Committee of the Whole

 

 

 

 

 

TO:

Mayor and Members of Council

 

 

 

 

FROM:

Andy Taylor, Commissioner of Corporate Services

Jim Baird, Commissioner of Development Services

 

 

 

 

PREPARED BY:

Paul Wealleans, Director, Taxation

 

 

Regan Hutcheson, Manager, Heritage Planning

 

 

DATE OF MEETING:

2003-Dec-16

 

 

 

 

SUBJECT:

Property Tax Reduction Program for Heritage Properties – Additional Information

 

 

 

 

 

RECOMMENDATIONS:

THAT the Town of Markham implement a Heritage Property Tax Reduction Program effective January 1, 2003 under the provisions of Section 365.2 of the Municipal Act, 2001 to provide tax relief for eligible heritage properties as defined in the Act and in the by-law attached to this report;

 

AND THAT the criteria for eligibility in the heritage tax reduction program include the following:

1.      To meet Provincial requirements an eligible heritage property must be designated as a property of cultural heritage value or interest under Part IV of the Ontario Heritage Act or it must be part of a heritage conservation district under Part V of the Ontario Heritage Act; and, in either case, the property must be subject to a heritage easement agreement under section 22 or 37 of the Ontario Heritage Act; and   

2.      To meet Town of Markham requirements, an eligible property/building must meet all of the following additional eligibility criteria to the satisfaction of the Commissioner of Development Services:

a.   Be classified as a Group 1 or Group 2 structure as evaluated by Heritage Section staff using the Town of Markham’s ‘Evaluating Heritage Resource’ document; and

b.   Be in a good and habitable condition.

3.      If only a portion of a property (building and land) is deemed to be of cultural heritage value, Town staff would determine that proportion for the purposes of the application and forward the application to the Municipal Property Assessment Corporation for an assessed value of the portion;

 

4.      A heritage easement agreement must be in place by December 31 of the taxation year for which relief is sought except for 2003 in which case the heritage easement agreement must be in place no later than July 31, 2004; 

5.      The property must not be the subject of any Town by-law contraventions, work orders or other outstanding municipal requirements as of the date the application is made;

6.      The amount of the annual heritage tax rebate be set at 30% of taxes payable on the eligible property;

7.      There are no outstanding municipal fines, arrears of taxes, fees or penalties assessed against the property.

 

AND THAT Council support the elimination of the agreement preparation fees associated with heritage conservation easement agreements to encourage property owners to enter into these forms of agreements as part of Markham’s commitment to preserving its local heritage resources;

 

AND THAT the heritage tax reduction will be applied to taxes as levied, or as reduced on a reconsideration or assessment appeal;

 

AND THAT the Town of Markham’s Fees and Charges Bylaw 2002- 276 be amended to reflect the elimination of the easement agreement fees and to include the heritage tax reduction application fee;

 

AND THAT the application fee of 20% of the annual heritage reduction for the initial year of application and the application fee of 10% of the annual heritage tax reduction for each renewal period (every third year) be deducted from the total annual heritage tax reduction amount once calculated;

 

AND THAT the Heritage Tax Reduction shall be repaid by the owner in full for every year for which there are outstanding municipal by-law contraventions, work orders, penalties, fees, arrears of taxes, fines or other outstanding municipal requirements;

 

AND THAT staff report annually to Council on the program and include elements such as the number of applications, costs and resource requirements; 

 

AND THAT the Regional Municipality of York be requested to pass its own heritage tax reduction by-law to account for its share of the total taxes, failing which the 30% reduction in taxes would be limited to the Town and education components;

 

AND THAT the necessary by-laws (attached) be enacted.

 

PURPOSE:

The purpose of the report is to provide additional information regarding the heritage tax reduction program that was requested at the December 8, 2003 meeting of Finance and Administrative Committee.

