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HomeMy WebLinkAboutFinance & Admin - 1992-04-27FAC\1992-04-27 FINANCE AND ADMINISTRATION COMMITTEE MINUTES APRIL 27, 1992 The Finance and Administration Committee met this date, commencing at 11:20 a.m., under the Chairmanship of Alderman C. Zehr with the following members present: Mayor D.V. Cardillo, Aldermen T. Galloway, G. Lorentz, J. Smola, M. Wagner, C. Weylie and J. Ziegler. Others present: Alderman G. Leadston, Messrs. T. McKay, J. Gazzola, J. Wallace, R.W. Pritchard, F.S. Graham, G. Sosnoski and Ms. L. MacDonald. Mr. Glen McNeil was registered as a delegation this date concerning permission to operate a Mobile Ice Cream Truck within the City limits, but did not attend. MARKET VALUE ASSESSMENT The Committee was in receipt of reports from Mr. T. McKay and Mr. J. Gazzola dated April 15 and April 24, 1992 respectively concerning background on the above assessment method and options regarding the implementation of a phase-in or a deferral plan. Mr. J. Gazzola summarized the contents of his report and pointed out that a shift in Region and Education taxes has occurred resulting in a greater allocation to both the Cities of Kitchener and Cambridge. He noted that a program to phase-in both increases and decreases over a three year period would cost the municipality approximately $3,100,000.00 to $5,000,000.00, which if included in the general levy, would increase the current tax rate by an additional 1 to 5%, depending on the option selected. Mr. Gazzola added that in addition there would be significant administrative costs involved in adjusting the billing system, and a resulting delay in issuing tax bills of approximately five weeks. He pointed out that this would effect the City's cash flow and result in lost revenue of approximately $90,000.00 per week. Mr. Gazzola stated that he does not favour the phasing-in program, but rather a deferred payment option which would allow taxes to be paid over a two to three year period. He acknowledged the problems encountered by ratepayers experiencing large increases, but noted that the majority of adjustments do not involve extreme situations. He stated that in his opinion the Fair Market Value Assessment System is the best available and provides ample opportunity to appeal unfair assessments. Alderman Ziegler suggested that the information supplied to date is incomplete in that no calculation was given relative to the phasing-in of increases and decreases greater than 25%. In response to a question from Mayor D.V. Cardillo, Mr. Gazzola elaborated on Section 364 of the Municipal Act which allows the City to provide relief in cases of extreme tax increases. It was noted that in order to pursue this option Council would have to enact a by-law which would include criteria for administering any applications received. Mr. McKay suggested that such applications could be dealt with through a specially established committee. Alderman Lorentz pointed out that Council should define a percentage re-assessment increase which it considers to be extreme and staff identify the number of properties so effected. Alderman Galloway pointed out that the City itself only utilizes 30% of the tax revenue it collects and questioned whether the cost of any phase-in program could be partially attributed to both the Region and the School Boards. Mr. Gazzola replied that based on previous meetings it is unlikely that with the exception of Cambridge any other municipalities or Boards would agree to a phase-in. Alderman Galloway expressed the opinion that any phase-in program should be contingent on other taxing bodies agreeing to contribute to the costs. Alderman Wagner inquired why commercial properties had not been included in Mr. Gazzola's outline of a deferral plan. He replied that to date no Council in the Province has included commercial properties in such a plan, as under normal circumstances they are entitled to claim a portion of the increase as a deductible expense. In response to a question concerning the impact on the plan if commercial properties were added, Mr. Gazzola replied that there would be no significant impact. FINANCE AND ADMINISTRATION COMMITTEE MINUTES - 38 - APRIL 27, 1992 MARKET VALUE ASSESSMENT (cont.) Alderman Ziegler referred to the previous motion of Council which he said instructed the Commissioner of Finance to implement the phase-in. He also added that in his opinion the establishing of a phase-in plan would be intended to assist Kitchener ratepayers and should not be construed as a subsidy payment to the Region and School Boards. Mr. Timothy Flannery, Phipps and Flannery, appeared concerning the proposed phase-in of re- assessment increases. He pointed out that in his opinion Council had shown forethought in preparing its previous motion, and being aware of the problem had intended to offer relief to taxpayers. He added that staff had an opportunity to present their concerns