Disclaimer: This document was assembled by Hubert Hogle based on council minutes and some personal recollections. It has no official status. It is a work in progress and is still incomplete. It is believed to be a reasonably accurate account of the history of area rating in the Town of Greater Napanee based on the historical records but there are many areas of the history that a murky. It is included here because the area rating issue has suddenly come to the forefront in Greater Napanee and it is hoped that this summary will provide some background and sources of further information. I am a lawyer in good standing with the Law Society of Upper Canada but have been retired since July 1, 2011. This is an attempt to assemble and document the facts as they are known now and become known and the statutory provisions that may apply. I express no opinion on the legality or otherwise of tax policy of the Town of Napanee or on any other legal matter. Any errors or omissions should be reported to me at hogles2@yahoo.ca.
The Town of Napanee and four neighbouring municipalities were amalgamated by arestructuring order of the Minister of Municipal Affairs and Housing made under s. 25.2 of the Old Municpal Act dated January 7, 1997. A transition committee sat for nearly a year and sorted out many sub-issues and the amalgamation took effect on January 1, 1998.
At the time of the order, Towns were responsible for policing, but Townships received OPP policing for free. Napanee had at one time maintained it’s own force, but at the time of amalgamation contracted with and paid the OPP to provide police services.
The order allowed Area Rating of Police Services in the Old Town of Napanee. The restructuring order provided:
8.1(1) The new Corporation of the Town of Greater Napanee may provide for a special mill rate adjustment to apply to the taxpayers of the former Town of Napanee for the purposes of police services in the area which now forms part of the new municipality, on or after January 1, 1998.
8.5(3)(a) The Corporation of the Town of Greater Napanee shall limit any municipal tax increases occurring solely as a result of this Order and the amalgamation of the former municipalities constituting part of the new Town, and exclusive to tax increases related to fire services, to three percent of the municipal portion of the real property tax bill each year beginning in 1998 until the increase is fully implemented.
8.5(3)(b) The cost of the phase-in of the tax increase, in any, shall be financed, to the extent possible, by limiting tax decreases by the amount of the cost of he tax phase-in.
It is important to note is that, under the Restructuring Order, area rating could only be done for policing and only in the old geographic Town of Napanee. Current tax policy is for a larger area (generally, the water-sewer area but with some exceptions on Vanluven Road and elsewhere) and is not earmarked for any particular service. (In particular, it is not earmarked for water and sewer and this is causing great confusion to the group on Vanluven Road.)
It is clear that current tax policy cannot be supported by the Restructuring Order.
Andrew Gonsalves, Ted Davie and others formed the Rural Ratepayers Association (RRA) shortly after amalgamation. They claimed that rural tax bills had risen as result of amalgamation and provided some anecdotal evidence. No comprehensive investigation was done to verify the claim. There were changes made in the way assessment was done about the same time and, 16 years later, it unclear what effect this had on rural taxes.
Starting June 8, 1998, Gonsalves and Davies began lobbying council.
Section 362 of the (old) Municipal Act (in force until January 1, 2003) provided that all taxes must to be levied equally upon all assessments: Old Municpal Act
362.(1)All municipal, local or direct taxes or rates shall, where no other express provision is made, be levied upon the whole of the assessment for real property or other assessments made under the Assessment Act, according to the amounts assessed in respect thereof, and not upon any one or more kinds of property or assessment or in different proportions.
This section is virtually identical to section 307 of the (new) Municipal Act, 2001 which came into force on January 1, 2003. New Municipal Act
It is worth noting that s. 186 of the New Municipal Act provided that the provisions of restructuring orders, in most cases, prevail over the new Act.
186. (1) An order of the Minister under section 173, a commission under section 175 or the Ontario Municipal Board under section 180, 181 or 182,
(a) is conclusive evidence that all conditions precedent to the making of the order have been complied with and that the municipalities have been restructured in accordance with this Act; and
(b) prevails over any Act or regulation with which it conflicts except,
(i) this section and regulations made under this section,
(ii) sections 171 to 185, and
(iii) regulations made under sections 171 to 185. 2001, c. 25, s. 186 (1); 2006, c. 32, Sched. A, s. 84 (1).
Exception
(2) Despite clause (1) (b), a municipality may exercise its powers with respect to any of the following matters before or after an order of the Minister under section 173 or an order of a commission under section 175 comes into force, unless the order precludes it expressly or by necessary implication:
Changing the name of the municipality.
Transferring powers between upper-tier and lower-tier municipalities.
Dissolving or changing local boards.
Changing the composition of council.
Establishing, changing or dissolving wards.
Any other matter dealt with by a provision of an Act that provides, expressly or by necessary implication, that the provision or the exercise of power under the provision by a municipality prevails over an order of the Minister under section 173, a commission under section 175 or the Ontario Municipal Board under section 180, 181 or 182. 2006, c. 32, Sched. A, s. 84 (2).
Exception
(3) Despite clause (1) (b), an order described in subsection (1) does not affect any exemption or partial exemption from taxes or rates or any authority to provide for those exemptions in any Act. 2001, c. 25, s. 186 (3).
Taxes
(4) If, as a result of an order described in subsection (1), an area of a municipality is subject to taxes or rates which do not apply generally across the municipality, section 21 of the Assessment Act applies with respect to those taxes or rates as if the area were the whole municipality. 2001, c. 25, s. 186 (4).
Revocation of restructuring orders
186.1 (1) Every order described in subsection (2) whose effective date is earlier than January 2, 2005 and that remains in force on the day before the day on which the Good Government Act, 2009 receives Royal Assent is revoked. 2009, c. 33, Sched. 21, s. 6 (6).
(a) orders of the Minister made under subsection 173 (4) or (5) or under a predecessor of one of those subsections; and
(b) orders of a commission made under subsection 175 (1) or a predecessor of that subsection. 2009, c. 33, Sched. 21, s. 6 (6).
Exception, provisions with continuing effect
(3) Despite subsection (1), if a provision of an order that is revoked by that subsection still has effect on the day before the day on which the Good Government Act, 2009 receives Royal Assent, the provision is not revoked and continues to apply. 2009, c. 33, Sched. 21, s. 6 (6).
Application of Legislation Act, 2006, ss. 51, 53, 56 and 57
(4) When an order is revoked by subsection (1), sections 51, 53, 56 and 57 of the Legislation Act, 2006 apply as if the order were a revoked regulation. 2009, c. 33, Sched. 21, s. 6 (6).
However, s.222 permits council to change the ward boundaries or dissolve the wards subject to appeal to The Ontario Muncipal Board. In Stone Mills, council decided to dissolve the wards and an appeal to the OMB was dismissed.
On April 12, 1999, the Property Committee of Council heard deputations from the RRA asking for relief and from Shaune Lucas opposing change. At that meeting the clerk provided a list of five methods of getting around section 362 of the Municipal Act and implementing an area rating system. I do recall seeing the list at the time and wondering at whether they were vetted by the municipal solicitor for their legality. I can find no evidence on the Town website that the legality of what was being done was ever verified by the municipal solicitor.
That, in order to facilitate decision making of Council, the Staff provide the 1998 cost by Ward of the following services: policing, sidewalks, streetlights, snow removal, litter cleanup and sweeping and that this be investigated as a sixth alternative.