 

BACKGROUND:

At its meeting of December 8, 2003, the Finance and Administrative Committee considered a report entitled “Property Tax Reduction Program for Heritage Properties – Final Report” and requested staff to review and clarify the wording of certain matters raised relating to the proposed Property Tax Reduction Program For Heritage Properties, as follows:

      Clause 1, Sub-section 1: clarify heritage easement criteria;

Clause 1, Sub-section 2: clarification relating to additional municipal criteria (heritage classification);

      Clause 1, Sub-section 3: clarification regarding building and/or land; and

      Clause 1, Sub-section 5: clarification regarding infractions - eligibility and time frame;

 

The Committee also requested that a report be presented for consideration at the Committee of the Whole meeting on December 16, 2003. 

 

EXECUTIVE SUMMARY:

This report addresses and incorporates comments and issues raised at the December 8, 2003 meeting of the Finance and Administrative Committee. It is recommended that a heritage tax reduction program be implemented in the Town of Markham effective January 1, 2003.

 

OPTIONS/DISCUSSION:

This report will address each of the issues raised separately. Where necessary, recommendations have been amended.

 

Clause 1, Sub-section 1: Heritage Easement Criteria - Clarification

Provincial legislation that permits municipalities to implement a heritage tax reduction program requires that the eligible property be subject to a heritage easement agreement or an agreement with the municipality respecting the maintenance and preservation of the property.  The Town has been successfully utilizing heritage easements for a number of years.  These easement agreements are registered on title of the property and can be enforced by the municipality using the penalty provisions of the Ontario Heritage Act.

 

The other option of using a municipal maintenance and preservation agreement would need to contain similar requirements as an easement agreement and would not have the legislative backing of the Ontario Heritage Act or the ability to use the penalty provisions.  It is staff’s opinion after consultation with Provincial staff that an easement agreement is necessary to ensure protection of the heritage property.  Recommendation 1 has been amended to reflect the specific requirement of an heritage easement agreement.  The draft by-law has been amended to delete from subsection (iii) of the definition of “Eligible Heritage Property” the reference to “an agreement with the Town respecting the preservation and maintenance of the property”.

 

Clause 1, Sub-section 2: Additional Municipal Eligibility Criteria (Heritage Classification)

It is recommended that, in addition to provincial requirements, two additional criteria must be met to the satisfaction of the Commissioner of Development Services to be included for eligibility.  These are:

a.       Be classified as a Group 1 or Group 2 structure as evaluated by Heritage Section staff using the Town of Markham’s ‘Evaluating Heritage Resource’ document; and

b.      Be in a good and habitable condition.

 

Staff originally requested that as part of the municipal criteria, the property must date from an early age in the development of the Town, retain most of its original architectural features and represent a specific style, period or method of construction in addition to being in a good and habitable state.  These were requested to ensure that only contributing heritage properties would be eligible.  It was suggested that the first three criteria could be construed as being subjective and that it may be more appropriate to utilize the Town’s approved heritage resource evaluation process to assess the heritage value of the building.  If a building is classified as Group 1 (of major significance and importance, worthy of designation) or Group 2 (significant, worthy of preservation), it would be eligible if it is also in a good and habitable condition.  Staff will prepare criteria to help assess what would be considered ‘good and habitable condition’.

 

Clause 1, Sub-section 3: Clarification Regarding “building and/or land”

This recommendation relates to a property that may only have a portion of it to be deemed of cultural importance, and therefore, eligible for the tax reduction. The intent is to ensure that the portion of the building and land that is valued by the Municipal Property Assessment Corporation (MPAC) relates only to the eligible portion.  For example, if a farmhouse is sitting on a 10 acre parcel of land, the eligible portion would only be the farm house building and the land it is sitting on. In rare cases, there may be a cultural heritage feature associated with the building such as a significant tree or cultural landscape element that is identified in the designation by-law.  In that case, the eligible portion may include the building and some additional land.  The recommendation has been amended to read “building and land” not “building and/or land”.

 

Clause 1, Sub-section 5: Clarification of Infractions - Eligibility and Limitations and Restrictions

This recommendation is included to ensure that a property that receives a heritage tax reduction is in compliance with municipal by-laws and not be the subject of any contraventions, work orders, penalties, fees, arrears of taxes, fines or any other outstanding requirements.

