Report to: General Committee Report Date: January 5, 2010

SUBJECT: Creation of New Residential Condominium Property Classes

PREPARED BY: Paul Wealleans, Director, Taxation

RECOMMENDATIONS:

THAT the report “Creation of New Residential Condominium Property Classes” be received;

AND THAT the Condominium Working Group recommends to Council that it support the creation of new property classes for residential condominium townhomes and residential condominium apartments in Ontario;

AND THAT the Province of Ontario be requested to amend legislation and any necessary regulation(s) to create a new property class for residential townhome condominiums and a new property class for residential apartment condominiums;

AND THAT letters regarding this request be sent to the Premier of Ontario, the Minister of Finance, the Minister of Municipal Affairs, the Minister of Public Infrastructure Renewal, the Canadian Condominium Institute (CCI), and any other appropriate organization;

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

EXECUTIVE SUMMARY:
The Condominium Working Group was established by Council on October 9, 2007 and has held four meetings since then. Its goal as set out by Council was:

“To identify issues/options with respect to services received and taxes paid by

condominiums that the Town of Markham could support and advocate at the

provincial level.”

The full Terms of Reference are included in the Background section of this report. A number of reports and analyses were considered by the Group, including:

· Background overview and summary of reports and presentations that had come before Council prior to the establishment of the Group;

· Condominium stock in Markham;

· MATCO financial impact analysis reports and presentations;

· Waste grants;

· Staff report and presentation regarding estimated costs of providing certain services to residential condominiums in Markham;

· Review of various options

· Creation of new residential property classes for condominiums.

There was considerable discussion with respect to services received by condominiums and estimated costs (produced by both staff and MATCO) to provide services to condominiums. Alternative options were considered. Analysis completed by staff estimated that providing certain hard services to residential condominiums would increase the Markham tax rate by 1.9%. While there were differing opinions of the amount of a tax rate increase under various scenarios, any cost to provide the services will result in a corresponding tax increase to Markham taxpayers.

After considerable discussions and debate, the Group is recommending to Council that it request the Province to amend legislation to create new property classes for apartment condominiums and townhome condominiums.

PURPOSE:

The Condominium Working Group is recommending to Council that it request the Province of Ontario to create new property classes for residential condominium townhomes and residential condominium apartments in Ontario.

BACKGROUND:

At its meeting of November 24, 2009 the Condominium Working Group considered a staff report “Creation of New Residential Condominium Property Classes”. The Group recommended that Council request the Province of Ontario to create new property classes for townhome condominiums and for apartment condominiums.

The Condominium Working Group was established by Council at its meeting of October 9, 2007. The Terms of Reference were also set by Council and amended slightly by the Working Group at its first meeting on November 13, 2008. Its goal and final Terms of Reference are:

Goal: To identify issues/options with respect to services received and taxes paid by condominiums that the Town of Markham could support and advocate for at the Provincial level.

1. Identify and clarify the extent of the services that are not provided by the Town on townhome condominium properties, including: street lighting, potable water, water system maintenance, sewer maintenance, road maintenance, snow removal, etc.

2. Identification of all condominiums in the Town to include both townhome and high-rise for maximum potential impact.

3. Identification of physical limitations to providing services to

all condominiums.

4. Determination as to whether or not there should be qualifying criteria for condominium inclusion or should all condominiums be included.

5. Review of fairness issue to other private property owners not receiving identified services on their properties, such as commercial malls, etc.

6. Estimate of cost impacts.

7. Financial impact on Town’s tax rate.

8. Review of MATCO’s 3 proposed options, including any legislative impacts:

a) Rebates

b) Town to provide services

c) New property class for condominiums in taxation system.

9. Summary and Recommendations

a) Develop a strategy at political level

b) Develop a strategy at provincial level

c) Consider other groups that should be asked to be involved at the Provincial level, such as: AMO (Association of Municipalities of Ontario), AMCTO; AMTCO; CARP (Advocacy Group for Canadians Over 50); and BILD (Building Industry and Land Development Association).

10. Task Group membership:(As per Council Extract of October 9, 2007)

· 3 Councillors

· 2 MATCO Members

· 1 Non-MATCO Condominium Association Member

· 2 Non-Condominium Homeowners

· 2 Finance Department Staff, Town of Markham

OPTIONS/ DISCUSSION:

The creation of new property classes requires the Province of Ontario to amend the Ontario Assessment Act. The Town of Markham can only request that the new classes be created but the power to implement the changes rests with the Province.

Requirements to Create New Property Classes

Section 7 (1) of the Assessment Act prescribes the classes of real property for the purposes of municipal taxation. This section of the Act allows the Minister to further define the classes by regulation. Ontario Regulation 282/98 (as amended) does just this. Section 3 (1) (ii) of O.Reg 282/98 provides that “a unit or proposed unit, as defined in the Condominium Act” is to be included in the residential property class. To create the two new condominium classes it would be necessary for the Province to amend this regulation.

Markham Council would need to adopt a resolution requesting the Province to create a new property class for residential condominium townhomes and to create a new property class for residential condominium apartments.

Impact of Tax Ratios on the Potential New Property Classes

Tax ratios represent the amount of taxation that is borne by each property class in relation to the residential class. The ratios reflect the tax rate of each class to the residential class. Section 308 (3) of the Municipal Act, 2001 defines the tax ratio for the residential class as being 1. For example, if the tax ratio for the commercial class is 1.50, then the commercial tax rate is 1.5 times the residential tax rate.

Currently, no other class ratio can be less than 1 with the exception of the farm class and certain non-residential vacant land classes.

For the proposed condominium classes to have a tax rate lower than the residential class, the Province would need to amend legislation.

FINANCIAL CONSIDERATIONS:

Should the Province amend legislation to create new condominium property classes and permit a tax rate less than the residential tax rate for condominiums, and should Markham Council approve a lower tax rate for condominiums, there would need to be a corresponding tax increase to the balance of Markham taxpayers.

HUMAN RESOURCES CONSIDERATIONS:

Not applicable.

ALIGNMENT WITH STRATEGIC PRIORITIES:

Not applicable.

BUSINESS UNITS CONSULTED AND AFFECTED:

None.

RECOMMENDED BY:

________________________ ________________________

Joel Lustig Andy Taylor

Treasurer Commissioner, Corporate Services

ATTACHMENTS:

None

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