr and Mrs Milne, but you are welcome to the committee. It is perhaps the lateness of the hour, but we do appreciate your coming at this time to make your submission. Please go ahead once you're ready.
Mr Chris Milne: My name is Chris Milne. This is my wife, Noella. We're citizens of the city of Toronto, we're taxpayers. As you are, we're very concerned about MVA and the impact it is going to have on all of us. One of the major concerns we have is that today, weeks before implementation, we haven't the slightest idea of what is going to happen and where it's going to go. There has been a lot of misinformation, there's been no information, and there is a lack of time. I'm extremely upset that there has not been enough time allowed for the taxpayer -- not the representatives, not the people who pass the laws, but the person who writes the cheque, the taxpayer -- to evaluate what this is all about.
I am an educated man and my wife is very well educated, and if you ask me today what effect it's going to have on myself, on my family, on my house, on my community, on the place where I shop, where I go to work, I have no idea. That to me is the fundamental problem and the reason we're having these hearings today.
I'm very, very proud of the city of Toronto. I'm very happy to live here. It's a world-class city, and we didn't get there by accident. It's a city that works. We have this thing called Metro which consists of a bunch of suburbs, of communities, Toronto, North York and so on. But what do we really think of when we think of Toronto? We think of the heart of the city, we think of the CN Tower, we think of the Dome, we think of the downtown, we think of the Toronto Islands; we think of all these things which all happen to be within the city of Toronto. But these are shared by all of Metro. Everyone comes into Metro every day. I think everyone should support Toronto, whether they live in Metro or in Toronto. It should be equal. It should be fair.
We want to avoid the mistakes that have been made by other cities around the world -- New York, Detroit -- and the tax base is fundamental to that. That's really what it's about. New York almost went bankrupt. Why? There was no support for the core. And New York is a disaster: strip bars and strip joints everywhere. Harlem -- go take a look.
There are four basic points I'd like to make about property taxes. One is fairness, and I think we're all for that. The second is impact. How will it affect people? Will they be able to pay? Third is acceptance by all parties, which I don't see today. The fourth is implementation.
The city of Toronto represents 25% of Metro but pays far more than that share in taxes today. I don't know the number, no one has told me, but 75% of those taxes paid by Toronto go to the common good of Metro: 50% goes to the school boards, 25% goes to Metro in general.
Toronto is also home for most of the poor, most of the sick and most of the elderly and has a greater share of the burden of housing for all of these people. These people are on fixed incomes and must live close to services. An increase in taxes in the Toronto core will affect these people. You can have grants, you can have subsidies, but it's not very efficient; these people will be affected. A tax increase will severely impact these people because they are on fixed incomes that will not go up with MVA. It should be understood that this burden should be shared by all municipalities, no matter where they are. MVA goes against this principle.
Impact: The person footing the bill here is the taxpayer, and he has had no opportunity to assess, evaluate or measure the impact of his increase in taxes, whatever it is, or even decrease. People should have been sent notices in their tax bills a year ago showing them, "If you are under MVA, your taxes would have been this," and then they'd be able to think about it, talk about it and come up with maybe some problems or issues that might need to be discussed.
The timing for this change has got to be the worst: We are in the midst of one of the worst recessions we've ever had. Many businesses are failing and cannot pay their taxes now. If you increase them, they still cannot pay their taxes. Who will foot that bill? The province?
More businesses will fold. You will have an increase in unemployment in downtown Toronto for sure. Small businesses will fail. I see it happening every day. This will create further unemployment, because this tax will be the straw that broke the camel's back.
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I travel a lot back and forth between Toronto and Montreal. In Quebec they had the wisdom to introduce an additional tax, similar to the GST only it's a provincial GST, and I can tell you the impact that's had on that city. The city has been devastated.
As it is, downtown has a tough battle with the regional shopping centres. Start increasing the taxes on the retail on Yonge Street and other streets of Toronto and it's only going to continue to push out that business that has already been shifted out to the regional shopping centres. What will happen is what has happened in Montreal.
I was born and raised in Montreal, and I used to walk down St Catherine Street proudly. It was a beautiful retail street -- high-end stores, shops -- and today it's nothing but strip joints. I couldn't take my son down that street, and that's in a matter of 15 years; I've been away from Montreal for 15 years.
Why has it happened? In order to pay the taxes, you have to have a high-income business on the second floor. We all know that second-floor retail businesses don't make a lot of money, because it's not good space unless you happen to be doing something that's on the edge, like peep shows and strip joints. Go look at Montreal. Walk down St Catherine Street. It is nothing but strip joints and peep shows, and that will affect the city.