In 2000, the matter, apparently came to a head. On April 3, 2000 various options were discussed and council decided to adjourn a decision until April 10. Minutes April 3. 2000
On April 10, 2000 the Clerk put forward a further option. This Option would expand the urban core to include the built-up portions of Ward 2 and 4. The increase in tax rates to the urban sections of Wards 2 and 4 could be phased in over a specified time period until it reaches the same level as Wart 5 with the remaining Wards 1-4 paying 66% of this rate. Minutes April 10, 2000
RESOLUTION 577/00 Shermerhorn & Weaver That this option be adopted in principle but that the Clerk provide further calculations starting with the 66% (Adolphustown/South Fredericksburgh/North Fredericksburgh/Richmond), 77% (new Urban Core – former Richmond and North Fredericksburgh) and 100% (Napanee) rate differential and projecting over a three year period and further that this information be provided to the next Regular Council Meeting to be held April25, 2000. CARRIED
On April 25, 2000 the Clerk presented the 3-year plan but gave council two options. The first ended the urban area at 401. The second, which was adopted, included “North of Highway 401 to and include Goodyear.” Minutes April 25, 2000
RESOLUTION 604/00: Shermerhorn & Weaver That Council approve Option # 2 but that the Clerk recalculate the figures using a redefined map area to include the boundaries of the water and sewer area and further that the phase-in period be calculated for a period longer than three years. CARRIED
RESOLUTION 619/00: Weaver & Elm That the Town of Greater Napanee adopt a three rate tax policy system whereby the rural area pays a rate of approximately one- third less than the former Town of Napanee area, and further that the area surrounding the former Town of Greater Napanee within the water and sewer boundaries have a rate established which would, over a four year period, phase in the rate from the rural rate to the urban rate on properties within that boundary.
By-law 00-31 was passed to implement this resolution. By-law 00-31 imposes the rate and the file containing it is on the Town website. The by-law has 3 pages of text and Schedule A which is referred to in the text of the by-law and therefore incorporated into it. The file on the Town website which contains the by-law has 13 pages of additional working papers including version #1 of the now notorious map of the urban area. None of these 13 pages are referred to in the by-law and it is unknown whether staff consider them to be incorporated into the by-law or not. Some of them appear to be copies of previous working papers which set out the various options open to council. By-law 00-31
On May 28, 2001 on a 4-3 vote the by-law to impose the rate for 2001 on the existing basis and to adopt the present 4 year tax policy for the remainder of this term of Council. Minutes May 28, 2001
Present 4 Year Tax Policv Plan
RESOLUTION 215/01 : Mills & Veltheer
That Council adopt the Present 4 Year Tax Policy Plan for the remainder of this term of Council. Mayor Remington requested a recorded vote. Councillor Gonsalves: Nay Councillor Hodson: Nay Councillor Sonneveld: Yea Councillor Cole: Nay Councillor Veltheer: Yea Deputy Mayor Mills: Yea Mayor Remington: YEAS: 4 NAYS: 3 As a result of the recorded vote, the motion was declared ………………………. CARRIED.
RESOLUTION 212/01 : Mills & Veltheer That By-law No. 01 -30 be read a second time and finally passed and that the Mayor and the Clerk sign the same and affix thereto the seal of the Corporation. CARRIED.
On January 1, 2003 the (new) Municipal Act, 2001 came into force. Section 307 confirms the general rule (which was in the old Municipal Act) that all taxes are to be levied on the whole assessment equally unless otherwise provided: New Municipal Act, 2001
307. (1) All taxes shall, unless expressly provided otherwise, be levied upon the whole of the assessment for real property or other assessments made under theAssessment Act according to the amounts assessed and not upon one or more kinds of property or assessment or in different proportions.
An exception is created in section 326 which provides:
326. (1) A municipality may by by-law,
(a) identify a special service;
(b) determine which of the costs, including capital costs, debenture charges, charges for depreciation or a reserve fund, of the municipality are related to that special service;
(c) designate the area of the municipality in which the residents and property owners receive or will receive an additional benefit from the special service that is not received or will not be received in other areas of the municipality;
(d) determine the portion and set out the method of determining the portion of the costs determined in clause (b) which represent the additional costs to the municipality of providing the additional benefit in the area designated in clause (c);
(e) determine whether all or a specified portion of the additional costs determined in clause (d) shall be raised under subsection (4).
Definitions
(2) In this section,
“benefit” means a direct or indirect benefit that is currently available or will be available in the future; (“avantage”)
“special service” means a service or activity of a municipality or a local board of the municipality that is,
(a) not being provided or undertaken generally throughout the municipality, or
(b) being provided or undertaken at different levels or in a different manner in different parts of the municipality. (“service spécial”)
Limitation
(3) An area designated by a municipality for a year under clause (1) (c) cannot include an area in which the residents and property owners do not currently receive an additional benefit but will receive it in the future unless the expenditures necessary to make the additional benefit available appear in the budget of the municipality for the year adopted under section 289 or 290 or the municipality has established a reserve fund to finance the expenditures over a period of years.
Levies
(4) For each year a by-law of a municipality under this section remains in force, the municipality shall, except as otherwise authorized by regulation,
(a) in the case of a local municipality, levy a special local municipality levy under section 312 on the rateable property in the area designated in clause (1) (c) to raise the costs determined in clause (1) (e)…
No one seems to have noticed that Napanee’s tax policy did not comply with section 326. At no time did Council ever designate the service or services for which the urban ratepayers were to pay a surcharge, nor estimate the cost nor was the area (simply designated “the water-sewer area”) clearly defined.
Section 326 permits a surcharge but not a discount. The 2000 tax policy created a 32% discount in the rural region which is equivalent to a 47% surcharge in the urban region.
On May 12, 2003 council dealt with the Vanluven Road situation but apparently made some mistakes which Harry Kellar, 194 Vanluven Road, and others have complained about for years. The following two resolutions were passed: Minutes May 12, 2003
RESOLUTION #220/03: Veltheer & Sonneveld That the Tax Policy approved with Resolution #215/01 be brought back to the floor for reconsideration to:
i) properties fronting on County Rd. #41 north of Vanluven Road ii) properties fronting on Goodyear Rd. east of County Rd. 41 and west of Kimmett Side Rd iii) properties within the Richmond Trailer Park CARRIED
RESOLUTION #221/03: Veltheer & Zatterberg That for the 2003 Taxation Year, Council adjust any properties within the area defined above that do not have municipal water and sewer services from urban core rate to the rural rate; and further that any properties with water and sewer services within the above described areas that are currently at the rural rate be adjusted new to the urban core rate. CARRIED
In the run-up to the 2010 election, I was asked about the legality of the area rating system. I was still practising law at the time. I spent several hours reviewing the minutes on the Town website. This was very difficult because the website was a mess and the search function did not work properly. (The search function is still very cumbersome.)
I also spent some time doing research and I was puzzled that I could find no basis to support the area rating system. I thought there must be something I was missing. I did not pursue the matter but I started asking questions.
In 2011 staff did some calculations on the effect of changing the 66% to 67, 68, 69, 70, 75, 80, 85, 95 and 100% but nothing came of this.
On April 28, 2011 on a motion by Shaune Lucas and passed 4-3 the rural rate was changed from 66% to 68%. Minutes Apr 28 2011
RESOLUTION #206/11: Lucas & Pierson That the following operating and capital tax rates which represents a 100:68 ratio be approved:
Operating Rate Capital Rate
Urban 0.006204 0.000724
Rural 0.004219 0.000492
Councillor Lucas requested a recorded vote.
For: Councillors Isbester, Pierson, Lucas and Deputy Mayor Cole. Against: Councillors Schenk, Grant and Mayor Schermerhorn
As a result of the recorded vote the motion was CARRIED.
This led to a storm of protest from the RRA. The RRA reportedly sent contingents to visit several councillors. On May 10, 2011, in a process that clearly had been choreographed in advance, Ted Davie attended with a large group of Rural Ratepayers and threatened to point out all council’s mistakes in the paper. A resolution was made by Cole & Isbester to place the 2% in a reserve fund designated to be used specifically for upcoming rural projects. The resolution, which had been drafted and circulated in advance also specified that area rating not be revisited for the remainder of the council term. The mayor refused to allow any debate on the motion and council voted for this with only councillor Lucas dissenting. Minutes May 10, 2011
DEPUTATIONS Ted Davie – UrbanIRural Tax Rate
Ted Davie spoke regarding the rural tax rates and the recent resolution by council to increase that rate. Mr. Davie questioned why a good arrangement made at amalgamation was changed now when the rural area has not received any new amenities. Mr. Davie threatened to point out all council’s mistakes in the paper if council did not restore the trust of rural taxpayers.
