Toronto, province spat over property taxes

Mayor John Tory says the city may look to raise rents or other measures in response to the province trying to claw back property taxes.

Thestar.com
Sept. 28, 2015
By Rob Ferguson

Mayor John Tory says the city could raise rents on the province if Premier Kathleen Wynne’s government tries to claw back property taxes.

With the province confirming it is appealing property tax assessments on provincial buildings - which could mean millions of dollars in lost revenue for the city if the more than dozen appeals are successful - Tory said they may look at measures to counteract those losses.

“I understand these legal mechanisms are in place. I understand they have the need to find money for themselves - but so do we,” Tory said Monday.

“And so that is why I said that we will be putting this into the context of a much broader series of discussions where we can say, ‘Fine, we’re going to review some arrangements we have with them and jack up the rent,’ or, you know, change the terms of different things.

“So, I think this is really a proper topic for discussion between the two governments where if this reassessment happens, it’s at a cost to us and it really makes our problems bigger, that we’re going to be coming to see them about.”

There is already some indication the province can expect rents hiked in response sometime soon.

A new report to government management committee on the lease at Old City Hall - the Queen St. address where the province has rented as a courthouse since 1972 - outlines a $43,000 increase in annual rent totalling $9.7 million. That lease agreement will be before councillors next week.

City spokesperson Jackie DeSouza said the province has a right to appeal its property tax assessment - a process dictated by the provincially legislated Municipal Property Assessment Corporation, or MPAC.

She said several of the appeals are “intended to correct factual errors” about properties being sold or changes to their uses. If that is the case, DeSouza said “the city has no recourse but to accept the outcome.”

But neither Infrastructure Ontario, which launched the appeals, nor the city would confirm the total amount of taxes in question.

“At this time, it is premature to determine the amount of assessment at risk in respect to these appeals and the subsequent financial impact to the city since the appeals have not been settled,” DeSouza said.

The provincial government defended the tax assessment appeals as reasonable, with Infrastructure Minister Brad Duguid maintaining “the system is set up to provide property owners with the opportunity to appeal,” even as opposition leaders mocked the move.

“You hear complaints left, right and centre about MPAC,” said Progressive Conservative Leader Patrick Brown, who noted it’s “probably not” worth the staff time and resources at Infrastructure Ontario to challenge the assessments.

“Maybe the province will finally appreciate why so many Ontarians have trouble with MPAC. It’s sad and comical at the same time that it’s arrived at this position that the province itself is appealing MPAC. I think it speaks for itself.”

The appeal “certainly doesn't engender a lot of confidence” in MPAC’s ability to assess properties, added NDP Leader Andrea Horwath.

“It’s quite interesting to watch ... I think what it shows is that MPAC is not working and there needs to be an overhaul.”

Duguid said the appeal system was set up by the province at MPAC, an arm’s length agency, to ensure fairness.

“All property owners, including Ontario taxpayers ... ought to be paying the appropriate level of taxes,” Duguid said after the legislature’s daily question period, insisting it is “not at all” unfair to get any rebate possible from property taxes paid to the City of Toronto. “I think Ontario taxpayers would want us to ensure that we’re not paying more for those lands than we ought to be.”

He was unaware of how much the province could get back on property taxes paid with appeals on some properties dating to 1998.

A spokesperson for Infrastructure Ontario said there is “no specific target” for how much they hope to get back from the city.

Meanwhile, the city still faces upcoming budget pressures after bureaucrats scrambled to patch a $86-million hole left in the 2015 budget by a lack of provincial assistance.