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PROPERTY TAX RATIOS, RATES & POLICY. KAWARTHA MANUFACTURERS ASSOCIATION APRIL 21 ST , 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
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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 MCI RATES X RATIOS X CVA MUNICIPAL TAX BILL
MUNICIPAL - RATIOS • RATIOS SHIFT TAX BURDEN FROM RESIDENTIAL TO MCI • 2008 RATIOS
MUNICIPAL - CVA MultiRes Comm Ind MultiRes Ind Residential
MUNICIPAL – WEIGHTED CVA MultiRes Ind Comm Residential 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
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)
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