before Council on April 13 and questioned why the City is even considering other options at this time. Mr. Flannery suggested that any Freedom of Information access requests made in regard to re- assessment should include an automatic fee waiver, and that the municipality establish open houses to review any relevant City documents. He asked whether Mr. Gazzola had referred to the Provincial report entitled "Region Wide Tax Study" when making his calculations, specifically, were the calculations, rates and classes contained in the report relied upon. Mr. Gazzola replied that the study was used plus an additional printout from Regional Assessment giving a breakdown of adjustments by Ward and class of property. Mr. Flannery asked whether the additional printout referred to further elaborated on the tax study document and Mr. Gazzola replied in the affirmative. Alderman G. Leadston entered the meeting at this time. Mr. Flannery asked that a re-assessment phase-in program be established to assist taxpayers and again questioned why a deferral plan option is being dealt with at this time considering the previous motion of Council directing the phasing-in of increases and decreases. Alderman Zehr pointed out that Mr. Gazzola's report is not inappropriate due to the complexity of the issue. Mr. McKay clarified that the 10% base rate for increases and decreases referred to in Mr. Gazzola's report is intended to apply solely to the re-assessment and not to any adjustments due to additions or improvements made to the property. Alderman Lorentz pointed out that a significant number of taxpayers in his Ward will be receiving decreases and may not support a phasing-in program. Mr. Flannery offered the suggestion that the City's Reserve Funds should be tapped in regard to the costs associated with implementing the program. Mr. Ewald Mausser, 81 Nipigon Street, appeared concerning re-assessment and referred to a recent magazine article citing deflation in the value of Toronto homes and an oversupply of office and industrial space. He questioned how a tax system can be based on erratic fluctuation in real estate values, and how businessmen could be expected to cope with substantial tax increases, which in some cases exceed 100% in any given year. Mr. Carlos Ferrera, 1189 Victoria Street N., appeared and referred to various calculations used to determine the re-assessed value. He questioned why he should be expected to pay for someone else's willingness to purchase land at inflated costs and indicated he cannot afford the proposed 65% tax increase. Mr. James Ball, Ball Bros. Ltd., indicated that in spite of a decrease in property values his business is facing a 65% increase, translating into approximately $23,000.00. Ms. Irene Zalagenas, 309 Frederick Street, appeared concerning market value re-assessment. She referred to Mr. McKay's report and the findings of various committees concerning market value assessment and questioned the reason for a four year interval between re-assessments. She noted that both the Blair and Hopcroft reports indicated relief should be available relative to tax increases and be financed by the Province. Ms. Zalagenas pointed out that in times of recession safeguards are required relative to the Fair Market System and the FINANCE AND ADMINISTRATION COMMITTEE MINUTES - 39 - APRIL 27, 1992 MARKET VALUE ASSESSMENT (cont.) current situation illustrates such a need. She advised that in her opinion simply deferring tax payments does not remedy the underlying problem. It was also noted that both Ms. Zalagenas and Mr. Flannery are developing an information package which will be made available to the public and include reference to the appeals process. Ms. Nancy Forler, 173 Cedar Street S., appeared and suggested that savings in construction costs relative to the new City Hall should be used to assist ratepayers effected by significant tax increases. Alderman Zehr pointed out that the amount in question has an impact on the construction of Capital projects generally and this reduction has already been incorporated in the Budget and Capital Forecast. Ms. Forler questioned whether the City could use its Reserve Funds for a phase-in program. Alderman Zehr pointed out that all of the money in the Reserve Funds is committed with the exception of approximately $4,000,000.00 in the Tax Stabilization Reserve Fund. He added that the purpose of this Fund is to offset dramatic increases in taxes not assessment. Mr. McKay noted that the City has already used $1,700,000.00 from this Fund to reduce the tax rate in 1992. He stated that Council has an established policy concerning use of the Fund and it will likely be required in each of the next three years. Mr. Barney Strassburger, 1326 Victoria Street N., appeared and commented on the relationship between a zoning designation and the actual use of the property as regards the calculation of assessed value. Alderman Ziegler reminded Council