Acceptance: This MVA is being forced upon the people of Toronto. They have not been given a choice. They have not been given time to decide. The mayor of Toronto is threatening to break away from Metro, and I don't think this should be taken lightly. It's a fact. People are seeing a shift of $46 million from Toronto to the other municipalities. Taxes are going down everywhere but in Toronto. This should not be taken lightly. There is no consensus, no acceptance. Tell people what their taxes are going to be. Let them look at them privately. These are private matters. Each person should know what his taxes specifically will be. Let them evaluate. Let them decide. Give them time.
Implementation: Some of the last-minute adjustments were done in the tax by applying caps and so on just to gain approval. Ultimately we're going to have to accept the full amount in the end, and the timing has got to be the worst. Wait a year. Give people in business a chance to get on their feet. Give them a chance to evaluate their situation. Wait until the recession is over.
In summary, I think we should be dealing with these four points: fairness, impact, acceptance and implementation. We should issue pro forma tax bills so that people can see what their taxes are going to be and see if they can afford it, see if they have to move, see what adjustments they have to make, see if changes have to be made. Give people a chance to assess and decide at the taxpayer level.
Measure the impact on fixed-income people. Maybe you'll find out that certain areas of the city have not been reviewed thoroughly enough and there's going to be serious problems. Does the city of North York really want everyone to move up there?
Wait a year and then decide. I would delay the implementation of MVA until the taxpayers have had a chance to assess it. I would send all taxpayers a notice in their February 1993 tax bill telling them what their taxes would be under a fully implemented MVA.
I would change the base year back to 1984. A gentleman earlier today had a very valid point: 1988 is a flawed year. It was a year of speculation, not a normal year. It should not be used for setting the basis for taxes. Go back to 1984, which was the first year you used, which is more appropriate. It was a more stable year. It was more in line with the economy and the way it is today. We were just coming out of the 1981 recession. The year 1988 is a clear distortion, and this distortion will exist for four more years in the tax base if it's adopted, because you're going to take four years to readjust it.
Other than the fact that it does have an impact on fixed-income people, which I don't think has been addressed, and it will severely hurt the downtown core, I'd just like to leave you with a few thoughts from my wife, Noella.
Mrs Noella Milne: I have lived in several major cities around the world, but Toronto is my favourite city. What makes Toronto so special is the fact that people love to work downtown, play downtown and live downtown. This gives the downtown core a vibrancy and a life that makes it welcoming and safe. I, as a woman, feel safe downtown, unlike the downtowns of any other major city I've lived in. I believe MVA will drive the restaurants and stores from downtown and will attract only seedy bars and other activities that can afford the higher taxes, and eventually will drive away the residents from downtown who don't find it an attractive place to live any more.
I thought the drive of the 1990s was to move towards an approach of residential intensification and conservation of space rather than sprawling suburbs. MVA will achieve just the opposite.
The Chair: Thank you very much. We have time just for a short question.
Mr Perruzza: If I can recap a couple of things you said, basically you haven't been consulted enough, and the local taxpayer hasn't been involved enough in the decision. From my understanding, and I haven't been around this long, whether or not to update the tax rolls is something that's been talked about in Metro now for the last 25 years and more aggressively, I guess, in the last four or five years, when Metro first made a decision and then that decision was forwarded to the provincial government of the time. The provincial government then sent it back and said: "Well, 1984 is not an appropriate year for us. We would like you to base it on 1988." That happened all over again, and then they forwarded that information back and so on. So there's been a considerable amount of debate around this specific issue.
We, as a provincial government, don't control how property tax bills are sent to people. That's something the local municipality does, and it can break it down any way it wants and can demonstrate any information in that tax bill. In fact, for the past several years, the city of North York has circulated a flyer along with its tax bill indicating clearly where all the taxes it collects go in terms of percentages, and what some of those tax dollars pay for and the names of the people who actually are responsible for those mill rate increases. That's been going on for quite some time, and maybe municipalities can do a better job in showing people clearly what moneys are used for and what the impacts of MVA are.
But I don't agree, and I disagree with you categorically, when you say there's going to be a mass exodus of businesses from the downtown core etc. This isn't a debate about the suburbs versus the city of Toronto or any of that, the way some of our opposition people would like us to believe. It's a debate about properties that come on line later in an assessment cycle as opposed to properties which have come on line earlier. So there are a lot of inequities in the city of Toronto now.
For example, if you took a street in downtown Toronto and renovated it, the new properties there would come on line at a much higher rate of tax than the existing street. It's essentially the same location; you wouldn't have to change the property size or the square foot size of the property itself.
The other point, very briefly, is this argument that they're all going to move to the suburbs. The suburbs are going to pay a higher rate of tax even under this plan. They're not going to come to par with the city of Toronto for similar-valued properties. There's still going to be a disproportion built into this to the tune of about 50% at the end of two years.
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The Chair: Perhaps Mr Milne can respond to those two questions.
