Report to: General Committee Date of Meeting: May 26, 2008

SUBJECT: Water and Sewer Arrears Added to the Tax Roll

PREPARED BY: Paul Wealleans, Director, Taxation

RECOMMENDATIONS:

THAT the report entitled, “Water and Sewer Arrears Added to the Tax Roll” be received for information;

AND THAT Council endorse the policy of adding of water/sewer arrears to the tax account of the property to which the service was provided effective July1, 2008;

AND THAT Staff be authorized and directed to do all things necessary to give effect to this resolution.

EXECUTIVE SUMMARY:

Not applicable.

PS advises Town staff that there are many instances in which the supply of water and sewer services to a property are billed to the tenant. The tenant is then responsible for the payment of all charges. PS further advises that in many instances these charges go into arrears and collection becomes impossible for a variety of reasons – primarily because the tenant vacates the premises without payment being made. PS note that in 2006, 129 tenant accounts were written off as uncollectible. The number for 2004/5 was 119. Numbers for 2007 are not yet available from PS.

There have also been instances where a property changes ownership and the prior water arrears are not paid and cannot be transferred to the new owner. The policy in this report maximizes the likelihood that water arrears will be collected.

PS advise that in certain cases where a customer is a proven poor-paying customer an upfront deposit is obtained. However, the deposit system is not applied to residential customers.

Authority

Provisions currently exist in the Municipal Act, 2001 that authorize the transfer of outstanding water arrears to the tax account. Section 398 (2) of the Act states:

“The treasurer of a local municipality may add fees and charges imposed by the municipality, upper tier municipality or local board, respectively, to the tax roll for the following property in the local municipality and collect them in the same manner as municipal taxes:

In the case of fees and charges for the supply of a public utility, the property to which the public utility was supplied.”

Comparable Municipal Information

Toronto carries out regular reviews of water arrears and transfers these arrears to the tax account. These transfers include those that were initially billed to tenants. Toronto charges a $35 fee for the transfer.

The Town of Richmond Hill does not charge a fee but it does take the step of shutting off water after its collection process has been exhausted. In most cases, however, the owner is offered the option of having the water arrears charge transferred to their tax account prior to shut off and most owners follow that course of action. In terms of tenanted property, Richmond Hill’s practice is to bill the property owner, rather than the tenant. If a tenant wishes to be billed directly, the tenant must request the Town and the Town requires written consent and authorization from the property owner. Once received, water can be billed directly to the tenant and if the water charges go into arrears, it can be transferred to the owner’s tax account as the owner had previously given written consent. Richmond Hill bills water in house and has more control of its process.

The Town of Aurora transfers outstanding water arrears to tax accounts after 60 days for both property owners and tenants.

The policy outlined in this report will result in the Town transferring these water and sewer arrears to the property owner’s tax account. This transfer to the owner’s tax account may cause concern from the landlords as they may have assumed that they are not liable for the tenants’ arrears and further assumed that the tenant has paid the charges.

It is important to note that under the Health Protection and Promotions Act, RSO, 1990, residential landlords are required to provide potable water to tenants, therefore the landlord is to some degree responsible for water. The landlord also has an opportunity to check the credit rating of potential tenants, whereas the Town has no option but to supply water to the property without having the advantage of determining whether the tenant is credit worthy.

To ensure property owners are aware of this policy, a communication plan will be developed to inform property owners. The plan will include notices in the local newspapers and information on the Town’s website as well as direct notification to owners either through the tax bill or an alternate mailing.

PS and Town staff have met and agreed that at a minimum PS will forward a list, at least on an annual basis, to the Town of water accounts that are in arrears for which all collection efforts have been exhausted. These will be added to the property owner’s tax account by the Town and collected in a manner similar to property taxes. For properties that are sold, the new owner will be responsible for any water arrears. However, as part of due diligence upon sale of a property, both vendor and purchaser should take the steps of obtaining confirmation of water account status so that any new charge is known and can be taken into account in finalization of closing of the sale.

PS staff will continue to provide detailed information to any property owner who requires it. This would allow the landlord to take steps to mitigate their costs such as asking for a deposit to cover water and sewer arrears, and to check on arrears before the tenant leaves.

FINANCIAL CONSIDERATIONS:

The Ontario Energy Board (OEB) has issued an Affiliate Relationship Code that prohibits utilities, including PS, to absorb water and sewer debt and as a result, any write off becomes the responsibility of the Town.

To implement this process will require minor software modifications by PS.

ENVIRONMENTAL CONSIDERATIONS:

None

ACCESSIBILTY CONSIDERATIONS:

None

ENGAGE 21^st CONSIDERATINS:

None

BUSINESS UNITS CONSULTED AND AFFECTED:

Legal Services Department

RECOMMENDED

BY: ________________________ ________________________

Barb Cribbett, Treasurer Andy Taylor, Commissioner

Corporate Services