RESOLUTION #211/11: Cole & lsbester
That 2% of the approved rural tax levy be placed in a reserve fund designated to be used specifically for upcoming rural projects and that the agreed upon 68% levy remain in effect for the remainder of this term.
Mayor Schermerhorn requested a recorded vote.
For: Councillors Schenk, Grant, Isbester, Pierson, Deputy Mayor Cole and Mayor Schermerhorn Against: Councillor Lucas
As a result of the recorded vote the motion was CARRIED.
I have found the tactic of stifling future debate to be a disturbing feature of recent councils.
Amazingly, nothing was done to create the reserve fund. No by-law was ever presented to set up the reserve fund. Accounting standards would seem to require that reserve funds be set up separately and set out in the Financial Statements but this was not done. The 2% was simply dumped into the unallocated surplus and no council member or member of the public (urban or rural) noticed. In 2014, after I was unable to locate the reserve fund in the Town financial statements, I e-mailed the Treasurer and asked where the money had gone. He acknowledged that the 2% was in the general surplus. The e-mail exchange is found elsewhere on this website.
Mar 12, 2013 & May 28, 2013 Harry Kellar attended council complaining about the situation of the Vanluven Road residents who do not get water or sewer but pay the urban rate. This shows the confusion of council, staff and the public about this issue. Harry Kellar lives at 194 VanLuven Road east of Kimmett Side Road, so apparently he was missed in the 2003 adjustment. Nothing was done.
It has been impossible to determine exactly what happened in the bowels of Town Hall, but there are hints that, by 2013, staff may have begun to wonder about whether the tax policy was permitted by the Municipal Act.
On September 4, 2013 the Treasurer made a report to Council recommending that current tax policy not be changed ad hoc and a “Service Area Review” be done. Report to Council Sep 4 2013 On September 10, 2013 council approved this. Councillors Schenk & Grant voted against the proposal. Minutes Sep 10, 2013
That Council approve the recommendation that the current tax policy not be changed ad hoc but rather tax policy be an included feature of an overall Service Delivery Review;
And further that as part of the 2014 budget process, staff resources be set aside to prepare a request for proposal for expressions of interest and completion of a Service Delivery Review process.
Councillor Schenk requested a recorded vote.
YEAS: Councillor Isbester, Councillor Pierson, Councillor Lucas, Deputy Mayor Cole and Mayor Schermerhorn
NAYS: Councillor Schenk, Councillor Grant
As a result of the recorded vote, the resolution was declared CARRIED.
The Napanee Beaver reported on the meeting in the September 19 edition. The CAO said,
“The legislation on which the town operates has changed considerably since 1998 when we amalgamated this municipality. The decisions that were made in 1998-2000 were based on legislative requirements and legislative direction at that point in time. That was the best framework we had. This review would also take a look at the changes in these legislative requirements and incorporate them into some recommendations as well.”
The Mayor noted that council would still have to approve any recommended change to the tax policy that might appear from the service review. He said,
“It’s up to council to change the tax policy. This report will not change the tax policy. It’s up to council.”
The SDR proposal seems to have been designed, at least in part, to bring tax policy within s.326 of the Municipal Act.
At the November 21, 2013 budget meeting, the CAO proposed to set up a system whereby the services provided by the Municipality would be reviewed. Minutes Nov 21 2013
REP – Service Delivery Review (Resolution)
Raymond Callery, CAO reviewed the service delivery review process.
Mr. Callery advised that he has gathered significant amount of background information. There are 6 steps to the process and the Town is currently at step 4 – to investigate other feasible service delivery methods. Mr. Callery reviewed the methodology that the larger the study limits, the more expensive and time consuming the study will become. The study model is divided into services, organization, efficiencies and financing categories. As the Town currently provides 126 municipal service categories, with multiple services under each category, staff is recommending that:
(i) selected services and resident priorities be reviewed;
(ii) the review be completed under the existing organizational structure, subject to proceeding with RFPs as recommended;
(iii) all efficiencies in service delivery be considered; and
(iv) source and application financing be considered. Mr. Callery exhibited an example of Town Youth Programs through the service delivery review model.
Staff will report back with some scoping of the services for Council’s consideration and an REP will be required to retain an external consultant for part of or the entire project.
Council raised questions regarding how this service delivery review relates to the urban and rural tax rate issue. Mr. Callery advised that this will be part of the financing section of the review.
At the November 21, 2013 Budget Meeting, Council directed the CAO to set up a system whereby services provided by the Municipality would be reviewed. Arising out of Council’s direction to undertake a Service Delivery Review (SDR) the Senior Management Team met on February 21, 0214 to discuss possible approaches and confirm the services and delivery practices within each Department/Division. The CAO emphasized that this is not an employee performance evaluation but rather a review of the services provided by the Municipality to its’ citizens.
Following the meeting, Senior Management were to provide feedback and prioritize these services by completing a related Excel spreadsheet. The Director of Operational Audits will then analyze the data and provide recommendations in terms of a Service Delivery Review protocol.
To date, I have researched the approach taken by a number of other Municipalities including staff reports, strategies and implemented SDR’s. I have reviewed a document entitled a Guide to Service Delivery Review and found it to be a beneficial resource. The publication was developed by the Ministry of Municipal Affairs and Housing in partnership with the Association of Municipal Managers, Clerks and Treasurers of Ontario, the Municipal Finance Officers’ Association of Ontario and the Municipal Administrators’ Association. I would recommend the six stage approach as outlined in the Guide should form the basis of the review.
The principle behind a Service Delivery Review is to implement a framework whereby there is a systematic evaluation of the existing services in terms of efficiency, effectiveness and sustainability. The SDR process will focus on setting priorities and where possible reduce the cost of delivery while maintaining or improving service levels.
Discussion
Stage 1 – Getting Organized Currently we are at the first stage in the process. I anticipate refining the initial feedback in order to structure a consistent delivery review template. Additional considerations within each service area should include:
(1) The level of importance to the public (external).
(2) The level of importance operationally (internal).
(3) How is the service financed (taxation, user fees, other)?
(4) Is the service legislated (mandated)?
(5) Is the service discretionary?
(6) Influences such as risk management, health and safety, standard practice.
(7) How to describe usage areas (entire municipality versus a defined area)?
The subsequent stages of the process could include the following framework.
Stage 2 – Performance Outcomes and Service Standards (What do you want the service or program to do?).
Stage 3 – Understand and Evaluate Current Performance (How is the current service performing?)
Stage 4 – Consider Internal Improvements or Investigate Other Feasible Methods.
Stage 5 – Select a Service Provider.
Stage 6 – Implement, Evaluate and Report.
Senior Management is committed to conducting a thorough review of the services currently provided by the Municipality and members of Council will be kept informed on a regular basis. Throughout the process Council will be called upon to make the critical and strategic choices.
My research into the approach taken by other Municipalities has brought me to the following conclusions. The cost of the project will be directly related to the scope of work. The level of expertise required for a review of every service and program would be wide ranging. In larger Municipalities where the entire review was conducted by outside consultants, the costs were substantial. In smaller Municipalities where the service areas were prioritized by Senior Management and approved by Council, costs were dramatically reduced. For this reason, our recommendation would be complete the majority of the background work internally.
Municipal staff is available to answer any questions members of Council may have.
On March 25, 2014 council received this report for information
On April 2, 2014 Charles McDonald delivered another long report:
At the March 25, 2014 Regular Session of Council, Municipal staff submitted an initial report relating to Service Delivery Review (SDR). Council then directed staff to establish a timeline for the SDR process and also provide members with a copy of the Excel spreadsheet completed by Senior Management. Members of Council were to review and provide feedback on the information to date.