Mr Milne: I'd like to use the analogy of the constitutional debates; we've been trying to change the Constitution for a hundred years. My wife and I both agree, as well as many people in the city of Toronto and North York and elsewhere, that the current system of assessment needs to be changed, needs to be corrected, needs to be made more fair. We're not disputing that. What we're disputing is that we don't want to be thrown into the same type of thing that Prime Minister Brian Mulroney threw this country into just a couple of months ago: "We've got to make a decision about this country in the next two weeks. I'm sorry, but I don't have any information out for you to evaluate it and assess it."
That's what is upsetting us. I think it should be a law that a citizen should be given notice a year prior as to what the impact of a major change such as this will be on himself -- the impact on his property, or whatever -- so that he can respond. Today, yes, it is between the people over here and the people over here who are debating; meanwhile the taxpayer's sitting back here and saying, "I don't know what the hell's going on, but I'm really afraid, because I don't know what's going to happen."
You may be right, Mr Perruzza; you may be correct. But today, sitting here, I have no idea whether you're right or wrong, and that is the issue.
Mrs Milne: I think it's a bit unfair, really, to say that it's not going to impact the city of Toronto disproportionately, more so than any other municipality. Isn't that an unfair statement? I know studies and figures have shown that the city of Toronto is going to be adversely impacted, much more than any other, so I think that's unfair for you to say. How do you know that one shopkeeper here will be paying more? Across the board, Toronto's going to pay much more, and I think that's --
The Chair: I think the views have been expressed, and clearly there are some things we just don't know. We want to thank you very much for coming before the committee and setting out your views this afternoon. Thank you both.
BARBARA HALL
The Chair: Could I call Barbara Hall, please. Welcome to the committee.
Ms Barbara Hall: My condolences to all members of the committee for the weekend they've had. I'm sure there were many other places you would have preferred to be.
I'm a city councillor in the city of Toronto and represent a downtown ward, ward 7, and have lived in that part of town for about 25 years. I came to Toronto and had a great affection for the downtown. Having spent the early years of my life on the east coast and the west coast, I found the downtown of our biggest city a wonderful place to be.
I moved away about 20 years ago to a large American city, Cleveland, and I can still remember the feelings I had 18 years ago when I returned to Toronto early one morning on the bus; I'd come from Cleveland on the bus and, as those overnight bus trips often are, it's a ghastly trip. The bus came in along Queen Street just at sunrise, past city hall. It was held up a bit because there was a street cleaner ahead of us, one of the ones that sprayed the water out, and that seemed wonderful; one never saw those in Cleveland. I went to the bus station, got off, took my bags and walked to friends in Cabbagetown, where I was going to be staying while I got relocated here. I found myself, as I walked through the streets to my friends' house, weeping at one point. I can remember the emotion I felt as I walked through a city that was friendly, was inviting, where even at 6 am there was a lot of activity. You could see people cared about what happened there; it showed, and I could feel it. It felt like I'd come home.
In Cleveland, where I had lived and worked as a probation officer, after 5 o'clock one saw only security guards or police cars on the main streets, and as you went off the main streets you saw what had once been wonderful older homes which had been abandoned when the middle classes rushed to move to the suburbs, now often abandoned -- officially abandoned -- but filled with the poor, the homeless, who were prepared to take anything for shelter.
Over the past few months, as we've been dealing with the MVA issue in the city of Toronto, fighting it at city council and with our constituents living in the neighbourhoods of Toronto, I must say, on a couple of occasions, I've wept again, and this time not with the kind of joy I felt then but with a real despair and anger at what I see as a carelessness that's being shown to the future of this city.
It may seem melodramatic for me to compare Toronto and Cleveland, and I may sound emotional, but I don't think it's melodramatic and I am emotional, because this city that I care a great deal about, that works very well, I think -- there are ways it could work better, and many of us in this room and throughout have worked long and hard to keep it where it is. All of that work, I believe, with the passage of this legislation, will have been for naught, and we will end up with a very tragic situation in this city.
First of all, I'd like to talk about the process. I am concerned that I have seen a number of times in the press that this bill is going to be passed next Thursday. I must say, as somebody in government, I find it deplorable that that is being said. Hundreds of people have come down to depute, and if the minds have been made up already and the bill is going to be passed, then why in heaven's name have you wasted your time on this weekend, and our time, in bringing us down?
I've also heard it said that what is being proposed by Metro is not full MVA. Well, for some it may not be, but for many it is, and I thought what this bill was meant to do, or what a new tax proposal was meant to do, was bring in equity, wipe out the unfairness that is there. I would be the first to acknowledge that the present system is not a fair one, but bring it in with a pile of new inequities?
Any home sold after January 1 will end up with full MVA. What are we going to have? As a lawyer, I can imagine the kind of messes that are going to come about as people avoid, with a purchase or selling their home -- there'll be all kinds of side agreements that will never get registered on title in order to avoid that. Or, if that doesn't happen, then we'll have the equity that people get out of their homes decreasing. Full MVA.
