Monday 7 December 1992

Metro Toronto Reassessment Statute Law Amendment Act, 1992, Bill 94

Women Plan Toronto

Shirley Roll, housing coordinator

Emmess Equities Inc

Samuel J. Sable, managing director

Barrie Clulow

Raymond Cho

Lynden Park Mall Association; First Effort Investments Ltd

Rick Rizzo, representative

Jim Turnbull, representative

Sleuth of Baker Street

Marion Misters, co-owner

Pauline Shapero

William Davidson

Allan Morrison

John Newhouse

Joseph Bobyk

Sandy Aguanno

Hub B. Keenleyside

Downtown Fine Cars Inc

Gerry Peterson, general manager

Terry Mudry

George Teichman

Lawrence Park Ratepayers' Association

Sandy McIntosh, director and past president

John Kent

Heather De Veber

Lucille Giles

William Gallos

Terry Marescaux

Tanny Wells

Elliot Title

Exploration House

Liana Sneyd, representative

Corso Italia Business Improvement Area

Phil Capone, coordinator

David Goring

Ken Bluestein

Ilona Todd

Johnston and Daniel Ltd Realtor

James R. Gairdner, president and chairman


*Chair / Président: Beer, Charles (York North/-Nord L)

*Acting Chair / Président suppléant: Eddy, Ron (Brant-Haldimand L)

Vice-Chair / Vice-Président: Daigeler, Hans (Nepean L)

Drainville, Dennis (Victoria-Haliburton ND)

Fawcett, Joan M. (Northumberland L)

Martin, Tony (Sault Ste Marie ND)

Mathyssen, Irene (Middlesex ND)

O'Neill, Yvonne (Ottawa-Rideau L)

*Owens, Stephen (Scarborough Centre ND)

White, Drummond (Durham Centre ND)

*Wilson, Gary (Kingston and The Islands/Kingston et Les Îles ND)

Wilson, Jim (Simcoe West/-Ouest PC)

Witmer, Elizabeth (Waterloo North/-Nord PC)

*In attendance / présents

Substitutions present / Membres remplaçants présents:

Eddy, Ron (Brant-Haldimand L) for Mr Beer

Frankford, Robert (Scarborough East/-Est ND) for Mr White

Grandmaître, Bernard (Ottawa East/-Est L) for Mrs Fawcett

Mammoliti, George (Yorkview ND) for Mrs Mathyssen

Mills, Gordon (Durham East/-Est ND) for Mr Martin

Poole, Dianne (Eglinton L) for Mrs O'Neill

Rizzo, Tony (Oakwood ND) for Mr Drainville

Stockwell, Chris (Etobicoke West/-Ouest PC) for Mr Jim Wilson

Swarbrick, Anne (Scarborough West/-Ouest ND) for Mr Gary Wilson

Turnbull, David (York Mills PC) for Mrs Witmer

Wiseman, Jim (Durham West/-Ouest ND) for Mr Drainville and Mr Martin

Also taking part / Autres participants et participantes:

Fletcher, Derek (Guelph ND)

Tassonyi, Almos, senior economist, municipal finance branch, Ministry of Municipal Affairs

Clerk / Greffier: Arnott, Douglas

Staff / Personnel:

Drummond, Alison, research officer, Legislative Research Service

Richmond, Jerry, research officer, Legislative Research Service

The committee met at 0941 in room 151.


Consideration of Bill 94, An Act to amend certain Acts to implement the interim reassessment plan of Metropolitan Toronto on a property class by property class basis and to permit all municipalities to provide for the pass through to tenants of tax decreases resulting from reassessment and to make incidental amendments related to financing in The Municipality of Metropolitan Toronto / Loi modifiant certaines lois afin de mettre en oeuvre le programme provisoire de nouvelles évaluations de la communauté urbaine de Toronto à partir de chaque catégorie de biens, de permettre à toutes les municipalités de prévoir que les locataires profitent des réductions d'impôt occasionnées par les nouvelles évaluations et d'apporter des modifications corrélatives reliées au financement dans la municipalité de la communauté urbaine de Toronto.

The Acting Chair (Mr Ron Eddy): Good morning, ladies and gentlemen. The standing committee on social development to hear representations on Bill 94, Metropolitan Toronto Reassessment Statute Law Amendment Act, 1992, is now in session. Welcome, and we'll proceed with presentations.


The Acting Chair: The first presentation, Women Plan Toronto -- is their representative present? Would you like to sit up at the desk, please. Use the mike and announce your name and the group you represent, if you would. We have, I believe, 20 minutes for a presentation, which will include questions, if any, by the members of the committee. Welcome.

Ms Shirley Roll: Thank you. My name is Shirley Roll. I'm with Women Plan Toronto.

There are several reasons why Metro's proposed market value reassessment is a problem for the women of the city of Toronto. The majority of women in the city of Toronto are tenants. Many of the women are on fixed incomes, including many of the elderly, single moms and the disabled. These women simply cannot afford rent increases to cover the cost of increased taxes on their buildings.

Many of the older women who are not tenants are none the less on fixed incomes and trying to remain in their homes in their communities. Significant increases in their taxes may well force them out of their homes. This runs counter to our intentions of helping our seniors to age in place, and certainly would be detrimental financially, socially and psychologically to those individuals forced out of their homes.

Women in the labour force are still earning less than 70% of what men in the labour force are earning, and it appears that our provincial government is pulling back on its commitment to rectify this situation. Many of these women are also sole providers and care givers to others -- children or parents -- on their limited wage. Most of these women cannot afford increased taxes.

Over the past couple of years there have been massive funding cuts to support services for women. Those service providers are struggling to exist without the burden of increased taxes. Tax increases could put them over the edge.

The impact of MVA on the business community threatens the safety of Torontonians on their streets. Many retail businesses have not made it through the current recession. Others who have managed to hang on are concerned that MVA will be enough to force them out of business. We need streets with the life that viable retail enterprises foster. These are generally safe streets because they are occupied.

The current taxation system is not fair, but we are not convinced that what Metro proposes is fair either. Basing the taxation system on property values, particularly inflated property values of 1988, is not the most fair way of doing things. As we've seen, property values behave somewhat like yo-yos and have no accountability to the intentions set out in our official plans. The least we can do is wait until the Fair Tax Commission has released its findings and recommendations before deciding the best way to alter our tax structure.

The health of the centre of the city, as Toronto is to Metro, is vital to the health of the whole. Numerous American cities have demonstrated what happens when care is not taken to ensure that the core remains vibrant. It is what the city of Toronto has to offer that entices visitors and business concerns to come to Metro.

We can appreciate that Metro is in a tight spot financially; we all are. It's just not worth killing the heart of the city to temporarily ease Metro's financial situation. Our American examples illustrate just how difficult it can be to recover the heart once it is gone.

Recognizing the importance of a vibrant core, there is apparently a special tax in the city of Cincinnati that the outlying regions of that city are required to pay and which is directed back into the centre of the city. Perhaps the Fair Tax Commission, or whichever is the appropriate body, should investigate this to determine how it works before any reassessment scheme is adopted for Metro. Thank you.

The Acting Chair: Thank you. Questions? Dr Frankford.

Mr Robert Frankford (Scarborough East): I'm a Metro member but from an outlying part, from really as far as you can get before you reach Durham. Let me turn it around, because we've heard a lot about this argument about the viability of downtown and the potential dangers, but let me turn it around to my perspective.

There is agreement that my area is overtaxed to the residents there, so your point about the difficulties of affording to live there exists right now. But in addition, we're looking at the urban form and the risks there. It is a low-density area. There are undeveloped areas and there are wide streets. I believe it could do very much with intensification, and we keep on hearing that the centre's intensification is everything that has to be preserved.

In addition, we often heard this argument about the analogy with American cities. We have not had the opportunity of analysing in detail what American cities are about, but my impression is that we're really dealing with a very different situation and that one gets suburban areas there, really very different municipalities which have deliberately low taxation, low density and middle-class flight, which is often being followed by employment flights, so that the equivalent of the financial area is actually following and the white-collar jobs are going there. This is a significant part of the downtown US city pattern that we're seeing.

I think there are very strong differences in what we have right now with our Metropolitan government and I think that they're going to continue so. Do you have any comments?

Ms Roll: I don't know all the details. I've only heard that this is the case in Cincinnati. My feeling is that Metro seems not to have spent a lot of time researching the assessment scheme that it's been trying to put in and it's just been sort of bulldozing ahead.

I guess my suggestion is, why don't we wait for the Fair Tax Commission, find out what they have to say and explore how other cities are doing it? Perhaps the Cincinnati example is not appropriate to Metro.

Mr Frankford: I don't know either. I would suspect that one is dealing with something more equivalent to the GTA than Metro Toronto per se.

The Acting Chair: Thank you. Mr Grandmaître.

Mr Bernard Grandmaître (Ottawa East): Let's go back to the Fair Tax Commission. The Fair Tax Commission was instituted or created to find a more creative way or a more equitable way to tax people, not only property taxes but any tax, every tax, I should say. Why do you think that Metro and this government are trying to push this bill through before looking at the Fair Tax Commission report?

Ms Roll: One of my two guesses would be that they are in a financially difficult situation. There have been greater demands, due to the recession, on Metro's funds, so it would like to get it through as quickly as possible to help that situation. But the other thing that often happens is that once a decision has been made at a level of government where policies are set, it's very difficult to take it back and rethink it. If they are sold on this particular scheme, of course they're going to try to push it through before they're forced to rethink it and think about different schemes.


Mr Grandmaître: Would you be surprised if I was to tell you that Metro won't be making any more money? They won't be receiving more moneys.

Ms Roll: If they don't get any more money, then everybody loses, because those entitled to the tax decreases probably won't get them and those who have to pay the increases will obviously have to pay the increases.

Mr Grandmaître: The bottom line is that the six municipalities won't be losing money. It's a break-even situation, but more balanced. This is what they're saying. It'll be more balanced; it'll be a fair tax.

But I still can't understand why the government is pushing Bill 94 before looking at the fair tax proposal. I haven't seen it. It's called a unit assessment plan or scheme. I'd like to see it to find out the differences between what's existing now or what's before us and what the Fair Tax Commission is recommending.

I don't blame you; you should be concerned. You're absolutely right when you say that women and especially our senior citizens will be dearly affected by some of the moves proposed by Bill 94. Thank you for being with us this morning.

Mr David Turnbull (York Mills): You make very important points. Metro actually requested the government to address this historic imbalance that exists with respect to taxation of apartments. Tenants are taxed at three and a half times the rate that single-family homes are.

I want to basically demolish the argument that Mr Frankford made to you. We had a witness who came here who lives in Scarborough and has a shop in Scarborough and also has a shop at Yonge and Eglinton. She was speaking against MVA, and she testified that her home in Scarborough, backing on to a ravine and looking on the lake, is currently taxed at $3,000 and is actually getting a tax reduction, whereas the small, unfinished apartment above her store at Yonge and Eglinton is taxed at $6,000.

So all of these stories about Scarborough being overtaxed are if you buy into the proposition that the convoluted scheme that Metro has come up with is correct and that the assessment that was done in 1988 is correct. Both of these are highly questionable, given the fact that we know that some college students did a lot of the assessments and there are so many mistakes that the courts are going to be filled with appeals.

It is a fact that under full MVA, which is known as section 70, we have the numbers for 1984, and Scarborough would actually pay more than it currently pays now. So it's a very narrow view that is being taken by Dr Frankford when he suggests that it is generally accepted that Scarborough is paying more than its fair share. The city of Toronto actually transfers in excess of $300 million a year to Scarborough for education purposes.

Indeed, we need a more fair tax system. I'm not setting out to bash Scarborough, because there may be many cases where people honestly are paying too much tax. But to depict it as being an absolute that Scarborough is paying too much depends purely on your definition and accepting the 1988 values and accepting something less than full market value, which would in fact shift a burden to Scarborough.

You raised a second most important point, and that is, why aren't we waiting for the Fair Tax Commission to report? We see in the paper today an interview that Dave Cooke, the minister responsible, had with the Globe and Mail on Saturday, where he said that these are becoming repetitive and that he thinks we should get on with it. He said that he wants to get this legislation through this week, and yet the Fair Tax Commission report is coming out on Wednesday.

In other words, they don't want you to have a chance to look at it and understand it and give some sober consideration to the report. Taxpayers' money has been put into paying for this extensive study. They're not interested in it. They want to push through this legislation. I think it's going to be to the detriment of tenants because if you don't take an opportunity like this to address the historic imbalance that tenants have, you're never going to do it. In other years, the money won't be available because it won't be a fluid pool.

Could you maybe respond to that long diatribe? I'm sorry.

Ms Roll: I guess I agree with you. I also read the Globe and Mail this morning and one of the reasons I didn't even bother bringing photocopies was because I figured that most of you wouldn't be listening to me anyway. I'm pleased that you are.

Mr Turnbull: I assure you that the people on this side are listening to you.

Ms Roll: I can hear that. That's terrific.

Mr Gordon Mills (Durham East): What makes you think we're not? I object to that.

The Acting Chair: Continue, please.

Mr Mills: That's awful.

Ms Roll: I agree that when I read that the Fair Tax Commission findings were due out this week, and that Mr Cooke had said they just want to vote on it and get the bill through, I was quite discouraged.

Mr Turnbull: Yes.

Ms Roll: It doesn't make any sense to me to bulldoze it through without looking at the options, and like all of you I don't know the details of the unit assessment proposal, but on the surface it looks like it makes more sense because it's not going to bounce around like a yo-yo the way property values are going to. I would like to know more of the details before this kind of scheme gets put through.

Mr Turnbull: Thank you very much.

The Acting Chair: Questions? Mr Rizzo.

Mr Tony Rizzo (Oakwood): Can I ask where you got the information that Mr Cooke wants to pass it through without any consideration to amendments to the bill? Where have you read that?

Ms Roll: I'm not sure it said he wanted to push it through without amendments. It said that he wanted to get the bill put through as soon as possible, even before Wednesday, if possible, even though I believe that's when the vote is scheduled for on the bill. From my reading of the article -- I don't have it with me; I don't remember exactly what was said -- it sounded like he wasn't interested. Oh, that's it here?

Mr Rizzo: That's right.

Ms Roll: Okay.

The Acting Chair: It's perhaps more appropriate to ask Mr Cooke if the question is to be asked. Do you have a response?

Mr Rizzo: What I am saying is that Mr Cooke never said that he wants to push the bill through without all the information from the public. We have been sitting for two weeks, day and night and the weekend, and so we are absorbing all kinds of information. What he was saying is that apparently the public is becoming repetitive, and how can it not be that? We all know the problems. You know the problems and you come here and express your opinion. Other people feel the same way and they express their opinions. It's a matter of fact that people will be repetitive.

The Acting Chair: Mr Rizzo, do you have a question? You asked a question earlier. Does the presenter wish to answer the question?

Mr Rizzo: The question is this: Do you think two weeks of full hearings, morning, afternoon and evening, from all kinds of people, from all kinds of groups, are going to be enough for us to take a decision, in view of the fact that the House should adjourn at the end of the week, as a fact?


Ms Roll: Yes, theoretically, two weeks of hearings should give you enough input in order to make your decision, but I'm not sure where the two weeks comes from. My understanding is this started last Monday and the vote is this coming Wednesday, which is a total of a week and a half, not two weeks.

Mr Rizzo: When we talk about how we meet, standing committees meet only one afternoon every day. We are meeting mornings and afternoons and evenings. As interpreted by our procedures, eery day stands for three full days. Usually we meet on Monday, Tuesday, Wednesday and Thursday. We met on Friday; we met on Saturday; we met on Sunday.

Mr Turnbull: Where were you?

Mr Rizzo: I was here.

The Acting Chair: Mr Rizzo, what is the purpose of the question? The witness has made a presentation.

Mr Rizzo: What I'm saying is that it's not only two weeks. Usually, it's two weeks times three in terms of hours and the number of people listened to. Do you think that time is going to be enough for us to make a decision?

The Acting Chair: Do you wish to respond to the question?

Ms Roll: I think I already responded.

The Acting Chair: Yes. Thank you very much.

Mr Turnbull: Before you leave, I have a point of order.

The Acting Chair: Yes.

Mr Turnbull: I asked the parliamentary assistant not to leave the room, because I told him I was going to ask a question. He said that he objected before. Do I take it that he was objecting to the witness saying that the government isn't listening?

Mr Rizzo: How can the PA answer the question if he's not present? It doesn't make any sense.

Mr Turnbull: Precisely. I asked him not to leave.

The Acting Chair: Gentlemen, please.

Mr Rizzo: It does not make sense --

The Acting Chair: Mr Rizzo, please address the Chair.

Mr Turnbull: Mr Chair?

The Acting Chair: Yes.

Mr Turnbull: I want clarification from the parliamentary assistant. He refused to wait for me to ask this question.

Mr Rizzo: This is not a point of order, Mr Chair.

The Acting Chair: Just let Mr Turnbull finish and I will respond.

Mr Turnbull: He was objecting at the point that I said certainly the people on this side are listening. If he is reading something else into that, let him do it, but basically, is he objecting to the witness saying that her opinion is that the government isn't listening?

The Acting Chair: Thank you, Mr Turnbull. Mr Mills advised me at the beginning of the meeting that he had to leave at a certain time for a very few minutes. He did object, as I noticed, and you have responded to that. He will be returning in a very few minutes and we'll have the opportunity. He asked me for permission to make a short statement before he left and that wasn't possible with the questioning.

Mr Turnbull: In that case, could we possibly ask the witness to stay in the room until he returns, because I would like clarification on this, whether he's objecting to the witnesses making their comments?

Mr Frankford: On a point of privilege, Mr Chair: If there's a suggestion that members on this side are not listening, I would like to draw to your attention that I made a fairly lengthy comment based on the witness's remarks.

The Acting Chair: Yes, that was noted. You had the first question.

Thank you for your presentation. You are invited to stay, as the parliamentary assistant will be returning shortly. You've noted that, I guess.


The Acting Chair: The next presentation is by Emmess Equities Inc. Is there a representative present at this time? Would you come forward, sit down and use the microphone and give your name and the company you're representing and make your presentation, please. We have 20 minutes for presentation and questions by the members of the committee. Welcome.

Mr Samuel J. Sable: Thank you very much, members of the committee, for giving me the opportunity of expressing some of our concerns about the issue. My name is Samuel J. Sable and I represent Emmess Equities and also a number of the building owners and operators in the Spadina core and west to Dufferin Street, south to the Gardiner, bordered by Queen Street on the north.

We operate a number of warehouse and factory buildings in the downtown core and we are compelled to ask the question, why now, when the economy is the worst it's been in many, many decades, in fact worse than I have ever experienced in my history of 50 years in this business? Why now, market value as of 1988, when frenzied buyers were speculating and assembling and buying real estate, to use the trite expression, "like it was going out of style," like never before in the history of this business, and in my humble opinion, never again will we see this kind of speculation and frenzied buying?

We ask the question, "Why now?" when the same properties that were being sold for two and three and four times what they were selling for before, each time at a higher price to the succeeding buyer -- it's just like the stock market. Why now? For example, our buildings, and there are other building operators, have a vacancy factor of 65% in the downtown core, which will likely be 70% after the first of the year.

We ask the question, is it etched in stone that this new assessment formula must be put in place immediately or else? Mr Rizzo, you were the one who made the statement that this system is not perfect, that this system is not fair, but it's better than the one we have in place. Am I correct in that?

Mr Rizzo: Yes.

Mr Sable: Just because it's not fair, certainly it's not fair to implement it if it's not fair. We rely on the government to be fair with us. I stated that in 50 years in business, we haven't had as many bankruptcies, abandonments and closures of businesses as we have had in the last 24 months, in all our history. It's inconceivable, but obviously the general public doesn't realize this.

You picture an artist who has a loft space in one of the buildings in the core and is struggling. He can't pay his rent now, where every penny means something to him. Can he be charged with this excess? He's struggling to stay in business -- or the little carpenter who is making chairs or tables or stools or something, and he can't pay for his rent as it is today. Many of them are behind three and four and six and eight and 10 months. They haven't got the money. They have to go out of business. If this continues, they will have to go out of business like so many others have.

I'm afraid that we are going to be left with a huge number of abandoned buildings which as of now it's very, very difficult for us to maintain, let alone with the grossly unfair added taxes that are proposed to be levied upon us.

Because a building in 1988 was flipped three or four times and wound up with somebody paying 300% to 400% more than what the same building sold for in 1985 or 1986, the owner of the building down the street is taxed on the basis of the so-called "market value," the market value, they say, of the building that's speculatively sold for a grossly inflated price either because of the frenzied buying, because the buyer specifically needed that location and was willing to pay any price for it, or because of an assembly. This does not create market price. This is unfair and it's not really a true assessment and a true interpretation and definition of market price.

I submit to you respectfully, members of this committee, that any of these buildings in the areas I'm speaking of that are being assessed today at the assessed value that is being contemplated, I challenge anyone in this community to be able to sell those buildings for half the price at which they're being being assessed today. I make that an irrevocable challenge.


I think we should realize that the buildings in the downtown core are mostly these factory and industrial buildings that are mostly obsolete. They are obsolete because they were built in the early 1890s up to the period of perhaps 1925-26 and they do not have the facilities that heavy industry, for example, would require.

The textile industry which used to occupy the central core buildings in the Spadina core is practically extinct. They failed, went bankrupt, were abandoned, moved out in the middle of the night or just closed up and handed the landlord the keys, leaving most of these buildings either half or three quarters vacant.

My personal opinion is that this core I'm speaking of will become a ghetto, that the owners won't even have enough money to tear the buildings down and that the city will be left with the responsibility of taking care of these buildings. The city will lose the taxes it is presently getting on these buildings.

We are striving very hard to try and wait to see that this thing turns around and that we will be able to meet our obligations. Banks have seized up on us like they have on every other business, mostly in the real estate business. The small businessman doesn't have a chance at all. He's cut off completely, and we are down to a fraction of what our allowances at the bank, what our lines of credit are today.

I might be so bold as to suggest to the committee that it might be wise, on the government's part, to go through the Spadina corridor and west through to Dufferin or Ossington or Shaw or Dovercourt and go south as far as the Gardiner Expressway and see what is happening in that area. I respectfully suggest that an in-depth study should be made of these areas. You can't just go ahead and plank on a tax like this arbitrarily. With respect, I submit that it is arbitrary. I think this certainly deserves at least that part of it.

Mr Rizzo mentioned just a few minutes ago that the committee has been working for two weeks on this and "Don't we think it's enough time?" My answer is, certainly not. Just listening to a couple of hundred people is certainly not the path I think this committee should follow.

I'm not trying to tell you how it is, but I think you should see for yourselves what is happening, and you can't do it by just listening to the people. You have to see what is happening out there. You have to go down to these people and go into these small businesses and ask them questions. These are the people who make up the fabric of this community.

I submit to you, my friends, that there will be thousands of jobs lost as a result of this procedure, thousands of casualties and millions of tax dollars lost to the city. I beseech you, gentlemen, surely this legislation could be put on hold, the way many other pieces of legislation are put on hold, not only for weeks or months but sometimes for a year and sometimes beyond that.

We feel this business of vacant lands not being capped, for example, is entirely ridiculous and unfair. It has no rationale to it. We have a three-storey building of 10,000 feet, and it has a little bit of parking at the back for the shipping. They call it Waterloo Terrace. According to the assessment, it went from $775 in commercial realty taxes in 1992 to $7,047. It's unheard of. It boggles the mind to see these kind of figures of 10 and 20 times the amount of what the present taxes are.

There's a building a couple of doors away from one of our buildings. It was flipped three times in 1988. The last buyer, who was a retail brewer, had a restaurant and licence and wanted this particular location. The first sale was made at around $700,000, the second one at $1.05 million, I recall, and the third one -- this is all within weeks -- at $1.25 million. Our building is taxed on the basis of that building because it was flipped three times. This is what is labelled as market value.

I submit to you, gentlemen, that this is totally unfair, and it is not like the government not to put in an in-depth study on a major, major issue such as this. I beseech you, for the benefit of this beautiful community, to please take another good, hard look at it.

The Acting Chair: Thank you for your presentation. There are questions, I believe.

Mr Turnbull: Thank you very much. You very eloquently spoke about the rise and fall in values of commercial properties in the downtown core. You spoke about the fact that the factories in the downtown core are now obsolete. We've had a lot of presentations on this subject, and believe me, I'd like to explore that more.

But perhaps most of all I would like to ask you to speak about the fact that it becomes apparent from the kind of answers we're hearing from the government that it's saying, "There may be some things wrong with this, but there's going to be some wonderful new scheme in the future." However, they don't believe this is going to lead to economic hara-kiri in the downtown core in the interim period. Even if you believe that they're going to have this marvellous new plan we've been pushing for -- we've been saying we need something like unit assessment, which is not subjective but is a quite objective method.


Quite apart from that, I'm saying in the meantime, if you believe something is going to happen, and I for one do not believe because we haven't heard any timetables or any suggestion as to what they're going to do -- but the bottom line I'm asking you is, they don't seem to believe this is going to lead to the absolute bankruptcy of many businesses in the downtown core, and not just in the downtown core, businesses right across Metro and, as you correctly said, there's an awful lot of small, commercial buildings selling today for 50% or, in some cases less than 50%, of what they were trading for in 1988.

I know that as a commercial real estate broker, you know that as an owner, but could you try to give a message in your answer to tell them why this is not scare tactics, this is the case? Talk about mortgage defaults and things like that. Could you just give us some examples?

Mr Sable: I come back to the suggestion I made that seeing is believing, and you can't understand why we're talking about what you term as scare tactics. It is not scare tactics, it is real. Go in and talk to those people. There isn't a day in the week -- and I tell you this, God's truth as today is Monday -- that we don't have two or three tenants coming in and beseeching us: "Please, we want to stay in business, Mr Sable. Unless you reduce the rent by 50%, we cannot stay in business." When we reduce it by 50%, we still have to wait two and three months for that cheque. And you tell me this is not scary? This is unbelievable and I speak from experience.

Mr Turnbull: And that's even without tax increases that you're having this problem.

Mr Rizzo: I have a couple of questions for you. First of all, I want to state a couple of things: This proposal is not in place yet and all the problems you mentioned before, of course, are not caused by this proposal yet. I would suggest the economic problems that we are facing have been caused by others and from other people rather than Metro or provincial governments. I would suggest that free trade was the cause of all the problems we all are facing now, and free trade wasn't imposed by Metro or by the provincial government, but by Mr Turnbull's friends in Ottawa. That's number one.

Number two: We have to understand that what we have now is market value. The only difference between this market value and a new market value that Metro want to impose is just a matter of numbers. If these same properties were assessed at the raised number 40, 50 years ago -- 1942, when this plan was introduced for the first time -- we wouldn't have any difference. The only thing that is going to happen now --

The Acting Chair: Mr Rizzo, do you have --

Mr Rizzo: -- is the assessment level, nothing else. It's not the total number --

The Acting Chair: Mr Rizzo, do you have a question, please? We're in the question period and we have a very short time. Please present your question.

Mr Rizzo: Do you know that when you hear people like Mr Turnbull talking about 1988 assessment, it means absolutely nothing because, if the assessment was made in 1987, 1985 or 1989, it would have meant nothing as a total revenue to the municipalities? So if your property is assessed $100,000 or $1 million, in relation to all the other properties, the amount of money the municipal government would take from you would be exactly the same.

It's just a matter of numbers again. If there are 10 properties in one municipality and the total revenue for the --

The Acting Chair: Mr Rizzo, I insist on a question.

Mr Rizzo: But I had to explain about the kind of question --

The Acting Chair: Please, can we get to the question? We're short of time and there is one more question.

Mr Rizzo: Do you understand that if the assessment was made based on 1966 with the same principle, with the same ideas, you would pay totally the same amount of taxes, that it wouldn't have made any difference at all?

Mr Sable: I don't agree with that at all.

Mr Rizzo: But this is a fact.

Mr Sable: No, it's not a fact, sir.

Mr Rizzo: Can we have the expert, maybe, explain that?

The Acting Chair: Sorry, what is your question of the -- is this legislative counsel?

Mr Stephen Owens (Scarborough Centre): On a point of order, Mr Chair: We have a ministry representative behind Mr Danielson, if he can answer the question.

The Acting Chair: The question is -- just clarify it, please.

Mr Rizzo: The question is, if the assessment was made in 1986 or 1989 or 1991 rather than 1988, the total amount of money as revenue to the municipality wouldn't have changed.

Mr Sable: Excuse me, Mr Rizzo. You said 1956 or 1966.

Mr Rizzo: It makes no difference. It doesn't matter.

The Acting Chair: Excuse me. The question is, then, that regardless of the base year for the assessment, the amount of money raised does not change.

Mr Rizzo: It wouldn't change.

The Acting Chair: Do you wish to comment on the question? Are you clear on the question?

Mr Almos Tassonyi: Yes, Mr Chairman. My name is Almos Tassonyi. I am a senior economist with the municipal finance branch of the ministry. As I understand Mr Rizzo's point, on the whole, the reassessment scheme is revenue-neutral. That is to say it doesn't matter which year a reassessment is implemented; the total amount of taxes will remain the same. Now, of course, in the new year we'll have mill rate increases and so on to raise the new amounts of money necessary, but the specific point that Mr Rizzo is making is true.

The Acting Chair: Thank you. Mr Grandmaître, next question?

Mr Grandmaître: Thank you, Mr Chair. Let's talk about the possibility of a speculation tax. You referred to speculators --

Mr Rizzo: You didn't know that.

Mr Turnbull: It's rubbish.

Mr Rizzo: You didn't know that.

The Acting Chair: Mr Grandmaître is speaking.


Mr Rizzo: I'm sorry. But of course --

Mr Turnbull: I beg your pardon? What am I supposed to learn?

Mr Rizzo: You've tell people --

Mr Turnbull: I'm telling the truth.

Mr Rizzo: You are not telling the truth.

The Acting Chair: As Chair of the committee, I call you to order. Mr Grandmaître is speaking.

Mr Turnbull: Okay. Excuse me, Mr Chair.

The Acting Chair: Point of order?

Mr Turnbull: He has just made a suggestion that I am not telling the truth. He has to withdraw that.

The Acting Chair: I did not hear the statement. Mr Rizzo, do you wish to respond? Very quickly, please. We have another --

Mr Rizzo: Mr Turnbull said, "You are telling me I'm not telling the truth." No, as a matter of fact, he said, "I'm telling the truth" -- he's telling the truth. I'm saying --

Mr Turnbull: You said I am not telling the truth. You said it.

Mr Rizzo: I am saying now I'm of a different opinion.

The Acting Chair: Mr Rizzo, can you withdraw the remark if you made such a remark? Would you do that, please?

Mr Rizzo: Yes, I can reaffirm that I am of a different opinion from what Mr Turnbull says, and I apologize to the --

The Acting Chair: Thank you very much. Now, Mr Grandmaitre, you have the floor. Quickly, please.