 

The draft Heritage Tax Reduction By-law has been amended in the following manner:

1.      The term “contravention” has been added to the definition section.  A “contravention” has been defined as “an offence under a municipal by-law, Act or regulation for which enforcement proceedings have been commenced”;

2.      The section setting out the eligibility criteria regarding by-law convictions has been amended to refer to “contraventions” as that term is now defined;

3.      An additional section has been included with the “Limitations and Restrictions” section to provide that where there is a contravention in any year for which a Heritage Tax Reduction applies, the amount of the rebate for the year during which there is non-compliance with the contravention (even where there is a conviction) or where there are outstanding fines, penalties, arrears of taxes, fees, or other outstanding municipal requirements, must be repaid in full by the owner.

 

The intention with these changes is that a “contravention” prior to application disqualifies an owner from making an application for the year or years during which the contravention exists.  Once there is compliance, however, the owner becomes eligible for rebates for future years.  In addition, where an owner commits a contravention after having been given a Heritage Tax Reduction, the total amount of the reduction is to be repaid while there is non-compliance with the contravention.  There would be no in-year adjustments. Any contravention in any year would disqualify the owner from a rebate for that entire year.   It should be noted that the contraventions contemplated in the draft by-law include offences with respect to every municipal by-law and Provincial and Federal Act and regulation that relate specifically to the building or land for which a Heritage Tax Reduction is sought or given. 

 

FINANCIAL CONSIDERATIONS:

If all 1299 properties designated as heritage in the Town were to qualify for a rebate, total costs would range from $1,014,628 (Town share $191,788) for a 10% program to $4,058,512 (Town share $767,154) for a 40% program.  However, given the criteria proposed, the number of eligible properties is reduced from 1299 to some 564 properties.

 

Should owners of all 564 eligible heritage properties successfully apply for this program, the cost to the Town would range from $80,400 (10%) to $321,601 (40%).

 

The recommended program as outlined in this report, with a 30% reduction and with a 10% take-up, would cost the Town of Markham an estimated $24,121.  The cost to Markham if all 564 properties became eligible is estimated at $241,201. Given the timing of this report, and the time required for the program to be implemented (including application and information brochure development and printing), advertising and application receipt and processing, rebates will not be processed in 2003.  It is therefore recommended that program costs be funded from the 2004 budget.

 

There will also be associated costs for the development and printing of the application and brochure that should be covered through the application fee.

 

Program costs of $24,121 for 2003 will need to be funded from the 2004 budget as well as a similar amount for 2004.

 

BUSINESS UNITS CONSULTED AND AFFECTED:

Legal Services Department and Planning and Urban Design Department.

 

ATTACHMENTS:

Appendix A – Draft Bylaw to Establish a Program to Provide Reductions or Refunds in respect of Eligible Heritage Properties

Appendix B – Draft by-law to amend Bylaw 2002-276 (Fees and Charges By-law) 

 

 

 

 

 

 

 

 

Andy Taylor, Commissioner, Corporate Services

 

Jim Baird, Commissioner, Development Services

 

 

Q:\Finance and Administration\Finance\SHARED\2003COW_Council\0321 Heritage Rebate - Additional Info.doc

 

 

BY-LAW 2003-

 

Being a By-law to establish a program

to provide tax reductions or refunds

in respect of eligible heritage properties

 

                        WHEREAS the Council of The Corporation of the Town of Markham is empowered by section 365.2 of the Municipal Act, 2001, S.O. 2001, c. 25, as amended, to pass a by-law establishing a program to provide heritage tax refunds in respect of eligible heritage properties;

 

                        AND WHEREAS the Council of The Corporation of the Town of Markham deems it advisable and in the public interest to provide financial assistance on the terms set out in this By-law as an incentive to encourage property owners to renovate, restore and maintain heritage buildings in the Town of Markham;

 

                        NOW THEREFORE the Council of The Corporation of The Town of Markham enacts as follows:

 

1.        In this By-law:

 

 “contravention “ means an offence under a municipal by-law, Act or regulation for which enforcement proceedings have been commenced that relates specifically to the building or land for which a Heritage Tax Reduction is sought or given;

 

        "Council" shall mean the Council of The Corporation of the Town of Markham;

 

“Eligible Heritage Property” means land or buildings or a portion thereof that is,

                (i)            located in the Town of Markham;

                (ii)           designated under Part IV of the Ontario Heritage Act or is part of a heritage conservation district under Part V of the Ontario Heritage Act; and

(iii)                subject to a heritage easement agreement with the Town under section 22 or 37 of the Ontario Heritage Act

and that complies with the additional eligibility criteria set out in this By-law.