As stated in my first report, the principle behind a Service Delivery Review is to implement a framework whereby there is a systematic evaluation of the existing services in terms of efficiency, effectiveness and sustainability. The focus of the SDR is to improve the level of services and programs while reducing the cost of the delivery. An SDR will assist members of Council with any review or update of a taxation policy. My recommendation is to utilize the six stage approach as outlined in the Guide to Service Delivery Review. The cost associated with this project will be directly related to the scope of work. Therefore, it is my recommendation that the majority of background work be completed internally.
Discussion
A Powerpoint presentation on The Municipal Reference Model identifies the common threads of almost every study as:
– Defining our Services (what services are provided, what value are they offering and are they the right service)
– Improving our Services (what is the cost of our services, can we improve our efficiency, effectiveness and quality)
– Service Levels (how was the current service level determined, what are the cost and service implications if we raise or lower service levels)
– Service Accountability (who is accountable for which service and does it need to be adjusted)
– Service Operations (how do we deliver the service and are there better ways)
As part of the first step in the process we will be guided by these principles. We must also define our services and differentiate between a service and a Departmental operational task.
As stated in my March 19th report, each service area will then be evaluated in terms of:
(1) The level of importance to the public (external).
(2) The level of importance operationally (internal).
(3) How is the service financed (taxation, user fees, other)?
(4) Is the service legislated (mandated)?
(5) Is the service discretionary?
(6) Influences such as risk management, health and safety, standard practice.
(7) How to describe usage areas (entire municipality versus a defined area)?
Next Steps:
o Staff will further define service financing options, service levels, usage areas, mandated services versus discretionary
o Staff will attend SDR training on SDR scope and disciplines
o Staff will report back to Council the end of May/early June 2014
With respect to other projects, as Director of Operational Audits I am currently involved with developing a 5 Year Energy Conservation and Demand Management Plan. Pursuant to Ontario Regulation 397/11 this is mandated for completion by July 2014. I have also been conducting operational energy audits at the Water Treatment Plant and the Waste Water Treatment Plant. A walkthrough of the SPC is forthcoming. As Council is aware an LED streetlight conversion program is being considered.
Municipal staff is available to answer any questions members of Council may have.
The report was received for information on April 8, 2014.
On June 24, 2014, the CAO made a report to council indicating that staff would provide to Council, by the end of June “the framework of legislative limitations that municipal tax policy must be developed within.” He also recommended that the municipal solicitor to run a session to review the specific services to be area rated. Report to Council Jun 24 2015
In keeping with Resolution #324/13; on January 2, 2014, Charles McDonald was seconded to the position of Director of Operational Audits, working in the Office of the CAO for one year. Within these duties, Mr. McDonald was to front projects related to energy conservation and management, Street Lighting Conversion, Service Delivery Review and RFP’s. The first two projects have taken considerable more staff time than originally estimated, but real progress has been made on Service Delivery Review.
On February 21, 2014, Senior Management met to discuss the best approach to identify services to be reviewed. A template was devised and management reported back to Mr. McDonald on the various services and data collection methods.
Between January 2 and April 4, staff reviewed a number of municipal approaches to completing an appropriate review and the Directors of Operational Audits and Finance attended a training program to learn from expert practitioners how to best approach implementation of these programs that would result in effective outcomes moving forward.
On March 25, 2014, a report update was forwarded to Council outlining the 6 steps to completing a service delivery review. Council, at that meeting, asked to review the type of research that staff were undertaking. On March 26, Council was provided the spreadsheets that management was working through to allow for their comments. General feedback from Council was that they did not have enough indepth knowledge of operations to fully complete the forms, but some feedback was received and will be incorporated into the final RFP.
On April 4, 2014, Council finalized the 2014 Budget which resulted in approval of our consultation budgets. Based on these projections, consulting work in all areas could be apportioned for the appropriate allotment of funding.
As reported to Council on April 8, 2014, further work is required to separate service areas from tasks involved in the completion of work within a service area. Council also needs to define the final limits of the RFP prior to it’s issuance.
Next Steps
1) Provide Council with the framework of legislative limitations that municipal tax policy must be developed within. This will be completed by the end of June.
2) Provide a independently moderated session (staff recommends Tim Wilkin to run the session) for Council to review the management identified service areas and determine the final services to be included within the limits of the RFP. This should be completed by the end of July.
3) Management complete the data collection for those Council identified service areas and develop the RFP in conjunction with this process. This should be completed by the end of August.
4) Release the RFP for a third party consultant to complete the economic impact analysis of the collected data and form conclusions on proposed tax policy. RFP would be awarded by mid September.
5) Consultant would review data and return a report to management for review by the end of October.
6) Consultant would present report to new Council prior to the end of January 2015 for implementation of any revised tax policies for the 2015 taxation billing cycle.
Given the 2014 budget and tax billing cycle is complete, the first year that any changes to tax policy could effect would be the 2015 taxation year. The timelines above have been recommended by staff to allow for changes to the 2015 billings. It could also be problematic for this Council to recommend a new tax policy that would in effect be nonbinding on a future Council, which will be duly elected in October of 2014.
It is my understanding that the original resolution was brought forward to deal with public concerns about the unfairness of the present implementation of tax policy. Council agreed with the staff position that a ten year old tax policy should be reevaluated rather than tweeked, to make it more defensible to the public given the change in service provision, legislative amendments and community growth that has taken place. The above timelines allow for this process to take place in a manner that ensures both an accurate, complete and independent review is undertaken prior to any recommendation coming forward. It also allows these changes to be implemented without having to revisit the matter twice within a 3 month window and still effect the next possible taxation billing cycle.
I trust this report provides the necessary information and better defines the timelines and Council decision points.
Respectfully, Raymond Callery, CAO
On June 24, council received the report for information:
Unfortunately, the first step [providing Council with the framework of the legislative limitations that tax policy must be developed within] has become very arduous, as there are a number of complicating factors of overlapping legislation passed by a succession of governments. Our lawyers have spent a great deal of time on research and interpretation, with no case law to provide guidance.
When later challenged about what he had been told, the CAO claimed that any report he received from the lawyers was verbal. In any event, no further legal opinion was provided until the new council requested a formal legal opinion in 2015.
Just how these services were selected for area rating was not explained. The flavor of the list of services would indicate that someone in the rural faction had some input. How else can one explain the “livestock kills”?
No explanation was made as to how any consultant could go about defining an area of the municipality which benefited disproportionately from one of these services or the cost of such additional benefit. No provision was made for making the data used by the consultant public or for having public input to the process.
On August 8, 2014 Councillor Lucas (Ward 5) sent a letter to the CAO asking a number of questions. The first one was: “In general or specific terms is the present urban/rural levy legal and consistent with current provincial legislation?” Shaune Lucas list of questions
On August 18, 2014 Council approved the list of services to be reviewed: Minutes Aug 18, 2014
CAO – Service Delivery Review RESOLUTION #336/14: Grant & Pierson
That Council receive for information the CAO-Service Delivery Review report;
And further that Council approve the final list of services to be included in the RFP being:Parking, Crossing Guards, Livestock Kills, Fire Suppression, Police Response Page 3 of 8 REGULAR SESSION OF COUNCIL – August 18, 2014 Minutes (new formula analysis), Sweeping, Catch Basins, Sidewalks, Street lighting, Shoulder Maintenance, Ditching, Grading, Dust Control, Culvert Thawing and Waste Disposal.
CARRIED
On September 23, 2014 councillor Lucas received a two page written response from the CAO. The answer still didn’t answer the question about the legal situation. Staff Response to Councillor Lucas’ Questions
Staff Response to Councillor Lucas’ Questions Re: Service Delivery Review
The basis of our tax policy comes from the work completed in 2000 by staff. The original urban/rural difference was based on a basic differential in the cost of policing. This differential was accommodated under tax policy based on a section of the Minister’s Order that authorized the terms and conditions of amalgamation. No further legal review was done prior to setting taxation policy between the implementation of the program and 2014. A succession of Councils, other than one small adjustment to the rate structure, has been opposed to any adjustment to the rate structure. With over ten years of legislation passed, changes to policing formulas and changes to the services provided within the community, staff fully support a complete review of all legislation and that the lawyer work in conjunction with the successful bidder on the RFP for Service Delivery Review.