I know over the past few days you've heard from the railway companies, Hydro, GO, TTC, all of those interests who have vacant land. They will be impacted with full market value, the thing that we are supposedly not getting, and the full MVA on some of those bodies will impact not only the city of Toronto but people who use the services of those various organizations throughout the province. Hydro users, people who travel on GO and TTC, are all going to help bear the price of this misguided plan.
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At the present time, there's a requirement that the full amount, the full assessment, the full amount of taxes that would have to be paid, will have to be put on tax bills throughout Metro if this proposal goes through. I believe that seeing that number there will act as a slow poison for people in the commercial sector and the non-profits over the next few years. They may not be required to pay full MVA now, but I believe that the impact of seeing those numbers on the bill will mean that rather than looking at ways to reinvest or to strengthen their position in this city, people will start now to look at ways of moving out of the city.
We will lose many of our businesses. We will lose our arts sector. We will lose many of the non-profit organizations and activities that have gone a long way to making this city the exciting place it has been for both residents of the city, residents of the rest of Metro, and indeed many people who come from around the world to visit Toronto, a place that has an international reputation as a city that works.
Finally, I'd like to talk about the question of whether you as a level of government must respect the wishes of Metro council as a duly elected regional government. Usually, yes, and I must say that there are times when I have said, "Stay out of other levels of government," when you have come in. But to say, when there is something as serious as this, that because Metro, a duly elected body, has approved it, you must go along is wrong. I believe it's irresponsible and I believe it really is a copout.
Provincial governments clearly have the right to intervene. They don't usually intervene, but when there are situations they believe to be crucial, they have done that. On a purely non-partisan, across-the-board basis, Premier Davis believed, and I think many people since then have confirmed, that the Spadina Expressway would have been very destructive to this city. Two weeks ago I was in Dallas. Maybe we would have ended up with a city more like Dallas, where the freeways really rule that city. Premier Davis stepped in, recognizing the importance of that issue to the survival of a vibrant city with neighbourhoods.
Over the past few years, there was a lot of controversy around what was happening on the waterfront in this city. Some pretty ghastly things had happened down there. Premier Peterson stepped in and declared a provincial interest in the harbour lands.
I believe the issue of MVA is one that this government should declare a provincial interest in. Premier Rae should, as his predecessors did, recognize that when something is as crucial to the survival of this city, a responsible government must step in and declare a provincial interest and put this madness that's proposed and is before you today on hold.
There is no full economic and urban impact study done. Yes, the issue has been around for 25 years. Yes, nobody likes to bring in changes in taxing legislation. But this thing has changed by the second. Nobody knows what it's going to do. Maybe at the end of the day, I'm wrong. If I am, then an impact study would show that. But if I'm right and we go ahead, then it's not going to be very helpful for any of us five years from now or three years from now or 10 years from now to look at a dead core to this city, given the impact it has on the economy of the whole Metro region, the GTA; indeed, the province.
People in this country and in this province love to hate Toronto and yet Toronto, over the past decades, has had a lot to do with the vitality of those areas. I believe all those areas would be negatively impacted if Toronto suffers the kind of degradation we've seen in large American cities.
I believe this should be put on hold and that the proper studies should be done. If that is not done, at the very least, remove the requirement that full assessment and taxes be put on the tax bill. Get rid of that slow poison.
The Chair: Thank you very much, Ms Hall. There are a few questions. Thank you, as well, for the broad non-partisan spread. I trust our hearings will end this afternoon in that sense of harmony. I have Miss Poole, Mr Turnbull and Mr Perruzza. Perhaps I could ask for one question from each person. Thank you.
Ms Poole: Barbara, you've said so much that I'd like to ask you about and it's hard to be limited to one question. You have said in your comments that the government clearly has the right to intervene and that you think a responsible government would and must step in, but we have gotten very different messages from the provincial government.
First of all, they say they are only giving Metro the same right any other municipality in the province has. Secondly, they say this is not an MVA plan. Thirdly, they say, "Well, in the unlikely event it is an MVA plan, it isn't full MVA." Fourthly, they say they continue to be against MVA, and fifthly, they've accused members of the opposition, who have, quite frankly, made comments very similar to yours over the last week, of spinning yarns.
Barbara, your party, the NDP, in 1984 passed a resolution which said it was against market value assessment. If the current provincial government -- which to be fair is in a real dilemma; for any government in its position today this would cause difficulty -- goes ahead and passes this legislation by Thursday, as is reported by the Minister of Municipal Affairs, David Cooke, in today's paper, will it have betrayed one of the premises your party has been based on?
Ms Hall: I think all party conventions from time to time take positions on matters where, after forming a government, the realities of governing may cause the government to do something differently. I certainly believe governments have the right to do that. I do believe, however, that this party has long had a position of being opposed to MVA. It continues to say it maintains that position. I believe that to go ahead with the proposal before us would have it getting too many of the impacts of that policy which it says it is against. So I would say: "Stop it. This is MVA."
