Although both sides clearly stated they are not pointing fingers, much of the discussion Monday night at Wellington North council with MPAC representatives tried to clear the air about local farms being assessed as residential properties.
The meeting of council and the Municipal Property Assessment Corporation on Sept. 21 started with Treasurer John Jeffrey’s memo to council on farm taxation and problems with the local assessment roll.
Jeffrey wrote, “At the Aug. 10 meeting, [councillors] were advised of a problem with the final tax billing on farm properties. The issue pointed out at the time was the erroneous change on the 2008 assessment roll for the 2009 taxation of a number of farm properties from the farm tax class to the residential tax class.
“As a result of the MPAC error and the first due date for the final billing on Aug. 28, the consequences of the situation are being realized.”
Jeffrey continued, “The taxes due on Aug. 28 for the farm portion of the total assessment is four times higher than it should be. Finance department staff have advised farmers who enquired about the problem, to pay the amount they think it should be, and the late payment charges will not be levied on the outstanding balance.
“The payments to the county and school board that are made at the end of September are based on the actual levy using the assessment roll provided by MPAC. When this situation is fixed by MPAC, staff will process ‘write offs’ to adjust the individual tax bills outstanding. Write offs and adjustments happen every year but are typically offset by supplementary taxes collected during the year.
“The township provides the final reconciliation to the county and school boards at the end of the year remitting cheques for the net amounts owing or receiving cheques for amounts due to the township. As a result there isn’t a significant impact to the township cash flows.”
But, Jeffreys concluded, this year, with this problem, the write offs will be higher than normal and the township will not get compensated from the county or school boards until the end of the year for its share of the write offs.”
He also noted “a number of taxpayers of all tax classes pay their property taxes through their mortgage payments.”
That means tax bills are therefore forwarded to the respective banks, who ensure the tax bills are paid according to the due dates. Staff have been advised that in some farm cases the banks have advised their clients that their mortgage payments will be increased to accommodate the increased tax bill – despite being assured that the bills, as issued, will be corrected.
“The banks have paid the full amount as billed and due without any adjustment,” he said.
Jeffrey further noted a property owner who called MPAC was advised the problem may be solved by the end of the year. “Local staff cannot fix the problem until the official documentation is received from MPAC.”
Jeffrey also said the change of historical farm assessment to residential assessment has had an impact on the calculation of the 2009 tax rate.
“If the farm assessment had been accurate, the tax rate for 2009, given the budget adopted by council, would have been higher.”
He added,“The township staff time required to correct these errors will be significant.”
Jeffrey said this is a situation MPAC has been aware of since February when it initially communicated the problem to the township.
“They were actually probably aware when the final roll was being prepared in 2008.”
He wrote that township staff continually asked when the issue would be corrected, but received no solid commitment.
“It is not certain which agency is at fault – but at this point that determination is secondary to getting the problem fixed for the taxpayers of Wellington North.”
He summed up his memo by stating “There doesn’t seem to be an appreciation of the problems this error is having on the township and its taxpayers.”
At the meeting, Jeffrey explained the situation is more serious than just an irritant to township staff. He said it has affected over 70 farm properties in Wellington North, so those properties are being billed according to the residential, not the farm tax rate.
“The consequence is a significantly higher bill than what they would have had in prior years.”
The municipality invited MPAC representatives to come to council directly to get their side of the story. “Maybe they can explain what happened and what steps are being taken to get this problem resolved as quickly as possible,” he said.
Mayor Mike Broomhead asked if the problem is widespread.
Jeffrey believes it is. He said about 7,500 properties across the province have been affected in different municipalities. In Wellington North, it affected between 70 and 75 properties.
“So it wasn’t every farm?” Broomhead asked.
Jeffrey said every year, some farms are affected because paperwork is unfiled to prove a property is still a farm operation – and those get dealt with fairly quickly.
“That’s not the issue we’re talking about here.”
Jeffrey said Wellington county treasurers have not met since this issue came to a head, so he is uncertain how other municipalities in Wellington have been affected. “I’m not sure they were hit as hard as us.”
It seemed during presentations from MPAC, that its officials were portraying their organization as a victim of circumstance.
Jon Hebden, MPAC’s municipal relations representative from the Kitchener office, explained MPAC’s role is to work within provincial legislation, and with tax incentive programs developed by various government ministries.
