YONGE-BAY-BLOOR ASSOCIATION
TORONTO AREA BUSINESS IMPROVEMENT AREAS
BLOOR-YORKVILLE BUSINESS IMPROVEMENT AREA
DOVERCOURT PARK AREA RESIDENTS ASSOCIATION
GLENORCHY RESIDENTS ASSOCIATION
HOTEL ASSOCIATION OF METROPOLITAN TORONTO
PARKING AUTHORITY OF NORTH YORK
TORONTO AUTOMOBILE DEALERS' ASSOCIATION
NORTH TORONTO UNIVERSITY WOMEN'S CLUB
SWANSEA AREA RATEPAYERS' ASSOCIATION
TORONTO ROOMING HOUSE ASSOCIATION
SOUTH ROSEDALE RATEPAYERS' ASSOCIATION
TORONTO TAXICAB OWNERS AND OPERATORS ASSOCIATION
CONTENTS
Wednesday 2 December 1992
Metro Toronto Reassessment Statute Law Amendment Act, 1992, Bill 94
York Mills Heights Ratepayers
John Clinkard, president
Marathon Realty Co Ltd
John Beales, executive vice-president
Cam McCollum, property tax manager
Douglas Aitken, president and chief executive officer
Yonge-Bay-Bloor Association; Toronto Area Business Improvement Areas
John W. Combs, director, YBYA and vice-president, TABIA
Deer Park Ratepayers Group
Katherine Packer, president
Mike Boychyn
O'Shanter Development Co
Jonathan Krehm, part-owner
Bloor-Yorkville Business Improvement Area
Merv McCarthy, chairman, board of management
Dovercourt Park Area Residents Association
Dale Ritch, representative
Transport 2000 Ontario
John McCullum, past president
Glenorchy Residents Association
Mary Wahl, president
Fritz Wahl
Margaret Lang, member
Hotel Association of Metropolitan Toronto
Charles Powell, president
David Hutchinson, legal counsel
Parking Authority of Toronto
Norris Zucchet, president
Danny Manczur, president, CUPE local 43
Parking Authority of North York
Robert Yuill, chairman
Toronto Automobile Dealers' Association
Bill Davis, director of government relations
North Toronto University Women's Club
Helen Banks, convener, politics and law group
Donalda McLean, member
Shirley Sims, member
Nancy Westcott, member
John Andrachuk
Murray Blankstein
Swansea Area Ratepayers' Association
Bill Roberts, director
Wendy E. Davies
Toronto Rooming House Association
Larry Chilton, president
David Vallance, member
Metro Citizens for Fair Taxes
Margaret Gardner, member
Dora Ellis, member
Joan Schmidt, member
South Rosedale Ratepayers' Association
John Grieve
Tanny Wells
Paul Crawford
Toronto Taxicab Owners and Operators Association
Sikko Wiersma, director
Kendall Carey
STANDING COMMITTEE ON SOCIAL DEVELOPMENT
*Chair / Président: Beer, Charles (York North/-Nord L)
*Acting Chair / Présidente suppléante: Caplan, Elinor (Oriole 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:
Caplan, Elinor (Oriole L) for Mr Beer
Farnan, Mike (Cambridge ND) for Mr Martin
Frankford, Robert (Scarborough East/-Est ND) for Mr Gary Wilson
Grandmaître, Bernard (Ottawa East/-Est L) for Mrs Fawcett
Mammoliti, George (Yorkview ND) for Mr Drainville
Mills, Gordon (Durham East/-Est ND) for Mr Martin
Poole, Dianne (Eglinton L) for Mrs O'Neill
Rizzo, Tony (Oakwood ND) for Mrs Mathyssen, Mr White and Mr Martin
Ruprecht, Tony (Parkdale L) for Mrs O'Neill
Stockwell, Chris (Etobicoke West/-Ouest PC) for Mr Jim Wilson
Swarbrick, Anne (Scarborough West/-Ouest ND) for Mr White
Turnbull, David (York Mills PC) for Mrs Witmer
Wiseman, Jim (Durham West/-Ouest ND) for Mrs Mathyssen
Also taking part / Autres participants et participantes:
Cooke, Hon David S., Minister of Municipal Affairs
Marland, Margaret (Mississauga South/-Sud PC)
Clerk / Greffier: Arnott, Douglas
Staff / Personnel:
Drummond, Alison, research officer, Legislative Research Service
Richmond, Jerry, research officer, Legislative Research Service
The committee met at 0937 in room 151.
METROPOLITAN TORONTO REASSESSMENT STATUTE LAW AMENDMENT ACT, 1992 / LOI DE 1992 MODIFIANT DES LOIS EN CE QUI CONCERNE LES NOUVELLES ÉVALUATIONS DE LA COMMUNAUTÉ URBAINE DE TORONTO
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 (Mrs Elinor Caplan): The standing committee on social development is now in session. This morning we will be having public hearings on Bill 94. There's a representative here from each of the three caucuses.
YORK MILLS HEIGHTS RATEPAYERS
The Acting Chair: I call the first presentation, the York Mills Heights Ratepayers. I'd ask that you begin by introducing yourself to the committee. You have 20 minutes for your presentation; we'd appreciate it if you'd leave a few minutes at the end for questions from the committee, but that is entirely up to you. I will notify you when you have five minutes remaining in your time; I'll notify the committee members as well. Please have a seat and speak right into the microphone.
Mr John Clinkard: My name is John Clinkard. I'm president of the York Mills Heights Ratepayers association. Ladies and gentlemen, I represent residents who live in the neighbourhood bounded by Highway 401 on the north; the crest of the Don Valley -- that is to say, the west branch -- on the east; the city of North York/city of Toronto boundary on the south, and Yonge Boulevard on the west. We have approximately 350 residents in our area.
In our view, this proposed legislation would have a very damaging impact on small commercial business in our immediate vicinity but also throughout the Metro area. As most of you are aware, unemployment in this city is at a post-Second-World-War high, higher than in all but two of the seven other Metro areas in the province.
Business confidence has been severely eroded by this recession, and most economists who monitor the region's economic health, including myself in the role of senior economist for a major Canadian chartered bank, are of the opinion that it will take several years for the unemployment rate to return to pre-recession levels.
Just the day before yesterday, a national employment survey revealed that Toronto had one of the weakest job markets in the province. The report indicated that employment demand in the Metro area was lower than in all but five of 19 centres surveyed.
In 1990, the most recent year for which data are available, small business, ie, those employing five or less, was the only source of net employment growth. The other four business categories, 5 to 19, 20 to 49, 50 to 499 and 500-plus, all recorded net declines in employment. Bill 94 would increase taxes on a large number of small businesses which will serve as a key source of new jobs in Toronto over the next several years.
Under this proposed legislation, taxes are supposed to increase by 50% over the next three years on an estimated 43,000 businesses. This is a significant understatement of the increased financial burden on all businesses in Metro, given the fact that municipal taxes will rise by at least 5% and we could also see provincial taxes rise by a considerable amount in 1993.
This tax increase, plus higher electricity rates, up 15% to 20% in the next two years, will cause many small and medium-sized businesses to experience continued financial stress, despite improving economic conditions in other parts of the country and in the US.
It's also true that taxes on many commercial properties will be reduced. However, in light of the weak economic conditions and the high level of uncertainty across the city, it is more likely that business will use this tax saving to reduce debt and to increase profitability rather than to hire.
Our association recognizes that there's no best time to introduce a major taxation policy; however, there is a worst time. With the Metro economy in such weak condition and with unemployment at record levels, this is the worst time. Our association requests that this committee recommend that this legislation not be implemented at this time, since it would materially slow the rate at which the Metro economy recovers.
Second, our association requests that this committee recommend that the base year for valuation be changed. The period 1986 through 1989 was the most volatile in terms of property prices in the history of the city. House prices in that period rose by over 150%. We believe that choosing a less volatile period as a base year for assessment purposes would result in fewer appeals of assessment, given that speculative activity artificially inflated the price of many properties across the Metro area. In addition, the choice of a more stable time period would reduce and possibly eliminate the need to set up a large, expensive bureaucracy to perform a reassessment every four years. A more suitable base period would be 1983-84, with reassessments every 8 to 10 years.
Third, our association requests that the committee recommend that the concept of market value assessment be broadened in order to take into account some measure of services used by a property, based on the unit value of the property in question.
Fourth, our association acknowledges that the proposed legislation would materially increase uncertainty for owners and renters of commercial properties as well as for home owners. In the case of commercial properties, this uncertainty about what will happen after three years will provide an incentive for all business to move to lower tax jurisdictions, thereby robbing the Metro area of essential revenues.
Those businesses which are "footloose" will move first to take advantage of the glut of vacant commercial space on the Metro fringe. In addition, owners of properties needing upgrades will postpone any improvements they might make to a property since they are not sure if the building will generate the revenue necessary to pay for them. In the case of residences, the uncertainty of what will happen after two years will distort the housing market.
For these reasons, our association requests that the committee ensure that whatever legislation is introduced eliminates uncertainty about property taxes. To this end, it should contain a clear outline of how any changes in the property tax system will be completely implemented, not partially implemented, as is now the case.
Thank you very much for giving me the opportunity to address you. I'll take any questions.
The Acting Chair: Thanks very much for your presentation. Questions from the committee?
Mr David Turnbull (York Mills): John, thank you very much for your excellent presentation. You could be cast as an expert witness, given the fact that you're a senior economist. You state that in the period 1990, only businesses with five or less employees grew.
Mr Clinkard: On net, yes.
Mr Turnbull: What do you say would be the likely impact on Metro of the thousands upon thousands of businesses, particularly small businesses, that will get significant increases on their market value reassessment?
Mr Clinkard: As I indicated in my presentation, I feel that many companies will take this money and wait before they do anything with it. This money will come in not as an increase in revenue; it's a decrease in the amount they have to spend. So the money will filter in, and this money will be used to pay down debt, which we all know is quite high, and it will be used to improve profitability to make your bank balance look better, so the bank is not looking at you as carefully as perhaps it has been. In my opinion, these two decisions will take precedence.
Mr Turnbull: I was actually speaking about the ones who are getting increases.
Mr Clinkard: Sorry. People who have tax increases I think will be forced to either hold the line, not hire, or in some cases I could see having to reduce staff in order to pay increased overheads. The ultimate impact, of course, would be to force companies to close or to move elsewhere.
Mr Turnbull: So there will be job losses.
The Acting Chair: Thank you, Mr Turnbull. Question, Mr Owens?
Mr Stephen Owens (Scarborough Centre): A quick question, but it may require a lengthier response. You've outlined fairly succinctly the problems you see with this proposed plan. I have some sympathy with the concerns that have been expressed by yourself and many of the other witnesses to date. My question to you, however, is how do we go about addressing the inequities that are currently within the system? On the side of Victoria Park that I represent in Scarborough they are paying proportionately higher taxes than a house or a business on the other side of Victoria Park Avenue. How do we go about addressing those inequities?
Mr Clinkard: I think the first step is to look at a concept, as I pointed out, of taxation that addresses not only the value of the property but the services it gets. So I'm looking at a combination of unit value and market value assessment.
I agree that something has to be done to address the tax inequities that exist. I think it is unfair. There are houses in our area that are paying taxes that are disproportionately low. I will be the first to acknowledge this.
To express that thought more fully, I think many of the properties in our area will experience higher taxes. I don't have a problem with that. My problem is that if you're going to increase taxes and implement a process of re-evaluation and bring property taxes to a more realistic level, then let's do it based on values more representative of their long-term value; this is to say, not just the 1988 period but a more stable period. The last time we did it was in 1952, which was a fairly stable period. Prior to that, I think it was 1944; that was a fairly stable period. I think it's the wrong year and that's a very important point, because speculative activity would have driven up prices in some areas for a very temporary period of time.
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Putting the shift on to commercial properties I think is a mistake, because that is the generator, the spark plug of activity in a city, small business. That's the initial source of jobs, of new growth. We see all these large companies, including the financial services sector, that are holding their own by -- our bank has a hiring freeze; most others also. We're not hiring. It's these small businesses that are the only source of the entrepreneur. This is where he gets started. I think this legislation is not going to have a positive impact on them at all.
Mr Bernard Grandmaître (Ottawa East): I agree with you that between 1986 and 1989 were real estate boom years in the Metro area, but an impact study was done to look at a 1984 value and a 1988 value, and this committee is being told that there's very little difference between a 1984 and a 1988 impact study. Do you believe this?
Mr Clinkard: I haven't seen the study. I can't comment on it. I'm afraid I don't know.
Mr Grandmaître: But this is what we're being told: using the same number of units, one million or 1.1 million units, very little difference. Would you believe this?
Mr Clinkard: I would find that difficult to believe because of the dramatic increases in some areas versus some other areas. I can speak to the centre part of the city and some parts of North York, where I've seen this happen. It would appear that when you've had a speculator -- I can give you a personal experience. I bought a house in 1982 in North York, and at that time there were very few houses on the market. A lot of people were basically just holding their own in terms of buying or selling a house: Nobody was buying, nobody was selling. As we went into the 1983-84 period, more houses came into the market. But I think in 1986 what happened is that the market started to free up some more and then you had a speculative demand that started to accelerate during this period, and those drove up the price on a fairly limited supply of houses. There wasn't the supply of houses that started to enter the market, for example, in 1987, 1988, 1989, more in the late period of 1989-90. In my opinion, there would have been a larger gap in that period.
Mr Robert Frankford (Scarborough East): You were saying that taxes should reflect the services?
Mr Clinkard: I believe that some representation of services should be factored in, yes.
Mr Frankford: What would you say about an area like the one I represent, Scarborough East, where home owners' taxes are higher and services are less? There is less public transportation than downtown. There is no subway. There is less garbage collection. There is an inequity there, isn't there? Should not the taxes go down?
Mr Clinkard: You have a heterogeneous entity in a city. It's not homogeneous. You have certain areas that have a greater need for transportation. I believe there are 500,000 jobs in the city of Toronto. It's by far the source of employment for the Metro area, or it offers more jobs, and clearly its transportation needs are higher in order to allow those people to commute. I guess I'm not sure when you say the services are not as high in that area. Are there the jobs there that require the services? Do you see what I'm saying?
The Acting Chair: There are just two minutes remaining.
Mr Turnbull: To continue on that same subject, it is often suggested by those people, particularly in Scarborough, that they don't have the advantage of subway service, whereas of course the subway does go to Scarborough. If one were to take the cost of the subway and try to apply it to some sort of utility value to the residents of the neighbourhood, I think it would be fair to say that there's not an awful lot of people in your neighbourhood who actually use the subway. Is that fair to say?
Mr Clinkard: A fair number drive, yes.
The Acting Chair: Thank you, Mr Turnbull. I appreciate your time. There's one minute remaining, if there's anything you'd like to sum up and share with the committee.
Mr Clinkard: Just briefly, as I indicated in my remarks, there's no best time to introduce tax reform or a major change in tax legislation, but given the weak state of this economy, this is the worst time. We've never had unemployment in the city as high as it is today, and this will definitely dampen employment growth and extend the recession this city is experiencing.
The Acting Chair: The committee appreciates your appearing this morning. If there's anything additional you'd like to communicate with the committee, you may do so in writing. We appreciate your coming.
For the information of members of the committee, it's my intention, if time permits, to rotate through the caucuses on the basis of who requests a question. I will be quite lenient with the deputations around the amount of time they take in answering and I'll be quite strict with the members about the time they take in asking the questions, if that's acceptable to everyone.
Mr Grandmaître: What else is new?
Mr Owens: We do appreciate your --
The Acting Chair: I just thought I'd clarify that for you in case you'd forgotten, Mr Owens.
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MARATHON REALTY CO LTD
The Acting Chair: I'd like to call next the Marathon Realty Co Ltd. You have 20 minutes for your presentation. We ask that you begin by introducing your delegation to the committee. If you could leave a few minutes at the end, we'd appreciate it so the committee could ask you questions, but the time is yours to use as you wish.
Mr John Beales: My name is John Beales, and I am the executive vice-president of Marathon Realty Co Ltd. I am joined by Mr Douglas Aitken, the president and chief executive officer, and Mr Cam McCollum, the property tax manager for Marathon Realty.
Thank you for allowing Marathon the opportunity to address the committee with respect to the Metropolitan Toronto interim reassessment plan. Our comments this morning will be directed to the issue of the proposed treatment of vacant land under the Metro plan.
Marathon Realty Co Ltd is a corporation with a mandate to develop and operate commercial property throughout Canada. In its capacity as an owner of commercial property, it manages approximately 3.7 million square feet within the municipality of Metropolitan Toronto. Its portfolio is diverse and includes such well-known properties as Metro Centre, Atria, Citibank Place, 40 University Avenue, 1500 Don Mills in North York, North York Square in Don Mills, CIL House in North York and the Dufferin and Agincourt malls. We are a significant taxpayer. Our tax bill for those properties is something in the order of $15 million to $16 million a year.
In addition to our built portfolio, our portfolio includes a significant portion of the former railway lands in downtown Toronto known as Southtown. This presentation addresses the impact of the interim Metropolitan Toronto reassessment plan on the viability of the proposed development and the negative impact on the public benefits proposed in this development.
It is our understanding that the intent of the interim reassessment plan of Metropolitan Toronto council is to move forward in an orderly manner towards a fair and equitable tax system. It has been conceived and brought forward as a step towards market value reassessment.
Marathon Realty Co Ltd acknowledges that a gradual move towards a market-value-based system of assessment reform is necessary to reduce the existing inequitable tax treatment of similar properties within Metropolitan Toronto. We also support the Minister of Municipal Affairs in his view that full social and economic impact studies must be carried out prior to the move towards full market value assessment. We note that the minister also emphasized that Bill 94 does not empower Metro council to implement full market value assessment during the five-year interim reassessment plan.
Marathon's concerns specifically relate to the treatment of vacant land, now to be part of a new category of property called "other property class" under the Metro plan. We think it is very important for the committee to understand how this new category of land came into being. First, however, the committee should appreciate that Metro has proceeded through an extensive consultation process, and Marathon was part of that process.
Dating back to 1989, Marathon, primarily through CIPREC, the Canadian Institute of Public Real Estate Companies, took part in public discussions to reform the property tax system in Metro to bring about a sense of fairness and equitable treatment that was lacking in the existing property tax system.
The problem with the current Metro plan is that it was conceived at the last minute by Metro council without the benefit of renewed public input and comment. Out of these last-minute changes emerged this discriminatory treatment of vacant land, whereby it was specifically excluded from the capping provisions afforded to virtually all other residential, commercial and industrial property. Mayor Rowlands of the city of Toronto has characterized this compromise as an irrational hybrid. This is clearly at odds with the minister's position that the Metro plan does not introduce full market value assessment, but rather that full market value assessment must first have the benefit of social and economic impact studies.
It is our strong opinion that Metro should not be permitted to immediately implement full market value assessment on vacant land, and we urge the provincial government to prevent it from doing so.
Furthermore, we are advised by Metro staff that the capping provisions of the Metro plan will extend to land development parcels that are presently occupied with an interim use and subject to the payment of business taxes. However, lands that are incapable of generating this type of activity on December 31, 1992, due to zoning or developmental restrictions will be severely penalized as to capping provisions; in fact, these provisions will not be available to those lands.
Marathon Realty is actively pursuing development approval for its Southtown project, the most significant multi-use development site in Metropolitan Toronto at this time, maybe even in Canada at this time, in fact. It is important that the committee understand the substantial benefits of this project and the causes of the current state of development in Southtown wherein there is no interim use.
Southtown's financial contributions and economic benefits are expected to be significant. It is estimated that Southtown will create 11,500 direct construction jobs or some 9,400 person-years of employment over the period of its development, innumerable indirect jobs and about 15,000 permanent employment positions when it is completed. In addition, Marathon's direct cost of site improvements and public infrastructure in Southtown will be at least $73 million, of which $45 million has already been expended. Added to this is another $55 million for rail relocation, studies, planning and design and other costs, for a total of some $100 million that Marathon has already invested in the project.
Southtown is a public transit-oriented development. Southtown will take full advantage of its strategic location at the centre of the regional public transit system. With Union Station only steps away, it is reasonable to estimate that almost 80% of all employees within the Southtown project will use public transit. No other major centre in the GTA, if not in all of Canada, can compare with respect to reducing our reliance on the automobile.
Intensification of uses within the established urban areas also reduces the consumption of valuable land across the GTA. For example, if Southtown's office component were constructed in a suburban location such a Markham or Vaughan it would likely consume over 100 acres of land and generate close to five times the automobile trips.
Southtown is a new type of community. It will create a new downtown community that will achieve a number of significant urban planning objectives. While Southtown extends the downtown core, it will not be like King and Bay. Rather, it represents a new community linking downtown to the waterfront, with a full range of uses, activities and services.
Southtown will be a public place with wide streets, parks and other publicly accessible spaces. Bremner Boulevard, a wide, European-style pedestrian-oriented street, will be created through the community.
Finally, a 17-acre park, the largest in the central area and comparable in size to Allan Gardens, will be introduced next to the SkyDome. This central park will allow for the preservation of the historic railway roundhouse building and its related structures. There will also be the creation of a new public building related to the new façade and entrance on the south side of Union Station.
Marathon has endeavoured to proceed as rapidly as possible through a very complicated planning process in the development of Southtown. Following many years of public discussion and study, Toronto city council in September 1985 approved a new part II plan and zoning bylaw for the railway lands, which was confirmed by the OMB on December 3, 1986. The part II plan had a holding designation which prohibited Marathon from developing Southtown until the removal of such designation.
In July of 1988 Marathon made an application to have the designation removed and at the same time implemented a program for site preparation. That site preparation consisted of the removal of surplus railway lines, removal of 500,000 cubic metres of fill and extensions of various pedestrian connections under the railway lines. Marathon continued discussions with the city for the removal of the holding designation, and in March of 1990 Marathon applied for development of two commercial buildings.
However, on May 28, 1990, the city chose again to review the public objectives for the railway lands. Of consequence to Marathon, the city also passed an interim control bylaw in August of 1990 which froze all development on the railway lands until the review was completed. While certainly not pleased, to say the least, Marathon at that time chose to enter into discussion with the city of Toronto rather than challenge the review at the Ontario Municipal Board.
Through those discussions, Marathon accepted a significant downzoning to accommodate public objectives and submitted new development applications to the city of Toronto in October and November of 1991 for two office towers and a public building. As a result of that downzoning, there was a loss of some 1.5 million square feet of density, which clearly has had a significant economic impact on the viability of the project.
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On August 14, 1991, the city of Toronto council passed a new part II plan and on September 23, 1991, the city of Toronto passed a new zoning bylaw for the railway lands east. From September 23, 1991, to October 1992 the city, Marathon, the Toronto Harbour Commission, Ontario Hydro and the Harbourfront Corp worked on the conclusion of outstanding matters. The new part II plan and zoning bylaws were referred to the OMB. That OMB hearing commenced in October of 1992 for the purpose of hearing the new railway lands east plan and bylaw. The evidentiary phase of that hearing is now concluded and we anticipate that on December 21, 1992, the OMB may render a decision on the city bylaws for the Southtown development.
We wish it to be noted that Marathon has acted very reasonably in this review process. We are not here to argue whether or not the review was necessary, but the fact remains that it has held up development of Marathon's lands. Marathon does not relish holding these lands vacant. We are continuing to aggressively move forward with a process of development in conjunction with the local governments.
In our view, the characterization of these lands as vacant is incorrect. These lands are in production. Marathon has expended and continues to expend a significant amount of money to move this development forward. With respect, there is absolutely no rationale whatsoever to treat development lands such as Marathon's Southtown lands differently depending on whether or not a business assessment exists for some interim use on those lands on December 31, 1992. In fact, when one compares this to similar development lands but lands which have on them an interim use such as a commercial parking lot and therefore a business assessment, the result is clearly discriminatory and unfair. Marathon would reasonably have had some type of use, at least of an interim nature, on the Southtown lands on December 31, 1992, if the development freeze and public review of its lands had not taken place. Now, even if an interim use were to be established next spring, it would be to no avail insofar as capping the impact of the full market value assessment. Moreover, the absence of a cap will penalize Marathon even further by making the economics of any future interim use prohibitive.
To penalize Marathon for following a development process imposed by local government with the consequence that it does not now have an interim use such as surface parking lots is not only discriminatory but grossly unfair. It demonstrates a real lack of understanding on the part of Metro council as to the consequences of its actions on the viability of this project, particularly given the current economic conditions that you all are quite aware of.
In our view, it is patently inequitable for the interim plan to separate future development land that does not happen to have an interim use established on it as of December 31, 1991, as a class of land which will receive the full impact of market value assessment. As the government has stated, full market value assessment as contemplated by this legislation may never come into existence. To acknowledge this while at the same time treating one sector of the economy as though it were fully in force and other sectors to the contrary is unacceptable.
The only other class of property, in addition to the newly created "other" property class, which is to be similarly discriminated against by the application of full market value assessment under Bill 94 is residential property upon a transfer of ownership. The frustration of discriminatory treatment of this class of property has been heard by the government, at least to the point of requiring Metro council to pass a separate bylaw to implement such discriminatory provisions. The government should not overlook the equally discriminatory treatment of vacant land. Consistent treatment of all property owners must be a hallmark of any property tax scheme. As stated, we support a movement to a fair and equitable tax system. This legislation, however, by its discriminatory treatment of vacant land is regressive and should not be passed without amendment.
In conclusion, we emphasize the following:
Marathon has proceeded as quickly as possible in the planning and development of Southtown and has cooperated with local government to provide significant public benefits in this development.
Marathon rejects the view that it should be discriminated against and penalized with respect to its land holdings vis-à-vis the holdings of another developer that happens to have an interim use as of December 31, 1992.
Marathon does not accept the position that the provincial government should rubber-stamp a flawed Metro plan which clearly discriminates against Marathon's Southtown development.
It has been suggested in the press by the Minister of Municipal Affairs, who has recognized this problem of the treatment of vacant land, that Marathon should go back and seek relief from Metro council after the legislation has been passed. With respect, the Metro chair has already said that Metro will not make any changes. The government therefore must not abdicate its responsibility for this legislation, but rather must address directly this discrimination in Bill 94 against vacant land.
In closing, we urge this committee to amend Bill 94 to remove the ability of Metropolitan Toronto to exclude vacant land from the capping provisions. We urge the committee to consider the fairness of such an amendment and place this type of property within the capping provisions applied to virtually all residential, commercial and industrial property within the municipality of Metropolitan Toronto.
The Acting Chair: Thank you very much for your presentation. What I would like to propose, with the agreement of the committee, is that each caucus be able to place its question. I have three speakers who would like to question and then the deputants will be able, with time permitting, to sum up and respond to all the questions at the same time or in writing. If that's agreeable, Mr Owens, place your question.
Ms Dianne Poole (Eglinton): Madam Chair, I just would like the answers to the questions to be on the record.
The Acting Chair: Well, there are two ways it can be done. You can place your question and then the deputation will answer in the time permitting at the end. If there's additional information, they can respond in writing and it will be a part of the record of the committee as well.
Ms Poole: But they will be allowed to respond?
The Acting Chair: Yes, of course.
Ms Poole: Thank you.
The Acting Chair: Place your question, Mr Owens.
Mr Owens: It's hard to play devil's advocate in 60 seconds. Yesterday CP Rail testified as to some fairly catastrophic results, if this plan is implemented, with respect to the numbers of employees who would be affected if we proceeded following the plan and the treatment of railway lands. You folks are in a peculiar position, being an operating arm of CP Rail.
My question is: Based on the amount of money that Marathon will make on the development of this property, is there any thinking going into the use of that money to offset any problems of the parent company, CP Rail, with respect to market value assessment?
The Acting Chair: Question, Ms Poole.
Ms Poole: You have stated quite well in your brief that the minister's position that the Metro plan does not introduce full market value assessment is clearly at odds with the facts.
My question to you is: If all homes are assessed at market value at the point of sale, if all new construction and all lands, as you point out, under production are assessed at full market value, all vacant lands, full market value, all railway rights of way, all GO Transit, hydro -- this is still part of the question -- municipal parking lots and business taxes will be at full MVA for all new businesses or businesses relocating, would it be your opinion that a significant portion of Metro will be under full market value and that they've been treated inequitably by the way they've classified it?
The Acting Chair: Question, Mr Turnbull.
Mr Turnbull: I'm a commercial real estate broker, and it would be my observation that it seems that the 1988 values of land that we're transacting were in fact based on a highest and best use. The revenue officials claim that this is not the case. Would you comment as to whether, from your observation of the assessment of your lands, it would appear to be based upon highest and best use?
The Acting Chair: Thank you, Mr Turnbull.
The time for your presentation has expired, unless the committee wishes to grant additional time for a couple of minutes to respond, if you could respond to the questions in a couple of minutes. If there's additional information, you could answer the questions in writing for the committee.
Mr Beales: I'm sorry, Madam Chair --
The Acting Chair: Could you take a couple of minutes and try to answer the questions? Is that possible?
Mr Cam McCollum: I'll respond to the first question, and that is with respect to the economics of the development at Southtown.
The negotiations that took place between Marathon and the city of Toronto -- and Metro council, for that matter -- in determining the conditions upon which those lands could be developed have taken place over a great number of years. During that period of time we have seen property values go up, and as property values went up, the development could offer more and more benefits to the community as there was more profit in the development.
In last two to three years we've seen property values decrease substantially and now we're seeing a potential of additional costs to the project by way of interim carrying costs on taxation. So the economics of that project are now becoming very marginal.
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The Acting Chair: Thank you very much. Any further response in one minute?
Mr Beales: Yes.
Mr Douglas Aitken: With respect to the second question, it's my opinion that even with the gradual changes that we are hearing about of business properties going to full MVA during the term, there will certainly be a significant portion of properties in Metro that will still be under the capping provisions at the end of the five-year term. So that just perpetuates the inequities as built into this plan.
The Acting Chair: What I'd like to suggest is that if there's additional information you'd like to share with the committee, if you communicate in writing it will become part of the official record. Thank you very much for your presentation this morning.
YONGE-BAY-BLOOR ASSOCIATION
TORONTO AREA BUSINESS IMPROVEMENT AREAS
The Acting Chair: I'd like to call next the Yonge-Bay-Bloor Association, Toronto Area Business Improvement Areas. Please come forward and begin your presentation. The clerk will take your brief. This is the clerk.
Begin your presentation by introducing yourself and your delegation to the committee. You have 20 minutes for your presentation. We'd ask if you would leave a couple of minutes at the end for questions, if that's possible, but the time is yours to use as you wish. Please have a seat, speak right into the microphone and don't be nervous.
Mr John Combs: I'm not nervous. I'm 72, so I'm past that.
I am John W. Combs, vice-president of TABIA. TABIA is the Toronto Area Business Improvement Areas. I'm a director of the Yonge-Bay-Bloor Association and the Bloor-Yorkville BIA, and I'm president of the arbitrators and mediators institute of Ontario. I'm an appraiser, an expert witness and an arbitrator of real estate disputes.
I'll read, but I'm going to speak impromptu here. This whole matter is mixed with commercial and residential. One doesn't have a darned thing to do with the other, except the horrendous incomes you get off of commercial real estate.
I'm an appraiser. I have talked to 20 or 30 appraisers I know who have done market value appraisals in 1988 and I can tell you, one case you've all read about, and that's La Scala, had an appraisal of $4.3 million, I believe, and the market value comes in at $8.4.
We wouldn't be here, in my opinion, if the assessments weren't flawed. I'm talking about commercial, because I really don't get involved in residential. The commercial assessments are seriously flawed and the difference between the way they do the commercials now is quite prejudicial to the small businesses.
I represent 6,000 small businesses, and if they go through this market value the way it's proposed, you are going to have a great collapse in real estate value to these people who have built these estates, to the tenants who will lose their businesses. The bottom line is affected seriously. We've talked to them all over.
I have been involved in the market value assessment reform working group for the city of Toronto for three years before this came down, so I'm fairly familiar with it. The assessments are flawed, and you wouldn't have all these Mickey Mouse solutions if they weren't flawed. If they were correct, they would probably be swallowed right through.
In my opinion, it is a fact that a substantial number of 1988 commercial assessments are flawed. It is my professional opinion that the provincial assessment department has erred seriously. Many reputable fee appraisers of commercial property who concluded appraisals in 1988 were 50% or less than the provincial assessments for 1988. Serious errors.
I represent approximately 6,000 businesses, the majority of which could be wiped out financially, causing a serious loss of jobs. The impact that 1988 market value assessments would have is onerous and, quite frankly, untenable. This dramatic increase in assessment and the resulting taxes will force many businesses and people out of downtown Toronto and possibly out of business. The heart of Metro Toronto is Toronto. It could quickly become a ghost town because of increased rents. It could mean the loss of 10,000 to 20,000 jobs -- those are jobs.
Regardless of how MVA affects you, either increase or decrease, be assured the impact of increases will seriously compound the effect of the current economic condition. We're also in the real estate brokerage business in downtown Toronto and I can tell you, it's having a very real affect on rents and is a very real question to all prospective tenants.
Objections to the present MVA appraisals or assessments will result in a backlog of 5 to 10 years in the assessment review courts and the Ontario Municipal Board, thereby necessitating extreme costs to the individual taxpayer, and again to the taxpayer through government expenditures to defend the process, a two-time cost to the taxpayer. Highly unfair.
The result of carrying out the present proposed MVA system could be a second Boston Tea Party. I'm not hysterical; I don't whine. I'm just telling you: beware. As of November 1992, there is a delinquency in tax payments to the city of Toronto of $271 million. How high will this deficit go if MVA is passed?
Finally, after you review all the data before you, you should recommend a review of MVA and its assessments. That is the primary thing, a provincial and Metro economic impact study. Everybody has walked away from an impact study. What is going to happen? Nobody can tell you what's going to happen. The environmental impact, the economic impact -- nobody has done them. Nobody can tell you what's going to happen, so you're working in a vacuum.
You're all sensible people. You all know what I'm talking about. You all ought to recommend that this thing be put off until an impact study is done. A provincial and Metro economic impact study should be completed as to the effect on the commercial tax base. In addition, the loss of real estate values, the loss of jobs should motivate the present NDP government towards a serious look at the MVA.
I'm just going to give you a little example of what happened. In 1984 you had assessment set out. Thirteen of the major buildings downtown had a 69.5% increase in their taxes. It would have been devastating. When it comes out to 1988, they don't have the impact at all. It's the small businesses that have the impact. You people all come from areas where small businesses are a very vital part of any real estate in any community. These people will be very seriously affected.
I recommend that you recommend to the Legislature that we withhold doing anything on MVA at the present time. If you don't, you recommend that we have caps on it, because there aren't any caps in the law as it's written right now, as I understand, and that you cause impact studies to be done, because I think we will have a dreadful effect. In my opinion, we're going to have five years of this downhill. It's going to be worse and worse and worse. You haven't seen anything yet.
Looking around the room, I don't see anybody who was 20 in 1940 and went through the last depression. I know what it can be, and it can be the same thing here. You can't buy your way out of everything, I'll tell you.
So you're going downhill. You've got five bad years ahead of you, and you better do everything you can to help these people. These are hard workers, these retailers and small businesses.
That's all I've got to say, and I should hope you would support our 6,000 businesses.
The Acting Chair: Thank you very much for your presentation. Question, Ms Poole.
Ms Poole: How much time do we have?
The Acting Chair: There are approximately seven minutes remaining.
Ms Poole: To be divided equally?
The Acting Chair: Yes.
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Ms Poole: Mr Combs, I really want to thank you for your presentation. You have very articulately outlined the difficulties with what the government is doing in rubber-stamping Metro's plan. You've not only talked about the deficiencies in the plan itself, you've talked about the lack of impact studies on small business. You've talked about the shift away from large commercial properties on to the small businesses and how this will be the straw that breaks the camel's back. You've talked about the difficulty the city of Toronto's already having with delinquent taxes.
I only have time for one question, so the question I would like to ask you is about your statement in your written brief about the substantial number of the 1988 commercial assessments being flawed. Using 1984 values, all the big office towers and big commercial developments went up significantly in taxes. You're talking about 50% tax increases.
Mr Combs: It's 69.5% downtown on the 13 major buildings.
Ms Poole: This happened under 1984 values. The major office tower owners were launching a huge campaign to fight against this.
Mr Combs: They did.
Ms Poole: And lo and behold, when the ministry figures came out, using 1988 values, not only did they not get an increase, in many cases they got a substantial decrease.
Mr Combs: They did.
Ms Poole: How can one rationally explain this away, unless how they did it was flawed, unless it was a politically cooked-up solution?
Mr Combs: I believe they have power politically, as we all do. They're the financial group in the city. That isn't the point. The way they judge they're going arrive at what the tax is going to be is that they look at the commercial differently than the small commercial. They approach them differently. I can't remember whether they gave them a 25% vacancy rate. They did it differently so they arrived at a figure that was even or below.
The little guy didn't have any change. I can give you an example. At the corner of Sultan and Saint Thomas, Jasmac is building a hotel on Charles Street and bought the little corner that used to be Morlands furs or Morlands sheepskin coats, or whatever it was, because it needed it for the entrance. They needed to have the right of way there. On that basis, the rest of them were all assessed the same way, which is incorrect. You have $50,000 incomes with $1.5-million assessments. It's ridiculous. So you must do the same on commercial all the way through, which they didn't.
Mr Turnbull: Mr Combs, you are an expert. It may interest you to know that your member, Zanana Akande, was at question period yesterday but didn't show up for the vote immediately afterwards on market value, even though she campaigned as being against it.
My question to you as an expert is, would you not say it's probable that the Ministry of Revenue, despite what it claims to the contrary, based the assessment on small properties, based on highest and best use where there was higher density available --
Mr Combs: No. It appears what they did, Mr Turnbull, is that they took sales, took that value, broke it down and carried it on with the rest of the street, regardless of what the incomes were.
Mr Turnbull: Were their sales sustainable on the long-term basis?
Mr Combs: Well, if you have an assembly, which is what I'm talking about, they're going to overpay for something to get that because it's important.
Mr Turnbull: But if you're doing an assembly, it's for the highest and best use for higher density, is it not?
Mr Combs: It should be, yes.
Ms Anne Swarbrick (Scarborough West): Mr Combs, you put forward an excellent presentation. Thank you. It seems to me the major area you're pointing out as being a problem is your belief that the 1988 assessments are seriously flawed. For that reason, actually, I was originally going to ask you, is the appropriate route to correct that not in fact to have those appealed? I see you were anticipating that in referring to the kind of gigantic backlog that would mean.
My question would be, if you know of sufficient examples of cases where the 1988 assessments are flawed, would you not in fact see that some of that specific information should be sure to be put before the minister in terms of whether there should be some triggering of reassessments, rather than necessarily throwing out Metro's process?