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Mr Turnbull: Barbara, forgive me, because I really don't think this should be a partisan thing, but in view of the fact that you are from the Metro NDP caucus, I have to ask you this question. Not only is there a policy commitment of your party, which is supposed to be binding on your party, but in addition to that, Zanana Akande, Frances Lankin, Ziemba, Silipo, Ward and Churley --
Mr Mills: Not partisan, Mr Chair.
Mr Turnbull: -- all actively campaigned in the last election as being against MVA. You have clearly said that you believe there are times when this can be deemed to be a provincial responsibility --
Mr Perruzza: Mr Chairman, he has no understanding of political parties, none whatsoever.
The Chair: Order.
Mr Turnbull: -- and you've outlined the reasons why you believe that this can be superimposed at times when there are other interests that are important.
Given the fact that some of these people are senior cabinet ministers now and they campaigned actively as being opposed to this and it was one of the main campaign commitments of these people, is it not reasonable to say that these people should at least break ranks with the party and vote along these lines, since it was one of their main campaign platforms at that time?
Ms Hall: I don't know that it was one of their main campaign platforms. I'll go home and look at the collection of campaign literature I have and make that opinion.
Whether it was or wasn't, I guess what I am saying to members of the government and to members of all parties is that this thing that is before all of us, this MVA plan, is one that is destructive to the city of Toronto or will be destructive to the city of Toronto. I don't believe it's an issue about which one should be partisan. I'm calling on all members of the Legislature to oppose it and to get the information that will allow you and us to make an informed decision at some point.
The Chair: Thank you. Mr Perruzza, last question.
Mr Perruzza: Just for the record and for the people at home who are watching us today, it's also worth mentioning that both the Liberal caucus and the Conservative caucus were split basically right down the middle on this issue when we voted on second reading in the Legislature, so --
Mr Turnbull: That's just not true.
The Chair: We're almost at the end of the day. It's been a long weekend. Can we simply --
Mr Turnbull: Mr Chair, I want the record corrected now. The majority of the Conservatives and the majority of the Liberals voted against this and all the NDP voted for it.
The Chair: Mr Perruzza, do you have a question to Ms Hall?
Mr Perruzza: Yes. They were both split on it and most of them weren't in the House that day.
The Chair: Mr Perruzza, can we just have a question to Ms Hall, please?
Mr Perruzza: I think that's worth noting: not doing their job and not being in the House to vote on these things --
The Chair: Will the member please place his question?
Mr Perruzza: -- and I can extract the record --
The Chair: Order, please. Will you please place your question?
Mr Perruzza: I just want to get back to the study for a second. This is something that has consistently intrigued me after, I guess, 53 hours of public hearings on this now, and having listened to many people from both the city of Toronto and some from some of the suburbs speak on all sides of this issue: that we need to have an impact study, and I would agree with that. In fact, that's something that's built into the proposal we have. But isn't the best impact study of all basically the way Metro decided to proceed on this with the 5% one year, 5% the following year and the 10% and 10% and then 5% for the commercial and industrial sectors? And we have close to five years to be able to monitor that.
The part that intrigues me about that kind of impact study is that I don't think it should have a narrow scope. I don't think the study should concentrate just on what happens in the city of Toronto. I think it should have a wider scope in terms of assessing what net impacts or net benefits and net losses are within all of Metropolitan Toronto. I would like to see that basically happen because --
The Chair: And that's your question?
Mr Perruzza: -- although I live in North York, I spend most of my time in the city of Toronto, and I love this city.
Ms Hall: I wish it was that easy. I talked about a number of areas where it isn't the 5% and 10% or the various formulas, where it's everything right away. It's been a long time, but this plan was put together on the floor of Metro the day or two days before. It was a moving target for many days. This was put together. This was never looked at.
I talked about my experience in Cleveland. I was in Dallas recently. The last couple of days I was in Windsor at an FCM meeting. When you look at streets that have stores already closed and buildings already abandoned, it's very hard to bring it back from there.
The responsible way in which I think people should proceed is to know before they do it, not to say, "Go ahead and, five years from now, if we were wrong, we'll change it." My fear is that at the end of five years we'll find out it was wrong and it will be virtually impossible, or very difficult, to change it and bring it back to where we are now, which we all know needs work. Let's carry on to make this a better city.
The Chair: Mr Perruzza, I'm sorry. At this point, we have to move on. The question was put and Ms Hall has answered it. We'd like to thank you for coming today and appreciate you being here.
Ms Hall: Thank you. I hope your next weekend is better, everyone.
HOWARD MOSCOE
The Chair: The final presentation, Howard Moscoe.
Mr Turnbull: On a point of order, Mr Chair: We were requested earlier whether we would allow Howard Moscoe to go on. The opposition has agreed to it, in full knowledge that he is in favour of MVA. He was not on the speakers' list. Barbara Hall was. I just want it noted that we have agreed to him.
