PROPERTY TAX RATIOS, RATES & POLICY

KAWARTHA MANUFACTURERS ASSOCIATION

APRIL 21ST, 2009

BACKGROUND

PROPERTY TAX

MUNICIPAL RATE BET RATE

X CURRENT VALUE ASSESSMENT

PROVINCIAL REFORM STARTED IN 1998

MUNICIPAL - CLASSES

TOTAL TAX LEVY DETERMINED BY THE CITY BUDGET

THE LEVY IS DIVIDED BETWEEN THE DIFFERENT CLASSES – PRIMARILY RESIDENTIAL, MULTI-RESIDENTIAL, COMMERCIAL & INDUSTRIAL

EDUCATION (BET)

CONTROL ASSUMED BY PROVINCE IN 1998

STILL WIDE VARIATION ACROSS MUNICIPALITIES

CURRENT POLICY IS TO HAVE A COMMON RATE OF 1.52% BY 2014

MUNICIPAL - ASSESSMENT

PROVINCE MOVING TOWARDS CURRENT VALUE ASSESSMENT SINCE 1998

VARIOUS POLICIES IN EFFECT TO REDUCE LARGE, SUDDEN INCREASE

POLICY IS 4 YEAR MOVE TO 1998 CVA REASSESS IN 2012

THE TAX PROCESS

CITY SETS BUDGET

DETERMINES TOTAL TAX LEVY REQUIRED

MPAC SETS CVA TOTAL BY CLASS

CITY TAX POLICY SETS RATIOS

WEGHTED CVA BY CLASS

MUNICIPAL - ASSESSMENT

ASSESSMENT CARRIED OUT BY MPAC INDUSTRIAL ASSESSMENT IS A

DEPRECIATED REPLACEMENT COST AS REALITY DATA IS SPARSE

RESIDENTIAL BASED ON REALITY, COMMERCIAL ON RENTAL VALUE

MUNICIPAL - RATIOS

RATIOS ARE USED TO SET THE WEIGHTED CVA

RESIDENTIAL IS 1, MCI SET AS MULTIPLES

FOR A CLASS, CVA TIMES THE RATIO IS THE WEIGHTED CVA WHICH DETERMINES THE LEVY

MUNICIPAL - RATIOS

IN 1998 PROVINCE SET “RANGES OF FAIRNESS” FOR RATIOS

COMMERCIAL & INDUSTRIAL SET AT 0.6 TO 1.1

REFLECTS MUNICIPAL COSTS DRIVEN PRIMARILY BY RESIDENTIAL CLASS

THE TAX PROCESS

TOTAL TAX LEVY

WEIGHTED CVA

RESIDENTIAL TAX RATE

X RATIOSMCI RATES

X CVA MUNICIPAL TAX BILL

MUNICIPAL - RATIOS

RATIOS SHIFT TAX BURDEN FROM RESIDENTIAL TO MCI

2008 RATIOS

CLASS AVG P’BORO LINDSAY

COMM 1.728 1.842 1.278

IND 2.285 2.598 1.278

MUNICIPAL - CVA

IndMultiRes

2009 CVA BY CLASS

79%

0.30%

12.30%6.60% 1.70%

Residential

IndCommMultiRes

MUNICIPAL – WEIGHTED CVA

2009 Weighted CVA

66.30%0.30%

18.70%

11.10% 3.60%

Residential

Ind

MultiRes

Comm

13% of the tax burden is shifted from Residential, Industrial more than doubles

MUNICIPAL - RATIOS

RATIOS USED TO SHIFT TAX BURDEN FROM RESIDENTIAL TO MCI

2008 RATIOS

CLASS AVG P’BORO K.L.

COMM 1.728 1.842 1.278

IND 2.285 2.598 1.278

IMPACT

POLICY: REDUCE MIR RATIOS TO 1.5 OVER 8 YEARS STARTING IN 2010

BUILDING ASSESSED AT $2.5 MM MOVING TO CVA OF $3.25 MM

ASSUMING NO CHANGE IN RESIDENTIAL RATE (UNDERSTATES IMPACT)

IMPACT

’09 – ’19 TAX

IMPACT

NO CHANGE

$1,090k -

1.5 IN 10 YRS

$ 854k $ 237 22%

1.5 IN 8 YRS

$ 811k $ 280 26%

NEXT STEPS

COMMERCIAL WOULD PAY $128K LESS THAN INDUSTRIAL FOR PREVIOUS EXAMPLE

COUNCIL WANTS TO REVIEW POLICYAS PART OF BUDGET FOR 2010

CLOSE GAP WITH COMMERCIAL FREEZE THE POLICY ONCE SET –

ADJUST BUDGET, NOT POLICY

APPENDIX