Mr Combs: First, it's two-party confidential: the party that had the appraisal made and the appraiser. They're bound. I would have thought they would have called in outside appraisers to do the appraisals for assessment, not a bunch of people who just did what they wanted to do.
I deal with them. I do tax appeals, and I've been reasonably successful with tax appeals. They've got to be bright. You've got to prove that they're wrong, but do you know the expense to little businesses of going to the Assessment Review Board? Not knowing anything about it, they have to get a lawyer. Then if they have to appeal again, they go to the Ontario Municipal Board. Who's paying for both sides? The little guy is. He's paying his own costs and, as a taxpayer, he's paying the rest of the cost.
What would you do? Flood the assessment review court with five more years or 10 more years of work? They're two years behind now, I believe. I don't understand what the point is. Everybody can say, "You have an appeal," but if the assessments were done correctly, I don't think we'd be here.
Ms Swarbrick: It sounds like you would also, therefore, be happier to see a system of taxation where large items, like education, aren't funded through the property tax system that creates this mess, but rather funded through an income tax system. Is that correct?
Mr Combs: I just think we're overloaded on land and buildings right now. We can't afford it. It's getting to the point where it's ridiculous.
The Acting Chair: Thanks very much for your presentation. We appreciate you appearing before the committee this morning.
Mr Combs: Thank you.
DEER PARK RATEPAYERS GROUP
The Acting Chair: I'd like to call next the Deer Park Ratepayers Group. Your presentation has been circulated to the committee. You have 20 minutes for your presentation. Please begin by introducing yourself.
Mrs Katherine Packer: I'm Katherine Packer, president of the Deer Park Ratepayers Group. I should like to begin by thanking the members of the standing committee on social development and, through them, the Minister of Municipal Affairs for giving me this opportunity to express my views, and those of most residents of Deer Park, regarding the proposed bill.
One of the steps taken early in this government's period in office was to set up the Fair Tax Commission. I can think of no other single act that has earned the government more widespread approval from its constituents all over the province. The fact that the property tax was explicitly added to the mandate of this commission encouraged the belief that the government was seriously committed to property tax reform. Citizens all over the province made submissions to the commission, many of them concerning market value assessment. Members of the general public have also served on the commission's working groups.
I point out that I have been a member of the property tax working group, and I do so because I don't want to be accused of lack of candour, but the views I express this morning are my views and those of my neighbours; they are not intended to be representative of those of the working group. There will, I hope, be some coincidence.
Members of the general public have also served on the commission's working groups. They have given generously of their time and talents on the assumption that the government would be as committed to the work of this commission as were the members of the public. More important even than the extensive public consultation is the innovative research being carried out for the commission to investigate the fairness of the current tax system and to examine alternatives to it.
It has been a profound shock to all those who had put their faith in the work of the Fair Tax Commission to learn that the government is prepared to make a decision on an issue as important as the introduction of MVA in Metro without waiting for the report of this commission. Not only has the decision been made without the benefit of the commission's recommendations, but this action on the part of the government undermines the credibility of the commission itself. What we had hoped for, what we had been led to expect, was a program of genuine tax reform. Instead, unless the government can be persuaded to rethink its current position, what we will get is, to quote the Minister of Municipal Affairs, "a small step towards market value assessment."
It has been argued by the minister himself, as well as other members of the government, and most recently by a member of Metro council, that what is being introduced is not MVA. All the evidence, however, supports the contention that it is MVA. The assessment figures prepared by the assessment branch of the Ministry of Revenue based on 1988 values are market value assessments. Whether or not a home owner will receive an increase or decrease in the taxes he will pay in 1993 and 1994 will be determined by whether his 1988 market value assessment is higher or lower than the assessment on which his 1992 taxes were based. The figures that will appear on the assessment rolls for all of Metro, including the city of Toronto, beginning in January 1993 will no longer be the assessments on which the 1992 taxes were calculated. They will be the 1988 market value assessment. As matters stand, if Metro's proposal is approved without emendation by the government, at point of sale full market value reassessment will take effect on residential properties of one to two units. Finally, full market value takes effect January 1, 1993, on certain types of properties, such as vacant land, and we have heard eloquent presentations in the last two days on that "other" category of property.
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What further evidence is required to prove that the interim Metropolitan Toronto reassessment plan is market value assessment? Certainly the members of Metro council, both those who supported it and those who opposed it, did not doubt for a moment that the issue they were debating was market value assessment. It may be a small step, as the minister has stated, but it is a step in a process that will, in my opinion, inevitably lead to full market value assessment being implemented in Toronto in spite of unanimous opposition on the part of Toronto's own council.
Metro council could not impose market value assessment on Toronto without passage by the government of enabling legislation. The government has taken the position that it must respect the rights of a local municipal council to make its own decisions. But the city of Toronto at present has the right to make its own decision, a right which the province is taking away from it by Bill 94. If it is a question of accountability, the city of Toronto is accountable to 635,000 citizens. True, other regions have been given the right to make such decisions, but consistency for its own sake is certainly not a virtue.
The city of Toronto is adamantly opposed to the introduction of market value assessment for reasons most of which have already been covered in the debate in the Legislature and with many of which members of the government agree. I would like to review briefly those that are of particular importance to residents of Deer Park.
While the argument at the present moment is over the method of assessment, there is a more general problem with the property tax itself. The reason the property tax is so important is that it raises so much revenue. It is second only to the income tax in Ontario in its revenue-raising capacity. It is estimated that in 1993 property taxes will bring in about $15 billion. The average taxpayer thinks property taxes should pay for services such as water and sewage, roads and fire and police protection. But more than half of the property taxes paid in Ontario go to support education and other social services.
When a tax raises a very large amount of revenue, the question of fairness becomes very important. What do we consider fair with respect to such a tax? Our society generally regards a tax as fair if, like the income tax, the tax burden is shared in such a way that those with higher incomes pay higher taxes and those whose incomes are lower pay lower taxes.
How does the property tax measure up according to this standard? It is intuitively obvious that for wealthy people who own large homes their property will represent only a small proportion of their equity. The bulk of their wealth will be in other investments. People with moderate income will, on average, have a larger proportion of their wealth tied up in their property than the very rich. For poor people who own their homes, those homes may represent virtually all the worldly wealth they have.
The property tax is in effect a wealth tax on only one form of wealth, namely, property, and it takes no account of liabilities. It follows that poor people, while they may pay lower taxes than rich people, will pay much higher taxes proportionate to their incomes, which is the exact opposite of the principal of a graduated income tax. The fundamental weakness in the property tax is that it is unrelated to ability to pay. Its appeal to tax collectors lies in the fact that property cannot be moved or hidden, and thus the tax cannot be easily be avoided.
Similarly, one does not need the assistance of the Fair Tax Commission to identify the flaw in using market value assessment as a basis for property taxation. At the time an individual purchases a house, it is reasonable to presume that he has the ability to finance the purchase, and it is reasonable for a purchaser to assume that his taxes will increase gradually over time. But assessments based on market value are directly affected by a volatile real estate market. In the space of a few years, property can double or treble in value. The very wealthy are in a position to adjust to such swings, but not a person in moderate circumstances.
Market value assessment, as it is being proposed, has other negative features. Those who support MVA make the statement that MVA is easily understood because everybody knows the value of his own house. This may be true, but there is very little necessary relationship between what an individual thinks his house is worth and its market value assessment.
Metro published an explanation of its interim reassessment plan in the November 30 issue of the Globe and Mail. Market value is defined as: "The most likely selling price between a willing buyer and a willing seller in an open market. It is not the actual sale price." The formula used by the assessors is much more complicated than Metro's definition implies. Sales records form a part, but other factors play a much more important role in determining the final figure.
Many Deer Park residents have been unable to find any relationship at all between the value of their house and its 1988 market value assessment. Even more difficult to understand is the relationship between the assessments on neighbouring houses. In our case, we have a house next door that is smaller than ours and lacks a garage. It is in every way, in our view and in their view, a less valuable house, yet our assessment is lower than their assessment. There are many worse, more interesting examples which I won't waste time on.
The incomprehensibility of market value assessment is, in itself, one of its flaws as a method of assessment. It is also an expensive system to maintain. Because market values are not stable, it requires frequent updating. Because the basis on which the assessment is made cannot readily be verified by the taxpayer and the assessment itself therefore can appear arbitrary and unfair, appeals are likely to be frequent and costly both to the taxpayer and to the government. It is pointed out that the taxpayer ultimately supports the government as well.
The proposition that properties of the same value should pay the same property tax is open to question when the value is determined by market value assessment. Why should a small house on a narrow 25-foot lot with no garage in Deer Park pay the same tax as a large house on a large 150-foot lot with a three-car garage in the suburbs? It will cost six times as much to provide roads and sewers for the large house. The small house will cost far less to service, and it satisfies the government's planning objectives with respect to intensification of housing. Market value assessment rewards urban sprawl. It encourages wasteful use of property for housing and uneconomic provision of municipal services.
There are two other types of inequity inherent in the proposed Metro interim reassessment plan which I would like to touch on briefly. The whole point of the plan is to redress inequities suffered by the owners of single residences in Metro that are overassessed relative to the single-residence average. Even under the present circumstances, such home owners are significantly underassessed compared to tenants, and Metro's interim reassessment plan does nothing to redress the injustice of the current property tax system with respect to tenants.
A significant proportion of tenants are among the lower income groups, yet tenants currently pay property taxes at three times the rate that owners of single residences do. Even the first small steps that are proposed in this bill can affect tenants adversely. Landlords of 117,000 high-rise apartments will have to pay more taxes, and these increases will be directly passed on to tenants. Furthermore, there is no assurance that tax decreases will be passed on to tenants. This point alone would justify the government in rejecting Metro's interim reassessment plan.
The other inequity I wish to mention is that affecting commercial and industrial properties. We are currently in the most serious recession this country has seen since the Great Depression. Small businesses have been failing at an alarming rate with the present level of taxation. In the current economic climate, there is no way of knowing how serious the impact of the proposed 25% increase in taxes spread over three years will be. The fear that it will result in more failures and bankruptcies seems well founded. The risk is to small businesses all over Metro, not merely in Toronto, but Metro councillors and the provincial government are choosing to turn a blind eye to this aspect of the problem.
Toronto has earned its reputation as a safe and livable city because of its small residential neighbourhoods such as the one I represent. Within a comparatively few city blocks, a wide variety of income levels, ages and lifestyles are to be found. Retired couples live next door to families with young children. Many of the houses sport Neighbourhood Watch signs. Composting and recycling are taken seriously. Street parties are held annually on some streets, a sense of community is manifested in many ways, and residents are aware and proud of the history of Deer Park.
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If full MVA is implemented in Metro, the impact on the city of Toronto as a whole will be disastrous and neighbourhoods such as Deer Park will be the first to be destroyed. Neither the young families nor the couples living on pensions will be able to afford the taxes. They will be the first to move out. The small houses will be replaced by monster homes which only the rich can afford. This pattern will be repeated throughout the city until no one will be left but the very rich and the very poor. One has only to visit one of the once-great American cities such as Los Angeles or Detroit to get a picture of what is in store for Toronto if market value assessment is implemented.
It is not difficult to point out the weaknesses of market value assessment and the inherent danger in a tax system based on it. For that we do not need the Fair Tax Commission, but the challenge of proposing a fair and equitable alternative is another matter. That is the task the commission has tackled. No changes in the tax system should be approved until the Fair Tax Commission has made its report and there has been an opportunity to study its recommendations.
The Minister of Municipal Affairs is not unaware of the risk to Toronto; he has said as much himself. He has asked us to accept his assurance that his government would not permit Metro to implement full market value assessment. I do not question the minister's good faith; I question any government's ability to make good on an undertaking such as this.
I question whether Metro will avail itself of the opportunities which Bill 94 affords, and will indeed pass bylaws to provide caps for the categories that, under the present proposal, will be on full MVA based on 1988 values as of January 1, 1993. I have even less doubt that Metro will pass the necessary bylaw to remove caps from houses at point of sale, the government's protest notwithstanding.
It comes down to a question of the order in which things are to be done. There are powerful forces that favour market value assessment. Approving Metro's interim reassessment plan may seem as only giving away a few inches of ground, but in fact it is the abandonment of a principle.
The current proposal under discussion does nothing to address the real inequities in Metro's system of property taxation. In some instances, as outlined above, it will tend to increase existing inequities. The government has never officially reversed its position against market value assessment, which is clearly stated in its 1984 party platform. Its only responsible course of action is to reject Metro's current proposal and wait until the Fair Tax Commission has made its report before it embarks on tax reform.
The Acting Chair: Thank you very much for your presentation. There's five minutes in total remaining. I'd ask the members to keep their questions short.
Ms Swarbrick: I'd mostly like to say thank you very much. You've presented an extremely thoughtful and very knowledgeable presentation. Those are exactly the kind of things we need to be thinking about as we move towards what's going to happen in 1998.
I want to point out in the one area, in terms of tax decreases being passed on to tenants, that as you might have heard, Bill 94 in fact will allow for either Metro to make the request for the decreases to automatically be passed on to tenants by reducing the maximum rents, or if they don't do that, we have written into the bill an ability for even one tenant in a building to apply to the rent control office for the reductions and that would then be applied to the rest of the tenants in that building.
I just want to pass that on, but otherwise to say thank you for a very thoughtful contribution to what has to take place, if not for this immediate round, then at least for the next round for sure.
Ms Poole: Thank you for your presentation, Katherine. It's obvious you were a big help to the Fair Tax Commission. It's just unfortunate that the report will not be implemented before going ahead with this scheme.
On page 2 of your brief you rightly point out the inconsistency of the government with addressing this issue as MVA. The minister has said it's not market value. I have Hansard here, where the parliamentary assistant is quoted twice as saying this is not a market value plan. If it is not a market plan, what is it?
Mrs Packer: Since I believe it is a market value plan, I won't attempt to describe it. If you will consult Hansard, you will see that the Minister of Municipal Affairs himself identified it as a market value plan, because he said it was only a first small step towards market value assessment.
The word "honest" occurs to me. It is not quite honest to make claims that it is not market value assessment.
Ms Poole: Unfortunately, your point of view isn't being represented in the Legislature by the government, because your NDP member, Zanana Akande, chose not to show up for the vote, which is unfortunate.
The other question I have to ask you is about homes going to full market value at the point of sale. I am very concerned that what the minister has done by requiring -- not forbidding -- Metro to pass a bylaw is just a camouflage, because Metro has voted three times, over the protests of city of Toronto Metro councillors, to put this in. Do you have any faith, do you have any idea that Metro council might change its vote this fourth time, or are you convinced that it will go through unless the province stops it?
Mrs Packer: I attended the debate at Metro council and participated in it before this vote was cast on the present plan, and I can only say that I saw no evidence to lead me to have any confidence at all that if they were to proceed with this bill, they would not pass a bill to remove the caps at the point of sale. I am confident that is going to happen. Now I am a private citizen, I'm not here as an expert witness, but that is my belief.
The Acting Chair: Thank you very much for your presentation today. We appreciate your appearing before the committee.
Mrs Packer: Might I say I appreciate being invited to come.
The Acting Chair: I'd like to call next O'Shanter Development Company. Please come forward.
Interjection: No answer.
The Acting Chair: I'd like to call next the Bloor-Yorkville Business Improvement Area. Is there anyone here from the Bloor-Yorkville Improvement Area?
Mr Combs: I'm also from there. Dick Wookey was going to speak this morning and he hasn't arrived yet. I thought Dick would be here.
The Acting Chair: Is he planning to attend, do you know?
Mr Combs: I'm a director.
The Acting Chair: But is he planning to attend?
Mr Combs: He was planning to attend.
The Acting Chair: Well, then we'll wait. His time is not scheduled until 10 more minutes, so we'll wait for him.
Mr Frankford: I believe Mr Wookey spoke last night as part of another delegation.
Ms Poole: Madam Chair, on a point of clarification: Yesterday Mr Wookey attended as a member of the confederation of ratepayers groups, which is a large umbrella group of many ratepayers throughout Metro. Today he would be appearing as a member of his own group, which is the Bloor-Yorkville Business Improvement Area. I don't see any problem with the fact that there is a large umbrella group and then there is a smaller umbrella group representing different people.
The Acting Chair: Order, please. It has been the practice of committees, when inviting delegations or deputations or having requests from organizations and associations, to allow the group to choose whom they wish to speak on their behalf. I would suggest that we continue with the tradition, and when I call the group and it is their allotted time, they will decide who speaks for them. So if an individual appears before the committee more than once on behalf of several different groups, that's the responsibility of the group or the organization and not the judgement of the committee. So we won't have any debate or discussion at this time.
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MIKE BOYCHYN
The next delegation that has been scheduled is not here yet. Is Mike Boychyn here? Would you like to come forward if you are ready for your presentation? I haven't skipped the others. For anyone who is watching, they will have an opportunity, but since Mr Boychyn is here, he has 10 minutes for his presentation.
Would you begin now, please. I hope I have pronounced your name correctly. If I didn't, please let us know how you pronounce it.
Ms Poole: Just a point of information, Madam Chair: I wondered which group on the list Mr Boychyn is representing.
The Acting Chair: He's here as an individual. Individuals are allotted 10 minutes of time and he has replaced in the schedule Isabel and David Manore, the 11:30 delegation.
Ms Poole: So this has been a substitution by the clerk.
The Acting Chair: Yes.
Mr Owens: Just in terms of the group that is not here at this point, is it your view that it's forfeited its time, or will it be --
The Acting Chair: The clerk will contact them to see if they're coming. If we can accommodate them, we will. They've missed their time, but --
Mr Owens: We have a pretty tight schedule.
The Acting Chair: That's right, so we'll have to see and the committee can decide.
Please begin your presentation now. You have 10 minutes.
Mr Mike Boychyn: This has been on quick notice, and I have a copy of my résumé I would like distributed later on, if I may, please.
Members of the hearing committee, my name is Mike Boychyn. It is not Alan Wood, as the Toronto Star would have you believe in yesterday's paper. It is nice to be able to make our presentation to someone who will listen. On previous occasions we have either been drowned out or even crowded out. That, though, does not resolve anything. Neither does apprehension. There is always apprehension before a change takes place, as in this case. I have attended here for the last two days, and each time I went home, I rewrote and added to my presentation. How long can this go on?
We should not allow this hearing to degenerate to the crying-towel stage. I, for one, have great difficulty and suspicion about people who come on strong with the impression and delivery of the attitude that the sky is falling. This seems to be the case at times in this discussion of market value assessment. These people are either afraid of something or have something to hide. Their emotion should never stand in the way of rational analysis and possibilities. We should not shy away from coming forward with the possibilities and the exposure that market value assessment may provide.
There is an absence of any other outright proposals. Any proposal that would be worthwhile would without a doubt have appeared before us now, let alone getting lost. These may no more be lost than the people seeking them. No time is ever right in some people's minds, so they just play for time. I repeat, we have no reason to shy away from market value assessment. It is merely an honest attempt to raise and meet our financial obligations to provide maintenance and service that we require for efficiency and cleanliness in our cities.
If we start crying about our tax burden, the alternative is to cut back on our lifestyle and our expectations. It is redundant to ask, as some do here for political points, what is market value assessment? Market value assessment as a yardstick: A yardstick in this case is much more efficient than going about it by inches and fractions. The unit assessment which has been suggested may prove in the long run far more costly and the same or similar assessment value from that of an MVA analysis. I hope it is not just a stall.
I also resent the idea of imposing the legislative atmosphere by demanding the presence of ministers at the citizens' hearing. His presence should just be a courtesy and not an attempt to embarrass him. MPPs have that chance in their legislatures.
There may well be unusual situations of pricing and assessment inherent in our old assessment in downtown areas as well. The whole purpose of this reassessment process is to bring all disparity to light. Let us not extinguish it, or any other light; darkness we have now.
I spoke to one property owner who opposes market value assessment. This person had property in downtown as well as in the outskirts. He thought it was a threat when he said he was going to withdraw his tax rebates from his suburban property if MVA went through. My response was that this is exactly what the supporters of property value assessment want you to be able to do.
This old assessment is like an old car: It has been running downhill all the way. We should all know there is a limit before we have to change to a newer model. We should certainly all get a more comfortable ride. This assessment effort is not to intentionally pit the downtown area against the suburban area. Let us act like adults. We wish you nothing but continual health, to which we have certainly been contributing and will continue to do so, but our health and justice is also imperative.
We can now put our grievances into a little computer that will give us all the answers. They may not always be the answers we want, but a whole review and appropriate changes now will settle a lot more strife later on. Just as a white South African enclave in downtown Toronto would not be appropriate, this would challenge our justice system and our charter. The injustices against our native people have become an unwelcome international exhibit. If we exchange our subsidy for your claimed subsidy to us, maybe we will be more able to contribute to our educational expenditures in this give-and-take spirit.
If your downtown is not the Shangri-La some of us envision it to be and you wish to unload your burdens, then I'm certain everyone in Scarborough will welcome you to share with us. We have lots of empty stores as well. Scarborough has been referred to by Mayor Rowlands as an expensive sprawl. Let us not forget that Toronto downtown was once an urban sprawl. Our suburbs are not selfish about supporting the sprawl beyond our boundaries. We welcome them as neighbours. That applies to all Canadians.
The Acting Chair: Thanks very much for your presentation. We have five minutes remaining and three questions; there's probably time. Ms Poole, you're first.
Ms Poole: Thank you for your presentation today. I know you've been monitoring these hearings very closely.
The minister has said that this is Metro's plan and that it is not MVA. The parliamentary assistant has said this is not an MVA plan. In your opinion, is this plan that is before the Legislature right now a market value assessment plan?
Mr Boychyn: Their concepts may be different from mine, or ours, but I have no hesitation in describing it as a market value assessment plan. We think it'll be the most fair yardstick by which to assess our properties both downtown and in Scarborough, and the outskirts throughout the province, as has already been done.
Mr Turnbull: Mr Boychyn, I'm hard pressed to understand why you're saying that a unit assessment scheme would be more expensive than MVA. The cost of the reassessment for Metro was in excess of $11 million. It's mandated, under market value, that it should be reassessed every four years. In the case of the Muskokas, in fact, when they wanted to skip a reassessment, provincial legislation was brought in to force them to do it. It's been estimated that it costs something like $200 million a year to run market value assessment in this province. Why would you say that unit assessment would be more expensive? What do you base that on?
Mr Boychyn: Measuring anything by inches rather than yards certainly takes a lot more time, dedication and man-hours. There's no question that individual assessments on properties would be time-consuming. It would be useless, because a home and its valuation is dealt with on the basis of its amenities, whatever is in the home.
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Mr Turnbull: But with unit assessment you measure once and then it doesn't change ever again, unless you add to it.
Mr Boychyn: It deserves an update the same as market value assessment would, otherwise it will become obsolete.
The Acting Chair: Question, Mr Owens.
Mr Owens: Mr Boychyn, I want to thank you for your presentation. As a member who represents a riding in Scarborough, I'm pleased you're here to talk about some of the issues that we as Scarborough residents face.
Some groups have suggested that perhaps we should take a tour of the South Bronx to see the impact they're predicting as a result of market value assessment. In terms of my own riding and some of my colleagues' in Metro, I don't need to go to the South Bronx. I take a look at some of the results of the neglect of former governments, both Tory and Liberal, in terms of their tax policies. They're the people who have caused the problems that we currently face. We're now trying to fix the mess that's been handed down from generation to generation. Again, I'm pleased that you're here to support this bill and support the long-range cleanup of these problems.
The Acting Chair: We really appreciate you appearing before the committee today. I want to thank you --
Mr Boychyn: May I make a point with regard to the Bronx?
The Acting Chair: What I'd suggest you do is discuss it with him in the hall, or you can write to the committee. But your time has expired and there are other people waiting to present. Thank you very much for appearing before the committee today.
O'SHANTER DEVELOPMENT CO
The Acting Chair: I'd like to call next the O'Shanter Development Co. You have 20 minutes for your presentation. Please begin by introducing yourself to the committee. If you would leave a few minutes for questions at the end, we would appreciate it. The committee has received your written communication.
Mr Jonathan Krehm: Thank you very much, Ms Caplan. My name is Jonathan Krehm. I'm one of the owners of the O'Shanter Development Co. We own and manage some 2,800 apartment units in Metro Toronto and some 400 apartments in Calgary and Edmonton.
I'm here to speak on behalf of my tenants. I have no direct economic interest in the issue of market value assessment. Our anticipated changes as a result of MVA would be small reductions of taxes, which would be passed on to tenants.
The real issue here is inequity and the hypocrisy of both the current and the proposed assessment regimes. I find it quite incredible that the current government, which poses as the protector of tenants, would not have addressed the biggest single economic discrimination against tenants in this province, which is the assessment regime that we have currently and which you propose to keep. What has been proposed will keep an inequity by a different class of assessment for apartment buildings that means apartment dwellers pay two and a half times the taxes that single-family home owners pay. There is no difference of class for industrial that's proposed, or for commercial. The only reason this inequity has not been addressed is because of the politics of the situation. I find it quite upsetting that this inequity would be kept.
Roughly 25% of the rent of my Metro Toronto tenants goes to pay property taxes, some $1,800 per year per unit. In Calgary, where we have newer apartments, worth more money, with higher rents, 12% of the rent goes towards taxes, and the taxes are 50% of what they are in Toronto. They're roughly $850 per year.
I have brought copies of form letters which were sent to Premier Rae from 186 of my tenants urging the government to rectify the property tax injustice that is suffered by all Metro Toronto tenants. All residential properties should be assessed at the same rate. Thank you very much.
The Acting Chair: Thank you very much for your presentation. Mr Turnbull.
Mr Turnbull: I thought I would be last.
The Acting Chair: No, in the next rotation you're first. What I've been doing, just for everyone's information, is rotating through the caucuses.
Mr Turnbull: Fine. Mr Krehm, this inequity has existed for a long time, and it seems to me that there has never been, and probably never will be again, as good a time to adjust it. There was a request made by Metropolitan Toronto that the government address this inequity, and it's seen fit to do nothing about it. Could you expand on that a little?
Mr Krehm: I think it was shocking that this government would not address that issue when requested to do so. The only reason Metro Toronto did it is because of the 5,000 tenants -- and the 186 names I'm bringing forward to you were part of that group -- who petitioned Metro Toronto and then went on to do the same to Premier Rae.
Mr Turnbull: Typically, how many months' rent is consumed by taxes per year?
Mr Krehm: Three. And that is double what other Canadian citizens pay as a portion of property taxes, Canadian citizens who are tenants. What we have here is a discrimination against people because they're tenants, and the only reason we have it is because tenants don't know they pay the property taxes.
Ms Swarbrick: Mr Krehm, in the recent controversy around the whole area of property tax in Metro, I think one of the silver linings of the recent controversy is the fact that this long-standing inequity has come to light. Certainly I, and I know most of my fellow caucus members, didn't know about this kind of inequity until this recent controversy. Certainly our government is committed to looking towards the next assessment period and what could be done. It's obviously not something that, after decades of existing like this, can be immediately turned around, because the amount of money you're talking about has great implications on the rest of the system.
My question to you is, if and when our government is able to introduce the kind of fairness in the system that would remove this kind of inequity, would you be in support of maintaining rent controls to ensure that when that tax fairness for tenants comes, landlords don't eat up that deduction in rent by moving into that space created and charging higher rents? My question to you is, will you support the maintenance of rent controls at the time greater tax fairness is brought in for tenants to make sure they don't again lose that money through higher profits to landlords?
Mr Krehm: No, I would not support continuing rent controls, because rent controls are another form of discrimination against tenants for the benefit of politicians, as this present form of discrimination is. As I pointed out, in Calgary, where there are no rent controls, our tenants pay less rent for bigger, better apartments, and there are far lower property taxes.
Ms Swarbrick: So Mr Krehm, is your interest in appearing before us today not to help bring down the tax to your advantage?
Mr Krehm: That's absolutely a false characterization of my testimony. Under the present system -- and we know full well that at least for the near future that system will be in place -- there would be an automatic reduction of rent that would flow through to tenants of any reduction in taxes due to reduced assessment. That's the situation we have, and to talk about what may happen five years out and whether I would support that is just a red herring, quite frankly, Ms Swarbrick.
The Acting Chair: Ms Poole, you have the floor.
Ms Poole: Thank you very much for your presentation today. You said it is shocking that the government wouldn't respond to Metro's request to redress the unequal situation between home owners and tenants. You might be even more shocked to find out that yesterday I asked a question of the Minister of Municipal Affairs -- with the permission of the witness who was there at the time, because it's the only way we could get a question to him -- to ask him whether he planned to redress this inequity. His answer was that it was Metro's plan, Metro's problem, and I should address my question to Metro. The Minister of Municipal Affairs, who has responsibility for carrying this legislation, did not know that, first of all, assessment is a provincial responsibility. Second, he didn't know that, under section 63 of the Assessment Act, it provides regulation that prescribes the classes which perpetuate the inequities you talked about. May I ask you, are you shocked that the minister would have no idea? Don't forget this is a former Minister of Housing who purports to have protected tenants. He was unaware of this issue.
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Mr Krehm: Having had the misfortune to have had dealings with Mr Cooke in the past, I am saddened to hear that would be his response. I am not shocked.
The Acting Chair: There's time for additional questions if any member wishes to pursue --
Ms Poole: Could I pursue this avenue?
The Acting Chair: Mr Turnbull, did you have another question?
Mr Turnbull: Yes. Given the fact that this is based upon a supposed market value, do you not see significant skewing, to the extent that if a building has already got high rents -- let's say it went through rent controls prior to the changes that the NDP made and it has a higher income stream. Based upon that higher income stream, today it would have a higher market value; therefore, it would be subject to higher taxes. Is that not correct?
Mr Krehm: It would be, and if there was no correction of the skewing by difference in classes, yes.
Mr Turnbull: Exactly. So the government further penalizes the people who are already paying higher rents.
Mr Krehm: It's worse than that, Mr Turnbull. I can tell you that the supposed market value assessment -- on a 1988 basis, on one of our properties we got a proposed market value of $57 million. I have an appraisal that was done in 1988 on the property; it was worth $43 million at the time. It's completely out of whack. It's got nothing to do with market value, it's some bureaucratic estimation for their own purposes of what a system would be like.
Mr Turnbull: And this by a government that says it wants to protect tenants.
Mr Krehm: Exactly.
The Acting Chair: Further questions from the government caucus? Ms Poole, question?
Ms Poole: The city of Toronto placed a full-page ad in the Toronto Star last week. It stated that as a result of this plan 117,000 landlords will be entitled to ask tenants for a rent increase because of market value. They also make the point in this ad that if Metro had fully equalized taxation rates for all classes of residential property, only 1,200 apartments, instead of 117,000, would get an increase. In other words, if Metro's MVA scheme taxed apartments at the same rate as houses, 99% of 117,000 tax increases for high-rise apartments would vanish. Did you have an opportunity to present to Metro council on this issue?
Mr Krehm: Yes, I did.
Ms Poole: Were you surprised at this last-minute addition? Because right up until the 11th hour there were not going to be tax increases for those home owners or tenants under this MVA plan.
Mr Krehm: I haven't followed what the exact changes are. I don't know. It's very confusing trying to get what the proposed assessments are, because you're given two numbers. Our own properties happen to have been minor decreases, but they're small. They're 1%. The rents will be slightly adjusted. If there were increases in that magnitude, it's not in the realm of the legislation to get to pass any of that on.
Just because I've reviewed it on an annual basis, I don't think our assessments are such that they fall in the extremes. We're somewhere in the middle and I don't think we're affected by it. The whole way this matter has been dealt with -- there is some rationale to revising and reforming the assessment system, but what we have here is a skewed political compromise. The logic it purports to be carrying out doesn't quite work. It's been tampered with because of the politics of the situation to make something that's almost as grotesque as what it's replacing.
Mr Owens: It's unfortunate that this issue has reached the level of partisanship that it has. As it has, let me take an opportunity to continue that thrust.
Ms Poole: We are so pure --
Mr Turnbull: This is from a government that campaigned against MVA.
The Acting Chair: Order.
Mr Owens: Let's take a look at members of the Liberal caucus, like Elinor Caplan, Joe Cordiano, Alvin Curling; the Tory House leader, Ernie Eves; Gerry Phillips, Scarborough-Agincourt; Bill Murdoch, Grey; Bob Runciman; Chris Stockwell; Noble Villeneuve, all Tory caucus members and Liberal caucus members who stood up and voted yesterday to approve second reading of market value assessment. Yet the members for sanctimony and hypocrisy over on the other side sit there and suggest --
The Acting Chair: Order. Mr Owens, this is a time for asking the deputation a question, not making a speech.
Ms Poole: Madam Chair, on a point of order: A very misleading statement was just made, because it didn't refer to the majority of both Liberal and Conservative caucuses that voted against the plan.
The Acting Chair: Ms Poole has the floor and has the opportunity to state what her point of order is. I haven't heard a point of order yet.
Ms Poole: The point of order is that a misleading statement was made which should be corrected for the record --
Mr Owens: I'd suggest you withdraw that comment.
Ms Poole: -- and that a majority of Liberal and Conservative members voted against the plan.
The Acting Chair: Ms Poole, that is not a point of order, and terms such as "misleading," similarly "hypocrisy," and other words are unparliamentary and not appropriate for a committee from either side.
I would suggest that to this point in time this morning the hearings have gone quite well, in a civilized manner, and I would encourage all members of the committee to respect the rules of procedure, both of the committee and of the Legislature.
Thank you very much for appearing before the committee this morning. We appreciate your presentation.
BLOOR-YORKVILLE BUSINESS IMPROVEMENT AREA
The Acting Chair: The next presenter is the Bloor-Yorkville Business Improvement Area. The person making the presentation this morning is Merv McCarthy. Did I pronounce that correctly? Welcome. Please have a seat. Please begin your presentation.
Mr Owens: You've got a lot of nerve --
The Acting Chair: Mr Owens, you're out of order. I would ask that you allow the deputation to make its presentation.
Interjection.
The Acting Chair: Mr Owens, you do not have the floor.
You have 20 minutes for your presentation. Please begin now.
Mr Merv McCarthy: My name is Merv McCarthy and I'm the chairman of the board of management of the Bloor-Yorkville Business Improvement Area. On behalf of the Bloor-Yorkville BIA's 3,000 taxpaying business members, I wish to thank you for this opportunity to address your committee on Bill 94, the Metropolitan Toronto Reassessment Statute Law Amendment Act.
This enabling legislation requested by Metro council is a crucial piece of legislation relative to property taxation. If implemented, it will have a significant detrimental effect on the development of the structure, economy and social makeup of Toronto.
The Bloor-Yorkville BIA emphatically opposes the legislation and the power it gives to the Metro Toronto council to implement poorly thought out revisions to Metro's municipal taxation policy based on a flawed property tax assessment system.
Report 33 from Metro council does not address the real need for reform but rather puts into place a revised set of rules that will increase rather than redress the inequities that have developed over the last 40 years. Furthermore, the implementation of this scheme, in the absence of any major social and economic studies by Metro council on the impact on residential, commercial, arts and non-profit sectors of our community, represents a complete abdication of their duty of responsible government.
One of the most glaring inequities of this legislation is the flawed and erroneous property assessments upon which the new taxes are based. Reports that have surfaced recently indicate that as high as 20% or better of the assessments are significantly in error. This will result in mass appeals which will tie up the assessment review process for years. Clearly, we cannot allow the appeal process to drag out because of the errors of the assessment officials.
Bill 94 is provincial legislation that will impact not only the city of Toronto but all of Ontario. Municipal taxation policy is one of the prime determinants of the structure of urban communities. It must recognize and be supportive of the community vision as expressed in the official plans and bylaws passed by the local councils as well as by Metro. Any change, however seemingly insignificant, must be measured and evaluated against the longer-term development strategies.
The Bloor-Yorkville business community has been hit hard by the recession and many of our long-standing businesses have closed. Furthermore, a number of new development projects in our area, such as the proposed Cineplex development on Bloor, have been put on hold because of the poor economic climate. Bill 94 will further delay these projects, leaving gaping holes in our community. Any further business closures in the Bloor-Yorkville community will take us below the critical mass necessary for a viable and vibrant commercial area.
As one of the key tourist destinations for Toronto, our decline would directly impact the tourist revenue for Ontario. Is it not incumbent on our government to encourage business and tourism for the long-term benefit of Ontario? But your government seems determined to implement policies that will destroy the multilevel commercial, residential and business fabric of our city core.
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This taxation scheme encourages further urban sprawl at a time when other, longer-term initiatives are attempting to increase urban intensification and efficiency. It seems that important government instruments such as municipal taxation should be supporting in every way the efficiency of urban infrastructure.
On behalf of the board of management of the Bloor-Yorkville BIA, we urge you to reject Bill 94 and make an immediate call for provincial examination of real property reform affecting Metro and the greater Toronto area.
The Acting Chair: Thank you very much for your presentation. Ms Swarbrick.
Ms Swarbrick: Mr McCarthy, you state that our government seems determined to implement policies that will destroy the commercial, residential and business fabric of our city cores. Since this is really a Metro proposal we're dealing with, I'd like to know if you said that to the Metro government when you spoke to it.
Mr McCarthy: I didn't speak to the government, but it was addressed to the government.
Ms Swarbrick: Since this is a Metro proposal, why have you not spoken to the government?
Mr McCarthy: It's a Metro proposal, I agree with you, but it is the government of the province that has the right to either accept --
Ms Swarbrick: That's not my question. It's the municipal governments around Ontario that in every other municipality have set their own property taxes, and in this case we believe that Metro shouldn't be treated as immature children any more than the rest of the municipalities. If you're making such a remark about us, I'd like to know why have you not spoken to the appropriate level of government that's developed it, and why don't you accuse it of that rather than us?
Mr McCarthy: This has been addressed and they have been approached on the same level, but now we're approaching the province because it obviously doesn't feel that we are right.
Ms Swarbrick: The one last question I had is, what did the Metro government say in response to you?
Mr McCarthy: Merely that the greater picture is of importance to them, and they, I presume -- they have every right to do so, as I say -- consider the greater picture. However, we, as the Bloor-Yorkville BIA, are concerned with our particular area.
Ms Poole: Mr McCarthy, thank you for your presentation. It becomes obvious that one of the difficulties is that the government does not even understand what it's doing, and this was just evidenced by Ms Swarbrick in her comments.
Right now the city of Toronto, the local municipality, has the right to determine that assessment. What this legislation is doing is taking that right away from the city of Toronto and giving it to regional government. What they also don't seem to comprehend is that it is provincial legislation empowering the regional government to take over what was previously a responsibility of the city of Toronto.
The Acting Chair: Question, Ms Poole?
