In the budget setting process for 2017, Cobourg learned that several large corporations had appealed their taxes across Ontario and had been granted refunds and that the impact on Cobourg’s budget would be about $600K. There are other reasons for tax “refunds” so the budget was set at $800K for 2017. But the total so far to date is $1,050K. One of the controversial reasons for tax refunds is the vacancy rebate mandated by the Province but this was only $340K for Cobourg in 2017 and of this only $48K was for Downtown properties. The decision on vacancy rebates has now been passed back to Municipalities and the County is currently reviewing the situation. During 2017, Treasurer Ian Davey provided Council with three separate reports about property tax and although they were comprehensive, I thought it useful to consolidate them and report on how much goes to each category.
Total Municipal Tax Rebates reported on November 23, 2017
|Sep 30, 2017||Year To Date||2017 Budget|
|Town of Cobourg||$ (113,814.72)||$ (1,049,873.34)||$ (800,000)|
|County of Northumberland||$ (59,937.04)||$ (565,801.81)|
|Education||$ (109,741.51)||$ (1,084,951.99)|
|DBIA||$ (247.14)||$ (220.06)|
|Total||$ (283,740.41)||$ (2,700,847.20)|
Note that there are significant Assessment Review Board (A.R.B.) decisions still to come in 2017 – or if not, they will hit in 2018. Outstanding are claims by Canadian Tire and Shopper’s Drug. Ian Davey expects that the budget line for rebates for 2018 will be higher than usual but not as high as 2017.
The main reasons for rebates are:
- Heritage Incentive Grant
- Vacancy Rebate
That is, the MPAC valuation has been disputed and MPAC agreed (sometimes reluctantly) to a new assessment. No-one will want their assessment increased so these are always reductions which results in a rebate.
The total tax rebate due to reassessment was $2,460K with Cobourg’s share $1,046K. Of the total, the A.R.B. was required to rule on $1,410K. The biggest single property was the Mall which received a rebate of $872K for tax years 2013 to 2016. Of this, $439K was paid by Cobourg.
Home Depot wanted rebates going back to 2009 but agreed without a hearing and signed “Minutes of Settlement”. Their total rebate was $695K with $255K coming out of Cobourg’s budget.
Most of the other reassessments were commercial properties although some were residential – I counted 14 residences out of about 90 total addresses. These were typically around $1000 but some were as low as $22.
The overall rebate was mitigated by reduced vacancy rebates as well as “reallocation adjustments”. That is, I know the numbers don’t add up properly here – refer to Ian’s reports in the links below if you want to reconcile.
Heritage Incentive Grant
$6,400 was rebated to the property at 79 King Street West as a Heritage Incentive Grant. This is separate to CIP and is only relevant to Cobourg – the County and Board of Education do not participate. That property also received $1,658 vacancy rebate (actually more since they also got a percentage of the County and Education levy). No-one else in Cobourg got a Heritage Incentive Grant although you’d think more would. The Town’s website explains criteria here.
Vacancy rebates in 2017 added up to a total of $340K of which Cobourg reimbursed $130K. Of this, only $48K was for Downtown properties ( $18K from Cobourg’s tax). These (downtown) amounts are not a major part of the Town’s tax income but could be a significant disincentive for landlords to leave their properties vacant.
- Cobourg is over budget on the Tax rebate line – $800K was allocated and $1,050K spent.
- This “rebate of taxes” program will continue in 2018 with some large amounts likely.
- The blame for the excessive rebates is obviously inaccurate MPAC assessments of large commercial properties – at least in hindsight.
- The vacancy rebate and Heritage incentive grants are a relatively small part of the Town’s budget.
Ian Davey’s three reports from three separate council meetings are available below. The fourth link is to the post where the problem of large rebates was first mentioned.
- Cancellation Reduction or Refund of Taxes May 25 2017.pdf – May 25, 2017
- Vacancy Rebates Industrial and Commercial Buildings.pdf – June 9, 2017
- Cancellation Reduction or Refund Taxes 3rd Report 2017 November 23.pdf – Nov 23, 2017
- Cobourg’s Preliminary 2017 budget and report on requirement for unusual refunds