Tax rates are based on property assessment. Staff believe, to avoid confusion, the review firm should describe the basic principles used in the development of assessment values. By understanding the inputs into basic valuation development, it will avoid confusion of Council in perceived duplication between paying for services in your tax rate verses the provision of services inflating base assessment values.
All ratepayers have equal access to a snow removal vehicle. Staff has to rationalize the most appropriate plan for operations which may affect timing issues for various properties but all roads are open for access by the entire community to use without user fees. For community facilities, all residents have equal access to booking or using facilities and geographically speaking, fees charged do not change. Both roads and facilities are deemed by staff to be necessary services with equal and open access by all ratepayers.
Staff does not believe that the current tax policy was designed to reflect changes in the provision of either of these services. As indicated in the answer to question 1, the original tax policy was designed to reflect policing changes only and no other services were used in that calculation.
The review would follow the same philosophy as the services that are included in the review. A firm will look at all of the cost centers for that service, identify limitations to access or provision of that service, look at revenue sources and potential revenue sources for the service. They will then make recommendations to the change in the service provision and policy implications for taxation consideration.
In verbal conversation with our legal consultant, no case law exists in Ontario where a municipality has been challenged on their tax policy based on the legislative framework that exists in the province.
Other than specific legal advice that the new Council may request, all sessions held specifically on the service delivery process have been conducted in open session and I would see no reason for the new Council to change this approach. All meetings on tax policy have been held in open session since amalgamation. The new Council is allowed to ask for education material and an educational session to be held in closed session, but at no time can Council advance a municipal decision or deliberations during such a session. he new Council will have to determine the format for open sessions. This could be from listening to presentations and debate, to allowing deputations, to open houses to an open mike setting. The elected Mayor and Council in 2015 will need to determine the policy on this; staff as always will provide whatever support is needed based on those policy decisions.
The RFP allows each firm to identify a public consulting component of their bid. I would assume this schedule would be finalized by the new Council when the RFP is approved early in their term.
The RFP was just released. Cost will be determined at the point of closing in November and through negotiations with the successful firm, adequate budget will be allocated in 2015.
Staff held a meeting without Council. Discussions started in June and the matter has been on regular Senior Management Agendas since then. Managers also worked internally in their own departments to review the functional G/L areas to refine the list, prior to it coming to Council. The Deputy Mayor in the early stages of the process, as part of reviewing the Service Area Update report, asked all Council to be provided the staff consultation information. All Council were provided this information and asked to submit their ideas and comments. Two members took this opportunity. General feedback, including that of the Deputy Mayor was that staff was in a much better position to do this analysis, and staff was given instruction to continue this process independently.
If you are asking for a copy of the G/L accounts, they are available on request by the public.
Council has been provided a number of reports on historical tax policy and its development. I have included the reports provided during 2014 on this matter.
The report repeats the claim that the tax differential was based on “policing”. As the above review indicates, there is not a smidgen of evidence to support this claim.
On August 18, 2014, council approved the list of services to be reviewed including the “livestock kills”
The CAO drafted at 9 page Request for Proposal and on September 19 it was posted on the Town website and at least 10 firms were notified. Request for Proposal
At this point I became convinced that I should get involved. I felt council had no idea of the extent of the problem or how to fix it and I was not satisfied they were getting the help they needed from staff. I spent a lot of time researching what other municipalities had done and seeing if there was any way I could provide input to staff or to the candidates in the upcoming election.
On September 15, 2014, I sent a 4 page e-mail to the clerk reviewing the tax policy, questioning its basis and giving her my analysis of what other municipalities had done. I suggested that the list of services to be reviewed was completely off the wall. This was not presented to Council until December 16 (after the election) when it apparently caused some consternation by the mayor.
In September 2014, staff prepared a training manual for candidates briefing them on various matters. The following was the summary provided to candidates on the SDR. The summary repeated the claim that the 34% was based on policing even though there is no evidence in the record that such is the case. The order of the minister did not permit area rating for policing beyond the boundaries of old Town of Napanee. There are a number of other omissions such as the 2003 amendment and the ongoing controversy on Vanluven Road.
SERVICE DELIVERY REVIEW
A Service Delivery Review (SDR) is a systematic evaluation of existing services in terms of efficiency, effectiveness and sustainability. In August 2004, the Ministry of Municipal Affairs produced a Guide for Municipalities and the Town CAO participated in this project. The CAO was also a joint presenter with the Ministry at the Ontario East Economic Development Conference on this subject.
In 1998, Town Council established a single tax rate for the entire municipality. There was significant debate at that time on service levels and appropriate financing methods. The Minister’s Order establishing amalgamation, allowed for a variation in taxation for policing. Prior to 1998 only Napanee paid for policing. In 1998, all municipalities were required to pay for policing up to $90/household, except there was no maximum for municipalities that paid for policing prior to 1998.
In 2000, staff presented a series of tax options to Council. At the April 3, 2000 Council meeting, seven options were removed from consideration including a single tax rate. That left three options on the table including a grant program suggested by a Councillor at the meeting. At the April 10, 2000 meeting, Council adopted a tax policy that was a combination of the remaining options from April 3rd. The system created an Urban area, an Urban expansion area (part of Richmond and North Fredericksburgh) and a Rural area. The differential between the urban and rural rates (34%), was based on the difference in 1999 OPP costs. Based on an interpretation of 1999 Provincial grant policies, rural residents were capped at $90 per household and Napanee residents paid the balance of the contract costs. Over a three year phase in period, the urban expansion area rate would move closer to the Napanee rate. The urban expansion area took in all the water and sewer area and land between the Goodyear plant and Highway 401 around the Richmond Industrial Park. It also included land west of Highway 41 to Belleville Road south of the 401.
April 28, 2011, was the next time Council considered tax policy changes. There were no staff reports or presentations at the meeting. Council amended the Urban:Rural tax rate policy, to a ratio of 100:68. On May 10, 2011, Council passed a second resolution that 2% of the municipal rural tax collected be placed in a reserve fund to be used specifically for upcoming rural projects and that the agreed upon 68% levy remain in effect for the remainder of this term.
On September 10, 2013 Council approved the recommendation that future tax policy not be changed ad hoc but rather tax policy be an included feature of an overall service delivery review and as part of 2014 Budget, staff resources be set aside to prepare an RFP. At the November21, 2013 Budget Meeting Council directed the GAO to commence the process in terms of services currently being provided by the Municipality to its citizens. The SDR will focus on selling priorities and where possible, reduce the cost of service delivery while maintaining or improving service levels.
The Director of Operational Audits is the designated staff person to lead this undertaking. A template was devised for data collection and the Senior Management team prepared the data. Council has been kept informed of the process and also provided input during 2014. A copy of the released RFP is available on the Town website. The new Council will approve the successful firm, to complete the review at the beginning of their term.
On December 8, Charles McDonald reported that three responses had been received to the Request for Proposals which varied in cost from $45,600 to $50,000. He confidently recommended that the Watson & Assoc proposal be accepted. Amazingly, the proposals themselves have never been show to council nor put on the website. (On March 18, I asked the clerk to produce them so I could determine how the firms planned to crunch the data but I received no response.) Mr. McDonald gave no explanation of the differences between the proposals and no reason for recommending the one he did. The report does not set out what data the bidders would require, how long it would take staff to assemble data, what data was available, how it was to be analyzed or how the public could be allowed a chance to review any of these things and comment so as to preserve public confidence in the report. Charles McDonald Report Dec 8 2015
Discussion
The Request for Proposal (RFP) was posted on the Municipal website. Municipal staff then contacted a minimum of ten firms, including those listed as the top accounting firms in Ontario. An email provided a link to the website document.