Ms Poole: Mr McCarthy, you have stated clearly in your brief that Bill 94 is provincial legislation. Do you believe that if the NDP government and every NDP member voted in favour of this legislation yesterday -- except for ones like Zanana Akande, your member, who did not show up to vote at all. Do you believe that (a) this is provincial legislation and (b), if this NDP government implements it, it will be abandoning the city of Toronto?
Mr McCarthy: I do believe this is provincial legislation; otherwise, we would not be appealing to the province.
I'm sorry, I didn't catch the second portion of your question.
Ms Poole: The second portion of the question is, if the NDP government, which has the majority and which unanimously voted to bring it in and which has the responsibility, as government, of implementing this legislation, votes in favour of this plan, will it have abandoned the city of Toronto?
Mr McCarthy: That is my feeling. Of course, that would be my feeling of any government --
Mr Owens: What about your caucus members?
Ms Poole: Don't you understand? You're the government.
The Acting Chair: Ms Poole, would you please let the deputant answer the question?
Mr McCarthy: That would be my feeling of any government that brought in this legislation. This is flawed valuations.
The Acting Chair: Mr Turnbull, do you have a question?
Mr Turnbull: Yes. On that same issue, here we've got a government where all of the inner-city members who got elected to this government, many of whom are ministers now, campaigned in the last election that they were going to fight MVA. This is some fight they're putting up. Every one of them who turned up for the vote voted in favour of it. No wonder people have cynicism about politicians when they say one story at an election and then vote a different way.
The Liberals and the Conservatives voted the way of their conscience yesterday, and there were people who voted both ways, but every single one of the NDP who had campaigned as being against MVA in the last election and had committed themselves to being against it voted with the government -- all except Zanana Akande, who didn't show up to vote. She had been at question period only some 10 minutes before but didn't show up for the vote. How can you expect the carriage of justice if we've got politicians who will say anything to get elected?
Mr McCarthy: I must confess that we had not considered that this act coming to the province for ratification would be turned down, based on our assumption of the way we had been addressed.
Mr Turnbull: What has your member said? Have you talked to Zanana Akande?
Mr McCarthy: We have not spoken to Zanana since the vote, no.
Mr Turnbull: Do you intend to contact her?
Mr McCarthy: Yes, we do.
Mr Turnbull: Good.
The Acting Chair: Thank you very much for your presentation. We appreciate your appearing before the committee today. To you and to the other deputations, if there is any additional information, you can continue to communicate with the committee in writing. Thank you very much.
The Acting Chair: The Dovercourt Park Area Residents Association is scheduled at this time. They're not here. The clerk informs me that there have been some scheduling difficulties because of some of the changes and decisions the committee made on Tuesday. Is it the wish of the committee to adjourn for five minutes to give them an opportunity to show up? Committee stands in recess for five minutes. Please come back here no later than quarter to 12.
The committee recessed at 1138 and resumed at 1146.
DOVERCOURT PARK AREA RESIDENTS ASSOCIATION
The Acting Chair: I call the delegation from the Dovercourt Park Area Residents Association. You have 20 minutes for your presentation. We'd appreciate it if you'd begin by introducing yourself. If you would leave a few minutes at the end for questions from the committee, we'd appreciate that, but the time is yours and you may use it as you wish.
Mr Dale Ritch: My name is Dale Ritch. I represent, as you said, the Dovercourt Park Area Residents Association, which is a ratepayers' group in the west end of the city of Toronto. I've got a couple of submissions here.
The Acting Chair: You may submit them in writing; the clerk will take them from you. They all become part of the public record. For your information and others who may be watching, you can continue to submit in writing to the committee clerk any information which you think would be helpful to the committee.
Mr Ritch: Madam Chairperson, ladies and gentlemen, I'm delighted to be here today to address your committee regarding Metropolitan Toronto's reassessment proposal. As background information on my own involvement with the issue, I've been studying the issue of market value reassessment now for about 15 years as a layperson. I've been involved with the issue for many years and have closely followed the whole unfolding debate over Metro council's market value reassessment proposal, which goes back, as you know, pretty close to 15 years.
It first got my attention about 1981, when there was a furore around something called the windshield reassessment, when the Ministry of Revenue sent out assessors who reassessed 13,000 properties in the city of Toronto. It was called the windshield reassessment because they didn't bother going into the houses or anything like that; they just sat in their cars. They reassessed all the houses that had been renovated and jacked up the assessments based on a cursory examination. That was based on an impact study that Metro council had requested around 1981 for a market value reassessment in Metro based on 1980 market values. There was so much furore around this. The assessors actually went out in the summer of 1981 and investigated every property in Metropolitan Toronto. They did a thorough reassessment, unlike the one that was done last summer. In the summer of 1981 they actually went and looked through all the houses and reassessed every property in Metro, and then we had this flurry of windshield reassessments, which were subsequently thrown out.
The famous Russell Street decision threw out the 13,000 reassessments on the basis that they were done improperly. What the Russell Street decision said is that they could only value the improvements in terms of 1948 market values, not current market values, and that many of these renovations in fact were simple improvements, not renovations, and therefore should not result in a reassessment.
What happened after that is that the Conservative government, which had conducted the reassessment, buried the impact study for a few years, and it was happily buried until 1985 when the Liberal government under David Peterson came into office. At that time, they set up a task force headed, I believe, by the Revenue minister then, Mr Epp, which went around the province and looked at the assessment issue and published a lamentable study called Taxing Matters, by David Goyette, a contract employee who published a nice, big, blue report that suggested that market value reassessment should be brought in in Metro and that if Metro Toronto wouldn't do it, then the province should impose it unilaterally on Metropolitan Toronto. This recommendation was never disavowed by the Peterson government, interestingly enough.
What happened then was that the Peterson government, by reopening the whole issue of the reassessment, opened up the can of worms, and Metro Toronto went back at it again. Subsequently, a debate took place at Metro Toronto in 1987 and Metro Toronto at that stage pushed the whole proposal forward by recommending that there be a reassessment. But what they suggested was that, as 1980 market value at that stage was clearly out of date, there should be a new reassessment based on 1984 market values.
Then a new study was done, but it was based on the previous investigations that took place in the summer of 1981; therefore, Metro basically gave approval to market value reassessment based on 1984 market values. Of course, that dragged on for a while. What Metro wanted was a reassessment based on 1984 market values to take place in 1991. At that stage, the province interceded again. Remo Mancini, the then Liberal Minister of Revenue, said yes, Metro could have a reassessment, but it would not take place until 1993 and it would be based on 1988 market values. Then, of course, the new NDP government took over a couple of years ago, and here we are now today.
The point I'm making here, ladies and gentlemen, is that this whole process of reassessment has in fact been driven from the beginning by the provincial government, as all market value reassessments are. Right now this government is trying to pretend this whole thing is Metro's baby: "We're just bringing in legislation to do it. Metro asked." In fact, the reverse is true. Market value reassessment, this one and all the others, are driven totally by the Ministry of Revenue.
The grand architects of the scheme, Terry Russell and Jack Lettner, the former assistant deputy minister and deputy minister to the Minister of Revenue, are now no longer working for the ministry, but they used to go out and sell market value reassessments to all the municipalities across the province very assiduously. That was their full-time job, basically, to sell market value reassessment to municipalities across Ontario, and that is exactly what is still taking place.
The province goes out and threatens, cajoles, woos local municipalities, regional municipalities, county governments etc to bring in market value reassessments. This is not something the local governments have really any responsibility for. The ministry, of course, cooks the books or does whatever's necessary to get the local municipality to bring it in.
If, for instance, there's a lot of opposition in certain areas, the ministry will give grants; they will actually buy off municipalities so they'll have enough votes at a regional government or a county government to get the thing through. Usually what happens is -- almost inevitably, if you take a look -- these things are always passed through the local councils in December of the year, when nobody is interested, everybody's looking at other things. It's always done very secretly and furtively to defer as much opposition as possible, to tone down the opposition.
This is very much a provincially driven program, and we know it. The residents in the city of Toronto and my area know that this is a provincial responsibility. We're not buying the argument that this is Metro's baby and that you're just passing the legislation to go along with what they want. We know the government of Ontario and the Ministry of Revenue are the driving force behind market value reassessment.
And this, of course, is market value reassessment. It's -- pardon the language -- a bastardized version of it, to be sure. In fact, it's very doubtful exactly what this is. We know what it isn't. It's hard to say what this is, but it's basically stemming from the section 63 reassessment program promoted by the Ministry of Revenue.
My own involvement in this issue goes back many years, as I said earlier. I was an active member of the NDP for many years; no longer am. Starting in the late 1970s in the Dovercourt riding, a whole group of us involving people like Rosario Marchese, the MPP for Fort York, Tony Silipo, the MPP for Dovercourt, and Joe Pantalone, just to name a few, and many others, started up a campaign, a crusade, in the NDP to win the NDP to a position of opposing market value assessment.
The first thing I realized when I got involved in politics in the west end -- I'm talking about Dovercourt. This is an NDP bastion and has been for years, for at least two decades, with ethnic, working class home owners, an NDP bastion.
They've always hated market value assessment. The whole concept of market value assessment has been totally anathema to the ideology and the consciousness of the working class home owners in our community, for obvious reasons. If you improve your property, your taxes go up; just such a simple thing about this plan. Of course, working class home owners have a love of their community and a love of their homes, and I might add that working class home owners have almost all their equity, almost all their capital, almost all their savings invested in their homes. This is another thing you have to realize. It's not like this for the middle class and upper middle class. All the studies put out by the Fair Tax Commission support what I'm saying here.
Property tax is not a wealth tax; it's a regressive tax. The first thing I found out was that working class home owners hated market value assessment and wanted a new system. We launched a crusade in the NDP, starting about 1977, and we fought and we fought. We went to convention after convention at the Metro level and the provincial level.
Finally, in 1984, we won the NDP to our program, which was no further introduction of market value assessment. We had a whole package, the removing of education and spending from property taxes etc.
If you look at that page from the policy book in the NDP manual, there is a whole well-thought-out, well-connected program there for property tax reform, which the NDP is totally turning its back on now, rejecting it and throwing it out. I cannot understand this. The working class home owners in Dovercourt cannot understand this.
How a party which says it represents the working class in this province, and believes in its policies and is different from the other parties in that it sticks to its policies, can totally reverse itself and go back on its promise to the people, and totally reverse its policy, we find unbelievable.
We had a meeting last night of 400 home owners in our area, a very militant, angry meeting. These people are ready to go to war, not just with Metro council but with the province of Ontario, because they know what's happening here. They know this NDP government is getting ready to steamroller this bill through the Legislature without even any kind of decent hearings.
The other thing we know, that a lot of the people in our area know now is how much their taxes are going to be going up, because we went to the trouble of getting the lists and getting leaflets to the door. We've told thousands and thousands of home owners how much their taxes are going up. Most people in the city, in Metro, that are getting increases according to market value don't know that because nobody's bothered to tell them; none of the politicians, that's for sure. They're going to find out next May when those revised tax bills go out with the mill rate hike and the market value hike.
You're going to have insurrection in the streets in the city of Toronto, I'll tell you right now, because these people are not going to pay it. They can't pay it and they're mad. They're not mad just at the fact that they're being hit with an unfair tax; they're mad at the fact that they've been lied to by an NDP government and NDP politicians who have been telling them for 10 years, "We're against market value assessment," and now have made a 180-degree turn and are for it and are ramming it through the Legislature.
We in our community just can't accept this situation, where a party in power can just reverse itself, reverse a promise which has been made to the people and go 180 degrees in the other direction. We fought this battle in the NDP and we won it and now we're wondering why and how this can happen, that in such a short period of time a party has gone from being totally opposed to market value assessment and can reverse itself.
I want to talk a little bit more about getting back to the provincial government and what market value assessment is really about. One thing it is for sure is a tax grab against the inner-city areas, not just the city of Toronto but East York and York, where thousands and thousands of home owners are getting huge increases too.
I might add that market value reassessment is not just happening in Metro; it's happening all over the province now. There have been big battles fought this fall in Kingston, in Ottawa, in Kitchener. In Niagara region, the regional government voted against market value reassessment. In Hamilton-Wentworth, the regional government voted against market value reassessment. Last fall, Peterborough county voted against market value reassessment. Haliburton county voted against market value reassessment.
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What market value reassessment is going to do is not just destroy the city of Toronto, East York and York; it's systematically going to destroy every urban area across the province. This is what you've got to understand. What you're destroying are the urban areas. You're going to turn Ontario into Michigan and New York and Ohio, because what you've done by picking a 1988 base year -- it is your Ministry of Revenue officials who have done this. They've been the brilliant people who have decided that 1988 is going to be the province-wide base year. You'll remember we had a real estate boom in 1987, 1988 and 1989 in which in some areas of my community prices doubled within a year and then they collapsed again. Since then the prices have totally collapsed. So what you've done is to pick a base year that is totally irrational because those values are totally meaningless now.
What happened in the inner city is that the property values skyrocketed between 1986 and 1989 and then they totally collapsed, whereas in other parts of Metro the values went up, yes, and they came down less. So what you have is a peak here. We're being taxed up here and everybody else in the suburbs is being taxed down here. What you're going to get is this tremendous flight of tax dollars and capital from the city to the suburban areas. You're going to destroy the urban areas, the downtown core.
It's not just the city of Toronto. You've got to understand this is the same process that's happening province-wide. Up in Ottawa, the Ministry of Revenue and the regional government, in order to get a market value reassessment through council -- they got it through by one vote. Do you know how they did that? They bought off a couple of small municipalities. They went out and bought them off. They gave them grants, a few million bucks' worth of grants so they could get the votes. There are utterly scandalous things this government is doing. They've been doing it for years and now it's time to call a halt to this kind of nonsense, because we cannot afford to destroy all the urban areas in the province with these nonsensical, so-called market value reassessments.
I want to get a little bit into what we're talking about in market value reassessment. It's hard to say what market value reassessment is. For instance, the briefing papers put out by this government said, "Don't call it a market value assessment." Well, what the hell is it? That's what we want to know.
I've got some statistics here, a study that was done by the city of Toronto looking at the 1984 market values. I'm going to give a couple of copies to the committee. This is really important stuff to look at if you want to understand how this ministry has been pulling the wool over people's eyes for decades in this province.
By the way, market value reassessment is essentially a Conservative program that was introduced and administered by the Conservative government for a couple of decades. You should know that as well. I don't want to let anyone off the hook who bears responsibility for this program.
The city of Toronto did a study based on the 1984 market values that Metro did. They compared those so-called market values to actual sales prices in 1984; that is, actual market values, what a house sold for.
By the way, we should go back a bit here. What is market value assessment? It's a total contradiction, first of all, because a market value is a very scientific, objective thing. It's how much your house sells for -- not four years ago or 10 years ago or 30 years ago -- how much it sells for now. That's what a market value is. That's objective. That's rational. Okay, fine, take the word "assessment." You tack "assessment" on to "market value" and what do you have? An oxymoron, a contradiction. An assessment is an opinion of something concrete. It totally defeats the purpose, okay?
When you renew your mortgage, when you have to get a mortgage, you have to pay 200 bucks and some appraiser comes out and gives you a good idea of what your property is worth. That's not what the Ministry of Revenue does, though. They use what's called a mass appraisal technique. When they went around in 1981, they had to reassess a million properties. They use what's called a mass appraisal technique.
We had our city staff compare these so-called market values with the actual sales prices. I've got another study here that was done by a gentleman in Etobicoke. His name is Harold Bradshaw. He might even be addressing the committee, so you might be getting this from him anyway. I want to give him full credit for it. He went around and got some sales figures in 1988 for Etobicoke and compared them to the so-called market value reassessments the province came up with. What you find is incredible discrepancies. You find all kinds. I'll give you just one ward in the city of Toronto here.
The Acting Chair: There are two minutes remaining in your time, Mr Ritch.
Mr Ritch: I won't go into detail. I'll let you look at this stuff, but I just want to make the point that this is not market value assessment. They don't use sales figures. They don't use sales figures at all. All they use the sales figures for is to check. Their formula is a totally synthetic formula and it bears no relationship at all, necessarily, to what the market value of your house was or is at any time.
If you take a look at the range, we got it out of Woody Thompson, who was a regional assessment commissioner for the city of Toronto and Mississauga a few years ago that in the system the province uses, the margin of error is that 75% of the assessments are within 10% plus or minus. That means that 25% of the assessments are out by more than 10%; 25% of the home owners are victims or beneficiaries of this.
Nobody would accept an income tax system or an excise tax system or a sales tax system in which 25% of the cases are out by more than 10%. Nobody would accept that kind of system. Why does the province of Ontario accept that kind of system, which has such glaring inaccuracies in it?
Since my time is running out, there's just one other point I want to deal with here. I could go on at length about the ridiculousness of this system, and how unfair it is and how vindictive it is and how if you appeal your assessment, the Assessment Review Board has total power. They can roll it back. They can increase it. If you come up with a good comparison next door, they'll tell you at the ARB, "Oh, we've already reassessed that property up," so you can't use it any more. If you bring a lawyer, they bring three lawyers, whatever.
The Assessment Review Board is a kangaroo court from start to finish. It's a joke, and if you go to the OMB it's the same thing, because the ministry does not have to justify its assessments. There are no rules of procedure at the ARB and it does not have to justify how it does its assessments. This thing is a totally dictatorial type of system and it's got to go.
The final point I want to make is this: There is one thing the home owners in the west end cannot stomach, and I speak for the whole community on this, and we're going to go to war with the government. If we have to break the law, we'll do it, and I'll tell you right now, you're going to be responsible for this.
There is this point-of-sale thing on the residential. You took it off commercial, you took it off industrial, but it's still on residential. Why? Why is it that if you sell your house, the full increase goes through automatically, which means you multiply your tax increase by 20 and subtract that from the equity in your house, because any home owner's going to want to know what the taxes are going to be over the next 20 years. That means a home owner in the city of Toronto getting a $1,000 increase is having $20,000 stolen from his pocket if this thing goes through the Legislature with the point-of-sale thing intact. Why is that? How can you do that?
Sending it back to Metro for a bylaw; that is nothing. That is going to do absolutely nothing. They've got the votes there to do that. They'll pass it through in five minutes.
We're demanding of this government, and of this committee, that we want a recommendation, an amendment to the legislation that says, "Take the point of sale off residential." We're demanding that. We're not asking for it, we're demanding it, and if we don't get it, we're going to war against you guys in the province. Not a tax strike against Metro. We're not stupid. We know the city has to collect those moneys and it won't withhold the taxes to Metro. We're going to launch a tax strike against the provincial government, against the PST. That's what we're going to do. That'll be easy to do. We'll just tell all the merchants across the city, "Don't collect PST any more." Okay? That's what we're gonna do.
The Acting Chair: Mr Ritch, thank you very much for your presentation. I know the committee listened intently and we appreciate your coming before us this morning. If there's anything additional that you or your organization would like to share with the committee, you may do so in writing.
The standing committee on social development stands adjourned until 3:30 or immediately following routine proceedings this afternoon.
The committee recessed at 1208
AFTERNOON SITTING
The committee resumed at 1543.
The Chair (Mr Charles Beer): I now call this meeting of the standing committee on social development. We are meeting to consider Bill 94, the market value assessment bill, and our first witness this afternoon is Transport 2000 Ontario. I'd like to invite the representative to come forward to the table, and would you please introduce yourself for Hansard. We have 20 minutes from when you begin. Your submission has been passed out.
Mr Turnbull: Mr Chair, just as a point of information prior to this presentation, could we have identified as to whether we have ministry officials from Revenue in the audience, or do we only have them from Municipal Affairs?
Mr Gordon Mills (Durham East): Municipal Affairs.
Mr Turnbull: There's nobody from Revenue?
Mr Mills: Oh, yes, there is. I'm sorry. The one at the back.
Mr Turnbull: Will we have them in attendance at all times?
Mr Owens: They have been in attendance the whole time.
The Chair: Yes, I'm told that there will be somebody from each ministry.
I did want to just note as well that we have received one document that has been sent in by a Professor Goring, and you will have a copy of that. There were also some documents from this morning that are being circulated.
TRANSPORT 2000 ONTARIO
The Chair: Please go ahead.
Mr John McCullum: Good afternoon. I would like to thank the committee and the members on behalf of Transport 2000 Ontario for this opportunity to present some views and a submission this afternoon.
On the title page of the brief that has been left with you, a second name is listed. The gentleman, Mr Perl, sends his apologies. He was pre-empted from attending.
My name is John McCullum. I'm past president of Transport 2000 Ontario. I live in Burlington, Ontario and, as I like to say, I'm a member of the idle poor so I have time to give to organizations and public interest affairs such as this.
Just a word about Transport 2000 Ontario. Some of you have a copy of the leaflet. It's a volunteer advocacy organization. It's not a lobby group. We don't lobby for any vested interests, as I'm sure you would expect. It's supported by member fees, after-tax money and volunteer effort. It has over 400 members throughout Ontario and it's part of a national federation called Transport 2000 Canada. Its mission is to speak out in favour of socially, environmentally and economically sustainable transport policies and actions. It's not much different from what the round table was attempting to accomplish in the hearings in the various sectors, and we participated in one of those. We test this by seeking disclosure and research of relevant information affecting mission objectives and ensuring that we speak out for equitable treatment of providers and users.
Now, why are we here? Well, we're pretty concerned about inequitable treatment of rail versus road modes of transport by government policy at the federal, the provincial and now acceleration of inequity at the municipal policy level. You might say, "So what?"
Overall, the Canadian rail system handles two thirds of the total tonne/kilometres. Don't confuse this with revenues in the transport business. They only get one third of the revenue, but they handle two thirds of the tonne/kilometres. Of the rail freight traffic, about 30% is road transport-competitive.
The application of uncapped market value assessment to rail rights of way combined with the abrupt withdrawal in 1990 of the railway property tax class factor for rights of way will result in a very large new cost burden on rail operators in Ontario. I think you've heard that before, as I watch television of these hearings. One hears large numbers for Metro: another $40 million a year. I happen to live in the Halton region. Market value assessment is active there and one can deduce another $1 million there from the numbers that have been presented. Applied throughout Ontario, this amounts -- and I say this sincerely and with all the credibility I can command -- to potentially crippling and debilitating discrimination against the rail mode compared to road transport.
Why do we say all this? Comparatively speaking, the national rail systems must conform to much more meticulous and onerous -- read costly -- regulatory requirements, behaviour, reporting, implementation and pricing. This level of attention is not meted out to US railways, with whom they compete, by a very wide difference.
The rail operators pay the same federal diesel fuel tax, four cents a litre, as road transport does, and a range of provincial fuel taxes, in two provinces greater than that paid by road operators. In Ontario the current rates of fuel tax are listed there for you: 14-odd cents for trucks and 4.5 cents for rail per litre. The irony is that the payment of the fuel tax is represented by road transport as a full measurement of entitlement for government spending on road infrastructure construction and maintenance. What can rail expect for its payments? A good question.
The flaw of that position is that the cost of interest payments on debt funding, which is usually 20-year term -- and I think this is awfully important here -- of past years of capital spending on roads is not attributed to the cost of the road system. The poor Treasurer just has to pay that out of his bottom drawer. In Ontario, Transport 2000 calculates that this is more than $1 billion per year. We've done an exhaustive 40-year survey of Ontario public accounts, and by deduction and attribution that is our conclusion. Maybe we're out by $50 million, but it's in the billion-dollar category. That's a cost that is paid on the debt interest for the capital investment in the roads of this province and the capital subsidies to the cities and municipalities. It does not include any debt that might have been incurred for GO Transit, for maintenance of roads or buildings on the road system.
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In the US, the average fuel tax for rail is 9.1 cents a litre lower in the northern US states than in Canada. You may recognize that figure from perhaps data in the CP Rail submission because they're the people I got that from.
In the matters of capital cost allowance -- now we're talking about a federal matter -- for computation of income tax, rail assets in Canada reach 55% write-off in eight years; in the US, rail assets reach 100% write-off in eight years. Clearly capital investment in Canada has greater recovery risk.
Next, in Canada, any railroad can invade, so to speak, another system to a depth of 30 kilometres to serve a shipper and capture his business. That's the interswitching rule of the National Transportation Act. This is one of several provisions intended by government to preserve a competitive environment in a period of expected reduced rail network size and location, all in the belief that Canadian railroads still had a virtual monopoly. Transport on public road has shown otherwise, and I would add, intrusion or service by US lines has also shown otherwise.
Next point: There are nine or so border crossings between Canada and the United States where US railroads operate into Canada on their own tracks or with running rights on the tracks of Canadian railroads that are a matter of historical contract. There are also several border junctions of US and Canadian railroads where traffic can be exchanged between them. And if you consult a map, like this Railway Association of Canada map, you can see all this very clearly. They're spread across the continent in virtually every province. The US railroads concerned are bigger than Canadian and have heavy traffic volumes and therefore they can look on any business they can capture by slipping up into Canada at one end of the continent and capturing traffic and moving it along their lines and then depositing it across the border at the other end of the continent, and it's simply incremental business.
Canadian railroads do not receive the privileges of this invasion of another system described earlier where they operate in the US or connect with the US. The US railroads running on their Canadian tracks could claim equal treatment privileges for their shipments to a final US or Canadian destination if it were to their advantage. With lower US taxation and higher-volume economy, diversion to the US and/or solicitation for diversion to the US could be irresistible.
This, I might say, is also going to affect road transport in that it could include transport for road trailers and containers as well as direct loading of rail cars. CP Rail is particularly vulnerable because of its location close to the border.
So you may say after all that: "So what about MVA? Where does this fit in?" US federal law prohibits municipal land taxation of rail rights of way any differently than similar lands owned by others. I think you heard that from CP Rail, as I watched that on television this morning. US lines do not encounter what this bill envisages for Canadian rail rights of way, all of which is further compounded by the abrupt withdrawal of the railway property tax class factor. This leaves the clear conclusion, then, that these two provisions will add another severe burden to a vital Canadian transportation mode. This could be the straw that breaks the camel's back, so to speak, and trigger massive abandonments and/or line shutdowns. That in turn would mean loss of rail services throughout Ontario and the transfer of some traffic to a road system that is already bleeding the general taxpayer and leave no way of moving some bulk traffic economically, and those who depend on that bulk traffic will suffer. The railroads themselves can give quantitative evidence of the consequences of all this. So you may say, "My goodness, don't blame us for all that."
Unfortunately, this bill comes at a time when the tax issues and road price/cost allocation issues are being argued in other forums. They may be resolved there sooner or later or maybe not at all. If resolved at some time, the market value assessment provisions may seriously neutralize those results. I don't think there's much doubt that it may do it -- it will seriously neutralize them. If not resolved ever in those other forums, there may be no one to pay the tax assessment anyway in these many communities.
Either way, it's counterproductive for rail's ability to pay. That's the real question of taxation fairness: ability to pay. In the worst scenario, Ontario and its people would be the big losers. For example, where is the incentive to build GO rail links to the Toronto airport if it is just going to be there to enlarge the tax burden? Where is the incentive to reconsider branch line abandonments which have GO and freight relief potential if other tax reform is neutralized by MVA aspects?
What's Transport 2000 suggesting? By the same administrative procedures that were used to withdraw the railway property class tax factor in 1990, reinstate it until such time as its effect or equivalent can be enshrined in law. Ensure that rail business properties otherwise are not treated differently from those of other businesses.
I would add that, with the greatest respect to all members of this committee and all members of the Legislature, I'd go so far as to say that no government should feel shame; indeed, it should feel virtuous in withdrawing legislation, even at this late stage, in order to address the issues of equity all of you in this committee have heard, as I have heard them watching reports on Legislature TV.
If all that can't be done, I have only one conclusion for you, and that is, if cross-border shopping troubled merchants and legislators, then they and others will be stricken with shock when cross-border transport, operated by the US, takes over from Canadian workers and operators. That concludes the written comments.
The Chair: We have a few minutes for questions, and given the time, I will take one question from each caucus. I have Ms Poole, Mr Wiseman and Mr Turnbull.
Ms Poole: Thank you very much for your presentation today. Before I ask my question, could I just ask for a matter of clarification? Of your 400 members, are they all affiliated with the rail industry or are you a mixture of trucking and --
Mr McCullum: No, no, they're from all walks of life, Ms Poole. Some of them are teachers. Very, very few of them work for railroads. I think you could count them on the fingers of one hand. They're students, computer operators, academics, idle poor, like me, and teachers.
Ms Poole: That's quite important, because we've had a number of briefs from the railway.
Mr McCullum: No, we're not a lobby group.
Ms Poole: But you are from an umbrella group representing all walks and you can look at this in a fairly unbiased way.
The question I had for you is that because of the impact of Metro not capping the railway rights of way, my assumption is that this is going to make the railways totally uncompetitive, that they will close down part of their operations. They may have to.
Mr McCullum: I would agree with your surmise, and I would further suggest that you probably will see an acceleration of abandonment applications, but what you won't see but what will happen is that the railroads will not be able to have access to capital or equity to sustain their operations. The sustaining investment required to replace the ties, rebuild the ballast, replace the rails, paint the bridges and repair the structures will all start to be deferred and in the course of time the trains will have to slow down. And when they slow down, they'll lose some more of the road competitive business, and when the tracks start to deteriorate, the load limits will go down and they will start to lose the heavy loads and they'll reach a point where they haven't got enough business; they're better off abandoning it than running it. This will apply to a lot of the tracks east of Thunder Bay.
Mr Turnbull is here. Maybe he's heard that before, but that is what will happen. It won't happen tomorrow, it won't happen next year, but it'll happen in the term of this government and the next government. That's my opinion. I mean, God doesn't speak to me on these matters.
Mr Turnbull: Mr McCullum, thank you very much. Obviously, the rail rights of way have some unique aspects to them. The approach that is taken of taking the average of the adjacent land as the value of the rights of way seems, to say the least, imperfect, even if you liked MVA, simply from the point of view that you don't receive any municipal services to rail rights of way, as evidenced by the fact that when there was the derailment in Mississauga, the railways were actually billed for the fire service to the site.
It has been suggested that the impact on GO service will be an increase of $250 per year per passenger. Can you comment on that?
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Mr McCullum: I haven't heard that number, but of the $40 million that I hear about as the impact in, I guess, the greater Toronto area on the railway system -- maybe that's just Metro Toronto. If that's just Metro, then in the greater Toronto area it will be greater. That is the mandate of GO, to serve the greater Toronto area all the way to Burlington and even Hamilton. A good part of the traffic on these lines is the GO trains, so I would say something like maybe a third to a half of the $40 million has got to be on the bill to GO and that's going to show up on the passengers and --
Mr Turnbull: It's a direct pass-through, isn't it?
Mr McCullum: I guess it's a significant increase in each fare, maybe 5% to 10%. I haven't worked out any numbers, but it's there. I don't know what the terms of the contract between the railways and GO consist of, but if you want the service to run, there's going to have to be a bill to be paid.
Mr Turnbull: Based upon that, before the next question, could I just make a motion at this moment that the Minister of Transportation be requested to attend these hearings and comment on what action he is taking to handle the added costs that GO will have to incur as a result of the contractual obligations between CN and CP with GO?
The Chair: Do you want that as a motion or a request that we get that information from the minister?
Mr Turnbull: I would have it as a request. I'm concerned about getting ministers here.
The Chair: Why don't we get that information and we can discuss the motion at a time when we have the time to do that, Mr Turnbull.
Mr Turnbull: Yes, Mr Chairman.
Mr Jim Wiseman (Durham West): I'd like to welcome you to the committee and congratulate you and your organization on the work you've been doing. Whenever I get a chance I read through the information you supply, and I must say that if the general public were to read it they would have a better understanding of the inefficiencies of highways and the kind of cost-effectiveness that rail can supply in terms of meeting the needs of business and individuals.
It's $20 million per mile to build a highway and somewhere in the neighbourhood of $17 million to build bridges. It strikes me that your graphs and the information you have put out clearly indicates that rail is far more efficient. In fact -- and just to give you an opportunity to digress for a moment -- my understanding is that there are now studies being done that show that just-in-time delivery can be handled by the railways if certain conditions are met. Are you aware of that and can you give us a little bit of an overview there?
Mr McCullum: I think I would have trouble responding to your question from direct experience or knowledge of shippers, but if you take into consideration that 30% of the rail traffic is road-competitive, part of that is traffic they haul on the line called the long-distance haul with trailers or containers that can go on to trailers. They carry these on the railroad for the long distance and then they deliver them by truck, so that is part of the, perhaps, just-in-time inventory picture for some shippers and some users.
The most significant example of what I think you're talking about is the service offered by Canadian Pacific in using what they call a bimodal vehicle called roadrailers. These look like truck trailers and they can run behind a tractor on the highway for local delivery, and then they just drop a pair of wheels down to the rail and they hook them up to a locomotive and away they go on a train. If you go out to west Toronto, Campbellville or Cooksville any afternoon after 6 o'clock, you'll see the one going down to Detroit with about 20, 30, 40 of these on behind one little locomotive, two men in the cab. Now, that's productivity.
That largely serves the auto industry and if there's anybody concerned about just-in-time delivery service, it would be the auto industry. I think that comes very close to being an example of what you were looking for with your question.
The Chair: I'm sorry, I'm afraid our time is up. In the interests of ensuring everybody gets the same amount of time, I want to thank you for coming and bringing both your submission as well as the information about the organization.
Mr McCullum: Mr Chairman, for those who care, you all have this letter from Transport 2000 Ontario and there's some useful data in there. I know you're just besieged with things to read, but I suggest that this will be useful to you.
The Chair: Thank you very much.
GLENORCHY RESIDENTS ASSOCIATION
The Chair: I would call the representatives from the Glenorchy Residents Association. While we're waiting for them to come forward, if I can just say to members, if you can bear with me, we don't know how much time we'll have for questions on each side. So if each party could perhaps determine who might go first, it would make it easier for the Chair.
Welcome to the committee. If you would be good enough to introduce the members of your delegation and then please go forward. You have 20 minutes.
Mrs Mary Wahl: Okay. I am Mary Wahl and I'm president of the Glenorchy Residents Association. This is my son, Fritz Wahl, and this is one of the members of our community, Mrs Margaret Lang.
Mr Chairman and members, our association wants you to stop market value assessment now. The new system will be no more fair and equitable than the existing system and will cause a great deal of disruption to residential, commercial and industrial neighbourhoods. It will, in itself, disrupt existing market values. Businesses affected will reduce staff, go out of business and/or go elsewhere, and those suffering increases will suffer decreases in property values.
Our neighbourhood is mainly 1960s-type homes. We have 181 houses. We're located south and west of Edwards Gardens. We're surrounded by Wilket Creek Park and Sunnybrook Park and we're in the very western end of the Don Mills riding.
There have been some very large homes built as well as massive renovations in recent years in our area, but the older homes predominate by far. In general, market value assessment will cause the taxes on the newer homes to fall and the tax on the older homes to go up, and in fact the tax on the old and the new will be so close that no one will want the older homes.
Market value assessment will make real estate taxes within our neighbourhood, never mind the rest of the city, less equitable, and you can be sure we will be out to appeal our taxes en masse if market value assessment is implemented.
I brought along today two copies of the Glenorchy Gleaner. This is our neighbourhood newsletter. I'd like to circulate that with my comments here to show that we're serious. The lead article, of course, is market value assessment.
Market value assessment is based on 1988 values. In our opinion, 1988 was an overheated market and is an unrealistic guide to market values because the excesses did not hit areas uniformly. We know that market value assessment is based more on location and lot size rather than the house and its amenities, as it is now. This puts an onerous burden on our older housing stock, and especially the smaller houses on large lots.
The days of knocking houses down and starting over is over. It's gone. My real estate taxes have increased 44% since 1988. Now you would think market value has already been put in, but if market value assessment is implemented, this goes up to 56% since 1988. Our family income has not increased since 1988. Our present market values in Glenorchy are down at least half of what they were in 1988. We would like the provincial government to wait until the Fair Tax Commission submits its report for analysis and public review before making a decision on market value assessment.
In addition to this, I wanted to say that I'm also a sales representative -- this is a personal thing -- for several wholesalers. I sell to retail stores within about a two-hour radius of Toronto, mostly craft stores, places where people can go and buy leisure-time activities, a wonderful way to pass the time, a healthy way. These stores are extremely vulnerable under market value assessment and we're going to lose something very special in Metro if market value assessment is passed.
My son has a few personal comments.
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Mr Fritz Wahl: If MVA is passed, at Whitlock's Restaurant on Queen Street East in the Beaches, my place of work, the tax will go up so much that it's questionable Whitlock's will stay in business. Myself, the new worker, will be the first to lose my job.
I received this chance to do something productive with my life and which I enjoy. I do not want to lose it. It has taken me a year to find a job, and with MVA I don't know how long it will take to find another one. I don't want to be one of the 3.8 million people living in poverty.
Mrs Margaret Lang: I came here today with a report that took two years to compile about raising taxes. After reading this morning's paper and hearing that Bill 94 has had its second reading, I find that very hard to contend with. I represent people in Toronto and all its environs and I have their thoughts down here, but the way I feel -- how in the world can you legislate a law before all the evidence is in? It's like passing sentence on a criminal before the trial takes place.
I feel today is an exercise in futility and a waste of expenses and time and energy. Since when is a law approved before the evidence of both sides is tabulated and examined for a decision, which is so greatly objected to and is going to put taxpayers in jeopardy? Has the government dispensed with all constitutional rights and privileges for the taxpayer who pays for your salaries and expenses, and with a tax differential? MVA is unfair because it will create a benefit for a few and a great hardship for many. This is not a democratic way of government. The function of all laws should be equal for all.
MVA is based on the 1988 sale price, which was the highest in the province's history. First of all, it should be based on the price people pay and on this year, because business is down and everything's down. Where are we going to get the money? It does not take into consideration that the MVA will penalize the very people who bought their homes some 25 years ago, who have just paid for them and will be taxed the same as the monster homes with nine bathrooms, swimming pools etc. Also, young people just starting out are going to be penalized. Where are they going to get the money? Senior citizens can hardly make it now. They don't get paid vacations. They don't get tax exemptions.
This MVA is unfair legislation and it's been objected to strenuously, economically and financially. If it is forced upon the taxpayers you'll have the biggest tax revolt in history, even bigger than the one in California. We have no other alternative but to sue the government for unfairly legislated tax law in order to extort money, more and more from the overgoverned, overtaxed and underserviced taxpayers. We simply can't afford to and will not be treated as stupid, ignorant people and be deprived of our constitutional rights.
I've taken two years to interview people and had them sign petitions. Very few people are for the tax because they're just getting by now. You're putting people into jeopardy and invoking a hardship on the very people who can't help themselves. We request that this be put in abeyance until it's carefully studied and looked into, not just railroaded on to a taxpaying -- we can't afford it.
