COMMITTEE OF THE WHOLE MEETING NOVEMBER 7, 2016 WRITE-OFF OF PROPERTY TAXES AND RETENDERING TH LINE

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1 REPORT #FIN COMMITTEE OF THE WHOLE MEETING NOVEMBER 7, 2016 WRITE-OFF OF PROPERTY TAXES AND RETENDERING TH LINE RECOMMENDATION That Finance Report #FIN be received, And that Council approves Option 1 for the property located at th Line, Tottenham, And furthermore; Council gives the Director of Finance the authority to issue a tender with the minimum bid being $60,000.00, in an attempt to sell the property. OBJECTIVE To provide Council with the options that are available in dealing with the property that was not sold during the tax sale process in April of BACKGROUND The Town registered a Tax Arrears Certificate against the property located at th Line in After the one year waiting period lapsed, the Town moved forward and advertised that the property would be sold via tender to the highest bidder on April 23, Qualifying tenders had to be as a minimum, the cancellation price of the Arrears certificate. The tender proved unsuccessful as there were no bids submitted. The Town now has until April 23, 2017 to take further action on this property otherwise the Tax Arrears Certificate will expire and the full tax sale process will have to restart. COMMENTS AND CONSIDERATIONS Moving forward, the Town has two options in dealing with this property. Option 1 Write-off Taxes and Tax Sale: To move the property through the tax sale process again, staff suggests that the outstanding taxes on this property be written off and that the property be sold via a tendering process awarding it to the highest bidder. The Town can independently determine an acceptable minimum tender amount. Since the first unsuccessful tax sale, Finance Staff have been in contact with a couple of individuals who have expressed interest in the property. Due to the minimum tender amount (cancellation price) originally being so high, it discouraged the submission of any bids the first time around. The current zoning of the property is ORM CS RL (Oak Ridges Moraine - Country Side

2 Rural) which would allow for a single or semi family residential dwelling unit, combined with a lower minimum tender amount, staff is reasonably confident a successful bid will be received if the outstanding taxes were written off and a new minimum tender amount established. There are notice requirements that the Town must follow under the legislation. Notices of Intent have to be sent to parties holding an interest on the property at least 30 days prior to the first advertisement. Also advertising has to be done in a similar format to the original tax sale process, where an ad must appear once on the Ontario Gazette and once a week for four weeks in a local publication. The first ad must be published at least 28 days in advance of the tender opening. Tenders are subject to strict guidelines. Prospective bidders must submit a written formal tender prior to the closing date. The tender must be accompanied by a minimum deposit of at least 20% of the bid by way of bank draft, money order or certified cheque. These deposits will be returned if the accompanying bid is not successful. The successful bidder will have 14 days to pay the balance of the tender plus related land transfer costs; otherwise the tender becomes void, the deposit is forfeited to the Town and the next highest bidder has the opportunity to purchase. Should the tender not yield a successful bid, Council can then choose to vest the municipality s interest in the property (take ownership). The Town continues to use the services of Realtax Inc. for tax sale related matters and they will be providing assistance and direction to staff throughout the process. Option 2 Town Vests its interest in the Property: The Town does have the option to immediately vest its interest in the property. This option allows the Town to take ownership of the property without having any additional actions. Bypassing the tendering process is usually only considered when a municipality has a desired use for the property. Finance staff have consulted with Town department directors and determined that the property would have no useful purpose for the Town. Additional costs would also be required by the Town to remediate the property to a practical use. FINANCIAL CONSIDERATIONS Under Option 1, the amount of the write-off to be considered for this property is $153, A breakdown of the arrears is as follows; County: $ 6, Education: $ 32, Municipal: $13, Penalty: $55, Misc: $45, Includes tax sale charge backs and property standards fees Page 2 of 5

3 As authorized in the Municipal Act, the amount of the taxes to be written-off can be charged back to the County and the School boards based on their proportionate share. This means that the Town would have to absorb $114, (municipal, penalty and Misc. portions) of the total arrears, and the remaining $38, charged back to the County and the School boards. The Act also specifies how the Town is to distribute monies received from the retender. Similar to the write-off, any monies received are to be disbursed between the Town, County and School boards based on their proportionate share. However, the Act does give consideration for costs incurred by the Town to improve the property which can be deducted from the sale proceeds. This means that any money received from the successful tender would first be applied against the miscellaneous portion of $45, and any residual amount would be distributed between the Town, County and School boards. Below is an example to clarify how this would work. If the Town receives a successful bid of $60,000.00, the payment would first be applied against the miscellaneous amount of $45, The remaining $14, would be distributed proportionately based on the remaining write-off balance of $107,977 ($153, $45,855.00). The Town s portion of the remaining arrears, (municipal and penalty) represents 64.02% of the $107,977. As a result, $9, (64.02% of the $14,145.00) would be retained by the municipality. The residual difference of $5,093 would be shared with the with the County and the School boards. While staff would like to recoup as much of the written off taxes as possible, the main focus is recovering costs relating to the tax sale and property standards fees. In order to comply with the legislative notice requirements, it is estimated an additional $2, will be required for advertising and notices to parties with a registered interest in the property. For that reason, staff is recommending the minimum purchase price for the tender to be $60, If the property was sold for the $60,000 minimum tender amount, the net residual write off for the Town would be approximately $60,074. Attachment # 1 has been provided to outline how the residual write off amount has been calculated. If a write off of $60,074 was to occur, the 2016 Town Budget of $175,000 for write offs is expected to have a small unfavourable variance. Any sale proceeds in excess of the minimum tender amount of $60,000 would reduce the write off and impact the year end variance. Given the interest that has been expressed in this property and the rules surrounding tender submissions, staff are reasonably confident this property will be sold. Respectfully submitted: Page 3 of 5

4 Rob Rosilius Supervisor Revenue Services/Tax Collector Attachments: 2016 FIN-29 Attachment 1 Approved By: Department: Status: Lori Bedford Corporate Services Approved - 02 Nov 2016 Brendan Holly CAO Approved - 02 Nov 2016 Page 4 of 5

5 Finance Report FIN Tax Sale Property 4th Line Attachment #1 Application of $60,000 bid Page 5 of 5 Outstanding Arrears Percentage of Total Arrears (excluding Misc amount) 1) Payment of Misc Arrears 2) Residual Balance of Bid x % of Total Arrears (column 2) Revised Write-off Amount Non-municipal Charge back Net Municipal Write-off Amounts County 6, % (881.11) 5, (5,844.92) 0.00 Education 32, % (4,207.83) 27, (27,913.11) (0.00) Municipal 13, % (1,728.52) 11, , Penalty 55, % (7,327.54) 48, , Subtotal: 107, Misc 45, (45,855.00) Total Arrears: 153, Residual Balance: 14, , Net Town Writeoff: 60,074.28