The issue of providing municipal services to
private condominium developments (in particular, Swan Lake
Village Condominium) has been reviewed by Council in the past, as follows:
- June 14, 2005 - Council Meeting (report dated May 30, 2005)
- Council Action: Report received for information
- September 20,
2004 - Finance & Administrative
Committee Meeting (Presentation by Mr. Adrian Schollen, Chairman of the
Swan Lake Group & Association of Markham Village
and Townhouse Condominiums)
- Council Action: Referred for staff report
- August 26, 2003 – Council Meeting (Presentation by Mr. Adrian Schollen, Swan Lake Village)
- Council Action: No financial compensation be provided to residents
of Swan Lake
OPTIONS/ DISCUSSION:
The main issues relating to low rise
condominium owners receiving Town services have been noted in the previous
reports and include:
- The property tax system in Ontario is consciously designed not as
a user fee (as user fees are attributable directly to services received)
but as a means to include a share of the costs of services to the pubic at
large in the municipality. This share is determined by assessment of each
property. The use of any or all or none of the services (particularly soft
services) provided by the Town is a decision of the individual property
owner or resident (eg. libraries, arena, etc may not be used by the
individual but they are provided for the benefit of the total population).
With respect to hard services, for example, anytime a resident uses a
public road they benefit from municipal services, as the roads are cleared
and maintained by the Town.
- Condominiums are private property similar to the owner of a
single detached bungalow. The upkeep of this private property is the
responsibility of the property owner. Upon the purchase of a condominium
unit, the buyer is aware, or should be, that maintenance and services
within that condominium development is their responsibility, both
financial and otherwise.
- It is erroneous for condominium owners to assert that they are
not provided services when, in fact, services such as snow clearing, road
maintenance, street lighting, etc are provided by the Town to public roads
that are also used by condominium residents. The Town does not provide municipal
services on private roads, just as it does not provide services such as
snow removal from the driveway of an individual property owner who owns a bungalow.
Based on the discussion of these issues,
Council has in the past, received staff reports and taken no further action.
In 2002, Town Council did adopt a policy by
the Community Services Commission to provide garbage collection where possible
to condominium developments. Specific issues, such as vehicle size and road
access, had to be addressed before this was possible, as the original design of
the development did not anticipate these services being provided on the private
property to the residents. For new condominium developments subsequent to 2002,
the Town offered to pick up garbage providing the development met minimum road
width requirements or be designed for a modified waste collection service.
MATCO Presentation
In MATCO’s presentation, it stated that the
Town refuses to provide all of its services to condominium townhomes. In
particular, they list: street lighting, potable water, system maintenance,
sewer system maintenance, road maintenance and snow clearing. This point goes
to the issue of private vs. public property. As previously noted, it is this
very issue that differentiates the onus of providing a service. On private
property, it is the private owner’s responsibility for the services. Whether
the condominium is a high rise or a townhome development, it is their
responsibility for the services and maintenance and their agreements reflect
this. For all of the services noted by MATCO, the Town does provide them for
the portions that are on, or under, publicly owned lands. The Town does provide
street lightning on public roads, potable water though a publicly owned water
distribution system, maintenance of public sewers, and maintenance and clearing
of snow on public roads. These services
are provided consistently and fairly to the property line of privately owned
land.
An example of a hard service that is
available to all residents relates to public roads that are maintained by the
Town, and anytime a condominium resident uses them, they are being provided
services such as road maintenance, snow clearing, street lighting, etc as does
anyone who uses the road. The costs to provide these services are paid for by all
Markham
property owners.
MATCO’s Options
Despite this, MATCO’s position is that
these services are not provided to them and suggest three options to resolve
it:
·
Rebates to offset the perceived
costs
·
Provide the services on private
property
·
Establish a new property class
However, it is, again, the provision of
public services on private property that is the focus.
MATCO’s recommendation is that the 3rd
option be adopted and that a special property class under current provincial
legislation be established.
In support of this, MATCO notes that
Section 326 of the Municipal Act, 2001
provides any municipality the right to establish a different tax rate for
different property classes. This section of the Act replaces the old Local Improvement Act and relates to a special
tax rate for costs associated to improvements such as water main or sewer
construction. It is not a section to provide for a new property class but
rather a separate additional tax rate for improvements to an existing class of
properties.