Mr Grandmaître: Let's go back to more serious problems. Let's talk about the possibility of a speculation tax. You'll recall that when this government introduced the Fair Tax Commission, one of the responsibilities of the Fair Tax Commission was to look at 53 or 52, I think it was, different taxes that are imposed on people. Do you think that a speculation tax should be imposed -- not imposed, but introduced -- before this scheme or model of taxation, the MVA, is accepted? Do you think we should look at that possibility? Because you have told us that speculation was maybe the biggest problem in Metro.

Mr Sable: I mentioned a number of reasons why these properties went up, and one was the frenzied buying that was going on. Everybody wanted to get on the bandwagon. But with great respect, Mr Grandmaître, I don't think the speculation tax is relevant. I think a speculation tax would be a good idea to explore, but I don't think it's relevant to the MVA issue at the present time. You said before this legislation goes through, and I think there are many things that should be done before the legislation goes through, before any legislation goes through. Perhaps they can arrive at a more equitable way of doing things and not try to put people out of business, people who are hanging on by their fingernails to stay in business today. This should be, I think, the subject that should be addressed.

Mr Grandmaître: In the Agenda for People, the NDP program, one of the reasons the Fair Tax Commission was introduced was to look at these taxation programs, and now I find it very difficult to accept that Bill 94 will be going through before the Fair Tax Commission with its eight different commissions or committees will be before this committee.


Mr Owens: How do you know that, Ben?

Mr Grandmaître: How do I know that? Because it will be introduced on Wednesday, sir.

Mr Sable: I agree with you.

Mr Grandmaître: It will be introduced on Wednesday. What's the sense of having these hearings?

Mr Sable: What's the sense in having this Fair Tax Commission on it if you're not going to wait --

Mr Grandmaître: For the results.

Mr Sable: -- for the answer before the legislation is put through?

Mr Grandmaître: Thank you.

The Acting Chair: Thank you for your presentation, Mr Sable.

Mr Sable: Thank you so much for the opportunity.

Mr Rizzo: Mr Chairman, could I ask one thing only?

The Acting Chair: Mr Rizzo.

Mr Rizzo: Sir, if you are here, you are not wasting your time. We are listening to you. Nothing has been decided yet. We are listening to you.

Mr Sable: Thank you very much, Mr Rizzo.

The Acting Chair: Thank you, Mr Rizzo, for your statement.

Mr Sable: Can I make a last remark, if I may, Mr Chairman? The 11th-hour option here is expiring apparently before the Fair Tax Commission is even listened to, and I think that's highly unfair. I don't think this has to be done. I think it can be put on hold.

The Acting Chair: Thank you for your presentation.


The Acting Chair: The next presenter is Mr Barry Clulow. Mr Clulow, would you come forward. Unfortunately, you're only allotted 10 minutes, and we would hope there would be time for at least a very few number of questions.

Mr Barrie Clulow: There are two presentations. I'll be addressing the thinner of the two.

The Acting Chair: That's been circulated to the members of the committee?

Mr Clulow: Yes, it's embodied in the other one as well.

Good morning, Mr Chairman and honourable members. My name is Barrie Clulow. I'm a resident of Uxbridge in Durham region and I am a member of the Taxpayers Coalition Ontario. First, I would like to thank the committee for allowing me to make this presentation today.

My knowledge of the assessment system comes from interaction between myself and employees of the assessment department in the Ministry of Revenue both during presentations on market value and during assessment appeals. I have dealt with assessors, assessment managers, assessment commissioners and an assessment lawyer. I have successfully effected reductions in hundreds of residential assessments. In one case, an entire subdivision's assessments were reduced because the assessor had misclassified the homes.

(1) Assessment is a provincial responsibility.

(2) Municipalities can and do request MVR.

(3) The request before you by Metro is not in keeping with current legislation and requires you to pass special enabling legislation.

(4) Home owners currently have a means of addressing assessment inequities within their own neighbourhood and class of property.

(5) Municipalities currently have a means of addressing assessment inequities between municipalities.

The current 20-odd years of inequities, not the 40 we keep hearing here, have been created since the province took over the responsibility of assessment from local government.

The provincial assessment department appears to be deliberately creating assessment inequities to force market value assessment upon the entire province, something, thank God, no government to date has had the resolve to do.

A previous presenter mentioned something to the effect that this Metro plan was a tar baby and the province should keep its hands off. I say just the opposite: The province must deal with this legislation by quashing it or it will be tarred for ever as the government which perpetrated this dastardly deed on Metro taxpayers and ultimately all taxpayers in the province.

Under current legislation, region- or county-wide market value assessment requires an automatic update every four years. This is nothing more than a giant make-work project for the assessment department, which according to those I have talked to recently is already overworked and understaffed. More civil servants equals more bureaucracy equals more taxes.

In a recent conversation with an assessment manager, he indicated that the assessment department would soon be a crown corporation and that all assessment work would be billed directly to the municipality, thus resulting in higher municipal taxes.

This and previous governments have been led down the garden path by bureaucrats. By using the politically correct catchwords of the day, they are methodically creating a need for bigger and bigger government. Enough is enough. We are already taxed to death.

An MVA example of two almost identical homes: The example walks you through the entire process and will show why the assessments are unfair and inequitable. The example shows how a one-year difference in construction can mean an $11,000 difference in the 1980 market value assessment of two virtually identical homes, located on the same street, built by the same builder and with similar improvements to each home. Property A was built in 1969; property B was built in 1970.

The calculation goes something like this. They take the replacement cost new in 1969, multiplied by a location modifier, multiplied by the percentage good to give you the depreciated value, and you'll note that they're $41,113 and $41,907. That depreciated value is then multiplied by the additive value to give the building value. Add the lot value to get the 1980 market value and you end up, miraculously, at $77,558 and $66,098.

You will notice the only real difference in how the two properties are handled by the assessment department is the factor called additive value or value added. This factor is arrived at by looking at sales in the year reflected by your MVA. However, if you look at the factors used in this area, you will see that they bear more relation to age and location than they do to value. The regional assessors provide the following information regarding this value added factor: 1970 to present, factor 1.10; 1920 to 1969, factor 1.40; prior to 1920, factor 1.50; Bristol Ponds, factor 1.25.

You see that although your house may be the same as your neighbours', they might have a lower or higher tax bill than you. So much for our fair and equitable market value assessments.

By the way, just prior to this appeal in 1989, a further portion of the basement was finished, adding two more rooms, and the interior of the house refurbished in house A. In actual fact, it was duplexed, legally. Both of these homes sold shortly after, with house A selling first and at a slightly higher sale price than house B. Both homes sold for slightly more than $250,000.

Although this next example looks at Oshawa and Durham region, I am sure you will find a similar situation in Metro Toronto. You will find that the manuals used are the same. The only variance would be the factors and the base years.

Manuals and factors used to arrive at assessed values: In Oshawa, wards 1 to 6, they use a city manual based on 1950 values. It's factored back to 1950 values. They factor a 1969 replacement cost new by factors varying from 0.33 to 0.39, depending on the vicinity. Then they came out with a new manual, the Ontario valuation manual, factored back to 1950 values; factor 1980 replacement cost new by factors varying from 0.194 to 0.20, depending on vicinity.

In ward 7 they use a county assessors manual based on 1940 values and the assessment valuation manual, again factored back to 1940 values; they factor the 1969 replacement cost new by 0.21. Then they came out with the Ontario valuation manual, factored back to 1940 values; they factor 1980 RCN by 0.113. All six of these methods are currently in use in the city of Oshawa. I believe you'll find that the same situation exists in Metropolitan Toronto. The 1940 and 1950 values residential and farm assessments are then totalled, weighted and added to the commercial and industrial assessment. The total is then equalized to arrive at the per cent of liability for each area.

One or more of the above is used on all municipalities within the region. Durham region has two municipalities not on market value, one on 1982 values, one on 1984 values, three on 1985 values and one on 1988 values.

After a convoluted process of applying grants in lieu etc, equalization factors determined by the province are then applied to each municipality's total assessment to determine the share each municipality will pay for regional purposes.

If any area municipality is not satisfied with the assessment as revised, equalized and weighted by the Ministry of Revenue, the area municipality may appeal from the decision of the ministry etc, etc etc. This is what the local municipality should be doing instead of asking for MVA.


The following illustration shows how a property assessed using the 1980 valuation manual would be taxed in the two areas of Oshawa and the difference in taxes on the two completely identical homes. The figures and factors are taken from the appraisal card prepared by the assessment department on the home from the information supplied by the assessment department in regard to the factors for wards 1 to 6.

I won't go through it all, but as you can see, the home owner in ward 7 will pay between $119.48 and $254.02 more in taxes than the identical home in wards 1 to 6, and that's not even taking into account the value of the land; this in spite of the equalization factors used to equalize the assessment in the two areas. As time progresses, this dollar spread between wards only increases.

Honourable members, MVA, as calculated by a provincial assessor, is a sham.

The Acting Chair: Thank you for your presentation. Questions? Ms Poole first, Mr Owens next.

Ms Dianne Poole (Eglinton): Thank you very much for appearing before us today. I think your brief is particularly important because you are not a player within the Metro scheme. You have no vested interest as such.

Mr Clulow: I have no vested interest in Metro. I have a vested interest in this province.

Ms Poole: That's right, so I think your viewpoint is particularly important, that we've had it represented.

Your point 1 on page 1 was that assessment is a provincial responsibility. That point is well taken. Unfortunately, the government appears to be taking the stand that it is not a provincial responsibility. This is Metro's plan and they're giving Metro the same rights as the rest of the province.

I would dispute the government's analysis on two bases: One is that of the 735 reassessments throughout the province, the majority have been by local councils. It's only been in the most recent years that they've gone to regional councils having this responsibility, and certainly they've never gone to a reassessment with a major player such as the very large local municipality being totally opposed to it. The second reason is that there's never been anything like Metro's plan that has been approved by a provincial government.

I submit to you, and I think you would agree, that this is indeed a provincial responsibility and that the province does have a responsibility to look at this plan.

You're from outside Metro. I think there's one way in which the government cannot duck its responsibility for the people outside Metro. We have heard reliable information and reliable presentations that Ontario Hydro ratepayers throughout the province will be paying for Metro's plan, because under Metro's plan it is not capped. It is one of these players that are not capped for whatever reasons -- mainly political -- so they'll be paying $60 million more in taxes this year.

Mr Clulow: I've watched much of the debate on television. I agree with you.

Ms Poole: The second thing is that the railways' rights of way again have not been capped and the railways are saying they will be cutting lines and services across the province, and across the province there will be job losses due to this plan. Do you think, even if the government ignores all the other reasons why it's a provincial responsibility, that it has a right and a duty to protect people outside Metro from the impacts of Metro's plan?

Mr Clulow: The only problem I have with that is I believe in the user-pay system, but essentially, yes, I agree with you and assessment is definitely, by legislation, a provincial responsibility.

Mr Owens: In terms of the five points you've made, point 3 is that you're indicating the current legislation is not consistent --

Mr Clulow: I'm sorry; I can't hear you.

Mr Owens: Could we have the microphone turned up here? It's been a problem all week. Is that better?

Mr Clulow: Yes.

Mr Owens: A bit too much reverb on this thing. Anyway, in terms of your point 3, you indicate that this legislation is not consistent. My understanding is that in fact it is consistent with past practice and that our friends across the way in the former government also had some experience with this type of legislation.

In point 5 you suggest that municipalities currently do have a means of addressing assessment inequities between municipalities. Can you tell me what those are?

Mr Clulow: I have a copy of an equalized assessment report for the region of Durham and it's stated right on there, "From the assessment department." I'll read it to you. This is from assessment region 13:

"If any area municipality is not satisfied with the assessment as revised, equalized and weighted by the Ministry of Revenue, the area municipality may appeal from the decision of the Ministry of Revenue by notice in writing to the Ontario Municipal Board at any time within 30 days after notice of the revised, equalized and weighted assessment was sent to the area municipality by the Ministry of Revenue."

This is covered under sections 97 and 98 of the Regional Municipality of Durham Act. It is also covered under the Assessment Act. I'm sorry; I can't quote you the section it's covered in.

Mr Owens: I'm just going to ask the ministry person to respond to that. I'm not quite comfortable that you've been given the correct information.

Mr Clulow: The information comes from a letter written by the Ministry of Revenue and from the Assessment Act, sir.

Mr Owens: That doesn't mean it's always the correct information.

Mr Clulow: Then they're sending false information to every municipality across Durham region.

The Acting Chair: We'll have a comment by the ministry representative.

Mr Tassonyi: Again, I'm Almos Tassonyi. I'm a senior economist with the municipal finance branch. I would suggest to you, sir, that while I agree that's what that statement says, it is the discounted, equalized assessment and every municipality agrees with it in total. However, if your underlying argument is that there are inconsistencies within the assessments themselves as well as in the underlying factors, then I would find it hard to agree that the total averaging of all those assessments is absolutely fair and equitable.

That formula is in place in order to determine regional apportionments. It is fair up to a point in that everybody is treated the same way in all municipalities using the existing assessments. But by no means and by any stretch of the imagination would I care to suggest that in the region of Durham, which has not had a region-wide reassessment, it is as fair a system as exists, for example, in the region of Sudbury or in Waterloo or Haldimand-Norfolk or in any of the other reassessed counties where at least a single mill rate is applied to raise the moneys for regional purposes and for county purposes, as well as for coterminous school board purposes.

The Acting Chair: Speaking to the point of appeal, though, if a municipality does appeal the equalization, who hears the appeal and makes the determination? I think we need to know that.

Mr Tassonyi: The Ontario Municipal Board does, Mr Chairman.

Mr Clulow: They can get that factor changed and that will reduce the taxes on every property within that region or municipality.

The Acting Chair: I believe that has happened in the province of Ontario on some occasions.

Mr Clulow: Yes.

Mr Owens: If I have one more kick at the can here, you mentioned that in the region of Durham there are approximately six different methodologies, I guess.

Mr Clulow: Those six methods are within the municipality of Oshawa, and you will find that under market value assessment, one of the second two is used in all the other regions. For instance, in Uxbridge our assessment is based on the 1969 valuation manual, as the example you saw there of the appeal. They are factored back to a value which represents somewhere in the 1940s or 1950s; I'm not sure where it is.

Mr Owens: What's Oshawa done in terms of trying to correct this?

Mr Clulow: Oshawa is sitting on its hands. I currently have over 100 homes in a subdivision that have appealed successfully. The ministry has granted that reduction to the entire subdivision, which I believe is approximately 500 homes. There are other people within that same ward who are upset about these equalization factors that are used, and these are just the equalization factors between wards; they're not going into the equalization factors between municipalities, which are even worse.

The Acting Chair: Next question, Mr Turnbull.


Mr Turnbull: First of all, could you tell me a little bit about the taxpayers' coalition? Who is it made up of?

Mr Clulow: The coalition is made up of taxpayers across the province of Ontario. There are a variety of members in a variety of areas. Durham region has a Durham regional chapter which is a member of the Taxpayers Coalition Ontario, and then we divide into subchapters. We have a chapter in just about every municipality in Durham region. We affect municipal taxes, we affect school taxes, and we are now coming after provincial government legislation as well.

Mr Turnbull: You very well indicated the problems that exist with market value. You went through all these complicated formulas that are used. Indeed, if you've been watching the testimony, you will have noticed that on several occasions people have alluded to the fact that there were college students who were on summer jobs who actually did this assessment. Can you conceive of college students being able to adequately understand the application of these manuals? Even if the manuals were sensible and measured it adequately, do you think they would be capable of being able to make the right judgements?

Mr Clulow: The person coming out and assessing the house is just doing a mechanical calculation. The problem is that there are too many places where a subjective opinion is put in, and that affects the end result. You could take six different people and you're going to get six different subjective opinions. In fact, I have an example here, if you'd like to see it.

Mr Turnbull: Yes.

Mr Clulow: It shows where an assessor, after an OMB hearing, decided that the depreciation on a property was too low, changed it, and effectively altered the assessed value of the house. That was after an OMB decision.

Mr Turnbull: After the fact?

Mr Clulow: Yes.

Mr Turnbull: Effectively punishing the person for --

Mr Clulow: It was during the next market value assessment. We were evaluated in 1975, and then re-evaluated in 1980.

Mr Turnbull: So effectively we punished the person for having appealed?

Mr Clulow: Oh, yes, very definitely. I am that person.

Mr Turnbull: Okay. Well, we've heard more than one set of testimony over the fact that people are effectively punished by the Revenue department for having appealed their assessment.

Mr Owens: Give me a break. Where have you heard that?

Mr Clulow: It has been stated to me that the Ministry of Revenue circulates articles that I write and letters to the editor that I write through the Ministry of Revenue. I've heard that from three separate sources -- three separate, unrelated sources. So I would agree.


Mr Turnbull: Apart from the heckling from Mr Owens, who has a great vested interest in this, we heard from a gentleman from Mississauga who made testimony to this committee which very clearly showed that there had been a lot of offers to him that if he would back off from his appeal, they would reduce the assessment, and his assessment was changed more than once during the course of the appeals and counterappeals.

Mr Clulow: The assessment department, on every occasion that I have attempted to go the OMB in the past, has come and made a settlement with me which was close enough to what I wanted to prevent me from going to the OMB.

Mr Turnbull: Precisely. That's precisely the point I want to bring out. Is it your contention, notwithstanding the fact that many of the municipalities of Ontario are on market value, that this is the responsibility of the province and not just the responsibility of Metro?

Mr Clulow: Under current legislation, it is the responsibility of the province.

Mr Turnbull: The government would have you believe otherwise.

The Acting Chair: We've run out of time. Thank you for your presentation.


The Acting Chair: We're running considerably behind. I would ask Raymond Cho, councillor, to make a presentation at this time. I believe if the questions were somewhat shorter, we might be able to get them all in.

Welcome. Would you state your name, please, and proceed with your presentation.

Mr Raymond Cho: My name is Raymond Cho. I am a Metro councillor representing Scarborough-Malvern. I'm sorry that I am losing my voice; I have a bit of a cold.

Thank you very much, Mr Chairman and honourable members of the committee. I'm here to request that this committee and also the provincial Legislature approve the MVA, market value reassessment adopted by Metro council last October 29.

I'd like just to describe briefly about my riding, which I'm representing: 96.5% of the residential units in our riding have been paying overtax during so many years, I guess since 1953. In some situations they pay $2,000 more taxes according to the present market value assessment, and it's totally unfair. Each time I have some issues or problems at Metro council, I actually go out and I meet many residents, because I'm representing them, and I will give you some contents of my interviews with the people in our riding.

I met a black gentleman. He appears to be between 50 and 60. He said he got laid off. He worked the last 30 years. He doesn't have any income now, but he's paying over $5,000 property tax, which means he's paying $100 each week to live in that house, and still on top of that he has to pay a lot of mortgage. He wants to sell the house, but because his property tax is too high, he cannot sell it.

I met another gentleman. He was saying: "Look, Councillor Cho, I'm paying $2,000 more for my house, and I have a business in East York. It's a furniture store." His property tax is roughly $3,000. He knows a friend who runs a similar furniture store near Yonge Street. His property tax is $1,000. So in fact he's paying $4,000 more, $2,000 for his house and $2,000 for the business, and: "How the heck can I compete with my friend who runs the similar furniture store? What kind of tax system do you have? You are my representative. You have to correct this." I can only answer, "I'll try my best."

It's not just the $2,000 they pay more. If we don't correct this totally unfair tax system, next year he'll pay maybe $2,200, the year after $2,300. The gap will become even wider all the time.

I'm sure not just the Metro councillors but all the honourable members here are here to make a good law and you are here to practise a good system so that overall, not just the people living in downtown Toronto, all the people in Ontario should have fair treatment. This is long overdue, to correct this totally unfair tax system.

I urge you, the honourable members, I hope that you bring this message to the Legislature, not just from downtown Toronto but from all Metro Toronto, and then I hope that the provincial Legislature will adopt the recommendation passed by the Metro council.

I've heard, not just here but through the newspaper and through the Metro council, there are several arguments why it has not been fair for a long time. I will go into just a few points here.

This is the wrong time to pass MVA, but there's no right time to raise tax. Nobody likes to pay more taxes. If you listen to people, this is the wrong time; that's so true. But if you listen to a group of people from the other side, there's no better time than this time, because so many people are laid off and they couldn't pay the mortgage. Why would we urge them to pay $2,000 more tax, for years and years and years, and then the gap is getting wider all the time? To me, especially representing Scarborough Malvern, there's no better time than this time.

I heard the gentleman before me say there hasn't been no in-depth study. If we try to do an in-depth study, it takes two years, three years, four years. By the time you get the result, you write the report, you evaluate whether it's correct or incorrect, then it's already an obsolete report. So then we request another in-depth, and it goes another four or five years. It will never happen. We have 1988 market value assessment. We have the assessment done.


Another argument is that in 1988 the market value assessment, say it was a $500,000 house, today it's $300,000. It's true, but it should not just apply to the city of Toronto. It applies to Scarborough, it applies to North York, it applies to all over Ontario. If you try to use that argument again, we have to persist, this is a totally unfair tax system. So that argument doesn't buy as far as I'm concerned.

Another argument is: "In Toronto, we live in a congested area. You guys in Scarborough have all the space. Look at the ratio per square kilometre." Again that's a very poor argument, honourable members. When you go to Scarborough, especially the Malvern area, we have a huge Rouge Valley, we have Metro Zoo. There are even radioactive contaminated areas and then when you actually visit, we have so many congested social housing, we have high-rise apartments and then the crime rate is higher.

In terms of police services per capita, we have the least police services in Scarborough. When it comes to services, we don't have a subway, we don't have trolley buses, we don't have streetcars. We have the so-called supermailbox, which means sometimes seniors in their wheelchairs have to go five, 10 minutes in this cold weather and they don't have cars. They don't have door-to-door mail service in many areas.

I met one resident who said: "You know, Councillor Cho, I have to change three buses to make one registration mail and send the mail by registration. It takes 45 minutes." It's so easy to say, "You guys have all the space. We're living in congestion. It's fair that we pay less tax," but when you look at it, it's totally unfair.

I think I could say that the city of Toronto council spread all kind of misinformation. You know, "Your taxes go up 300%, 500%." They're really scared. The tactic was very successful in terms of immobilizing manpower, but it is totally unfair. It's not true. The tax increase for the business sector, as you know, is 25% over three years. It's not 200%, 300%.

They say businesses all over Metro will hurt if we adopt this market value. This again is totally untrue because in my riding approximately 60%, or 57%, of the businesses have a tax deduction and only a few businesses go up, but when it comes to the rest, as I mentioned earlier, it's almost 100%. They've been overtaxed and this injustice has to be corrected.

Another argument is, if you adopt this market value assessment, it's going to hurt the senior citizens. I'd like to mention to the committee here, we have seniors in Scarborough and we have senior citizens who are retired. We have unemployed people and we have a lot of single parents. All these people have been paying too much tax. Why do we have to urge them to pay more taxes when they have only limited income? We are forcing them to get out of the house and we just say it is unfair to keep postponing.

What we are actually saying is, "If we don't correct this unfair tax system, then you guys could go on tax revolt." A lot of people in Scarborough, they're not just saying it, some of them have already started, "I'm not going to pay the tax. I can only pay so much for the board of education but definitely not for Metro Toronto," and I don't know how to urge them to pay taxes. I mean, government has implemented totally unfair taxes for such a long time and that's the end result. I could go on and on, but I know you have heard so many arguments and points and theses from both sides, so what I'm saying is nothing new.

In conclusion, I know it hurts some people but we are not asking 100% increase, we are asking 10%, 10%, 5% for the business community, and especially the residential, it's 5%, 5% for two years, 10%. I think that's really good tax reform, and I'm making a very strong appeal to you that this committee should approve the recommendation, the motion passed by Metro council.

The Acting Chair: Thank you. A very short time for questions. Dr Frankford.

Mr Frankford: Thank you, and welcome. It's good to have some more Scarborough presentations here as there has been rather an impression from the number of delegations that this is dealing with the problems of people who all seem to be living around the Yonge Street corridor.

We've heard a number of points about urban planning, urban form, the urban economy, again very much from a downtown perspective. I certainly agree with much of what is said about the importance of city economies as the centre of economies. I wonder if you'd like to say something about the impact that you see this having on economic life in our end of the city, or rather our end of Metro.

Mr Cho: Especially downtown Toronto? Urban centres?

Mr Frankford: Around Scarborough.

Mr Cho: In terms of a tax deduction for the downtown Scarborough commercial sectors, it's a very minimum. Number-wise it's a majority, but it's a minimum, so I don't think they will get great benefit. but in terms of a tax increase it's not just Scarborough or even downtown.

We received letters from the Toronto economic advisory committee and the board of trade. The present recommendation, a motion passed by Metro council, is quite acceptable to these advisory committees, you know. I don't think it's going to create a real ghetto, and that is why we made that kind of suggestion. In terms of a negative impact, I'm not too concerned. I don't think it will create an economic ghetto. That's my view.

Mr Grandmaître: Being a councillor, let's talk politics. This MVA problem has been around for more than 40 years and I'd like you to tell me how come local politicians, Metro politicians, resolved this old problem or came up with a new scheme in a couple of hours? Can you recall this incident, if I can call it an incident?

Mr Cho: Well --

Mr Grandmaître: You know, they had legislation before them, they turned it down, they came back, they had a football huddle and they came back with a new scheme. Can you tell us, are you aware of this little complot?

Mr Cho: Well, first of all, we didn't pass this new MVA in a couple of hours. We had --


Mr Grandmaître: No, I'm not saying you passed it. I'm talking about the scheme that's before us being planned two hours or three hours before it was voted on.

Mr Cho: No, it's not true.

Mr Grandmaître: It's not true?

Mr Cho: It was debated for hours and hours and hours. We have MVA deputation by management committee. We tried to accommodate everybody as much as possible.

Mr Grandmaître: I'm sorry. You're not answering my question. I know it was debated. It has been debated for the last 40 years. I'm talking about the plan that's before us being arrived at by Metro at the very last minute.

Mr Cho: I'm a new councillor, Mr Grand -- I'm sorry --

Mr Grandmaître: Oh, it's Grandmaître. I've been called worse.

Mr Cho: Actually, the MVA was introduced to Metro council in 1989, I understand, and then it was --

Mr Grandmaître: But not the scheme that's before us.

Mr Cho: What I'm trying to say, it's not the first time, not decided in a couple of hours. As far as I'm concerned, I think it's kind of an incorrect question.

Mr Grandmaître: Well, I know that the scheme that's presently before us was dreamed up a few hours before the vote.

Mr Chris Stockwell (Etobicoke West): Just quickly, councillor. How are you? Maybe the answer he's looking for is the fact that this scheme is a modification of the 1989 plan that was put in place in 1989 and worked on probably for the entire year of 1989, but not accepted by the present Liberal government of the time and it died. So the plan has been around since 1989, and it has been modified sometimes, but the actual plan itself was basically in place in 1989, negotiated over that few months when you were having public hearings and meetings, and finally came into place at the last council meeting with some modifications to the caps for businesses and so on.

So to suggest the question you're suggesting, that this is a last-minute scheme -- there are a couple of minor changes that seem to buy in some of the members from East York and so on that allowed this thing to pass at council. Maybe that was the kind of response you were trying to put forward, was it not?

Mr Cho: Mr Stockwell, I understand you mentioned there was some modification and I wasn't around in 1989, so I couldn't really compare the two pictures, you know, but as far as I understand it, the modification we put forward and adopted is a great modification.

Mr Stockwell: Oh, I think it is too.

Mr Cho: This 10% increase over two years, I think we tried to do the best we could. Also, I fought against the increase, especially for the business sector, because business is the area where they create jobs and jobs are the best economic engine. I personally fought for 10%, 10%, 5% increase over three years.

Because of that, I've been in very hot water in my riding. Being of Korean background they say, "You have a Korean business, you try to satisfy them, neglecting all your riding." I'm trying to be as fair as possible, really struggle --

Mr Stockwell: No, but all I'm trying to point out is that really to categorize this as a last-minute deal is to a degree unfair.

Mr Cho: Whatever we do, I'm sure that it's the same thing with the Legislature. When you go through a certain process, you have to go through at the last minute kind of thing. Then there's a beginning and there's the end. I'm not sure whether I could answer your question to your satisfaction.

Mr Stockwell: Good answer.

The Acting Chair: A final question, Mr Rizzo.

Mr Rizzo: Sir, would you think that it would be fair if the provincial government before it passed this proposal could make further changes to it, tried to respond to the concerns of the people appearing in front of this committee for the last week and a half at least?

Mr Cho: That's a very difficult question for me to respond to, but as far as I could say as a Metro councillor under the present economic situation, the motion that we passed at Metro is most fair. I wish personally that there shouldn't be any correction, but it's up to the honourable members.

The Acting Chair: Thank you for your presentation, Councillor Cho.


The Acting Chair: The next presenter is the Lynden Park Mall Association. Please take your seats and introduce yourselves. I believe you're located in Brantford, Ontario, as I would recall. We allot approximately 20 minutes, hoping that there will be time for some questions by committee members within that time. Proceed, please.

Mr Rick Rizzo: My name is Rick Rizzo. My brother and I are independent retailers in the city of Brantford. I'm actually just here as support for Jim.

Mr Jim Turnbull: My name is Jim Turnbull. It's kind of ironic. I see a Rizzo and a Turnbull.

The Acting Chair: Yes, we noted that and we noted you're together.

Mr Jim Turnbull: We've never heard of these guys before.

Ms Poole: That's not only ironic; that's bizarre.

Mr Jim Turnbull: That's right. We actually work together. I just hope we work a lot better than these two guys.

As I said, my name is Jim Turnbull. I'm here representing two parties, first the company I work with, which is an independent retail chain of 70 stores operating in shopping centres in Ontario, including three in the Metro Toronto area. The other party is a tax committee from Lynden Park Mall in Brantford, with some 20 members who operate small retail stores in this mall. This committee has been lobbying tax increases with various government and business groups and has been given this opportunity to voice its concerns regarding market value assessment.

Being that Brantford and the majority of other municipalities in Ontario have already adopted MVA, we have been conditioned in accepting this concept. However, I do wish to speak about a very specific inequity in this system for businesses operating in shopping centres, to show the consequences being experienced at first hand and to insist that this legislation be changed. The inequity is in the apportionment of market value assessment between major or so-called anchor tenants, ie, department stores, grocery stores and ancillary tenants, which are all the remaining tenants in malls.

The problems stem from subsection 13(3) of the Ontario Assessment Act, which I've shown as exhibit A, which deals with apportionment of value of multiple occupancy properties. This section states that any assessment for multiple occupancy properties be based on a rental income approach.

Shopping centres are assessed using this income method, under which the rental income on each individual property for the base year is obtained, smoothed to account for unusual highs and lows and capitalized to determine the market value for each property.