Mr Moscoe: If it's a problem, Mr Chairman, just have the clerk --
Interjections.
The Chair: Order, please. Please sit down, Mr Moscoe. The Chair just notes that we have had during the hearings several instances where individuals thought they were on and came, and the Chair made a decision that we might as well proceed. Today Mr Moscoe thought he was on, and on that basis I did that. There are some other people who --
Mr Turnbull: That's why I checked with the clerk before. To the best of his knowledge, he wasn't on the speaking list.
The Chair: But there have been others where there have been perhaps misunderstandings. There are people who will be appearing tomorrow in the same vein. If we could ask Mr Moscoe to go ahead, let's just have our last witness and then we can discuss things. Please go ahead.
Mr Howard Moscoe: My point is going to be very simple. I'm not going to address whether I am or am not in favour of market value assessment, though in fact I do support the Metro compromise proposal. I'm very proud to have been a part of the structuring of that proposal.
I think it would be irresponsible for this Legislature to interfere in the assessment process, which is the responsibility of Metropolitan Toronto. There have been some 750 municipalities in this province which have gone through a market value assessment scheme and the Legislature has not, to my knowledge, interfered in those schemes. In fact, the architect of market value assessment, Bill Davis, wisely structured it in a way that would decentralize the blame for introducing market value assessment.
Municipalities were invited to do a study. The province came in and did the study. The results of the study were made known to the municipalities. The municipalities held hearings. The municipalities reviewed the scheme and then decided whether or not, on their own, to implement it.
You ask then: "Why is this matter not done by order in council, as has been done by most market value assessment schemes? Why is an act of the Legislature required?" The answer is very simple. Metro, in its wisdom, has built into its market value scheme or its interim assessment plan a number of protections for citizens that could not otherwise have been built in without an act of the Legislature. In fact, what the Legislature is being asked to do is to pass a bill that will allow Metro to introduce the protections that it believes its citizens require -- that and nothing else. So to oppose this bill would not be to oppose market value assessment but would be to oppose the protections that Metro has determined are in the best interests of its citizens.
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The framers or drafters of this legislation did it very wisely, because it provides for Metro an opportunity for sober second thought: Metro will be required by bylaw to implement a number of those changes and will have the opportunity, when it passes its bylaw, to make any changes that it deems necessary.
But I want to remind you that Metro is a democratically elected government and has a responsibility, has held public hearings on this matter, has debated the issue for a number of years. Under the previous discussions on this matter some four years ago, the city of Toronto came forward and said, "This is not the time to implement this." The then government of Ontario -- I can't remember which it was -- agreed, and therefore asked that we redo the assessment based on 1988 values. There is never a right time to implement this, because it has taken 40 years for the system to get so screwed up that no government has had the courage to tackle it.
It would be an offence to the people of Metropolitan Toronto for this government to fail to pass this legislation, and it would be an offence to the people of Metropolitan Toronto for any political party to attempt to delay this legislation so that the decisions of Metro, the democratically elected government of Metro, cannot go forward in a timely fashion. We have had due regard to all of the representations that have been made to us at Metro, we have a bill that we believe is fair. All of the harbingers of doom and gloom I think will prove not to be true, but we will have the opportunity to see that in the first year of its implementation. And if there is a problem with the current scheme, Metro may make an adjustment to that scheme by adjusting the bylaw that's before us, that this Legislature is giving it the power to do.
So, I urge you, Mr Chairman, and I urge this committee to get on with the job. We've held our public hearings, we've listened to the public, and it would be a slap in the face of the citizens of Metropolitan Toronto to deny us the opportunity to have our democratically elected right and to bring this legislation forward. I urge you to pass it immediately.
The Chair: Thank you, Mr Moscoe. Three questions: Mr Turnbull, Mr Perruzza, and the final word to Ms Poole.
Mr Turnbull: Howard, I heard you speaking at Metro, and you said this was going to result in no increases in rent for tenants in apartment buildings. I'm sorry you weren't here earlier this afternoon to hear the very eloquent presentation by the Metro tenants' association, who very clearly spoke to the fact that there will be increases in rent as a result of this. They also recognized the fact that there is no way of getting the decreases to the tenants unless the $6 million to administer it is borne by Metro. I wonder whether you're planning the funds for that.
Also, there was a motion by Metro Toronto asking the province to correct the imbalance between tenants and single-family residences. This legislation does absolutely nothing to do that. Further, Barbara Hall, who spoke immediately before, commented on the fact that Bill Davis, who you cited, intervened in municipal matters to stop the Spadina expressway and she said that indeed they should in this matter.
Mr Moscoe: I'll take the last question first. Bill Davis didn't start the Spadina expressway, but he started market value assessment. It would seem rather improper for someone to start something and then stop it. The scheme for implementing market value assessment was started by the Tories, has been implemented in the majority of municipalities across the province, and this government ought not to interfere. Bill Davis was wise in this.
