Town of Fort Erie Our Focus: Your Future Corporate Services Prepared for Council-in-Committee Report No. CS-24-07 Agenda Date September 17,2007 File No. 230517 Subject A HERITAGE PROPERTY TAX RELIEF PROGRAM FOR THE TOWN OF FORT ERIE Recommendations THAT THAT THAT THAT the Council support the Proposed Heritage Tax Relief Program in principle; the Town s Solicitor be directed to prepare the appropriate by-law; a copy of this report be circulated to owners of designated heritage buildings; and the Town request the Regional Municipality of Niagara to implement matching rebates. Relation to Council s 2007-2010 Corporate Strategic Plan Priority: Development and Land Use Goal: Not applicable Initiative: Not applicable List of Stakeholders - Museum and Cultural Heritage Committee - Property Owners of designated buildings Prepared by: Original Signed Gillian Corney, Manager of Revenue and Collections & Dave Heyworth, Senior Policy Planner Submitted by: Original Signed Margaret Neubauer, C.A. Director of Corporate Services Approved by: Original Signed Harry Schlange, MBA Chief Administrative Officer
Corporate Services Page 2 of 5 Report No. CS-24-07 Purpose of Report The purpose of this report is to recommend a Heritage Tax Relief Program for the Town of Fort Erie. BACKGROUND The former Local Architectural Advisory Committee (previous to the Museum and Cultural Heritage Committee) became interested in exploring the feasibility of initiating a tax refund program given changes to the Municipal Act that allows such a program and the fact that the City of Port Colborne has developed a similar program. Background information on the program was collected and discussed in general with the former Committee and recently the feasibility of a program has been brought back to the Museum and Cultural Heritage Committee. Properly maintained heritage properties enrich our quality of life and give communities their unique character and sense of place. Although heritage properties provide benefits and enjoyment to the entire community, many are privately owned. A Heritage Tax Rebate Program provides an incentive to owners to make regular investments in maintenance and restoration projects. The program encourages owners to be stewards of their heritage properties. Heritage property tax relief is a financial tool for municipalities to help owners maintain and restore their properties for the present and future benefit of the entire community. Adopting the program is a municipal choice and administered locally. The Municipal Act gives municipalities the option of establishing a program to provide tax relief (10% to 40%) to owners of eligible heritage properties. Municipalities must pass a by-law to adopt the program. Appendix 1 is a Recommendation Memo written by the Senior Policy Planner to the Museum and Cultural Heritage Committee recommending that the Committee support the proposed Heritage Tax Relief Program. The memo contains background information on the source of heritage property tax relief, eligibility criteria, the amount of relief for the Fort Erie program and the form of tax relief. Council should refer to this memo for background information. The following web link http://www.culture.gov.on.ca/english/culdiv/heritage/hptrm.htm can be accessed for more detailed provincial information. Analysis At present there are 20 properties that have heritage designations in Fort Erie. Of these properties, 14 would be eligible for tax relief as 6 properties are exempt from taxes. The Table below identifies the Town, Regional, educational and total tax relief at 10%, 25% and 40%. At 40% the Town s contribution would be approximately $3,744.73. % Rebate Town Region Education Total 10% $936.18 $1,447.44 $519.49 $ 2,903.11 25% $2,340.45 $3,618.59 $1,298.72 $ 7,257.76 40% $3,744.73 $5,789.74 $2,077.95 $ 11,612.42
Corporate Services Page 3 of 5 Report No. CS-24-07 It should be noted that the Town is allowed to apply a cap to the program. Applying a cap to the maximum allowed assessed value ensures the budgeted funds are not disproportionately used by a few properties. If a cap of $250,000 is applied, the Town s contribution at 40% would be just under $4,000. The cap would apply to two properties. One property has an assessed value of $257,000 and the other an assessed value of $564,000. If an additional $1,300 was added to the budget, for a total of $5,000 for the 2008 budget, this would ensure all current eligible properties could make use of the program to the maximum amount and provide a budgetary incentive for the designation of some future