This inequity occurs due to the fact that the major tenants pay significantly less in rents on a per-square-foot basis than do the ancillary tenants. Being that the majors have significantly reduced rents, the corresponding market value assessments, and hence taxes, are disproportionate to the ancillary tenants. While it could be accepted that the majors should pay something less in taxes on a per-square-foot basis, they are actually paying a great deal less than the ancillary tenants.

Major tenants typically sign long-term leases with combined terms and options ranging from 25 to 100 years at very low rents. These deals are given to the majors for various reasons, and in my view it's because the landlords feel the majors give the malls stability. Without the majors, landlords feel they would not attract the other tenants required to fully develop shopping centres.

Ancillary tenants, on the other hand, do not have the luxury afforded the majors and typically sign shorter-term deals, up to 10 years, with much higher rents: $10 to $100 per square foot, from our research, depending on various factors. These leases also normally have escalation clauses which kick in over the course of the term.

Given the factors I've mentioned, it can be seen that the disparity in rents causes inequity in the apportionment of value and hence taxes becomes greater as time goes on, because majors experience no real increases in rents, whereas the ancillary tenants experience both escalation increases and are subject to the market forces when renewing or originally signing leases. This market factor alone has dictated very large increases in rents over the 1980s.

As municipalities update to more recent base years for MVA, the discrepancy I've been mentioning becomes greater. I've enclosed an analysis, which is shown in exhibit B, showing the actual impact on Lynden Park Mall in Brantford, where the city in 1991 changed to 1988 as the base year for MVA. In 1982, the ratio of taxes in dollars per square foot was just under two to one, ancillary tenants to the majors, while in 1992 this jumped to just over three to one. The majors occupy 60% of the mall space, yet contribute one third of the tax dollars. To appreciate the financial impact of this, the increases in taxes for the ancillary tenants range from 35% to 135%, while the majors enjoyed a 26% decrease, bearing in mind that the municipal mill rate increased by 5.5% over this period.


Exhibit C, which is also attached, shows some of the actual figures relating to what I'm speaking about. In the case of our company, which has three stores occupying a total of 2,940 square feet, we went from paying $22,000 in combined property and business taxes in 1990 to $34,000 in 1991, a staggering $12,000 or 55% increase in one year. Another company suffered a 114% increase, from the ones that are on the table there. As I mentioned, the majors experienced decreases.

I've also shown examples of the impact on some retail stores for Bayshore Shopping Centre in Nepean, which in 1993, along with the entire Ottawa region, is moving to 1988 as the base year for MVA. Our particular store, occupying 1,415 square feet here, will incur a $7,200 increase in taxes in one year. Independent businesses simply cannot survive under this hardship.

In a letter to a tenant of Lynden Park Mall in 1976 from the then Minister of Revenue, Arthur Meen -- shown as exhibit D -- which deals with section 13(3), formerly 17(3), of the Ontario Assessment Act, I'd refer you to the last paragraph of his letter. It includes the statement, "The early indications are that the business community will benefit by way of stabilized or reduced taxes when the [new] systems," which refers to the apportionment of values, "are fully implemented."

This in fact may have been the case in 1976 when the shopping centre industry was in its growing stages and the discrepancies in rents between majors and ancillary tenants were not as great as they have become. The study done by the ministry likely concluded correctly in making the above statement under 1976 conditions. However, if officials from the ministry were to conduct a similar study today, the conclusions would be far different.

I trust I've illustrated the impacts of the current inequities in the apportionment of market value assessment specifically as it relates to the shopping centre industry. You may wonder why this problem has only come into the forefront now when the same legislation has been in effect for several years and most municipalities in the province are already on MVA. The reason for this is because most municipalities have been using older market value base years -- 1984 and prior, and most, 1980 and prior -- where the rent discrepancies were much less. For the few municipalities that moved to 1988 market values, one city council in particular had no idea the impacts this would bring on shopping centres, let alone could individual retailers be expected to assess this in advance.

As municipalities update to more current values, as they are now doing in moving to these 1988 values, the problem I've brought up will accentuate and the government will be faced with yet another crisis, not just for Metro Toronto -- in fact Metro Toronto is not really bearing the brunt of this thing -- but for every municipality in Ontario.

In my closing remarks, I refer you to the attached newspaper article from the Globe and Mail of October 29, 1992 -- exhibit E in your notes -- which addresses this very problem I've been speaking about. At Scarborough Town Centre, for example, the ancillary tenants will see tax increases of more than $2.1 million, whereas the majors will be in line for reductions totalling just under $2.4 million. This gets us back to the Toronto situation which your committee was formed to hear, and I bring this up since we have experienced at first hand the severe financial impact this article clearly points out. Also, a Toronto Star editorial on October 31, 1992, which again makes reference to this specific problem, states: "Metro can't ignore such anomalies. Nor can Queen's Park and its Fair Tax Commission."

As I stated at the outset, we are not necessarily against the concept of market value assessment. However, the legislation, ie, the Assessment Act, must be changed to encourage a fair method of apportioning market value assessments in shopping centres. It is clearly obvious the current legislation is not achieving fairness, an obvious requisite of any taxation system. If this is not done, the results will be devastating on Ontario's retail business, apart from the majors.

We're the living example of the results of this, and I will state that this committee has already lost two members in the last six months whose businesses have succumbed. We're looking for you people as legislators to make the changes necessary to prevent this from happening in the future.

The Acting Chair: Thank you for your presentation. Mr Mills wishes to speak at this time.

Mr Mills: Thank you very much, gentlemen. I've listened intently to what you've had to say this morning and I tend to agree that the Ministry of Revenue should revisit this whole apportioning of the taxes among tenants in shopping malls, and I hope it does.

Mr Stockwell: If we don't base it on your dollar value that you're paying, the only other way I can imagine you'd base it on is square footage.

Mr Jim Turnbull: Yes, exactly.

Mr Stockwell: And that's what you're supporting?

Mr Jim Turnbull: I would go somewhere in between. Square footage the majors probably would never accept, but there's got to be something somewhere in between. You can appreciate this situation is going to be the same. We're just starting to see the original impacts of this. For a big guy who's got a rent of $3 a square foot right now and a small tenant who's got a rent of $40 a foot, 20 years from now that big guy's still going to have rent of $3 a square foot and the other guy could be $100 a square foot. Somewhere along the line, the majors' tax is going to go down and down and down as a total.

Mr Stockwell: I don't understand that, frankly. I appreciate what you're saying. I don't understand why the discrepancies would be greater on a percentage basis.

Mr Jim Turnbull: On a percentage basis they wouldn't, but under the current legislation, the way the assessments are done, it's on an individual property basis.

Mr Stockwell: But then it's taken in mass, applied to the mall and then split out according to the dollars valued at.

Mr Jim Turnbull: Of each individual property.

Mr Stockwell: Store.

Mr Jim Turnbull: Of each individual store. That dollar, that split-up, is done based on assessment which is done totally on a rental income approach.

Mr Stockwell: What about common areas?

Mr Jim Turnbull: Common areas are included in with the assessments for each individual property.

Mr Stockwell: And you appropriate so much common area per size of your store?

Mr Jim Turnbull: Yes. The way I understand it, it's included actually in each individual assessment. We don't have a problem either with -- well, we do have a problem, but we will accept the fact that shopping malls may go up in value and the market value of the --

Mr Stockwell: No, I think you have a very salient point here. The last question I have is, what's the split you're looking at, 50-50, as opposed to dollar and square footage, or have you given that any thought?

Mr Jim Turnbull: As I mentioned, in terms of the ratio of the ancillary tenants?

Mr Stockwell: Yes.

Mr Jim Turnbull: Back in 1982 it was 2 to 1 and now it's jumped to 3 to 1.

Mr Stockwell: No. What's the split you would make up your tax dollar with? I'm saying, "Okay, how are you going to do it, purely on a square-foot basis?" and you say, "No, the majors wouldn't agree to that." So what is the split, 50% based on square footage, 50% based on rental?

Mr Jim Turnbull: Somewhere. I haven't done the detailed studies or analysis of that.

Mr Stockwell: If your group gets together and decides what it is, let me know. I don't disagree with you. I think there's some fundamentally flawed process here, because I myself am in a mall of that size, and I would be not the biggest store, not one of the smallest either, but it seems to me disproportionately I'm paying significantly more in tax than some of the big boys and I'm not really sure why.

Mr Jim Turnbull: That's the reason for it, the individual --

Mr Stockwell: Yes.

The Acting Chair: Thank you for your presentation.


The Acting Chair: The next presenter is Ms Misters. Would you please come forward and have a seat and make your presentation. Please give your name.

Ms Marion Misters: My name is Marion Misters. I live in the city of Toronto and I have a business co-owned with my husband on Bayview Avenue on the East York side of the street. Thank you very much, Mr Chairman and committee members, for letting me talk this morning. I felt I had to be a part of this process, even though I'm a very minor player, but I felt I had to say my piece, and I know you've heard it all before.

What I'd like to do is to present to you a scenario my husband and I are aware of which we don't think the proposed system of MVA is going to help alleviate.

We own a bookstore. One of our colleagues who owns a bookstore in the city of Toronto is presently paying $700 a year in property taxes. His store's virtually the same square footage and the same frontage as our store. We pay approximately $6,000 a year. That's a difference of $5,300 a year.

I'm not sure if I've done this correctly, but if the proposed legislation goes through with the caps of 25%, in three years he will be paying $875 a year and we will be paying $7,500 a year. That's a difference of $6,625 per year. This of course doesn't count any business tax that is calculated, based on our property tax.


The proposed system will exacerbate the problem and it does nothing to create a fairer system. We're not against paying taxes. We just think the tax system should be fair to everybody. In three years, all you will have done, or all that you will achieve, is to start this debate all over again. What are we going to do in three years time? Do we go up another 25%? His taxes won't go up very much, ours will. Isn't there a system somewhere in North America we could use that is successful, that is fair to everybody?

If MVA is allowed to go in full force, obviously that's going to cause a lot of problems. Our property taxes alone will increase by about $4,000 per year. I would then need to sell about $10,000 worth of books to cover that extra cost. That's about 1,600, 1,700 paperbacks. I'm already open seven days a week. I only close three days a year: Christmas Day, Boxing Day and New Year's Day. How am I going to sell 1,700 more books to try and cover the cost of the increase in tax? Bookstores, as you know, have been hit with GST in the last few years and that has reduced our sales.

I know there's no easy answer, but the proposed system seems to make the inequities a little more unfair. Have you considered, or would you consider basing property tax on square footage, the frontage of the building? How about basing the property taxes on the services we use? All I would like to say is, please reconsider before you pass this. Thank you.

The Acting Chair: Thank you for your presentation. Mr Stockwell, please.

Mr Stockwell: What are your taxes going up under market value assessment, if it were implemented full blown, to $10,000, did you say?

Ms Misters: Approximately, yes.

Mr Stockwell: What would the taxes of this friend of yours go up to under full MVA?

Ms Misters: To $7,000.

Mr Stockwell: So you'd still be paying $3,000 more.

Ms Misters: That's correct.

Mr Stockwell: Where's your store?

Ms Misters: Bayview Avenue.

Mr Stockwell: Bayview and what?

Ms Misters: South of Eglinton.

Mr Stockwell: It just seems to me that your -- I'll make it a comment and you can comment on it. Under any system, they still have to generate the same amount of money. You understand that under the system we're implementing today, there are no new dollars assessed; it's just different proportions of that amount of dollar value. I know what you're going to say, too, with respect to basing it on services, because again I have a business and frankly I don't use any of the services. I have to have my own garbage picked up. I have to pay for my water and hydro. What they do every so often is, in the snowfall, come around maybe and clear the snow off the road. Everything I have to pay for myself. I don't use the library, send kids to school etc, so I'd almost be getting a rebate if it were for services and I don't think that would work.

It seems to me that your argument that is maybe there's just too much tax, period, because under any system your taxes are going to be pretty high -- $7,000, $10,000 -- whether it's unit assessment or market value assessment. If you base it on services, no, they'd be very low, but then that would be transferred to the residences, so you can forget that one. No politician will vote for that in a million years.

Really, my comment is that I don't really think any system's going to make a big difference to you. I think your fight is with local government because they're simply spending way too much money. That's the only way I can see you getting out of this predicament.

Ms Misters: I agree with what you're saying. Under any tax system, if it's perceived to be unfair, then you have a problem. I think if people perceive it to be fair, then there's --

Mr Stockwell: But perceived to be fair or not, you're still going to pay $7,000 to $10,000 a year.

Ms Misters: That's true, and my house is going up by 42% in the city of Toronto and yet I have a 30-footed frontage. I didn't bring those into my figures. I have to sell, I think, another $4,000 a year just to cover the extra cost of the house property taxes going up.

There is no easy answer. I certainly don't have the answer and I don't know what to suggest. I agree with you; I don't have kids, I don't send anybody to the education system, but I must pay those taxes. I agree with that. I pay the taxes. I live in Canada. I choose to live in Canada. I could very easily live in the United States. I choose to live in Canada because of the social services. I don't mind paying tax as long as it's a fair system.

Ms Anne Swarbrick (Scarborough West): I appreciate very much your point about not minding paying tax when you feel you are getting the services for that. I certainly agree. I prefer the kind of Canadian system we've got too, as long as it can be seen to be fair.

I just want to ask if you're aware of the kinds of things that our government has initiated to try, if not in this round of assessment because it may be too soon -- it is too soon for everything to come together -- to work towards a fairer system for the next round of assessment.

We have now committed, because of the controversy around here, to work with Metro on a full economic and social impact of the system to look at what improvements can be made. We have been looking for some time now at the issue of whether education could be refinanced, to be paid for in a different way instead, such as through the income tax system based on ability to pay, and that'll be coming up in 1993 in a report through Tony Silipo for cabinet to deal with.

We also, of course, have the report of the property tax working group of the Fair Tax Commission coming out and the whole issue of the negotiations with the municipalities around disentangling who pays for what services between the municipalities and the province.

I didn't quite hear one of the things you were saying. Did you say that you feel support for the idea of financing education through an income tax system? Is that part of your position?

Ms Misters: No, I didn't say that. I haven't thought of that.

Ms Swarbrick: How would you feel about it?

Ms Misters: Without having kids, my feeling is that if you have kids, you pay for it, but obviously that is really not the right way of doing things. Our future depends on the kids' futures. The country depends on the young people and all of us have to support that.

Ms Swarbrick: I'm glad you feel that way. I don't have kids either, but I've never had a problem with the idea of contributing to the next generation of working people and taxpayers.

Ms Misters: I don't have a problem with that either as long as it's all done on a fair system. If it is an ability-to-pay system, I think that's fine too.

Ms Swarbrick: That's what I was wondering, if that's something you'd think would be reasonable.

Ms Misters: I think ability to pay is a very good, fair system. I don't think provincial sales tax or GST is a fair system, because it's not based on ability to pay. I realize that you can get a rebate, but you have to be in a pretty low income bracket to get those federal rebates. Maybe we should start from scratch and rewrite the whole act all over again. That would certainly give a lot of work to other people.

Ms Poole: Thank you very much for your presentation today. I know the area in which your business is situated quite well because it's right across the street from my riding.

It would seem to me that you would certainly benefit under a unit assessment system where it is the square footage of your building and your lot, because if you're comparing that to a lot out in Scarborough, you'd be paying the same taxes. It would seem to me that would be a system that would certainly be much fairer to you than the current one.

Ms Misters: I would think so, yes.

Ms Poole: That has been a proposal by the cities of Toronto and North York, but unfortunately it has never been given a comprehensive review, and Metro council just dismissed it out of hand because it has been quite wedded to going to a market value reassessment as opposed to it. I would think that with the unfair situation you are in right now, it would be benefited by a unit assessment system. Maybe that's something we can work towards if the government will let us.

Ms Misters: Thank you, and maybe we'll move across the street to the Toronto side.

Ms Poole: I'm not sure that under the current system that's going to help you a whole lot. In fact, it might even mean your taxes will go up further.

Ms Misters: Actually, they won't. For a number of stores on the other side of the street the taxes are going down, or they're increasing by only $200 if full-blown MVA is brought in.

Ms Poole: That's part of the very real problem. I've been talking to a number of the merchants on Bayview south of Eglinton, because that's where my family does its shopping every Saturday, except this weekend when instead we are in market value hearings. When I talked to the merchants, there were widely varying degrees of what their taxes would go up to. In fact, a few were getting decreases but their decreases were quite minimal, while the increases were in many cases quite astronomical and going to 200% or 400%, in one case 800%. That's another part of the problem, that there is no equity now and this particular proposal won't bring equity either.


Ms Misters: I know. There was mention about doing all these reviews and potential to change the perceived problem in 1992, 1993, 1994, 1995. Could these reviews on the Fair Tax Commission not present their position before any property tax changes are implemented? Would that be something you could consider, or have considered probably?

Mr Turnbull: Indeed the question you have just posed is the question which I've been asking all week and many of the presenters have asked: Why on earth go forward with this legislation before we have the report of the Fair Tax Commission?

My wife also has a store on Bayview, just south of Eglinton, and I know the position you're in. The taxes you're going to pay are based upon this inflationary boom that occurred in 1988, peaked then, and as you were the tenant, you weren't in a position to take advantage of any of that increase. In fact we own our building, and we resisted any temptation to sell the building, so we didn't benefit from those prices, but now we're being punished because of the fact that there were a few people foolish enough to pay the ridiculously high prices of 1988, and your business taxes are based upon the property taxes.

Through no fault of your own, the fact that there was inflation, inflation Bob Rae used to say was terrible -- they're blessing a scheme which allows taxes to be based upon the inflationary prices of 1988. In many cases, the properties on Bayview are worth half of what they were in 1988, and not just Bayview, throughout Metro, but particularly in the inner core of Metro. Perhaps you could just comment on that.

Ms Misters: What you say is correct. It is an unfortunate situation, but as Mr Stockwell said, this whole procedure is not a revenue-generating procedure, although I'm sure by some it's perceived to be. Perhaps another year might make the taxes more equitably distributed, as opposed to using the 1988 numbers.

Mr Turnbull: Yes. Indeed, Grey county already had the assessment numbers for 1988. Recognizing that 1988 was a very bad year, they have ditched it and they've said they're going to base it on 1992 numbers. They think it is more representative because it smooths it out more, rather than a few properties which went bouncing up at the height of the market.

Ms Misters: I think it would be interesting to see what the values would be based on 1992 as well.

Mr Turnbull: Yes. You'd actually have substantially less taxes relative to the other people.

The Acting Chair: Thank you for your presentation.

Ms Misters: Thank you for listening to me.


The Acting Chair: The next presenter regarding Bill 94, Metropolitan Toronto Reassessment Statute Law Amendment Act, 1992, is Mrs Pauline Shapero. Would you come forward, please, and make your presentation. Good morning.

Mrs Pauline Shapero: I have here copies of the material I am going to refer to and I'd like to leave it with you.

The Acting Chair: Thank you very much. The clerk will take it and distribute it. We appreciate that.

Mrs Shapero: I'll start my presentation by telling you something from a standpoint of morals and what is happening in our midst.

The Acting Chair: Would you like to be seated? It's up to you whether you wish to stand, but the microphone actually will work better if you sit. Thank you.

Mrs Shapero: This brief starts in this manner. You have a copy of it.

The late Mahatma Gandhi once said, "One of the great sins of the world is politics without principles."

After presiding at a judicial inquiry in 1960, Judge Joseph Sweet made the following statements:

"For ever the rule of law is endangered. It must necessarily follow that liberty itself is imperilled. The rule of law cannot be confronted with greater peril than when the lawmakers themselves participate in its flouting or in its disregard."

Now, points of information on this brief.

(1) Although devious services of agents are legally available to landlords, free, at the disadvantage and at the expense of their tenants, a survey reveals that only around 14% of landlords in Ontario have applied for rent increases. This dates back to 1983, so maybe there are more of them now, but I doubt it.

(2) Opportunists and politicians under misleading programs are alarming people. In some instances these pretenders receive government-approved grants to accomplish this. They also collect tithes from the tenants.

(3) The abovementioned activities under the guise of democratic principle are pitting tenant against landlord and creating turmoil and hostility in places that people call home.

(4) Our country is founded upon the principles that recognize the supremacy of God and the rule of law. The rental review procedures are at the present time being legislated at a very high risk. They are a mockery of justice and offending the law. My recommendations to this commission will, without any doubt, be beneficial to both landlord and tenant, and the rule of law would be rightfully enforced.

The chairman, when he heard our presentation, made a comment. He's passed away and I could weep every time I think of it. He said, "I fought in a war so that people wouldn't live in fear." His name was Mr Goodrow.

Let's go to the Ministry of Housing. First of all, I'm going to read a declaration and I'll tell you how a lot of these people who are employed in these places live in despair.

"Mrs Shapero, your township is still bad. The leftovers of the Tonks gang is all you have got. Sorry I can't sign my name, but the enclosure will explain what I am wanting you to know. I wish I could help. God bless you. I'm too old. They plagued me for many years. I chose to make my living working in the administration. It was a terrible mistake. The memories are depressing. I am getting on in years with time on my hands, and I keep wondering if the clique will be finished in my lifetime."

Those are the kinds of declarations and I have dozens of them. But, please, have a heart. Here's another one. This comes -- and I don't want to mention any names because I don't want to get any of these people into any kind of turmoil -- from the rent review services branch. Here's what I wrote to him and then I'll read the reply.

"Dear Mr So-and-So, the authentic information I have left you for your inspection I am hoping will explain to you the intolerable circumstances that exist and are without restraint being further created. I am an optimist. In 1968, from an experience I had at Toronto city hall, I found out that one person can make a difference. I know that there are remedial actions that must now be directly taken. This can positively be accomplished diplomatically and would rescue people from devastating situations that have, without discretion, been implemented around them and are destroying them. I was about to discard these enclosed old documents, but on second thought I felt that I should give a person of your intellect an opportunity to read them."

Mr Goodrow came to our building because a woman was in terrible trouble, and he came personally and said to that woman, "I fought in a war so that people wouldn't live in fear." Everybody was trembling. They were paying all their money in rent that they could possibly spare, and here the landlord wanted, I forget what it was, around 20%, and he was pretty close to getting it. I hired the best lawyer on the North American continent. I paid him $5,000 and he went there and he searched the whole thing, he brought in the law and he made hash out of them. But that isn't what I want. I want to feel secure; I want my grandchildren to feel secure.

When I was 14, 15 years old and I saw the mayor of Toronto, I ran home to Borden Street and everybody on the street knew that I saw the mayor. I thought it was such a great thing to take a look at him and I felt that he was something out of the ordinary. I sang God Save the King every morning when I went to school. Today the children make hash out of the politician, they run him into the ground, because they're a little better educated than I was.

We learned different things in school. We learned to read and write, and arithmetic, and today they read the Toronto Star and I think that should be -- they want to outlaw the lotteries for children under 16, I think they should outlaw the Star and the other newspapers. I don't think that the children should be allowed to read them and learn that Hitler got $6 million a year to destroy the people in Germany. These kids are coming out and they're pretty smart and they say, "I wonder how much they get in Canada to destroy us." That's exactly what a 16-year-old kid said to me a few weeks ago -- well, maybe a month ago.


Here's Mr Robert Glass and what he did:

"Chief Justice Houlden

"Commission Counsel

"180 Dundas West

"Toronto Ontario

"Dear Sir:

"Mrs Pauline Shapero of the below-listed address has been in contact with rent review service on a number of occasions for over the past years. She has two general areas of concern. Her building has an application under rent review and we are helping her as she prepares her appeal. However, Mrs Shapero has a larger concern and that is the moral decay in our political system as reflected in the relationship between politicians and the building system.

"We are not in a position to help Mrs Shapero in resolving this matter. Mrs Shapero has extensively documented her concerns. She asks that these materials be copied and forwarded to the Houlden inquiry in the expectation that someone would speak with her. I have enclosed a copy of the material for your perusal. If you have any questions regarding the information provided, please do not hesitate to call me."

Here's a man with a conscience and he wants something to happen so that he can be proud of his appointment as a -- let's say for helping the people rather than just being a tout for a bunch of politicians who are picking up the graft, and I said "graft". If you want to charge me with an offence, you can go ahead and do it, behind the scenes.

I'm a real estate broker and I could have made millions, as much money as politicians make on the quiet, but I don't like money. I'd sooner get up and do a good thing for a human being. I arranged most of the apartment buildings in Toronto, a lot of them -- let's say a lot of them. No builder could get an apartment building unless he had the right lawyer and he knew which door to walk into.

My people, the ones I represented, got their permit because I blackmailed the politicians. I'm a blackmailer. I knew what they were doing and they were scared that I might come out and just put them where belonged -- in hell.

Now let's go to Justice Houlden. I was called in and three detectives interrogated me for at least an hour or more. They were on my side but they had to play dumb. Very soon after, maybe days or a week or two, the Patti Starr commission was called off. So it served a purpose. At least the taxpayers weren't being taxed with the cost of running a farce. It's now a farce.

The material in that envelope that I gave you -- because you'll come to the conclusion, I'm sure, that truth is stranger than fiction. I have the documented evidence that we're in deep trouble, and I'm not here for my own wellbeing. I was born in 1911, so I'm not going to live much longer. But I'm here for my grandchildren and my children. They don't deserve to take the beating that they'll take if you fellows don't come to your senses.

Let's go to another one:

"Mrs Pauline Shapero

"30 Edith Drive

"Apartment 712

"Dear Mrs Shapero:

"Further to our telephone conversation of June 28, this is to confirm that the Ontario Housing Corp is subsidized at a rate of approximately $1 million per day by the government of Ontario."

Now, are you going to get enough money to cover all these expenditures from these poor little guys that you're trying to tax? There's no such thing as market value assessment.

I happen to be a real estate broker, and when I went to get my real estate licence, Mr Kuchereppo was collecting bribes from everyone who got a licence, but he couldn't collect it from me. So he refused to give me my licence, and I blackmailed him. I called him at 3 o'clock in the morning at an unlisted phone and I got the phone from one of his neighbours. He said, "Why are you waking me up and taking me out of bed?" I said, "I can't sleep and you're not going to sleep either." Then a week later I got my licence. You see what I mean? Now, that's the atmosphere we're living in, but we don't have to live like this.

"Should you wish any further assistance, please do not hesitate to call us." Now, that is from the Ministry of Housing.

Here's a brief that I submitted, and I'll only give you a few lines from it because I don't want to keep you too long, "In conclusion, I want to say that Central Housing and Mortgage Corp is just a political pork-barrel for some and destruction for others."

I listened to a woman here who needed a licence to get her building permit to get the building going. Now, when a builder buys land, he takes the money from the bank and he pays interest on it, and if he holds that land too long, he goes into bankruptcy, if he can't get a permit to build.

I got them permits to build and I got the biggest and the worst slobs into the business. They didn't know any more about building than an alley cat does. But I went in and I stood up for them, because I felt that the politician was just waiting for a little bit of money to come in the back door and then anybody could get a building permit.

If I was in the picture, the politician didn't come in. They were afraid of me. To this day they're scared of me, because they've always felt that I cause them trouble. The minute they made the little donation -- or big donation -- they got their permits in a week or 10 days. You see what I mean? It was all smoothed over and put through.

I could even tell you about something else that would horrify you, and it's in the limelight right now. When the old people leave their estates to the government to look after them, well, this man happened to work -- his name was Mr Roach. I'll mention his name. He's dead and buried. His mother owned a property and I was assembling an apartment building on Raglan Avenue.

Somebody phoned him and told him if he could get that property for a lot less money, they'd put a certain amount of money into his pocket. It happened that he was the son of this lady, that the public trustee was looking after her property -- they weren't looking after her property; her son worked there, so his name was on the title or whatever.

I moved in out of sheer coincidence, an act of God. I happened to go to a meeting in York township and he happened to be at the meeting. When he got up to speak, they were offensive. So I stood up and I said, "I don't like the way you're talking to that citizen." When I said that, they said, "That property is in the hands of the public trustee." He said, "Oh, no, it isn't; I am." Do you get the idea?

Usually they get red in the face when you catch them, but this time they went sick. They looked like they were all going to die. They called the meeting off quickly and they went into the back room. They went into the back room, and in the parking lot this developer came over -- I guess he had made the phone call -- and he said, "Pauline, quick, get involved and you'll make a commission." I said, "You go to hell." Just like that, right in front of them all. I said, "For the simple reason I didn't want your signature, your uncle's signature and everybody's signature in the business, because you'd cheat your own grandmother if she was still alive."

The next day I went down and they gave me a signature that I'd get the commission. Okay? Now Mr Roach, I got him the price that he was supposed to get, but they went to bribe a man -- the bribes went in there like crazy and they're probably still going in, but that's how I learned about it. Now let's go to --


The Acting Chair: We need to leave some time for questions. We certainly appreciate your presentation to the committee.

Mrs Shapero: Okay. You've got all the answered in that envelope I gave you, in writing.

The Acting Chair: I thank you for the background information and the documents you've presented here. We will make them available for the members of the committee to have a look at as soon as they can. I'm sorry that we are so short of time.

Mrs Shapero: I don't think you're giving me even -- what is it, 10 minutes?

The Acting Chair: No, I think you started at 11:45. At least that's what I had recorded. But if you'd like to sum up with something and then if you would like to leave time for a question or two, we'd appreciate it.

Mrs Shapero: Okay. I've told you already that the housing uses $1 million a day. I called and asked them what they do with the money. He said, "It's all for paperwork. It fills up" -- what are these places they're looking for garbage dumps? He said it fills up the garbage dumps, and they can't even get enough of the dumps for us to get rid of it. A fellow who works there told me that. That's not from me, because I don't know about the garbage dumps, okay?

The Acting Chair: Did you wish to --

Mrs Shapero: In conclusion, I want to say that the Central Mortgage and Housing Corp is just a political barrel for some and destruction for others. Free enterprise cannot and must not compete with governments. It is not honourable and has destroyed our economic stability in this country.

If you take all the money from the 200,000 tenants in Toronto, tell me who's going to keep those businesses going. I can't buy a new dress if he raises -- it's up to $900 now; it was $195 when I went in there. But I don't care, because I don't need to eat too much and I don't go to these fancy places where you pay $35 a ticket, so I can manage it. I'm not complaining.

The Acting Chair: We thank you for your presentation.

Mrs Shapero: But I can't go down and buy a new pair of shoes every time I want to.

The Acting Chair: Do you have any further comment on market value assessment itself?

Mrs Shapero: Why? Look, I don't want you to treat me as though I'm a moron. I feel you're taking all these people and having them here under false pretences. That's exactly what you're doing. It said in the Toronto Star this weekend that by Thursday this market value assessment will be law. It's in the Star. I've brought you the clipping.

The Acting Chair: Yes. thank you very much. I know the --

Mrs Shapero: Why are you thanking me and why are you brushing me off? Aren't you a little bit interested?

The Acting Chair: The newspapers do comment, of course.

Mrs Shapero: I'm going to give you one more story. It says here, "Hitler got millions for leading German people to destruction." How much are you guys getting for leading Canadian people to destruction when you're sitting here and you don't even want to hear the facts of life?

The Acting Chair: The committee has been meeting for several days, hearing, as you would term it, the facts of life.