In addition, MATCO notes that Section 330
(3) of the Municipal Act, 2001
provides that municipalities “shall establish a single percentage for all
properties in a property class, but different percentages may be established
for different property classes”. This section of the Act actually relates to the current capping provisions that are
mandatory for Ontario
municipalities for the non-residential classes and allows for a percentage of
taxes to be established for each class to recover (“claw-back”) the amount of
taxes capped under Section 329 of the Act.
To ensure revenue neutrality, the annual amount of taxes capped for commercial,
industrial or multi-residential classes is recovered by withholding a
percentage of full tax decreases from properties in these same classes. Section
330 (3) does not authorize a tax rate or
percentage to a new class, such as condominium townhomes.
To establish a new property class, the
Ontario Government must provide authorization. If new property classes are
established with discounted tax rates, a greater proportionate share of the
total tax burden will shift to the rest of the properties in the municipality
resulting in increased taxation across fewer properties.
MATCO recommends that a Task Group be
established to “examine the methods and options available to reconcile our
situation and recommend solutions that meet the requirements of both the Town
and the Markham Association of Townhome Condominium Owners.”
The
establishment of a task group is predicated on the assumption that its purpose
would be to determine, at least, which municipal services should be extended to
condominium corporations, costs of these various services, density issues and
the capacity to provide the services. A task group would require a level of
commitment of both time and resources on the part of the Town. Staff from
Finance and Operations would be required.
The time required would likely encompass at least four meetings plus
additional between to carry out necessary work.
Before
a task group is considered, it is necessary to again examine the principle on
which it would be struck. The principle is the determination as to whether this
type of development is not being treated fairly by the Town because certain
services are not being provided by the Town. However, the key difference is: as
private property they have agreed to be responsible, both financially and
otherwise, for the provision of certain services as spelled out in their
agreements.
The implications of providing services to
private property are increased costs to all other property owners in the municipality
through higher taxes. The position of MATCO could very well be adopted by other
property owners (e.g. regional shopping mall owners who clear snow, maintain
roadways, provide lighting, etc for their property) and the resulting costs to
the Town will have an impact on the tax rate. There are at least two key
impacts: firstly, the fairness issue (service to all private property in Markham); and secondly, the
potential increase on the Town’s tax rate affecting all Markham property owners.
ENVIRONMENTAL CONSIDERATIONS:
Not applicable.
ACCESSIBILITY CONSIDERATIONS:
Not applicable.
ENGAGE 21st CONSIDERATIONS:
Not applicable.
RECOMMENDATION:
THAT the report “Swan Lake Village Condominium – Request to Establish a
Task Force” be received for information.
PURPOSE:
The purpose
of this report is to respond to a proposal from the Swan Lake Group and the
Association of Markham Village Townhouse Condominiums to establish a Task Force
for Fair Taxation and Delivery of Municipal Services. It is this group’s
position that the Town of Markham
is not treating condominium owners fairly in terms of municipal services
provided to condominium developments. The report provides information regarding
property taxation in Ontario
and the delivery of municipal services to condominium developments in general
and to the Swan Lake Village
condominium in particular.
EXECUTIVE SUMMARY:
This report
sets out the broad property taxation policy in Ontario established by the province and its
relationship to the provision of municipal services. It also addresses the
issues raised by the Swan Lake Group and the Association of Markham Village
Townhouse Condominiums as well as a preliminary analysis of associated
comparative costs for selected services provided by the Town. A fundamental
issue is the provision of municipal services to owners of dwellings on property
owned by private condominium corporations.
The
proponents from Swan Lake Group and the Association of Markham Village
Townhouse Condominiums put forth the argument that property owners in
condominium developments – particularly, low density condominium developments –
do not receive the same services that all other residential property owners do
despite the fact that they are levied taxes at the same residential tax rate.
All purchases of property in a condominium development require the purchaser to
enter into legal agreements with the condominium corporation that sets out
services to be provided and paid for, by the condominium owners. In most cases,
these include services such as garbage disposal, snow removal, lighting, etc.
These requirements are known at the time of purchase but it the view of the
Swan Lake Group and the Association of Markham Village Townhouse Condominiums
that low density condominiums, similar to any other residential subdivision,
should be provided these services by the Town.
The group is requesting that the focus, should a Task Force be struck,
relate to services such as road maintenance, garbage disposal, street lighting,
snow removal, sewer and water infrastructure.