properties. It is important to note that the by-law adopting the program would not require Council to provide funding for the program every year. The program could be eliminated by giving 30 days written notice to affected parties. A criteria of the by-law would be to ensure benefiting property owners stay current with their taxes. Financial/Staffing Implications The program will create extra workload in Corporate and Community and Development Services. Corporate Services will have to administer the program with the assistance of the Museum and Heritage Committee (M&HC). Building inspectors, with the participation of the M&HC, will perform annual inspections. This extra workload is seen as manageable. The $5,000 funding request for 2008 is supported by the Museum and Cultural Heritage Committee and is seen as reasonable, given the benefits to the owners of designated properties and the incentive for future designations. Policies Affecting Proposal Section 365.2 of the Municipal Act has given municipalities the option of establishing a program to provide property tax relief in the form of rebates (10% to 40%) to owners of eligible heritage properties. By-law No. 41-07 adopted Council s 2007-2010 Corporate Strategic Plan. It should be noted that the Town s Strategic Plan, which must be considered in budgetary decisions, does not specifically address funding or provide focus for general heritage matters. It should be noted that heritage preservation plays a role in enriching our quality of life and attracting residents, businesses and visitors to communities. The Town s new Official Plan places an emphasis on identifying and protecting important built heritage in the Town. The program assists in maintaining heritage properties.
Corporate Services Page 4 of 5 Report No. CS-24-07 Comments from Relevant Departments/Community and Corporate Partners The Museum and Cultural Heritage Committee considered the attached June 25, 2007 Council memo and strongly supported the development of a Heritage Tax Rebate Program with the following more detailed comments of support: the largest rebate possible (40%); the concept of the $250,000 assessed value cap; the concept of annual inspections; that the tax rebate be tied directly to the owner maintaining the historical attributes of the property; and after significant discussion, the Committee agreed the Conservation Agreement could be between the Town and property owner and did not have to be an easement agreement registered on title. With respect to an agreement not registered on title, it was explained to the Committee that the by-law designating the property identifies and provides protection to features designated. Further, that given the nature of property owners entering in to the designations voluntarily, an agreement with the property owner was adequate as any future new owner who did not wish to participate in the program would not be further encumbered. The concept of the tax rebate being directly tied to the owner maintaining the historical attributes of the property was discussed further with the Town s Solicitor and Finance Planning Department staff. It was generally agreed that such a specific requirement would be difficult to administer. It was further agreed that making certain improvements might require the property owner to save money for several years before making improvements and that the program should provide this flexibility. The intent of the rebate in general is for the owner to better maintain the home. Yearly inspections will ensure the program is not being abused. Alternatives There are various alternatives to this program in terms of possible funding allocation amounts identified under the Analysis Section of this report. There are also alternative funding options that can be considered such as grants and loans permitted under the Heritage Act. Although these options can be more specifically tailored to restoration, the loan program is considered more administratively complex. The grant program would likely involve larger sums of money for restoration projects for specific projects, potentially setting up a larger fund and/or competition amongst owners for available funds. These options can be considered at any time by Council to supplement or replace the Heritage Tax Rebate Program. The Heritage Tax Rebate Program could be eliminated by giving written notice to affected property owners. There are also alternatives as to whether an agreement with the property owner should be with the Town and current owner or an easement agreement registered in perpetuity.