 

 

“Heritage Property Tax Reduction Program” means a financial assistance program adopted by the municipality to help owners of heritage properties maintain and restore their properties for the benefit of the entire community by providing tax relief to owners of eligible heritage properties;

 

        “Heritage Tax Reduction” means the amount of property tax reduction in respect of an Eligible

        Heritage Property;

 

“Lower Tier Municipality” has the same meaning as in Section 1 of the Municipal Act, 2001;

 

“MPAC” means the Municipal Property Assessment Corporation;

 

“Owner(s)” includes a corporation and partnership and the heirs, executors, administrators and other

legal representatives of a person to whom the context can apply according to law;

 

"Person(s)" includes a corporation and partnership and the heirs, executors, administrators and other

legal representatives of a person to whom the context can apply according to law;

 

"Town" means The Corporation of the Town of Markham.

 

2.     The amount of a Heritage Tax Reduction shall be 30% of the taxes for municipal and school purposes levied on the property that are attributable to:

 

                (i)            the building or structure or portion of the building or structure that is the Eligible Heritage Property; and

                (ii)           the land used in connection with the Eligible Heritage Property, as determined by the Town.

 

3.             Subject to the conditions set out in this by-law, one Heritage Tax Reduction may be paid annually for each eligible heritage property in the property tax class of Residential, Multi-Residential, Farm, Commercial and Industrial as defined by the Assessment Act, R.S.O 1990, c. A. 31 and Ontario Regulation 282/98 thereunder, as amended.

 

4.             MPAC, at the request of the Town, shall determine the portion of a property’s total assessment that is an attributable to the Eligible Heritage Property.

 

 

Eligibility Criteria

 

5.             In order to be eligible to apply for a Heritage Tax Reduction, owners of the subject properties must provide proof, satisfactory to the Treasurer of the Town, of the following;

(i)            the property has been designated as a property of cultural heritage value or interest under Part IV of the Ontario Heritage Act or it must be part of a heritage conservation district under Part V of the Ontario Heritage Act; and

                (ii)           is subject to a heritage easement agreement under section 22 or 37 of the Ontario Heritage Act; and

(iii)          the heritage easement agreement referred to subsection (ii) above must be registered against the eligible heritage property by December 31 of the taxation year for which relief is sought except for the 2003 tax year in which the easement must be in place no later than July 31, 2004;

(iv)          the Eligible Heritage Property is not the subject of any contraventions, work orders or outstanding municipal requirements; and

(v)           meets all of the following criteria, to the satisfaction of the Commissioner of Development Services:

(a)     Be classified as a Group 1 or Group 2 structure as evaluated by Heritage Section staff using the Town of Markham’s “Evaluating Heritage Resource” document ; and

(b)     Be in a good and habitable condition

                                   

(vi)                          there are no outstanding municipal fines, arrears of taxes, fees or penalties assessed against the applicant.

 

6.             All applications must include the following to be considered for the refund program:

(i)            Heritage easement agreement approved by Council.

(ii)           Photographs of all elevations of the Eligible Heritage Property.

(iii)          Proof of insurance on the Eligible Heritage Property.

 

7.             The application will cover each year of the two-year period as long as the property remains an Eligible Heritage Property.  Renewal of the Heritage Tax Reduction must be made by application every third year.  The application fee shall be deducted from the Heritage Tax Reduction once calculated.

 

Limitations and Restrictions

 

8.             The Heritage Tax Reduction program set out in this By-law is subject at all times to the availability of funding for the program.  Nothing in this By-law requires the Town to provide funding for this program and the Heritage Tax Reduction contemplated by this By-law may be eliminated by Council through repeal of the By-law at any time with no notice whatsoever to affected persons.

 

9.             The Heritage Tax Reduction program is subject to any regulations that the Minister of Finance may make governing by-laws on tax refunds and reductions for heritage properties.