BACKGROUND:
At the September 20, 2004 meeting of the Finance and
Administrative Committee, Mr. A. Schollen, Chairman of the Swan Lake Group and the Association
of Markham Village Townhouse Condominiums made a presentation regarding
property taxation and the delivery of municipal services to condominium
developments. In particular, the Committee was requested to
establish a
Task Force for Fair Taxation and Delivery of Municipal Services. The committee
adopted the following resolution:
“That the presentation of Mr. Adrian Schollen, Chairman of
the Swan Lake and the Association of Markham Village Townhouse Condominiums,
regarding the formation of a Task Force for Fair Taxation and Delivery of
Municipal Services, be referred to staff for additional information and report;
And that such report include an exploration of the issues;
an overview of the taxation system; options available; the merits of
establishing a task force; suggested terms of reference; related criteria and
membership; and if possible, implications.”
This issue
has been before Committee and Council previously. Prior to the deputation on
September 30, 2004, it was before the Finance and
Administration Committee in June 2003 and at its meeting of August 27, 2003
(Clause 1 of Finance and Administration Committee Report 51), Council did not
provide compensation to Swan Lake condominiums.
OPTIONS/DISCUSSION:
This
report will address a number of issues, including: an overview of property
taxation in Ontario,
the provision of services to property owners in a municipality, condominiums as
private property developments, Swan
Lake specific issues and
the merits of establishing a Task Force.
Property Taxation in Ontario
Property taxation in Ontario is not based on ability to pay nor
user fees but rather on an annual
budgeted amount approved by municipal council, raised through a tax rate
levy and collected based on the apportioned value of individual properties. The
levy is determined by municipal council that authorizes a budget necessary to
fund the services required by the municipality in that year. The taxes
collected are sufficient to fund these services and are levied against all
properties in the municipality based on the proportionate assessed value of
each property. The higher the value of the property, the higher will be the
taxes levied against the property.
The use of services in the municipality by
individuals is a choice made by residents who may decide not to avail
themselves of certain services even though they are funded by total budgetary
requirements. Whether residents in the municipality utilize the services of an
ice arena, recreation centre, park or a library is solely up to the residents
but the funding to operate these services is included in the overall municipal
budget. Lifestyle choices may result in certain municipal services not being
used but does not preclude them from being funded by the municipal levy.
A user pay approach to taxation would not
only be difficult to implement but could lead to financial shortfalls resulting
in service closures or cutbacks. Calculating and allocating such costs might
also prove difficult. For example, the provision of library services can be
defended as necessary and beneficial for the community. Its resources can be
utilized by all ages, not only as a learning and educational tool but also as a
source of entertainment and culture. If a fee was charged each time a person
entered a library or borrowed a book without any other financing from the
municipality, it could result in funding shortfalls which would either need to
be provided by the municipality or result in closing of the library or
reduction of its services. Many municipal services will not be provided by the
private sector because there is no financial gain to be realized but are still
recognized by the community as necessary to the health and well being of its
residents.
Supplemental user fees, such as a
registration fee for swimming lessons, is a fee administered to cover the costs
of the program. The basic provision of recreational services by having a public
pool available is included as part of the budgetary requirements approved by
Council. The additional fee is a fee over and above the basic cost of the
service.
The current tax system is a value based
system and the requirements determined and funded globally through the annual
municipal budget process. Should residents not choose to use certain services,
it does not follow that their tax bill be reduced to take it into account.
There would be serious impractical aspects of such a system.
Condominiums as Private Property Developments
One of the major issues in providing
services, particularly to residential condominiums, is the fact that
condominiums are located on private property. The purchase of a residential
condominium – whether it is a high rise or low rise – is a lifestyle choice.
The purchaser is aware that an agreement must be entered into in which
maintenance fees will be charged to provide the funding of services (both
repair and replacement) that are the responsibility of the condominium
corporation and its residents.
It has been suggested that through
municipal taxation a condominium owner has paid for municipal services and that
despite the condominium agreement freely entered into, the municipality should
either provide the service to the condominium corporation or provide a rebate
to offset the cost. For example, snow removal from roadways in a condominium
development is a cost generally borne by condominium residents as it is removal
of snow from streets on private property. The argument that the municipality
should remove this snow without a cost to the condominium residents is
analogous to that of single family home owner with a double car driveway with
the expectation that the municipality will remove the snow from the driveway.
It is the responsibility of the single family home owner to remove his/her own
snow. The municipal cost for snow removal that is included in the overall
budget provides for snow removal from all municipal streets in the Town so that
once residents leave their property, whether it’s from a condominium
development or a double car driveway – access to drive on other roads in the
Town is unimpeded.