He said property owners can apply to the Ontario Ministry of Agriculture, Food and Rural Affairs (often called, simply, OMAF) for a farm tax incentive program, but it is up to that ministry to determine if a property qualifies. He said it is OMAF that provided MPAC a list of which properties currently qualify for the farm assessment.
“Many of these changes come in after the return of the assessment roll.”
For Wellington North, that roll was provided to the township in December 2008.
Hebden said MPAC was informed of 77 properties that qualified, after the assessment roll was issued.
But he said, MPAC is also dealing with revised legislation regarding assessments and implementation of taxation – including the four year cycle and the phase in of assessments. He said as a result of legislative changes, MPAC had to wait for the associated legislation to be filed to determine the impact to year end assessment corrections.
Hebden said in early May, letters were sent to affected property owners, advising of the delay in processing assessment corrections. In addition, MPAC provided a list to municipalities.
In mid-July, the provincial legislation was finally filed.
“Therefore, the current delay and situation is a direct result of MPAC receiving all notification for the 77 properties after the issuing of the roll and the legislation on how to calculate the phase-in not being passed until July 16.”
He said once that legislation was passed, MPAC was in a position to deal with the situation and those properties dealing with tax incentive programs.
As a result, most of those amendments are being processed and he expects the notices to be sent within the next few weeks.
“We understand the frustration experienced by property owners,”he said, added much of the problem is due to the late filing of the regulations.
“Since the regulations were filed, MPAC has worked diligently to process the tax class changes.”
He said that now that the regulations are in place, “any late tax class notifications from OMAFRA or the MNR should be processed in a more timely fashion.”
Jeffrey of the amended notices, only two had been received at the municipal office.
MPAC representative Jennifer McConkey explained those two were processed manually, at the request of the municipality and the remainder would be mailed out shortly.
Jeffrey confirmed the legislation was passed July 16. “We’re now two months after that legislation has passed, and only just getting stuff in the mail now.”
Hebden said MPAC had to wait until after the legislation was passed to determine how it could be implemented. “That’s the reason for the two month delay.”
Jeffrey said, “Even last fall, MPAC had been aware of the problem whether it was OMAF’s fault or your fault … with the large number of farm properties affected.”
Hebden said MPAC did not get any information until last January.
Jeffrey said, “The assessment roll [provided by MPAC] was in the township office on Dec. 9, and we were already identifying the fact our farm assessment had dropped significantly while every other assessment had gone up.”
Hebden explained the information from OMFRA came in after. “They are continually updating us, and dictating which properties qualify and which ones don’t.”
Jeffrey said when the roll was finalized in December, there were a large number of farm properties that had switched classification – more than normal. “I would think some bells would start ringing.”
Hebden maintained OMAF still dictates the classification, while MPAC simply processes that information. He said a list was sent to the township in April regarding properties where adjustments would be coming.
Jeffrey said there is a whole escalation of paperwork and the phones are ringing off the wall. “My thinking is that MPAC could have responded more quickly.”
He said in 1998 legislation was in flux and the work was still accomplished. “It’s not like this has never happened before.”
Councillor Ross Chaulk said farm owners must submit forms every few years to verify they are still farms. “Most of the farms I see around here were farms 100 years ago.”
He wondered why they are not viewed as an exception and come under review once the farm is sold. “It seems it would be lot easier.”
While Chaulk agreed the situation might be different in areas closer to Toronto, it is generally unlikely that many properties would switch uses that quickly in Wellington North. He believes the paperwork now is simply creating jobs in processing information.
Councillor Dan Yake asked if it would not be worth MPAC’s time to work with OMAF to get the situation solved.
McConkey said the tax incentive programs are operated completely separate according to the respective ministry rules and guidelines.
“MPAC has nothing to do with those programs at all.”
She said at the end of the day MPAC simply gets a list of who qualifies and who doesn’t
“But you know there’s problems,” Yake said.
McConkey said all MPAC gets is information on which properties are included or excluded. “We are not really privy to why they might be included or not.”
Yake said, “It is your office that is taking the heat and the crap for this, so I would think you’d try to be working a little bit harder [to resolve this].”
McConkey said there are regular meetings with the ministries, but with this new year of legislation, she said there are lessons to be learned.