Mrs Shapero: Ontario, I believe, is very --

The Acting Chair: The committee is indeed appreciative of the presentations that have been made for its --

Mrs Shapero: I don't know. I don't want your appreciation. I want active measures taken and in a hurry.

The Acting Chair: Yes. Okay.

Mrs Shapero: Here's another thing. Hitler was --

The Acting Chair: Thank you. Just a moment. I think we have one question and then we'll have to move on. Was there a question, Mr Rizzo?

Mrs Shapero: "Hitler got millions for leading German people to destruction." I want to know what our governments are getting for leading the people to destruction, and you are leading them to destruction. There's no education system, the police and the courts are a fake and a farce, and I speak from experience, because I trusted to them.

The Acting Chair: Do you really --

Mrs Shapero: I went to the Don Jail one day to see who was there and why Regent Park people spend the weekends in there to get something to eat. I'm telling you the truth.

The Acting Chair: Ms Shapero, you are making very broad generalizations --

Mrs Shapero: I'd be satisfied -- if you want to hang me, go ahead.

The Acting Chair: -- but maybe you mean to. Maybe it's your intention to make broad generalizations.

Mrs Shapero: I want conditions to develop where you won't destroy everybody in our midst.

The Acting Chair: We will note that. Thank you very much. What you have said this morning is on the record.

Mrs Shapero: And here's a -- I don't what it is. This is Ontario Hydro, a syndicate worse than crooks. They had the Lamport thing and everything they bought tripled. When they get away with getting away with half a million, the next time they jack it up to a million and each time it goes higher and higher. Well, they've come to the point where you can't live with it any more. You're through. You've got a deficit there in Queen's Park and you've got one in Ottawa.

The Acting Chair: Could we talk on this subject of market value assessment? That's why we're here.

Mrs Shapero: There's no such thing. I went to the same lawyer whom we paid $5,000 to appear before Mr Goodrow because money's nothing; money's garbage. You die tomorrow and you can't take it with you. If you leave too much for your kids, they ruin it, okay? Do you know something? He said, "Pauline, it's an insult to my intelligence to even talk about that."

The Acting Chair: I'm sorry to advise you that the committee has run out of time for your presentation. All of your remarks are recorded for the committee's consideration, and we now thank you for your presentation. Thank you very much.

Mrs Shapero: One more thing: when they built Ontario Place, I want you to know --

The Acting Chair: I'm sorry. It has nothing to do with the subject, and I thank you for your presentation.

Mrs Shapero: I followed the stadium up to the last, and the graft that was pulled out of those places is phenomenal. Now you can't do it. You're finished, everybody. There's no more left to steal. They're not even stealing; they're legislating a situation where they benefit financially, and they're mentally retarded, because they can't -- if they wreck the country and there's no stability in the country, what can they do with their money? A lot of them put it in Switzerland.

The Acting Chair: I want to assure you, Mrs Shapero, that the members of the committee are concerned about the future of the country, the province and indeed local municipalities.

Mrs Shapero: I'm sorry that I can't say what you want me to say. I wish I could. I'd be very happy if I could tell you what you want to hear, because that market value assessment -- I'm a real estate broker. I can sell a palace on one street for $150,000. I can get a shack down the street, and if a builder comes along who wants to pay $1,000 a front foot or whatever it is, I can get more for that shack than I can get for the luxury home.

The Acting Chair: Thank you very much for your presentation. I now declare the presentation concluded. Is Mr Nick Trianos present? Is Mr Trianos present? I am calling the third time. Thank you very much for your presentation. I now declare the meeting adjourned until 3:30 this afternoon.

The committee recessed at 1207.


The committee resumed at 1532.

The Chair (Mr Charles Beer): I call the standing committee on social development to order. We are meeting to discuss Bill 94, the Metropolitan Toronto Reassessment Statute Law Amendment Act, 1992.


The Chair: Our first witness this afternoon is Mr William Davidson. Would you be good enough to come forward, Mr Davidson. Welcome to the committee. Help yourself to some water if you so urge. You have 10 minutes for your presentation.

Dr William Davidson: First of all, I'd like to thank the committee for permitting me to speak and to express to you that this is my first direct exposure to the democratic process. I understand you've been sitting for a week now, and I surmise there'll be little new in my presentation. However, I've come to speak against market value assessment.

I speak first on my own behalf and inform you that approximately three years ago I bought a house downtown which happened to be the smallest house on the street. At that time and until the present, I've been paying approximately 7% of my disposable income on property taxes. If market value assessment is carried out in full, I have been informed by city council that I'll be expected to pay approximately 14% of my disposable income.

This house was bought in a good neighbourhood because I expected that when I retired from my present occupation, I would be able to sell it and use the proceeds thereof to live fairly comfortably for some time in the future. However, not only have the market values declined considerably since 1988, but market value assessment will surely permit or encourage this decline to continue. So I see both my present income and my possible future income being very markedly reduced by market value assessment.

I then take you to my office. My office is a converted residence which is also downtown. We have some figures provided to us once more by Toronto, and it looks like market value assessment will raise our present overhead costs, which are already 65%, to 75% and probably make the operation financially unjustifiable.

I believe my story is common to many in downtown Toronto and indicates a potential death blow to small business, particularly retail business on our streets.

Market value assessment, in my opinion, is inequitable as a tax base and I urge you, members of this committee, to listen to the people and to vote against its use. Thank you very much.

Mr Grandmaître: Are you self-employed, sir?

Dr Davidson: Yes, I am.

Mr Grandmaître: Has your net income increased by 14% in the last year?

Dr Davidson: My net income? I'm a doctor. I've seen a steady decrease in my net income over the last 10 years. Our overheads keep increasing, the taxes we pay keep increasing and, as you know, the government hasn't seen fit to permit us to earn money at the same rate as we're losing it.

Mr Grandmaître: If I'm not mistaken, you told us that if MVA or this scheme is applied, your increase would be 14%.

Dr Davidson: No, my increase would be from 7% of my disposable income, what I'm left with when I pay my taxes and my overhead, what I take home; 7% of it goes on property tax now. The indicated figures make it appear, by my calculation, that this would be almost doubled to 14% of disposable income, to pay taxes on a house which I thought I had already bought.

Mr Grandmaître: If MVA goes through, what will be the increase on your property?

Dr Davidson: It will be $8,000.

Mr Jim Wiseman (Durham West): Could you give me an idea of the location of your house, the frontage, the tax, so I have an idea where it is?

Dr Davidson: My house is on Roxborough Street, the first street above the Rosedale subway. We're on a corner lot. I can't tell you the frontage because I don't know which street it's on, on the corners. I can't answer that question. What was the rest of your question?

Mr Wiseman: I was trying to get some idea of how market value assessment plays out throughout the city. In my community, we've had market value assessment for a long time, and the distribution of taxes is not as great as it appears to be in terms of Metro. I'm just trying to get some idea of property values, how much it costs to buy the houses, frontage, what the services might cost, transit delivery, what it would cost to pick up garbage and that kind of stuff.

Dr Davidson: Quite simply, the house I live in cost me $1.175 million. I bought it in 1987. It's market value was assessed in 1988 as $1.5 million. They got an increase of, what?

Mr Wiseman: Forty per cent.

Dr Davidson: Not 40%, but a big increase. It's over 30% in one year. Of course, as you know, the prices have all collapsed, and it's probably worth less than I paid for it now, if my friends in the real estate business are to be believed. I would love to know the philosophy behind the taxes in the first place. How can anybody turn around to their citizens and say, "We're going to double your taxes" on any account?

The Chair: I'm sorry, I'm afraid the time is over. Thank you very much for coming before the committee.



The Chair: I call Mr Allan Morrison. Thank you very much for coming. Please go ahead once you're ready.

Mr Allan Morrison: After reading the Globe this morning, I question the value of my presence here this afternoon, but I've been able to rationalize that on the basis that it will make me feel better after it's all over anyway.

I live in the city of Toronto, and I have a house that's worth $500,000. I have a nephew who lives in Scarborough. His house is worth $400,000. His house is bigger than mine and sits on a larger lot. His income is twice that of mine. His net assets are three times those of mine. On top of that, he drives a 1992 Jaguar and I drive a 1985 Toyota.

Ms Swarbrick: You've been doing something wrong.

Mr Morrison: He has four children who are all in the public school system. My two have left home. I have no problem with taxes going to serve the commonweal of education. But Allan Tonks and his band of parochial politicians at Metro Hall think this is good tax policy, and they want to come into my bank account, take my money and give it to my nephew to help him pay his taxes. Of course, when you rob Peter to pay Paul, Paul never complains.

It's so apparent to me that MVA is fundamentally flawed and fundamentally wrong that I really don't understand how our political people can push this thing through.

One more anecdote: I worked hard, saved my money and bought a nice house. A friend of mine worked hard and saved his money, but he was a sailor. He bought a 30-foot sailing boat. He bought a cheaper house with a smaller mortgage and used that money to maintain the boat and travel. A third friend of mine never could hold a job, never could save any money, gambled it all away, drank it away, but he finally married a woman with a few bucks and went out and bought a real cheap house. These same people at Metro Hall want to take my money and give it to the other two people to pay their taxes. It's that simple. It really is that simple.

There are options out there, and there are good options out there. I'll just pick one. Every dwelling unit in Metro Toronto should pay a basic, fixed dollar amount. Let's say $2,000. On top of that, you would go to unit value assessment and add a variable on, based on square footage and based on lot size -- simple, stable and fair.

That's about all I want to say this afternoon. Finally, we have too much government in Metro. We don't need city hall and Metro Hall and we don't need the councillors with all their lawyers and social workers and traffic engineers, special assistants, secretaries and word processors. If you want to do something really good for Metro, whittle down two levels of government to one level of government.

The Chair: Mr Morrison, a few questions.

Mr Turnbull: I agree with every word you said. I'm not sure if $2,000 is the right number for the base amount, but I agree we should start with a base amount and then build unit assessment on top of that. I believe a base fee, whether it be $500, $1,000 or $2,000, whatever it happens to be, would at least reflect the fact that this government wants basement apartments; it seems to be pushing that. If you have multiple dwellings in a house, it would seem reasonable that you have multiple base units, and on top of that you build the unit assessment.

Mr Morrison: That would complicate the issue.

Mr Turnbull: And I agree with you that we have too many levels of government. Ultimately, we're going to have to wake up in this country. We are taxing people too much, and I'm not pointing the finger at any single party. Every party in this country is culpable in this respect. We are killing the people in Canada and ultimately we are taking away our viability, and that's why people are leaving. We must listen to people like you and say we've got to reduce the amount of government, because otherwise we'll never be able to reduce the amount of taxes.

Mr Morrison: MVA has no direct bearing on income, net assets, level of services. It's wrong. It's that simple.

Mr Turnbull: In your example, where you said you have a smaller house than your friend, whereabouts is your house?

Mr Morrison: North Toronto.

Mr Turnbull: And your friend's?

Mr Morrison: He lives in the extreme east end of Scarborough.

Mr Turnbull: Interesting. But they would say yours has got a higher market value, and therefore you should be paying more taxes.

Mr Morrison: Of course.

The Chair: Final question.

Ms Poole: Thank you very much for your presentation, Mr Morrison. I think with your stories you very graphically illustrated that we aren't correcting an inequitable system, we are compounding the inequities and just trading one set of inequities for another.

Mr Morrison: I agree.

Ms Poole: You've mentioned that you think if we had a base amount that was charged, plus unit assessment --

Mr Morrison: Plus a variable for unit value.

Ms Poole: -- basically the size of the lot and the house, this would be a much fairer rate and, quite frankly, I agree with you.

Mr Morrison: It's more stable, it's understandable and I think it's fair.

Ms Poole: Just one last comment in that regard: I think, in addition to being stable and being easy to comprehend, it would also have the added advantage that the amount, whatever it is, whether it's $2,000, $1,000, $500, that base would help alleviate some problems, for instance, in Scarborough, where they have larger houses and large lots. It would help bring that differential down so they wouldn't be as unfairly taxed; everybody would be paying a base and we'd go from there.

The Chair: Thank you, Mr Morrison.


The Chair: I call Mr John Newhouse, if you would be good enough to come forward, sir. We welcome you to the committee. Once you're settled, please go ahead with your presentation.

Mr John Newhouse: Thank you, Mr Chairman, honourable members. I'm a little bit hard of hearing, so if there's any response, I wish you would use your microphone. I left you a brief.

The Chair: Yes, it's being circulated now.

Mr Newhouse: It's called Province-wide Implications of a New Tax Differential System in the Assessment of Real Property. I am from outside of the city, from the town of Tavistock, but a lot of people outside of Toronto are following the MVA debate with great interest, because it has possible implications for the entire province.

I have a clipping here from the mayor of Ingersoll, Mr Rodenhurst. He is afraid that his town is going to suffer as a result of reassessment, so he's against this reassessment because he thinks further outlying areas are going to benefit, and the town of Ingersoll is going to get stung. This whole MVA debate pits inner cities against suburban areas. Sorry that you're getting overloaded with all this paperwork, but that's part of the game.

I don't want to read the brief that I have, it's all well-known planning matters.

The Chair: Mr Newhouse, if you want to highlight it and then just leave some time for questions, we have 10 minutes.

Mr Newhouse: Yes. On page 1, I had underlined that "the efficiency of urban services is in inverse proportion to its urban expansion." What I'm saying is, the bigger a city becomes, the more unmanageable it becomes, the more inefficient it becomes. Eventually, cities are going broke, which we are all familiar with in North America. That's just a well-known fact.

I'm suggesting that instead of looking at municipal taxes just to get money for services, we look at municipal taxes as a planning tool. I agree with people who say that if you increase the tax load on inner cities, it's going to cause urban blight. I also agree that if you decrease the tax load on suburban areas, it's going to encourage further growth. If we continue at the rate cities are expanding now, there's going to be chaos in 25 years; there's no doubt about it.


You have to look at what's happening in Cambridge. It's chaotic development. If you look at London, there are 64,000 acres for further city expansion. If you look at Thorold, there's an entire new city developing around Brock University. If you look at a small village like Chippawa, there are three roads going north out of Chippawa, each with a ribbon of development.

Twenty-five years ago you could count the amount of residences on the fingers of both hands and now they are innumerable. I could go on and on. On the corner of Highways 97 and 401 near Cambridge is an an entire new truck service centre, and eventually people want to live near it. Urban sprawl is still ribboning and still leapfrogging into the countryside.

It doesn't only affect the tax base and the tremendous amount of cost for servicing those outlying areas but it also affects the environment, it affects wildlife and it affects farming. It detracts from urban transportation, because the more people you are drawing out of the urban centres, the more people are going to rely on automobiles.

What I'm suggesting, therefore, both to stop or diminish urban sprawl and make the cities more efficient, is that we try to counter urban sprawl by taxing new development at a higher rate than at present. In other words, you would have a differential tax rate where you would tax the urban cores less and you would tax the suburban areas more.

I realize this cannot be done overnight, because what has been going on for 40 years cannot be undone in a matter of a few years. If there are developers who have invested money in land, they're not going to be very happy. We need the cooperation of everybody.

My suggestion is that if you want to tax outlying areas as a deterrent to further urban expansion, you formulate a new tax differential plan which would be implemented over, say, 25 years, a lifetime, so that people know what's going to come but at the same time they're not going to be hurt immediately.

I think politically that would be a good solution. We never know whether a Tory government or a Liberal government or an NDP government is going to govern for ever, but I'm very sure that if this present government took a step such as this, possibly this government could go down in history. Possibly this example in Ontario would be followed by other cities throughout North America and some historic breakthrough in the control of urban expansion could be made.

That's basically what I have to say.

The Chair: We have time for two questions.

Mr Wiseman: I read your brief quickly and I was listening to you. I like your notion of controlling urban expansion.

One interesting deputation was from Joan King, a regional councillor in Metro, who indicated on the weekend that market value assessment would in fact encourage increased concentration in compact urban form in the --

Mr Newhouse: Could you say that again?

Mr Wiseman: Compact urban form; concentration of people.

Mr Newhouse: MVA would encourage that?

Mr Wiseman: Yes, that's her contention based on the notion that --

Mr Newhouse: No, I think I said the opposite.

Mr Wiseman: I know you said the opposite. I'm throwing this out at you as a thought because what she said was that property taxes would be so high with market value assessment on high-value property that you would have to add storeys to it in order to make the property pay for itself. Would you care to refute that?

Mr Newhouse: I would say that if you equalized assessment all over the province so that everybody knew what his property was going to be rated at, there's no problem. But it's the rates you apply that bring in the taxes, not the assessment. If you have market value assessment all over Metro or all over Ontario, that's fine, but it's the rates you apply, because industry and commerce pay a higher rate, supposing I say 10% more than residential taxes, and industry pays, say, 15% or 25% more than residential taxes.

In the same way, you can make categories in residential to equalize the assessment. You can tax urban core properties at a lower rate, say, at an A rate, and people who are removed a certain distance from the centre of the services at a higher rate. You could eventually have three or four different rates, depending on the distance the services have to traverse. There is no end to the cost of services when you expand a city.

Ms Poole: Thank you for your very sensitive brief. We particularly appreciate that you came, I believe you said, from Tavistock.

Mr Newhouse: Pardon?

Ms Poole: You came from Tavistock. Is that correct? Is that what you said at the beginning?

Mr Newhouse: Yes, I did, two hours down the road, but the roads were pretty good.

Ms Poole: Right. We very much appreciate that you came from Tavistock to present to our committee. It is particularly important because you are not a player in the Metro debate, so you don't have any parochial interests like the rest of us do.

I thought your brief extremely sensitive in pointing out the difficulties with preserving our urban core. We had a presentation, I think it was yesterday -- was yesterday Sunday?

Mr Stockwell: Yes.

Ms Poole: Yes, it was yesterday -- by Barbara Hall, who made the statement that in every decade in the last three decades there has been a Premier who has intervened in a local matter in order to preserve the city of Toronto.

She cited Premier Davis in 1970s stepping in to stop the Spadina Expressway. She cited Premier Peterson in the 1980s as stepping in to put a freeze on the waterfront lands and declare a provincial interest. It was her supposition that the Premier of Ontario, this time an NDP Premier, should make his mark in history by preserving the city of Toronto by stopping this plan, and doing precisely what you have been suggesting, an in-depth study of urban servicing and preserving of our urban core.

I'd just like you to comment on that. Do you think the Premier would have a right to intervene in this matter? It has been said it's a Metro matter decided by the democratically elected Metro council. Do you believe Premier Rae should step in and say, "Regardless of what Metro council has said, we do not believe this will preserve our city core"?

Mr Newhouse: I believe there's an urgent need for the provincial government to intervene, simply for the reason of overriding parochial interests. We all know local politicians vote for developers and expansion and taxpayers, if they demand so, even if it's contrary to all planning principles. It's as though the federal government were to give up defence to the provinces.

I think the provincial government would be wise to amend the Planning Act to provide for these tax differentials so they are applied uniformly across the province, because there is a definite correlation between urban growth and cost of servicing. The provincial government is on the right road in that respect.

The Chair: Thank you very much for coming in, and thank you for your presentation. We appreciate it. Safe trip home.



The Chair: I call Mr Joseph Bobyk, if you would be good enough to come forward. Welcome to the committee. I hope I've pronounced your name properly.

Mr Joseph Bobyk: Correct. You're one of the few who has been able to do it.

My name is Jos Bobyk. I was a businessman in the downtown area for 34 years. I'm speaking here as an individual, and I suppose as a senior citizen, with my own personal concerns. Unlike the first gentleman, who said he never had any confrontation or any dealings with any government body, my experiences have been different in the past. Back in 1959, I had the unfortunate experience of being expropriated, my entire business with the whole staff and all -- just receiving a letter with a 28-day notice and $3,000 plus 5% for inconvenience. It took me a four-year battle; the lawyers ended up with all of it. I was fortunate to find temporary headquarters through my suppliers and such. I decided this was never going to happen to me again, seeing I was in a rented place, even though I still had a three-year lease.

I bought my own place on Avenue Road, worked very hard for eight years without a day off, but I was going to have my own place. The day I was moving in, the moving vans arrived only to be unable to enter Avenue Road, because the city that day was tearing Avenue Road up for a period of several weeks for the purpose of widening it. Back I went to temporary quarters through the kindness of other people.

I bought a house in the Annex. It was the first house next to St George Street. My concern was, because St George Street has a lot of apartment buildings on it, what were the chances of this happening right next door to me? The people at city council said: "There's no way. First of all, the lot is only 100 feet by 120 feet; there's no way they can put up a high-rise. Secondly, the two houses that would have to be removed are both heritage houses."

I bought this lovely little house where I intended to live; as a matter of fact, still am 23 years later. I bought in 1970. In 1972, suddenly a 120-foot skyrise is sitting 30 feet away from my house and at the back, a 40-foot medical building. I've lived through all that.

While I was still in my 50s I had to retire. I sold my business. Fortunately, through all that, I'd made enough to retire very comfortably, or so I thought. Then came MVA. I went down to Metro Hall or, as somebody has called it, "Tonks Towers," for two days and listened. It was such a mishmash, but always it seemed that everybody was ganging up on downtown Toronto, which upset me very badly.

When I first thought of speaking to you, I had planned to defend myself for different reasons. But now I've changed my mind: I've nothing to defend. I have lived in the Annex since the 1940s. I lived there in rooming houses when the whole area was rooming houses, run-down and everything else. I was going to school at that time; that's all I could afford. I later moved into a flat, later into an apartment, then I got a coach house and finally I bought myself a house I could afford where I would live, loving that area, and where I would retire.

When I bought the house in 1970, the taxes were $784. Today I pay just under $3,200. Though the assessment hasn't changed, I hear, the taxes have been going up all the way. I'm a semi-detached, one of four houses on a lot of 105 feet that the four houses share. The average taxes are $3,100. I'm the only one fortunate enough -- and I planned this -- who has a driveway. The other three have no driveway; they have no back lane; they have nothing. They have to rent space in the apartment building garages or else they pay for street parking, if they can find it, an additional expense.

Under MVA, my property will be going up from $3,200 to approximately $5,900. Totally, speaking of the four houses, the taxes now are $12,322. Under MVA, the four houses will be $20,446. I'd like to compare, as the people in the boroughs have been doing all along. Say we take a house at $350,000 to $450,000. How many houses are there in the boroughs on a 20-foot or 30-foot lot? Yet take that 100 feet that the four of us live on, and the costs are the same as they would be for 100 feet in the suburbs: 100 feet of installing sewers would cost the same, 100 feet of paving would cost the same, 100 feet of plowing would cost the same, sweeping the streets, water lines, even policing. Police on patrol in our area cover four houses, whereas in the suburbs they will probably cover only two in that 100 feet, or maybe three. Therefore, where do these people say we are taking advantage of them, that they are paying for us? I just don't see this at all.

I am a retired citizen. Through the years I've been retired now, which is 14 years -- I had no pension because I was self-employed -- my income has dropped 40%. Inflation, taxes and so on keep going up, which means you're getting along on less and less.

A very interesting thing: I picked up the paper yesterday and I read about Health Minister Lankin's new project, which I think is a long-overdue idea, where she says it's time to keep senior citizens at home where it's less costly and where they're more comfortable. Fantastic. I'm a senior citizen. I bought this house. It's a little bigger than I require now that my family is gone and such, but it's an ideal place in that I could change a portion of it to have somebody live in to give me the chance of living at home, to live in my own house where I've been for 23 years, where I chose to live.

And now my taxes, within the next few years -- right now, yes: 10% this year, 10% next year. Then what happens? It will be a minimum of $4,000, maybe $5,000, $6,000, $7,000, $8,000 after that. Are you going to take $8,000 away from me, which means I'm going to have to give up my house? Because I've already had realty people in to evaluate it and see what I can possibly do to make ends meet? You're going to take that $4,000, $5,000, $6,000 away from me, take me out of my house. Then you're going to turn around and have to pay a homemaker $10,000, $15,000 or $20,000 to come in to look after me when I could look after myself.

As a senior citizen, like the rest of our generation, we worked and we believed we got what we worked for. We never asked for anything. I'm here today, ladies and gentlemen, with the same feeling. I'm not asking you to give me or other people like myself anything. All I'm asking is, please don't take any more away.

The Chair: Thank you very much, Mr Bobyk. I regret that we've run out of time, but I do want to thank you for coming before the committee and giving us your story.



The Chair: Could I ask for Sandy Aguanno. Mr Aguanno, thank you for coming to the committee. Please go ahead when you're ready.

Mr Sandy Aguanno: Thank you very much. I'm going to focus on commercial property, because that's what I own and that's where I believe the most damage has been done, and the injustices have never been dealt with or removed.

Market value assessment has absolutely no relevance to the taxes a commercial property should pay unless you factor in the viability of that commercial property. If a store is vacant, if the rent is cut or the income of the property is less, it is worth a lot less. However, a vacant home doesn't really lose as much in terms of its value. It retains a much higher percentage than a commercial property does.

Unfortunately, there are only a few politicians I've heard from and talked to who understand that MVA is going to cause the demise of a lot of commercial operations in the city of Toronto and in the suburbs. Unfortunately, my two representatives, whom I talked to, don't share the views that it's going to close, or if they do, they certainly aren't concerned with the minority viewpoints. They are supporting the residential side. It's what I call residential tunnel vision, because there are other people in the borough of Etobicoke, where I'm from, who are going to be hurt by this.

Unfortunately, a lot of people in Etobicoke I don't think realize yet that MVA is going to increase taxes for them as well. My point here is that I'm not able to get fair representation from my local officials because they have biases. Their biases are not directed towards me at all; they're directed towards their residential constituents and, possibly, towards their own personal gains they'll get through MVA. In one particular case, the local councillor -- while my store is going up in taxes, his store is going down $5,000 a year, so I don't think he can really represent my views.

I own two small stores in Etobicoke with an apartment above the stores. The area of the stores is approximately 500 square feet each. The properties are approximately 18 feet or less. In other words, the property is 75% residential and only really 25% commercial, but I'm being taxed as if it were a commercial property.

Here are some examples of the unfairness that affects commercial owners:

(1) The method of assessment of small commercial properties is inadequate and out of line with true values.

The Queensway and Royal York area, where my store is located, is one of the poorest in Etobicoke. In one small block of eight stores across the road from my building, six are vacant. Down the street, four out of six stores are vacant. Business has never been good there and it doesn't command the kind of rental income that you can get in better business sections, yet this MVA is going to try to level out taxes to a much greater extent. That's simply not fair unless you look at the income of a property.

When I spoke to the assessment branch, they told me they assess commercial properties much the same way they assess residential properties. They don't factor in leases, income levels and relative location, which all have a significant bearing on the value of a commercial property. In fact, two commercial buildings close to each other can differ substantially in value depending on the income level of that particular property.

The 1988 assessed value placed on my property greatly exceeds its true market value. For example, my gross income will be 14 times my assessed value. When you compare this to other income properties whose income is only seven or eight times their assessed value, you realize the injustices of MVA. These assessment mistakes will cause more business to fail, and I think it will be a disgrace to our cities and the province to have these empty stores sitting all over the place.

(2) MVA does not take into consideration the true market value of commercial properties immediately following the 1988 assessment. Here you have to understand that the moment they make an assessment on a commercial property -- for example, a $5,000 increase on that property's taxes could reduce the actual value of that property by $40,000 to $75,000, yet they still assess us at the full market value, which no longer exists, because once you increase the expenses and reduce the income you reduce the market value. That wasn't taken into consideration by the assessors.

Income properties are valued according to income. Increases to residential tenants are fixed under the Landlord and Tenant Act. These tax increases we'll be facing on commercial properties can't be recouped from residential tenants because they're capped, and we can't go back to our commercial tenants because most of them are hanging on by their fingernails. Either we're going to have an empty store, which I expect to have, or put them out of business completely.

By the same token, owners of commercial properties in the better business sectors have already established their rental income in line with their taxes. In other words, that's been factored in. Sure their taxes might be higher than what they think they should be, but their income is also relative to their expenses in many of these cases. They've factored that in. It's been their overhead now for the last 20 or 30 years. But now, because of MVA, their increases and income will jump up substantially, and so will the value of the building they own.

Does the MVA system plan to equalize and redistribute the wealth? My property is going to go down. Their property is going to go up. I didn't know MVA or taxes were supposed to influence and affect market values of houses and properties generally, but that's what this is doing.

The premium applied to the mill rate for commercial properties is discriminatory. Historically, the mill rate on commercial properties has been significantly higher than residential and residential income properties. Why, for example, should I pay twice as much taxes as a comparable residential property? Why should I pay twice as much taxes as a comparable duplex that has equal or greater income than my property? There are numerous examples of these inequities if you want to look at and look for them. Where's the fairness in the system?

It's unfair to require small businesses to pay taxes based on the assessed value of the commercial property. Why are business taxes tied into the assessed value of the property? The assessed value of the property bears no relation to the value of the business. This is a double whammy on businesses, because MVA means that the business taxes are going to go up at the same time the business owner is going to be expected to pay a higher rent because of the tax increases on that commercial property. They're hanging on by their fingernails and they're going to go out of business. There's no doubt about that, and you can't get blood from a stone.

The final point I want to raise is that MVA distorts the relationship of property taxes compared to the level of income from a commercial property. This distortion will seriously affect the ability of a property owner and business to refinance. Obviously, if you reduce the value of a property and it's coming up for refinancing, the banks are going to say no, and you want to believe it, because they've said no to me. If they say no on refinancing, you're out of business, if not bankrupt. They're going to force you out, and I think this is just a disaster and criminal that this can happen.

The one point I wanted to make was that it's taken 40 years for this system to get this far out of whack. I don't dispute that there are inequities in the whole tax system and that they've got to be dealt with, but in commercial properties, if it's taken 40 years, it makes sense to take 30 or 40 years to balance off the inequities, wherever they might be. Find a good system that's going to come up with a fair tax and then take 30 or 40 years. Businesses can't generate more income simply because somebody has said, "You're going to pay double the taxes you paid last year." That money has to come from somewhere. The businesses aren't generating more income and neither is the building, and you're devaluating the property at the same time. I think that's all I had to say.

The Chair: Thank you very much, Mr Aguanno. Your timing is impeccable, right on the 10 minutes, and we thank you very much for your presentation and also for the submission you've made.


The Chair: I call Dr Hub B. Keenleyside. Dr Keenleyside, welcome to the committee. I know you have been listening to a good deal of the presentations over the last week.

Dr Hub B. Keenleyside: I'm on medication which gives me a dry mouth, so it's very important to have this.

The Chair: Good. We've got lots of water.

Dr Keenleyside: I won't be over eight minutes, I don't think.

The Chair: Okay. Please go ahead when you're ready.

Dr Keenleyside: I am an anaesthetist, 65, and practised in London, Ontario, for eleven and a half years, from 1957 to 1968. I relocated to Toronto in January 1969 and retired December 1990, two years ago now. I had to retire, actually. It wasn't of my own volition. It's one reason I'm drinking this.