Swan Lake – Specific Issues
Representatives
from Swan Lake have indicated clearly their
position that they believe they are not being treated fairly by the Town
because the Town does not provide certain services to them that are available
to all other residents despite the fact that they pay full residential taxes.
In particular, road maintenance, garbage disposal, street lighting and sewer
services have been identified as areas that should be provided by the
Town.
Initial
information received from Swan
Lake representatives is
based on the different condominium corporations within Swan Lake
plus selected other low rise condominium developments. Costs were extracted
from each condominium and, where possible, compared to Town data for
maintenance costs per km of road, etc. Based on these initial costs, the
provision of these services for Swan
Lake would increase the
Town’s municipal tax rate by approximately 1% or about $680,000 (about $9 per
household).
A
complete analysis to verify these costs would be necessary. However, the
principle of extending municipal services to private condominium property, when
such service costs are clearly the responsibility of the condominium
corporation, also needs to be included in any examination of this issue.
Other related issues include the fact that Swan Lake
is a gated community and access must be received prior to entering and that
some of the roads may in fact not meet municipal standards.
The Town of Markham Council approved a rebate to certain
residential condominiums for garbage removal in 1995. There is no reduction to
the tax rate but a rebate is provided annually to twelve condominium
corporations. When the program was implemented in 1995, all condominium
corporations in the Town were offered a rebate in lieu of the provision of
garbage service. The condominium corporations that opted for the rebate were
subsequently grandfathered by Council in 1998. The Town has since undertaken a
review of other condominiums to ascertain if the Town can logistically provide
garbage service to them based on street layout and access. In 2002, the Town
extended the collection of garbage collection to York Region Condominium
Corporations 906 and 932 in Swan
Lake Village.
This rebate is considered by some
condominium residents as a precedent by which the Town should expand to cover
costs of other services that are the condominium’s responsibility. However, the
garbage rebate was implemented at a time when a separate rate was imposed for
waste collection – a rate that no longer exists.
Merits of Establishing Task Force for Fair Taxation and Delivery of
Services
The merits of establishing a task force may
include:
- Providing an opportunity for
ratepayers to have input into an issue that is of concern to them.
- Providing an opportunity to more
fully examine the implications of providing services on private
property to the Town of Markham as a whole
- The review of this issue may
have an impact on more than a single municipality
However, establishing a task force may have
negative connotations in that expectations of the property owners may be
heightened simply because the task force is formed, and increased frustration
will result if the outcome is not in favor of the condominium owners. As noted
previously, this issue has been before Council before and its decision did not
favour the residents of Swan
Lake.
Membership:
It is recommended that, if a Task Force
is formed, it include at least two members of Council, Town staff from
Financial Services and the operating department responsible for the service
provided, as necessary, two members of the Swan Lake Group and the Association
of Markham Village Townhouse Condominiums and that the Task Force report to
Council no later than December 31, 2005.
Terms of Reference:
The terms of reference are not detailed
in this report but should include the investigation of the extent to which
services may be provided, the practicality and methodology, the possible
precedent impacts of such actions, relative fairness to all property owners in
Markham (service to private property) and any other issues as determined by the
Task Force. It would also be recommended that the scope of services to be
reviewed be limited to: road maintenance, garbage disposal, street lighting,
snow removal, and water and sewer infrastructure.
Possible Implications:
The implications of providing services to
private property are increased costs to the municipality. As the fairness issue is addressed (service
to all private property in Markham),
it is difficult to estimate what the impact on the Town’s tax rate will
be. The position of the Swan Lake
Village Group will likely be adopted by more property owners (e.g. condominium
high-rises, estate homes with long driveways etc.) and the resulting costs to
the Town will have an impact on the tax rate.
FINANCIAL CONSIDERATIONS:
There
are no financial implications to establishing a Task Force, however
implementing the provision of municipal services on a Town-wide basis on
private property will have a negative impact on the Town’s tax rate.
BUSINESS UNITS CONSULTED AND
AFFECTED:
None.
ATTACHMENTS:
- Letter
from The Association of Markham
Town House Condominiums
- Finance
And Administrative Committee Resolution – Sept. 20, 2004
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Paul
Wealleans, Director, Taxation
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Andy
Taylor, Commissioner, Corporate Services
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Q:\Finance and Administration\Finance\SHARED\2005
General Committee Finance\0520 - Swan Lake Village Condominium 2.doc