In accordance with the RFP Schedule, a voluntary meeting with proponents was held on October 6, 2014. Some written questions were also received arising out of the RFP process. Responses to the questions and background information were provided to all the consulting firms, thereby ensuring all parties received the same information.
Upon closing on November 14, 2014, three submissions were received.
Name of Firm Cost (exclusive of HST)
Watson & Associates $45,600
Dillon Consulting $48,416
KPMG $50,000
The submissions were reviewed by the Chief Administrative Officer, the Director of Finance and the Director of Operational Audits. Considerations included ensuring completeness of the submission (signed offer, evidence of insurance, WSIB Certificate, fee proposal, company profile and methodology and work plan).
Each document was evaluated in accordance with Section 5 of the RFP. Following this review it was deemed that clarification was required pertaining to the two submissions which received the initial highest ratings.
Subsequent meetings were held with Watson & Associates and Dillon Consulting. Again the CAO, Director of Finance and Director of Operational Audits evaluated and rated the consultants with a scoring system. As a result, we are recommending Watson and Associates be accepted to complete the Service Delivery Review.
Staff would like to emphasize the timeline to complete this review is ambitious, while having regard to the forthcoming municipal budget process.
Municipal staff is also recommending:
(1) That the municipality’s Solicitor review and comment on the proposed contract prior to signing by the Mayor and Clerk.
(2) Upon awarding of the contract a start-up meeting be held between Council and the consultant. Municipal staff is available to answer any questions members of Council may have.
On December 16, 2014, the (new) council reviewed Mr. McDonald’s report and my letter. They voted unanimously to cancel the SDR. Minutes Dec 16 2014
CORRESPONDENCE FOR ACTION Mr. Hubert Hogle -September 16, 2014 Re Service Delivery Review
RESOLUTION #519/14:
Schenk & Isbester That the Council receive for information the correspondence from Hubert Hogle regarding the public consultation process for the Service Delivery Review; And further that Mr. Hogle be advised that the Service Delivery Review will include a public process and that he will be part of the process. CARRIED.
My take on this was that they agreed that the list of services was off the wall but possibly different councillors agreed to cancel the SDR for differing reasons. I don’t know.
Council had a very embarrassing episode involving a methadone clinic. No one on staff alerted Council about the Human Rights issue or checked on whether a building permit had already been issued. A planner was retained to draft a report and by-law. Then, staff apparently heard about the Human Rights and building permit issues, possibly from the lawyer representing the doctors. (It’s not clear exactly what they told council about how or when they discovered the problem.) In any case, the planner and the lawyer were paid to show up just to explain why the by-law that the planner had drafted could not be passed. I include this incident to show that the two new councillors must have realized at that point that (1) you can’t always rely on staff and (2) council still gets the blame for what staff do.
Everyone seemed to be ignoring the elephant in the room. On February 10, 2015, Shaune Lucas brought things back to the table by a notice of motion, returnable March 10: Minutes Feb 10 2015
That the Town of Greater Napanee undertake a complete review of our municipally imposed urban/rural taxation policies during this term of Council that includes, but not limited to, staff reports, questions and direction from current elected officials and questions/comments from Greater Napanee taxpayers;
And that this review be done above and beyond our current municipal business and budget process and that this ad hoc committee be conducted in the public forum open to the public, with pre-determined meeting dates;
And that the first state of this review be a complete review of historical operating expenses and capital expenditures and taxation policies since the urban/rural taxation policy was implemented;
And that the calendar year of 2015 be the time frame for this first phase of municipal taxation policy;
And that the balance of this term of Council be used to discuss and implement or delete municipally imposed tax rates for future Councils going forward with input from staff, elected officials and Greater Napanee taxpayers in a committee format open to the public.
My take on this motion (which I had not seen in advance) is that councillor Lucas is not opposed to the idea of a consultant being retained to do the costing analysis. I saw the thrust of the motion as being to ensure that the public has input and is informed throughout so that there are no more secret studies where the result is pre-ordained.
Also on February 10, 2015 Harry Kellar made yet another deputation to council. Minutes Feb 10 2015
Harry Kellar Re: Tax Situation in VanLuven Road/Highway 41 Area of Greater Napanee Mr. Harry Keller was in attendance to request that Council address the issue of the approximately 40 – 42 properties in the VanLuven Road area that are not on municipal services and are paying taxes at the urban rate, by providing a 32% tax rebate to reduce their current tax rate to the rural tax rate. Mr. Keller noted that he first made this Page 1 of 6 REGULAR SESSION OF COUNCIL – February 10, 2015 Minutes request in 2012; however a resolution was delayed due to Council’s decision to proceed with the Service Delivery Review. Mr. Keller requested that the issue be resolved on the final tax bill for 2015.
RESOLUTION #81/15: Lucas & Harvey That the pending resolution instructing staff to bring forward a report to the March 24, 2015 Regular Session of Council regarding background information on the Town’s tax policy be tabled. LOST.
RESOLUTION #82/15: Schenk & Cole That Council instruct staff to bring forward to the March 24, 2015 Regular Session of Council, a background information report on the Town’s tax policy which includes:
(i) the number of properties in the Van Luven Road area of the Town not on water and sewer services that are taxed at the urban rate, and which properties are taxed at the rural rate;
(ii) why the boundaries for the taxation rates were established as they were;
(iii) the amount of the commercial and industrial taxes in this area; and
(iv) the reduction in tax revenue that would be realized if all properties in this area were paying the rural tax rate. CARRIED
At this point, it became obvious that the Rural Ratepayers Association (RRA) were mobilizing. I worked with councillors Shaune Lucas and Carol Harvey and others to rally the urban group. Letters appeared in the Beaver pro and con and the RRA put an ad in asking their members to show up in force on March 10. At least this time there was no call for tractors.
I sent an e-mail to the Treasurer on March 2 asking for precise information on how much the taxes would go up in the rural region if area rating was completely removed. I knew it was only about a quarter of 32% and I spent a lot of time trying to calculate it but gave up because the spreadsheet on the website was in pdf format, not Excel (under which it was generated) and was so illegible that many of the numbers couldn’d be read even with computerized magnification. I even offered to calculate it myself if he send me the spreadsheet but he never responded. I was not even able to get a legible paper copy. After the 2015 by-law was prepared, I was finally able to see a copy which was sufficiently legible to calculate the effect area rating was having on overall taxes.
Dennis Mills and I requested deputations and both of us wrote letters. Larry Holmes did the same for the Rural Ratepayers. The mayor jumped in with an attack on me on March 5 (without naming me) suggesting that I was the one causing the divide on council for trying to change things and questioning my patriotism. The members of the public that I talked to felt this attack was unwarranted and reflected poorly on him. I decided to ignore it.
It became apparent from a variety of sources that the mayor had met with some members of the RRA at the Town Hall around the end of February. Whether he was supporting the rural faction or just seeking their input is unknown.
I continued my research and prepared a “Myth and Fact” sheet about Area Rating. A copy is on this website. 200 copies were printed and handed out at the meeting on March 10. About 250 people attended. My granddaughter distributed the copies until we ran out. Some copies of my deputation letter were distributed as well. The council chambers was packed and the crowd extended down the stairs, out the door and down the sidewalk to John St. The rural ratepayers had obviously been told to arrive early and they filled the council chambers shortly after the doors opened. But, my impression was that the crowd was pretty equally divided between urban and rural ratepayers. Deputations were heard and the crowd dispersed. After everyone had left, councillor Max Kaiser introduced a motion as follows:
Mar 10, 2015 NOTICE OF MOTION Councillor Kaiser
WHEREAS general assessment seems a very flawed measurement of property values;
AND WHEREAS it is these values that are used as a base for taxation;
AND WHEREAS we have seen great dissatisfaction with taxation levels with regards to services rendered;
AND FURTHER I believe that there may be similar interest on this matter elsewhere in this province, but no obvious avenue to discover it;
THEREFORE, I move that Council gives permission and enables Greater Napanee CAO and/or CFO to interact with their counterparts across the province, or as they might in the course of other activities, with the goal of inspiring more or, possibly, all other municipal Councils, to begin a concerted lobby of Provincial Government seeking change in the legislative requirement to use MPAC assessment values, as they are, as the basis for taxation.