We live in North York at 20 Berkindale Drive, a small bungalow on a 125 by 75 lot. We think it was built about 1953. It's one floor, three bedrooms, two bathrooms and half a basement. It was bought December 23, 1968. Only three homes were available that were relatively close to schools and the hospital. After selling my home in London, I looked at the three homes in North York. I looked at 20 Berkindale Drive in the morning, bought it in the afternoon and drove back to London in the evening.

I paid $64,000 for the property, and in 1989, 20 years later, was offered $1 million for it. It was an unusual offer. The intent was to tear it down and build a monster home. I later learned that I had bought just before property values began to rise. The property value in 1988 was $684,000; 1990 would have been a better base year.


We did not want to sell because I was still working and had to be close to Bayview in case of an emergency at the hospital. I had no idea when I bought the house that property values would escalate like this. I did not realize either that I was moving into one of the most sought after locations in Metro. Why should I be penalized just because of this unexpected property value escalation? There was no point moving to another location that would subsequently decrease in value. We couldn't move to Stouffville, for example, to get lower taxes.

It is somewhat of a paradox that when I was working, my taxes were lower, and now when my income is lower, my taxes are higher. We are also outside the Yonge corridor, so it is still at least 20 minutes by TTC bus to get to the subway. Why are monster homes' taxes going down when a small bungalow like ours is going up? I submit that these considerations and others represent a gross inequity to me and to thousands of other home owners across Metro. That's all there is.

The Chair: Thank you very much. We have time for a question.

Mr Turnbull: Can you tell me about the neighbourhood you're in? Is there a lot of redevelopment going on, builders buying houses and knocking them down?

Dr Keenleyside: It's a good question, because they're all over the place, stretching from our house up to Harrison Road and from Old Colony to Heathcote, that area. I used to take walks around the area. I haven't counted them, but in that relatively small area I'll bet there are 15 to 20 monster homes, and some they haven't even been able to sell.

Mr Turnbull: In other words, the value of the lots was bid up by these in-fill builders, and the people who didn't sell are now being penalized for the increase in prices that the developers bid up.

Dr Keenleyside: Exactly. It's a domino effect almost.

Mr Turnbull: So really what we're doing with this plan is blessing the speculation and inflation that set in in 1988.

Dr Keenleyside: Exactly.

The Chair: Thank you very much, Mr Keenleyside, for coming before the committee.


The Chair: I now call upon the representative from Downtown Fine Cars Inc. Perhaps you'd be good enough to introduce yourself for the purposes of Hansard, and then please go ahead.

Mr Gerry Peterson: Good afternoon, Mr Chairman and honourable members. My name is Gerry Peterson. I am the general manager of Downtown Fine Cars. This is my first opportunity to address a committee of members of Parliament. I had always gone by the old adage I'd heard years before that said: "Should I write a letter to my member of Parliament? Each member of Parliament has two ends, a thinking end and a sitting end. Since his whole success depends upon his seat, why bother, friend?"

However, market value assessment has brought even the general managers of car dealerships out to address you.

The Chair: You're welcome for it.

Mr Peterson: A news broadcaster said today the committee is going to wind up hearings, due to the repetitive nature of the submissions. I say, "Bravo," we're all singing from the same song book. If you need convincing as to the impact this initiative will make on employment in this town, I suggest you take your committee on the road and visit businesses door to door, those that aren't displaying for rent signs or for lease signs. You will see in short order the reality of the situation.

Downtown Fine Cars' specific case is simple: Present realty tax amounts to $103,035; under full implementation, taxes would increase to $273,560. Under the stepped proposal, operations will not generate sufficient revenue to pay the tax.

Clearly, we are at an impasse. The government has become a latter-day Sheriff of Nottingham, increasing taxes to support the nobility, the civil service, who enjoy salaries and benefits that no private business can afford, and taxing the serfs, small businesses, who work longer and longer hours for less in order to support the system.

Ask yourselves, what do you expect to happen? Businessmen often go through this process when they're making a change that will affect the marketplace.

When the taxed do not have the ability to pay, what are the options? Here are some scenarios: The business would cease to exist. What would that result in? (a) You don't get the $103,000 you currently enjoy; (b) you get 60 people on the street looking for jobs; (c) your city will become a ghost town.

You force a tax revolt. Otherwise law-abiding citizens are forced to break the law due to ill-conceived policies. The fragile structure of our society will break down.

All you have to do is look back as the federal government and the provincial government -- I'm not an apologist for smokers, but what they thought they'd do is they'd tax smokers out of existence. What's happened? It's like the Volstead act in the United States. You've got a criminal area now that's selling cigarettes and nobody's paid less for their cigarettes than they're paying right now.

By coming forward with some of these policies, you're going to have a tax revolt on your hands because it can't be paid. It's as simple as that. It can't be paid.

A third possibility: Investment leaves and moves to a climate where profit is not a dirty word.

Provincial and federal governments plan to invest in job creation. For the most part, these jobs are short term with more money being spent on the administration than the actual workers.

Can you not see, at this point, your best efforts would be in job keeping? For the annual salary of one public servant, you can keep 60 people employed. Who will make that sacrifice? Is there anybody out there who is altruistic enough within the provincial government, within Metro government, who would make the sacrifice to give up his job and allow a business to exist that would employ 60 people?

Our dealership has already sacrificed 17 employees to the recession. The date these assessments were made, we had 77 employees at Downtown Fine Cars. We now have 60. That's 60 even as far as two weeks ago. The result was that when we had two apprentice mechanics we were training, we had to let them go. Who is going to step in?

You always have the great schemes for job training and creation. These people were getting trained. Who, at the level in the civil service, would come forward and give up his job so that businesses can run? What have the government employees sacrificed? You people know what is right, and to coin a phrase, just do it. Thank you very much.


The Chair: Thank you very much. I have Ms Poole and Mr Stockwell.

Ms Poole: Thank you very much for your presentation today. I think in a very succinct way you have laid the problem before us. It's just a shame that Mr Mammoliti wasn't here. He loves fairy tales. In the rent review hearings he told the tale of Robin Hood, where the landlords were Prince John and the NDP government was Robin Hood coming in to save the tenants from this dastardly evil. To carry your analogy one step further, I think the government has now been called the Sheriff of Nottingham, the evil arm of Prince John, so I think they've come down since Mr Mammoliti first told his fairy tale.

I want to ask you about the results you've talked about on page 2, where basically you'll have a business paying no taxes, you'll have 60 people on the street looking for a job, and the fact that our city will become a ghost town. Mr Turnbull and I have been accused by one of the government members, as recently as yesterday, of using fearmongering tactics by talking about some of these potential impacts. I say "potential," but I truly believe they will happen. Would you like to comment? Is this fearmongering or are you convinced that if this plan comes in, it will have a devastating impact on the business in Toronto?

Mr Peterson: People who don't believe this will happen have got cotton all around their heads. They don't sit down and get their sorry butts out of bed like I do at 6 o'clock every morning, and don't go home often until -- I won't be home until 9 o'clock tonight. When I have to let somebody go, when I have to dismiss one of my staff, I feel it heartfeltly. It's a very sad situation when this has to happen.

A Volkswagen dealership changed its sign in northern Toronto; it hasn't resurfaced. There are all kinds of automobile dealerships that are already out of business. They haven't resurfaced; they're gone. There are fewer and fewer of them around, and we're part of the fabric of this community.

If you don't think that this is real and this is going to happen, then just sit and watch it go. You can probably run a stagecoach through the centre of this town, and the only people who will be able to make it down here are the people who are employed at Queen's Park. This is going to happen, and it's not going to get better.

I was a banker for 17 years before I got into the automobile business, and I saw many businesses fail. They say bankers have got cruel hearts. The politicians' hearts aren't cruel; they just don't know any better. They're not where the rubber hits the road, as we say in our business. You've got to get down there and interview the people we've had to lay off.

The last thing businesses such as ours want is to see employees go, the very last thing. If we can hold anything out together -- our shareholders have written Bob Rae a petition. We haven't had any dividends in three years. If you think people are going to invest millions of dollars and not have any dividends, then I suggest you put your savings in that same bank account of small business that we put our savings in and expect no interest. It's serious, and you've got to pay attention to it.

Mr Stockwell: How long have you owned Downtown Fine Cars?

Mr Peterson: I am the general manager and small shareholder. I've been there five years.

Mr Stockwell: You don't own it?

Mr Peterson: No. However, we don't enjoy small business tax rates. Every nickel, every red sou we do make there is taxed at the 50% rate, sir.

Mr Stockwell: I know all about it.

Much has said about this tax revolt. Many people I speak to, including people in the car business, are getting major reductions because they've been overpaying their taxes for a significant number of years. They suggest that if they don't get their reductions -- not necessarily the car people, but some businesses say if they don't get their reductions, they're going to form a tax revolt. Some 9,000 citizens in Scarborough have apparently formed a group that says if they don't get their reductions, they're going to have a tax revolt. How do you respond to that?

Mr Peterson: First of all, I was going to take you to task and draw your attention to the submissions that have been made to the committee and to the Premier by the Toronto Automobile Dealers' Association.

Mr Stockwell: I was here for that.

Mr Peterson: I don't think it is a fact that the automobile dealers in total are looking for gigantic reductions in their tax.

Mr Stockwell: No. Specific dealers, I said, who are getting reductions in their taxes because they've been overpaying for years. But that really wasn't the question. A significant number of people out there say, "If you don't give me my fair tax reduction, because I've been overpaying," for three and four decades, in some cases, there's going to be a tax revolt on the other side. So it seems like you're damned if you do and damned if you don't.

Mr Peterson: All of what we're saying here right now is very simplistic, and I understand that. The fact of the matter is that if people don't have jobs and there isn't employment, there's no money to pay anybody, and that's got to be productive employment. Are you suggesting that the people who have been living with these taxes -- and I'm one of them. Personally, in my private dwelling, if market value assessment goes through, I'll have a reduction.

Mr Stockwell: No, I'm just speaking of the businesses, sir, the businesses I have phoning my offices in Etobicoke; businesses that have been overpaying in some cases for two and three decades; businesses, sir, that are getting reductions of upwards of $14,000 or $15,000 on a $31,000 assessment; businesses saying: "If you don't give me my fair tax, I'm not paying taxes any more. I'm going to revolt because I'm significantly overpaying compared to anybody else." What's your response to them?

Mr Peterson: I go back to my original point: We're all overtaxed. All of these businesses, the people who are phoning you, have reduced their staff. Have you reduced your staff, Mr Stockwell?

Mr Stockwell: Yes, I have.

Mr Peterson: And has the provincial government reduced its staff?

Mr Stockwell: You're not answering my question. You're asking me questions about my staff. My staff at my business? Yes, I've laid people off at my business as well. I know exactly what you're going through. I get my sorry butt out of bed at 6 every morning and go to work. I know exactly what you're going through. I had layoffs in the business I own, that happens to be in the car business as well. I know exactly what you're going through.

But my question, very specifically, is what do I say to these businesses that have been overpaying their taxes for two, three and four decades, in some cases adding up to $500,000, $600,000, $700,000 in overpayments, when they say, "I'm going to revolt if you don't start appropriating the fair amount of money to my business, because I've had to lay off staff and in some instances close the doors"?

Mr Peterson: That's what we're facing. What do you say to them? You say to them, "Let's get together and let's all stay alive."

Mr Stockwell: Find a fair system. That's what they've been saying for 42 years. They don't believe me any more.

Mr Grandmaître: You never had the guts to do it, Chris.

Mr Stockwell: Who?

Mr Peterson: Is this whole thing, Mr Stockwell -- are taxes going to decrease?

Mr Stockwell: There are going to be no more tax dollars found. It's the same pie. It's just a pie and you're redistributing it differently. I'd like an answer. Nobody's giving me an answer. What do I tell these people: Wait another year or two years or five years when they think of a new system, or let's think of a new system that perpetuates the inequities? Is that what we're saying? What do I say to these people who lose their jobs, lose their business because they're paying too much in taxes, when you come here and say: "It's an open revolt. You don't drag your sorry butts out of bed until after 6"? What do I tell them? They drag their sorry butts out of bed every day of their lives.

Mr Peterson: That's right, and I hope there are some of them here who are going to make that proposal. They're the people who are going to answer some of this, Mr Stockwell. They're going to have to decide whether there is a business climate here at all. You know that has to be decided.

The Chair: Mr Peterson, thank you for coming in. I was almost going to say "for dragging your butt in here this afternoon." I appreciate it.



The Chair: I believe Mr Terry Mudry is here, if he would be good enough to come forward. To the members, we're skipping ahead a bit, but Mr Mudry was here. I thought we could bring you forward, sir, and we welcome you to the committee. When you're ready, please go ahead.

Mr Terry Mudry: Thank you. I didn't expect to be just in time. My name is Terry Mudry. I live at 37 Blair Athol Crescent in Etobicoke. I also have a small business in North York at 59 Sheppard Avenue West. I'm a trained accountant, and I generally know the fundamentals and the technicals of taxation, but I'm not deeply into the calculations, so bear with me.

A lot of what I had in mind has been said a number of times -- I've watched television -- and there's no need for me to repeat what has been said, but I'd like to make a couple of points.

By way of illustration of the taxes, on my street everybody gets a decrease. I guess I'm one of the few who appears before you who's due for a decrease, of $600 per year. I'm not terribly impressed with that, because I don't think it can be sustained. The reason I don't think it will be sustained is because, of the houses on each side of me, the house that is worth at least $200,000 more and was actually traded in 1988 is going to pay about $1,000 less tax than the house on the other side of me. It's a complete aberration. I hear so many people coming forward and saying, "Who's done this? It looks terrible," and it does look terrible. I'm also aware that a gentleman by the name of Bradshaw from Etobicoke appeared before your committee, I think last week. A group of ratepayers got together and checked these market values, and they were a complete aberration. It's just a terrible, terrible job.

I know that in the Kingsway area there are houses that are paying unduly low taxes right now, no question about it, but after revising it to this so-called market value, things don't improve a whole lot; in some instances, they're ass backwards. On my street all of our residents are getting decreases, which is all right to take, but you really need to be entitled to it. On the other hand, there's a street by the name of Brentcliffe Road -- my good friend Mr Stockwell would know that street -- and the houses on that street are what are called storey-and-a-half two-bedroom houses. They're all assessed at around $500,000, and that's nowhere near equity. The houses on our street are much larger. The houses on all streets around the Kingsway are much larger. It just doesn't fit to pay that kind of tax for small two-bedroom houses and to assess them at that value. They just don't have that value.

By way of illustration, my small financial services business at 59 Sheppard Avenue West is 500 square feet total. It's a little old house from 1940 vintage or something, and the tax is going to increase from $1,800 or $1,900 to $6,500. Guess what? That's exactly the rent I pay. Two doors further on is a little French restaurant, which is a very nice little restaurant. It's a one-person type of operation. He has 800 square feet and his present taxes are $3,000, going up to $15,000. That man works 60 or 70 hours a week. He has never brought home as much as a senior secretary from Metro council or from Queen's Park takes home, and this system wants another $12,000 out of his pocket. I say to you, you want another pound of his flesh? Gosh. He said to me, "If it happens, I'll give them the key," and I don't blame him. If I have to pay any more, I'm going to leave too. My small business does not even require the office that I have, so if I have to double my rent, forget it. I'm in arrears already because I can't collect on accounts. Those of you who are in business know something about that.

The question of fairness and the question of perception of what is fair and what is not fair -- I've been listening on television to the performance of you members, some of you members, and I hear what I call bellyaching. What do I say to people who have been overpaying for 40 years? I saw Mayor Joyce Trimmer make a passionate plea. What am I going to say? These people have been overpaying and it's enough. We're going to be in revolt.

I say, by whose God, by what authority, are they overpaying? Who says that they're overpaying? Why are they overpaying? Does that mean because they're overpaying, somebody else has to get shafted? God, there must be a better way to make it more fair. But the perception is created by the very politicians who ran and said to their constituents, "Hey, this market value, you're entitled to decreases and I'm going to make sure you're going to get them," and now they're all up in arms because they feel they have been overpaying. Who has caused it all? It's the Metro councillors themselves. Having got the results, 72%, 80% are going to get decreases, and that of course is going to assure them of re-election.

I have been involved in our ratepayers' federation, which is a federation of associations, over a number of years and we had a position on this last October, and you've got that in the notes. Last October one of our associations said to us, "We will withdraw from EFRRA if you are going to oppose market value assessment, because most of us are entitled to decreases and we would like to have them." I can't blame them, but it was the politicians who really told them that they were entitled to them. Who else? The question of what calculation you use is not authoritative. Everybody doesn't have market value assessment, and in a city as volatile in the marketplace as this is, it is completely unfair.

Another illustration: I watched a councillor from the area up north of Highway 401 and east along Highway 404; I don't know her name. She compared a house that's valued at $300,000 in her area to a house that's valued at $300,000 at 138 Seaton Street. I don't know who lives at 138 Seaton Street, but I do know Seaton Street. I used to knock on doors for political reasons on Seaton Street and more recently I've been delivering food baskets to Seaton Street at Christmastime.

I suggest to you people that no matter what anybody says, that this house is $300,000 and that house is $300,000 and therefore they're equal, they are not equal. As to that house about which that councillor spoke, I would be willing to speculate that the people donate the clothes to the Salvation Army where the people from Seaton Street buy them or get them free. You are going to equalize them because they're both worth $300,000, so they both should pay the same taxes? Something's wrong with that.

I saw people from the Armour Heights area, the Dufferin area, and I remember those people were mostly from Little Italy, around midwest Toronto. They went up there for the good life: nice big driveways, Roman arches, air-conditioning, one kitchen upstairs, one kitchen downstairs. Heck, the people on Seaton Street can't even --


The Chair: Mr Mudry, if I could ask you just to --

Mr Mudry: Sorry.

The Chair: No, it's quite all right. If you could just come to a conclusion, I'm afraid we're just about out of time and I want to allow you to finish your remarks.

Mr Mudry: I guess I'll just finish at that. I suppose if you politicians are worried about the perception of the public that politicians are sleazy, I guess I've tried to make that point. There is, after all, rationalization to make and this thing is really not fair. Thank you.

The Chair: Thank you very much for coming before the committee today. We appreciate it.


The Chair: I call Mr George Teichman, if you'd be good enough to come forward. Thank you. We have a copy of the pages, I believe, that you wish to have distributed.

Mr George Teichman: Yes, thank you, Mr Chair. I forgot my reading glasses, so you might see me holding pages so far away that I can't read them even at that location.

The Chair: That's quite all right.

Mr Teichman: So I might take my glasses off at times and I might have a page up fairly close to me and I'll be squinting, looking a little strange, I'm afraid.

The Chair: Some of us have similar problems.

Mr Teichman: Try not to forget them. First of all, does everybody have a copy of the four sheets of paper? I'd like to say a few words before I address those four sheets of paper. I'd like to start off with a question regarding municipal services. I think it's important that we ask ourselves, "Do municipal services service people, do they service property or do they service location?"

"To serve and protect," that is what we see on the sides of police cars. Is this to serve and protect people or is it to serve and protect property or location? The same goes for water services, sewers, schools etc. Police probably serve people the most, but they certainly are interested in serving the property that we own, but to a much larger extent, I would think, than the servicing of people. Police really don't serve location.

Location, however, is nevertheless important. It's an important element in the delivering of services. For instance, wider lots that we see in the suburbs are usually more expensive to serve than the narrow lots we see in the city of Toronto. Low density is more expensive to serve than high density. The location of the houses in these suburbs have longer distances to extend these services.

This, however, flies in the face of fair market value assessment. I use the word "fair" in front of MVA because what we have done here is we have put two notions together, "fair market value" and "assessment." There is a sensible notion to the concept of fair market value. It is used in real estate all the time. Appraisers base their living on the basis of determining fair market value, and there certainly is a fair notion, a sensible notion, to the concept of fair assessment. I think what all of us really want is fair assessment, but to put these two phrases together and try to have people believe there is sense to the notion of fair market value assessment just doesn't make sense at all.

I think I would like to now refer to those four sheets in front of you to give some examples. I have others here with me as well, but I thought I could come up with two comparisons that show the great disparity between what is available in the outlying areas of the Metro area for the assessment dollar as compared to something in the centre of the city or closer to the downtown areas.

On the first page we have an address, 16 Elkwood Drive in Scarborough. There is a picture at the bottom left-hand corner; 16 Elkwood Drive has a 1988 market value assessment of $246,000. It is a detached house, has five bedrooms, three bathrooms, a finished basement, a double drive and double garage on a 50-foot lot.

Let us compare that with the second page: 214 Fairlawn Avenue has the same assessment of $246,000, and look what we get for $246,000 in the city. We get a semidetached house with three bedrooms and one bathroom. These three bedrooms are less than one half the bedroom area at 16 Elkwood, there is no driveway and there is no garage. The people are able to pay for street permit parking. The lot is 15 feet wide compared to the previous lot of 50 feet. Those two houses have the same assessment, and I ask you, which one is really being delivered more services?

The second comparison example, 41 Delbeatrice Crescent, is in Scarborough. The 1988 market value assessment is $282,000. Again, it's a detached house of 2,700 square feet. That is the information I was able to get from the multiple listing. It has a finished basement, four bedrooms, three bathrooms, a double drive, a double garage and is on a 60-foot-wide lot.

We have on the fourth page a house with a higher assessment than this one: 353 Deloraine Avenue is assessed at $292,000. This house is detached -- yes, we can get a detached house -- but it's quite small; it's only two bedrooms. It has two washrooms and it has approximately one half the bedroom area of the house in Scarborough at 41 Delbeatrice Crescent; it has a single driveway, it's very narrow and there's no garage.


The Chair: I'm sorry to interrupt for just a second.


The Chair: If I understood that message, we can continue. The Chair will let us all know when we have to evacuate, but it sounds as though there's a fire on the third floor, or at least an alarm. Please continue. Sorry about the interruption. It may happen again but we'll carry on.

Mr Teichman: No problem. Just a couple of more words on this address at 353 Deloraine. This house, a very small house, is on a 25-foot lot, as compared to the previous one, which is on a 60-foot lot.

It appears to me that there is no sense to this notion of trying to combine fair market value.


The Chair: We shall continue to stand by. Go ahaead.

Mr Teichman: Basically, I'm trying to make a connection that municipal services really do serve people to the greatest extent and property to a much smaller extent. Certainly location does have an impact on how expensive it is to deliver those services. In the city of Toronto, where the lots are smaller and the houses are smaller, it would be less expensive, not more expensive. However, most people I talk to, I believe, are willing to accept a compromise.

Instead of saying to the people in the suburbs, "You really should be paying more money for the same size of house as we people do in the city," I think it would make sense to go to the unit value assessment notion, that houses with the same-sized building and the same-sized lot should pay the same taxes. This would be a very easy method to monitor as well, because the records are with the municipalities, it is very easy to update, and there is no question. There won't be anybody going to a hearing and asking for a reduction in their taxes because it doesn't compare in value with the person next door.

The Chair: Thank you very much. I regret all the bells. I'm just worried that we're going to get a lot more bells shortly, so I'm afraid we're going to have to move on to our next presenter. Thank you.

Mr Stockwell: No questions?

The Chair: Sorry, we're about to head into some more bells, so I think we're going to have to keep moving or we simply won't complete our witnesses.


The Chair: I call the representative from the Lawrence Park Ratepayers' Association. We trust you'll be able to --


The Chair: I shouldn't have said that. Just make yourself comfortable. As we stand by, perhaps you'd be good enough just to introduce yourself for Hansard and then please go ahead with your submission.

Mr Sandy McIntosh: Certainly. My name is Sandy McIntosh. I'm the past president of the Lawrence Park Ratepayers' Association. I'm currently a director and a very active member of its executive. I'll try to make this short and sweet just in case we do get interrupted, but I don't mind.

First, let me thank you very much for permitting ratepayers' associations such as ours to take your time and allow us to voice our opinions on such a serious matter as market value assessment. I am sure you have heard the same stories over and over again. I gather from the newspaper report this morning that you people are getting rather tired of the repetitiveness of the matter, so I'll try to touch on a couple of topics other than what you've been going through.

We in Lawrence Park feel that there are many different methods of taxing property other than market value. Some of them are a lot more palatable than market value, and these could be fairer to all areas of Metropolitan Toronto, whether it's Lawrence Park, Forest Hill or even Scarborough.


The Chair: Hear, hear. It seems the danger has passed. The committee expresses its delight.


Mr McIntosh: Does this happen on a regular basis?

The Chair: We try not to have this happen every day. I'm sorry, but it sounds as though we won't have to worry about that again, so please continue.


Ms Poole: Mr Chairman, on a point of order: Is this because Legislative Assembly staff feel we politicians are so dense we need a message five times before it can be absorbed, or is there some other reason for this?

The Chair: No comment. Please go ahead.

Ms Swarbrick: It's good you were asking other politicians.

Mr McIntosh: I feel that market value will not work in Toronto, primarily due to the very nature of the definition of market value. Any economist, real estate broker or lawyer will be very quick to tell you that market value is the price at which a property trades when a purchaser and a vendor come together, neither being under any undue pressure.


Mr McIntosh: One saving grace is that we don't get it in French as well, I guess. Not yet, anyway. It may come.

The Chair: Just wait. Merci beaucoup.

Mr McIntosh: I feel this definition of market value is very key to the situation. I wonder how a group of provincial assessors can determine the actual pinpoint market value of a property in a metropolitan area the size of Toronto and as complex as Toronto.

Our area of Lawrence Park, for example, which is relatively stable, the same size of houses, uniform areas throughout Lawrence Park compared to most other areas in Toronto, would be hit by an average increase of 71% under full market value. The changes range from a slight decrease in a few cases to increases of well over 100% on many of our homes. To me, this does not sound like fair market value or a fair property tax system.

Another reason I feel market value will not work in Toronto is that it will drive more and more businesses to the suburbs or even out of Ontario or out of the country. Investment properties in Metropolitan Toronto will become slum areas or even non-existent. With property taxes increasing so dramatically, I feel only the very wealthy or the very poor will be left living in the core of the city of Toronto. This is not what we as citizens of Toronto want to see happen.

What method of property taxation would work? George Teichman has already mentioned unit value. I'll get into that in a second. Currently, the Fair Tax Commission is meeting and due to make some recommendations very shortly. Our association in Lawrence Park has been closely involved with Michael Walker, Anne Johnston, Dianne Poole and others over the past several years battling market value assessment. We still very strongly support them in their opposition to its passing.

We feel unit assessment taxation is a method that deserves strong consideration as an alternative to market value. We are not against fair and equitable property taxes. What we are against is the unfair and unstable method of taxation that we feel market value will place Metropolitan Toronto under.

The unit assessment method of taxation, which is some combination of lot size and square footage of a home times some sort of mill rate to come up with a dollar value, would tax all properties equally, whether they are located in Scarborough, Etobicoke, Rosedale or Moore Park. This would really be a user tax for services, which is exactly what property taxes are supposed to be for.

The cost of operating such a system I feel would certainly be less expensive than a market value method. Appeals would be at a minimum, as there is virtually nothing to argue about. Right now, I would venture to guess that in Lawrence Park, probably at least 75% of home owners will end up appealing their tax increases if market value goes through. Think of what that cost is and the wastage of time it will create.

In conclusion, the Lawrence Park Ratepayers' Association definitely feels it is time for the property tax system in Metropolitan Toronto to be brought up to date. A new and fairer system should be put in place, but not at the expense of the residents and the commercial property owners of the core part of the city of Toronto. A market value system of taxation could destroy the city of Toronto, and we could become ghostlike such as downtown Detroit or New York. We don't want our businesses and residents to move to the suburbs. We want to keep them in the downtown core, but it won't happen with market value.

The directors of our association and the residents of Lawrence Park are strongly opposed to market value, and we hope your committee will consider the consequences if Metro is allowed to put it into place even in its watered-down version. Once in place, we feel Metro would quickly see to it that full market value was achieved in order to maximize its tax dollar intake. Please, we're asking you to consider stopping this market value assessment and take a hard look at other, fairer property tax systems. I thank you very much for your time.


The Chair: We have time for two questions.

Ms Poole: Sandy, thank you very much for your presentation today. I would like to make one clarification. It was printed in the newspaper that some committee members are tired of the repetitiveness. I think they were quoting the minister in that regard. There are a number of members on this committee who do not feel the presentations have been repetitive. In fact, each presentation has brought some new aspect or some new perspective on this particular plan. So I do appreciate your presentation.

Mr McIntosh: I thank you for that comment. It's heartening to hear that out of everything, a little something will come out, which makes us feel it's at least worth while coming down. Thank you.

Ms Poole: It certainly has been. I think all members of the committee will agree to the fact that we have had many excellent presentations.

One of the unfortunate byproducts of this whole debate has been an alienation between the city core and the suburbs. I think it's unfortunate and perhaps inevitable, because people in the city of Toronto feel we're fighting for the future of our city, and people in the suburbs have been told by the politicians, I think quite rightly, as one of our previous presenters pointed out, that they are overpaying. So we have this confrontational situation.

If we're looking for an alternative, you mentioned unit assessment, which is what was proposed by the city of Toronto and the city of North York. I would suspect a lot of people in the suburbs would have a problem with that particular method of reassessment, because they say it gives a clear advantage to the smaller properties within the city core that are actually worth much more.

What if we had an adaptation of that unit assessment? What if, as has been suggested I think by two presenters, you had a flat rate which every resident of Metro paid in property taxation, regardless of size of house, regardless of where it was located, regardless of the market value of that property? Then in addition to this flat rate, say $1,000 or $1,500, whatever it is, a unit assessment factor as well. In my opinion, this would ameliorate some of the disparities between the suburbs and the downtown core, yet I think it would protect the downtown core and those smaller houses that under market value would get severely hit. Do you think that kind of system would have any possibility?

Mr McIntosh: I think it could possibly work. Are you talking of a poll tax per property? In other words, a base tax and then an additional tax based on the size of the lot, the size of the house.

Ms Poole: That's right.

Mr McIntosh: I think some combination of that could work. I think it might be, as you say, a way of equalizing feelings for the suburbs end of the city. I just feel that if I want a tennis court and a swimming pool on my property, I have to have a large property and therefore I should expect to pay more taxes. That sort of feeling could be interpreted into this additional tax on top of the base tax.

Ms Swarbrick: Mr McIntosh, one thing that Ms Poole and I can definitely agree on is there have been some excellent presentations before this committee.

Mr McIntosh: Thank you.

Ms Swarbrick: How do you feel about the issue of ability to pay as a factor in whatever the property tax is?

Mr McIntosh: I think ability to pay is related to ability to buy. In other words, with market value I feel that we're getting into a location tax, into a wealth tax, into trying to tax people because they live in expensive houses, and we're getting away from the real meaning of property taxation.

You're getting into an income tax system as opposed to a property tax system, and I don't think ability to pay -- you know, if I can't afford to live in the city of Toronto, I shouldn't be living there. If I can't afford to pay my fair share of taxes living in Toronto, I shouldn't be living in Toronto, because I won't be able to afford the housing in Toronto. But my taxes are going to be for the same services, whether I'm in Etobicoke or wherever I am. At least, I feel they should be.

