Finance and Administrative Committee
	TO:	Mayor and Members of Council
	FROM:	Barb Cribbett, Treasurer
	PREPARED BY:	Paul Wealleans, Director, Taxation
	DATE OF MEETING:	2004-Jun-28
	SUBJECT:	Highway 407 - Property Taxation Issue

RECOMMENDATION:

THAT Council adopt the following resolution:

Whereas the 407 ETR is being operated by the private sector on a for-profit basis through tolls paid by those using the highway;

And Whereas the 407 ETR operates in a number of municipalities;

And Whereas the Province has indicated it plans to expand the use of toll roads in Ontario;

And Whereas municipal roads connected to the 407 ETR are subject to increased vehicular traffic placing additional demand on the local infrastructure;

And Whereas the land occupied by the 407 ETR does not generate property tax revenue to the local municipality;

And Whereas the Province of Ontario makes payments-in-lieu of property taxes (PILs) on lands owned or controlled by the Province where taxable tenants occupy the land;

And Whereas the current Assessment Act exempts from taxation toll highways, and the current Municipal Tax Assistance Act excludes highways from a payment-in-lieu of property taxes (PILs);

NOW THEREFORE be it resolved that the Council of the Town of Markham request the Province of Ontario to make the necessary legislative and regulatory changes regarding the 407 ETR and all future toll roads which are operated in full or in part by for-profit organizations, to provide local municipalities with:

· The ability to charge property taxes; or

· The ability to charge payments-in-lieu of taxes (PILs) at the commercial rate that would be payable if property taxes were applicable; or

· An equivalent portion of the revenues received from toll roads

AND THAT of this resolution be forwarded to the Premier of Ontario, Minister of Finance, Minister of Transportation, Minister of Municipal Affairs and Housing, the local member of Provincial Parliament, the Association of Municipalities of Ontario (AMO), the Municipal Financial officers Association of Ontario (MFOA), the Region of York and all municipalities through which the 407 ETR passes.

PURPOSE:

This report provides information regarding the current exempt tax status of Highway 407 and the possibility of it being made taxable or eligible for a payment-in-lieu of tax.

BACKGROUND:

On April 26, 2004, the City of Vaughan adopted a resolution requesting the Provincial Government to make necessary legislative changes to permit municipalities to tax express toll roads (specifically Highway 407) that are currently exempt from property taxation or payments in lieu of taxes.

Vaughan forwarded its resolution to those municipalities through which Highway 407 runs requesting that Councils take similar positions. In May 2004, Council of the Town of Richmond Hill adopted a resolution similar to Vaughan.

OPTIONS/DISCUSSION:

407 ETR (Express Toll Route) is an express toll for-profit highway that is exempt from both property tax or payments in lieu-of-tax. It spans approximately 108 kilometres from Halton Region to Durham Region, including a portion through The Town of Markham.

Since 407 ETR is a for-profit business similar to any other business in Ontario, it would be consistent with taxation policy of all other commercial property in Ontario if it were liable to taxation. Property owned by the Provincial Government in which for-profit businesses operate generate a payment in lieu of tax. For example, other highway service centres with commercial leases located on provincially owned highways are required to make payments-in-lieu of tax.

Although municipalities do not receive any tax revenue from 407 ETR, they do incur costs with respect to feeder roads and associated maintenance costs.

Although recent legislated changes provide for the creation of future new toll highways in Ontario, it is recommended that any resolution for the taxation of toll highways should apply only to those which include private sector for-profit ownership.

The tax could take the form of a linear charge per kilometre so that the municipality through which Highway 407 runs would receive an amount equal to that length of highway times a rate.

FINANCIAL CONSIDERATIONS:

It is difficult to estimate the level of revenue that could be derived by the Town of Markham from this proposal.

Should some form of taxation of toll roads be approved by the Province, it would add to the operating cost of 407 ETR, which in turn would likely be passed on to users in the form of increased tolls.

BUSINESS UNITS CONSULTED AND AFFECTED:

None

ATTACHMENTS:

None

Paul Wealleans, Director, Taxation

Andy Taylor, Commissioner, Corporate Services

____________________________________

Barb Cribbett, Treasurer

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