Corporate Services Page 5 of 5 Report No. CS-24-07 Conclusion Although heritage properties provide benefits and enjoyment to the entire community, many are privately owned. A Heritage Tax Relief Program provides an incentive to owners to make regular investments in maintenance and restoration projects. The program encourages owners to be stewards of their heritage properties. Attachments Appendix 1 - Recommendation memo on the Heritage Tax Relief Program
Appendix 1 to Administrative Report CS-24-07, September 17, 2007 INTEROFFICE MEMORANDUM COMMUNITY & DEVELOPMENT SERVICES To: From: Subject: June 25, 2007 File No.350302-0055 Members of the Museum & Cultural Heritage Committee Dave Heyworth, Senior Policy Planner A HERITAGE PROPERTY TAX RELIEF PROGRAM FOR THE TOWN OF FORT ERIE RECOMMENDATION It is recommended that: 1. the Committee support a Heritage Tax Relief Program for Fort Erie in principle and advise Council of an appropriate tax relief percentage; 2. the Committee review this memo and advise staff and Council on key elements identified for a Heritage Tax Relief Program; 3. the Senior Policy Planner ensure a draft adopting by-law, application and conservation agreement are reviewed by the Town s Solicitor and Finance Departments; and 4. a draft Administrative Report be prepared for consideration and comment by the Corporate Services Committee on July 27, 2007 prior to preparation of a formal report to Council on August 13, 2007. BACKGROUND Properly maintained heritage properties enrich our quality of life and give communities their unique character and sense of place. Although heritage properties provide benefits and enjoyment to the entire community, many are privately owned. A Heritage Tax Relief Program provides an incentive to owners to make regular investments in maintenance and restoration projects. The program encourages owners to be stewards of their heritage properties. Heritage property tax relief is a financial tool for municipalities to help owners maintain and restore their properties for the present and future benefit of the entire community. Adopting the program is a municipal choice and administered locally. The Municipal Act gives municipalities the option of establishing a program to provide tax relief (10% to 40%) to owners of eligible heritage properties. Municipalities must pass a by-law to adopt the program. There are several municipalities in Ontario that have programs. Locally the City of Port Colborne and the Regional Municipality of Niagara have programs.
Appendix 1 to Administrative Report CS-24-07, September 17, 2007 Who Pays For Heritage Property Tax Relief Property taxes go to school boards and to the local and the upper-tier municipalities. Municipalities that adopt a tax relief program contribute by funding their portion of the tax relief. The Province shares in the cost of the Tax Relief Program by funding the education portion of the tax relief to the same percentage funded by the municipality. The municipality recoups the cost of the education tax reduction by deducting the appropriate amount from the remittances it makes to the school boards. The Region has a program to match the tax relief provided by municipalities. Eligibility Criteria To be eligible for tax relief a property must contain a building, structure or portion thereof that is: Designated under Part IV of the Ontario Heritage Act or part of a heritage conservation district designated under Part V of the Act; and Subject to a Heritage Conservation agreement for the property. The Municipal Act provides three options for the heritage conservation agreement: 1. an easement agreement between the property owner and the local municipality under section 37 of the Ontario Heritage Act; 2. an easement agreement between the property owner and the Ontario Heritage Foundation under section 22 of the Ontario Heritage Act; or 3. an agreement between the property owner and the local municipality respecting the preservation and maintenance of the property. The first two agreements are binding on present and future property owners. These agreements ensure protection of the heritage property in perpetuity, as every owner must conserve the property to the same extent. In contrast, the third option is an agreement made with the current property owner only and may or may not be registered on title. It ceases to have effect when the owner sells the property. It should be noted the City of Port Colborne requires a Heritage Easement Agreement as a condition of the City s 40% tax relief program. In speaking to the planner who administers the program, it was indicated there is some reluctance from property owners to enter into agreements registered on title in perpetuity. It is important to note the Town of Fort Erie enters into the process of designating properties in a cooperative manner. Furthermore, designation by-laws under the Heritage Act are also registered on title and offer protection to the important features and attributes identified in the by-law. Homeowners may consider additional restrictions registered on title to be unattractive especially if the tax relief is at the low end of the scale such as 10%. Given the above, the Committee may wish to consider Option #3 concerning agreements. Such an agreement could still contain requirements respecting the preservation and maintenance of the important elements identified in the by-law designating the property for architectural and/or historical significance. For instance the agreement could require inspections, specify the timing of inspections, as well as require pictures of the important elements mentioned in the