that subject to the legality of a phase-in program, Council has already adopted a motion to proceed with this initiative. He suggested that additional information is needed regarding the number of properties effected by the program as well as further calculations relating to its costs if implemented in five percentage point increments between 30 and 50%. Alderman Ziegler recommended that Council choose a level of relief and offer a deferral payment option for those properties above a specified base level which would not be eligible for relief under the phase-in program. He also suggested that assistance be offered relative to commercial properties. Alderman Wagner asked that additional figures be produced to reflect the cost of including commercial properties in a combination of phase-in/deferral programs. Alderman Zehr suggested that a factor may have to be applied to commercial properties in recognition of their ability to write off property tax payments. Alderman J. Ziegler put forward a motion to defer consideration of a possible phase-in/deferral program to the regular May 4, 1992 meeting of City Council pending a report from Mr. J. Gazzola in response to requests and concerns expressed by Committee members this date. Alderman Leadston suggested that the City consider holding a public meeting involving both Provincial and municipal staff to discuss the re-assessment issue. Alderman Ziegler agreed that staff should advise concerning this option by the next Council meeting. Mayor Cardillo stated that he does not support a deferral as delaying the decision only frustrates the entire process. Alderman Galloway asked that Mr. Gazzola also identify the percentage of the phase-in/deferral costs which could be attributed to Region and Education Board taxes. Alderman Weylie reminded the Committee that they are only hearing one side of the argument, and have not heard any representations from individuals who would have received an immediate decrease. She also indicated that she could not justify a phase-in as Iow as the 10% level. Alderman Ziegler clarified his earlier proposal to indicate he is advocating a deferral payment system for some properties and a phase-in for others. He also acknowledged the need to identify any and all costs related to a relief program. Alderman Smola pointed out that to date Council has not addressed the larger problem of the assessment system itself. It was generally agreed that a special Committee of the Whole meeting would be convened on Monday, May 4, 1992 in Council Chambers from 4:00 -6:00 p.m. to further address this issue. FINANCE AND ADMINISTRATION COMMITTEE MINUTES 1. MARKET VALUE ASSESSMENT (cont.) - 40 - APRIL 27, 1992 Mr. McKay reminded the Committee that the phase-in option creates significant administrative costs and suggested that for the 40 - 50% level Council should consider relief under Section 364 of the Municipal Act. He clarified that staff did not have an opportunity to comment on the previous Council resolution, and that Council has not yet voted on the source of funds for a phase-in program. The earlier motion by Alderman J. Ziegler was then voted on, as amended. On a motion by Alderman J. Ziegler- It was resolved: "That further consideration of a deferral/phase-in program relative to the recent municipal re-assessment be deferred and referred to a special Committee of the Whole meeting to be held in Council Chambers on May 4, 1992 commencing at 4:00 p.m., pending receipt of a further report from Mr. J. Gazzola addressing the requests made by members of the Finance and Administration Committee at the April 27, 1992 meeting." The Committee resolved itself into caucus. The Committee reconvened at 1:15 p.m. to consider the balance of its agenda. 2. REFRESHMENT VEHICLES The Committee was in receipt of a report and recommendations from Mr. R.W. Pritchard dated April 22, 1992 concerning various licensing issues. Mr. Pritchard reviewed the recommendations in his report and pointed out that they are in response to recent situations which do not meet the criteria established by Council. Ms. L. MacDonald commented on behalf of the Fire Department and the Regional Health Unit indicating that the latter had several concerns relating to food preparation, and the former major concerns regarding the use of propane tanks, the availability of fire extinguishers and the separation distance between refreshment vehicles and buildings. On a motion by Alderman C. Weylie - It was resolved: "That no additional licence be required relative to the use of a refreshment vehicle on adjacent City property by an existing licensed restaurant/food premises provided an encroachment agreement is entered into by the licensee. Such encroachment agreement shall address health, fire and traffic approvals, and, That Chapter 557 of the City of Kitchener Municipal Code (Lunch Counter, Restaurant and Refreshment Stand) be amended to provide that no additional licence shall