I've been a court reporter for a long time and I've sat in on all kinds of things, but I've never yet seen a case where it's concluded before it goes into evidence, never before; it's the first time. I find that a betrayal of the people. Because we pay for everything, you should be accountable to us; not us to you.
The Chair: If I might, and then we'll go to questions, the procedure in the Legislature with all bills is that before a bill goes to committee, it goes through second reading. The purpose of this committee is to hear from the public, and there's then an opportunity for amendments to be made to the legislation. It has to go back to the Legislature for further debate and for third reading. I simply want to indicate, in terms of the various steps that a bill goes through, that there are still periods, including this committee and third reading, where changes can be made to the bill, and that is the point of this hearing.
Mrs Lang: I appreciate that, but the fact is that when a bill is read for the second time and they tell you it's going to be implemented by December 10, that doesn't seem fair play or an honourable thing to do.
The Chair: I appreciate your comments. I just wanted to indicate that the purpose of this committee is to hear from witnesses. There is an opportunity for amendments to be made to this or any other legislation that would be before a committee, and then it goes back to the Legislature for another debate and for another vote.
Mrs Lang: Okay; thank you.
Mr George Mammoliti (Yorkview): Can you tell me the average amount that a ratepayer would pay in taxes in your community?
Mrs Wahl: Do you mean right now or under market value assessment?
Mr Mammoliti: Right now.
Mrs Wahl: I'd say anywhere between probably $9,000 and $11,000.
Mr Mammoliti: That would be about $1,000 a month.
Mr Wiseman: Taxes?
Mrs Lang: Yes.
Mr Wiseman: It is $11,000 a year?
Mrs Wahl: What am I saying? I've got too many zeros. Remove a zero.
Mr Mammoliti: It is $900?
Mrs Wahl: No, $9,000 to $11,000; that's right.
Mr Mammoliti: They're paying $11,000 a year in property taxes?
Mrs Wahl: That's correct.
Mr Wiseman: On what size houses?
Mr Mammoliti: Are you sure about that?
Mrs Wahl: My house is one of the bigger ones in the neighbourhood.
Mr Mammoliti: How big is it?
Mrs Wahl: It's a two-storey and it's a 1960's type. It has five bedrooms and four bathrooms.
Mr Mammoliti: And you're paying $11,000 a year in taxes?
Mrs Wahl: That's right. Our current one is over $10,000, and it'll be almost $12,000 under market value assessment.
Mr Mammoliti: That's a lot of money.
Mrs Wahl: Yes, we think so. You can see what the newsletter says.
Mrs Lang: It's like a mortgage on your house. If you have to pay $1,000 a month on your taxes, you can get a mortgage and pay a lot less a month and you'll get equity in your house.
Mr Mammoliti: So the average in your community is $11,000 a month?
Mrs Lang: The smaller houses are $8,000 and $9,000.
Mrs Wahl: I would say it's about around $9,000, $10,000; something like that.
Mr Mammoliti: And are they average working individuals, or are they well off?
Mrs Wahl: My husband used to work for Canadian Pacific, and he was one of the leading people there, and now he is the general manager of Hydro in Mississauga. We're there, and people like that.
Mr Mammoliti: I must confess that I thought you were paying a lot less, and my line of questioning would have been in and around how my community is being treated unfairly. If you're paying $11,000 a year, I do sympathize with you, and I'll just leave it at that.
Mrs Wahl: Okay. Thank you very much.
Interjections.
The Chair: Order, please. Mr Grandmaître has the floor.
Mr Grandmaître: You're not going to dock me for this kind of --
The Chair: No.
Mr Grandmaître: Thank you, Mr Chair. Have you ever appealed your taxes?
Mrs Wahl: No, but we're very seriously considering it. But market value just makes the whole situation worse.
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Mr Grandmaître: We had a gentleman who appeared before this committee last night. His name was Mr Noble, a property tax consultant. He told us that if MVA goes through, you will not be able to appeal your taxes before 1997 or 1998.
Mrs Wahl: You're kidding.
Mr Grandmaître: If somebody can straighten me out on this, Mr Chair, we were told last night --
Mr Chris Stockwell (Etobicoke West): I'll straighten you out. That's bunk.
Mr Grandmaître: This is what we were told last night, and I think this is unreasonable. I would like --
Mrs Wahl: But then you're locking us into something that's extremely onerous.
Mr Grandmaître: I would like the Ministry of Revenue or somebody from the Ministry of Municipal Affairs to correct me if I'm wrong.
The Chair: Perhaps you could put that as a question.
Mr Grandmaître: If you want to have that privilege, you'll be overtaxed for -- well, I think you're presently overtaxed, but you'll be overtaxed for the next five years. Also, the fact that this committee is sitting while we're debating -- we've just had the second reading on the bill. I want to tell you something. We only had one reading on the bill and this committee was sitting. Just the one reading in the House and we were discussing this bill. I think this is a first as far as Queen's Park is concerned.
I just wanted to pass this on to you. I think you had better check with a tax consultant, because you won't be able to appeal your taxes. I think this is very, very serious business. You're being overtaxed, overcharged, at the present time.
The Chair: I'm afraid we're out of time. I want to thank you very much for coming before the committee. We will make copies of the material and distribute that.
HOTEL ASSOCIATION OF METROPOLITAN TORONTO
The Chair: I would now like to call the Hotel Association of Metropolitan Toronto.
Mr Mammoliti: On a point of information, Mr Chair: Do they have something for the committee?
The Chair: Yes. I said we would distribute the material to the committee, if it could be given to the clerk.
Ms Poole: Just on a point of clarification, Mr Chair: I wouldn't want the witnesses going away without understanding that we haven't confirmed that this indeed is true. In fact, I talked to some tax experts and although I would prefer to wait until we have a reply from the Ministry of Revenue, it appears that, for instance, next year you can appeal your 1988 assessment. It's just that if you're getting an increase, you wouldn't have any financial benefit to it because you're already capped. I think that rather than have the witnesses going away believing that it is fact that they cannot appeal, it is still under discussion.
The Chair: Thank you for that clarification. We have also asked for clarification from the ministry.
Would you please be seated. If you'd be good enough to introduce the members of your delegation, then we have 20 minutes. Welcome to the committee.
Mr Charles Powell: Good afternoon. My name is Charles Powell. I am the currently elected president of the Hotel Association of Metropolitan Toronto. With me is David Hutchinson, a barrister representing the hotel association.
I represent 120 member hotels in the Metropolitan Toronto area. Most of our hotels, as you can imagine, are in the downtown area, with another large concentration of hotels in the airport area, and then the hotels are dispersed somewhat in the east end and all over the city, not just in the city of Toronto but throughout the cities of York, North York, Etobicoke, Scarborough and the city of Toronto.
Tabled before you is a report of October 20, 1992, commissioned by our association. This report originally was prepared to analyse the impact of proposed tax reform with a 20% restriction on permitted reductions to commercial properties. Just prior to printing, however, this was altered to 30%, and I think since to 25%.
The Chair: What was that figure again, please?
Mr Powell: They kept changing the percentage of the amount of --
Mr David Hutchinson: It's now different again. It's 12% in 1993 and 21% --
Mr Powell: It's now 12%. If you have a decrease through MVA reassessment, you're restricted to 12% of it in the first year. The numbers in the report are slightly distorted because that figure changed since the time we first made the report, October 20.
This hurried process makes it difficult to completely understand what is occurring and to apprise our members. The proposed reforms are to have a lifespan to 1998. Many of our members will not be in business to see the end of this interim measure.
It has been known by assessment officials for a long time that hotels in Metropolitan Toronto are badly overassessed and consequently overtaxed. We appreciate that this has not happened by any design by either provincial or municipal governments. Some explanation for this is on page 27 of the report.
In 1991, individual major hotel properties were levied property and business taxes 100%, 200% or even 300% of their net income before any allowance for other fixed charges, such as debt service, capital replacement, insurance and lease payments. Canvassing over 13,000 rooms, this study -- at page 22 -- finds that realty and business taxes in 1991 were on average consuming 80% of income before fixed charges. These taxes in 1991 amounted to $4,428 per room on average, compared to $1,114 per room to the owners before servicing debt and other fixed charges. This is an average figure. Many hotels have rooms taxed in the $7,000 to $8,000 range.
We do not belittle the efforts of any other interest group, but we cannot avoid comparing the taxes on one room with the taxes on a single residential home. We know, of course, that the level of assessment taxation on residential homes throughout Ontario relative to their market values is almost always substantially lower than that on commercial, industrial and multiresidential properties. Many years ago, this province abandoned efforts to assess all properties at market value. In hundreds of municipalities, reassessment has been limited to adjustments within classes.
All we are asking is that we be reassessed and retaxed fairly within the commercial class. This has already occurred in most major cities in Ontario. We are also not so foolish as to suggest that this historical overtaxation is the entire reason for the critical condition of the industry. None the less, previously commissioned reports show that hotels in Metro are the most highly taxed in North America. The competitive position is partially addressed at pages 37 and 38 of our report.
We think it is important to note that surrounding municipalities offering the same high level of services and infrastructure tax hotels at a much lower rate. It is, in the opinion of our association, indisputable that property and business taxes are a major contributing factor in the decline of the hotel industry.
We believe that an equitable solution can be found in a method that would spread the overtaxation across the entire tax base. We suggest that this need not adversely affect any other special interest group. We do not understand why it could not have been done many years ago. The situation is unique. The ministry's impact study and its previous studies demonstrate that hotels have been historically overtaxed by hundreds of millions of dollars.
I'd like to draw your attention to exhibit 1, which is the last-but-one page. Exhibit 1 was prepared for us and it cites an example in the city of Toronto. We could have done one for the city of Etobicoke or the city of Scarborough, but we chose the city of Toronto, and it represents our best understanding of how this legislation will affect hotel properties in the city of Toronto.
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If we go through it, in 1992, 36 hotels in the city of Toronto have a total realty tax levy of $79.3 million. The indicated new total realty tax to equalize with commercial properties generally, and no withholding, is $46 million. In other words, what that says is that if hotels were taxed at the same commercial rate as other commercial property, like office buildings for example, that amount of tax, $79.3 million, would only have been $46.8 million. Hotels are overtaxed, therefore, by $32.5 million. This is in one year in the city of Toronto alone.
Mr Hutchinson: No, Etobicoke and North York as well.
Mr Powell: Oh, it's the whole lot?
Mr Hutchinson: This is just one example. There's limited time.
The Chair: Sorry, when you speak if you could just move to the microphone for Hansard.
Mr Hutchinson: Yes, I'm sorry. The same sample can be drawn by looking at the hotel situation in Etobicoke and North York. We're not picking on the city of Toronto here.
Mr Powell: It's just an example.
Mr Hutchinson: It's just at the time we picked this.
Mr Powell: We've done some calculations on the page which demonstrate what we're talking about. I hope you can see that after market value, in the first year, 1993 for example, the calculation we have come to is that instead of $79.3 million in taxes, we will pay $81.4 million, which is a further increase on an already desperate situation, and then it goes on from there, $84.6 million for 1994, $89.7 million for 1995.
It is recognized that mill rates will vary in the cycle and may be significantly lower or higher in any one year. In other words, we've done a calculation here making an assumption of an 8% increase in the mill rate.
Exhibit 2, which is the last page, is our best understanding of what happens to a model property in the city of Toronto if we were assessed at the regular commercial rate that other commercial property is assessed at. You can see we've picked an example of a hotel assessed at a value of $50 million, and the existing assessment is $4.25 million; in 1993, realty taxes and business taxes with the usual reassessment program to the general commercial base adopted by the ministry.
The next example there shows how much the tax would be on that example property if we were assessed at regular commercial rates; it would be $1.57 million, a considerable amount less.
The bottom half of the page measures the approximate impact of the proposed reforms to the taxes on that individual hotel example. So it would go from $2.8 million in 1992 to $2.9 million in 1993. In 1994 it would reach $3 million in taxes on one hotel.
To continue, Bill 94 has just become available for review. We think we are in a position similar to that of other ratepayers. We have not had time to fully digest all of its implications. We believe, however, that this legislation is a radical departure from historical and proper connection of assessment to taxation. We think that a heavy line is being drawn between the consequences and responsibilities of assessment as opposed to the consequences and responsibilities of taxation.
Are our members better off? We have serious doubts that this departure puts them and many other ratepayers in any better position. Certainly all rights to appeal assessments are protected, but the tax relief on a successful appeal can be diminished to an inconsequential amount. It may be that our members and other ratepayers are being left with ineffective appeal rights.
In the past, in order to be successful in assessment appeals, hotels have been required to prove that they are more overassessed and therefore more overtaxed than other hotels, which themselves are overassessed and overtaxed compared to commercial properties generally. Will they even be permitted to do this if clawbacks render the tax relief inconsequential? What is a reduction due to reassessment? Are we correct that there will be an entirely new forum for appeals to deal with questions such as this, administered by the municipalities actually collecting the taxes? If these important decisions are to be made by the area municipalities' councils, is it fair to insert a provision that a confirmation or alteration of the adjustment of taxes is final and binding with no appeal rights? I think I heard a gentleman sitting over there talking about this. Well, it isn't fair. There's no appeal process.
We respectfully urge this committee to report to the Legislature that more time is required to understand the full significance of Bill 94 before the die cast is set for the next five years.
Thank you. I'm willing to answer questions.
The Chair: Time for two questions. Mr Stockwell and Mr Wiseman.
Mr Stockwell: I agreed with you right till the end there, and I think that would be really, really silly of your association to request that it be delayed, considering the dilemma that you've found yourself in for the past 25 or 30 years.
Mr Powell: I don't understand why you think we would be silly when there's no benefit to us.
Mr Stockwell: There will be, as the process kicks in over five years or so and your reductions get kicked in and reduced.
Mr Powell: We'll still be overtaxed.
Mr Stockwell: You'll always be overtaxed, but I suppose 10% of something is better than 0% of nothing, and I guess that's the dilemma that you're faced with. Let me just go to the question, though. Maybe we can have a discussion about this later, but take my word for it, 10% of something is better than 0% of nothing.
I know of a hotel in Etobicoke that pretty much went out of business because of local tax problems, and I think your particular situation is maybe a macro view of everybody's problem who has been overpaying in a micro sense. They've had no opportunity to appeal their taxes because everyone around them is overassessed and everyone in the hotel industry is overassessed, so you can't very well appeal and point to other hotels because they're all overassessed as well.
Mr Powell: And the appeal process makes us compare ourselves to other hotels.
Mr Stockwell: Exactly, and when you're in my neighbourhood or a neighbourhood in Etobicoke and they say, "Okay, appeal your taxes," but everybody you appeal against on your street is overassessed, it makes the appeal process a flawed process.
My question is, if you suggest that we hold off and not approve this, would you be looking for some plan to be put in place that would seek to give you a full reduction of your taxes?
Mr Powell: What we are really seeking is to get our assessments reduced to the regular commercial level of taxation. Why are hotels singled out for treatment at a different level?
Mr Stockwell: Why are some home owners singled out for a different level? That's the $64,000 question and we can never seem to figure it out and for 42 years we've been battling about it. So you're prepared to give away what you have now with the --
Mr Powell: We don't have anything now. MVA doesn't give us anything.
Mr Stockwell: In the hopes that --
Mr Powell: These numbers explain that we'll actually pay more taxes in 1993 than in 1992, so what are we getting from MVA? We're getting no relief whatsoever and we'll still be going out of business just like the Sutton Place did this week.
Mr Stockwell: So you don't feel that there's any process built up or put in place that will reduce it?
Mr Powell: We are desperate. We're going out of business.
Mr Hutchinson: No, we feel they are losing rights; in fact, they may be losing rights because even in the past, although it was unsatisfactory, a hotel could appeal and compare to another hotel and say, "Relative to that hotel, we are overtaxed," and they could be successful. There weren't major successes, but the percentage reductions in the taxes were significant because the taxes are so high in the first place.
What we've seen now is the possibility that even the traditional right to appeal an assessment and have that assessment reduction be reflected in a tax reduction is being removed.
Mr Stockwell: So you're getting no reduction at all under Bill 94?
Mr Hutchinson: It's minimal. The report that was supposed to accompany this brief summary examined it on the basis of a permitted 30% calculation and it was insignificant. It's not going to help the hotel industry.
Mr Stockwell: So the 30% --
The Chair: I'm afraid I'll have to move on to the next question. I'm sorry.
Mr Powell: Even that was insignificant; now it's down to 12%.
Mr Stockwell: So that's very insignificant --
Mr Powell: Absolutely. The increase in the mill rate will cause an increase in taxes. It will overcome that decrease.
Mr Stockwell: I know.
The Chair: I'm sorry, we'll have to move on to the final question.
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Mr Wiseman: Very quickly, basically you're saying that none of your hotels anywhere in the Metro area is going to have decreases. The second thing -- and this question is more directed to the ministry -- is from the letter that Alan Tonks has written to you, and it says, in the second paragraph, "I have read the salient portions of the report and will be raising your concerns with the province to endeavour to persuade them to amend the Assessment Act to assess hotels differently."
My understanding is that Bill 94 complies with the requests from the Metropolitan council and that none of its requests was left out. So I would ask if the parliamentary assistant could in fact give us some assurance that we have not left anything out of this bill that would pertain to a request from Metro to meet this request.
Mr Mills: As the letter says, Mr Tonks says we "will be" raising your concerns, and it's our understanding that these concerns haven't to date been raised, although they very well may have been raised with the Ministry of Revenue, but not with Municipal Affairs.
The Chair: I'm sorry, I'm afraid our time has run out. I want to thank you both for the presentation you made and the larger document.
Mr Powell: Did everyone get the larger document?
The Chair: Yes, we did.
Mr Powell: I appreciate your interest. Thank you very much.
PARKING AUTHORITY OF TORONTO
The Chair: I'd like now to call the Parking Authority of Toronto. If those representatives would come forward, please.
Ms Poole: Mr Chair, might I ask a question?
The Chair: Yes.
Ms Poole: I just wondered why a representative from the Ministry of Revenue was not at the table. We are dealing with assessment. Obviously it is a piece of legislation which has carriage through the Ministry of Municipal Affairs, but it deals with the Assessment Act, it deals with assessment.
Mr Mills: We have a Ministry of Revenue person here who, on demand or request, would come to the table, but we've only got so much space here. The gentleman is seated at the back of the room.
Mr Wiseman: The parliamentary assistant is here.
Ms Poole: Yesterday, when I asked about whether the Ministry of Revenue had considered whether people had the right to appeal, I didn't receive that answer. So I just thought there was no representative here.
The Chair: Please introduce yourselves and go ahead.
Mr Norris Zucchet: Thank you. My name is Norris Zucchet. I'm the president of the Parking Authority of Toronto. Here with me this day as well is Mr Dan Manczur, the president of CUPE Local 43, which is the union which represents the employees of the Parking Authority of Toronto.
I've handed to the clerk a letter I have addressed to you which effectively outlines our concerns in so far as the Parking Authority of Toronto is concerned. I would draw your attention to the last page, which effectively is a point-form summary of the main points that I will try to present to you and the committee as a whole, explaining the concerns we have at the Parking Authority of Toronto.
First of all, again let me thank you for the opportunity to address this committee. We have for the last number of months been dialoguing with a number of people here at the province, in the various ministries, and also at Metro and the city to plead our case, if you will. Hopefully, today I will be able to do the same. Following my brief remarks, Mr Manczur would like to say a few things representing the employees of the Parking Authority of Toronto.
By way of background, the Parking Authority of Toronto operates approximately 15,000 public, off-street parking spaces in just over 90 locations throughout the city of Toronto. We also have a few locations that are just outside the boundary of the city.
We are financially self-sustaining. We do not use taxpayer money to finance our operations and we compete in the private sector marketplace in so far as parking is concerned.
In 1992, the authority paid $5.4 million in realty taxes and $1.3 million in business taxes, for a total of $6.7 million. We paid this through a payment in lieu of taxes, which is the requirement that we are captured by in the current Assessment Act.
We are very concerned about the overall introduction of MVA at this point in time. It certainly couldn't come at a more inopportune and inappropriate time in so far as our economy and in so far as the parking business as a whole are concerned. I won't dwell on all the arguments that are being made in terms of the fairness and why now and why not now, but I will try to identify one gross inequity which we believe was not contemplated by the plan as it was prepared by Metro and should not be allowed to be proceeded with in terms of the legislation.
Effectively, the problem stems from the fact that the current MVA plan would have all entities that pay grants in lieu of taxes assessed in the full amount, that is, 100% MVA, 100% tax increases and decreases, whatever the case may be, and although it is not specifically stated, we have been advised that the Parking Authority of Toronto would fall into this category. By falling into this category, the Parking Authority of Toronto would not receive the same capping and withholding privileges other commercial parking operators will receive as a result of the implementation of this plan.
Based on these current assessments that we have received to date and based on 1992 mill rates -- that means not next year's mill rates but this year's -- our taxes would increase from $6.7 million to $19.4 million. Quite frankly, we cannot sustain an increase of roughly $13 million a year, when you consider that last year our net profits from parking operations totalled $1.8 million. Literally, this would mean the end of the Parking Authority of Toronto after 40 years of service and providing a service to the motoring public.
The end of the Parking Authority of Toronto means the end of 300 jobs. It would mean the loss of all tax revenues, not just the business and property taxes but also the glorious commercial concentration tax which we pay to the province on an annual basis, which last year totalled some $4.4 million. Also, if we have to close down our operation, we would effectively be introducing 15,000 free parking spaces into the marketplace, something which we feel would have very dramatic and negative effects on transit as well as the whole parking marketplace.
From our perspective, the MVA plan must be changed to provide municipal parking authorities and the Parking Authority of Toronto with the same capping and withholding privileges other commercial parking operators will receive. I'm here today to recommend to this committee that it recommend to the Legislature that the minister use the powers of subsection 241.14(6) of the legislation to introduce by regulation the same protection measures to the authority and other municipal parking operations that other commercial enterprises would have. This would remove any uncertainty hanging over our employees and the future of the parking authority and would certainly rectify an inequity that was never meant to be, as far as we understand in our discussions with a variety of people who were responsible for drafting the plan.
We have also in the past suggested as an alternative to that recommendation that the legislation have a specific definition in the legislation to define municipal parking authorities as commercial enterprises and thereby protected by the commercial capping provisions and withholding provisions of the plan. That is what we're after. We're not after a free ride. As one of the previous members suggested, we're willing to take the 10% and 5%, but we're not willing to take a 100% hit. I think Mr Manczur would like to say a few words.
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Mr Danny Manczur: Thank you for the opportunity. Not too often do you see union and management get together on an issue and work together. On this issue we are together.
I just took office as president of Local 43, and one of the first phone calls I received was from a parking authority member saying, "What's happening to my job?" I said: "Hold on. What's happened to your job?" He said, "Am I going to have a job in the future?"
When we heard what's happening, Norris contacted us and we decided to approach you together. We are in full support of Mr Zucchet's presentation. We're in full support of management's presentation.
We're afraid that by increasing the tax on the parking authority, it's going to cost us 300 jobs. People are very uncertain, very anxious to hear. We're talking to them. We say: "Don't worry, we're going to be talking to some people. We're going to be talking to the committees." They say, "Don't tell me not to worry, because we know what's happening out there."
To us that would be a disaster. To 300 people that would be a great disaster, so we'd really appreciate it if you look very seriously at this concern and address this problem and use section 241 to include this as a commercial establishment.
The Chair: Thank you very much. We'll move to questions then. Ms Poole, Mr Mammoliti and Miss Marland.
Ms Poole: I was just looking at the section of the act where you are precluded from having the cap, and I believe it's 241.14.
Mr Manczur: That's correct.
Ms Poole: You were included as an "excluded unit," along with vacant land, railway rights of way, pipelines -- which I don't think there is a dramatic impact on because they're in their separate category -- "or a unit in respect of which an area of municipality is eligible to receive a payment in lieu." Are there bodies other than the parking authorities which have been hit by this "payment in lieu" category?
Mr Zucchet: Yes. As I understand it, obviously people like the Toronto Transit Commission also make payments in lieu; Ontario Hydro and a few others, crown corporations and organizations of that sort.
I'd have to suggest to you though, with respect, that we are quite unique in that we are in a competitive marketplace situation. These other organizations tend to have monopolies or are functioning in a very different economic environment than the authority.
All legislation that has dealt with the parking authorities always attempted to have us on the same level playing field as other private sector entities because we are in a competitive environment. That, I think, is what makes us unique and that's why, when we get lumped in with these other categories of uses, I don't think it's quite fair.
Ms Poole: It certainly doesn't seem to make much sense.
Mr Zucchet: No.
Ms Poole: If it comes about that the government refuses to amend that particular section and your continuation under this section is ensured, there would be no alternative for you but to close down those parking lots.
Mr Zucchet: Well, that would be the ultimate alternative. There is a provision in the legislation which allows Metro to pass bylaws that might categorize us differently, but I have to say to you that this raises a lot of uncertainty. It doesn't give us any concrete assurances as to what may occur over the next five years.
Quite frankly, it doesn't make us very comfortable having to, shall we say, await another full-scale debate at Metro to have this possibility occur. As we understand it, it was never intended that we be put into this category with these other agencies. "It was an oversight; it was an error." Everybody's quite apologetic, but to this point no one has taken an initiative to rectify this gross inequity.
The Chair: Thank you. Mr Mammoliti.
Mr Grandmaître: No supplementary, Mr Chairman?
The Chair: I'm sorry. The Chair apologizes, but if we're to stick to our schedule I've got to keep one question per caucus.
Mr Mammoliti: I'm going to have to disagree with you in terms of nobody dealing with the issue. We've left a provision in the bill that would allow Metro to do just this.
Ms Poole: They're going to give up $13 million a year.
Mr Mammoliti: Mr Chair, she consistently does this every time I speak.
The Chair: You have the floor, Mr Mammoliti, please.
Mr Mammoliti: This clause is within the bill and I guess my question to you is, understanding that a category should be set up and understanding that it's Metro's responsibility to do that under a particular bylaw and understanding that the province's hands are tied, because realistically this is a Metro proposal, Metro has asked us to implement this, are you going to go back to Metro and are you going to say: "Look, the legislation is open. You should be doing something like this"?
Mr Zucchet: We've already been to Metro and we've had discussions with Chairman Tonks and Mr Richmond, the chief administrative officer. We get a lot of assurances, but I have to say to you with due respect, sir, that jeopardizing a firm of 300 employees and gross revenue of some $30 million, and an organization that is self-sustaining and does not use taxpayer money to sustain itself, I think, is unfair.
Mr Mammoliti: Are you aware of the precedents this would set if the province were to put its hands in it?
Mr Zucchet: With due respect again, sir, it has made certain comments with respect to the resale of housing. I would suggest to you that we are not asking for any particular breaks. We're prepared to pay the taxes. We are asking for a definition, a clarification that would put us in the same competitive category as all the other private-sector parking operators throughout Metro would be in.
Mr Mammoliti: You're asking us to make an amendment to Metro's proposal, and that alone would create a precedent that would be very disturbing to all the councillors as well as Metro. I don't think they'd want their province to do that. We haven't done it in the past with any other municipality. Why would we do it with Metro?
Mr Mills: Could I just have a word, Mr Chair?
The Chair: I'm sorry. We'll have to move on to Mrs Marland if we're to keep to the times we agreed to. I said we'll take one person from each caucus. If at the end you wish to make a clarification, we can do that.
Mrs Margaret Marland (Mississauga South): I simply would say to Mr Mammoliti, no, you haven't done it before with any municipality, but the interesting thing is that if we're lucky, your government won't get the opportunity again either.
One of the things I wanted to ask the deputation was, you mentioned that this year you have paid $4.4 million in the commercial concentration tax to the province.
Mr Zucchet: That's correct.
Mrs Marland: That's just in 1992?
Mr Zucchet: That's correct.
Mrs Marland: Since the Liberal government introduced the commercial concentration tax, which I think was in 1989 --
Mr Zucchet: In 1990.
Mrs Marland: In 1990 was it? Prior to its fall from power, I guess.
Mr Grandmaître: Four months and three days.
Mrs Marland: Thank you. Four months and three days prior to your fall from the throne.
You must have experienced a tremendous reduction in business as an impact of the fact that you had no choice but to raise the parking rates in order to pay the tax and to operate, so I'm wondering -- last night we had CP Rail here trying to explain to these socialist government members that there's a tremendous loss of jobs as part of this issue with market value assessment. I hear that you're saying the same thing. If they don't care about some of the issues, you're pleading for the job aspect as well.
Does it also not become a broader question in terms of jobs if people who need their cars in order to do their jobs end up either not being able to afford the parking rates because that's where you have to hike them to, to at least to balance out at the end of the year, or secondly, there won't be the parking spaces available for them, so it would have a direct impact on their ability to do their jobs where they need vehicular transit and not public transit?
Mr Zucchet: Ultimately, I think if we go out of business -- first of all, we can't increase the rates to collect an additional $13 million a year. It's just an impossibility, and that's without any increases in 1993 from general taxes. If we do close down, the scenario would be that the parking spaces could come on market as free spaces which would send a lot of other commercial enterprises out of business and do a lot of damage to the whole transit usage scenario in Metropolitan Toronto, as far as I'm concerned.
Mrs Marland: Thank you, Mr Chairman.
The Chair: Thank you. The parliamentary assistant has a point of clarification.
Mr Mills: I'd just like to make a point clear, that this socialist government, to use Mrs Marland's phrase, heard your concerns. We heard them. We made the changes in the legislation that will enable Metro to make it easy for you, will allow it to create a special category for this purpose to handle your particular problems and to allow a cap of 25%, rather than hit you with 100%. We have heard you and made that in the legislation. I just want to make that clear.
The Chair: Do you want to comment on that?
Mr Grandmaître: Not "shall," "may."
Mr Zucchet: As I said earlier, there is a clause in the legislation that would permit Metro to do this. There is no guarantee that it will occur, sir.
Mr Mills: But I just want to say, sir, that this government heard your concerns and we changed the legislation to enable Metro to meet your concerns.
Interjections.
The Chair: I think the point has been made. Order, please.
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Ms Poole: On a point of order, Mr Chair: The parliamentary assistant just raised a point of clarification. I think another point of clarification is that $13 million is the amount that Metro would have to forgo in order to pass this special bylaw, and it simply is not going to do it. The only relief they can get is through provincial avenues, and you've copped out.
Interjections.
The Chair: Order, please. I think the points have been expressed. I want to thank you for coming before the committee and making your views known.
Mr Manczur: Mr Chairman, can I make just one comment quickly?
The Chair: Briefly, please.
Mr Manczur: To Mr Mammoliti, I am a public employee. I've worked for Metro for 22 years. I worked in solid waste management, which was one of the most profitable gold mines in the country, I would say. Right now Metro is wiping it out. That's why we want to stop this at this level, before it goes to Metro.
The Chair: Thank you very much. We appreciate your coming before the committee.
PARKING AUTHORITY OF NORTH YORK
The Chair: I now call upon the Parking Authority of North York, if you would be good enough to come forward and introduce yourselves.
Mr Mammoliti: Mr Chair, if I may, while we are setting up, some clarification?
The Chair: Yes.
Mr Mammoliti: Earlier I'd asked a group of people to explain the size of their homes and the value of their homes, and the answers that were given to me weren't really satisfactory. I did some checking and that home is worth $1.3 million. Earlier I said I was very sympathetic to the $11,000 that they're paying in tax. I want to remove that comment I made.
The Chair: Gentlemen, from the Parking Authority of North York, perhaps you would be good enough to introduce yourselves and then please begin your presentation.
Mr Robert Yuill: Mr Chairman, and members of the committee, my name is Robert Yuill. I'm the chairman of the Parking Authority of North York and I have with me Mr Nick Spensieri, the director of the Parking Authority of North York.
The Chair: Welcome to the committee, gentlemen. Please go ahead.
Mr Yuill: We appreciate the opportunity. First of all, we apologize for not bringing down sufficient briefs to cover the committee. We were unaware that it would be this size, and we would gladly send additional ones.
The Chair: We are having copies made now.
Mr Yuill: We are basically in the same position as the Parking Authority of Toronto. Our position here is not to support market value assessment or criticize it. We're here to make one particular position and that has to do with the effect it will have on the parking authorities.
There are three parking authorities in Metropolitan Toronto. There is the Toronto parking authority, the York city parking authority and we, the Parking Authority of North York. We are relatively new and we have, in our opinion and in the opinion of the council, done a fairly good job in our work here. We are charged with the responsibility of providing parking at reasonable rates in the city of North York and to be no burden to the taxpayers of the city of North York. That is quite clear.
The agreement is that the city of North York will receive 50% of any surplus we have. This particular program that is coming, market value assessment, under its present regulations, would eliminate more than all of that. It would take $168,000. I think we made a little over $150,000.
In effect, if this goes in the way it is, the Parking Authority of North York is bankrupt. I should hope that the provincial government is not in a position to put a body like us into receivership. We have no purpose in operating further if we cannot operate in the black.
This proposal, I guess you would call it, under section 241.14(1) says that we will not be treated the same as our competitors. When you introduced the commercial concentration tax, you said we shall be treated the same and you charged us. You took most of our profit then. You entered into the real estate business, which I was very critical of. However, that's history.
You said at that time that we are commercial properties. Now, when this bill comes in, you're saying we are not commercial properties and we shall be treated differently. All we ask is a very simple amendment. Treat us exactly the same as you do the other commercial parking businesses. You did it when you put in the commercial concentration tax and we see no reason for you not to make this very minor amendment.
As has been pointed out earlier, the Metropolitan council can do this. Perhaps when they brought in this recommendation, it was an oversight. The authorities we have spoken to indicate it was an oversight on their part. They didn't realize how it would affect the parking authorities. It is now, in our opinion, your responsibility to do this minor amendment.
We operate 9,100 off-street parking spaces. If this goes through and we have to pay the full MVA tax increase, there is no question but that these parking facilities will cease to exist as far as the operation of the city of North York goes. What will happen, we don't know. We can see that the city of Toronto and the city of York will do the same thing. There will be chaos as far as parking is concerned. I believe a total of about 30,000 parking spaces will suddenly explode and disappear, or will become unavailable. What will happen, nobody knows. The way it's working now, it's working fine. It's something we're proud of, it's something Metro's proud of and I think it's something you should be proud of.
We see no reason for you to object to a very small, minor amendment, and that is to treat us the same as you're treating all the commercial operators of parking authorities. We support the recommendation the Toronto parking authority has made.
The Chair: We have a number of questions. I have Mr Grandmaitre, Mr Mills and Mr Turnbull.
Mr Grandmaître: In North York, do you pay a payment in lieu? Is that how it works with you?
Mr Yuill: I think we're playing with words. We got into this -- we pay a grant in lieu, which is a payment in lieu. Yes, that is the problem. We pay the grant. This came to that category and what happened at Metro when it was bringing this recommendation in is that it didn't realize that. When we pointed it out, they said they had made a mistake. To my knowledge, they will support you if you make this amendment.
Mr Grandmaître: You'll have to talk to the government because it's not too interested in moving on it.
Mr Yuill: To us, you're all the government, sir.
Mr Grandmaître: Let's go back to the grant, or the payment in lieu. Does it represent 100% of your tax bill? Because usually a grant in lieu, or a payment in lieu, is not full taxation.
Mr Yuill: Yes. Because we are an authority, we, like other enterprises in North York, don't pay taxes; they pay a grant in lieu of taxes, and ours is 100%.
Mr Grandmaître: I realize this, but what percentage of the total tax bill does your payment in lieu represent? Is it 80%, 85%, 90%?
Mr Yuill: It is 100%.
Mr Grandmaître: It's 100%? Well, if it is 100%, how come it's called a grant in lieu or a payment in lieu?
Mr Yuill: Well, sir, that has to do with the bureaucracy of North York and the technicalities of this, and I wouldn't comment on it.
Mr Grandmaître: It's not only in North York.
Mr Yuill: That's the way they do business.
Mr Grandmaître: It's the Toronto parking authority as well. It's a payment in lieu. This is what I can't understand. If it's a payment in lieu, usually it doesn't represent 100% of your total tax bill, but in your case it does. So you shouldn't even be in that category, if you're paying 100% of your taxes. You shouldn't be in that category.
Mr Yuill: We would like not to be, yes.
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Mr Mills: I would like to thank you for coming with this presentation. I have just a couple of things to ask you.
Are you aware that the Minister of Municipal Affairs indicated your problem to Chairman Tonks, and that Mr Tonks indicated to the minister that he recognized you had some concerns, and, having had that exchange of words allowed the government to put in the clauses I described to the previous parking people?
So my final question is, when this bill is passed, will you then apply to Metro, having taken into consideration that the minister raised it with Mr Tonks, they're all concerned about it and this is really why this is in the bill?
Mr Yuill: Yes, we have discussed this with Mr Tonks and his staff. The reason they don't want it to come back there is that they don't want a full-scale debate opening up in the Metro council like it was before, where they had chaos. They don't want that. They would prefer to have it amended so that it comes back and it is done and it's not going to be debated as it was before. Because if they change it for us, there will be all sorts of delegations, as I understand it, from CN, Toronto Hydro, Ontario Hydro and other bodies demanding the same things.
The only difference here, as was pointed out before, is that we are in competition with commercial operations. We cannot raise our rates to withstand this impact. Ontario Hydro etc can, but we can't. Therefore, we're out of business.
The point I'm getting at is that it was my understanding when we left that Metro would prefer that this amendment be made by the government of Ontario in approving this. Therefore, when it gets back there, there won't be any debate.
The Chair: Mr Turnbull, last question.
Mr Turnbull: Welcome Bob, it's good to see you. One of the great problems we've had is that the government would like to perpetrate the myth that this is not MVA. It's obviously MVA to you. What else would it be?
Mr Yuill: I'm not quite clear. It is MVA --
Mr Turnbull: Well, they're telling us it's not MVA. They campaigned on a platform in the last election that they were against MVA, and now they're trying to suggest that the reason they're voting for this is because it isn't MVA.
Mr Yuill: I wouldn't comment on that, sir. They're the power in control and they have the authority to make this change. That's why I'm appealing to the government, which includes all parties, as far as I'm concerned, to make this small amendment. It will affect and bankrupt the parking authorities of Metropolitan Toronto.
Mr Turnbull: You'll appreciate that this all stems from the final deal cooked up in the last two hours of debate at Metro. All of the deputations that were made at North York -- I was there when they were made -- and in fact in the other municipalities were all talking about MVA in its original format as proposed, not this format cooked up in the last two hours. Would it not be reasonable to open it up for discussion again and get the municipalities to understand and vote on this issue again?
Mr Yuill: As the chairman of the parking authority, I will stay out of that completely, because we are a creature of the city of North York, and the city of North York has taken a position and it would be unwise of me to go contrary to it.