Ms Swarbrick: How do you feel about the fact that property tax now pays for education?

Mr McIntosh: I would like to see education taken right out of property tax and be a separate entity. I don't know how it could be handled, but I think it's too large of a chunk and it just causes more of a problem in the distribution of the dollar from the city to Metro and Metro back to the city. It's another twist in the game, so to speak, of manipulating tax dollars, and I think it would be wise to get it out and it's straightforward what property taxes are payable for.

Ms Swarbrick: Do you feel in terms of education that ability to pay should be a consideration with regard to education?

Mr McIntosh: Yes, I do, because I think education is, quote, a matter of right for people in Metropolitan Toronto. They should be able to go to school whether they can pay for it 100% or pay for it 50% or whatever the situation is. I think that the system should be wealthy enough to allow every child in Toronto to go to school.

Ms Swarbrick: Are you saying that only people who can afford to live in the city of Toronto should live here?

Mr McIntosh: Not necessarily, no.

Ms Swarbrick: That actually is what you said a few minutes ago.

Mr McIntosh: Yes, well, I'm sorry, but I mean that if I can't afford to buy property in the city of Toronto, I shouldn't be living here. But there are a lot of people who are living here who right now could not afford to purchase their house at today's market prices.

Ms Swarbrick: Because the implications, of course, of your inference that only certain people should be able to live in Toronto based on being able to afford to leads one to argue that in fact then city of Toronto people should pay more in taxes.

Mr McIntosh: I think there is housing available for pretty well anybody in Toronto. You can buy houses in the city of Toronto for under $200,000, and with mortgage rates the way they are these days, I think they're affordable for anybody -- not anybody, but pretty well anybody -- who has a steady job and a steady income. So people can live in Toronto. It's a question of whether they need six bedrooms and a double-car garage. Then they probably will not be able to afford to live in Toronto, and they'll live in the suburbs.

Ms Swarbrick: Part of what I was trying to get at, of course, is it seems to me that whatever system we're talking about, whether it's unit assessment of size, times of mill rate or whether it's flat rate plus a unit assessment, if people believe in the issue of ability to pay as a consideration, then both of those two proposals would still end up being unfair at some level, because whatever the amount is then would not have any consideration to the ability to pay. That was why I was interested in your perspective.

Mr McIntosh: But do you believe that somebody who cannot afford to live in Toronto should be subsidized somehow to live in the city?

Ms Swarbrick: Well, see, I think part of the wrinkle that comes out of what you were saying is that if people end up buying out in the suburbs because they can't afford to live in the city of Toronto, and the lots in the suburbs happen to be bigger but they happen to be cheaper than the places in Toronto, then why should they end up paying a higher property tax when in fact they've gone to the suburbs for the very reason that they can't afford to live in the city of Toronto?

Mr McIntosh: I understand what you mean, but perhaps the answer is they shouldn't be living on a large lot if they can't afford it in the first place, whether it's in Toronto or in the suburbs.

Ms Swarbrick: But what I'm saying is, what if they can afford to live on the lot, on the property, and that's why they can afford to buy it, but you're saying they should end up paying --

Mr McIntosh: The same amount. I see what you mean, yes.


The Chair: The parliamentary assistant had a comment, and then I'll recognize Ms Poole.

Mr Mills: I'd just like to set the record straight for the much- and often-quoted Globe and Mail. The minister never at any time said he was tired. He said that they're becoming somewhat repetitive. He never said he was tired. The reporter said he was tired. I can tell you, sir, that I have sat here now for over 60 hours listening to presentations, and I agree with the minister that they're repetitive but, to date, I have not tired of listening to you or anyone else. I just want to make that clear.

The Chair: And he's not tired either.

Mr McIntosh: I appreciate that.

The Chair: Ms Poole, and then we'll have to move on.

Ms Poole: I would be surprised the minister would feel he was tired that it was repetitive or he felt it was repetitive.

Mr Mills: He never said he was tired.

Mr McIntosh: I'm sorry I mentioned it. I just saw it at 4 o'clock this afternoon.

Mr Mills: Anybody who doesn't think this isn't repetitive is out to lunch. Good Lord, 60 hours.

The Chair: Some members may be tired and/or repetitive, but we're here and carrying on.

Mr McIntosh: This is the last day, I gather.

The Chair: We're not sure. Ms Poole, you had a short point?

Ms Poole: We're all tired, but we just disagree on whether it's repetitive. The minister was here for almost three hours of the 60, so I think he probably thought that was too much.

Mr Mills: I've been here 60.

Ms Poole: Anyway, Sandy, the point I think you were trying to make -- and I don't know if Ms Swarbrick is here -- the example I wanted to give you of ability to pay being equivalent to what you can afford to buy: In 1975, when my husband and I bought our home, we paid $62,500. He had just come out of law school and I was pregnant with our first child, and we had decided I was going to stay home for a few years, so we were strapped to the maximum to pay. We had a first, second and third mortgage on it, and it was really tough.

We're fortunate, because over the last number of years, both my husband's and my income has risen dramatically from what it was in 1975. Our house has risen in value. In 1988, a real estate person had said, "If you want to list this, we'd list it for $500,000." Our next-door neighbours spent six months in the last year trying to sell their house. They couldn't get $300,000 for it, and it's very similar.

But we're fortunate. A lot of the people in our area who bought, some have been there since the 1920s when the houses were built, but they've bought over the years and at the time they could afford it, but now if it's taxed on the market value, they simply can't afford it any more. The expectations have changed from the time when they first bought it.

I don't know if that's the thing that you were trying to explain, that it's what you buy it at at the time, whether you can afford it, that is the measure of your ability to pay, not necessarily what this new tax will impose on you.

Mr McIntosh: I tend to agree with you, because I think I would have a tough time buying my house in today's market, or in 1988 values. The point I would also like to add is that it points out that the volatile real estate market we have in Toronto does not go together with market value assessment; at least I feel it doesn't.

The Chair: Thank you very much for coming before the committee, and in particular thank you for ending the fire on the third floor.

Mr McIntosh: You're quite welcome.


The Chair: I call Mr John Kent, please, if you'd be good enough to come forward. Mr Kent, welcome to the committee. When you're settled, please go ahead.

Mr John Kent: Committee members, I speak as a long-time resident of the city of Toronto -- in fact I was born in Toronto -- and I am very definitely against market value assessment. I would just like to make a few points, not based on any expertise but with some knowledge and certainly a great deal of commitment to the city of Toronto, the quality of life.

I think market value assessment raises a number of specific problems, as well as general ones, to the Metro organization. First of all, I wonder how accurate the assessment that we have now is. For example, if a house sells at a higher price than the assessment that's been given it, does that mean that all other assessments in that neighbourhood should go up? I don't see how that can be rationalized.

Next, to my knowledge, market value assessment doesn't separate the value of the house and the value of the land. It might touch on what was just talked about: How does the system distinguish between land and house value? I'm a bit worried about the problem of home owners not being encouraged to improve their houses if that distinction between land and house value is not made clear.

I definitely believe that taxes should be based on services. I just make a couple of observations that I think have an impact on the tax, whatever the taxation system is. The services that we operate now certainly, it seems to me, unless I'm missing something, must cost more for a longer distance to travel. For example, if we take the water from the lake and take it up to the suburbs, it must cost more to go there, so it seems to me people should pay more, and similarly sewage being transported back must cost more.

People who live in the suburbs also use the city a great deal more than the city people use the suburbs, particularly roads -- and not just the Metro-controlled roads, the main ones, but also residential roads on which they park as well, not to mention add to the pollution. So in effect the city subsidizes the people of the suburbs to use our roads.

Similarly, the city dwellers subsidize the TTC. It seems ridiculous to me that people who use the TTC for short distances, for example, in the city, pay the same as someone going from downtown to Finch. We used to have a different system. There was a double fare at Lawrence, I think it was.

One thing that concerns me is I think in all my experience in city issues, there's a fundamental imbalance in the organization of Metro government. I'm sure there are other things that I haven't thought about, but two issues come to mind. I know they seem unrelated, but they have to do with the taxation system ultimately. There's a different way of thinking and dealing with issues between people in the city and people of the suburbs.

The two issues that come to mind: One is the expressway issue that hopefully we've put to bed, although there's Leslie Street that's still in the air. We in the city fought very hard to stop the Spadina Expressway. If we hadn't, it would have gone through, and it seems to me it was basically, generally speaking, the suburban people wanted it to drive into the city for their convenience and city people did not because it would have had an enormous detrimental effect on the city.

The other issue is the Toronto Islands. I know they're owned by Metro -- it's technically park land -- but we see it as part of the city. Generally speaking, people of the suburbs wanted to tear the houses down and develop the area with condominiums and wave machines and all the other proposals that have been made over the years. The people of the city did not. We wanted to leave it as it is.

It seems to me those two are examples of the different kind of thinking and the fundamental imbalance in this city that we had to fight hard and fast to have those issues put to rest, and really they haven't been, because there is always this spectre arising that an issue comes up and because Metro council is dominated by people not of the city, many of these issues are voted against the interests of city dwellers. I don't know the complications of it, but it seems to me it might be in our best interests, the people of the city, to somehow disband Metro council. I know it might seem radical, but I don't see any fairness in the system.

Market value assessment is yet another example, it seems to me. With this going through, we will end up paying for our so-called higher-valued properties in this city, yet really, in effect, we subsidize the people of the suburbs in many other ways that are linked, either directly or indirectly, through other expenses.

I guess one other example comes to mind. That is the transfer payments for education. The fact that the city of Toronto, which is dying in education, transfers millions of dollars to the suburbs seems extraordinary to me.

The Chair: We have time for one question. Dr Frankford, do you have a question?


Mr Frankford: I think you really raised too many questions to -- let me, as a Scarborough member, just throw out a challenge. You suggested that maybe Metro shouldn't exist. Obviously, even if there was a move to separation, this would not be an easy matter. One would have to think of separation of police and many other services. Let me point out that this is an interim proposal to moving things in the direction of fairness. I don't think anyone is suggesting that this is the final proposal.

Mr Kent: I'm afraid, and I think most people are, that once a tax is in place, it's there for ever, and taxes never go down. The system in itself, the whole procedure for taxation, is unfair. I agree with the last speaker also, that education shouldn't come from taxes. It just increases the inequality.

The Chair: Mr Grandmaître, I'm sorry I missed you; please go ahead.

Mr Grandmaître: You brought up a very interesting subject, the Toronto Islands. Only three weeks ago we passed legislation permitting these people to lease their land for 99 years for $36,000 -- that's $30 a month, quite a lease -- and we're on the verge of passing legislation that will double and sometimes triple the property taxes. How can the same government introduce such legislation as Bill 94 and at the same time pass legislation to provide this gift to the Toronto islanders? What are your comments?

Mr Kent: I'm not sure how that figure was arrived at, so I can't really comment. I'm not informed enough about the islands. It could be that that should be rethought, I don't know. But my point about the islands really was one of thinking, of attitude, that the island houses should stay there, and that's something that city people believe in.

Mr Grandmaître: I'm not talking about moving them. I'm talking about their 99-year lease. They're set for life at $30 a month, yet we're asking other people in the rest of Toronto and in Metro to please accept a 30%, 40% and 50% tax increase through MVA.

Mr Kent: This could be a problem, but I guess the government, in its wisdom, decided that's a fair price.

Mr Grandmaître: Thank you.

The Chair: Thank you very much, Mr Kent, for coming before the committee.


The Chair: I call Ms Heather De Veber. While you're coming to the table, I'll say to members that we are now passing out the summary of recommendations that cover the period from November 30 to the morning of December 7, inclusive; all members should have that. That replaces the previous document you received.

Welcome to the committee. Please introduce yourself for Hansard.

Ms Heather De Veber: My name is Heather De Veber. I live in the city of Toronto, and I'm here to plead for myself and for the city. I speak as a resident of a street. I've been in a house for 21 years. I love the city very much and have been active in my community and so on to protect the neighbourhood, to protect against land developers, expressways and so on over the last 20-odd years.

I feel that the city is a diversity of people and neighbourhoods. What happens with market value assessment, which I'm against, is that it kills the diversity and the texture of the city. First of all, it means that someone like myself, as a single parent -- I have fought very hard to keep my house over the last 20 years. I also have a business, in that virtually anything that doesn't move in the house I rent out to students or other tenants. What this tax increase means is that it is possible I'll be forced to sell the house. The tenants, whether they are legally bound to accept a 6% increase a year or 4%, whatever the rate is set at, simply are not paying it. They say, "I like living here very much, but I can get a better place somewhere else." I said, "I'm sorry to hear that. I hope you'll stay," and they did in fact stay. So there's no way I will possibly be able to get any of this tax increase from my tenants.

I don't want to move. My taxes right now are $4,500 a year. It would mean close to $9,000 a year for me in taxes. It's ridiculous, and I really resent being discriminated against by people with monster, huge, large properties out in the suburbs gleefully thinking that they are now getting fair taxation if this market value business goes through.

The phasing in is -- dare I say -- a bit of a scam. I don't think for one minute that 5% this year, 10% next year, is going to make any difference to me. If I have to sell the house, which as I say I don't want to, the price immediately locks in the full taxation. I will not be able to sell my house as I would perhaps in another -- the market's bad anyway. Having to sell it as soon as I would have to if this tax thing goes through is very upsetting to me.

I've seen what's happened on the street. Some people have moved out. Who is moving in? People with lots of cash from outside the city. I've lived there for 21 years and I don't want to move and I see no reason to. If this tax assessment business goes through, whether it's piecemeal, slow death or whatever, it is simply not fair.

I believe that yes, there has to be a change in the taxation at some point, but I'd like it to be urban-neutral. I'd like it to be based on the size of the property. I have a 45-foot frontage -- 45 feet, three and half inches, to be specific -- and I don't think that's a monster, huge property.

I'm delighted that the city was able to subsidize our composting boxes. That's great. Why are we still getting two pickups of garbage a week, I'd like to know? That is one cost, a very small one perhaps. I don't know the ins and outs of the way the city has to make the money or Metro does.

However, I repeat that I plead for myself and the city. I don't want the downtown core of the city to be filled with fat cat businessmen, which is what's happening on our street. People in the money market -- hard to believe -- are making enough money to move downtown from outside the city. People from outside the country, in fact, are moving in. I don't want to have to move because of that. There are people in my neighbourhood who are senior citizens, who have lived there for even longer than I have, and I see no reason why they should be forced out, nor do I want to be forced out.

I beg of you, please consider a visible means of taxation so that we look at the size of the lot, something we can see. I don't understand basing things on market value. Of course, the 1988 or whatever it is is immensely high value; certainly nowhere near what my house is worth. Thank you.

The Chair: Thank you very much. Time for a question, Mr Wiseman. I just say that the bells may start ringing to call us to the House for a vote, but we'll hope that won't happen until the question is over.

Mr Wiseman: Where did you say your house was? How much tax did you say you pay now and what would they go up to?

Ms De Veber: My house is on Rowanwood Avenue. It's one block north of Roxborough Street one block east of Yonge Street. My house is one block east of Yonge. Rowanwood runs into Yonge Street; the street is two blocks long.

Mr Wiseman: And your tax currently?

Ms De Veber: It's $4,500.

Mr Wiseman: And how much would they go up to?

Ms De Veber: To $8,800.

Mr Wiseman: That's with full market value, not with this plan.

Ms De Veber: Well, full market value will eventually come in, sir. I don't know what this plan is. This plan is just 5% here, whatever. I do not make an increase of 5% on my salary at work a year.

The Chair: Thank you very much for coming before the committee and making your presentation.

There is one witness who was scheduled before 6, but given that we are going to be called for a vote, we will try to reschedule that witness either for this evening or for tomorrow afternoon. The committee will reconvene here at 7 o'clock this evening. The committee is adjourned until 7 o'clock.

The committee recessed at 1740.


The committee resumed at 1905.

The Chair: I'd like to call the meeting of the standing committee on social development to order. We are meeting to review Bill 94, the Metropolitan Toronto Reassessment Statute Law Amendment Act, 1992.


The Chair: Our first witness tonight is Ms Lucille Giles, if she would be good enough to come forward. Welcome to the committee, Ms Giles. Please have a seat. Help yourself to some water. There may be the sound of carols in the background this evening. We hope that spirit of harmony will guide us in our deliberations, not only tonight but over the next while. We welcome you to the committee and please go ahead.

Mrs Lucille Giles: Thank you, Mr Chairman and members of the committee. I hope you can hear me.

The Chair: Yes, we can.

Mrs Giles: My name is Lucy Giles. I live in the city, and I understand that my taxes are going to increase. My member at Queen's Park has resigned and I'm therefore not represented.

I wonder if this is not the time to assess whether the city should be part of Metro, as Metro is calling the tune. When Metro was formed, and this shows my age, it was only as an experiment which was to be reviewed. Metro has now grown so large and can rule the city. Perhaps what we need is a smaller government, more efficient in meeting the needs of the people. The city collects the taxes for Metro, but the city is the one that gets the anger with this increase.

We are paying for a Fair Tax Commission to report soon. Why don't you consider their report? Isn't it irresponsible not to wait for their report?

Market value assessment is not a new idea. We have assessment now which is based on the market value of a former era. The big push to have a market value based on a more recent year is no doubt because the suburbs have not suffered such great price increases in the recent inflationary boom.

Our system has for years accepted municipal taxation based on the amount of property owned rather than the amount of services consumed. A tax based on the cost to rebuild, less depreciation, plus an amount per square foot of lot, using the same figures throughout the whole taxed area, would be in keeping with our history. Assessing suburban property owners more because they use more roads, sewers, water and TTC services has not in the past been part of our system. If, however, a new system is to be introduced whereby the suburbs are to benefit from taxing city properties on the basis of their location, then suburban properties should also be taxed because of their location.

One of the features which adds to the value of a city property is its location near the centre, but the city property owner has subsidized the building of the services to the suburbs. The province and city taxpayers subsidize the TTC so that people living in the suburbs can travel downtown at a great deal less than cost. The suburbs pay no more for services provided by all the taxpayers, yet because they are further from the centre, the services cost more. If people are to be taxed for the location in which they live, for example, living nearer to downtown, then people who live farther out should no longer be subsidized for TTC and other services.

It is to be remembered that while city properties in 1988 did, and many no doubt still do, sell for more than suburban properties, the city properties require fewer roads, sidewalks, watermains or sewers than similar-sized properties in the suburbs.

Increasing business taxes by the tremendous amounts promised by Metro will have serious effects on existing businesses and will discourage new business and industry in the city where a large portion of the unemployed now reside. I hope that in reaching your conclusions on this proposed tax, you will not drive business and industry out of the city or break up downtown neighbourhoods by rendering our residential areas too expensive to live in.

The Chair: Thank you very much for coming and for your presentation. We appreciate it.



The Chair: May I call Mr William Gallos. Mr Gallos, perhaps you would be good enough just to sit in one of the middle chairs. Thank you; it's just easier for the television cameras, I'm told.

Mr William Gallos: My name is William Gallos and I live at 1982 Queen Street East, which is located in the Beaches. I own two businesses there. One is a hairstyling business, which I've operated for the last 27 years, and in the last three years I opened a restaurant called the Seventh Wave, which is right next door to my hairstyling salon. I'm also representing the business association in the area tonight.

I'd like to speak to you tonight about the concerns with the MVA that face us as business people. I've been watching native Torontonians leaving the city in the last 15 or 20 years, the exodus, one after the other leaving the city. The question I asked them was, "Why are you leaving the city?" The answer was always, "We're trying to get away from the downtown." Most of them were saying: "Ghetto. We're going to the suburban areas. There's a better life there." These people never complained about taxes before. They just wanted to leave the city for a better life.

We've watched the sprawling of the suburban areas growing from the lake to Barrie and now from Oakville almost to Peterborough. This sprawling has, first of all, brought about an enormous amount of environmental issues. This idea of reassessing the city has brought a tremendous amount of pressure on us business people. I for one find myself today, after 30 years of hard work, unable to pay my mortgage because of lack of business.

I think that at this time to ask us to find more money, more taxes, is just not proper. We've continuously watched business leaving Toronto. It would definitely put me and many others in the area out of business. I'm asking you tonight to use your good judgement and say no to the MVA.

The Chair: There is one question from Mr Owens.

Mr Owens: I want to thank you for appearing here tonight. In terms of your area of the Beaches, it's probably one of the areas, in terms of real estate volatility, that has been hit quite substantially. I know that when my wife and I were looking to buy our second house, we would have loved to move to the Beaches, but due to price considerations, it just was impossible.

If the government were to accept this particular market value plan, what kinds of protections would you want to see, on top of what the minister has already requested, by placement in the bill for businesses like yours, as well as home owners in the Beaches area? What kind of additional protections would you need to see to ensure that your business had a reasonable chance of survivability?

Mr Gallos: First of all, I think that number one is not to increase the taxes at all. If possible, the city should increase density and provide incentives for people to come to the area. In the summertime, yes, we have a large influx of people who come to the area, but in the winter months it's bleak and there's hardly any business at all.

There's an enormous amount of space wasted and so I think the city can allow its density to go up so that more people can come into the area or, for instance, development can increase. It shouldn't be unthinkable to allow five- or six-storey buildings, so therefore you can increase the density so more people will come to the area, and more taxes will be paid to the city and so on and it will stop this sprawling. I would say, to answer your question, no increase in any taxes, and perhaps assist us, small business, somewhat, if possible -- for once, we need it -- and increase density so it brings some incentives so that people can move into the area. Instead of seeing empty stores, we see more density in the population so that we can do business.

Mr Owens: I represent a Scarborough riding and many of the businesses in my riding and many of the residents are looking at a tax decrease. If we follow through with this piece of legislation in its current form, I have a problem in terms of how I go back to those people I'm elected to represent and say, "Sorry, I'm not in favour of your particular decrease." What would you advise me to tell my constituents?

Mr Gallos: I didn't hear you very well. Could you repeat --

Mr Owens: Can I have this mike turned up? We've had problems with this mike all week. Just in terms of the people who I represent, the businesses, somewhere in the neighbourhood of 50% of the businesses in my riding are looking at a decrease and a lot of them are small businesses, like yourself.

Mr Gallos: Right.

Mr Owens: They're concerned that they're already paying too much tax and they want the decrease that may be afforded to them with this piece of legislation. I guess my question is, to a person like yourself, how should I go back to my constituents and say, "Well, we're not going to give you the decrease?"


Mr Gallos: I really don't know how to answer your question properly. I wish I had the answer for that. It would be a very tough question to answer, this question as to who should get a decrease, and whether the people in your area should not get a decrease. However, I think that the people who lived in the area -- first of all, they already knew what they were going to be paying and their taxes are not going up as much as our taxes are going up.

There is a difference between what we pay at the present time. You're asking us to pay double, triple or sometimes five or six times. We cannot sustain that kind of an increase.

Mr Owens: If you had one wish tonight, your wish would be that we would send this plan back to the Metropolitan Toronto council and ask it to rework it; that's if we could grant one wish to you tonight.

Mr Gallos: No, if I had a wish tonight, I think this government should put an end to the MVA, period.

The Chair: Thank you, Mr Gallos. I think that's a clear wish at the end of your submission. Thank you for coming.


The Chair: If I might then call Terry Marescaux, welcome to the committee, Mr Marescaux. Please go ahead once you're settled.

Mr Terry Marescaux: I appear here tonight. I think I'm a little nervous, not because I'm so nervous about presenting, but presenting on such short notice. I received word only today that I would be given this opportunity. Nevertheless, I am very happy I have the opportunity and I'll make the best use of it that I can.

I really feel that what concerns me the most is not so much what I've heard so far as what I haven't heard. This is a very major change the city is proposing and it seems we are in effect trying to change the superstructure of a very large building without going back and re-examining the foundations.

To date, many people have spoken very emotionally about how the suburbs are paying more than their fair share of property taxes. This, of course, they base on the market value assessment. Others feel that perhaps Torontonians can't afford to pay more. Most of the arguments so far seem to revolve around these questions. I think they are valid questions, but if we're really going to make major changes with long-term implications for the city, I think we should really be looking at the foundation.

Some of the questions that come to me are things like: If land values in Toronto are higher, should property taxes automatically be higher? If this is so, this would automatically increase the cost of almost all goods and services in the city; for instance, the rents paid for by welfare recipients. I have a small house. I rent out several small units in that house. If this tax is implemented, I will have no choice; I will have to increase the rents whether my tenants can afford to pay them or not. So there will be an immediate pressure to increase welfare payments to those people because they won't be able to afford the higher rents.

Of course, when they go to the corner store, or I go to the corner store, again the small retail owner is going to have been paying higher taxes and if he can't afford it, he will attempt to pass it on to me, the consumer. But many of those small businesses that are just around the corner from me I'm sure won't survive.

If I look at used tool rental service and other small businesses like that which operate on very small margins, I can't imagine how they are going to absorb these tax increases. I really can't. So I think there's a very fundamental question right at the outset. If land values are higher in the city, does that mean everybody in the city should pay higher property taxes and higher prices for the goods and services available in the city?

I guess another question that begs is whether there is any relationship between the taxes we pay in one municipality and the cost of services in that municipality. In other words, if residents of Toronto and taxpayers in Toronto are going to be asked to pay more taxes, are we going to get more services? Is there any relationship between the taxes we pay and the services we receive? I think many people are questioning that kind of relationship at all levels now, not just at the municipal level.

Of course, just hearing that I was going to speak today, I haven't had time to research, but I have heard that already in terms of taxes collected in the city of Toronto, there is a net transfer of education taxes to the suburbs. If we're looking for fairness, is that fair to the city? I'm not asking you to jump to immediate conclusions on these questions, but what I am looking for is at least some careful consideration of these questions. I have heard almost nothing about these things up to now and I'm very concerned about that.

I think there's also a question of accountability involved in this tax system. I don't mind my taxes going up if the politicians that I voted in, or that I at least had an opportunity to vote for, feel it's necessary to raise taxes to pay for the services that we use and so on. But in this case, it's the politicians I don't have any chance of voting for or against who have in fact imposed their wishes on the city of Toronto. It's the suburban politicians who voted for this change. The city politicians voted against it. Where is the accountability there? I can't do anything about it. I can't turf out the fellows who voted for this at the next election. It seems to me there's a fundamental problem there. There's taxation without representation.

Some of the arguments that have been put forward for market value assessment seem to me at best a little bit of wishful thinking. One of the things I have heard is that under the present system, it's so inequitable that many people appeal their taxes, and it's really tying up the system and they're very often successful. I think it's really wishful thinking if someone was to put forward the idea that these changes will end that legal wrangling.

For instance, on a row house that I own on Bathurst Street -- and I remind you that this is a row house -- I was told that a property that I recently paid $212,000 for is now assessed at, based on 1988 market value, supposedly, $370,000. I question how they ever arrived at this figure, because everything I've followed in the real estate market suggests that prices have not changed that significantly, so I definitely will be looking into avenues of appeal, and I'm sure I'm not alone. There will be so many appeals under this new system that I am sure the system will be quickly overwhelmed.


The Chair: Excuse me, Mr Marescaux. Sorry, but if you could start to wrap up here, that would be fine.

Mr Marescaux: I'm just about to do that. The one last thing I am concerned about is the lack of discussion of alternatives to this system and other recommendations. I have heard a couple of things, although there hasn't been a great deal of discussion about them. One is, as was mentioned earlier tonight, a tax on the basis of square footage. It seems to me that would be more equitable, or perhaps on the basis of services consumed.

In any case, I hope this committee will recommend to Toronto that before it implements, in great haste, this new system, at least it go back and look at the policies and assumptions that underlie it and really think very hard about the long-term implications of making it more expensive to live in downtown Toronto.

The Chair: Thank you very much. We appreciate your coming this evening at late notice.


The Chair: I call Ms Tanny Wells, please, if you would be good enough to come forward. Welcome to the committee. I believe we have a copy of your submission. It's being handed out. Please go ahead.

Mrs Tanny Wells: I appear before you tonight as one who cares very much for the city of Toronto. I was part of a delegation from the South Rosedale Ratepayers' Association last week, but I was also given this opportunity to come back and I'm very pleased I could do that. I wasn't going to till yesterday, and then reading the paper this morning, but I'm here.

As well as my involvement with the ratepayers, I'm a real estate agent, and at this moment I feel as though I've been in the eye of a hurricane. I'm sure you do too. My neighbours and clients keep phoning me to find out what's going on with MVA. I've been through most of the Metro hearings and several of these sessions here and I've been out on picket lines, handing out flyers in the neighbourhood and all those things an involved citizen does when you're really concerned about an issue.

I'm here to make one more pitch to you, because this level of government seems to be the last resort. As one of the speakers before me said, I live in an area where we don't have an MPP. We're unrepresented at the moment.

I'll be brief, because I understand that the minister feels the briefs are repetitive and that he wants the bill passed on Thursday. Repetitive maybe, but maybe that's because people do not believe that they're being heard. I sometimes get the feeling that the lights are on, but is everyone home? I feel it's the height of arrogance that one of you, at least, felt that it was appropriate to sign your Christmas cards during yesterday's hearings. To run the hearings through the weekend and say it's too much to expect to have members of this committee present and alert is to trivialize the procedure and insult the many citizens who made great efforts to appear before you.

One of the government members to whom I spoke in the corridor yesterday said, "Well, we wouldn't have had to have these hearings if the PCs hadn't insisted on them," and words to the effect that he felt you're all just going through the motions, ie, hearing us but not listening to what we're saying. When I asked him why he was even sitting on the committee, he said: "It's a good question. Maybe I'm in a conflict of interest." That's an interesting thought, and not one I'm going to pursue at this time.

I'm here to tell you, though, that out there somewhere where the common folk live who work, pay taxes and vote, there is confusion and misunderstanding, not to mention anger, over this issue. There have been so many permutations and combinations of this plan bandied about and the rhetoric is so confused that people really do not understand. Politicians who should know better are polarizing this community when they should be trying to unite it.

So we have a situation where many of the people in the suburbs truly believe the people of the city are ripping them off. They want the decreases which they have been told they deserve. Those same decreases have been cut back, so they are now going to feel shortchanged. If they get the 50% and 40% solution -- which they will get, apparently -- they're still going to feel hard done by.

People in the city, on the other hand, are feeling threatened, because so many businesses are hanging on for dear life, and the tax increases they will have to bear will push them over the edge.

Coupled with this has been the difficulty in getting accurate information regarding new assessment amounts. Many people who don't quite know the right questions to ask have been given erroneous information by people at the tax information and assessment offices, when they can get through.

You have heard many times, I know, how flawed and therefore unfair the assessment process has been. In fact, it's still not complete. When I called the assessment office last week, when we were preparing our brief for the ratepayers, I was told that some of the information for Rosedale and Forest Hill was being looked at again and we wouldn't know what the results were till the notices were sent out in March.