I sent councillor Kaiser an e-mail on March 12, 2015
In connection with your motion concerning MPAC, you might want to look at these links on the Ombudsman’s website:
There have been numerous complaints about MPAC which led to an investigation by the Ombudsman. A lengthy report called Getting it Right found numerous problems. MPAC promised to review it’s procedures but I think the consensus is that very little has changed. MPAC is funded by billing municipalities for its services and the Mayor suggested jokingly when the last bill was paid that we should look around for a new supplier. Of course, we have no choice but to use MPAC.
I have appealed assessment on one of my properties successfully several times and each time MPAC jacks it back up the following year. It takes me about a day to prepare the comparison sheet for each appeal. I know others who have had similar experiences. It’s very frustrating and often not worth the effort.
At the same time, there are many owners who are under-assessed and, thus not paying their fair share.
The assessments are generated by computer using data from market sales and a huge list of codes setting out the variables for each property. The codes include:
SAN_MUN Municipal Sanitary Services
RD_GRVL Gravel Road
SERCD_SA Sanitary Service Type Code
SERCD_WA Water Service Type Code
WTR_L_R Lake or River Water Service
WTR_MUN Municipal Water Service
WTR_NA No Water Services Available
WTR_NO No Water Service Potential to Connect/Install
Sidewalks, Streetlights and Transit (other than “Proximity to Mass Transit”) do not appear on the list of codes.
The problem is that they do not conduct site visits and much of their data is outdated or was never entered correctly in the first place. Even after a successful appeal, they do not appear to have a process to correct errors.
One problem seems to be that they have very outdated details on individual properties, especially where there has not been a recent sale. They no longer send assessors out to count the number of toilets as they did years ago. I believe they still get data on building permits that are issued. Another problem is that there is no system for recognizing the state of repair of the property which often has significant impact on the property sales data.
Their computer program is a highly protected trade secret and they did not explain to the Ombudsman how it worked. And they will not provide details, even to the Assessment Review Court, on how they calculated any individual assessment.
MPAC also generates the preliminary list of electors, which after revision by the clerk (based only on information in municipal records) become our voter’s list. There were lots of comments during the last election about how outdated our voters list was, but it was not the clerk’s fault. Three of my children were on the list as residing in my home, although they have lived elsewhere for 20 years. Numerous ballots arrived at apartment buildings for tenants who had not lived there in decades. These were discarded in the recycling bins in the lobbies where they could have been misused.
The Assessment Act requires landlords of buildings with 7 units or more to send in tenant details by July 31 each year but landlords are not aware of this requirement. There are no such provisions for updating tenant data on smaller buildings. MPAC used to ask homeowners to review and return the list of occupants but they no longer do this. I think these defects probably account for most of the errors on the voters list. With electronic voting this becomes more important because of the ease with which ballots could be misused.
Some improvements could be made at little cost such as informing landlords of their duty to send in tenants lists. Others, such as sending assessors to do site visits would be expensive. But, if public confidence in the system is lacking, maybe this has to be done.
If your motion passes, and I assume it will, you might consider asking the clerk to forward a copy to the Ombudsman. A second investigation wouldn’t hurt.
I received no reply or acknowledgment. Councillor Kaiser’s motion was passed 6-1 on March 24, 2015. Everyone agreed that this was a side issue and council still had to deal with the tax policy. Many comments were made that this motion would have little effect on what MPAC did.
The CAO was reportedly upset when the SDR was cancelled in December. The RRA deputation on March 10 made reference to a “Cost of Services Study”. So far as I know, this is the first time this term has been used in reference to this problem. I’m quite certain that the RRA didn’t think up this idea on their own. I suspect that it may have originated within Town Hall and was passed to the RRA by means unknown. I suspect that the CSS is an attempt to reintroduce what SDR under a different name, but this time specifically targeted towards fixing the tax policy. This has been one of the problems throughout – information is not shared equally with all council members; the urban councillors complain that they are kept outside the loop until the end and the RRA seems to have an inside track.
On March 24, 2015, the CAO and the Treasurer delivered their report on the Vanluven Road situation along with a recommendation that council receive it for information. The report stated: Review current tax policy in Vanluven Road area. The report contains a different version of the map attached to by-law 00-31. (A third version has been circulating amongst the Vanluven Road residents.)
(i) As per attached Schedule “A”, the number of properties in the Vanluven Road area of the Town not on water and sewer services that are taxed at the urban rate is 56 and the number of properties not on water and sewer services that are taxed at the rural rate is 26.
(ii) In 1998, Town Council established a single tax rate for the entire municipality. There was significant debate at that time on service levels and appropriate financing methods. The Minister’s Order establishing amalgamation, allowed for a variation in taxation for policing. Prior to 1998 only Napanee paid for policing. In 1998, all municipalities were required to pay for policing up to $90/household, except there was no maximum for municipalities that paid for policing prior to 1998. In 2000, staff presented a series of tax options to Council. At the April 3, 2000 Council meeting, seven options were removed from consideration including a single tax rate. That left three options on the table including a grant program suggested by a Councillor at the meeting. At the April 10, 2000 meeting, Council adopted a tax policy that was a combination of the remaining options from April 3rd. The system created an Urban area, an Urban expansion area (part of Richmond and North Fredericksburgh) and a Rural area. The differential between the urban and rural rates (34%), was based on the difference in 1999 OPP costs. Based on an interpretation of 1999 Provincial grant policies, rural residents were capped at $90 per household and Napanee residents paid the balance of the contract costs. Over a three year phase in period, the urban expansion area rate would move closer to the Napanee rate. The urban expansion area took in all the water and sewer area and land between the Goodyear plant and Highway 401 around the Richmond Industrial Park. It also included land west of Highway 41 to Belleville Road south of the 401. Mapping 2 options were presented. • Council chose to use the map which included: centre line of Goodyear Road to Goodyear Plant. Kimmett Side Road all of the way to 401 and include Milligan Farms. This was to capture all the lands north of Highway 401 that were to be used for industrial growth to ensure they were eventually captured in the urban rating when developed. (see attached map). April 28, 2011, was the next time Council considered tax policy changes. There were no staff reports or presentations at the meeting. Council amended the Urban: Rural tax rate policy, to a ratio of 100:68. On May 10, 2011, Council passed a second resolution that 2% of the municipal rural tax collected be placed in a reserve fund to be used specifically for upcoming rural projects and that the agreed upon 68% levy remain in effect for the remainder of this term.
(iii) As per the attached Schedule ‘A’, the amount of commercial and industrial taxes in this area (based on 2014 tax rates) is $499,371.72.
(iv) Also, per the attached Schedule “A”, the reduction in tax revenue (based on 2014 tax rates), that would be realized if all properties in this area were paying the rural tax rate is $170,701.88.
I spent several hours reviewing the report and found a number of omissions which I detailed in an e-mail sent to some of the members of council:
The report is that it does not set out how many properties are connected to water and sewer, but still paying the rural rate.
The historical part of the report has been cut and pasted from the CAO’s September 2014 briefing to candidates.
The report, like the briefing to candidates, repeats the claim that the 2000 policy was based on policing. The report states, incorrectly:
At the April 10, 2000 meeting, Council adopted a tax policy that was a combination of the remaining options from April 3rd. The system created an Urban area, an Urban expansion area (part of Richmond and North Fredericksburgh) and a Rural area. The differential between the urban and rural rates (34%), was based on the difference in 1999 OPP costs. Based on an interpretation of 1999 Provincial grant policies, rural residents were capped at $90 per household and Napanee residents paid the balance of the contract costs.