Mr Turnbull: But you took a position on the original market value and a suggestion that was put forward in North York. It was not the deal that was voted on at Metro.
Mr Yuill: That is correct. As I understand it, the deal was made by certain people the last day. It was a quick deal, a quick fix, and it presumably got sufficient votes to get through. I don't like that way of doing business. Obviously, what happened was that there was one small oversight, and this was it. I'm sure if they were aware of it at that time they would have excluded us.
Mr Turnbull: The railways feel there was more than one small oversight and so does Hydro.
Mr Yuill: The railways are different, sir. They are not in competition, as we are, with the lot next door, which you're giving --
Mr Turnbull: The railways are in competition with road transport.
The Chair: I'm sorry, our time is up. We want to thank you for coming before the committee. We have copies that have been circulated to all of us.
Mr Yuill: Thank you. I look forward to your positive support.
The Chair: Optimism is always a good force.
TORONTO AUTOMOBILE DEALERS' ASSOCIATION
The Chair: I would now like to call the Toronto Automobile Dealers' Association to come forward. The Chair sees someone who has sat in this room before, so welcome back to these surroundings. Would you be good enough to introduce yourself and your colleague, please.
Mr Bill Davis: Thank you, Mr Chairman. It's good to be back. I'm Bill Davis. I'm the director of government relations for the Toronto Automobile Dealers' Association. Accompanying me this afternoon is Mr John Philips, president of Mills and Hadwin, a dealership in Toronto.
Our association represents 350 new-car franchise dealers located in the greater Toronto area. Our members employ some 21,000 individuals who are highly trained professionals and technicians in the automobile industry.
This afternoon I'm here to share with you the concern of our 130 members and their employees who work in dealerships located in Metropolitan Toronto and to illustrate the impact the proposed reassessment plan using 1988 market values will have on their business and employment opportunities.
The economic climate of the 1990s, fueled by the recession, has dramatically impacted the automobile industry. Compared to the same period a year ago, car sales are down 12.5%, truck sales are down 8%. In the Toronto region, declining sales and the slow recovery of the economy over the past year and a half has resulted in the termination of over 800 employees from our dealerships.
The fragility of the automobile industry, which is one of the major components in the economic engine of Ontario, was recognized in last year's provincial budget when the honourable Floyd Laughren, Treasurer of Ontario, did not incorporate into his budget the proposal of the Fair Tax Commission to increase and to extend to vans and light trucks the gas guzzler tax. The provincial government recognized such a measure would drive the automobile market deeper into the recession and exacerbate the unemployment situation.
Our association does not oppose some form of market value reassessment, providing that proposal is fair and equitable to all parties. However, it is our opinion that the revised reassessment proposal before you today, the third one Metro has created -- and this one in the wee dark hours of the night after a marathon debate -- is neither fair nor equitable.
Forty-four dealerships in the Toronto area will experience the unfairness of this system, because Metro will claw back 90% of the tax reductions they should receive to subsidize and fund capped tax increases in other sectors. The 10% solution for reassessment simply delays the inevitable consequences of higher taxes for the majority of our members for three years. Of the 110 dealerships whose realty taxes we reviewed, 66 dealerships would face significant tax increases under full market value assessment as originally proposed by Metro. Under the 10% solution now before you, 44 dealerships will have their tax increase capped by the 25% rule of 1995.
I would like to provide for you some examples of the impact of full market value assessment in some of the dealerships across Metro. Addison on Bay would have experienced a 325% tax increase, Downtown Acura a 396% increase in realty tax, Downtown Jeep Eagle a 208% increase, Centre Honda a 340% increase, Sisley Motors in North York a 132% increase, East Court Lincoln Mercury in Scarborough a 225% increase, and Islington Chrysler in Etobicoke 75%. And that does not incorporate the business tax increases, which we were not able to obtain at that time. Twelve dealerships would experience tax increases of over $50,000 and six dealerships would see taxes increase over $100,000 per year.
Yet members of the committee would point out that Metro's proposal is not full market assessment but a gentle tax increase of only 10% for 1993, and Metro councillors would quickly indicate that they have the interests of small business people at heart because, through their wise counsel, they agreed to cap the tax increase at 25% by 1995.
But the reality is that the province, Metro and the cities will significantly increase taxes to meet their 1993 budgets. It is possible and very likely, therefore, that small businesses will face an additional 7% to 10% increase, for total tax increases in 1993 of 17% to 20%.
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No small business, no dealership, can absorb tax increases of this magnitude in the economic climate of today. If in three years the economy has not recovered and business faces a 25% tax increase, it doesn't take a rocket scientist to determine that a large number of small businesses will no longer exist in the Metro area.
Let me attempt to illustrate the dynamics of a tax increase in a more succinct manner. A dealership normally realizes a return of 1% profit on sales. That means that for every dollar of profit they must generate $100 worth of sales. What does that mean to our members facing a 10% increase in 1993 and a 25% by 1995?
Using an average price of $15,000 for a new vehicle, the Mills and Hadwin dealership, for example, would in the 10% scenario see a tax increase of $5,655, which translates into $565,000 of new revenue that they must generate, or an additional sale of 36 vehicles.
If Mills and Hadwin are still operating in 1995, a 25% increase would mean a tax increase of some $14,000; thus, that dealership would have to generate $1.4 million in new revenue, or sell 181 new vehicles.
It is apparent that in the present depressed economy, it will be very difficult to achieve the additional revenues required to meet the tax increase.
If the provincial government approves Bill 94, the reassessment will result in some dealerships being forced out of business, others will significantly reduce their staff, and the cost to purchase and repair vehicles will increase. These factors will fuel the recession and increase an already bleak unemployment profile for Metro, and stall any economic recovery.
Our association respectively suggests, in light of the following factors:
-- The present depressed economic climate that exists in Metro and Ontario.
-- The failure of Metro to undertake an economic impact study to determine the effect that a 10% solution and a cap of 25% would have on the commercial and industrial sectors of Metro.
-- That the Fair Tax Commission will release in the very near future its report, which will address the issue and give recommendations for implementing any reassessment plan, which I've been led to believe indicates that Metro fails to meet 6 of the 12 criteria it outlines.
-- That the Honourable David Cook, Minister of Municipal Affairs, and the Honourable Frances Lankin, Minister of Health, have indicated their opposition to full market value assessment.
That this committee therefore do the courageous thing and recommend to the Legislature that the following plan of action be implemented:
-- Delay the implementation of the reassessment plan as proposed by Metro council.
-- Request that Metro council establish a committee comprised of representatives from ratepayer groups, the business and industrial community and Metro officials.
That committee's mandate would include: review the present reassessment proposal; review and comment on the effectiveness of other reassessment models that do exist; consider the recommendation of the Fair Tax Commission on reassessment; undertake an economic impact study of any reassessment model approved by the committee; and within a year present to Metro council a reassessment proposal for approval that is fair and equitable for all the constituents of Metro.
Our association thanks you for the opportunity to share our concerns with respect to the reassessment proposal of Metro Toronto, and I would be prepared to answer any questions at this time.
The Chair: Thank you very much for the presentation. We'll begin with Ms Poole.
Ms Poole: Thank you very much for your presentation today. I particularly appreciated it because you've given a very constructive proposal for seeking an alternative solution.
Mr Stockwell, who has been on the committee at times, has mentioned that the problem, in his view, with not passing this proposal is that all tax reform will stall. He said they've been waiting for 42 years. What you have proposed is that people not wait another 42 years for tax reform but that within a year Metro council would come up with this proposal. Did you at any time make this type of proposal to Metro council, that it has, in so far as is possible in this very, very emotional issue, a group of people who are willing to work together and find a solution?
Mr Davis: Yes, we made that recommendation to Metro council when we addressed them in letters we had written to all the councillors. This is really a political issue in the respect that it has to do with re-election. It also has to do with bringing about some kind of concept to look at a reform of the tax structures in Metro and I would suggest to Mr Stockwell that he's not a Metro councillor any more, that he's a member of the provincial Legislature and that indeed this provides that opportunity.
It is important that you do impact studies so you have an understanding of how it affects the business community of the whole Metro area. In the kind of economic climate we're in now, I submit to you that you will see businesses go under. They will stop operating and you're going to increase unemployment. I just think that it flies in the face of reality to enter into this kind of program at this time when you can step back. Even the NDP government itself is bringing forth the Fair Tax Commission report on reforms in taxation. Let's take a look at all that stuff together and come up with a solution that's equitable and fair for everybody.
Ms Poole: You mentioned the impact on business and obviously you're referring to the 41,000 businesses throughout Metro that will receive the full 25% increase due to market value in addition to any normal, regular increases that the municipality and the school boards may levy. Were you aware that for any new business -- and we're not talking about a business being sold to another business, but about newly created business -- their business taxes will be based on full market value, and that if a business moves from one set of premises to another, again they are not protected by the cap as far as the business taxes are concerned, but they will be based on full market value? That is something that came to our attention recently and I think this is going to add to the devastation of the business community.
Mr Davis: No, we weren't aware of that. It will just simply destroy the entrepreneurial spirit which has built this province to the economic giant it is. That's what will happen.
Ms Poole: The question to be asked is if there will be any new business opened up in Toronto over the next five years if this plan goes through.
Mr Davis: I wouldn't open one.
The Chair: If I might, Mr Mammoliti has a question. It appears that we are going to start getting into bells shortly.
Mr Davis: That's all right. I know what bells are all about, Charles.
Mr Turnbull: Excuse me, Mr Chair --
The Chair: Yes, I'm sorry, I didn't have you down. If I may have the attention of the committee members, we are going to be getting into a series of bells shortly. I want to try to make sure that the two groups that are still here can present before that happens. I will allow questions if I could ask both Mr Mammoliti and Mr Turnbull to be brief because I know one group was here yesterday morning at nine o'clock and I want to make sure that they are heard as well. Mr Mammoliti, your first and only brief question.
Mr Mammoliti: Mr Chair, very quickly, we've sat in here for three days now and frankly I'm getting a little bit sick of hearing the negative aspects to this proposal. We haven't really talked that much about the positive aspects to this proposal.
You mentioned the impact on business. I know first hand that thousands of businesses within Metro are going to benefit from this plan -- eg, Adidas, a shoe manufacturer that happens to be in my riding and is going to get a $17,000 decrease in the first year and then another 10% on top of that in the second year. Do you not think that's a positive sign for the businesses that have been waiting for this decrease? Don't you think they're going to take advantage of this decrease? Don't you think that would mean some jobs in some of these areas? This is a positive side to all of this and it's part of the 57% of the people in Metro who are going to benefit from this.
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Mr Davis: Mr Mammoliti, I benefit. I benefit by $50 or $500, depending on whether it is full market or a 10% cap. But in the business community, what you need to realize is that we recognize that some businesses will benefit and some of our dealerships benefit, but they're clawing back 90% of that tax reduction. The other problem you have is that 60% of the businesses in Metropolitan Toronto will not benefit, and they're the ones that generate jobs. The residents who live in the suburban areas, who have been unfairly taxed, need to recognize that if there are no jobs down here, the tax base then moves on to the homes.
Mr Mammoliti: You said it: The people in the suburbs will benefit from this, the businesses will benefit from this, and we've got a number of people such as yourself coming here representing the business community and only talking about the negative.
Mr Davis: No, you didn't hear me, Mr Mammoliti.
Mr Mammoliti: I think it's an injustice --
Mr Davis: You didn't hear me. I'm sorry. You didn't hear me.
Mr Mammoliti: I think it's an injustice to the people who going to benefit.
The Chair: Order, Mr Mammoliti. Please allow Mr Davis to answer.
Mr Davis: I told you that 44 of our members benefit and I said the unfairness of the system is that the tax benefits they receive are being clawed back by Metro by 90% in order to fund the other areas that they've capped. So they don't benefit.
The Chair: We'll now turn to Mr Turnbull for the last question.
Mr Turnbull: It would seem to me, and I want to see if this is correct, with your knowledge of the auto business, that governments at various levels want to have it every which way. When they tax tenants in apartment buildings, it's taxed on the basis of assumed income value, which gives a value to that building, and tenants are terribly heavily taxed. In other words, they're saying the income value of that building equates to this market value.
In the case of automobile dealers, they want to divorce themselves from that concept because you've said that you have a 1% profit margin. Suddenly what you earn on a net basis is totally divorced, out of the equation. It looks as if they are taxing automobile dealers who have large lots based upon the potential value of it as a building site. Would you concur with that?
Mr Davis: Yes, we would concur with that. We think that's indeed what's happened. We have one dealership whose reassessment is somewhere around $17 million and he couldn't sell it for $2 million today if he tried.
The Chair: I want to thank you for coming. We all have a copy of your submission. Again, thank you for participating today.
NORTH TORONTO UNIVERSITY WOMEN'S CLUB
The Chair: I now call upon the North Toronto University Women's Club, if they would be good enough to come forward. Again, I would just note to members that bells may start ringing, but I think we'll be able to provide all of the time to this delegation, so we'll make sure we do that. If you would be good enough to introduce yourselves and then please begin, we have 20 minutes.
Mrs Helen Banks: I'm Helen Banks and I am the convener of the politics and law group of the North Toronto University Women's Association. My colleagues are Donalda McLean, Shirley Sims and Nancy Westcott. What we are proposing to do is to touch briefly on several aspects of the proposed legislation that concern us. We do thank you for the opportunity to make our presentation.
I want to speak briefly about the tax on small businesses, because to those of us who have lived so long in Toronto and have worked in Toronto, the concept of a metropolitan city, to include the suburbs and the downtown core, is a vibrant and exciting one. Even as the suburbs have grown, the core of the city has been maintained. We are very proud that Toronto has become known as an international city. We have created new complexes like Harbourfront and Market Square and at the same time we've kept our old neighbourhood shopping areas and their wonderful ethnic mix. The city has places like the Beaches and Chinatown and Kensington Market and High Park and Lawrence Park, to name a few. The streets are used by pedestrians and there is a relative feeling of safety, of raising your children in security and of being able to get to know the neighbourhood shopkeepers. We feel that in a city like Toronto, there was a vision when Metro was created that kept the core of the city alive, and that has been a very important aspect of our living in this core area.
Last night I happened to watch the presentation about the development between the province and the greater Toronto area of the planning for the future and that the greater Toronto area will comprise 6 million people in the future. But when you look at the map, it is a radius and the core is still there. We are concerned that that core should remain vibrant and alive.
It's vital to the ongoing vibrancy of this city that we support the maintenance of these neighbourhoods that I've spoken of. But with the proposed unreasonable increase in commercial taxes, we may well see a flight of small businesses to the suburbs. Empty stores and empty offices will contribute to increased crime, and without pedestrian traffic the streets will be abandoned and people will be apprehensive about using them.
We therefore deplore the excessive increase in commercial taxes. In talking with many of our local shopkeepers, whom we know personally, they tell us that they're only just covering their operating expenses. We are truly fearful that the core of our great city faces deterioration if the dynamism of our neighbourhoods is allowed to decline.
The vision for Metropolitan Toronto has been a thrilling one. What is the vision for tomorrow? There is a lot of planning, but is there vision? Where is the political will to ensure that there is a vision?
Mrs Donalda McLean: I'd like to speak to market value assessment. When responsible government elects to impose a tax it must consider two main issues: Will the tax raise the required revenue and how will it influence the conduct of its citizens? Taxation is a very effective instrument of policy.
Market value assessment means a major change in residential and business assessment in the city of Toronto and will result in significant increases in the amount of taxes paid for street and community conveniences and for accommodation.
I recognize that there seems to be a notion that this is not market value assessment. What I would like to say is that it's reassessment based on market value as far as I can see, a presumed market value.
The natural outcome will be a move, not only of residents out of the city, but also of small businesses that now provide a street life. This is a cruel and insupportable handicap for a city that has been achieving success as a place for people, a city which is the envy of many American cities where it is already too late to enjoy what we propose to discard. Furthermore, MVA works as a disincentive for the improvement and renewal of aging city properties. The Metro government ought to show the same respect for taxation as an instrument of policy as do the senior governments.
Toronto is the largest city in Canada and has had to pioneer in developing ways to make concentrated living acceptable. The city has accomplished this over the years by learning from its own mistakes and from the mistakes of others and by devoting a great deal of effort and resources to comprehensive and careful and caring planning. One of the objectives has been to ensure that there is a mix of commercial development and residential accommodation in the central core. This has for years been a guiding requirement in approving new developments. An insensitive and heavy hand is now a crushing handicap.
In the dynamics of Toronto real estate any market value system is almost immediately out of date. The MVA proposes to use real estate values powered by galloping inflation in the 1980s, which peaked in 1988 and were much more exaggerated in Toronto than in other parts of the province. These inflated valuations will determine the taxes to be paid in a recession.
It is necessary to collect taxes for government programs, but no other tax has criteria for the levy that is as subjective and as uncertain as the MVA nor has within it such potential for injustice. At the present time our tax system is obsolete and unfair -- we all know that -- requiring a whole court system with its supporting staff to deal with tax appeals. Why introduce a new tax that will only exacerbate this situation, requiring even more judges and more staff in a time of fiscal restraint? For the average tax payer the legal costs of an appeal will be formidable; for many, prohibitive.
It would be a simple matter to adopt a formula which would allow the citizen to determine by a simple calculation whether or not the levy is correct, while at the same time removing the necessity for continuously updating the assessment. The major federal and provincial taxes are ascertainable by objective criteria and the municipal property tax ought to aim for the same standard. Thank you.
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Mrs Shirley Sims: You've heard it before. North Toronto is a group of communities centred around shopping strips, schools and transportation routes. We have Yonge Street north of Eglinton and north of Lawrence, south Mount Pleasant and north Avenue Road, all of which encourage walkability and therefore safety. If these stores disappear, there won't be anyone walking on these arteries.
Today our 10-year-old neighbour can walk over and pick up a pizza or a sub or buy a Death of Superman comic book. When we walk over for dinner at the Moonglow we have a chat with the owner about our children who started kindergarten together about 30 years ago.
Just imagine for a moment what will happen when the dry cleaners, drug stores and watch repair shops leave and each store is empty. Healey's and Cowieson's survived the 1930s Depression. Now they are gone. They could not survive the recession. Olive's Handy Book Exchange moved into her son's store. He moved to Thornhill. She had not taken any money for herself for two years.
Some of the shops, such as Dan Young, offer delivery service. It enabled my cousin on Hillhurst Boulevard to stay in her home until she was over 90. The same is true for my mother who lived on Broadway until two years ago when she was 92. Malls don't offer delivery service. All they offer, besides shops and faceless vendors, is parking and a roof.
When older people can no longer remain in their homes because they cannot meet their taxes, they'll start demanding seniors' apartments and they will have to be subsidized as a result of the inevitable lowering of house prices due to the increase in taxes. Is Metro ready to start building these facilities for hundreds of people?
Then there are the nursing home facilities. At the present time there are no, or very few, such homes in North Toronto. The seniors will have to go to Scarborough or Etobicoke, where my mother is, and it now takes me eight miles to drive to see her when I used to be able to walk over to see her. Are these municipalities ready to accept and pay for North Toronto's seniors?
Finally, the centre of all this is the choice of 1988 as the watershed year for Toronto. Since that year values in North Toronto have decreased -- witness the recent auctions, not to mention the numerous power-of-sale notices -- but prices in nearby towns and cities have increased. MVA will decimate commercial and residential North Toronto. It is simply not just to penalize a community that has been safe and supportive for 50 or 60 years, a community that has obtained a balance for lower-, middle- and upper-scale income earners. Thank you.
Mrs Nancy Westcott: There are many aspects of the proposed legislation that I find distressing, not the least of which is that it is being rushed into law while the province's fair tax study is still under way and before the impacts of the proposed changes are studied and understood.
Today I wish to comment on only one aspect of the legislation which I think is particularly unfair and discriminatory and which will hit hardest at those residents of Toronto who sell their homes. The impact of increased taxes is phased in for most of the victims of this measure, but those who buy a house will immediately have to pay the full shot. This will result in making the purchase of resale houses less attractive to potential buyers who will demand a reduction in the price of the house.
It has been estimated by housing experts that the decrease in the value of a house will be by a factor of 15 to 20 times the tax increase. Thus, a $2,000 tax increase would result in a decrease of $30,000 to $40,000 in the selling price of the house. This capital loss becomes in effect a highly discriminatory tax on those who are faced with selling their homes. For many individuals who are selling because of age, the value of the home represents much of their savings. Why should this group be penalized?
For this and many other reasons, we request that MVA be put aside until the Fair Tax Commission completes its work and the impact of whatever tax is decided upon is fully understood.
I grew up in Philadelphia and I go back to visit every year. The urban blight and the fear in which people live there have to be experienced to be believed. I'm haunted by the idea that due to insupportable tax increases, businesses and home owners will move out of Toronto, tourists will stay away and we will see our vibrant, livable city deteriorate into a wasteland ridden by dirt, crime and decay. Please let us not destroy what we are lucky enough still to enjoy. Do not let Toronto become another Philadelphia.
On behalf of all of us, I would just like to summarize our presentation. Significant tax discrepancies exist in Metro Toronto. We recognize the need for revision of some kind. We object to certain aspects of MVA as proposed because we fear their adverse impact on the city in which we live. People in businesses will leave the city for the lower-taxed suburbs. Values of city properties will be depressed. Small shops will be forced to close if they cannot afford to pay higher taxes. Street life will disappear. Personal safety will be threatened and police costs will go up. The essential nature of Toronto as a city of neighbourhoods will be destroyed. The business base of Toronto will be adversely affected. Most unfairly, the time-of-sale implementation of full MVA will in effect place the burden of the tax on the Toronto home owner when he or she tries to sell the house by lowering the value of the property.
We want an equitable formula for property tax reform. There are other methods which are fair and do not require frequent, expensive reassessment, for example based on lot size and house size, based on services required and blended formulas including these and other factors.
We have deliberately kept our presentations very brief because we understand that the demands upon your time are great. Do not assume, though, that the brevity reflects lack of passion or commitment. We are very concerned.
The Chair: Thank you very much for your presentation. We'll move to questions. I have Ms Poole, Mr Wiseman and Mr Turnbull.
Ms Poole: First of all, welcome to the committee. As the member of the Legislature who represents North Toronto, I give you a particularly warm welcome. I think you've encapsuled the fact that North Toronto is a city of neighbourhoods. We have a lot of individual little neighbourhoods, but they're centred around small business, they're centred around people who very much care about their community and are very involved in their community, and one of the problems is that we in the city of Toronto now believe that way of life is in jeopardy.
A recent survey of businesses on the upper Yonge stretch in North Toronto showed that two thirds of the businesses said they would close their doors for ever if market value assessment came in. The government will point to the fact that Metro's plan provides a cap, but that's 25% tax increases over three years due solely to market value assessment.
In addition to that they have the ordinary, normal, everyday, every year increases one gets from Metro council, so you're looking at around a 50% increase. How many of our businesses in North Toronto do you think can survive under that onslaught?
Mrs Banks: It's very difficult, I think, to put a figure on it, but many of the stores along Eglinton Avenue, for example, have gone out of business several times. There is a small core remaining, and I think that will happen in all of the neighbourhood stretches, that you will find vacant stores.
Ms Poole: Yes. In fact we had a presentation today from a Mr Cazaly, who appendixed a sheet of paper which indicated that 13 businesses, as of November 1992, have now closed their doors in less than a mile along Yonge Street and 12 businesses in an even smaller stretch on Avenue Road. It's already happening, as it is throughout Metro because of the recession, but for the city of Toronto and parts of North York it is going to be absolutely devastating if this comes in.
One other thing, if you could comment: I think a point every one of you made is that Toronto is a livable city. One thing we love about our city is that it hasn't had the urban rot and the blight they have in other major urban centres. Can you just tell us, if this plan comes in, do you see any way that our neighbourhoods, our livability, can survive?
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Mrs Banks: May I speak personally? I have just found out that I'm one of the lucky people to have my taxes increased 100%. The house in which I'm living I have lived in for 25 years. It is evaluated now, in 1988, at $455,000. Even if it were to sell for something like $300,000, I think you would find people reluctant to pay $7,600 a year tax. So I think I am not in a position to be able to sell my house and I will have to live there until such time as I may go into a seniors' home, but it is an untenable position.
I have worked for 45 years; I've been a single parent; I have maintained my home. I'm very proud to have been able to do so, but at the present time it is very frustrating.
We have always felt in Toronto that when Metro started, it started to help out the suburbs. Some of the suburbs were absolutely out of money and there was a lot of feeling at the time among the people who lived in Toronto that we should be helping the suburbs to deliver the services, education, police, fire, and it has been done and there is no feeling of regret about that. But it is ironic that in 1992 we have the suburbs not caring really what happens to the core of Toronto and one wonders whether gifts are often resented and forgotten.
I find it untenable that the taxes will go up as much as they have on my house. They will go down in the suburbs, but people in the suburbs are living in a different kind of setting to the one I am. My friends who live in the suburbs have a big lot. I have a 30-foot lot in my house. I have a long backyard. I do not have a swimming pool. I do not have several bathrooms. I have one and a half bathrooms. There is no way my house is going to sell for $455,000, ever.
As Dianne pointed out, or someone pointed out, it's one of the ways in which you plan for your retirement, that when the time comes for you to sell your house, it will help ease the pangs of old age. But it's not going to happen.
I don't know whether I've answered your question, but I feel very strongly about it. We have tried to be very reserved about pointing a finger at anyone. We don't think anybody gets anywhere that way. We're all in it together. What we would like to see is a little appreciation on both sides for the positions people are in and to have a fair tax.
Mr Wiseman: Thank you. Unlike most on the panel, except for Mr Grandmaître, Mr Mills, Mr Beer and myself, we do not live in Toronto. What we have heard so far is that this plan totally disregards the needs of hotels, the railways, GO trains, businesses, homes, parking garages.
What you're asking me to do fundamentally is to come from outside of Metropolitan Toronto and say to the regional councillors who voted in favour of this that I know more than you do; that I believe all the people who say you don't care; that you don't know what you're doing and that there may be some malevolent reason for you to be voting in favour of this deal; that in fact this level of government, the provincial level of government, has to step in and act as sort of the daddy, the know-it-all, to bring an errant misbehaving child back in line to do what is right.
In fact, you're asking me to vote to overrule democratically elected regional councillors who say this is a good deal. They say this is a good deal. They know this community, or they're supposed to know this community, and what you're saying to me now and what everybody else has said -- not everybody else; the mayor of Scarborough didn't appreciate some of my comments either -- but what you're basically telling me is that these people don't know and don't care.
Mrs Westcott: You know, though, that this was extremely controversial and hotly contested every step of the way through the procedure and that "they" doesn't mean all of the Metro councillors. It was a very close vote and there was a great deal of opposition to it all along the way. The point is that the MVA was rushed through for certain political reasons, while there is still a Fair Tax Commission studying fair taxes.
Mr Wiseman: I assume they would have known that.
Mrs Westcott: I'm sure they did, but I'm pointing out to you that there is a Fair Tax Commission at work at the present time, and we've suggested that MVA not be implemented until the findings of that commission are heard and also the impact of this proposed tax is understood.
Mr Wiseman: The point I'm trying to make is that the case is being built for wanton disregard of the Toronto needs by the surrounding communities, which want to get lower taxes. So what you're asking me to do is to turn around and say that these regional councillors who sit on Metropolitan Toronto council don't know what they're doing, don't care about what you're saying and that they're going to totally destroy Toronto for the sake of their own political hides, or however you want to put it. That, in a nutshell, is what you're asking me to think about.
Mrs Westcott: That is a gross oversimplification, though.
Mr Wiseman: No. I'm sorry, I don't agree with you. We've heard that the hotels will close, that the railways will shut down, that the businesses will close and leave and that you won't be able to sell your houses. We've been hearing this for three days now.
Mrs Westcott: Would you come into the province of Ontario and set up a business after January 1?
Mr Wiseman: Yes, absolutely.
Mrs Sims: On Yonge Street?
Mr Wiseman: That would depend on what the business is, because as a person who has taught economics and has actually run seminars on how to start your own small business, I would be very careful about where and how I would do it and what product I would choose to put out there. One would have to measure what the fixed costs were, what the average costs were, what the variable costs were, what the taxes were and how all of this meshes together. It may well be that some of the products may not sell. Some products do. It depends.
The Chair: I'm just going to have to jump in because time is going down --
Mr Wiseman: I'm sorry. You can understand my dilemma in terms of what you're asking me to do.
The Chair: We'll go to Mr Turnbull.
Mr Turnbull: Thank you very much for the very good presentation.
This little interplay that we have illustrates very well the frustration I have in these committees. We are not allowed to have a discussion directly with the people and challenge the statements that are being made. I have to work through you, so excuse me.
The basic problem is that the outer municipalities, which will get a net decrease in residential -- and remember there are more residential voters than there are anything else -- have more votes on Metro council, so they say, "Oh, we want it." My position is very clear. I am not against fair taxation. If you are paying too little taxes, I would be the first person to say you should be paying more.
However, the contention I have is, the proposal before us is not to replace an unfair system with a fair system; it is to replace an unfair system with a different unfair system. We have an opportunity to correct a lot of ills and we should be doing it. As you have correctly pointed out, we run the risk of the urban blight of the US cities and we run the risk that we're going to destroy our businesses, and in them, the small businesses which create the jobs.
I'll pose this as a question to you because, as I've said, I'm not allowed to engage these people across directly in conversation, but --
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Mr Mills: You poor, underdone --
The Chair: Order, please.
Mr Turnbull: The moronic comments that are being made are by the parliamentary assistant.
The Chair: Mr Turnbull, you have the floor if you want to continue with your question.
Mr Turnbull: How can we make people understand that we are just asking for a fair tax system which treats everybody equally and does not set neighbourhood against neighbourhood where they say: "Oh, your houses have gone up more in value. You should be paying more taxes"? That fundamentally is greed, that people say, "It's unfair that your house has gone up, so we want to tax it away from you." I guess that goes to the fundamentals of socialism, and that's the problem. I'll put it as a question to you: How can we convince these people?
Mr Perruzza: Forty-two years of that.
The Chair: Order, please. Please go ahead.
Mrs Westcott: I guess we just have to keep on talking, making our concerns known. We've come here in honesty and good faith to express our concerns as residents of Toronto and of Metro, as home owners, as really concerned boosters of all of Toronto and proud citizens of a great city. We care and we don't want to see a good thing destroyed. This is a last-ditch stand, that's why we're here. We fought it every step of the way and this is our last chance to avoid what we see as five years, anyway, of disruption. How are you going to come back after five years of businesses closing? Make no mistake about it, it will happen.
Mr Turnbull: In the US, to try and kickstart the inner-cities again, they're giving tax breaks to encourage businesses to go back. Why would we be going in the opposite direction?
Mrs Westcott: Exactly, and it's very hard to go back, very hard to regain what has been lost.
The Chair: I'm sorry that I'm going to have to end the discussion at this point. I want to thank you very much for coming here today and making your presentation.
JOHN ANDRACHUK
The Chair: Our last witness before the break will be Mr John Andrachuk. If Mr Andrachuk is here, would he be good enough to come forward. Welcome to the committee. You have 10 minutes. Please proceed.
Mr John Andrachuk: Well, you've got yourselves quite a problem, I can see. I'm sorry, I got here a little bit late. I didn't see any of the other intervenors.
I'm going to suggest to you that you do have some power and some responsibility here, and in fact you can do something. Otherwise, the question is begged, why are you here? Why are you reviewing this? Why, indeed, is there a senior level of government involved in reviewing this particular legislation dealing with the most important municipality in Canada?
Essentially, what I'd like to put in front of you are two ideas. The first is that MVA, as I'm sure you've heard over and over again for the past several days, in this chamber and outside, is fundamentally flawed. It can never, ever work. I'll describe this in a moment. It doesn't matter what compromises are made, it doesn't matter what fine-tuning is done, it is simply impossible for it to work to achieve any of its stated purposes, or indeed even the hidden agenda purposes.
The second idea I'd like to put in front of you is that you can in fact put in place a very simple system. Everything is sitting there, ready to go right now. You can do it January 1, in fact, so why don't you just do it? As a compromise on that, what I'd suggest to you is that the Legislature turn down this destructive legislation by doing something very simple: Let it go in for a year. Instead of making it 1997, say in 1994 a new plan that makes sense is in place.
I'd like to come back to the question of the MVA as a possible method of taxation, in other words, of distributing the cost of running Metro Toronto. I think, if I've understood it correctly, there are approximately 575 economic neighbourhoods in Toronto. The theory of valuation here is that those neighbourhoods will have internally consistent valuations and that those valuations, each of them to the other 575, will have a consistency and a set of relationships and that those will periodically be revisited so that the market value in fact is established.
Here's a very simple thing that illustrates why this system is impossible to administer. You cannot have 575 dynamically interacting things, to say nothing of the fact that there are hundreds of thousands of houses involved here, being in concert one with the other. What you're going to have is like a waterbed: Press down here, this one goes up, this one goes down.
I think every single one of you who lives in this area knows that over the past five or six years your own neighbourhoods have varied in value relative to other neighbourhoods that you can name. Well, that means your house has gone up or maybe your house has gone down. What's going to happen in 5 years or 10 years when there's a revaluation? This system can never, ever be stable. Because it can't be stable, it can never be made to work equitably.
I put this in front of you. This is not a question of, "Well, we can do this little fine-tuning over here and we'll do some more multiple regression analyses here and we'll load up a Cray computer and burn it out in the next three weeks."
Nothing can be done to make this thing work fairly and equitably in a stable, consistent manner. Vancouver's experience, I understand, illustrates that. They're now revaluing, I believe, every year. So you want a mess? You're going to have a mess. You've got a mess already.
Why don't you take charge of this thing and just say no? You can do "no" in two ways. You can just say no outright or you can say: "Well, fine, you've had your 5 or 10 years to study this thing, Metro and you've come up with what you've come up with. We're not intervening at this point because we don't really understand all the puts and takes here and all the complexities, but tell you what. We're a little bit dissatisfied with this because we've heard enough that indicates there's going to be disruption, and it's indeed a social development question, so what we're going to do is we're going to let you put it in place for a year. But during that year, we want to hear back from you on some principles for your new system to go in in 1994." That's one way of doing it. I don't suggest that. I think you should say no.
Here's how an assessment's done, I understand. For example, the value of the building is obtained using cost factors in the 1980 manual, whatever that is, based on the quality of your home on a scale of 1 to 10. Nobody ever visited my house. By the way, to get the record straight, my taxes are actually going down by about $350, I'm told.
"To bring the value from 1980 to 1988, a factor of 2.4 is used. The square footage of your house is used, along with various other factors," unnamed, "that are listed attributes of your home with the department, and from the manual of 1980 construction figures calculated....1980 cost of construction figures multiplied by 2.4 to come to the 1988 figure. This figure is then depreciated based on the age of your home. This is now called the 1988 building value.
"The land residual values are processed using a multiple regression analysis program by the name of Statgraph," therefore it must be correct. "Values that are fed into the computer were the land residual value of the property, the frontage of the property, the depth of the property. This then produces a constant land," etc. This goes on for hundreds of thousands of homes.
Let me make a suggestion to you here, which is why I'm here. I think there should be some principles on which the assessments are made, which would then lead to the tax loads placed on individual citizens. We know that we're taking a total cost bill and just dividing it up among several hundred thousand residences and businesses and so on. I'm going to suggest six guiding principles here.
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(1) Objectivity: It's something you can touch and feel and measure, that any one of us, my nine-year-old kid, can go and do it, and it's not this kind of crap you just heard here;
(2) That it's simple; that again, any one of us, a householder, can go and figure out what his assessment value is;
(3) That it's economic; it's easy to administer. Do you want to buy a lot of computers? Do you want to have a lot of staff? Do you want to have a lot of assessors going around? Do you want to pump out a lot of paper? That's what you're going to get by doing this, and heaven knows, we've got cost problems throughout the economy.
4) That it's stable, that from one year to the next, from one decade to the next, that assessed value remains stable;
(5) That there's a correlation, as close as it can be made, between the cost of the services and the tax load and the tax assignment or allocation that results from it; and
(6) Comprehensiveness.
Having said all that, the obvious question which I'm sure is in many minds is: "Well, so what? If you're so smart, why don't you tell us how to do it."
I'd suggest to you that's what should have been done over the past 10 years or so, but never once, ever, have I seen anybody say that there are some guiding principles on which the basis of assessment, the theory of assessment, must be made. Rather, what is being done is to take what is and simply apply it, and applying it equitably and fairly and meeting principles like this is simply impossible.
So I'm going to make a suggestion to you. I'm sure you've heard this general thing before, but it's in essence a unit system. Base the property tax on a simple formula of lot and building area or volume. This is for houses. It's simple. It ain't perfect. There isn't necessarily a perfect correlation between costs of the service and who pays for it and how they pay for it, but it's better than anything you've heard come in front of you so far from the MVA folks. With industrial properties, obviously you need a more complex formula to recognize cost loads generated by different types of industry, but here also I'd suggest simplicity should be a guiding factor. Keep things simple.
This particular system satisfies all the principles I listed above except for comprehensiveness. By comprehensiveness, I meant that there shouldn't be exemptions. Everybody should pay for it. If you're using a service, you should be paying for it. Talking about organizations like charitable organizations and churches etc, there should be some mechanism by which everybody pays for the services they consume. That's a political decision. It's a very simple one; it can be removed as a discreet decision item from the other five principles.
The benefits of a system such as that are that the public can easily understand it. Anybody can understand it. They can go and measure it themselves. They can get out tape measures and they can go and see what they've got. They know they're being measured fairly.
My next door neighbour, who has a brand-new 5,000-square-foot house, is comparatively, within our neighbourhood of approximately 209 homes, valued at about two thirds to one half of what he should be on an internally consistent basis in our little neighbourhood. He is one third to one half of what he should be, just on the basis of other homes similar to his built at the same time and the same size, quality of construction and so on, within 300 feet, and it's simple, if you question the other valuations or his.
Fairness and equity here are self-evident and they're contained within the system itself. Nobody can argue with frontage, square footage, volume, factors like that that are utterly objective. You've obviously got definitional questions like corner lots and so on, but those are easy to resolve, I suggest.
In addition, the administration would be dramatically easier and significantly less costly. In fact it would have essentially no cost to it, other than mailing costs.
All the information required to rapidly implement this system is available today. You heard what I quoted here from the rules of the game, that the information to do this is actually sitting in computers today and within a matter of weeks every single home in the city could be valued. I'm talking about homes now, not businesses.
The Chair: Mr Andrachuk, if I could just ask you, there are just a couple of minutes left.
Mr Andrachuk: I'm finished. There's no additional cost to doing so; in fact the cost of implementation would be significantly less than that of the proposed market value assessment.