The issue of point-of-sale increases is unclear, to me at least. The minister has said he does not want this in the bill, but is it not true that Metro can pass a separate bylaw putting the increases back in? If Metro does that, will the provincial government allow it to stand or will it be disallowed?

My professional training has taught me that we should always try to negotiate to a win-win situation. Ladies and gentlemen, if this deal goes through, it will be lose-lose. Even a win-lose outcome would be bad enough, but a lose-lose would surely be disaster.

You have it in your power to change this course of action, and you're the only body that can do that. Please listen hard to what is being said. Replay the tapes if necessary.

You have another course of action open to you: You could put it on hold for a year, commission impact studies and at least consult the findings of the Fair Tax Commission.

We the taxpayers are really angry, and when common sense falls prey to political expediency and laziness, watch out for the results. In my experience, I have never witnessed such anger among the electorate.

You have been asked over and over to get rid of an unfair taxation system. How in the name of fairness can you replace it with one that is just as unfair and potentially devastating to so many of our citizens? Please find the wisdom and the compassion to seek a solution which will address the needs of the whole community.

The Chair: Thank you very much. Mr Wiseman, Ms Poole and Mr Turnbull, could we just have a short question?

Mr Wiseman: I have a quick question for you. From my position here, and I've sat through about half of the hearings, it looks like the genie is out of the bottle and you can't put it back. There is no win-win situation, no matter what you do in this, because the suburbs are not going to feel they're represented if this thing goes into the dumper and the city isn't going to feel like it is being represented if it doesn't, so there really is no way to win.

Do you feel, if we were to do some of the suggestions -- for example, one said a flat rate across the board to every house or every unit and then an increase on top. They were talking in the neighbourhood of $1,000 to $2,000. There are houses in downtown Toronto paying under $300 in taxes. If their taxes go up, do you think they're going to feel that's fair, even though across the board it could be fair?


Mrs Wells: If it was worked out on a situation like that, perhaps. I don't know which houses are paying $300 tax, unless they've got UFFI or they're frame houses or there's some problem with them like that.

Mr Wiseman: Or they were frozen after First World War veterans.

Mrs Wells: There are anomalies like that in the system. I certainly am not here to say that the system we have right now is fair. I don't believe it is. But I do believe that Canadians are basically a fairminded people. If we can have a system that's fair, then that's okay. But what we seem to be getting now is this terrible going at each other: "You've got what I need, and I've got what you want." I think everybody understands that there's a problem that's very evident, but I believe there has to be another solution to this. I just don't believe the one you're looking at is the only way. If you thought it was the only way, why did somebody appoint a Fair Tax Commission?

Ms Poole: Thank you very much for your presentation today. You've pointed out that there is a lot of confusion around the point-of-sale provision. I'd like to set the record straight here about why there is confusion.

In Metro's plan, it said that at the point of sale a residence would go to full market value. That was part of their plan. When it came to the provincial government, the minister said three things. He said that this plan was not full market value assessment; second, if it was full market value assessment, that the government wouldn't pass it because it thought full market value would be devastating to the city of Toronto; and third, that they were going to put in a provision to help protect the city of Toronto about the point-of-sale provision.

What they did was put a provision in the legislation that says Metro has to pass a bylaw in order to put on full market value at the point of sale. But the problem is that Metro has already voted on this three times, and three times they have said yes, they want houses to go.

Mrs Wells: That's my point.

Ms Poole: Exactly.

Mrs Wells: Can anybody take any solace in this? Someone was speaking yesterday, and a member of the government followed him out and said that provision is not in there. I'm not comfortable with the fact that if Metro passes it again, the minister will do anything about it.

Ms Poole: I think it would be impossible for the minister to do anything about it at that stage, if Metro passed it as a bylaw.

Mrs Wells: I think Metro intends to pass it again, don't you?

Ms Poole: That's the concern.

Mr Turnbull: Tanny, thank you very much. I know you've followed these hearings very attentively. If I could just sum up, it's quite apparent that the NDP have staffed their committee with people from the suburbs, and they're saying: "My people have been paying too much for years. They've been ripped off." We hear these expressions over and over again.


Mr Turnbull: I'm talking about the people from Metropolitan Toronto. That's predicated on the assumption that market value is a fair system. There's the problem. We have to convince them that they're injuring their own best interests as well as the people from the inner core.

But could you, as a qualified real estate agent, talk about the impact of the point-of-sale provision, if it's passed, and also elaborate on your reference to the fact that the assessment is not complete and will not be complete until the March notices?

Mrs Wells: I just found that out last week. I thought the assessments were complete, but obviously they aren't, which means that a lot of people have no idea what this bill is going to mean to them. They have no way of knowing until it's March and it's done.

On the point of sale, I know a lot of people out there are really on the edge. They've lost their jobs. They've been living off the equity in their houses, in many cases. This potentially could take 10% to 15% of the equity in their houses away from them.

Mr Turnbull: Just to clarify that, given the fact that they've already had a reduction in the value of the houses since 1988, could this wipe out their equity in many cases?

Mrs Wells: Yes, because a lot of people, if they bought at the height of the market, were buying with not very much down. What I think we tend to forget about what's happened in the suburbs as opposed to what's happening in the city is that when you want to buy a house and you go to the bank, the bank looks at what you own, what you're making, and what you owe. The figures they're using are principal, interest and taxes on the mortgage, and that tax figure is very important. If the tax figure suddenly doubles, it cuts their buying power down, so there are people who are in distress. Sure, there are people who are going to lose their equity.

The Acting Chair (Mr Stephen Owens): Ms Wells, I'd like to thank you for appearing before the committee again this evening. I'll undertake to ensure that your presentation is passed to the appropriate members you mentioned in your presentation. On behalf of the committee, I'd like to apologize for the treatment you received. As I say, I'll make sure your presentation is passed on.

Mrs Wells: I would just like to say that it wasn't treatment I've received; everybody's always been very kind to me. But I was watching what was going on over the weekend and also reading the Globe and Mail this morning.

The Acting Chair: Your observations have been noted.


The Acting Chair: I call Elliot Title. Good evening, Mr Title. I'd like to welcome you to the committee. If you could state your name for Hansard, let your presentation begin.

Mr Elliot Title: My name is Elliot Title. I'd like to thank the committee for seeing me. I was led to understand that the hearings were going to terminate yesterday. Thank you again for seeing us on Monday.

I represent nine properties in the downtown community. They're located around the perimeter of the downtown core, basically at King and Bathurst streets and Front and Sherbourne streets. We've been advised that these properties have been reassessed upwards to 2,600% increase. The average increase of assessment on these properties is 450%. Not only is the realty tax going to escalate dramatically but the business tax payable by our clients is going to escalate as well.

Our clients, 60 in number, employ approximately 400 people who live basically in the municipalities of Scarborough, Mississauga and Etobicoke. Very few of them actually live in the city of Toronto. These people are employed in the garment manufacturing industry, the printing industry, in the graphic arts, creative arts, transportation and distribution businesses. Our clients are presently calling us to ask us the ramifications of these increases on their businesses. When I tell them of the effects, they basically all advise me that the combination of increased realty tax and business tax will not allow them to stay in business or, least of all, stay in the city of Toronto.

If our clients do not stay in business, we will have increased vacancy factors in our space and we will not be able to pay our realty tax nor keep up the buildings the way we have done throughout the last 20 to 30 years that we have owned them. The properties will fall into the hands of the city and become boarded up like many other city properties we see. We all know what effect this will have on the economic climate of our city.

The system of imposing these new assessments upon us seems not to be fair nor equitable. The methodology is not sound, based on our own experience. We're not thieves or criminals. We've built these buildings from what they were 30 years. Some of them were brake shoe manufacturing facilities. We are law-abiding business people who will be forced to fight these new assessments in the courts. Where will we get the funds to go through these procedures? In this situation, we are the victims. Perhaps Metro Toronto, which passed this initially, or the province should fund these costs in this process, because we certainly cannot afford to.


I'd like to give you some examples of why I think the methodology of these new assessments is incorrect. One of them is 197 Front Street East, which we bought in 1987. We paid $3.4 million for a 30,000-foot building. We bought it through a third party. In 1988, they assessed this property at $17.231 million. The taxes are going to go from $85,000 in 1992 to $370,000. Our client, who occupies this building, employs 150 people. He will not stay in business. At 663 King Street, the taxes are presently $40,000. The taxes are going to be $100,000, an increase of 150%.

Our clients cannot afford these increases, nor can we as landlords. These people are going to close, basically. If they can afford to relocate, they will. If our clients close their businesses, we will not have tenants. We will not be able to pay the taxes. It's a steamrolling type of effect.

Here's another one, Niagara Street: It's a little empty lot east of Bathurst Street. The site is 9,400 square feet. We lease this to a garage next door that uses it to park vehicles; they're in the tire business. The present taxes are $2,200 per annum. The new taxes are going to be $62,000. We receive $12,000 a year gross income. That one's the highest one we have, a 2,664% increase.

Another one, on the corner of Adelaide and Charlotte Street, 6,000 square feet, which we lease to a parking lot operator: The present taxes are $5,200. Under the new program they're going to be $37,000. Gentlemen, we receive $15,000 a year, and we pay the present taxes.

The last two properties I've just mentioned cannot be developed on their own because they're too small a floor plate to even build anything on. As I said previously, I don't know where the assessment department, or whoever the assessors are, received the information or what they used. It's all wrong. Something is very, very wrong.

Another one we have -- I'm picking the highlights. Some I have are only 20%, but I'm picking the ones that are significant. At 128 Pears Avenue, a single-occupant building, the present taxes are $13,300. We have changed tenancies there five times in the last five years because the tenants cannot sustain their business. The taxes are now going to be $28,000, 5,000 feet, a single-occupant building.

In summing up, I pray that you in your wisdom do not create the downtown ghettos that have risen in some of the major cities -- and this is what I'm afraid of -- namely, the Bronx in New York, the east side of Philadelphia, downtown Detroit and the south side of Chicago. By your actions, ladies and gentlemen, we could lose what we enjoy here in the city of Toronto. Once we lose it, we'll not get it back.

If you have any questions, I'd be more than happy to answer.

The Chair: Thank you, Mr Title. We have time for one question.

Ms Poole: Mr Title, thank you very much for your presentation. The minister was here until a couple of minutes ago, and I wish he was here to hear what you just said.

Mr Title: If he comes back in, I'd be happy to repeat it.

Ms Poole: Actually, if you have written comments that we could photocopy for members, I'd very much appreciate it.

I'm going to ask you about a comment you made earlier in your brief when you were talking about the 450% increase; you had 60 persons in your client group and they employed 400 people.

Mr Title: That is correct. We have 60 tenants in this group of buildings downtown and they employ approximately 400 people.

Ms Poole: When you were talking about this incredible increase, you were saying these people cannot stay in business and all the employees from Scarborough, Etobicoke, Mississauga and so forth will be out of work.

Mr Title: I surmise so.

Ms Poole: With the cap that's been proposed, where there would be a 10% increase due to market value the first year, the same the second year and a 5% increase the third year, plus the regular mill rate increases, are you still going to have the same picture? Are you still going to have the same devastation and unemployment?

Mr Title: If any of you people would like to visit my office, I will show you that we get an average of one to two of our clients coming to us every week stating to us that they cannot stay in business and we must reduce the rent to them. I insist that we get financial statements, and you can see that their business is waning because of the recession or whatever you want to call it that we're presently in. They will not stay in business, because the 10% increase in rates is on the present mill rate. The average increase in mill rate, if I'm not mistaken, has been 6% to 8%, so we're looking at an 18% increase. That's very costly for people who are struggling to stay in business.

Ms Poole: They're on the edge right now, and this is going to push them over.

Mr Title: They're on the edge right now. I see these statements. We, as landlords, are on the edge as well. Let me tell you what is happening. We have had to put alarm systems in two buildings most recently because of problems we've had with security, theft. Just this weekend some people broke into a building we have and had a party Saturday evening; broke into premises, had a party.

We are finding it more and more difficult to maintain these properties. We have not only maintained them but have rebuilt them over a period of 25 years. I think we're conscientious landlords. We've taken these old buildings and rebuilt them to what people appreciate for these properties downtown. That's what gives the downtown community the vitality it presently has. We all enjoy it. But I'm concerned that we're going to lose it. These people will be out of work.

The Chair: Thank you very much, Mr Title, for coming to the committee and for your strong presentation.


The Chair: I call the representative from Exploration House. Would you be good enough to introduce yourself for the purposes of Hansard.

Ms Liana Sneyd: My name is Liana Sneyd. I don't have very much of a presentation. My husband wrote a letter to the minister on November 18, and I believe a copy of that letter is being given to each one of you. I can reiterate that we purchased a property, having sunk our life savings in it, approximately 15 years ago. It's a very small property, 16 feet in frontage, a row house on a deadend street. It is mixed commercial and residential, which is one of the reasons we bought it. We had been victims of the skyrocketing real estate prices in Yorkville at the time we decided we would buy our own property, basically to safeguard ourselves from having, at the whim of any landlord, our rent raised beyond what we could afford to pay or forecast.

We do not need very heavy traffic for the line of business we're in. We're very specialized art galleries dealing in antique maps, marine and scientific instruments, scrimshaw globes and paintings of nature and the sea. We therefore decided that we didn't need to be in a high traffic area, that people who were interested in our sort of things would seek us out; that the important thing, to a certain extent, was to have a forecastable rate of rent, mortgage, whatever one wants to call it, and to be in an accessible area, although not high traffic, just south of the Summerhill subway station.

When we purchased the house, the 16-foot frontage house, we did a bit of renovation to give us a little more wall space, if you will. The house was over 100 years old. It was one of the early railway houses on a street which originally was mainly industrial. With the passage of time, when Hunt's bakery had its labour problems and sold out, some of the street was redeveloped into fashionable town houses. Our property was not. Our property was and remains in part of the "commercial" area of the street. It's very restricted commercial space. It allows very few uses. The idea was to try and cater to an arts and crafts oriented tenant.


Unfortunately, with the passage of time, the residents in the area decided they didn't want retail, so the number of tenants, if not the number of uses, also dwindled. We now are one of two retailers on the street, the other being a small framing shop. The rest of the commercial area is offices of a restricted nature, law offices mainly.

I don't know what the properties are worth, quite frankly. I don't know who set the values on our property when they decided what the market value assessment was going to be. I can only tell you specifically two cases. Our immediate next-door neighbour at number 20, who is completely comparable to our property, except that she is partly detached whereas we are literally sandwiched in between a number of properties, listed her house for sale, on the advice of a friend who was in real estate, about five years ago at about $850,000. On her very optimistic outlook, she turned down an offer of $725,000 about four years ago. The property has not sold and she'd now be very happy to accept $400,000.

If her property is assessed on what whoever decides it was worth in 1988, I don't know what her taxes are going to be. I can tell you that our taxes are being raised from twice what hers are as it stands. She's paying a little over $2,000 a year at the moment for that small house she's in. We are paying more than $4,500 at the moment, and what is being proposed is that our taxes be increased to $13,329 on the residential part, plus $2,550 business tax, rising from $927, adding to approximately $16,000, which is about three times what we're paying now.

Our business has gone down incredibly. We are not talking about dwindling profits, we are talking about dwindling sales. I don't know how we have survived. It's probably because we do not have staff; we can't afford staff. So you're looking at staff, and this staff does everything that's needed in that house. My husband is 67 years old and very ill. He basically pays visits to the shop just to keep in touch. I don't get enough out of the gallery to survive. Consequently, I also do interpreting work freelance to make ends meet.

Back to the other example I wanted to give you about values on our street. Immediately next to number 20 is a property which its owner lost. It used to be owned by Summerhill Hardware, a very well-known business that was around for many years. They went bankrupt with the demise of real estate values. Let's underline that: Real estate values have gone down throughout the city. They lost because their trade catered to people redoing their houses. They lost doubly so, because they had a property which they thought was worth $3 million and it has just changed hands for $575,000. Who is going to pay what of that property? Who can possibly assess what it's worth today? We're talking about survival of the streets. We're talking about survival of the city.

Also, if people own properties which they rent to tenants and the rent controls control what the rentals are going to be, what landlord can afford to pay a market value assessment on a property which has been set by somebody who doesn't know the realities?

I don't have much more to say.

The Chair: Thank you very much. We have time for one question.

Mr Owens: Looking at the letter that you provided from your husband, current taxes, business and residential, are $5,800, and if we were to pass this particular piece of legislation, your taxes would rise to $13,329 in property taxes plus $2,550 in business taxes?

Ms Sneyd: That is correct.

Mr Owens: Did an assessor ever visit your premises?

Ms Sneyd: Not that I know of.

Mr Owens: No one ever knocked on your door and said, "I'd like to have a look at your property"?

Ms Sneyd: No, sir.

Mr Owens: So it sounds like your husband, where he calls this nonsensical in his second-last paragraph, is probably accurate.

Ms Sneyd: That's an understatement.

Mr Owens: What is the potential for yourself and your husband to be able to remain in business should this piece of legislation become a reality?

Ms Sneyd: I think we could only survive if we won the lottery.

The Chair: Thank you very much for coming before the committee tonight. We appreciate it.


The Chair: Could I now call upon the representative of the Corso Italia business improvement area? Welcome to the committee. If you would be good enough to identify yourself for the purposes of Hansard, please go ahead.

Mr Phil Capone: My name is Phil Capone. I'm the coordinator for the Corso Italia business improvement area, a business community along St Clair that basically forms the heart of the Italian community in the city of Toronto. By way of preface, I was involved over the last several months in the various discussions down at Metro Hall as well as different more demonstrative kinds of actions by business and resident communities across the city.

I'd like to say first that the prime motivating objection I have to Metro's present market-value-based proposal -- and it is exactly that; some people will say it is not market value. I want to very clearly draw to the attention of the committee that it is market value based, and that is the starting point for the problems most people foresee down the road. That objection comes from the very serious negative impact which it definitely will have on the businesses in my area.

The past two years have been very difficult ones for us. Free trade, GST and the general worsening of the Canadian economy have all caused considerable damage to our business community and many of the businesses in our community are just barely hanging on.

Each new measure which increases the already considerable operating costs of our members brings them that much closer to losing their businesses. These are lean times we find ourselves in, as we are all well aware. These are also very precarious times, which ask us to avoid inflicting any further shocks to our already faltering economic system.

The business community of Corso Italia consists of approximately 280 businesses employing over 4,000 people. If the present proposal is endorsed by the province, many of these businesses will close, and with their closure comes the loss of a significant number of jobs.

This, however, would be the immediate effect only. The potential long-term effect, we fear, would be more catastrophic. With more and more businesses closing all around the city and more and more people out of work, our own businesses would in turn be ultimately be affected. More job losses also mean more demands on social welfare programs, which in turn result in increased costs to existing businesses, which cause more businesses to close, and the deadly cycle spins on and on.


We're not experts on the economy or on taxation, but we are keen observers of how changes in one part of the economy ultimately affect us personally. In recent years particularly, we have become only too well aware of how integrally connected we are to the fate of the Toronto, Metro and larger economies as a whole. We see very clearly the serious potential danger of this proposal and, to be quite truthful, we are all very much afraid of what we see. It is for this reason that we are determined to do everything within our power to stop it.

I respectfully submit to the members of this committee and of our present government that we do not need more business closures. We do not need more job losses. We do not need the damage which will inevitably result from Metro's present ill-conceived proposal. We want and need real, responsible tax reform, which, we regret to say, the present proposal does not constitute.

I did not come here, however, to speak merely about the effect this proposal would have on my business community, nor to justify a decision by this government to decline Metro's request for enabling legislation solely on the grounds of the damage I foresee it causing to my community. Though this is ultimately important, there are many other reasons which need to be considered, and I expect that earlier submissions on this issue have likely addressed them in one manner or another.

I would like, however, at the risk of being repetitive, to comment on some of them to draw attention once again to the fact that there are many important and compelling reasons which show Metro's present market-value-based reassessment proposal to be inappropriate and unacceptable. Indeed, there are many reasons which justify a decision by the present government to decline Metro's request for the enabling legislation necessary to implement it.

In the interests of brevity, I'm just going to go through the first major section of my presentation which deals with some of the problems I see in the proposal, and then deal in some detail later with the principal thrust of this brief, which is addressing some of the reasons offered by the present government about why it is not possible, statutorily or politically, to decline Metro's request. I'll try to do that as quickly as I can.

First, The issue of negative economic and social impact: I think we've all heard numerous examples of how that is going to be a problem.

There's also the point of market value assessment being inappropriate because there's no necessary correlation between market value and the costs of providing municipal services to any given property. I think most people, upon reflection, will agree this is the proper way in which property taxes should be levied.

In addition, it penalizes property owners from improving their properties, even though such improvements don't impose in any way on municipal services and in fact ultimately benefit communities.

It's also inappropriate because owners of individual properties have no control over development or speculation activity that goes on in the communities wherein their properties are located. That brings about situations where you have people who live in houses 20, 30, 40, 50 years and are past retirement age, no longer earning an income, are on a fixed income, a pension of some sort, and because the property value of houses around them shoots up for either speculative reasons or because the area's become more attractive to younger professional people, all of a sudden their assessment rises and consequently results in an increase in taxes. This doesn't make any sense, because those poor people haven't made any increased demands on the municipality for services. It doesn't seem right that there should be an increase in that kind of situation.

It's also inappropriate because of the amount of subjectivity involved in making market value assessments. An awful lot of appeals result because of disagreements that occur in this regard, and this results in tremendous backlogs in our court system. We're all aware that the courts are extremely backlogged right now. This kind of proposal, and market value assessment in particular, I think is going to aggravate this; also the additional cost, both to the individual property owners and to the taxpayers as a whole as a result of administering appeal systems and court systems in general.

Market value assessment causes uncertainty, because if a person wants to rebuild on his or her property or purchase a vacant lot and develop it in some way, he doesn't know what the taxes of the project will be before he actually constructs the project, in most cases, as far as I know. They have to wait until after the construction is done. An assessor goes out, takes a look at the project and says, "Now we know what your taxes are." That creates a problem because, as everybody knows, money doesn't fall out of the sky. You have only a certain amount in terms of what you need to do. If the assessments aren't known beforehand, there's an awful lot of difficulty associated with that.

The third major point about why the present proposal or market value assessment systems in general are not appropriate for the Metropolitan Toronto market in particular is the extreme volatility of the real estate market in the Toronto area. I don't think I have to convince anybody of that. We've all been very close witnesses to what's happened recently, in the last couple of years.

As to equity in terms of the share that one municipality bears of the total Metro tax burden in relation to the others, it is my understanding that Toronto at present, with 29% of Metro's population, generates approximately 42% of the tax revenues. I've heard the accusation coming from people in some of the outlying municipalities that they're subsidizing the city. I submit to you that that is not true, that it works the other way around.

As to the question of the assessment data in particular, I think they're unacceptable because of some of the discrepancies I've heard just recently articulated here; for example, two similar properties very close to each other being assessed at very different rates. There doesn't seem to be any justification for that sort of thing happening, but it does happen in the present data. I think a good part of the reason for that is because I've been told that summer students comprise a large part of the core of assessors who actually put together this data. Unfortunately, summer students, well meaning though they might have been -- my understanding is that they didn't have any previous experience in this sort of thing, so that's what led to the problems we see today.

On to the sixth point regarding the inappropriateness of market value assessment. This is basically a continuation of an earlier reference to the appeals and the increase in the number of appeals we're going to see. The present waiting period for assessment appeals, I understand, is two years. People I have talked to who are very closely involved in this whole process are afraid it's going to go to something closer to 10 years.

The seventh point, and I'll try to move more quickly, because it's taking a while: Successive reappraisals are going to cost an awful lot of money, first, in terms of the appraisal team you're going to have to hire to work to do these appraisals, and second, in terms of the appeals and other things that will result as a consequence of any disagreements about the appraisals.

There are more appropriate alternatives proposed. There have been several that I have heard proposed at the Metro level. Unfortunately, this is my first day in this room, so I haven't heard if any others have been proposed. One very simple one that makes an awful lot of sense, because it draws a very close, direct correlation between a property for which taxes are being assessed and the amount and cost of the services that it's drawing from the municipality, is a combination of lot size, lot frontage and the size of the building.


I submit to you that this year is at least a reasonable start to looking towards alternatives. If we take a look at the second point on that list, lot frontage as an example, we live in a city. The city has roads, sidewalks, lighting; it has sewer systems and all the other different infrastructure components we need to live and work here.

If you have a stretch of road that's a mile long and you can fit 100 houses on there, the cost of constructing that road, the sidewalks, putting in the lighting, the sewer system, the water pipes and all the rest of it, is fixed, all right? If you fit 100 houses on there, you'd divide that cost 100 ways. If you only fit 50 on there, 30 or whatever other number you come up with as a result of the size of the lots, the cost apportionable to each of those houses is proportionally higher. There's nothing mysterious about this; it's pretty straightforward.

In all fairness, in the interests of responsible land use planning, I think we really do have to look at systems which make a direct, logical connection between class of services and the physical reality of the property we're considering. So I make that point.

In addition, there have been recommendations, and happily these are in line with the present government's position of ultimately moving education, welfare and other general costs to the provincial level. I think that's an important consideration.

The advantage of this kind of system, because it's not based on market value, is that the assessment would be constant; it doesn't change from year to year. That makes sense, because you're not making any more demands on the city's services in one year than you are in the previous or subsequent year. The assessment formula would be objective, both in definition and application. There are no judgement calls involved, and consequently the number of appeals is going to be dramatically reduced. There's no need for periodic reassessments. You eliminate the cost of that team of assessors you would have to hire to go out and do the job.

I'll move on to points 9 and 10 on page 7. As we all know, the Fair Tax Commission --

The Chair: Excuse me, I know there might be one or two questions and we're just starting to get a little tight for time.

Mr Capone: Are we? I will move on quickly, then.

I'll leave points 9 and 10 for you to consider. What I want to do is move on to page 9, if you will flip to that, regarding my concerns for the reasons being offered in support of Metro's proposal, and even more importantly, that are being offered as to why the government is compelled to provide the enabling legislation for Metropolitan Toronto and why it is appropriate to do exactly that in these circumstances.

First of all, we're told that the present proposal is not really a market value assessment. I submit to you that it is definitely based on market value assessment. In spite of the limits proposed for both commercial and residential properties over the following three and two years, respectively, there is nothing to guarantee that eventually assessment and the taxes based on it will not be pegged at full market value.

To borrow two appropriate analogies which have been used by opponents of this scheme in recent months, I'd like to just say that this is like being condemned to a slow death instead of a quick one. One that I find makes even more sense, as far as the dynamics of the situation are concerned, is being asked to put our heads in a noose, all the while being assured that it would only be pulled so tight. That's exactly what it feels like to us and I'm asking you to not ask us to put our heads in that noose.

Secondly, the point is made that taxation at full market value upon resale will not be automatically or immediately enabled by this legislation. Instead, Metro is being asked to reconsider this part of the legislation, and if it ultimately decides to proceed, it can only do so by passing a special bylaw. We all know, especially from having read in the papers, that Metro fully intends to do this, so I don't think this provision really protects the people of Toronto at all.

Thirdly, and this I think is probably the main one that has been offered to our community: We have spoken many times with our provincial representative, Mr Tony Silipo, and the argument he's made to us very strongly is that even though the provincial government is opposed to market value assessment systems in principle, the difficulty of the present situation is that it cannot deny Metro something which all the other local governments already have a right to.

I submit to you that Metro is not a local government. I submit to you that Metro is a regional government composed of six local governments, six municipalities. There's a very real difference here. While there is some justification in saying, for example, that the government of Ontario has no right to impose, on a matter of assessment, its will on the government of the city of Toronto, what I want to point out is that this is not what we're asking it to do. What we're asking in this instance is for the province to prevent the other five constituent municipalities of Metropolitan Toronto from imposing their will on the city of Toronto. I think, quite clearly, that explains what the situation is.

I think, especially because of the unfairness which some of my earlier points have reflected, that it's not only possible for the provincial government to do this, but it's also necessary if we are to preserve the original spirit, the intent of the formation of the original municipality of Metropolitan Toronto. Because we're here today, I think it's pretty clear to everybody that the province does have the authority and does have the statutory right to do this.

I submit to you that the reason, one of the reasons at least, why this kind of provision was part of the Municipality of Metropolitan Toronto Act was that it was felt necessary -- it was a statutory safeguard -- in order to have all the various local municipalities actually agree to the incorporation. Had it not been included at the time of incorporation, I seriously doubt whether the Metropolitan Toronto municipality would have been formed.

Just as a very focused example of one of the reasons why this would have been a concern to the city of Toronto, in particular, is that the city of Toronto has a very different kind of development character than the other municipalities. We all know it's characterized by dense development with emphasis on public transit. Other municipalities are very different. They have larger homes on larger lots with emphasis on private automobile transportation.

One of the things I'd like to very quickly address is the whole point that people, particularly in the suburbs, are making about how they are upset about the fact that if, for example, they own a $200,000 or $300,000 home in the suburbs, they are paying twice as much tax as somebody who owns a $200,000 or $300,000 home in the downtown core of Toronto.

I live in the suburbs. Six years ago I bought a home in the suburbs. I was very much aware of the difference in tax levels between the suburbs and the city. I moved out of a dwelling which was 18 feet wide and I moved to a dwelling which -- I think I've got about a 45-foot lot. I pay about three times the taxes and I fully understood why it was that I was being asked to pay that difference in taxes. There was no mystery to me. I accepted the extra cost because of the extra convenience, the extra amenity of living in that community. I'm not at this point going to start jumping up and down, saying: "Hey, wait a second now. Yeah, I agreed to it then, but now I have changed my mind because somebody's making a case for me." I don't expect it's fair for other people to be doing the same thing.

Moving on very quickly.


The Chair: Perhaps I could ask you to come to your conclusion. I regret we're a bit over the time.

Mr Capone: I will. I should in all honesty say that the people in the communities in Toronto have some various concerns about the public meetings. Although we're happy to have a chance to explain our side of the story and to explain why we feel there's a problem with the proposal, we do have serious concerns about the fact that second reading has already taken place and these hearings are not yet complete. The big questions in our mind are: Is the government listening? Does the government intend to approve Metro's proposal in spite of anything we say? Will our submissions make any difference at all?

I believe there's still a chance to stop the damage and injustice that's going to result from Metro's proposal. I still think there's a chance for reason to triumph in this kind of situation.

Very quickly, to comment on a point that was made to us about the province trying to get Metro and the city to sit down and come to an agreement as to what would be a fair alternative approach to assessment, I submit to you that the city has been trying for a very long time to have Metro hear its views on this matter and Metro hasn't been very receptive at all. Should this proposal be enabled, I don't expect Metro will be any more receptive than it has been already.