Appendix 1 to Administrative Report CS-24-07, September 17, 2007 designation by-law to provide a record of preservation and maintenance. Without a formal easement agreement (Options 1 or 2) the Finance Department may recommend one of the lower tax relief options. It is important to note inspections can be carried out by a Town Building Inspector, member of the Museum and Cultural Heritage Committee or combination thereof. It is recommended that any inspections be carried out by a Building Inspector relative to safety and/or Building Code issues and a committee member with respect to heritage issues. Amount Of Relief For Fort Erie At present there are 20 properties that have heritage designations in Fort Erie. Of these properties, 14 would be eligible for tax relief as 6 properties are exempt from taxes. The Table below identifies the Town, Regional, educational and total tax relief at 10%, 25% and 40%. At 40% the Town s contribution would be approximately $4,400. % Rebate Town Region Education Total 10% $ 1,102.27 $ 1,744.44 $ 657.84 $ 3,504.55 25% $ 2,755.68 $ 4,361.06 $ 1,644.59 $ 8,761.33 40% $ 4,409.09 $ 6,977.74 $ 2,631.35 $ 14,018.18 It should be noted the Town is allowed to apply a cap to the program. Applying a cap to the maximum allowed assessed value ensures the budgeted funds are not disproportionately used by a few properties. If a cap of $250,000 is applied the Town s contribution at 40% would be just under $4,000. The addition of an extra $1,000 to the budget, for a total of $5,000 and use of this approach would ensure all current eligible properties could make use of the program to the maximum amount. It should be noted the Town s Strategic Plan which must be considered in budgetary decisions does not specifically address funding or provide focus for general heritage matters. It should be noted that heritage preservation plays a role in enriching our quality of life and attracting residents, businesses and visitors to communities. It is important to note the by-law adopting the program would not require Council to provide funding for the program every year. The program could be eliminated by giving 30 days written notice to affected parties. A criteria of the by-law would be to ensure benefiting property owners stay current with their taxes. Form of Tax Relief Tax relief under the program, may take the form of a tax reduction, or it may be processed as a refund after property owners have paid their taxes. A tax refund has the advantage of highlighting to owners what they have saved and the savings that can be put back into heritage property conservation. With respect to Fort Erie, a tax rebate application for 2007 could be accepted by Finance from January 1,2008 to February 28,2008.
Appendix 1 to Administrative Report CS-24-07, September 17, 2007 At it s last meeting, the Committee members present expressed general support for a Heritage Tax Relief Program, but expressed that tax relief should be specifically tied to the maintenance and upkeep of heritage homes. It should be noted that providing relief in the form of a rebate for the previous tax year would be difficult if required to be specifically tied to maintenance. The agreement could require the submission of receipts showing previous year maintenance and/or restoration improvements which could be confirmed by inspections. The agreement could require the clearance of the Museum and Cultural Heritage Committee and/or Council prior to the Finance Department issuing the rebate. This approach could mean many homes would not be eligible the first year unless the owner could demonstrate through receipts and inspections that improvements were undertaken. Property owners would need to become educated about the program. A tax reduction in the current year by applying a credit against the owners property tax account could prove administratively difficult with respect to ensuring it only takes place if maintenance and/or restoration improvements are completed. Given, the adoption of a tax relief program automatically incurs funding commitments, it is important that administrative commitments be minimized and the program be as simple as possible. It should be noted that despite the fact the City of Port Colborne requires a conservation easement agreement, the agreement does not specifically require a tax rebate to specifically be applied to a maintenance or restoration project. CONCLUSION The comments and advice of the Committee on the main program issues will be forwarded to both the Corporate Services Committee and Council for consideration. Yours truly Dave Heyworth, MCIP, RPP Senior Policy Planner