be required in the event the licensee extends an existing lunch counter/restaurant/refreshment stand use to include refreshment vehicles situate outdoors on private property adjacent to its licensed premises. Such extension of use shall be contingent upon the licensee submitting written approvals that the vehicles meet all health and fire standards and zoning compliance, and, That Section 586.1.1 of Chapter 586 of the City of Kitchener Municipal Code (Refreshment Vehicles) be amended to provide that the licence fee to be charged to any person to keep or operate a vehicle from which french fried potatoes are sold shall be $1,050 per annum or part thereof, for each vehicle, and, That Chapter 586 of the City of Kitchener Municipal Code (Refreshment Vehicles) be amended, to provide that hot dogs and sausages may be sold from a refreshment vehicle on private property not involving an extension of an FINANCE AND ADMINISTRATION COMMITTEE MINUTES 2. REFRESHMENT VEHICLES (cont.) - 41 - APRIL 27, 1992 existing lunch counter/restaurant and refreshment stand use. Such licence would be subject to the licensee meeting all health, fire and zoning requirements. And further, that a fee of $1,050 be assessed against each such vehicle per annum, and, That Chapter 586 of the City of Kitchener Municipal Code (Refreshment Vehicles) be amended to provide that vehicles from which frozen confections in the original package or wrapper are sold on private property shall be a permitted use provided all health, fire and zoning requirements are met. The fee shall be $525 per vehicle per annum, and further, That all of the above Code amendments respecting Chapter 586 be limited to fixed locations as specified on the licence." 3. INTERIOR PAINTING - KITCHENER MEMORIAL AUDITORIUM COMPLEX A report and recommendation from Mr. R. Grau dated April 6, 1992 requesting an allocation from the Capital Reserve Fund to allow interior painting was circulated this date. Mr. Graham clarified that staff are requesting this project be moved from 1993 to 1992 as the work cannot be accommodated next year. Alderman Zehr questioned why the newly constructed Subscribers and Viewing Lounges required painting. Mr. Graham replied that painting is necessary to improve the appeal of the facility in order to retain present business and attract new business. Mr. Gazzola stated that he is satisfied that there is no other source of funding available in the Parks and Recreation Department budget, but cautioned that in his opinion it is not a good practice to borrow from the future to fund current projects. On a motion by Alderman M. Wagner- It was resolved: "That up to $80,000.00 from the Capital Reserve Fund (current balance, $73,775.00) be allocated in 1992 to the painting and upgrading of the interior of the Kitchener Memorial Auditorium Complex with work to take place in the months of May, June and July, and, That the above amount be in lieu of funds tentatively allocated in the 1993 Capital Budget and be subsequently credited back to the Capital Reserve Fund in 1993, and further, That a report outlining the specific work to be undertaken be submitted to the Community Services Committee." 4. CONFLICT OF INTEREST, OPEN MEETINGS AND THE DISPOSAL OF PROPERTY The Committee was in receipt of a report from Mr. R.W. Pritchard dated March 24, 1992 commenting on the Association of Municipalities' response to the Province's draft legislation. Alderman Zehr expressed concern over clause 5(c) which would effectively prevent a Council member who has and declares a conflict of interest from expressing his or her opinion. He noted that this seems to put Council members in a more disadvantageous situation than any member of the general public and on the surface appears discriminatory. Alderman Zehr asked that if the Committee is in agreement, they recommend this comment be communicated and addressed, possibly through a minor change in wording. FINANCE AND ADMINISTRATION COMMITTEE MINUTES - 42 - APRIL 27, 1992 4. CONFLICT OF INTEREST, OPEN MEETINGS AND THE DISPOSAL OF PROPERTY (cont.) On a motion by Alderman G. Lorentz - It was resolved: "That Kitchener Council endorse the comments of the Association of Municipalities of Ontario made in response to the Province's draft legislation concerning conflict of interest, open meetings and the disposal of property, as outlined in the report of Mr. R.W. Pritchard dated March 24, 1992, and, That a further concern be communicated, namely, that clause 5(c) of the proposed conflict of interest legislation would effectively prevent members of Council who have disclosed a conflict from otherwise communicating with the municipality in order to make their opinion known." 5. NEXT MEETING The next regularly scheduled meeting of the Finance and Administration Committee will be held on Monday, May 11, 1992 commencing at 11:00 a.m. 6. ADJOURNMENT On motion, the meeting adjourned at 1:35 p.m. G. Sosnoski Assistant City Clerk