Just to sum up --

The Chair: Very briefly. I'm sorry, I must ask you --

Mr Capone: Very briefly, then. It's a darn good thing I wrote my points down because, to be honest with you, the good part of my involvement with what has transpired over the last couple of months has been with a lot of street demonstrations, a lot of situations where passions really have gotten the better of us in many instances. We have really put our hearts, souls, bodies on the line on this issue. We've done everything we could. We've done it with courage. We've done it with dignity. We've done it with firm resolve in the belief that it is necessary for reason, for responsibility and justice to triumph over mere political expediency. We ask no less of the present government, as well as the other members of the provincial Legislature. There's more to it, but I won't read that.

The Chair: I realize that in your submission you've included a lot of other points, but I can assure you we'll have an opportunity to look at those and I want to thank you very much for the time and effort that you've put into this. Thank you for coming before the committee.

Mr Capone: You're welcome.


The Chair: I next call Mr David Goring, please, if Mr Goring would come forward. Members may recall that Mr Goring had mailed in his presentation and we received a copy of that previously. Mr Goring, welcome to the committee and please go ahead.

Mr David Goring: Thank you for being here to listen to me. I'm a retired professor of chemical engineering and I live in a small house in downtown Toronto. The last speaker has stolen all my points. I'll make them again, anyhow.

The Chair: It's the sincerest form of flattery.

Mr Goring: Yes. That was a good talk. I'm going to be short. I love living in Toronto. A lot of people love living in Toronto, so much so in the city of Toronto that they will buy miserable, little houses on tiny lots for extraordinarily large sums of money so they can be near a subway station and near a little street of stores. They pay a lot of money, far more money than the value of the house itself, just for the land.

My friends, this is good stuff; it's good stuff. It's what the province wants people to do. It's what the municipalities what people to do. They want to come and live in the downtown part of the city. They want people to have little stores in the downtown part of the city. It's great.

Market value assessment is against this. Market value assessment penalizes a person who decides to pay more for a small house and live in downtown Toronto because, as the last speaker said, the taxes you pay don't bear any relationship to the services you receive.

Let me give you an illustration. There's a lifestyle parallel to this. The establishment wants us all to eat good food and to take exercise. MVA is the equivalent of taxing vegetables and having people buy licences for jogging. Think about it, okay?

Now the alternative. Well, the last speaker suggested one alternative. Let me say that he's right. To have a fair tax system in a place like the city of Toronto -- and, for that matter, the suburbs -- you have to start with a basic equation. A taxpayer is taxed by the municipality for the services he receives. There should be some relationship between the cost of the service he receives and the tax he pays. Simple. Market value assessment doesn't give that.

How do you go about getting the cost? My suggestion, like the last speaker, is that you base tax on the size of the land; in fact, perhaps instead of taking the size of the lot, you should take the square root of the size of lot -- this is a professor talking, don't forget -- because that is a simple measure of road. But you need something else. Cost is not enough. We must have ability to pay. A fair tax system -- now listen carefully to this -- means that a rich guy should pay more than a poor guy for the same amount of service. To do that, as well as taxing on the basis of area of land, you tax on the replacement cost of the house, which is very easy to get. In all the fire insurance policies all over Toronto, you have replacement cost. You can get a good adjustor and in five minutes he'll give you the replacement cost of the 20 houses on our little street within a couple of thousand dollars.

A simple system to set up: replacement cost plus area of land; cost of service plus wealth, ability to pay. A tax system based on that, I think, would certainly be acceptable to the people of Toronto. I call it LARCA -- land area replacement cost assessment -- and I leave it with you.

My suggestion is that the provincial government stall this thing for a bit until people have time to look at it more carefully and come up with a tax assessment system which will not have the drive to stop people living in downtown Toronto.

The Chair: Thank you. Mr Wiseman.

Mr Wiseman: I don't agree with you on one of your points. It's not to be argumentative, but I don't think the replacement cost of the house is going to reflect the ability of the person in it to pay. If a person has bought the house and has insurance and has lived in it for 30 or 40 years and the house is paid for, the insurance premiums are still the same amount. If it burns down and has to be replaced, the insurance will pay for it. That still doesn't indicate that the person living there can afford it. So I would ask you to give some thought to that.

The second thing I'd like you to think about is this: To go to a system where the infrastructure services are paid for on the basis of footage or some kind of formula of square footage still leaves Metro with about $2.3 billion in funds it has to raise for education, welfare and day care. There have been some who have suggested that the province take responsibility for that. If they were to take that $2.5 billion as a burden there and use, say, an income tax or sales tax or whatever you want, how would we guarantee that those savings would be passed on to the property taxpayer?

Mr Goring: I think you would guarantee that by the way you guarantee that all taxes don't go up. People vote.

Mr Wiseman: They voted for the Metro councillors who put this in place.


Mr Goring: I agree entirely that education and welfare costs should not be included in property taxes, because they're not really related to property taxes. When people find themselves paying more income tax to pay for these things, I think they're going to expect very strongly that their property taxes are going to go down.

Mr Turnbull: Mr Goring, I almost have to slap myself when I say this. I find myself agreeing with part of what Mr Wiseman was saying.

The Chair: It's the Christmas spirit.

Mr Turnbull: I guess so. The replacement value of a building doesn't in any way reflect the ability of somebody to pay.

Mr Goring: Why?

Mr Turnbull: As Mr Wiseman pointed out, if somebody's lived in a house for 30 years and he's maintained it well, it may actually have a reasonably high replacement cost. I would suggest unit assessment would be fairer, because in some way it does reflect the size of the house and the amount of services.

Essentially, we have to get to a better system of taxing people. One of the presenters this morning suggested that maybe there should be a floor amount of money that all households would have to pay. He actually suggested $2,000; I would suggest something somewhat less than that. Then on top of that, you would build on components for the amount of front feet you had to service, because that would reflect the number of feet of street you have to service, the amount of sewers you have to service, and so much for the size of the building, because in some very crude way it might be able to reflect the ability to pay, on the premise that the very large house would be owned by somebody who can afford more than the small house.

Ultimately, I think we have to move more of the burden to a true income-tax-based approach, where it does reflect people's ability to pay, and get more cost of services charged out directly to people.

Mr Goring: Fair enough, but do you think market value reflects people's ability?

Mr Turnbull: I'm the most fierce opponent of market value you will ever find. In fact, I've been fighting market value for some seven or eight years. This is the very issue that brought me into politics. I only ran for the first time in 1990 and never thought I would. This is the issue that brought me in. I think market value is a totally flawed system, but I want to make sure that whatever we look at is a fair system which reflects people's ability to pay. That was my only comment. I wasn't being critical of you, I was just suggesting that the replacement value might be a poor reflection of people's ability to pay.

Mr Goring: Thank you for commenting. I'm not an expert on tax. You may be right on that.

The Chair: Thank you very much, Professor Goring, for being with us tonight.


The Chair: I'd like to call Mr Ken Bluestein. Welcome to the committee. Have a glass of water and relax. It is water.

Mr Wiseman: Paid for out of your service taxes.

Mr Ken Bluestein: I'd like to thank you or whoever is responsible for asking me to come here tonight. I called my councillor's office last week and spoke at length about the problem of MVA and how it affects my wife and I. I got a call back just today, this afternoon, that I was slotted in to speak at 8:50 tonight, so I haven't had too much time to collect my thoughts about this, although I've had a lot of time to stew about it inasmuch as we are definitely affected but we don't know exactly how yet.

To give you a little background, Bev, my wife, and I live in a home in North York, a small house we bought about 10 years ago. It's a bungalow and just the two of us live there. We've been there for 10 years and quite happy there. We've paid more taxes every year. Taxes have not gone down; they've gone up. Fortunately, we've been in a position to pay the increases and we live a fairly decent life.

We also purchased a small property in the city, on Eglinton Avenue. We were in business there. We started a business in 1971 and we operated that business for 13 years. During the course of that operation, we were approached by our landlord; he asked us if we wanted to buy this small building, which we ultimately did. That was about 1975, so we've owned the property for about 16, 17 years. The actual address is 948 Eglinton Avenue West. It's a small 17-foot frontage building with an apartment at the top.

When Bev and I retired about seven years ago from business, we rented it out on a fairly long lease. We have the same tenants on the property and we've had a few tenants living in the apartment over the store. It's been a fairly good arrangement.

In the interim, obviously taxes have gone up, rents have gone up and the value of the property has gone up, so there didn't seem to be any reason to worry. Of course, the economy was great at the time and everybody was buoyant, positive in their outlook and forward-looking. But I think in the last four or five years, at least for us, that has changed. I haven't been able to work in the last four or five years at my profession because of the economy and other related matters. My wife works. She has a fairly nice position and we're not crying, but things have definitely changed.

I'm sure that reflects what's happening in the economy in general, that people's lives have changed markedly from really relatively stable positions to positions varying from -- maybe better in some instances, but I would think on the whole not as good as they were in the 1980s. I'm not a street person, but our lifestyle has changed because of what's gone on in the economy and just the world in general. Things are changing, so we have to accept that. I don't want to get too philosophical, I'm on that route already, but just by way of background to let you know where I'm coming from.

As far as we're concerned, with respect to MVA specifically now, given what I've just said, imposing this type of tax at this time, given how I feel in general about what's going on with us and the world -- I would like to relate the two matters, because I think we're all in it together in that sense -- this is an imposed tax that feels more like punitive damages to me, punitive in the sense that we are being punished for the sins of omission or commission in the past, things that have happened politically and economically, where governments have failed to raise taxes incrementally over time and now we're paying the price. Governments need money to operate.

I remember as a fairly young man when the whole environment in Toronto changed, when Metropolitan Toronto took in all the suburbs. Forest Hill changed, it was amalgamated and so on. There were a lot of positive aspects to it, but I think even at that time there was a lot of hoopla about what it was going to create, not only politically but in costs and so on. Many years later, we can look back and see what kind of situation it's brought us to. But that's life, and I think we have to look to the future.


With this tax on this particular building we have and in general, people in our circumstance, I think it's an imposed tax and feels more like a punishment than a tax. We have had tax increases ever since we've owned the building. We've always participated in tax payments, whether we were a tenant or a landlord. We've always paid a share of the taxes. Now it's scary. We look at this kind of tax burden happening so suddenly as something we really can't handle. I don't know if our tenants are going to be able to handle any increases we pass on to them. We may lose them. Eventually, rents will not cover -- it won't be worthwhile to own any type of property, especially a small one where income is basically limited to a small store or a small apartment.

I feel it's a punishment; it's not a tax. And it's not fair. I feel like I'm going to be ripped off really good. The value of having owned a building over time will be diminished, in that sense. It's really a matter of substance to some degree. How do you justify doing this to small land owners? How do you morally justify doing something like this?

Also, because it's only been happening for a year or two -- the juggernaut has been rolling on for the last couple of years -- the taxes come out of left field. Suddenly there's a great need for it and everybody's pushing in that direction. That's unfair too.

My feeling is that it's motivated more by politics than from any other point of view. I think the political infighting is pushing it in the wrong direction. It's time to step back and have a look at what's fair and what's ethical in the larger sense.

The other point around that -- I have some very loose notes here -- is that people are barely hanging on. Tenants are barely hanging on and landlords, unless they're very wealthy, are barely hanging on too. They're barely hanging on to their tenants. They're hoping their equity remains, that somewhere down the road they can sell a building and make a profit, if that's not a vulgar term. It looks as though in this environment all that is going to erode and the value of small people owning small property is going to be valueless somewhere down the road. It just won't be worthwhile.

So who's going to own the buildings? Who's going to put money into them to refurbish them? Who's going to be attracted to come in and rent space in places like that, where the landlords are tight for money and can't put megathousands into something to fix them up? I don't know how to answer that. It's a phenomenally difficult problem.

Very specifically to market value assessment, is it fair market value assessment? If you use 1988 as the year to base this on, is it really fair to take the highest point in an up-spiral and say, "There it is. Let's grab it there," and when it starts falling down, forget about all that that surrounds it? To use 1988 is really unfair. I'll leave it at that.

I'll close now in the hope that this will all turn out well for everybody. That's my hope not only for us, my wife and I, who hopefully can retire soon and not have to worry about what we're going to do with our property, our home. Are we going to be taxed out of the house? Our small property: Are our tenants going to leave? Are we going to have to put it up for rent and try to give it away to somebody who will rent it and open something and try to make a go of it? I don't know. The future for us is an unknown quantity, and I'm sure there are other people in the same boat.

I'm asking you and the people you all represent -- I'm appealing to your better judgement. I'm asking you not to forget about tax and not to feel sorry for people in our position but to postpone this decision on MVA and deliberate a little more. Take the time to do it right. Evaluate it. Wait for the economy to recover. Let's everybody get a better view of things as things recover. Maybe that will have some impact on what happens with MVA, if we wait a little longer. If it's imposed now, the die is cast. Reassess and rethink, and then maybe we'll be on the road to some real market value here and some real, important value assessments in the future.

The Chair: Thank you very much for a personal and thoughtful presentation.

Mr Bluestein: Thanks very much for hearing me.


The Chair: I now call Mrs Ilona Todd. Mrs Todd, would you mind using that microphone? We've had problems with different microphones, so we're going to put you at one that works better. Thank you very much for coming before the committee tonight. Please go ahead.

Mrs Ilona Todd: Thank you for having me. I must say ahead of time that I won't be quite as eloquent as the gentleman before me. I got my appointment late this afternoon and I am really not prepared as well as I should be, but I do say that I certainly object heartily to these increases.

I am the executrix of my mother's estate. I am obliged to pay all the bills. The property I'm dealing with is at 126 McCaul Street here in Toronto. This is my sole residence, my principal residence, but it is zoned commercial.

When I had a mortgage arranged and registered yesterday, I was told I would receive a residential mortgage because this is what I qualified for, yet I have been taxed over the years for a commercial property because the area happens to be commercial. There is one commercial unit in the building and four residential units. The Toronto-Dominion Bank wouldn't give me a commercial mortgage. They gave me a residential mortgage because I did not qualify.

Now I find on inquiry to the Metro market value reassessment people that I will have an increase from $9,498 to $14,662 in 1993. That's not exactly what we have been told would happen even to a commercial property. That is a big jump, more than 50%.

There isn't much more that I can say. As I said before, I am not prepared, but these are the basic facts.


Mr Grandmaître: Thank you, ma'am. Can you describe your property for us? How big is it?

Mrs Todd: It was a Victorian building. My father took the pains and the money, his hard-earned efforts, to enhance the building. He got a permit, because he was a butcher, to put in a premises which was commercial, a store on the building.

Mr Grandmaître: There's only one business in the building.

Mrs Todd: Only one business. Since my father's death, it has had to be rented out. There are four apartment units, which I contributed to the upkeep of in the last 10 years, because I have been there for more than 10 years looking after my mother, who died in 1989.

Costs have been going up and up and up. I was forced to take a mortgage just recently. The mortgage I received yesterday, which had to be renewed, was with the Toronto-Dominion Bank. The Toronto-Dominion commercial department didn't see fit to mortgage my property, because they didn't feel it was qualified for that purpose. So they referred me to the residential department, and I did get a mortgage.

Mr Grandmaître: They turned you down, yet that building --

Mrs Todd: For a commercial mortgage. I was told I did not qualify in the commercial department.

Mr Grandmaître: What is the assessment on your building?

Mrs Todd: It was $20,125 in 1992. The new assessment will be increased for 1993 to $1.032 million.

The Chair: Mrs Todd, thank you very much. I know you thought you perhaps hadn't had enough time to get your point across, but I think you expressed your point very clearly.

Mrs Todd: Thank you very much.


The Chair: I would now call Mr James Gairdner. Welcome. It's always nice to have somebody who grew up in Newmarket come before the committee. Good to see you again.

Mr James Gairdner: How'd you know? I'm glad to be here this morning and come in and be with respected MPPs. I must admit, though, I moved 25 years ago to Toronto.

The Chair: That's right. The old homestead -- I digress, members of the committee, but we grew up on opposite sides of a farm. I don't think I've seen you since then.

Mr Gairdner: Yes, I've turned a little greyer, I must admit, but you look better.

The Chair: Welcome to the committee, and please go ahead.

Mr Gairdner: Thank you, Mr Chairman and respected MPPs. Analyses have indicated that each $1,000 increase in property taxes will reduce the property's value by about $15,000. Imposing full MVA on properties which sell during the next five years we feel unfairly discriminates against those vendors, many of whom may be selling because they're forced to either by economic hardship, retirement or forced relocation. Any decrease in property value comes right out of the owner's equity. A lot of people who bought in the late 1980s with the normal 25% cash and 75% mortgage have seen a huge drop in equity already. A further erosion of equity due to MVA will put many of them in a position where their mortgage is higher than their property is worth.

We've already seen that happen. I must admit, in 25 years in the business, I have never seen so many powers of sale as are taking place right now. As a matter of fact, nobody in our company was even used to the idea of powers of sale until the last two years. Now all sorts of agents are involved with powers of sale.

The concept of basing municipal taxes on the value of the property does not make sense. A municipality delivers certain services to its residents, much like Ontario Hydro or the telephone company. Hydro and Bell don't base their monthly bills on the property values; they base them on the amount of their services the consumer used. The same principle should govern municipal taxation, obviously with some modification to recognize the difficulty involved in metering the use of certain services, ie roads and parks.

Because the MVA that's proposed hits the central core the hardest in terms of tax increases, there's a concern that people and businesses will be driven to the suburbs, leading to a rotting of the core similar to that experienced by many US cities. That's a genuine concern. It's been expressed to me many times by people.

MVA is an unfair and unpredictable location tax, unrelated to the property owner's ability to pay or to services provided. No socioeconomic impact study has been done on the proposed programs, but I do believe there is a fair taxation study under way, and would suggest that it might be an idea to see what that has to say before this plan has to be pushed all the way through.

MVA is not reform; it is the same system already in place in Metro and throughout Ontario. This new Metro plan simply maintains the same unfair system based on a volatile real estate market.

The plan will severely affect the arts, non-profit groups and small businesses. Any significant tax increase in the face of the present recession will result in more job losses, closures and bankruptcies. I don't think that's why we're sitting here tonight, to watch more of this erosion take place.

I have never personally seen so many people who must sell their houses, and I'm saying in all price ranges. It's really been very dramatic. It's caused fear, and the fear is somewhat endemic.

I know I'm your last speaker, and I bet you can't wait to get home, but I've got to tell you, this is real stuff we're talking about.

The Chair: If it helps, we're here till midnight.

Mr Gairdner: Anyway, I'll make it quick.

The Chair: No, no, that's fine.

Mr Gairdner: The federal government has put in a new RRSP plan, which everybody's well aware of, to help people, specifically first-time buyers, buy a house. I feel that this plan will greatly impact on that and have a negative effect on it.

I agree that the old system is unfair. I agree that the people in Scarborough and outlying areas have very justifiable reasons to be complaining, but I don't honestly think that we should be taking the same principle and adapting it to the centre of Toronto, saying, "Okay, we got it off their backs; we'll stick it back on the centre of Toronto," and have the same system regenerate itself. That does not make one bit of common sense to me, not one.

It's too abrupt. The old taxation that came in, came in over a 40-year period. This one is going to be dramatic; it's going to be overnight. And when it comes to point of sale, and all of a sudden a buyer -- there isn't anybody in this room, if they are so lucky as to be able to buy a house, who wouldn't say to themselves, "I'm going to hiccup over a 300% increase in a tax." It's going to be dramatic, and some of those increases, which I'm sure you've heard a hundred times already, are very dramatic.

They are going to affect this city. They are going to affect the real estate values, and in my estimation, the real estate values are going to drop another 15% to 20%. The amount they have already dropped has caused tremendous hardship. What I'm really concerned about is the next percentile drop, because then we won't be talking about the number of people who must sell their houses right now; we will be talking about a whole huge group who will now not have the equity value in their house, and they will have to sell.

Once fear gets going, it's really a disaster. It follows throughout the whole system and affects everything. Real estate supports 27 different industries. If you crash the real estate system, you crash 27 more industries. It's a fact; we can prove it. I rest my case.


The Chair: Thank you very much. Mr Turnbull.

Mr Turnbull: Thank you very much, Mr Gairdner. I've got a series of quick questions, because I would really like to bring out these issues.

I believe it's the case that the increase in properties in Metro in 1988 was uneven, that certain areas, central areas, went up disproportionately to others. I also believe they went crashing down further, relatively, than the others. Could you comment on that?

Mr Gairdner: That's absolutely correct.

Mr Turnbull: Can you give me a sense of the difference in proportions from area to area?

Mr Gairdner: Yes, I can. I didn't know you were going to ask this question, but I have some answers.

Mr Turnbull: As we're both real estate professionals, we're prepared with the same sort of thoughts.

Mr Gairdner: I don't have it in front of me. I guess I've left it at home. I was just looking at the list today of the houses, I think you're talking about, in the higher price range?

Mr Turnbull: Yes.

Mr Gairdner: Those houses that went up, I must admit, 30% during 1988, have dropped more than 50% in many cases since 1988.

Mr Turnbull: So that somebody who bought at the peak -- let us assume they were moving out of a substantial home in order to be able to afford a very expensive home. They would of necessity have had to put some cash into it, and maybe taken another mortgage on top of what they got out of the old house they were selling, so their equity could be wiped out by these sorts of drops.

Mr Gairdner: You're absolutely right, but in a lot of those cases I think you can add into it that their businesses have been suffering at the same time. Those individuals not only probably had to sell their house but had to do it in order to satisfy the debts that were on the house plus they had business problems.

Mr Turnbull: So we've taken the example of somebody who's bought an expensive home at the height. Let us talk about a senior citizen who happened to be in a fairly modest house but in an area that became hot real estate and who had lived in that house for many years. They would have experienced an increase in taxes as a result of the area being dragged up by the infill builders buying houses and knocking them down and building monster homes. Is that not correct?

Mr Gairdner: That's absolutely correct.

Mr Turnbull: But they would not have participated in the profits of that, because they would have just been continuing to live there and now they would not be able to get those values.

Mr Gairdner: That's correct; they won't be able to get those values. But what's important for this committee also to remember, as the gentleman prior to me said, is that the values that jumped up from 1987, 1988 and 1989 were disproportionate to what's been happening over the last number of years; it was a dramatic increase and the reduction has been just as dramatic.

Mr Turnbull: The impact, as it's not even across Metro, would have the effect of making taxes artificially high for some areas because of that particular year that was chosen as the assessment year.

Mr Gairdner: Absolutely.

Mr Turnbull: We know that 1988 was an absolute, all-time peak of values. Can you conceive, in the next 10 years of values, ever attaining that height again?

Mr Gairdner: I can't at this moment, I guess for several reasons. I'm not going to take everybody's time all night, I won't do that. But I don't see that in my experience after these many years, because structural changes have taken place in Ontario. The structural changes affected everything: manufacturing, supply, everything is affected by it. People who had a lot of money and sustained the economy don't have those sorts of funds any more. So it's going to be a long time for us to make up for the losses that have taken place and then, in turn, make equity and then continue on.

Mr Turnbull: I realize that you weren't around in these days, but if you know from history what happened after the Great Depression in terms of the crash in property values, do you know how long it took for those values to be recouped?

Mr Gairdner: It took a world war that really got things going. If it wasn't for the war, it would have been a lot longer.

Mr Turnbull: God, I hope it doesn't take a world war this time.

The Chair: Ms Poole.

Mr Derek Fletcher (Guelph): Thank you, Mr Chair. Oh, I'm sorry.

The Chair: I won't make any comment about the similarity, but it does seem to me that there is a distinct difference.

Ms Poole: I demand a withdrawal or a retraction, Mr Chair. It is getting late, and I think we're getting a little bit punchy, even though we've got several hours yet to go.

Mr Gairdner, I would like to ask you some questions about the point of sale provision. In Metro's plan, there was a section which stated that residences at the point of sale would go to full market value. They would be capped until that point, but upon sale, full market would apply. The government said it would like to attempt to remedy this because it wasn't very keen on this particular provision, so it said in the legislation that Metro could bring in a bylaw about the point of sale provision. I think probably you and I, judging from the smile on your face, share the same --

Mr Gairdner: Scepticism, maybe?

Ms Poole: "Scepticism" is probably a very good word -- "cynicism," I was going to say -- as to whether Metro would actually change its mind, as it has voted three times in favour of this point of sale provision.

I would like to ask you about two impacts, first of all, the impact on the real estate profession. I suspect there would be a fairly serious ramification in that there would be far fewer properties for sale; maybe not so much fewer properties for sale, but fewer properties which are actually sold if the buyer coming in realizes that the property is going to go to full market value in taxation.

Mr Gairdner: I think the same number of properties would still be up for sale. I think what's going to happen is that the value of those properties is going to drop dramatically. It will happen obviously more in the upper end than it will in the lower end, the percentage difference. If a tax goes from $10,000 to $30,000, that means you have to make $60,000 just to pay your taxes. So those houses at the upper end, in other words, the geese that lay the golden eggs, are really going to be hit. It's still going to have a percentage change down below, but it just won't be as high.

Ms Poole: We had a presentation this afternoon from a small business person from Etobicoke. They said there would actually be difficulty in refinancing with this market value on the horizon. I wonder if that would be even more difficult in the home market, where it is actually going to full market value on point of sale.

Secondly, can you give us an idea of how much the houses would be devalued? You mentioned that it obviously would be more serious on the higher-echelon than on the lower-echelon houses. Can you give us an example of, say, a house for sale for $500,000? How much would its value deteriorate by the fact that the buyer knows he is going to pay taxes based on full market value?

Mr Gairdner: Can I divert just for a second? I won't take long. I had an individual come in today who is a vendor. The agent was having a terrible time with this vendor because he wasn't selling that house, so I just took it upon myself to walk in and talk to that individual. After I explained to that individual what's going to happen with market value assessment, he dropped it 20% in four and a half minutes. My point is that if that happens because somebody is afraid that all the other houses are going to drop at the same rate, how quickly they would do it, what's going to happen to the market? These people have to pay taxes. If all of them are going to start going bankrupt at a rather rapid rate, it's going to affect all of us in this room dramatically.

With regard to your question about a $500,000 house, it will be approximately, in my estimate, a 15% drop. I think there's also going to be sort of a hiatus in that there's going to be a period where people are going to say, "I'm not sure what I'm going to do," so it's going to take longer for it to have an effect. It's very dramatic. Anybody who takes money out of his pocket today to hit a 300% increase in taxes has to have his head read. They're going to be thinking to themselves, "This doesn't make sense."

I'm not saying that the city doesn't have a problem. I'm just saying it's inequitable, that's all. I'd love to see that fair taxation system study come in and take a look at it and try to make it fair.


Ms Poole: And if the properties do devalue, as you have probably quite rightly estimated, there's also going to be a problem in that the person's equity will severely be impacted and he or she may have trouble refinancing.

Mr Gairdner: They will have trouble refinancing because of the thing called gross debt service ratio, and that ratio is going to be imbalanced.

Ms Poole: So very serious ramifications for the whole --

Mr Gairdner: Yes, there really will be. I honestly believe, by one of your questions, that if this group of astute people in this room can take into their minds the fact that a promise about re-evaluating the system after MVA is pushed through to stop point of sale is going to take place, that it is very necessary to have your very good thoughts and good wishes stop that from happening and be either part of it or have it taken out. I'm very worried about what's going to happen to this city, and I've lived here -- I love this city, I've got to tell you, but I am very worried, I really am.

The Chair: Thank you. Mr Fletcher.

Mr Fletcher: It's a pleasure to be here. I've been dropping in and out of these meetings. I don't remember the Great Depression, as Mr Turnbull may. And as far as being astute, thank you.

Mr Gairdner: You're much younger than I am.

Mr Fletcher: You never know; it's deceiving.

I agree with what you're saying, and I agree with what Ken was saying. I'm on your side. But do we throw it back to Metro and say, "Look, this is your ball of wax, go ahead"? Not that I don't trust Metro, but I think it may use a big brush to paint everything. Or do we go ahead and move on this?

Mr Gairdner: I'm not here to say whether you should or shouldn't put in MVA; I don't think that's my job. But I really do say that if you do point of sale, we're making a huge mistake. It's like there's one part of this that doesn't fit, part of the plan that's out of whack. In the next five years we're going to see dramatic changes in real estate. I don't think that's what we're trying to do. We're trying to keep the level somewhere there so they can pay the taxes. If the values continue to go down, the taxes go down, everything goes down the tube.

Mr Fletcher: Is it a gradual thing that we should be looking at?

Mr Gairdner: Anything that's gradual and is considered as being fair. Your question is very fair. I don't believe, though, that a person who comes in and buys a house in 1993 should be paying for the vagrancies of the past governments over the last 40 years, and they're supposed to do it the day they buy a house. I don't think that's equitable.

The Chair: Would you like a question, Mr Wiseman.

Mr Wiseman: I just wanted to add that I've been sitting in these hearings since the very beginning --

Mr Gairdner: God bless you. It's been a long haul.

Mr Wiseman: Well, I've had the weekend off. I think Ms Poole and Mr Turnbull and Mr Frankford have had a little longer haul even than I have.

The Chair: And some others.

Mr Wiseman: Hey, I sat in that chair Thursday night.

What I would like to comment on, though -- and I'd like to hear what you have to say -- is that we had Mr Tonks and Mayor Trimmer and Scott Cavalier and a whole host of regional councillors and mayors from the outlying regions come in here and praise this package up and down and say that we really don't have an option. Scott Cavalier, who was sitting in that chair on Friday said that we, as the government side, don't have an option, because they are the elected representatives of this area and they have made a democratic decision to do this.

Now we've been hearing for some time that the railway lands are in serious jeopardy, the hotels, the arts community, vacant lands, Hydro, resale homes. How can this be a good deal, if every sector we're looking at -- and how can they as politicians and then how can we as politicians override them as elected politicians and say: "No, we aren't going to do this because you've got it all wrong. You've really let everybody down and made a real mess of this."

Mr Gairdner: That's a very fair question.

The Chair: A simple question, and if you can give us the answer to that one, we'll be --

Mr Gairdner: I'd like to know if I could extend my time just a bit.

Mr Wiseman: We already did that.

The Chair: We'll make this the last question and the last answer.

Ms Poole: Preferential treatment by the Chair for his old friend, huh?

Mr Gairdner: I truly believe your question is related to the fact that Metro Toronto has a really major problem. I agree with that. I'm talking about the fact that at one stage everybody in Toronto thought they were going to have a 300% increase in their taxes. Somehow that got rolled back to a 25% increase over three years, so all of a sudden everybody said, "Phew." It came down a little, but there are some dangling participles involved in this, and one of them is point of sale. Point of sale is going to be a dramatic hit over the next four or five years that doesn't have anything to do with the 25% increase. It has to do with a 200% and 300% and 400% and, in some cases, a 500% increase.

That's the part I'm talking about. I'm not saying throw out MVA. I am saying I don't think it's fair. As a government, you've got to do something. What I am saying is that on point of sale, you're going to have a dramatic net effect that I don't think is going to be beneficial to this city and the surrounding areas at all.

The Chair: On that note, we'll end this evening's meeting. I want to thank everyone. The committee stands adjourned until 3:30 tomorrow afternoon in this room.

The committee adjourned at 2126.