Municipal Capital Facilities Exemption of City Properties from Realty Taxes

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1 STAFF REPORT ACTION REQUIRED Municipal Capital Facilities Exemption of City Properties from Realty Taxes Date: December 3, 2013 To: From: Wards: Reference Number: Government Management Committee General Manager, Parks, Forestry & Recreation Ward 10 York-Centre Ward 28 Toronto Centre-Rosedale Ward 29 Toronto-Danforth P:\2014\Cluster A\PFR\GM AFS#18756 SUMMARY This report seeks City Council authority to adopt the necessary by-laws to designate space at various City-owned locations as municipal capital facilities and to provide a property tax exemption for municipal and education purposes. RECOMMENDATIONS The General Manager of Parks, Forestry and Recreation recommends that: 1. City Council pass a by-law pursuant to Section 252 of the City of Toronto Act, 2006, providing authority to: a. enter into a municipal capital facility agreement with respect to the properties identified in Appendix A ; and b. exempt the rentable area from taxation for municipal and education purposes. Tax exemption is to be effective from the latter of the following dates: the commencement date of the lease; the date the municipal capital facility agreement is signed; or the date the tax exemption by-law is enacted; 2. City Council declare that the community centre facility at 740 Finch Ave W be primarily for local community use, for City purposes and for a public use, in accordance with Ontario Regulation 598/06. Municipal Capital Facilities Exemption of City Properties from Realty Taxes 1

2 3. Council direct the City Clerk to give written notice of the by-law to the Minister of Education, the Municipal Property Assessment Corporation, the Toronto District School Board, the Toronto Catholic District School Board, the Conseil Scolaire de District du Centre-Sud-Ouest, and the Conseil Scolaire de District du Catholique Centre-Sud; 4. Authority be granted for the introduction of the necessary bills to give effect thereto; and 5. The appropriate City Officials be authorized and directed to take the necessary action to give effect thereto. FINANCIAL IMPACT The annual property taxes for the properties identified in Appendix A to this report is approximately $2,578 comprised of a municipal portion of $1,845 and a provincial education portion of $732 based on 2013 Current Value Assessment (CVA) and 2013 tax rates. Establishing exemption for these sites would result in a net loss to the City of approximately $1,845, representing the municipal share of taxes that would no longer be payable by the tenants (see Appendix "B" for detailed breakdown). Two of the three properties, namely 1076 Pape Ave and 455 Lake Shore Ave have not been assessed as taxable by MPAC. MPAC may return these properties as taxable in the future, by declaring them Municipal Capital Facilities through this report the potential financial impact to these organizations is mitigated. The Deputy City Manager and Chief Financial Officer has reviewed this report and agrees with the financial impact information. COMMENTS Properties owned and occupied by a municipality or local board are exempt from taxation pursuant to Section 3 of the Assessment Act. However, where a municipality or local board leases property that would normally be subject to taxation this exemption does not apply. The three properties identified in Appendix "A" are leased by the City to non-profit organizations who operate for the benefit of the community. The resulting exemption will allow the organizations to provide a value added service to the communtiy at a reduced operating cost Pape Ave is a City owned property occupied by Kennedy House Youth Services Inc. Real Estate Services entered into a lease agreement with Kennedy House Youth Services who then entered into a service agreement with Shelter, Support and Housing Municipal Capital Facilities Exemption of City Properties from Realty Taxes 2

3 Administration to run a youth shelter out of this subject location for the purpose of providing short-term accomodation and counselling for youth aged Real Estate Services has been consulted with respect to this report and support the recommendations contained herein. 453 Lakeshore Ave is a City owned property on Centre Island which is leased to Artscape - Gibralter Point and offers an affordable retreat space, studios and accomodations for artists and creative thinkers. Artscape is a not-for-profit urban development organization. 740 Finch Ave W is a property owned by the Toronto and Region Conservation Authority and leased to CARD (Community Association for Riding for the Disabled). CARD provides therapeutic horseback riding to children with a variety of disabilities, including Autism, Down Syndrome and Cerebral Palsy. LEGISLATION REGARDING MUNICIPAL CAPITAL FACILITIES Section 252 of the City of Toronto Act, 2006 allows the City to enter into agreements with any person for the provision of municipal capital facilities, and allows City Council to exempt from taxation for municipal and school purposes, land or a portion of land, on which municipal capital facilities are or will be located. Ontario Regulation 598/06 prescribes the various classes of property eligible as municipal capital facilities for the purpose of section 252. Under Section 252 of the City of Toronto Act, the legislation requires: (a) (b) that the property owner and the City enter into an agreement for the provision of a municipal capital facility for the space being leased; and that a by-law be passed by Council permitting the City to enter into the agreement, and to exempt the property to which the municipal capital facility agreement applies from taxation for municipal and school purposes. The City-owned sites that form the subject of this report correspond as follows to the classes of eligible municipal capital facilities set out in the Regulation: 1076 Pape Ave - 2. (1) 10. Social and Health Services. 455 Lakeshore Ave- 2. (1) 16. Cultural, Recreational or Tourist purposes. 740 Finch Ave W 2. (1) 14. City Community Centres. Upon the passing of this by-law, the City Clerk must give written notice of the by-law to the Minister of Education. For the tax exemption, the City Clerk must also provide a written notice of the contents of the by-law to the Municipal Property Assessment Corporation and the Secretary of any affected school board(s). Municipal Capital Facilities Exemption of City Properties from Realty Taxes 3

4 CONTACT Ann Ulusoy, Director, Management Services Branch, Tel: (416) , Fax: (416) , SIGNATURE Jim Hart General Manager, Parks, Forestry and Recreation Municipal Capital Facilities Exemption of City Properties from Realty Taxes 4

5 - Appendix A - Ownership of Subject Properties Roll # Address Owner Division *1076 Pape Ave Toronto City SSHA Lakeshore Ave (Centre island) Toronto City PF&R Finch Ave W Conservation Authority Toronto & Region PF&R Roll# - Appendix B - Financial Impact due to Property Tax Exemption (2013 Tax Year) Address Municipal Tax (1) Education Tax (2) Total Property Tax (1+2) Pape Ave $0 $0 $0 455 Lakeshore Ave (Centre Island) $0 $0 $ Finch Ave W $ $ $ Total tax impact due to exemption (sum of column 1+2): $ Municipal tax reduction (sum of column 1): $ Total net loss (sum of column 1): $ Municipal Capital Facilities Exemption of City Properties from Realty Taxes 5