The Chair: Thank you very much for coming and putting down some proposals and ideas for the committee to consider.
The committee now stands adjourned until 7 o'clock, when we'll begin the evening session.
The committee recessed at 1815.
EVENING SITTING
The committee resumed at 1924.
The Chair: I'd like to call the evening session to order. Just for the record, for those who have been waiting for us to start, we had to receive permission from the House to go ahead while votes are being taken in the House, but we have received that permission and we're ready to go.
MURRAY BLANKSTEIN
The Chair: I would call the first presenter, Mr Murray Blankstein, if he would be good enough to come forward. I was almost going to say "and sign in, please." Please be good enough to introduce yourself for Hansard and then proceed with your presentation.
Mr Murray Blankstein: My name is Murray Blankstein and I wish to thank you for allowing me this opportunity to make my views known to you. In this regard I speak for many of my colleagues, clients and friends. I have never before seen such depth of concern with any other tax change. This is so because there is a realization that not only could the changes have a devastating impact on businesses of all sizes and on people with fixed incomes, but that they seriously threaten the very fabric of Toronto.
There is a perception, much warranted, that the present system of property taxation is grossly unfair. It is well documented that market value is subject to innumerable distortions from property to property and from area to area. In my written brief I cite two examples, one where the assessor set a value 243% higher than actual cost and the other 58% higher than appraised value. How can you justify a tax system where there can be such distortions? In actual practice, the present system has no objective base on which to levy the property tax, unlike the sales tax or income tax systems.
Even if the assessor is aware of all the distortions and factors which would influence the value of one property as compared to another, it is an almost impossible task to factor them all in. The system does not recognize the ability to pay of the persons responsible for paying the tax, nor does it recognize the benefits of municipal services received.
Why should the pensioner living in the vicinity of the old industrial district around King and Dufferin suddenly be faced with substantial property tax increases because of market speculation concerning the possible redevelopment of the Massey-Ferguson lands, which may take decades to complete and which won't put another dollar in the pensioner's pocket unless he sells his house?
Why should a small restaurant, retailer or business in central Toronto be faced with a substantial tax increase because the land under its building, for assessment purposes, has the same value as land under a 30-storey office tower? Why should the land portion of the value determination for that small restaurant, retailer or business be borne by a single occupant or small business when for the office tower, the land portion of the value is spread over all the occupants and businesses in the office tower?
Why should the industry located on Eastern Avenue pay taxes at a rate which is three or more times higher than it would have to pay if it were located just beyond the borders of Metro?
Should tax policy be such that it drives people on fixed incomes living in the older, more densely populated areas out of their houses; that it drives business, especially small business, away from the central areas of the city; and that it forces industry, and with it industrial-type jobs, out of Metro? Are these policies we want to support?
There is something wrong when the Assessment Act requires value determination, but at the same time recognizes that such value determination is subject to distortion and then attempts to resolve the problem by providing procedures for equalizing assessments. The result is that factors are applied to different classes of property: 2.2% for residential other than apartments, 8% for apartments, 4.3% for commercial and 6% for industrial properties.
These tax factors appear to be arbitrary. They are certainly difficult to understand, except that they provide a subsidy in favour of home owners and discriminate against apartment tenants and industry. If equity and fairness are to be the standard, then the same standard of market value should be applied across all classes of property. There is no other tax legislation which is so fraught with distortion and open to such subjective and arbitrary application by the taxing authority.
Metro council, in complying with provincial legislation, has the limited choice of either making no change to the assessment base or going to a 1988 market value. As a compromise in implementing the latter, it put in place a system of arbitrary caps and clawbacks to phase in the burden and benefits over time. These caps and clawbacks don't relate to the inherent distortions and discriminations in the system. They simply distort it further, making a mockery of the property tax system and any attempt to bring equity and fairness to it.
We have serious problems in our economy. Our business and industrial base is going through a massive restructuring. We are losing business and industrial jobs at an alarming rate. The government has said that it wishes to encourage industry, and it should. However, the use of market value for property taxation is counterproductive in that it distorts costs and reduces competitiveness. Occupancy costs, which include property and business taxes, must be included in the cost of production. Property taxes on industrial properties average as high as $2.35 per square foot in the city of Toronto, $1.90 per square foot in Scarborough, $1.55 in North York, $1.15 in Richmond Hill, $1.05 in Mississauga, to as low as 85 cents per square foot in certain areas of the Toronto region.
1930
The cost of a widget produced in a factory in Toronto, Scarborough or Mississauga must sell at a competitive price, whether in Halifax, Edmonton, Dallas or Rome. Unless we adopt tax policies which assist and encourage our industries to be competitive, and market value assessment surely does the opposite, we will continue to drive industry away from this region.
I hope the last thing we in this province would want to do with our planning policies is to destroy the beauty and diversity of Toronto. The central area of Toronto has a character which is special, which has made Toronto the magnet it has been for business, industry and culture. The suburbs and outlying areas, on the other hand, are indistinguishable from any American city.
Property taxation has a major impact on land use and planning. If a property owner can't afford to maintain the property, and that includes paying the property taxes, the property will not be maintained and will eventually be abandoned. That goes for residential as well as commercial and industrial property.
You need only look to Detroit and Buffalo to see what can happen. Regrettably, we are starting to see it now in Toronto with increasing numbers of vacant commercial and industrial properties. Undoubtedly, the recession has been a significant cause. But property taxes are high, and if they are increased, and with the commercial concentration tax, the risk is that more and more properties will be vacated and ultimately abandoned. There will be a compounding effect which may be very difficult and costly to reverse.
It has been indicated that the changes approved by Metro would raise the property tax payable by Ontario Hydro by as much as $50 million, increasing electricity bills by an average of 50 cents per month and much more for industry. This is because of the increase in market value of Hydro facilities and transmission corridors in the city. There would be a similar impact on the rail corridors and other utility and quasi-public facilities. It is the height of absurdity that a market value property tax system should apply to those facilities, thereby increasing costs to everyone. Those facilities and the land under them have no market value while in use providing public services.
The market value system is perverse. The central area, which is more compact, makes more efficient use of land and services such as water, sewage, roads and transit. Because of its higher density and larger tax base, the central area also contributes towards the cost of providing services to the suburban areas, which are more spread out. In addition, those residents and businesses in the central area are paying an extra subsidy towards the suburban areas by reason of the fact that the central area, because it is the central area, generally has a higher market value than the suburban area.
Much has been made of the massive transfer of funds from the city of Toronto to the Metropolitan Toronto School Board. About one third of the funds, or $316 million, is not used by schools in Toronto. The city of Toronto comprises only 16% of the land area of Metro, has only 27% of the population and presently provides 42% of the tax revenues received by Metro Toronto. Therefore, it is obvious that it is the taxpayers in the central area who are subsidizing the costs for services provided to the suburbs.
This kind of analysis, which pits the residents of the city of Toronto against the residents of other Metro municipalities, is destructive and not one which encourages a healthy and cohesive city. However, so long as we have a property tax system such as the present one, then such analysis and comparisons will of necessity be made.
Statistics Canada reported last month that over the past 11 years, while the consumer price index increased by 70%, urban taxes rose by 113%. Eliminating the inflation factor, the real increase was a staggering 26%. In the city of Toronto property taxes increased 8.34% this year, while the inflation rate was just over 1%. In addition to increases in the mill rate, which we have been told to expect, the taxpayers of Toronto are facing further substantial increases, even though capped, resulting from the decision to change the assessment base.
Education costs account for approximately 55% of total property tax revenue in Metro. Add to that welfare costs, of which the Metro Toronto property taxpayer pays 20%, and it is clear that provincially mandated programs and policies are undoubtedly the single largest factor in the property tax issue.
In my opinion, the property tax should not be a source of funding for education and welfare. Those are the responsibility of every person in this province and the cost should be paid for out of the general revenues of the province. If that improper and unfair burden was removed from municipal responsibility, then there would be room for Metro to assume the full burden of public transit, which is more appropriately a local responsibility. Property taxes would be lower and they would not have such a devastating impact.
The provincial government must take full responsibility in this property tax issue, as it is provincial legislation which determines how property tax is to be assessed and levied and it is the province which has the power to shift what are arguably provincial responsibilities for education and welfare away from the municipalities in the property tax base and fund them out of the general revenues of the province.
The present system of property taxation, whether on the old value or on the updated 1988 value, is unfair and flawed. In my opinion, a system of taxation such as unit value assessment, which is based on consumption of or benefits from municipal services, would be fairer and easier to administer.
Not to take anything away from this committee, the Fair Tax Commission should be allowed to have public hearings, study and report on the property tax system, giving careful consideration to its effect on all classes of taxpayers, on business, industry and jobs and its impact on the urban form. As well, it should consider the burden of funding that falls on the property taxpayer, what should properly be paid out of the property tax system and what should properly be paid out of general revenues of the province.
Property taxes must be looked at with respect to the effect they have on our industrial policies, land use and urban planning, and whether the effect may be counterproductive to such policies and planning. Most important, the impact of the property tax system, including the commercial concentration tax on the continued viability and health of the central Toronto area, has to be carefully considered. When you have experts such as Jane Jacobs, a world authority on cities, coming out strongly against market value assessment for its devastating impact on Toronto, then the government has to pay attention, draw back and give this matter careful consideration. It is my sincere hope that it will do so. Thank you.
The Chair: Mr Blankstein, I want to thank you for your presentation. You've clearly put a great deal of thought into that. I'm just sorry that because of our time constraints we aren't able to get into question and answer at this time. But this, of course, will form part of the record of the hearings, and again I want to thank you for the time you've clearly put into this.
Mr Blankstein: Thank you for hearing me.
SWANSEA AREA RATEPAYERS' ASSOCIATION
The Chair: I now call upon the representatives from the Swansea Area Ratepayers' Association. I was going to say "if they would be good enough to come forward," but if you, sir, would be good enough to come forward and please identify yourself for the purposes of Hansard. We have a copy of your brief and I believe all members have it.
Mr Bill Roberts: Good evening. The name is Bill Roberts. I'm a director with the Swansea Area Ratepayers' Association.
A brief background: The association predated the incorporation of the village of Swansea, which was in 1926, and has continued to survive past the amalgamation --
The Chair: I take it that's not a personal statement.
Mr Roberts: No. That gives us sort of a unique perspective, because we were involved in one of the few municipalities that did not go bankrupt during the 1930s and when we were amalgamated by Toronto we had a large reserve fund. Our taxes went up in the first 10 years about 1000%, the services went down about the same correlation and we've got a big deficit because we're part of Toronto.
In essence, though, our group is unincorporated but includes tenants, residents, home owners and businesses, and that's the perspective I'm bringing to the situation now.
We've been opposing market value since it was first proposed back in 1976. I'll get on to some of the points back then that we thought were wrong and what has proven to be wrong with the whole proposal.
Part of the problem with market value is the limited number of variables that you use for comparison. There are only four or five variables built in. This produces a real skewing because how do you compare properties if you're only looking at four or five variables? The problem at that point becomes: You say, "Well, these four variables match those four variables; therefore, these two properties are the same," when in fact they are not.
That's one of the fundamental problems with market value; it is not the market value system they envisaged in 1976. They were assuming computerization, multiple variables being built in so you would get a true comparison between properties. The assumption was even, if possible, to compare unique properties from one region to another. If you had enough variables built in, in theory you could do it. That has not occurred.
What has happened is the assessors have maintained the old, archaic system and skewed the system completely out of whack. It's so broad brush that it's a poor indicator. Properties get grouped together that do not correlate to each other, and what happens is that speculation becomes a significant factor in an area. What happens is, because of the few variables, somebody comes in and starts redeveloping a house or artificially starts increasing the prices on the street. Even though nothing else has occurred to any of the other houses on the street, the assumption is they've all increased in value.
1940
That would be all right if you assumed the capitalist system was the way everybody worked with houses -- that houses were commodities, not homes. But the reality for most people is that they buy the place to live in. When there's a peak, they're not going to sell off like they would sell stock. Market value inherently assumes you sell it when there's a profit. For this government to support that is rather unique. You're going to force people to sell their homes because they can't afford to pay the taxes and the only way they can keep any shelter is to sell their home and move somewhere else where they may be able to afford to live.
You're really taxing what are called paper profits. If the person doesn't sell, he has no profit. When they sell six years later, as in this market now, they may have lost money. Are you going to give them their money back? Is there a capital loss? No. There's no benefit for their paper profit. That's one of the fundamental problems with market value.
In stable residential areas like Swansea or even the Bloor-Junction area -- and the reason I talk about Bloor-Junction is that it's a working-class neighbourhood and used to be part of the same ward that Swansea's in and is basically working class. Swansea has a large number of seniors, so in some ways the economic reality's the same for both. As speculation occurred in both areas, prices went up for the houses. The 1988 figures are going to have a significant impact on those people being able to live in those neighbourhoods and the stability of those neighbourhoods. Commercial properties have the same problem because speculation was quite heavy in parts of downtown Toronto.
In British Columbia, under a regime that was the same as the present regime here in the sense of being NDP, they developed a market value system that had multiple variables in it, and the impact of speculation was much less because of the multiple variables.
The effects of speculation basically -- and I've got to say this because I'm a real estate lawyer -- were not uniform. There were places in Etobicoke where the rise of speculation was very small. At the same time, in Toronto there were other areas where the increments were 30%, 40%, 50% every year on the same house. The reality is, and I've seen this right now, that there are houses in parts of Etobicoke, like the Kingsway, where they're going to pay fewer taxes now in the sense that their taxes are going down compared to a bungalow built in the 1950s, even though the house in Etobicoke was built in the 1940s.
Assuming the inequities were when a house was built and trying to adjust that, one would assume some correlation between the two happening. It's not because of the impacts of speculation during the mid-1980s. Metro Toronto is fixing using the 1988 values. The problem with that is the fact that speculation was not uniform, so it will result in an unfair fixing of where speculators had moved in.
Part of the assumption of market value is the assessed rate given to a property. The taxes are drawn from that. If the assessed value is not right, if it's inaccurate, if it's inequitable, the taxes based on that will have the same reflection. That's part of the problem. It will increase the instability in those neighbourhoods. What you've got to understand too is that in 1976, when the Commission on the Reform of Property Taxation in Ontario was created, it did not realize the rate of speculation or property tax increases that would occur. When you read their material, there's no indication of their even expecting that.
When you compare the shifts in 1986 and 1988, areas of Toronto that were going to have their taxes go down in 1986 had their taxes go up in 1988 because the speculation had moved into those areas. If you keep it at the 1988 values, you're going to penalize those areas for what were really unreal values.
You would remember the history. The reason why I'm doing this is simply that it really begins back in 1952 with the Privy Council, which said that market value is the basis when calculating taxes, what a willing seller and a willing buyer will come into agreement on. That's supposed to be the test. The reality though is that the assessors say: "We don't care what you paid for the property in 1988; we don't care what you sold the property for in 1988. Our book says what the value of the property is." Saying that, they disagreed with the fundamental basis of the 1976 report, so this is false market value to begin with.
The other aspect about it was -- I cite another case and we'll go through it -- that the Ontario Court of Appeal said that the whole object of the thing was to have an equitable system where you could test it. When you get into the equities, the reform commission in 1976 accepted market value because it was a basis for judging fairly and equally. Somebody could tell what a property sold here for, what a property sold there for, whether he was paying a fair tax.
That's not going to happen now. With all the capping and everything else that's occurring, it will be very hard for people to tell what is fair. The equities, the tests, the objectivity that was presumed back in the 1976 study are gone, and what Metro has done is deviate even more from that point.
I'm curious about how you're going to deal with houses built in 1992, 1993 and 1994. Assuming you keep the old system, I presume what'll happen is, to keep everything equitable, whatever price they pay for the property in 1992 will be raised up to 1988 values and the appropriate adjustments will be done. If there's no capping or freezing, they'll pay 1988 values on their 1992 property. I just want to see what the taxpayers say when you explain to them how the property is being assessed at 20%, 30% or 40% above what they actually paid for the property in 1992. If you think the screams are bad now, just wait till then.
I'm curious what's going to happen in five years because of the inequities in the speculation. I'm quite sure Etobicoke is not going to be at all thrilled, or Scarborough or North York, when things begin to line up with the real values and their taxes are suddenly going to go up. I bet you'll see the same vote to not change the taxes but to keep the inequities there in place. You're going to find a system that is truly equitable, that truly reflects real values of property, not this artificial system.
The argument that the people can appeal if their taxes have gone up is just not there. There will probably be so many appeals in Toronto that there'll be a backlog of anywhere from two to three years. The reality is that you have to pay your taxes, even though you filed an appeal. That may well mean the home owners will be either forced out of their homes or businesses will become bankrupt while they're waiting for their appeal, so there won't be any justice there either for those businesses that feel they've been swiped unfairly by too high a valuation on their property.
Along that line, you should remember that in 1953, when Metropolitan Toronto was created, it was designed to transfer moneys from Toronto, Forest Hill, Swansea, Weston, York, Mimico, Long Branch, East York and New Toronto, which were established municipalities, to pay for the infrastructure of Scarborough, Etobicoke and North York. The benefits of Metro have not come back to Toronto or some of these other municipalities yet. In the Bloor-Junction area there are roughly 400 to 600 more students than there are class spaces, but Metro's school board will not finance a school in that neighbourhood, and more development is coming in, and right next door to the Bloor-Junction area is Lansdowne and Bloor, which is one of the major crack cocaine areas, second only to Jane-Finch.
Mr Mammoliti: Point of order, Mr Chair: I don't agree with that comment. Jane and Finch is no longer --
Mr Roberts: It is no longer? Okay, then this area probably is number one.
Mr Frankford: I think that's very dangerous.
Mr Mammoliti: Yes, I'd be careful.
The Chair: I think --
Interjections.
The Chair: Order, please.
Mr Roberts: With all due respect --
The Chair: The witness has the floor.
Mr Roberts: All I can tell you is that that's information heard at the Ontario Municipal Board from police officers. If it's changed, fine, but what I'm saying is, Bloor-Lansdowne has a serious crack cocaine problem. There is no funding for community centres or schools there from Metro. So where's the infrastructure coming back to Toronto? But their taxes are going to go up.
There's going to be a significant impact on Bloor West Village. We've spoken to the businesses there. They will not be able to carry on. Bloor West Village is unique, because it was the first strip business area in North America to redevelop itself. It would be a shame if this tax system destroys it.
Essentially, the Swansea Area Ratepayers' Association takes the position that we do not support the present proposal. It's flawed because the assessment basis on which it's based is flawed. We support finding a system that will truly be equitable and will reflect true values or some true system of dealing with needs and bases. We're waiting to see the results of the study we've been waiting for for some time now, which reflects some of the realities that came out in the mid-1980s, that shows that market value is probably flawed for areas like Metropolitan Toronto.
We wonder about the rush, given the impacts this will have in the city of Toronto and other areas, and we suggest that you really need to do impact studies before you decide to go forward with this. Once it's come in, once you've done what's happened, it will be too late to say, "Oh, sorry, I guess your business has gone bankrupt, but we all make mistakes."
I remember from religious studies in university the old Taoist philosophy that you have two choices, one which will reflect significant change and one which will not. If the delay, for a short period of time, will allow you to analyse what the impacts will be, delay makes more sense. What I'm suggesting to you is, there are significant problems with the system, significant problems with what Metro has done with it. If you put this in, you will be held accountable for what happens, not Metro.
The Chair: Thank you very much. We have time for a couple of quick questions.
1950
Mr Turnbull: Mr Roberts, thank you for an excellent presentation. You've touched on a few very interesting points. The question of taxing paper profits: Would you say it was true that the speculative boom that occurred in 1988 could not have been sustained had everybody wanted to sell their house at that price, that in fact prices would have collapsed if people tried to sell them?
Mr Roberts: In fact they did collapse, because there were more speculators in the market than there were people willing to buy. The actual problem began in 1985 and kept increasing every year. People were getting a 30% profit on their property in six months, which shouldn't happen. Normally, with real estate you expect a rate of return equivalent to inflation unless you luck out by getting a piece of property somewhere and then something changes in the immediate vicinity. That wasn't happening. People were making paper profits.
Mr Turnbull: And you alluded to the fact that it was uneven across the city, that some areas were increasing at a greater rate of knots. Would you comment that many of these places that increased at a greater rate of knots have tumbled further relative to the others?
Mr Roberts: Yes, that's true. In fact, I know situations where people are buying properties right now for $50,000 less than the mortgage on the property.
Mr Turnbull: So in fact you're locking in an incredibly inaccurate picture of values. Even if you like market value, one would have to conclude that 1988 would give you a highly inaccurate picture of values.
Mr Roberts: In fact, I think the reason they went back to 1940 was partly that they were having the same sort of pressures in 1953, 1954, 1955 within Metropolitan Toronto, so they went back to what they considered was a stable period, which was 1940.
Mr Turnbull: And you alluded to the imperfect assessment that occurred. In fact, our last witness, who we unfortunately didn't have time to question, said that Pollution Probe bought offices in Toronto for $670,000 in 1988 and is now assessed at $2.3 million. How can this happen, that anybody can be so stupid as to assess a building at multiples of the price it was actually bought for in the year they've done the assessment?
Mr Roberts: I cite one street in Parkdale, Beaconsfield, where the same problem exists. The variations are about $100,000 between one end of the street and the other.
Mr Turnbull: The people who are howling and saying that the present system is inequitable are absolutely correct, but unfortunately they feel that they should get reductions to their constituents at any cost, whether it means equity or not. I'm hard pressed to understand the logic of that. The problem is that we have to convince them. You don't have to convince me. How do we do this?
Mr Roberts: That's partly what we need the study for.
The Chair: As we think out how to do that, Mr Mammoliti.
Mr Mammoliti: I'm sorry for cutting you off earlier, sir. I have a hard time dealing with the comparison, the comparison being taxes, with the drug movement and Jane and Finch and all that stuff. The drugs and the crime related to drugs in the Jane and Finch community have dropped 42% over the last year and a half, sir, and we have been paying more taxes than most people in Metro over the last 50 years.
Mr Roberts: With all due respect, I'll lay odds Jane-Finch wasn't developed 50 years ago; maybe 30, maybe 20.
Mr Mammoliti: The question I have for you, though, is that in terms of equity, and Mr Turnbull was talking about equity, are you saying the present system is better than this Metro proposal? Are you telling the people in the suburbs, the ones who are going to experience a drastic decrease in their property taxes, that the current system is better than this proposal?
Mr Roberts: No, I'm not saying that. With all due respect, what Metro is doing is simply taking a flawed system and making it more flawed. Just because somebody gets some money back and says: "Fine. I'm okay. We don't care what happens to the person down the street" -- that is the essential problem. Swansea area ratepayers have been arguing for 20 years that there are problems with the system, and we want a better system. The problem is this clinging to market value, which is not working. You've got to get a system that is fair, is equitable and properly reflects what's going on.
Mr Mammoliti: We agree on that point. We have to do some work in terms of adjusting the property tax system. But that's a system that's right across the board in Ontario; that's a system we've got to address here in the Legislature, no question about it. But here we have a Metro proposal that's a separate proposal, and in my opinion this is better than the current system. I personally don't want to keep paying more than the person in Swansea. That's my opinion and that's the opinion of a lot of people in the suburbs. They've been paying a lot more taxes than the average Metro person; 57% in Metro are going to experience a decrease with this plan. I'm going to have to disagree with you on that. I think the current system is worse than the proposal. I'm not saying the proposal in perfect, but it's a Metro proposal. They've asked us to implement it. Do you know the precedent that would --
The Chair: Is there a question there?
Mr Mammoliti: In terms of the precedent, do you realize that if the province puts its hands in this there's a precedent set here? The province has never done this with municipalities in the past. Do you realize that? That's my question.
Mr Roberts: I recognize that, but I'd also point out to you that part of the problems recognized by the Conservative government under Darcy McKeough when it allowed municipalities to make the decision, municipality to municipality, was the realization that in the case of Metropolitan Toronto and some other urban municipalities, market value could have a significant impact, and the studies had to be done in those local municipalities. The reality is that even in 1976-77, problems were recognized back then, and those problems are still there.
I have to point out to you, with all due respect, that a lot of the infrastructure up in the Jane-Finch area was paid for by taxpayers in Swansea, Forest Hill, Toronto, East York, York and Weston, because there wasn't the money in North York to pay for it. If you're willing to pay your debt back, fine.
The Chair: I'm sorry, but we're going to have to end this part of the presentation. I want to thank you very much for coming and representing the Swansea Area Ratepayers' Association.
Mr Turnbull: Mr Chair, could we in future have the time for questions divided equally between all parties? I think it was highly unfair to my colleague.
The Chair: We can try. The Chair is in the hands of the committee, but there are times when we simply don't have that time and I'm going to have to exercise some judgement. We have a number of groups to hear tonight and we are running behind. I will try to accommodate as many members as I can.
WENDY E. DAVIES
The Chair: Our next witness is Mrs Wendy Davies. Welcome to the committee. We have a copy of your presentation. Please go ahead.
Mrs Wendy E. Davies: Ladies and gentlemen, I am Wendy Davies and I'm here to discuss what the implementation of market value assessment has done to Mississauga with respect to the proposal of implementing MVA in Metro.
Since January 1986, when MVA struck Mississauga like a thunderbolt, I, as president of the Mississauga Association for Property Tax Reform, have spoken publicly on the matter at least 20 times. It appals me that in our so-called democracy no one in government appears to take seriously the most adverse effect it has had on those municipalities that were forced to accept it. However, and whatever the outcome, in Toronto at least there has been an opportunity to learn about this new set of rules before the fact. Mississauga learned them the hard way, after the fact.
The Assessment Act states that land, including a house etc, should be assessed at market value. Market value is defined as the amount that the land might be expected to realize if sold on the open market by a willing seller to a willing buyer. In theory, market value assessment sounds reasonable: equal taxes for houses of equal value. But this does not happen in reality. Municipal politicians are told that a greater percentage of their municipality will have a decrease in assessment. From our experiences, those decreases are token, compared to the shock increases.
The provincial assessment department will not divulge any information about the impact to be experienced in the various areas of the municipality. The area in which I live in Mississauga began in 1940 and thus is heterogeneous. The highest increase was 300%, and it was quite common to be up 30% to 50%. Please understand that this happened to us overnight.
2000
There are new subdivisions of homes in north Mississauga that had been fields in 1980, carved into civilization in 1984 and then in 1986 were assessed at hypothetical, astronomical values for the base year of 1980, bearing no resemblance to what they had paid in 1984.
Metro's base year would be, I believe, 1988. Real estate values in 1988 were at their highest. How can anyone justify using values from that year?
With real estate escalation of leaps and bounds in the 1980s, and now the recession causing loss of jobs and loss of confidence to invest in anything, let alone real estate, using market value to estimate property taxes makes no sense at all. Toronto home owners have assessments that go back many years. I can assure you, if the Mississauga experience is repeated, MVA is not about to sort out Toronto's assessment problems.
MVA is carried out at an enormous expense to the taxpaying home owner. It is done in a hurry and with human failings. During one hearing I attended, the chairman made the comment that if you had nine assessors assess your home, you would probably have nine different assessments. There is no consistency. If you are at home when the assessor calls and no appointments are made, you can only hope that the assessor is in a reasonable frame of mind. I can recall being told some of the comments: "What are you worried about? You can afford it" or "You'd be better off selling this place and moving to the country."
When Mississauga was forced to accept market value assessment, the new assessments were mailed accompanied by a formula for the home owner to calculate the bottom line. We took the mill rate times the assessment to give us our new tax rate, approximately. They also included information on open houses, which were conducted for the home owners by the provincial assessors. I attended the one in our vicinity and spoke of Clarkson, where I live. The assessor asked, "Where is Clarkson?" I replied, "You're in it." That was the beginning of a very long, discouraging road and, at the time, the birth of the Mississauga Association for Property Tax Reform.
The appeal process experience, the hearings where we appealed our assessment, not our taxes: When the home owner decides to challenge his assessment through the hearing process, he or she is victimized from day one. We were told that the Assessment Review Board would be an informal, relaxed court. Having observed many, and appealed three times myself, it is anything but. The onus is on you, the property owner, to prove the assessors wrong. The hearings are so confrontational and intimidating that I have seen men shake with rage and women weep. Home owners feel, through no design of their own, that they have been put through a wringer. Mayor Hazel McCallion told me that if she were to appeal her assessment, she wouldn't know where to begin. Ladies and gentlemen, if our mayor of Mississauga would have difficulty, anyone would. By the way, as with so many residents in Mississauga, the mayor's increased assessment of 116% forced her to move.
The system pits neighbour against neighbour. Only the assessors have access to all the required information, the formulae used and how they are applied. All research and the hearings are carried out in the daytime; very inconvenient for most. You are informed of the day of your hearing with an approximate time. Many abandon their appeals, for they see the hopelessness of the process. Just when you have spent weeks gathering whatever material you can -- and I've known many to use their holidays -- you might receive a phone call at 10 pm the night before offering you a deal; that is, a small reduction if you will not challenge your assessment. However, you must still appear to confirm.
Market value assessment is, you would expect, based on market prices of other properties similar to your own. You spend weeks gathering your statistics, taking pictures and making maps. Prior to your hearing date, your assessor might phone to request what comparisons you are using. You dutifully tell him, because you were told that the chairman expects you to. You arrive for the hearing, and the rules of the game have changed. The assessor uses other comparisons which you have not considered because you cannot see the similarities, and then he introduces formulae for which you have no understanding. As an example of this, one of the comparisons used for our property was literally a marble castle on the lake, bearing no resemblance whatsoever to our house in size, lot, location or quality of materials.
The assessor talks of the whole package, mass appraisal, and perhaps that a lot is a lot, if there ever was such an intelligent phrase. The land residual of the whole package may be calculated like this: Take the land portion value of, say, three properties -- $55,000, $52,000 and $85,000 -- and average them. Now why would anyone in their right mind average these three residuals?
If the property owner questions the formula used, the answer will no doubt be, "A lot is a lot." During one of my hearings I asked about the use of the assessor's manual, the one by which the assessor is trained. The chairman turned to the assessor and asked, "Do you ever use your manual?" Not at all comforting, because all that is left is personal judgement and the mood of the day.
The chairman might have asked, "Have you examined your neighbour's house?" Intimidating? You bet. All the while the owner is on the spot trying to defend himself in a situation he did not create, and his tax dollar is paying for the humiliation. If you hire a consultant to represent you, the assessor will have a QC to carry out the interrogation. Even with professional help you must still participate. Minutes of the court are not recorded. The chairman writes his own notes.
During the hearings of a neighbour and myself, we requested written decisions. When they arrived by mail, the only accuracies stated were our addresses. The written analysis had nothing whatever to do with our proceedings.
If you lose at the ARB, and very few win a reduction in their assessment, and you decide to challenge the province's decision at the Ontario Municipal Board, you must first submit a fee. At the OMB you are confronted by assessors accompanied by lawyers. Undoubtedly, you require professional assistance at great expense.
Two Mississauga residents felt so wronged by their ARB decision that they decided to go on to the OMB. However, with business commitments and so little time to prepare, they asked for a postponement by letter, couriered 10 days before the hearing, abiding by the rules. They were told by phone to be there anyway, at which time it would be decided whether to accept the postponement. One man went for both. The chairman gave him the dressing-down of his life. In fact, he felt treated as a four-year-old. To add insult to injury, the chairman charged each of them $200 for wasting his time and that of the lawyer.
The greater portion of our tax bill is for education -- 62% in Mississauga. Why is the onus on the property owner to pay the educational tax bill? With MVA, the burden is beyond belief. Reassessment is expected to be carried out every four years, thus no property owner can plan his financial obligation for property taxes. It makes no sense that property taxes are linked to market value.
In Mississauga, many home owners who have supported their community for decades have felt totally helpless. Governments do not practise restraint. It appears it is their right to make money on the calculated increased value of a property on which the home owner has made nothing.
Why improve or upgrade a home? MVA can destroy pride in home and community. Since the implementation of MVA in Mississauga in 1986, my property tax increased $1,000 immediately. By 1992, it compounded to double the taxes we paid in 1985.
MVA in Mississauga has already driven thousands out of their homes. With the economic climate as it is, we cannot sell our homes for anything like what they have been assessed. As for retirees and those thousands who have lost their jobs, they, we, are appalled at what the government has done to us. Taking in boarders can become the order of the day just to meet the tax bill.
In a democratic society we should expect our elected representatives to act on our behalf, not against us. We in Ontario are already burdened with taxes at seven levels.
Market value assessment in Mississauga has been a disaster. Misery is not looking for company. Please, don't allow another unforgiving mistake to be made, this time in Metro.
The Chair: Thank you very much. I realize there was some confusion at the outset regarding whether you were here representing the Mississauga group, and so for that reason I will allow a question from each caucus, beginning with Mr Owens.
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Mr Owens: This is pretty outrageous behaviour you've had to experience in the process of the assessment on your house. What happened? Did you complain about this?
Mrs Davies: The comments that I refer to are comments of others who have -- it has been discussed as well as in the hearings. Are you referring to, "Why don't you sell your house and move to the country?"
Mr Owens: No, no, in terms of the story you reported, is this a situation that's happened to yourself personally?
Mrs Davies: At the OMB level?
Mr Owens: Yes.
Mrs Davies: No. This has happened to two people who live within our area, both in Clarkson, one north of the Lakeshore and one south, one who lives right around the corner from us. The name is Schwartz.
Mr Owens: As I say, this is outrageous behaviour.
Mrs Davies: The steam was coming from his head when he walked out he was so upset. He went straight to a telephone and called me.
Mr Owens: Did your person report it to the local MPP?
Mrs Davies: It's all been reported. This goes back a way, and by the way, having been charged $200 each, it was later withdrawn. But he was charged and the man he represented at the time, having couriered 10 days earlier the notification that they would like a little more time. That happened at the OMB level.
Mr Owens: I appreciate your comments. Just one quick final question: In terms of your experience of others going through the assessment appeal process, what has been the average cost they've been asked to bear?
Mrs Davies: Are you talking about taking on a consultant?
Mr Owens: The whole process from start to finish.
Mrs Davies: First of all, we go back to 1986, because that's when we had the implementation, and I have to tell you that because we were told it was going to be a relaxed, informal court, the majority of people went without any assistance. Others, you could spend thousands.
Mr Owens: Right.
Mrs Davies: But I do know what it's like to come up against a lawyer and be totally intimidated by him.
Mr Owens: I'm just trying to get an idea of what the cost of justice is.
Mrs Davies: Do you know how much lawyers charge per hour?
Mr Owens: It depends which firm they come from.
Mrs Davies: Okay, but none that I knew, certainly at the ARB level, took a lawyer with them; that was out of the question, and since the percentages of receiving a reduction are next to nil, nobody would be willing to spend thousands of dollars.
What we learned about going on to the OMB level is that you are definitely faced by a lawyer, so it's ridiculous to be there without one. However, a lawyer was also used at the ARB level. At the beginning there were just the assessors there, but soon there was a lawyer there, and if there was any talk of there being a consultant with you -- and one of them spoke here last night, Mr Keith Noble -- then they immediately took a lawyer with them, had a lawyer with the assessor.
Mr Grandmaître: I'd like to quote a paragraph of your brief on the very first page:
"However, and whatever the outcome in Toronto, at least there has been an opportunity to learn about this new set of rules before the fact. Mississauga learned them the hard way, after the fact."
I want to warn you that we are not providing you with all the facts. You will learn after the facts.
Mrs Davies: Yes, I'm sure I will.
Mr Grandmaître: There is no impact study done. There was none at Metro.
Mrs Davies: Excuse me. What I'm referring to there is that the only thing we had was a paragraph in the local newspaper to say it was going to happen. It was written that there would probably be an average of a $180 increase and an average of about a $50 decrease. I haven't heard of one increase at $180. There was, I think, a $100 decrease. Both of those figures were pies in the sky. That's all the information we had. We heard on Monday we were going to have it; on Wednesday we received our bills. That's what I mean by that comment.
Mr Grandmaître: I see.
Mrs Davies: I know you will never learn all there is, all the information, ever, because that's the way this process works, but at least you've had something going on. That's all I'm saying about that.
Mr Grandmaître: If I can go on, Mr Chair, I think the two previous witnesses put it very clearly. The provincial government must take full responsibility in this property tax issue. We were told some months ago that the minister was to introduce enabling legislation to provide Metro with the same power as any other regional government in this province, and we believed him.
This committee is now faced with two problems, the enabling legislation plus a plan, and the minister admits that he doesn't like some of the sections in the plan, but he may or will allow Metro to make changes. Do you agree with me that this total package, this legislation, is the total responsibility of the provincial government?
Mrs Davies: The provincial government looks at things from that level and the way I look at it is that I think it's been passing the buck in that Metro has passed it on to --
Mr Grandmaître: The Assessment Act is the responsibility of the provincial government.
Mrs Davies: That's the way it has been. Prior to that it was the local government.
Mr Grandmaître: In 1970.
Mrs Davies: But our experience -- I'm going by our experience -- was that they didn't really know what they were dealing with at all. They'd walk into an area and they didn't have any idea whether it was a good area or it wasn't an area. I mentioned to you that in one of the hearings, and I was there for that statement, a chairman said you could have nine assessors assess your home and you will probably get nine assessments.
Mr Grandmaître: Just like lawyers.
The Chair: Mr Turnbull.
Hon David S. Cooke (Minister of Municipal Affairs): The Minister of Municipal Affairs in 1986 --
The Chair: Order, please.
Mr Turnbull: Mrs Davies, I remember hearing your story several years ago and I was outraged at the time by the story and I'm equally outraged today.
The problem that I see for a lot of people who want to claim that they're incorrectly assessed is when you use comparatives of neighbouring houses that very, very often -- and we've heard this in evidence so far today -- the assessors will beetle in when they find out the comparatives and they will reassess the house and say, "Oh, that was wrongly assessed," and they've jacked that one up. So in fact your neighbours certainly don't want to share the information with you as to what their assessment is in case they become victims of the assessment scheme.
One of the great problems we've had over the years is that the people in Revenue, the assessors, want MVA at all costs because those are their jobs. It's estimated that some $200 million per year is spent across the province in administering the assessment program, money which could easily be saved.
Mrs Davies: That's right.
Mr Turnbull: And I might say, it's slightly passing strange when, long before I was in politics, I exchanged an awful lot of very strong letters with the then Minister of Municipal Affairs, Bernard Grandmaître, on the subject of market value assessment, where he was wanting to say, "Well, we'll only do it if Metro requests it," and that has been the position of governments and they throw the ball back. But the responsibility is clearly shared equally between the provincial government and Metropolitan Toronto. There's no doubt about it.
Hon Mr Cooke: It's not what Darcy said.
