Ontario aims to cash in on Toronto property-assessment rebates

Theglobeandmail.com
Sept. 27, 2015
By Adrian Morrow and Greg Keenan

The Ontario government is trying to squeeze millions of dollars out of the City of Toronto by appealing the property-tax assessments on several provincial properties - including the Legislature Building at Queen’s Park and the headquarters of the Ministry of Finance.

The bizarre manoeuvre involves the province fighting its own property-tax-assessment system, arguing that it messed up when calculating the worth of the properties.

The government is trying to get the assessments lowered on 19 different properties in order to collect a rebate from the city. The properties range in value from the Legislature Building, assessed at $172-million this year, to a piece of empty land at 346 Front St. E., worth just $10,000. Also under appeal are such prominent locales as the courthouse at 361 University Ave., Osgoode Hall and the Frost Building, which houses the Finance Ministry.

So determined is the province to get its money back that it is appealing some assessments as far back as 1998.

If the government’s push is successful, the city will have to pay the province back some of the tax money it has collected on those properties going back as far as 17 years.

The Globe and Mail calculates that the city has collected roughly $65-million in property tax from the 19 properties in question during the years under appeal.

The value of a property is determined by the Municipal Property Assessment Corporation (MPAC), an agency set up by the provincial government. Any property owner can appeal the assessment to the Assessment Review Board, which is what the government is doing.

Infrastructure Ontario, the provincial Crown corporation that manages the properties and is pursuing the appeals, refused to explain why it thinks the province should pay less tax on these properties. IO is also keeping the documents related to its appeal secret.

“IO is following its mandate to manage the provincial government’s portfolio in a prudent manner,” IO spokeswoman Bianca Lankheit wrote in an e-mail. “This is a necessary function of cost-effective management of publicly funded assets.”

Ms. Lankheit also insisted that IO and MPAC have “a close working relationship,” even though IO is arguing that numerous MPAC assessments on provincial properties are faulty.

Toronto City Councillor Gord Perks chuckled when told about the appeals. “This is so ridiculous,” he said. “How much confidence can members of the public have if the government that created the assessment system doesn’t even agree with it?”

The squabble over property taxes is just one of numerous fights between all three levels of government over money, he said. Provincial downloading of social services in the 1990s, and cuts to transit-operating subsidies, have also put pressure on the city to hike taxes to make up the shortfalls. Every $25-million the city is short in its budget, he said, equals a one-percentage-point rise in property taxes.

“It is not uncommon for other orders of government to look around and try to save money by squeezing it out of the city,” he said. “If they succeed, that doesn’t make the cost of delivering our services any less. Somebody still has to pay that money, so it just gets distributed across the tax base.”

No property, it seems, is too big or too small for the province to launch an appeal over.

Some are worth large sums of property tax. Queen’s Park, for instance, netted the city $2.7-million in 2015; the province is appealing assessments on the building all the way back to 2004. The University Avenue courthouse, valued at $119.6-million, cost the province $1.8-million, Osgoode Hall ($78.4-million) was worth $1.2-million in tax and the Frost Building ($42.8-million) netted $656,230.

At the other end of the scale are 50 Trinity St., and 346 Front St. E. Each were valued at just $10,000 and shelled out $251.11 and $128.33 respectively in taxes this year.

Those properties were two of several under appeal around the Distillery District and the West Don Lands, a formerly industrial area east of downtown Toronto that is rapidly being gobbled up by condo developers. Most of the provincially owned lands in the area are empty or contain warehouses, though one currently houses an auto body shop, and all of them could be lucrative targets for developers. They also included 373 Front St. E. (worth $8.9-million and $135,037 in property tax) and 45 Eastern Ave. ($6.9-million and $104,224 in tax). Nearly all the appeals in this neighbourhood went back as far as 1998.

Two of the more valuable properties are two parking lots on Centre Avenue and Chestnut Street, land the province eventually plans to use for a new courthouse. Those two properties combined were worth $694,567 in property tax this year.

Also under appeal are two pieces of vacant land on Passmore Avenue, an industrial strip near Markham Road and Steeles Avenue in Scarborough (worth a combined $5.3-million, and $56,418 in tax) and a piece of parkland on College Street next to the University of Toronto campus ($3.7-million and $39,381 in tax.)

The fight is indicative of just how hard up for cash both the province and the city are. The amount at stake is small compared with the province’s $132-billion annual budget. But the province seems to determined to recoup it anyway, as it battles to erase a $8.5-billion deficit.

Infrastructure Ontario would not say how much it is costing in money or other resources to fight these assessments. Asked if it was a good use of the government’s time to pursue appeals for small amounts of money over 17 years, Ms. Lankheit wrote: “IO takes its responsibility for managing and enhancing the province’s portfolio very seriously.”

Councillor Perks said he can understand the provincial officials’ rationale, particularly in a time of fiscal restraint. If they weren’t chasing every possible dollar, people might think they weren’t doing enough to save the province money.

“In fairness to the people at Infrastructure Ontario, they undergo a level of public scrutiny that involves delivering services at the lowest cost, and that involves going after property-tax assessments,” he said. “It’s perverse, but that’s one of the consequences of all the accountability and scrutiny that government agencies go through.”