In fact, there’s no evidence to indicate what the tax differential was based on in 2000. My own recollection was that the rural group made the claim that there taxes had gone up by a third and council of the day accepted that without inquiry. Parts of the minutes support my recollection.
The Minister’s order, dated January 7, 1997, allowed area rating for policing but only in the old geographic Town of Napanee, not in the water-sewer area. The Minister’s order cannot support the current policy and the CAO has acknowledged this. Why he keeps referring to policing is beyond me.
The Mayor also repeated the “policing” claim in his Beaver letter.
The report makes no reference to the April 25, 2000 meeting which defines the urban area but in a very ambiguous way:
The Clerk presented to Council a three-year plan for the following options, which include a new urban core. This policy will gradually close the percentage gap between the new urban core and urban properties over a three-year period, while keeping the rural area at a constant 66 %.
Option # 1 Urban Core Policy – Urban North Fredericksburgh and Urban Richmond to South of Highway 401
Option # 2 Urban North Fredericksburgh enrichment including North of Highway 401 to include Goodyear
RESOLUTION 604100: Schermerhorn & Weaver
That Council approve Option # 2 but that the Clerk recalculate the figures using a redefined map area to include the boundaries of the water and sewer area and further that the phase-in period be calculated for a period longer than three years. CARRIED.
The report makes no reference to the May 8, 2000 meeting where the tax policy was finalized:
That the Town of Greater Napanee adopt a three rate tax policy system whereby the rural area pays a rate of approximately one-third less than the former Town of Napanee area, and further that the area surrounding the former Town of Greater Napanee within the water and sewer boundaries have a rate established which would, over a four year period, phase in the rate from the rural rate to the urban rate on properties within that boundary.
BY-LAWS RESOLUTION 620/00 Schermerhorn & Schenk :
That By-law No. 00-31 being a by-law to authorize and establish the 2000 Tax Rates to be used for the calculation of municipal tax bills be read a first and second time and finally passed and the Mayor and the Clerk sign the same and affix thereto the seal of the Corporation. CARRIED.
The report makes no reference to By-law No. 00-31 (the by-law to levy taxes for 2000) passed May 8, 2000, which established the so-called “tax policy” for the first time. By-law 00-31 adopts the tax rates in schedule “A”. Schedule “A” has 3 columns with mill rates for Rural, Urban and Urban Core. It does not contain any definition of these areas. The computer file on the Town website which contains By-law 00-31 has some other working papers too. It is not at all clear whether these working papers were intended to be part of the by-law. There is certainly no reference to them in the body of the by-law. One of these working papers is a map. But the map is not the same as the map attached to the report to council for Tuesday’s meeting. In particular, the map does not include the area north of Vanluven and west of a line about 100 feet west of Kimmett Side Road.
There is no reference in the report to council to the fact that the whole issue of the Vanluven Road properties was revisited three years later on May 12, 2003:
Reconsideration of Resolution #215/01 Regarding Tax Policy
RESOLUTION #220/03: Veltheer & Sonneveld
That the Tax Policy approved with Resolution #215101 be brought back to the floor for reconsideration to: i) properties fronting on County Rd. #41 north of VanLuven Road ii) properties fronting on Goodyear Rd. east of County Rd. #41 and west of Kimmett Side Rd. iii) properties within the Richmond Trailer Park CARRIED.
RESOLUTION #221/03: Veltheer & Zatterberg
That for the 2003 Taxation Year, Council adjust any properties within the area defined above that do not have municipal water and sewer services from the urban core rate to the rural rate; and further that any properties with water and sewer services within the above described areas that are currently at the rural rate be adjusted to the urban core rate.
In addition to the extreme confusion created by the 2000 paperwork, there is a serious ambiguity in whether the term “Water-Sewer Area” means the water-sewer area in 2000 or the water sewer area as it exists from time to time. The 2000 water sewer area has been extended to include a large number of new homes north and west of Angus Drive. Are these ratepayers, who are connected to water and sewer paying the urban rate? If so, why do ratepayers on Highway 41 who are on water & sewer still pay the rural rate? None of this is addressed in the report.
Even after the 2003 revision, there is still no map. In fact, no map has ever been produced that has been adopted by council. There is no by-law or resolution anywhere defining the line between the zones or setting out in any unambiguous way how that line is to be drawn.
For 15 years, the rural mill rate has been set at a 34% discount to the urban mill rate (32% for 2011 and later). But nowhere is it set out in the by-laws or minutes exactly how the calculation is to be made. (A 34% discount for the rural rate has the same effect as a 47% surcharge to the urban rate. 100/68 = 1.47)
Council reviewed this report and, accepted the staff recommendation that it be “received for consideration”.
During question period at the council meeting on March 24, I pointed to the map attached to the report and pointed out that it didn’t cover the Hart subdivision, just west of Slash Road. Councillor Cole allowed that he lived there and asserted that he paid the urban rate. I pointed out that there was nothing in the minutes about council extending the urban area beyond Slash Road and asked how this could be done without council approval. The mayor indicated he would find out how it was done and let me know but neither he nor anyone from the Town got back to me.
Councillor Schenk made a motion to call a public meeting in June after the budget was finished and the 2015 taxing by-law passed and to receive no further deputations on the issue until then. The mayor persuaded him to withdraw the part about not receiving further deputations. The motion passed 6-1. The date was eventually set for June 29, which is the first day of summer vacation. Council has only one regular meeting during the summer.
On April 21, council finished budget deliberations. As usual, nothing in the staff recommended budget was changed and a 3.7% increase was approved exactly as staff drafted. The mayor called for a motion to approve the budget. Councillor Lucas unsuccessfully to get the tax policy separated from the overall budget. He stated that he approved the budget but not the tax policy (32% discount). The council then passed the budget with councillors Lucas and Harvey voting against the motion.
The clerk indicated that council would be presented with the by-law to implement the budget by imposing the tax rate at the next meeting on April 28. But councillor Lucas then dropped a bombshell by asking for a legal opinion on the legality of the tax policy to make sure what council was doing was legal. Councillors Schenk and Kaiser voted against it but, surprisingly, Councillor Cole voted for it. Councillors, Lucas and Harvey voted for the motion and Deputy Mayor Isbester, who was chairing the meeting in the Mayor’s absence, paused, then voted for it. The CAO was noticeably rattled and claimed this had never been questioned before. As noted above, the legal status of the tax policy has, in fact, been questioned and vague answers were given. In fact the CAO, when he proposed the SDR indicated that a review of the legal limits of tax policy was the first priority. (See paragraphs 32 & 39 above.) The lawyers have been consulted in the past, and apparently have done extensive research, but no legal opinion has ever been presented to council.
On April 28, no legal opinion and no by-law was presented. Staff had not even met with the lawyers. On May 6, councillors received a note from staff that a legal opinion would take 3 weeks and a by-law had to be passed by May 12 because the County and Education portions of the taxes (60%) were due on July 1. But the Town should have already collected 50% of the taxes by April 24 when the last instalment of interim taxes came due so it’s not clear what the panic is.
On May 4, I noticed that a notice of passing by-law was posted for the May 12 tax by-law and inviting questions and comments. I e-mailed the clerk and treasurer asking for a copy and asked that the schedule be legible pointing out that they never provided a legible copy from the 2014 by-law, not even to the council that passed it. I receive a response directing me to the .pdf file posted on the website which was just barely legible. With this and a 3 hours labour, I reproduced the excel spread sheet from which it was generated and calculated the exact effect that removing the rural discount would have – that overall rural taxes would rise 8.9% and overall urban taxes would fall 8.1%.
No legal opinion was provided at the May 12 or May 26 meetings. Councillor Lucas (Ward 4) asked that if be available before the meeting on June 29. Everyone seemingly agreed. Councillor Lucas also made a Notice of Motion for June 9 to answer the question about the effect that area rating is having on overall taxes.
Last updated June 4, 2015
Updates& Notifications in Your Email As They Happen.
Join our mailing list to receive the latest news and updates from the directors of the Napanee Rate Payers association.