Mr Turnbull: That's what I'm saying, and I'm fed up with the smug comments, the fact that the NDP championed the cause of being against MVA and many of their ministers in fact said they would fight against it at all costs, and now they're saying: "Well, that's a municipal affair. We shouldn't be mixing into it."
The question is, how can you trust politicians if they campaign on the basis that they're against something and then they vote in favour of it when it comes to a vote? Why bother going and voting or listening to politicians if they're not going to do what they say?
Mrs Davies: I think in this time probably politicians recognize at all levels of government that they aren't being trusted. We put them into power and it's a very sad state of affairs. Then when you beg and you plead and you listen to the experience of the other municipalities -- the first one that went with market value was Niagara-on-the-Lake. Niagara-on-the-Lake is a pride of Ontario.
The man who started up the Ontario Association for Property Tax Reform, to be quite honest, died of stress over this. I got to know him very well and he promoted the idea of our joining with them. But it just seemed that whatever you did to your house, if you improved your community, if you took pride in your community, then they were going to sock it to you, which is what happens with MVA. Yet the provincial assessors come to the municipal councillors and say to them, "This is in the name of equity." It does not happen; there is no equity.
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Mr Turnbull: One last quick question: Do you have anything against paying your fair share of taxes?
Mrs Davies: Of course not.
Mr Turnbull: Thank you very much.
The Chair: Thank you very much for coming before the committee this evening and for your presentation.
I'd now like to call on the Summerhill Residents Association, its representatives or representative. Is there anyone from the Summerhill Residents Association here?
TORONTO ROOMING HOUSE ASSOCIATION
The Chair: I would then call the Toronto Rooming House Association. Are there representatives of the Toronto Rooming House Association? Would you be good enough to identify yourself for Hansard and to introduce your colleague.
Mr Larry Chilton: Hello. I'm Larry Chilton. I'm president of the Toronto Rooming House Association. This is Dave Vallance. He is one of our members who has helped me with this submission, among other members who have helped us.
The fate of the city of Toronto rests in the hands of the provincial government. On behalf of rooming house owners of the city of Toronto, we urge the members of the provincial government of Ontario to show the foresight and wisdom of leadership by voting against the Metropolitan Toronto Reassessment Statute Law Amendment Act, 1992, which has been requested by Metro Toronto council.
Throughout the relatively short history of this province, Toronto has been the focal point. Toronto has been the centre of economic activity of the province. Toronto is where the provincial Parliament sits. Toronto is where the Supreme Court rules. Toronto is a big city that is a major attraction for tourists from the United States, and even around the world, because of its reputation as a clean, safe city where people actually live downtown. Toronto is a wonderful city. By the way, we know this because we see a lot of these people coming from around the world and we provide accommodation for them.
However, Toronto as we know it is about to be changed; not just changed, but changed irreparably for the worse, we feel, if this so-called market value assessment, MVA, is allowed to creep in under the guise of more equitable taxation or tax reform.
If one were to believe the media, it would seem that this approval is just a formality, a rubber stamp, something the province must do without treading on deliberations or decisions of Metro council. We would have liked to give the government more credit than that. We would have expected the government to do a complete and thorough investigation of the impact and implications of this reassessment, as well as the methods of reassessment, before considering any sort of provincial approval.
All our members own legal rooming houses licensed by the city of Toronto. This should put them in the same category for assessment purposes, since the criteria for a licence is determined by city of Toronto bylaws. There appears to be no recognition of city of Toronto bylaws, official plans, zoning regulations or height restrictions. This seems to apply to many categories of property, not just rooming houses. We will examine rooming houses.
From a small random sampling of our members and the way this reassessment would affect them, numerous inconsistencies and incongruities became apparent. We discovered some licensed rooming houses assessed as single-family dwellings, which has been the traditional way they have been assessed by the city of Toronto. Others were assessed as multifamily or the same as apartment buildings. Still others received a designation that may be commercial, but we don't know. One property in a prestigious neighbourhood actually shows a 20% decrease, while a property in a depressed area would have an increase of 120% from a much higher current tax that already does not appear correct.
Following are some examples of variations in tax rates. The actual assessed values are questionable in many cases.
If you want to look this over quickly, I think the important thing to look at is the final column, the tax as a per cent of market value assessment. A quick look at that and you'll see that it's quite common for discrepancies three times; I guess one person's paying three times as much as another person here. It seems to me that it's pretty wild, the variations we see here.
I refer to the asterisk here. From the outside, this is obviously an apartment building with six large two- and three-bedroom suites, well maintained and close to Dupont Street. It seems absolutely incredible that one half of a semi-detached house in Parkdale that is occupied by people on social assistance and assessed at $429,000 will be expected to pay the same tax as another rental property assessed at $1,425,000. It is apparent to us that the assessors were not working with any standard when properties with the same function and use are categorized randomly at the apparent whim of each assessor.
We also question why the assessors are allowed to determine the tax category on a random basis for similar classes of property. Should that decision not belong to the municipal government or even to the province? This is, after all, low-cost housing which we feel provides a good essential service to society. Should it not be supported on a uniform basis?
In the recently released Report of the Rooming House Review, City of Toronto, in which we had substantial input, by the way, the great need for this type of housing is emphasized along with proposals and funding for rooming houses owned and operated by the private sector. In fact, the province is currently providing funds to help save this type of housing. This is a classic case of the right hand not knowing what the left hand is doing and is a direct result of the incredible haste with which you are processing this mangled scheme.
Incidentally, when these types of incredible numbers were pointed out at the Metro hearings, Mr Tonks said, "Bring them to our attention and we'll fix them." The way he fixed MVA?
This leads to two problems. First, a large proportion of homes will not know the implications of not doing something, but we will be doing our best to inform them. Second, once they are informed they will start to appeal, along with home owners, business owners, tenants and owners of vacant lots, the municipality for its parking lots, and others who realize what has happened. This becomes a make-work project for assessors, lawyers and a lot of other people who will probably take crash courses. We know a lot of people are unemployed in Ontario, but is appealing assessment the kind of work we should be trying to encourage?
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Of approximately 120,000 tenants whose rents will increase as a result of this scheme, only 4,000 to 5,000 are residents of rooming houses. However, most of these people are in the lowest income segment of our society and many have disabilities that further disadvantage them. It is recognized that this type of housing is most efficiently and economically provided by the private sector and it is lamented that in the past decade the number of licensed rooming houses in the city of Toronto has fallen from 900 to 545. This continues to drop, certainly, in this economy. This has happened for many reasons which haven't gone away, and when combined with the poor economy and the increase in tax because of MVA, there is little doubt that the number will continue to fall.
We have had rent controls and landlord-tenant laws that are very difficult for a small landlord to work with, increased city and fire regulations and now a tax increase that could not be foreseen. In our business, anyone charging rents that have been increased according to provincial guidelines is likely to have vacancies. Many rents have not increased for the past two or three years, and some have actually been reduced to pre-1988 levels to cope with a vacancy rate not seen in decades. I've personally heard of people who have reduced their rents as much as 25%.
Statistics show that this recession has been most severely felt by the city of Toronto. Even the perverted compromise of this proposed reassessment act would be like kicking Toronto in the head when it is already on the ground. It is ludicrous even to think that if there were a legal way to pass on this increase by even an extra 5% to the tenants, they would be able to pay.
MVA will mean many home owners will rent a room, further reducing the value of rooming houses, because of the vacancies and the fact that they will lower the rents to get the cream, the better type of tenants. Additionally, it is just as easy to receive the social assistance cheque by mail in a suburb or a non-licensed -- illegal? -- rooming house. By the way, this MVA, we feel, is just going to promote, as a number of other things are already promoting, illegal rooming houses. There's been a lot of work done to make the existing legals safe places to live. This is just another of a number of factors that are pushing people away from this safe accommodation that already exists into illegal rooming houses.
Continuing, this raises another point. The city of North York and other suburbs have consistently refused to legalize rooming houses because it would devalue their property. This is curious when they now claim that houses in Toronto are more valuable than in the suburbs. However, everyone knows that rooming houses are all over the suburbs, but since they have never been recognized, the chances that they have received similar assessments is very remote.
The recent record of bankruptcies and power of sales will be rivalled only by the number of boarded-up rooming houses and buildings and overgrown lawns. Have you ever seen the inner city of Detroit or Cleveland? Pass this act and come and take a look at Parkdale in a couple of years. Better yet, take a look at it today. There are already houses that have been boarded up.
While the watering down of MVA may have eased the conscience of some Metro councillors and saved the face of others, it has done nothing to address the real issue of fair and equitable taxation. It is actually going against the grain of the work being done by the Commission on Planning and Development Reform in Ontario and the reports of the Office for the Greater Toronto Area. Even diluted as is, the consequences of this reassessment will be most devastating to the economy of the city.
When properties capped by the current proposal are sold, the full MVA tax will apply. From an investor's perspective, every $1,000 increase in taxes will result in a $15,000 decrease in value. Some realtors have said that a $5,000 tax increase means a $75,000 decrease in value for these types of properties.
Again, we question that the assessor should be determining property classes, when the city of Toronto has traditionally treated rooming houses as single-family dwellings.
We are also concerned about the way the assessment office is handling the issue. When our members called the provincial assessment office, they were told that they should not be concerned, that the increase would only be 5%, as if the proposal now before you were passed already. In fact, they were doing it back in October, after Metro council debated the issue.
It would be fair to conclude that the majority of ratepayers are not fully aware of what is proposed, unless they were patiently persistent and assertive during their inquiries. The proposed amendment, in its scrambled format, is shortsighted and will have the effect of lowering property value in Toronto, so that in five years the whole process will reverse.
The vote for this plan at Metro was a joke. Those who had a majority of constituents who got a break voted for it; those who had more losers than winners voted against it. Does conflict of interest mean nothing?
The city of Toronto cannot change anything. That is why we are here: You are the only people who can take a dispassionate look at it, and we are appealing to you to stop it. Canada, to the surprise of many, did not fall apart after the recent No vote in the referendum, nor will Metro disintegrate if the proposal is not approved by the province. The converse may be true if it is passed. Please vote "No MVA."
The Chair: Thank you very much for your presentation. I know a great deal of work and information went into it. I regret that our time is completed at the 20 minutes, but I do want to thank you for everything.
Mr David Vallance: Can I make one comment? The lack of attention around the table has been a bit disturbing. I know some have been following from their own paper. I was here yesterday when the railway people made their presentation, and a powerful one it was, in my opinion. They got a lot of attention because there was a $12-million increase, I think, in their tax base. If just 300 of these rooming houses are going to face $5,000 increases, which is quite possible, based on the statistics we've shown you, that amounts to $1.5 million. It may not be quite as big as the railways, and we're not employing 16,000 people either. But we do house 4,000 or 5,000. I think it's an important issue, and I'm disappointed at the lack of attention.
The Chair: I appreciate the comment. Thank you for appearing.
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METRO CITIZENS FOR FAIR TAXES
The Chair: I'd like to call the Metro Citizens for Fair Taxes. If you have any copies of your submission, please give them to the clerk. Would you be good enough to introduce yourselves for the sake of Hansard.
Mrs Margaret Gardner: My name is Margaret Gardner; I'm from Scarborough. Joan Schmidt is from Scarborough and Dora Ellis is from North York. Mr Paul Crawford represents another group. Metro Citizens for Fair Taxes represents quite a few groups. We are not just one group but a loosely tied set of groups all across Metro, because we find we haven't had a voice in the media or any other way. So we have been working behind the scenes, and our numbers are growing. In the last month, I think people have realized that it isn't going to change, and for that reason they're going to make a difference their own way.
Each group represents large numbers. In my group there are about 9,000. It's growing every day so I can't really keep a tab on it, but everyone is spreading that message, so it's going to grow rapidly. I know of several other groups. Some are 5,000, some are different numbers, but there are 18 of them. A 19th one joined this weekend. I was surprised that they would call me and express that, but it's really incredible how much groundswell there is over this issue. We represent a large majority of the citizens.
I know a lot of media have come out and said, "It's 50-50; it's this or it's that," and a lot of numbers have been thrown around, but we, as citizens, took the trouble to get the actual reports ourselves. There is 72% of suburban residential that is affected by this, that has been paying extremely high taxes for a very long time. They knew about that and they've waited a long time to get some kind of relief.
You'd go to your assessment office and they'd say: "You can't appeal this because of the vicinity clause. You're all paying high taxes, so you have to stay paying those high taxes." After trying that, they said: "Why don't you wait till next year? They're bringing in market value." People said: "That's a good idea. Then we'll try to wait for that." Up until about a month and a half ago they thought the process would work and this relief would come, but that didn't happen.
We're not satisfied with Metro's plan. I think that message has come from Toronto as well, but for a different reason. From our viewpoint, someone had better listen to our side. We've tried very hard to get our message out to the media and then they ask us: "Why didn't you come forward? Why didn't you say something?" We had press conferences. Different groups have tried. We put out extraordinarily informative things, and they suddenly say to you, "Well, we don't have to put it on the air." So we never had a voice.
We tried all the different avenues. All we have left is to work behind the scenes, and that's what happening. It's rather spontaneous in the last month since the decision was made, because people can't take it any more.
This example we have up here is a North York home. It's three quarters of a mile from the Toronto home. I went through the rolls -- and, of course, because we didn't have anybody to offer these numbers or figures or assessment rolls to us, we had to pay for them -- and I found hundreds of examples of each with relatively the same tax within dollars and the same market value.
One house is just behind Spadina Road, has a large lot and a nice big home; three quarters of a mile from it, the other one is in North York. Under MVA they would have paid the same tax, but their current tax -- and there's quite a few of each example, not to represent only one isolated case; we really were careful not to do that -- $4,916 by North York and $617 paid by the Toronto home.
We then went to all three levels of government -- we went through the director of finance for the province, for the city and for Metro -- to make sure that our implementation was as close to what can be expected to happen as we know at this time. There may even be more taken from us, because they don't know how much is going to be needed to cover the caps on the increases. These minuscule increases, I might add, are very tiny, and for someone to complain about that is kind of hard to believe.
But this is what will happen. First, the mill rate increase goes on, and we have estimated that to be -- and we confirmed it -- possibly between 8.5% and 10% next year. That's what I've been told is the estimate by most finance departments. That's a pretty round figure, but it's 1.5% either way; that's what they said. So we did it to both: put the mill rate increase on, took off the decrease on the North York home and got the 1993 tax. So this person is saving about some $300 by next year. The following year you add the mill rate on again, take off 10% of the remaining decrease and they're almost right back where they started from within two years -- not even, because by 1994 you're starting the year again. But if you take this plan all the way to 1998, they're paying $7,000 property tax.
These are average people. These aren't high-powered executives or really wealthy people; these are the average citizens. I've got examples from all over Metro, tons and tons of assessment rolls that reflect numbers like these or even higher.
With the increase side, add on the 5% after you put the mill rate on and you get the 1993 tax. Follow the same procedure, and with the plan that Metro has now put forward and that you're saying you're going to approve, this is what's going to happen by 1998. If someone can tell me that the poor people in Toronto are suffering a recession, they should see what's happening in the suburbs. They don't have a clue.
In our area, the same house has gone power of sale twice in the last three years, but not just that particular house: all over the place. Go by the real estate offices all around our area: The whole window is covered with powers of sale. You ask those people why they lost their homes. When they're paying taxes like this and a mortgage and their utilities and their bills and raising children, you can't afford these things.
If everyone were paying his fair share, I suppose we'd have to swallow that, but that's not the case. We know that, and the people aren't going to take this any more. You say, "You're the majority and you haven't been forward." We've tried, we've really tried to get our voice in. I'm glad you're having these hearings for that reason, because at Metro they locked us out of the room. They filled the room early. No one tells this story. They locked all the people out of the room and at the last they let us in, when they knew our buses were supposed to leave at 10:30.
I stayed on because I was determined to see what the outcome would be. I knew so many people who really wanted to voice their opinion. It was so strange, because people walked up and said: "Hello. My name is Kola Akande." I knew Kola. He's a wonderful guy. He's in our group. The funny thing was, it was a 22-year-old university student filling his place, laughing his head off and going outside drinking beer. They had it all stacked that way. It went on and on with name after name, and then the report came out in the media right away, "The people against it were out in droves, but no one was there to support it."
This is the kind of process we've dealt with. No one dared to say this, but I'll say it: This is not the way we thought it was going to be, and until someone wakes up -- the people are so angry out there. They call me and I hear their pain. I'm not normally emotional, but this particular thing has brought out things in me I didn't even expect, but this situation has gone too far. These numbers speak for themselves, and this is three quarters of a mile apart. We're not talking from here to another city that's in another area; we're talking Metro.
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They say Toronto could split from Metro and they could become their own city: 650,000 people, in a world context, what would they really represent? This is a threat. We all know many of the things they've said are not true. We're one community. We are Metro Toronto and we should be treated like Metro Toronto, not like separate little coves and everybody has to be separate in their taxes and separate in what they pay for every single thing. It's not just the taxes this works on, it's been unfair on many other things, but this is the biggest dent and people have suffered enormously.
I have one more thing I really have to say. I've heard many members stand up in the House and say, "When you moved there, you knew what your taxes were going to be." That's another farce. If you bought a newer home, which I don't think should be a stain on your reputation -- I think they've made some pretty weird comments about newer homes.
At the time when we bought in 1989 there was a shortage of homes so we had to go really far, almost to the edge of Metro, to buy a home we could afford, and so we inquired. We weren't stupid about this. I phoned the assessment office and I said, "What will my taxes be, because we have to know this?" They said $1,756. I said, "Are you sure that's the final assessment?" They said yes.
Now, bear in mind I bought it secondhand, so it had already been on the market for a year and they should have known what the taxes were by then. When we purchased, I made the lawyer specifically get a letter from them indicating that's the case. We moved in and two months later we suddenly found out our taxes are $3,400. We couldn't afford that.
You might say, "Gee, that's not too bad." Well, it's a lot. We still have the house, for how long I don't know, but what scares me the most is that I don't even have furniture in it, and when will I get any? I don't know if I'll ever be able to afford it and I thought: "Jeez, we have to live with this. We're the only ones in this boat." But since I got involved in this, I've seen so many people living like me. You don't see this so much in some cities but you do when you're stuck with this because you can't afford these things.
I don't say, "Well, poor me." I say what kind of deal is this if we can't treat everybody in this Metro area as a group? We make up this great city. Some of us even come from Toronto, having lived there for a number of years, and have many friends there, but we all just want to pay a fair share and we're not against paying taxes; we're only against being treated unfairly. That word has been used a lot but it shouldn't be overlooked.
The other thing is that I have to talk about some ads that went in the paper recently. You have a handout there. They call that a citizens' group; well, I would say we're a citizens' group. We're not well connected, we're not the élite, we're not the money people in the country, but we're a hardworking, relatively decent class of people and I think we deserve a little bit better than that.
The city of Toronto has put forth these ads, "221,000 home owners will get unjustifiable tax increases" -- the money they spent on this. What's really strange is that they try to scare everyone. Even people who didn't know what MVA is might think they're affected by it, "Poses a dangerous threat to home owners all across Metro." They write words that'll scare people who are tenants. The truth is that 306,000 people should get their taxes lowered but no one knows this, because this is what they see.
Next they see, "117,000 tenants are going to get increases under this plan." I was a tenant for many years and I resent what they're doing to them, because 309,000 of them really don't know that their rents will go down. That's three times as many but you're going to have people coming to your hearings who don't even know what they're talking about. They're not even going to understand the issue. They're just going to see this, because we don't have the money to counter these things.
But the worst one, this one, came out Monday and this is a blatant insult to the entire political process, I'm sure to the citizens of this great city -- I would say this is the city, this is Metropolitan Toronto. "124,000 businesses will get tax increases," and then they go with the threat thing again. If you look at Metro's own report, there are only 125,000 businesses in all of Metro. How did they get that? Does that mean only 1,000 are getting decreases?
I beg to differ. If you look at Metro's report, the actual fact is that 54% of the businesses across Metro are getting decreases, so I would say I agree with our mayor. This is an information attack but it isn't a truthful attack. This should be condemned by you people because this misleads people who really wouldn't have known the truth. That's why, behind the scenes, what we're saying is, if you can't fix it, we're not against you or any one person or any one thing, people are just telling me over and over again: "We're not going to pay. We don't feel a justifiable reason for paying any more."
That's what they're saying, and there are so many of them. That's something I don't even recommend but that's what they're forced to do because they can't fight this. There's no way they can handle it.
I'll defer to my colleagues and let them explain what they have to say, if they have any time left, and I thank you.
The Chair: I know there are several who wanted to pose questions --
Mrs Gardner: Okay, certainly.
The Chair: -- and I'm afraid we have a limited amount of time, so if you would like some questions, I think that might be appropriate. If I could ask you one question, the chart you brought -- do you have that on a page?
Mrs Gardner: It's on your handout.
The Chair: Okay, fine. Thank you. Mr Stockwell. We are somewhat limited so I would ask each member to be succinct.
Mr Stockwell: Yes, I appreciate the comments. Having been around this issue elected for 10 years, I understand exactly what you're saying. I've been to a number of meetings where the people have said the same thing. I can understand there is some emotion tied to this for the length of time you have been involved in this fight.
I've been through the tax rolls on a number of occasions. I also see that you have some tax rolls there. I'd just like to ask you a quick question. I've been through the city of Toronto tax rolls and I found literally thousands of people paying less than $1,000 a month -- less than $1,000 a year -- in taxes, going through the tax rolls; not just a few, but thousands. I've found them as low as a few hundred as a yearly assessment that they pay from the city of Toronto. Have you got any examples, or did you find that?
Mrs Gardner: I have tons of them. I couldn't afford to buy all the rolls so I went to just grab some from each -- wherever I could -- and I was appalled. I could have bought the whole thing, except I couldn't afford it. I don't think I should pay all my tax money to fight this. They're all like that. There's pages and pages. Each is hundreds and that's all they have.
Mr Stockwell: So it's not unusual to find less than $1,000?
Mrs Gardner: No, not at all. I could go through them all with you, but I think that would be pointless. If anyone wants to look at them, it's just filled with them.
Mr Stockwell: What about in the North Yorks, Scarboroughs and Etobicokes of the world?
Mrs Gardner: In Etobicoke, from what I can see, just grabbing a random sample here, they seem to be extremely high. They talk so much about Scarborough, saying, "Oh, Scarborough this," but Scarborough isn't as bad as North York and Etobicoke in terms of dollars.
Mr Stockwell: I know it isn't.
Mrs Gardner: Maybe in numbers of people paying too much, but they're actually paying really a lot higher.
Mr Stockwell: A lot in some areas. Thank you.
Mr Mammoliti: I just want to clarify a couple of things before I ask you a question very quickly because I don't have much time. This is just a little misleading.
Mrs Gardner: We just wanted to give you the document that shows --
Mr Mammoliti: You disagree with the application here?
Mrs Gardner: Well, I do in the sense that when they come out --
The Chair: I'm sorry, just for clarification, because we couldn't see what you were saying was misleading, Mr Mammoliti.
Mr Mammoliti: Yes, it's an application from Save Our City.
Ms Dora Ellis: That is not us. That is the people who are fighting us.
Mr Mammoliti: Yes, okay, I just wanted to clarify that.
The Chair: I just wanted us all to be clear what it was you were talking about.
Mr Mammoliti: The front page of the handout, okay? It's not them. They're actually opposed to them. I just wanted to clarify that.
First of all, all six of you should be proud of yourselves for coming out here today. I've been waiting on a group like you to come out and basically talk about what we've been talking about for the last three days, so you should be commended for having the guts to come out here.
I have been saying probably everything you've said except, of course, that particular example. I've been saying everything you've been saying for the past three days and I've been ridiculed by Mr Turnbull and by Ms Poole, who isn't here to hear your story, unfortunately. They've been calling us every name in the book and all we've been doing is trying to talk about the injustice; trying to talk about what's happening in the suburbs; trying to talk about the fact that this will actually help 57% of the residents in Metro.
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Mrs Gardner: Actually, it's 65% across Metro, all residential.
Mr Mammoliti: Is it? I stand corrected. It will help 200,000 of the 350,000 rental units out there and those tenants. All of this stuff I've been saying, and what I get is Mr Turnbull calling us a bunch of socialists who don't know what we're talking about and I get Ms Poole, who isn't here to hear your story, telling us how wrong we are and how unfair we are as a government. So I want to thank you for coming out. I appreciate what you've done today, and you've got this MPP's vote.
Mr Tony Ruprecht (Parkdale): Just very briefly, Ms Gardner, I am just wondering. Your group just started recently, or did you do this for a few months?
Mrs Gardner: Actually, we found out about the change coming to market value and that's what motivated most people, because they didn't expect it to be changed. They thought it was going to go through.
Mr Ruprecht: Did they just call you, or how did you get started in this?
Mrs Gardner: I heard something and then I called someone. I got a name somehow from some news item or something. I called them. Then they told me more about it. Then I decided that to be really informed was the best measure, so I investigated everything I could myself and for some reason, when things came up, I decided to go and find out more. As that came about, more and more people found out about me, and then tons of people started phoning me and I actually have nerve damage in my left hand from answering the phone, and that's not a lie. My doctor said to me, "What did you do, fall asleep on your arm every night?"
Mr Ruprecht: How many telephones do you have in your house?
Mrs Gardner: One, and that one should be going soon too.
The Chair: I'd like to thank you all for coming and for the work you've put into your presentation. I might just add I hope that you'll never be concerned or afraid about coming to appear before a legislative committee or a municipal committee. We should always ensure that in those public places everyone feels comfortable and free to make their presentation, so we're glad you could be with us tonight.
Ms Ellis: We had other people who had other aspects of this.
The Chair: I'm awfully sorry. I'm afraid we have to stick to our time frame.
Mrs Gardner: Can they come back?
Ms Ellis: We got less time than the people before.
The Chair: I'm sorry, ma'am, we keep to this time. I believe Mr Crawford is going to be making a presentation.
Mrs Gardner: As long as you know that she's from a group in North York. We have members who are in groups in Etobicoke as well, and it's funny, because they're all calling me, so I'm like a hub and then there's another hub. It's really weird. It's just so loosely --
The Chair: If those groups would speak with the clerk, we could try to find another time when you can make that presentation, but as Chair I must ensure that everybody has the same amount of time and you have had 20 minutes, which is what the group is permitted. If we didn't do that, we'd be here until midnight. We'd be happy to keep your presentation if you have it written out, but, as I say, Mr Crawford is going to be appearing later and we can make room.
Ms Ellis: Can we bring it in? I didn't prepare it until today because we didn't know until yesterday about this.
Mr Stockwell: If you type it up and give it in, they'll distribute it.
[Interruption]
The Chair: If that's agreeable to the members. The gentleman who is appearing next has said that he's willing to wait for five minutes if you could say what you --
Interjections.
The Chair: Okay, and I'm sorry to be difficult, but it's just that we're trying to get in as many people as we can. Please go ahead.
Mrs Joan Schmidt: I just want to add two things to what Margaret had to say. I'm going to be very brief, but I think it's really important.
I've been in contact with a couple of real estate agents in my area who have mentioned to me that the powers of sale in our area are so high that they see 18 or 20 a day coming across their desks just for the city of Scarborough. I said, "Is that every single day?" He would have given me some sort of paperwork or testimony, but I didn't have time to get it in the mail or I didn't get it today from him before I came down here.
I said, "Now is that every day?" and he said, "Well, okay, 14 or 15 would be conservative." I said, "What about the city of Toronto?" and he said to me, "Four to five would be very generous," what they would see per day coming from the city of Toronto. He said to me, "The reason that people are losing their homes in Scarborough is because the property value has dropped so much here and not in the city of Toronto."
Another thing that I want to point out is that we went to a Scarborough council meeting to ask about our taxes and when we went there, there was a gentleman there who actually did the assessment for the city of Toronto in 1948, 1949 and 1950, and the assessment system they used -- he called it blue-grey manual or something -- originated from the States. He then went from there to another job for the Greater Toronto Assessment Board and he did 13 municipalities at that time that made up Metropolitan Toronto. They didn't have time to do 13, they only did 12. The one they did not do was the city of Toronto. So it has never been redone, and there was no equity at that time in relation to the other 12 municipalities that made up Metropolitan Toronto.
He also did mention that at that time there was a bylaw for the war veterans and it is a tax that is frozen and that has never been taken off the books. No politician has ever taken it off the books. We went down and looked at the rolls and some of them are like $257. These are the ones that are probably coming up with the $600 and the $700. But those are some of the causes of the inequities.
Mr Stockwell: You should make it clear it's the First World War veterans.
Mrs Schmidt: Are they First World War? He just said "war veterans," so I don't know. I have his name, I have his phone number, his address, if anybody wants to question him. He actually did the assessments in the city of Toronto and then he did all the municipalities. He is alive and I did see him and I will give you his name and address and phone number, if you want it, to prove that the city of Toronto was never, ever assessed on any equity to the rest of the municipalities.
The Chair: If you'd be good enough, I'll ask you to give that to the clerk.
Mrs Schmidt: I will.
The Chair: Thank you again very much for coming out this evening.
SOUTH ROSEDALE RATEPAYERS' ASSOCIATION
The Chair: I would now call the South Rosedale Ratepayers' Association. Mr John Grieve?
Mr John Grieve: Yes, sir. I feel like the Devil incarnate. That was a very moving speech. I hope you all realize that you've got a hell of a problem on your hands. It's not her fault that she's here; it's not my fault that I'm here. Anyway, this is Tanny Wells, one of our executive, and I'm also on the board.
In case you don't know, south Rosedale is an area in central Toronto which is bounded on the south by Bloor Street, on the west by Yonge Street, on the north by the CPR right of way, and on the east by the Bayview extension.
I just wanted to correct the thought that Rosedale was an exclusive haven of the rich. There are some very well to do people there; you're not looking at any here. But we have a lot of tenants, we have a lot of fixed-income pensioners, we have a lot of rooming houses. Again, in light of that rather emotional and very touching speech from the lady ahead of me, I find it somewhat ironic that equity and fairness have been the self-proclaimed touchstones of the government since it took office and yet it's given second reading to a bill which is going to cause a lot of grief for many of the citizens.
We in south Rosedale are unalterably opposed to the proposed plan. I have submitted a memorandum, but in view of the fact that I've given up a little time, I'd just like to make seven basic points and then I'll pack my bag and go away.
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You've heard most of these before, but let me just reiterate them. We object to the proposed plan. Firstly, it is tied to the real estate markets, which you've heard from other speakers tonight are volatile and very unpredictable.
Secondly, it will present serious financial hardship to a great many residents and small business people. Many pensioners are just simply going to have to sell their homes.
Thirdly, it will have the effect of bankrupting many small businesses. If you can look at the material, I just gave you an example of what's happening to one little stretch of businesses right in our immediate area.
Fourthly, ultimately it will strangle the central core of Toronto, leaving an urban wasteland for suburban residents to pass through on their way to work. You've heard allusions tonight, and I can repeat them, about other cities in the US. We don't want Toronto to be like that.
Fifthly, and we've heard this before in the short time I was here, the valuations have been extremely badly done. I've cited a couple of examples in there. Furthermore, the tax base on which we calculate our taxes will always be at least four years from reality, and the costs of administering the system will be absolutely horrendous.
Sixthly, the full impact at the date of sale is totally unfair. It's putting on the person who, for whatever reason, wants to sell his property a tremendous burden. In effect they are the ones, I assume, who are going to be financing the decreases. I think that should be changed.
The seventh point is, and we've heard this before, that the government has appointed a Fair Tax Commission which, as I understand it, being a layman, has been set up to deal with and make recommendations regarding tax inequities. To me, it only makes sense to wait and hear what they have to say. All I can say is that we urge you to recommend to the government that this be done.
I will say no more. Do you have any questions?
The Chair: Thank you very much for your presentation. Mr Rizzo, did you have a question?
Mr Tony Rizzo (Oakwood): No.
Mr Mammoliti: I do.
The Chair: I'm sorry; I've got the wrong Tony. I needed last names. Mr Ruprecht and then Mr Mammoliti.
Mr Ruprecht: I appreciate your comments, and my sympathies obviously are with you, especially looking over my notes. I recognize that you do make sense. All your points here are well taken, but my question is that you indicated earlier that you were very much moved by the points made by the previous speaker.
Mr Grieve: Yes, I was. I think you couldn't help but be.
Mr Ruprecht: You couldn't help it, that's correct. In fact, throughout your presentation your comments were peppered with indications of that speech, yet I see what you're saying here. We've got a problem on our hands, as you indicate. Knowing well your presentation and the presentation that came just before you, has that changed your position at all?
Mr Grieve: No, it really has reinforced my position that we've got one hell of a problem and it doesn't help me feel that what is being proposed is the solution. We've heard that our tax dollars go to all sorts of things, particularly education and welfare, which should not be a burden of the property owners. I think that should come out of the general revenues of the province of Ontario and be equally shared by everyone. I have no idea what the tax commission is going to say, but it might well say something like that, and then maybe we can rationalize the tax system in Toronto. Perhaps the unit tax system -- again, I am not an expert and the last thing I expected to ever be doing was addressing a committee of the Legislature, but here I am.
We've heard time and again that there's been no impact study. I can show you an impact; I can show you the owners of those businesses, particularly the tenants. If they're all moved out of there and the buildings are boarded up and the landlords haven't got anybody to rent them to, then the landlords go broke and there are no taxes. It all goes back to the suburbs anyway.
Mr Ruprecht: Do I have a second or not?
The Chair: A short supplementary.
Mr Ruprecht: Short, okay. You're absolutely right; there have been no impact studies. But we do know now, certainly from the city's point of view, what some of the impacts will be. We know the increases in GO Transit. We know there are no caps, for instance, on empty lands. We know that some of the jobs that we really need to get ourselves out of this recession in downtown Toronto -- the railway lands certainly -- nothing much is going to move in that direction. So in terms of economic impact studies, while it is true that none have been made, and hopefully they will be made, the predictions are very grim.
Mr Mammoliti: Thank you, sir and ma'am, for coming out. If you don't mind, I'd like to just switch over to the homes in Rosedale for a second and ask you the average price of a home in Rosedale. Would you have those statistics?
Mr Grieve: I wouldn't. Mrs Wells is in the real estate business, so she would be able to give you --
Mr Mammoliti: The average price for a home in today's market.
Mrs Tanny Wells: The average price for a home in today's market. Again, one of the difficulties -- and I'm not trying to hedge this -- in a situation like Rosedale is that we have a tremendous variety of homes. There have been in the last month some sales over $1 million, one close to $2 million. There have been many more in the $400,000 to $500,000 range.
Mr Mammoliti: The point I'm trying to make is that the people in Rosedale are paying roughly $8,000 or $9,000 a year for taxes for those homes.
Mrs Wells: That all depends. In some of the new --
Mr Mammoliti: I believe that's the address.
Mrs Wells: Wait a minute. On some of the new construction in Rosedale -- and there are many -- they're paying very high taxes, and some of our people will in fact have cutdowns.
Mr Mammoliti: If I'm not mistaken, the average is about $8,000 or $9,000 a year.
Mrs Wells: It could be.
Mr Mammoliti: In my community we have homes that are worth $200,000 to $250,000, and those individuals are paying on an average $3,500 a year for taxes. To me, that's not fair.
Mrs Wells: No. I would agree with you.
Mr Mammoliti: On a home that's worth $2 million and paying on an average $8,000 or $9,000 in taxes a year, compared to those in the suburbs that are paying almost as much for a home that's worth not even a quarter of the price, that is unfair. I'm not saying I disagree with you in terms of the tax structure. We definitely have to do something in terms of fixing the situation across the province.
Where I disagree with individuals like yourselves who come to the committee is, keep it separate. Let's talk about the Metro proposal and talk about the fairness that this provides for perhaps a short-term period.
Mrs Wells: Could I respond to you for a minute?
Mr Mammoliti: What would you, as a representative from Rosedale, have to say to an individual who's paying almost $4,000 in terms of taxes for a house that is a quarter of the size and worth a quarter of the price of most of the homes in Rosedale, when you come here and say, "Halt it; stop it; don't let it go through"? These people want their decrease. What do you have to say to them?
Mrs Wells: What I have to say to that is there's been a real crisis in leadership in this community that's allowed this to happen. I went down to the Metro council meeting. I have never seen such an exhibition of fear and greed. I think I got the feeling of what it might have been like to be in the Coliseum. Everybody is so really emotionally involved in this and nobody is taking the commonsense approach of, "Let's stand back, figure out what's the best thing and get on with it quickly."
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There's no question that what's going on in the suburbs is not fair. We aren't asking you to carry on doing that. We're asking you to look at the best information you can get, look at the impact studies. Some of us have been involved in this city through the reform movement. Because we live in Rosedale, it's very often difficult for us to actually speak out because we're put in the corner; we don't hurt, right? There are lots of powers of sale in our neighbourhood, as a matter of fact. We aren't immune to this.
I believe very strongly that somebody -- and we're looking to the provincial government; you're the only place we've got left -- should say: "Hey, Metro Toronto you're important to us. You've got to work." This can't go on. You can't have this business of setting up the city against the suburbs, and the politicians in the suburbs today terrifying people and pointing at what we're paying as opposed to what they're paying. We want a fair situation. Market value, it turns out, does not seem to be fair. I think that's the clear message we should be getting.
Mr Mammoliti: Well, I disagree with you. I think it's better --
The Chair: I'm sorry, Mr Mammoliti. Mr Turnbull.
Mr Turnbull: Thank you for your presentation. Everybody who has come here has complained that the present system is inequitable, and everybody agrees there should be change. I will quickly point out the absolute inaccuracies with what Mr Mammoliti was saying, inasmuch as the average price of a home in south Rosedale is nowhere near $2 million. He just displays the fact that he knows nothing about which he's talking.
Mrs Wells: No. There has been, I believe, less than one sale in the last year at that price.
Mr Turnbull: Yes. The biggest problem we have is clearly somebody who stands to get a reduction and feels aggrieved because he feels he's been paying too much taxes. I don't blame them saying, "I want it and I want it now," and that is fundamentally what is happening. But at the same time, we're saying, "Let's build a fairer system."
There was one gentleman who came in here today and his suggestion was: "Fine, pass this measure for one year. Instead of having it for five years, pass it for one year and force Metro in conjunction with the province to come up with a better system within a year." That seems like a reasonable proposal.
There has been no study ever done of unit assessment for years. The city of Toronto and the city of North York have been on record as requesting an impact study of unit assessment. It was always refused because it was said that it was too expensive, and yet this assessment which has just been done, where there are so many inaccuracies that you could drive a bus through it, and there are going to be mass appeals as a result of it, cost $11 million.
I would ask you: Would you be prepared to accept this scheme for one year if there was a commitment by the government to put some money into looking at a more equitable scheme?