Mr Turnbull: So you think this was a good move by Bill Davis?
Mr Moscoe: I think it was, because it decentralized the blame. I don't for the life of me understand --
Mr Turnbull: No, you think MVA was a good idea of Bill Davis.
Mr Moscoe: I think the structure for implementing it was a wise structure, a useful structure --
Mr Turnbull: Which you're embracing. What about the tenants?
Mr Moscoe: I'm on the tenant pass-through committee, and I think the allegations you made are simply not true. The $6 million cost is --
Mr Turnbull: That's not what Metro tenants are saying.
Mr Mammoliti: Let him finish.
The Chair: Order. Mr Moscoe, you have the floor.
Mr Moscoe: Just as some home owners will receive increases, some tenants will receive increases.
Mr Turnbull: But you said in Metro that they wouldn't receive any increases. I heard what you had to say.
The Chair: Mr Turnbull, let Mr Moscoe respond.
Mr Moscoe: The scheme at Metro evolved. Initially, there was no 10% and 10% and 5% cap. That happened during the debate at Metro. You have to understand how municipal government works. Municipal government operates on a compromise principle. The scheme did change as it moved along, and initially there were no increases to the tenants. That became not possible to do. We wanted to protect as many people as possible. Yes, some tenants will receive some increases as a result of this. The majority of tenants will receive decreases, and substantial decreases, and yes, there will be a proper mechanism in place to pass through those decreases to tenants, and it will not cost $6 million. That's a figure that's subject to negotiations with the province. We believe -- and I'm a member of the tenant pass-through committee -- that figure can be substantially reduced, because we question some of --
Mr Turnbull: Howard, you spoke about --
The Chair: Mr Turnbull, I'm going to have to move on to Mr Perruzza.
Mr Turnbull: We've allowed him to be here when he wasn't on the list. I just want to ask him --
The Chair: No, I'm sorry, Mr Turnbull, please. Mr Perruzza has the floor. Order, please.
Interjections.
The Chair: Order. Mr Perruzza has the floor. Mr Perruzza, would you place your question, please. We're almost finished, so if we could just place our questions.
Mr Perruzza: My question is actually very simple. I just want to explain very briefly to people who are here why we're here, and then I want to give Councillor Moscoe an opportunity to respond to both my comments and I think he wanted to finish up with Mr Turnbull's.
The Chair: Can we keep the comments brief and the questions sharp, please.
Mr Perruzza: Very briefly, we're here not because we want to interfere with Metro's democratically elected right to do what it is that they've asked to essentially have done. That's what my understanding is. We're here and we've conducted 53 hours of public hearings so that one Conservative and one Liberal --
The Chair: Okay. Order, please.
Mr Perruzza: -- and a couple of others who have shown up on occasion --
The Chair: Order. Mr Perruzza, order. I will not let you go on this way. We are at the end of a long weekend. To impute motive to any member is simply not acceptable. I would ask you to please place your question to Mr Moscoe. I don't want any more of the kind of comment I've just heard.
Mr Perruzza: Why do you think we're here, Howard?
Mr Moscoe: I think you have responsibility to examine the details of the legislation, but I think that once the details have been examined, you have a responsibility to pass the legislation on.
The bill has within it enough flexibility for Metro to make the adjustments that may be required if it's deemed required to have adjustments. But Metro did have extensive hearings on this matter and I don't understand why you would want to treat Metropolitan Toronto any differently than you've treated the other 750 municipalities across the province who have implemented a form of market value assessment. When the Liberal government was in power I believe it allowed Sudbury to phase in market value assessment over two years, but no other municipality has come forward with as extensive a package of protections for its residents than has Metropolitan Toronto. That's why you require an act of the Legislature.
I would urge you to move this matter forward. It's not your decision to make, it is our decision to make, and let us stand or fall on the basis of the decision that we make.
The Chair: Last question to Ms Poole.
Ms Poole: Mr Moscoe, welcome to the committee. It's been a somewhat heated welcome, but welcome none the less.
You've made a number of statements which I would -- maybe "challenge" is too strong a word, but certainly disagree with. I'd like you to comment on any of my responses to you.
First of all, you've said that 730 municipalities throughout Ontario have been reassessed and the provincial government has not interfered with them, so why would you treat Metro any differently?
I would submit that there are two basic differences from any other municipality that's reassessed across the province. First of all, most of those reassessments were done by the local municipality, ie the city of Toronto, not the regional municipality. In instances where it was the regional municipality, it was with the consent of the major players in that municipality.
Second --
Mr Moscoe: Do you want me to respond to these one at a time or take them all at once?
Ms Poole: I don't think the Chair will let you.
The Chair: Ms Poole, if we could keep it short, please. We really are at the end of everybody's patience, and I would like us to finish.