 

10.           Where multiple easement and/or preservation and maintenance agreements are registered on one parcel of land, multiple refunds will not be provided in respect of the same heritage features.

 

11.           Upon application, the owner must consent to the Town conducting an inspection of the interior and exterior of the Eligible Heritage Property at any reasonable time, if required, to ensure that the relevant heritage easement agreement is being complied with and to ensure that the eligibility criteria can be met.

 

12.           No Heritage Tax Reduction will be given under this By-law where the Town determines that the relevant heritage easement agreement is not complied with to the satisfaction of the Town. 

 

13.           Heritage Tax Reductions shall be calculated using the assessed value of the property, as returned, for the taxation year for which the application is made.

 

14.     If the assessment of a property for a year changes as a result of proceedings under the Assessment Act or Municipal Act or a judicial decision, the Heritage Tax Reduction shall be recalculated using the new assessment and the tax roll for the year shall be amended to reflect the determination.  The Town may set off any amount in favour of the Town against any refund to be paid to the owner as a result of the appeal, or it may apply it against the taxes owed for the succeeding taxation year.

 

 

15.     The Heritage Tax Reduction shall be repaid in full by the owner for every year where there is an outstanding contravention or where there are outstanding municipal fines, arrears of taxes, fees or penalties assessed against the owner.

 

16.           The minimum amount of the Heritage Tax Reduction that shall be paid for an individual property is $50.00.

 

 

Penalties

 

17.           If the owner of an Eligible Heritage Property demolishes the Eligible Heritage Property or

breaches the terms of the relevant heritage easement, the Town may require the owner to repay part or all of any Heritage Tax Reduction(s) provided to the owner for one or more years under this By-law.

 

18.                   The Town may require the owner to pay interest on the amount of any repayment required under section 17, at a rate not exceeding the lowest prime rate reported to the Bank of Canada by any of the banks listed in Schedule I of the Bank Act (Canada), calculated from the date or dates the Heritage Tax Reduction(s) were provided.  Any amount repaid under this section will be shared by the Town, School Boards and the Region of York (if applicable) in the same proportion as their respective shares of the Heritage Tax Reduction(s) on the property.

 

19.     This By-law shall be known as the “Heritage Tax Reduction By-law”.

 

19.                  

                       

 

 

20.   The effective date of this By-law is January 1, 2003.

 

 

READ A FIRST AND SECOND TIME THIS   DAY OF                                 , 2003.

 

 

READ A THIRD TIME AND PASSED THIS  DAY OF                                 , 2003.    

 

 

 

 

 

________________________________                     __________________________________

CLERK                                                                       MAYOR

 

 

Appendix B

 

BY-LAW 2003 – XXX

 

A By-law to Amend By-law 2002-276, “A By-law to Impose

Fees or Charges for Services or Activities Provided or Done

by The Town of Markham”

 

Whereas Section 391 of the Municipal Act, 2001 provides that a municipality may pass a by-law for imposing fees or charges for services or activities provided by or done on behalf of it;

 

AND WHEREAS Council wishes to encourage owners of heritage properties to enter into Heritage Easement Agreements to ensure the ongoing maintenance and long-term protection of these properties;

 

NOW THEREFORE THE COUNCIL OF THE CORPORATION OF THE TOWN OF MARKHAM HEREBY ENACTS AS FOLLOWS:

 

THAT By-law 2002-276 be amended as follows:

 

1.      That the following fees and charges contained in Schedule “A” related to the CAO Commission – Legal Department be deleted:

 

                                Heritage Easement Agreements        $300.00   Per Agreement

 

2.     That Schedule “A” of By-law 2002-272 be amended by adding thereto the following section:

 

Heritage Tax Reduction Application:

-          first year of application:              20% of annual heritage reduction amount

-          every renewal:                              10% of annual heritage reduction amount

 

3.        All other provisions of By-law 2002-276, except as herein amended or effected, which are not inconsistent with the provisions of this By-law shall continue to apply.

 

 

READ A FIRST, SECOND, AND THIRD TIME AND PASSED THIS

 ( ) DAY OF (month), 2003.