Mrs Wells: I have a slight problem with that, simply because I am in the real estate business and I know that with the point of sale impact thing, it could be very, very tough on home owners who for some reason have to make a move. If you could say to them, "Fine, don't move; nobody will move for a year; we'll freeze up and all the real estate agents can go away for a year," maybe, but I think that's one place that would be a real problem.
Mr Turnbull: I agree with you.
Mrs Wells: But the rest of --
Mr Turnbull: The point of sale is a real problem and, quite frankly, the government is suggesting that it has a problem with it. It could have fixed it --
Mr Grieve: Excuse me for interrupting. Couldn't the government just say --
Mr Turnbull: They could refuse it. It's that simple.
Mr Grieve: Because the minister himself --
Mr Turnbull: They are the ones who drafted the bill.
Mr Grieve: An article in the Globe and Mail a couple of weeks ago said, "Government Against MVA," and hey, great.
Mr Turnbull: Yes, everybody read it with the same glow and suddenly you find out that it's just posturing and then the very next day they brought in the bill --
Mr Grieve: I struggled through the bill.
Mr Turnbull: -- and it had no guts in it. All they require is for Metro to pass a bylaw. Well, Metro has already voted on this in 1988-89 and again this year, so there's nothing to suggest that it's not going to pass that bylaw. They can pass it in five minutes.
Mr Grieve: Exactly.
Mr Turnbull: That's the problem we face and you, as a real estate agent, understand the kind of reductions that we've seen in neighbourhoods like yours, disproportionate to the rest of Metro.
Mrs Wells: Yes, I believe that --
Interjection.
Mrs Wells: Yes, but --
Interjection.
Mrs Wells: I think they have occurred everywhere.
Interjection.
Mrs Wells: I know. That's the problem, though. That's the problem with continuing a dialogue like this because it's polarizing, and I look to you to provide some leadership that takes the high road and says, "What's the best thing for the whole community?" and not somebody's ox being gored at the expense of somebody else's benefit. That doesn't create a very positive community for us to live in.
The Chair: Thank you.
Mr Grieve: You've made us, in effect, an adversary of that lovely woman, and she probably thinks I'm okay, too, if we got away from this. My own partners --
Mr Turnbull: We have to find a way of bridging these problems.
Mrs Wells: Yes.
Mr Grieve: My own partners live in Scarborough. There's tension.
The Chair: The Chair is going to exercise his discretion and allow one brief question by Mr Rizzo.
Mr Rizzo: I think we all agree here that there is a consensus that this system doesn't work and it's not going to work and it's not fair and has not been fair for the last 50 years, since it has been put in place by the friends of Mr Turnbull -- it's easy to judge -- who doesn't know anything, apparently doesn't know how hard it was even for me to get the report that I got two months ago or last month. They've been working on this for years and years, so postponing one year won't mean anything and they won't be able to do anything. It just shows it's demagoguery.
The Chair: Is there a question?
Mr Rizzo: Yes, the question is this: Do you know that for those people living in Rosedale, other property owners also in Metro are paying the higher taxes just to support you?
Mrs Wells: I understand that is a debatable question, that in fact there are some fairly substantial transfer payments going to the suburbs. I think it's a very complex issue. What we have always said is that we want fairness, but we don't believe it comes from the market value system. I for one, as a citizen of this city, I'm tired of being pilloried like this, and I don't want the people from Scarborough thinking that people in Rosedale are terrible people.
We've paid our dues to this city. A lot of the people who built the city came from there. It's an old, old neighbourhood which we've worked very hard to keep as a nice place to live, to keep liveable, and we've tried to be good citizens. I don't think that it's fair ball to say that the people in Scarborough and North York are subsidizing the people in Rosedale.
Mr Rizzo: It has not been your fault, but that's the case, unfortunately.
Mrs Wells: I don't believe it's true.
Mr Grieve: With respect, can I just comment?
The Chair: Yes, a final comment.
Mr Grieve: I don't know where I got this number; it was either from Councillor Gardner down there or from Councillor Bossons, but the number that I have in here on page 2 is that $316 million is already transferred from the city to support suburban schools.
The Chair: I'm sorry that we're out of time, but I want to thank you for both your presentation and also for your generosity earlier in allowing us a few more minutes with the previous group, and perhaps there some symbolism in all of that that may help us through these difficult issues. We thank you again for coming.
Mr Grieve: Thank you for the hearing.
PAUL CRAWFORD
The Chair: I now call Mr Paul Crawford. If you would come forward, please, Mr Crawford, a copy of your submission is being passed out. You have 10 minutes and please begin when you're ready.
Mr Paul Crawford: I'll try to be brief. You've got my submission. I suggest you read it, if there are any questions. I'm going to digress from it a little bit because I've been dealing with this since I moved to Scarborough six years ago and found out that I was being ripped off by the assessment system.
It's really a very simple problem. Taxation must be fair and equitable. At this particular time, it is not fair and equitable. All of the studies, all of the years, everything that has gone before us today has indicated that. You do not need more studies to determine that. You also do not need more studies on unit costs or unit business; no, you do not. Market value assessment has been established as the fairest way to go, as the fairest way to base taxes to try and correct what's been going on for so many years.
Basically, the people in Scarborough, for instance, have been paying thousands and thousands of dollars. I mention this in my summation. If we decide that we're fed up enough and decide to take this to Divisional Court, it could be ruled that unfair and inequitable taxation could be retroactive. You may have to go back and pay back the amounts of money that you've taken off these people unfairly. When I say "you," I don't mean this particular government; I'm talking about government in general.
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I've made some suggestions in here, and I've given some examples. I think everybody's problem is the same if we can get to the heart of it. Whether they're running around here or somewhere else with "Stop MVA" or whether we're saying, "We don't want any more higher taxes," we're basically saying the same thing. The problem with the "Stop MVA" is that what they're saying is: "Listen, you've been ripping off those people out there for the last number of years. Would you please keep on doing that and leave me alone." You're not going to do it any more. You're not going to do it to me personally any more because now I know what my taxes should be, and that's the way I'm going to be paying my taxes from now on, the way it should be through fair market value assessment. I think an awful lot of people are beginning to feel the same way.
Scarboroughites, generally speaking, have not had the opportunity to come down and storm the Parliament buildings or storm Metro. I think what should have happened is that some of those hearings should have gone out to Scarborough so you could have felt the way we feel. It might be fine to say, "Please don't give me any more higher taxes," but think about the people that have already been suffering higher taxes for the numbers of years they've been living in the same vicinity.
Think about this also, and make this change when you get back to the legislation. We people who decide to fight taxes that are unfair, when we go to an assessment hearing, we don't want some assessor saying to us: "Listen, you live in a certain vicinity. I decide what that vicinity is. I have decided that vicinity is taxed fairly. Therefore, you have no argument." When you take it even further and go to the OMB and it gives you the same argument, when it is allowed to define "vicinity," it makes for all kinds of transgressions. So one thing your government has to do is get that stopped.
Basically, taxes are a distribution of expenses among the people who are using the services. The way I understand it is broken down is that there's 25% municipal, 25% Metro and 50% education. That's not just used up by the people in my neighbourhood. The 25% portion is used up by everybody in Scarborough, and I should be able to look at Scarborough for that portion and be fairly assessed on that basis over all of Scarborough. The part that you're using for Metro, the other 25%, I should be able to look all over Metro to determine whether I'm being assessed fairly and equitably. The big one, the education, I could say "Metro," but it actually goes beyond that to make sure that it is fair and equitable.
Just to jump around a little bit, I don't think we would have had this problem today except that somebody a long time ago realized that the system wasn't fair and equitable and did nothing about it. They've let it continue until taxes have become so high that you can't help but notice that your neighbours are paying a good deal different than you.
Here's another thing: When you load 15% on to the taxes of the people in Toronto, let's say they're paying $1,000, that's $150; when you load it on somebody who is being unfairly assessed, that's $300. So you're expounding on the error over and over again as taxes go up.
It's simple. The system is wrong. Correct it. After you correct it and you still need more money from us because you decide the businesses can't go down -- and I agree, they can't go down -- at least when you come back to us and ask us for more money, you'll be doing it on a level playing field. Is that too much to ask?
If any of you here doubt that that's the situation, then I suggest you had better do your homework: You had better get out Scott Cavalier's study, you'd better get out the study that was done before that and the one that was done before that. They all tell you the same thing: Market value assessment is the best way to go. It tells you something else: The system is not fair, the system is not equitable. Nobody can argue with that.
It's a human rights issue. If we were all women or if we were all coloured or if we were all a minority group, you wouldn't think of treating us this way. Try to think of us as a minority group that is being discriminated against and get that thing changed quickly.
If I can answer any questions, I'd be glad to.
The Chair: We have time for just a couple of questions. Mr Mammoliti and Mr Turnbull.
Mr Mammoliti: I'm going to stick up for the people who are wearing the badges here for a second, even though I agree with you in terms of MVA. The people who are wearing badges I've listened to over the last three days, and the consistent message they're giving us is that there's a problem all over the place. They're concerned about MVA because it bumps up their taxes in the middle of a recession. They're upset about it, they're depressed about it, and they want us to do something about it.
The difference I have with them is that this is a Metro plan and not a provincial plan. If we were to change that, it would lead to a precedent that is very dangerous for the province.
I'm going to have to stick up for them in terms of understanding why they're upset. They're upset because they know the system is flawed, and they're coming to the provincial government, using this opportunity to say: "There's a problem. Rectify it."
And we are listening. Now, whether we do it with MVA or whether we look at the whole structure is up to the province.
Mr Crawford: I'm not disagreeing with you.
Mr Mammoliti: But you said something that really hit me: that if ratepayers in the suburbs got together and took the government to court, they'd win, in terms of fairness, in terms of equity, all their taxes back retroactively for 39 years.
Mr Crawford: I was saying that if it went to Divisional Court and you were to lose, it might not just be a case of the Divisional Court saying, "Yes, this has not been fair and equitable, therefore you must enact this right now." They would be in effect saying, "You have been" -- if you'll pardon the expression -- "screwing these people for a large number of years." It could be retroactive. It could mean that you haven't had the right to overcharge me for the last six years or somebody else for 20 years or somebody else for four years.
To me, it is so fundamental that taxation has to be fair and equitable in a democracy. If it's not fair and equitable we don't have a democracy, and if we don't have a government that can make that one fundamental thing, we don't have a government either.
I'm not knocking the people running around with those buttons, even though they're very well organized. But really what they're saying is, "Stop higher taxes." We don't want to split the communities by saying, like I said before: "They've been paying higher taxes. Keep it that way; don't load it on me." All of us are saying the same thing. If I sat down and negotiated with them, I would say: "Basically, what you want to do is keep your taxes the way they are. Basically, what we want to do is get ours down where yours are."
Mr Turnbull: Mr Crawford, give me a sense of your own home. How much frontage do you have?
Mr Crawford: Mr Turnbull, frontage doesn't make any difference.
Mr Turnbull: Just humour me for a second. How much frontage do you have?
Mr Crawford: I have 30 feet.
Mr Turnbull: How many bedrooms do you have in your house?
Mr Crawford: Two bedrooms.
Mr Turnbull: And what are your taxes?
Mr Crawford: A little over $2,600.
Mr Turnbull: And they're going to go down from that?
Mr Crawford: Yes.
Interjection.
Mr Crawford: Just to respond to that gentleman, it doesn't make any difference what the amount is; it's equity we're looking for. If I had said $8,600, I guess you'd feel better.
Mr Turnbull: What do I say to somebody in my neighbourhood who has a two-bedroom bungalow -- admittedly, it's a 60-foot frontage -- of 1950s vintage, who are currently paying $5,600 and are getting an increase on their MVA? The house is not in particularly good condition. They're pensioners and they don't really use any services: There is no sidewalk, the road is in poor condition, and there are no storm sewers; there's just a ditch. What do I say to them about the fact that they're going to be paying more under this system and they're currently paying $5,600?
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Mr Crawford: Mr Turnbull, there are anomalies all over the place. We can all pick them out if we want to. I don't know that particular one. Basically, their taxes are too high.
Mr Turnbull: But they're getting an increase under market value.
Mr Crawford: Their taxes are too high now and they will be much too high when they get that increase, but that doesn't have anything to do with MVA being the best system.
Mr Turnbull: It certainly does.
Mr Crawford: No matter what system you use, you're going to have anomalies.
Mr Turnbull: That's not an anomaly. Developers were buying up houses in this area, knocking them down and building monster homes on them. The people who were living in the existing homes had no control over the fact that the developers were bidding up the prices. Their use of services hadn't increased, their ability to pay hadn't increased, yet, as a result of the fact that developers had deemed that to be an area for hot real estate, the values were being bid up. Their taxes are going up in lockstep with them. How can you equate that with fairness?
Mr Crawford: Because MVA is the fairest system of them all. The system you have now has already proven to be unfair, so they've looked for many years to find something that is fairer. MVA is the best thing they've come up with. There are anomalies. These people have got to have the opportunity, when it's finally put in, to do the same thing I've been trying to do: go to the assessment board and have it changed on the basis of what's happening.
Mr Turnbull: So you would have my pensioners pay more because their house has gone up in value.
Mr Crawford: What about the pensioners who are paying more than that now?
Mr Turnbull: Excuse me. Your taxes are $2,600.
Mr Crawford: Those are my taxes.
Mr Turnbull: Yes, and you've got a two-bedroom. These are people who are paying $5,600 in a 1950s bungalow with no storm sewers. Why are they having their prices bid up?
Mr Crawford: Because they're using a system of market value assessment.
Mr Turnbull: That's precisely my point.
Mr Crawford: And you can find other examples, but what about the thousands --
Mr Turnbull: Unit assessment is a lot sounder and it's a lot fairer.
Mr Crawford: I would agree that unit assessment is a lot sounder, and in unit assessment you'd have the same thing happening. You'd still have to come to a fair system, no matter what you use. If they had come up with a unit system, you'd be sitting there arguing, saying, "The unit system has got anomalies, so the market value system would have been better." It's the best system you're going to get for the time being.
Mr Turnbull: There are many people who would disagree with you on that.
The Chair: On that, I'm afraid we've reached the end of our time. Thank you for coming this evening and making your presentation.
TORONTO TAXICAB OWNERS AND OPERATORS ASSOCIATION
The Chair: I call now the Toronto Taxicab Owners and Operators Association. I'd like to note for the members of the committee that there is one other presenter whose name did not get on to the list and who will follow the Toronto taxicab owners' association.
Would you be good enough to introduce yourself for Hansard and go ahead with your presentation.
Mr Sikko Wiersma: Thank you, Mr Chairman. My name is Sikko Wiersma. I was born in Holland. I came to this country in 1951 and was educated in this country. My father was a building contractor in Brockville, Ontario. I went to high school with Bob Runciman, who's an MPP here. He and I are the same age. His father was editor of the local newspaper in Brockville. We go back a long way.
However, getting back to the real world, we have a very serious problem in this community. My industry, the Toronto Taxicab Owners and Operators Association, is not a bunch of rich fat-cats. We have very serious problems in terms of a decline in demand and a decline in investment in our industry. The investment value has dropped in the last two and a half years from approximately $300 million to $150 million and declining.
Most of the people who work in our industry are immigrants; they were not born in this country. Approximately 80% of taxicab drivers are immigrants.
There's a discriminatory aspect to this system we're dealing with. What I want to talk about first is this committee system. This is the standing committee of social affairs. This is probably the appropriate committee to deal with this problem, because you're going to be dealing with a lot of social problems from the city of Toronto after a lot of the small businesses have gone broke when they have to pay this market value assessment on their businesses.
I've heard home owners. I think property owners have one problem, but business operators have a different problem with market value assessment: They've had values assessed on properties which they don't necessarily own.
I'll quote you one example, Mr Peter Zahakos, who runs Zack's Taxi at Dufferin and Bloor. He's been a very successful operator over the years. He's of Greek origin; he's also an immigrant. A little over two years ago he was operating in excess of 50 units in this city, but because of the decline in the economic activity I believe he is down to somewhere in the neighbourhood of 30 taxicabs. However, MVA will double his business tax to $8,062 a year from $4,776 current. That's the business tax. This has nothing to do with Rosedale or Forest Hill or anywhere else; this has to do with a business tax. Now, on the property he's leasing, the premises he's operating from, the tax will jump to $27,076 from $16,021. This is a secondary increase which is not faced by home owners.
The second aspect of this discriminatory taxation is regional. I believe the previous deputant made a very good point. The suburbs have been overtaxed, and there's a reason for that. When my father was a building contractor and was building a house for someone on the outskirts of Brockville, which was a smaller community, the people knew their taxes were going to be higher because they generally had larger frontage, they had to pay for more services, more roads --
The Chair: Can I interrupt for a second? For Hansard, could you tell us what newspaper the clipping you read was from?
Mr Wiersma: This came from the November 1992 issue of Taxi News; it's on page 10. I will leave it for the clerk. I believe Mr Zahakos sold this publication four years ago. He was the publisher of this publication until four years ago.
Anyway, getting back to this construction in suburbia, this city developed in the last 160 years. At one time I was an executive buyer at Simpsons-Sears and I was in senior management at the T. Eaton Co. I've travelled all around the world, to every continent. I've decided to live in this city because I believe we have the heart and soul in this community which is made up of a cross-section of ethnic, multicultural groups that give this city a unique distinction from anywhere else in North America. It's phenomenal.
What this MVA proposal has done is to pit the suburbs against the downtown core, the people who were here originally, and they're not all wealthy and fat-cats. I heard Mayor Rowlands say yesterday that Parkdale is going to be the worst affected area in terms of MVA for residential assessment. They're not wealthy people who live there. There are some nice homes in the High Park area, but the average home in that area where Councillor Pantalone is the councillor -- and he's an NDP councillor, and he's totally against this MVA program.
Roger Hollander, who is the NDP Metro councillor for Rosedale represents a real dichotomy. You just heard the deputant from upper Rosedale, but let's look at the rest of his constituency.
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St Jamestown: When I arrived in Toronto I lived in St Jamestown from 1968 until 1974. That's a community of 15,000 people. Within a small area of approximately four or five city blocks, on average, you have 15,000 people.
From there, I moved to West Hill in Scarborough, out to the boonies by choice. I knew the taxes were high, but I knew that in advance. Caveat emptor. I knew what I was buying. I wasn't buying a pig in a poke. I knew I was buying a larger property, a four-bedroom home. I can't recall what the taxes were. I've moved from there since.
However, you cannot equate that block where I moved to in West Hill, across Highland Creek -- where in the same region there were 150 homes with a population of about 400 people -- versus the same geographic area downtown of 15,000 people. That's the largest concentration of population, I believe, in this country.
You cannot compare MVA, you cannot compare apples to oranges and you cannot compare lumber to cloth. It's not a simple equation like that. I believe that, having also lived out in Etobicoke at one time. Currently, I'm living in the Beach. People in the Beach are very disturbed. We have an average community. Some yuppies who have lost their status have moved from higher-income homes and they're wandering down to the Beach. It's a beautiful community with lots of parks. The homes have been slightly overvalued on average because of location.
The local councillor, who's not NDP, Paul Christie, is against this. I don't see my MPP fighting on our behalf.
Mr Rizzo: Who is she?
Mr Wiersma: The Minister of Health.
Mr Rizzo: She is.
Mr Wiersma: Is she?
Mr Rizzo: Yes, she is.
Mr Wiersma: Is she fighting in caucus?
The Chair: Order, please. Just continue with your presentation.
Mr Wiersma: All right. I'm sorry. I haven't seen it publicly.
I've spoken to Steve Ellis, the city councillor. He's not my councillor. He's very disturbed. He's the gentleman who was carried out of the Metro council meeting. He is a lawyer. He knows how to conduct himself. I must apologize to this committee. I was very perturbed because I do like some of the NDP councillors personally.
I've talked to Mr Moscoe quite often because of our taxi industry problems. I think the communication here should be cross-party. This should not be an issue of where you people from this side of the House and the people on the other side of the House are in conflict.
What we have is a problem in Metro. I think it's a structural problem, a problem where the Metro chairman has a lot of power. He can appoint councillors to executive committees -- there are committee chairs and then they have an executive committee -- and he has tremendous power there and can do a tremendous amount of arm-twisting. They make all kinds of backroom deals that the average citizen is not aware of.
I'm a cynic in the political process. I understand how these things work. I did do research for the Honourable Davie Fulton back in the 1960s when I went to Carleton University. We all know how these things work.
It's unfortunate that here we have all these councillors like Derwyn Shea, who's a Progressive Conservative, Paul Christie, Christie, whom I mentioned, Dennis Fotinos -- incidentally, Peter Zahakos ran against Dennis Fotinos, the Metro councillor who's a Liberal, in the last municipal election a year ago. He's against this. Bev Salmon, the only black councillor, she's a socialist and she's against this plan.
What I really want to stress is the ethnic composition of the city of Toronto, not the suburbs. The suburbs are clean. People have moved gradually from downtown. The old garment trade, the Jewish people, a lot of the elderly are living up in Forest Hill, but they were born at Spadina and College. They grew up there. Some of them I've done business with.
We look at Chinatown west and we look at Chinatown east at Broadview and Gerrard, and we look at the Portuguese community and we look at Kensington Market. We look at the Italian community -- that's in the city of Toronto; this is going to be drastically affected -- the old Italian community where the Portuguese are now, and Dufferin and St Clair where the Italians are currently in a very high proportion.
We have the Caribbean community up at the Vaughan and Oakwood area. We have the Korean community, which is just past Honest Ed's at Manning and Bloor, and the East Indian Community at Coxwell and Gerrard. All these communities that have developed in this multicultural community will be destroyed by MVA.
Why? Because of this example: The MVA tax will destroy their businesses and it will destroy their motivation to remain within this community. They'll scatter to other communities, and what you're doing and what Mayor Rowlands was telling us is that you're going to destroy the heart and soul of this Metropolitan community.
The reason why the suburbs developed around the city was because of the unique position this city had geographically for the last 150 years. Toronto itself did not evolve because of the suburbs. The suburbs came around the city of Toronto. If people chose to live there and pay higher taxes because of newer services, that was their choice. It wasn't the fault of the people who originally lived here, their descendants or whoever.
I do not believe that one year ago, during the Metro council elections, one Metro councillor mentioned that he wanted a mandate for MVA. I cannot recall this. A lot of the councillors who voted in favour of MVA came in by acclamation, which actually is misleading your voters by default, isn't it? If you do not disclose what you intend to do in the following year, it's misleading by default.
In my travels, I've travelled to a lot of American cities and done business there. When I was in charge of the home improvement and paint and wall covering department at Eaton's as a national department manager, I went to a city like Cleveland where the downtown core is a ghetto. Sherwin-Williams is there and Glidden, their head offices. The suburbs are beautiful but there's no life in the downtown core. Buffalo has no life in its downtown. They're trying to revitalize it, but it was destroyed. A lot of American cities that used MVA have been destroyed in their core and -- if I could just finish, one moment, Mr Chair.
The Chair: I just want to note that a couple of people want to ask questions and I thought you could leave a bit of time.
Mr Wiersma: Certainly. We're developing the Manhattan syndrome in this city, where you can look down from Queen's Park here and you can look down and see those big towers and say, "Well, Toronto is wealthy," but that's not where the people live. The people live where I said, in these ethnic communities, and that's what makes up the fabric of this city. Those people are the ones who gave you people on this side the mandate to govern. Whether you live in Toronto or you don't live here is irrelevant. Where you pay your taxes or where you don't is also irrelevant. But I believe you people have a mandate where a lot of the councillors for your party came from, the heart of the city -- you have a mandate to serve them.
Mr Rizzo: Do you ever remember any member of Metro council suggesting that this was a provincial problem, so let's go to them and let them fix the problem? Or they dealt with the problem first and once they could get their way, then it was given to us, of course, because we have only the power for enabling legislation. Now, because the Liberals and the Conservatives want to get some political points, we are going through another public inquiry and then try to find out what's right and what's wrong.
What I can tell you is that people like Pantalone and Mike Colle, who were in favour of market value assessment four years ago, changed their position just because the percentage changed. When they thought the majority of the people were going to get decreases, they were in favour. It was never a matter of principle. Because if it was a matter of principle then, it should be a matter of principle now. If they were against it then, they should have been against it now. They were for market value then because it was politically convenient for them to get the votes in their communities, and now, because the number has changed, because the assessment was changed, it's not convenient any more, so where is the principle?
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The Chair: Is there a question then?
Mr Rizzo: What I am saying to you is this: It's a Metro market. It's a Metro problem. We only have enabling legislation that we are to pass. I think it's unfair to pass the buck to us and blame us for whatever is going to happen.
Mr Wiersma: I agree with your comment. It's unfair to pass the buck to you. I think you should pass the buck right back to Metro council. They do not have a mandate for this legislation.
What it was, and this is what disturbed me the other day, was that the parliamentary assistant said that this bylaw was passed by duly elected council. Having known the process and the problems that we've had in the taxicab industry with being ignored with our very, very serious problems with the Metropolitan Toronto Licensing Commission, going to make deputations, going through the committee process and being ignored, we have a very cynical view of the old boys' club at Metro council.
There are some new councillors who seem to be seeing the light. The city of Toronto is very dynamic, but unfortunately -- there's one other aspect of this, when people change their votes about market value. You're not comparing the right time. As in everything else, timing is of the essence. We're in the worst recession, bordering on depression, since the 1930s, and what may have been apropos seven or eight years ago in boom times, when people may have been able to afford this, from businesses or their homes and the cash flow, today can't afford it. You know yourself that for businesses that are just hanging on by the fingernails, it doesn't take very much to push them over the edge.
Mr Turnbull: For the record, I would like to correct something. Mr Rizzo started on the fact that people changed their votes and he thought this was not appropriate, and how they'd fooled people. Well, in the last provincial election, we have on record Frances Lankin, Zanana Akande, Tony Silipo, Margery Ward, Marilyn Churley and Ziemba, who all campaigned on a platform that they were against MVA. They said that if they were elected, they would fight against it.
They stood up the other day, with the exception of Akande, and voted for it. Akande absconded from the House. She was in the House at question period 10 minutes before the vote was held. So much for that little lecture that we had about people standing up for it. They campaigned on this.
The other thing I just would like to correct is that I think Bev Salmon would be quite offended at the suggestion that she's a socialist. Put it this way: One of the first people I spoke to as to whether I should run was Bev Salmon, to get her advice.
Mr Wiersma: I like her personally.
The Chair: And the question?
Mr Turnbull: A question that you've raised in my mind is, isn't it ridiculous when you're running a business that in some way the business tax and the property tax you pay are based upon the value of the building, which you may not own. There's somehow an equation of a relationship of ability to pay based upon the value of the building you're in.
Mr Wiersma: Yes it is, and this is what I was saying: the Manhattan syndrome. What we're to do is ghettoize the city of Toronto, and we're not only going to drive the ethnic community out, but we're going to drive out small business, which is the largest single employer in this country; not the multinational corporations and not even the government.
Our percentage of transfer payments and GNP is much too high in this country. There's another aspect of this. Today Mr Mazankowski may be seeing half the light. He is reducing expenditures by $8 billion, but this is precisely the problem we have in this country: too many levels of government, too many overlapping jurisdictions.
I studied economics at university, and one of my professors, Douglas Fisher, and Pauline Jewett, Heath Macquarrie, the old federal MPs, these people had a great social conscience. I learned a lot from them, but none of them ever advocated destroying the fabric of this country fiscally. When you have Metro government overtaxing its population and you have other government jurisdictions trying to stimulate the economy -- not everyone agrees with Keynesian economics that you can spend your way out of a recession, that if you develop capital investment and capital formation, eventually it will come back.
What we have is a Metro government that just can't help itself. We've got a Dome down there which is beautiful. I can't afford to go there. I can't afford to take my kids to a ball game. It's only for the wealthy. It's for the wealthy, the people who contributed their $5 million. It's not for the average person. We've got $550 million sitting down there. You people can't sell it, but a lot of people in the entertainment industry and in the news media can afford to go.
We won't get much publicity for criticism like this, but I think it's a pretty sad commentary that this morning I was at the works committee at Metro council and the beach area is being polluted with all kinds of pollutants in the air. We cannot afford to treat the sewage properly --
Mr Turnbull: Even though they built a new Metro hall.
Mr Wiersma: Exactly. My kid, my 10-year-old son, against my instructions, wound up swimming this summer at the beach. He spent two days in bed with a bacterial infection because he accidentally swallowed some water. That's a pretty sad commentary and legacy that we're going to leave behind to our children.
You people have the power in this building to have a very close look at the Metropolitan Toronto act. I believe that this mess in Toronto, the city of Toronto and Metro, should be cleaned up.
I can tell you, within my industry -- as I said, 80% of the people who struggle on the streets are recent immigrants. They come from all different countries. A lot of them are afraid to speak: They're afraid of authority and they're afraid of government because they come from abusive systems; they come from the Middle East, they come from the Far East, they come from dictatorships, Central America. They're used to just being dictated to.
During the same four-year period that our licence fees increased by 300%, from 1988 through 1992 inclusive, for both drivers and owners -- if you talk about drivers, it's from $25 to $82; it's not very much, but if you take 11,500 drivers, that's a lot of money.
The Chair: I ask you to wind up. I'm afraid we're out of time.
Mr Wiersma: Certainly. During that same four-year period, we had 1,100 armed robberies and assaults against taxi drivers and five murders. Talk about allocating resources: Can you imagine how many million dollars it costs in police investigation to handle this problem? And not one dollar of this has been allocated to driver safety.
I think the problem we have in Metro is one of structure and accountability. The key problem is that a year ago when we had our civic election, all the publicity was given to the mayoralty race and no one was paying attention to Metro. A lot of these people got in by default; it was a flim-flam, a shell game. And as soon as they got elected, they've gone on this rampage -- they want the Pan Am games now, because they fumbled the ball on the Olympics -- and we have a serious problem in this city. We have ghettoization --
The Chair: I'm sorry. We have one more deputant and we are over the time. Could you just wrap up in a brief phrase or two.
Mr Wiersma: I believe that this government should -- in the days of John Robarts and Bill Davis and even Mr Peterson, they felt strongly enough about the city to stop developments like the Spadina extension. They wanted to keep the unique character of this community the way it was. We don't want to have the spaghetti expressways that LA has. We want to have a community that has heart and soul. If this legislation passes, you're going to take the heart and soul out of Toronto.
The Chair: Thank you very much.
2210
KENDALL CAREY
The Chair: I now call our last witness. Let me just say, as I did the other night, that, while you are the last witness, we welcome you equally as we have others. I'm sorry for the misunderstanding that left your name off the slate, but we appreciate the fact that you have come, and we all have a copy of your submission. Would you please introduce yourself for Hansard and make your presentation.
Mr Kendall Carey: My name is Kendall Carey. I come here as an individual, though the material that you have in front of you is printed on our corporate stationery. Thank you for the opportunity of addressing you. I, as I've just said, run a small consulting business which advises in the areas of economic feasibility and strategic analysis. My personal discipline is economics.
With respect to Bill 94, a number of standards have traditionally been used to evaluate the merits of taxes and taxation systems, including the following: A tax should promote an intended economic impact or, at the least, have a neutral impact; a tax should be perceived to be fair or equitable; the basis of the tax should be easily measurable; other requirements are ease of collection and minimizing administration. Against these criteria, how does Bill 94 stack up, but more particularly the MVA component of it?
You've doubtless heard from others about the expected disastrous economic and social impact of MVA on the city of Toronto, so I'll limit my comments in this area by simply noting that there's always been a successful policy in Toronto to encourage residential and small business development in the inner-city core because, as planners know from the American experience, a city loses its vitality and security without this stabilizing element. MVA is in direct opposition to this policy and will in effect Manhattanize Toronto, as you've already heard, by forcing small businesses to close, driving out present residents and discouraging future ones.
I believe there are two main areas at the core of the property taxation issue, namely, equity and measurability. With respect to equity, it's interesting that the supporters of full MVA in the suburbs base their argument solely on equity, as I heard earlier this evening. They have to pay property taxes based on full value, so everyone else should too. In a sense, they're right -- that is, if equity is judged solely on adherence to a particular standard. For example, if taxes were based on personal height -- that is, the taller you are, the more tax you pay -- it would be unequitable if I paid more tax than someone of the same height. However, that ignores the real issue, which should be, is a system based on personal height equitable to start with? We would probably all agree that it is not.
The real issue here then is, is MVA an equitable system of property taxation? The answer to this has to be a resounding no. It's an arbitrary system masquerading as being fair. It's arbitrary for the following reasons.
First, the comparative values of properties bear little relationship to income or wealth unless land prices are stable over a period of many years, which has not, of course, been the case here in Toronto. So MVA hits low-, middle- and high-income earners indiscriminately. The same is true if the criterion used is wealth.
Secondly, the value of a property bears no relation to the services used, as it's heavily weighted by the land value per square metre. People do not create more garbage or need more education because their land is more highly valued. Similarly, with respect to commercial property, the value of a lease bears no relation to the space used. For example, a large department store will typically pay a fraction per square foot of what a small retail store will pay.
When property values rise sharply, MVA is essentially a tax on capital gains which have not yet been realized and, using 1988 values, have no hope of being realized for another decade at the least.
The question with respect to measurability as it applies to the MVA is, how do you measure market value? There really is no equitable way of measuring value other than the transaction value of an unforced sale. Since most properties do not change hands in the valuation year, there is no way of knowing what that value would have been. For example, the new 1988 assessments show a difference of 35% between the values assigned to the two duplex properties on either side of where I live. These are the same size and age and have undergone about the same amount of renovation.
Fortunately, there is a straightforward solution to all of these problems, which is to base property taxes on a combination of usable space and land area. Such a system would have the following benefits: It would not result in any significant social or economic disruption; it's readily measurable; it's as equitable in terms of income and wealth as you're likely to get using property as a yardstick; it bears some relationship to the services used, since there is at least some correlation between house size and number of occupants and/or the services used, and between the lot size and the cost of servicing a lot; and it does not involve taxing unrealized benefits.
What is the point of using an obviously flawed system like MVA when a much better system is readily available? MVA is economically and socially disruptive, inequitable, unethical and smacks of political expediency on the part of some of the Metro politicians.
In conclusion, I would suggest that you throw Bill 94 in the garbage, where it belongs, and introduce a property taxation system based partly on usable space and partly on land area. The proportions used and the rates actually charged could be set locally for different types of property, that is, residential, commercial or whatever. Such a bill would be very easy to draft and equally easy to administer and could be applied on a province-wide or selected test basis, such as Metropolitan Toronto.
It would also show that the NDP government does indeed feel a responsibility for the equitable treatment of all Ontario's citizens, thereby justifying its claim to stewardship of this particular role.
The Chair: Thank you very much for a very interesting brief. I have three questioners. We'll begin with Dr Frankford.
Mr Frankford: You talk about Manhattanization, and there's been a lot of reference in these hearings to American cities and trends there. I think of Manhattan as a lot of commercial towers, which I think we have here, but I don't think we can say that is the result of a tax policy. It's the result of land use and commercial decisions.
Mr Carey: I think that is partly true. What I mean by "Manhattanization" is that as far as the residents of Manhattan are concerned, you have basically two classes: You have the very wealthy, who can afford to live there -- and it's not just taxation; it's also parking and everything else -- and the very poor, who live in what we call affordable housing or public housing. I don't think the city of Toronto would really want its residential communities to go to those poles. What makes the city a worthwhile place to live and work in is the fact that you've got a broad cross-section of society living in it.
Mr Frankford: Let me go to the other end of Metro, which I happen to represent, which, I think there is agreement, is overtaxed. This is not something you referred to, but the Americanization and even the South Bronx analogy have been raised. Let me suggest that excessive taxation there can do exactly that: One would be left with a deterrent to development of land, maybe a small number of large houses and the undeveloped areas remaining undeveloped, with the apartment high-rise buildings getting to be empty and dangerous places. I think leaving in place what we have right now has the potential for a South Bronx scenario.
Mr Carey: Leaving what about what we have right now in place?
Mr Frankford: The inequities, the overtaxation of Scarborough.
Mr Carey: As to whether or not Scarborough is overtaxed, using the standards that are currently in place, which is MVA, as I was trying to get across, if that is your standard, then, yes, it's overtaxed. But the issue is, should that be the standard? If you have a different standard, would they then be overtaxed? My guess is that their taxes would probably go down anyway if you applied a system which is based on the size of the usable space, internal space, and the land area. I don't know for sure, but it would not necessarily result in their taxes staying the same.
Mr Turnbull: It may interest you to know that the Fair Tax Commission has completed a study, where it took the income tax tapes of the city of Pickering and ran an analysis of income by household against various models, one being market value and the other unit assessment. They concluded that, contrary to what some people would have you believe, it was not more inequitable.
In fact, the present system ignores the potential of significant savings which could be had by this government, which is in so much financial difficulty, to the assessment system each year. The assessment system is costing us, by the time you factor in appeals, somewhat in excess of $200 million a year. This system could be in place quite simply and, once you've got it in place, would be virtually cost-free, because unless you add to the size of a building you wouldn't have to change the assessment, and you drive everything from there. Obviously there are lot of provincial bureaucrats who are very attached to the present system, because it's created an awful lot of employment for these people.
Mr Carey: Not just for them, but also for the courts and everyone who hears all of the complaints about the valuations they turn up. I'm very interested to hear that, but I can't say I'm surprised.
Mr Turnbull: Do you not think it passing strange that this government would hurry this legislation through prior to the submission of the final report of the Fair Tax Commission, which, we understand from drafts which have leaked out, is fairly critical of market value and suggests that alternatives like unit assessment should be examined. We know that report is pending, but they're pushing this legislation through quickly, quickly, before the report comes out.
Mr Carey: I would go further than saying it's passing strange. I would say it's completely idiotic.
Mr Ruprecht: Mr Carey, is your new tax system, based partly on usable space and partly on land area, in place anywhere else in the world?
Mr Carey: Britain has a system which is along those lines. I don't know if they call it a unit value system or whatever, but they moved away from market value assessment for exactly the same reasons as Ontario is now experiencing and should also move away from it. Land values are just too volatile.
Mr Ruprecht: How long would it take to introduce this new assessment system? How many years?
Mr Carey: It wouldn't take any time at all, because there are data on file on every property that exists as to its usable space and its land area. It's all there in surveys, so it's just a matter of stuffing it all into a computer.
Mr Ruprecht: How soon do you suppose this could be done?
Mr Carey: I don't see why it should take more than three months, properly administered.
The Chair: Thank you very much, and that will conclude our hearings for today.
Before members leave, I would just like to note for the record that we have received a letter addressed to me, as the Chair of the committee, from the minister responding to a presentation made yesterday, and that has been passed out for the information of members. This committee stands adjourned until 9:30 tomorrow morning.
The committee adjourned at 2222.