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Ms Poole: Secondly, in other instances they were straight section 63 or section 70 of the Assessment Act. There has never been such a convoluted hodgepodge as this Metro plan.
The second point in the same vein is that you have said the province should not interfere and the province does not have the right to intervene. I will give you two instances of the spillover damage outside Metro that has been inflicted by this Metro council.
The first is the fact that Ontario Hydro will have a tax bill increase in excess of $60 million per year. This bill will have to be paid by every ratepayer, every hydro user, in the province. The second instance is the railway rights of way. The railways have made it very clear that across the province they will be reducing services, cutting services, and there will be job losses across the province because of Metro's plan and the unexpected increase of $40-million-plus taxes.
The Chair: Ms Poole, I'm sorry, but could you bring your question to a point?
Ms Poole: I will bring this to a close and just ask you how you can say that the province should not intervene when it is clear that the province has an interest and that the province's duty is to protect not only the people of Metro but --
Mr Moscoe: The railways?
Ms Poole: The people who lose their jobs in those railways, the people who have to pay extra hydro rates, Mr Moscoe. Would you please respond?
Mr Moscoe: I'll try to take them piece by piece. First of all, as to the matter of consent, in fact when Metropolitan Toronto applied for a market value assessment study, they did it collectively, and it was a number of years ago. In fact they had the tacit consent of all the municipalities within Metropolitan Toronto. Otherwise, those studies could not have taken place. But it was done on a regional basis.
As to the hodgepodge, as you call it -- and I take it your position is that Metro should have straight market value assessment, which would be devastating to your constituents in East York, absolutely devastating -- Metropolitan Toronto has taken --
Ms Poole: First of all, I do not represent East York.
Mr Moscoe: Well, Mr Chairman, excuse me, but may I --
Ms Poole: I do not represent East York.
Mr Moscoe: Well, wherever your constituents may be --
Ms Poole: And I do not support market value assessment.
Mr Moscoe: Well, your constituents in Rosedale or North Toronto or wherever they might be --
The Chair: Mr Moscoe, if you would just answer the question.
Mr Moscoe: -- would be devastated by a full market value assessment scheme. So what you call a hodgepodge in fact is a package of protections for your constituents. I would be very disappointed if this scheme went forward without those protections in place, and I would hope you would support those protections being put in place.
Ms Poole: I do not support market value assessment.
Mr Moscoe: Well, you will not have that choice to support market value assessment, because Metro has an interim assessment scheme that is not market value, that in fact builds those protections in for your constituents.
Ms Poole: Give me a break.
Mr Moscoe: But the other municipalities in the province, the vast majority of them, have done full market value assessment. Slam, they've hit their constituents with market value assessment. If that's what you want, then don't support this legislation.
Thirdly, as far as Ontario Hydro is concerned, Ontario Hydro rates will always increase. There will always be a reason for them to increase.
Ms Poole: Not because of Metro's plan.
Mr Moscoe: You don't lay it on market value assessment.
Finally, with respect to the railway rights of way, first of all, the railways were gifted those lands by the government of Canada. They didn't pay for those lands and they've been paying underassessment on them for many, many years at the expense of the people of Metropolitan Toronto. Now, the best way to get the railways to do something with those lands is in fact to raise the taxes on them so they'll be encouraged to develop them and sell them, maybe even deed them to the city of Toronto for use as parks. That's the answer to the railways.
I understand they've conducted a significant lobby here. They'll have the opportunity to conduct their lobby at Metro before we in fact pass our bylaw. That's built into the legislation. We'll meet them and we'll deal with them in our way. So thank you very much.
The Chair: Thank you very much for your presentation. If I could, to the committee, before we adjourn, I just want to check something. Everyone in the committee should have the schedule tomorrow, such as we have it at this time, beginning at 9:30 here in this room.
Mr Perruzza: Can I ask a question about procedure before we leave?
The Chair: Okay, it's just that Mr Mammoliti --
Mr Perruzza: When would you need to report?
The Chair: Mr Mammoliti.
Mr Mammoliti: Let me ask mine. Mr Chair, I'm not going to take a lot of time, but we're going into the 55th hour here of hearings. Yesterday in my community -- I've had to answer a lot of questions in terms of why I'm not there. Explaining that we're into 53 -- 55 now -- hours of hearings is pretty difficult to explain to your constituents.
Mr Turnbull: And you're not getting any overtime.
Mr Mammoliti: They also are concerned in terms of how much this has cost the taxpayer, and at this point, Mr Chair, I'd like to ask how much money this has cost the taxpayer to conduct this opposition-driven hearing we're into at this point. How much has it cost? How quickly can I get that information?
The Chair: The question is noted and we'll check it out for you. We're meeting tomorrow at 9:30. We stand adjourned until that time tomorrow morning.
The committee adjourned at 1756.