Complete Auction Details

Complete Auction Details

UPDATE on WRAFT
By Shal Gewurtz

If you were inclined not to read an article with a boring title “UPDATE on WRAFT” but the subtitle above caught your eye, read on.

As I write this article, on Friday February 1st, a blizzard is raging outside which, of course, will be a distant memory by the time you read this in the RLCA Spring 08 Newsletter. But as I nurse my Glenfiddich single malt scotch whiskey and wiggle my toes in front of a warm fire, the image of biting snow mixed with freezing drizzle in a cold wind seems to be an apt metaphor for my topic, namely property tax assessments coming our way later in 2008, courtesy of our friendly Ontario Government and its strong-arm agency, MPAC, alias the Municipal Property Assessment Corporation.

You don’t like my imagery so far? Well let me try another one on you – I feel like a radar operator on the Titanic frantically trying to pass warnings about the impending collision with a massive iceberg most of which is invisibly submerged beneath dark silent cold foreboding depths. I don’t think radar existed in 1917, but who cares about historical accuracy – the main thing is, DO YOU
GET THE PICTURE?

Yes folks, massive increases in tax assessments for waterfront properties are definitely coming.

In the Fall 2007 RLCA Newsletter, my first article since I became the WRAFT contact on your behalf, I reviewed the mandates of WRAFT (stands for WATERFRONT RATEPAYERS AFTER FAIR TAXATION) to which the RLCA belongs, and its sister organization, CAPTR (stands for COALITION AFTER PROPERTY TAX REFORM). With last Fall’s provincial election underway, I passed to you WRAFT’s summary of where the 3 parties stood on the issue of property taxes assessments. I also summarized for you what several newspaper columnists wrote about this issue, and specifically their warnings that this issue was going to hit Ontario property owners hard once the freeze on assessments was lifted in 2008. But the only issue to emerge during the election campaign was faith-based schools, to the exclusion of anything else, and the Liberals were re-elected with a majority. Since the Fall RLCA Newsletter, I forwarded 2 WRAFT reports to all members on the RLCA email list.

Before I summarize these WRAFT reports for the benefit of RLCA members who do not have email or who have become members only recently, let me (a) summarize a recent article which provides a fascinating insight into the lunacy of the market value assessment system, and (b) provide my own commentary about the unfairness of this system.

In a January 15, 2008 article in the Globe and Mail, John Barber called the property tax assessment a “ticking assessment bomb now threatening to blow up so many settled Ontario homesteads - a policy nobody paid the slightest attention to six months ago, when it could have made a difference”. Mr. Barber states that “the message is not new. But people don’t listen to anything they’re not ready to hear. They weren’t ready last fall. Now they are ….especially, with tax bills landing in mail boxes”. Mr. Barber goes on to say that tax increases will not hit everybody, but “Ground zero, unquestionably, is cottage country, a sprawling landscape comprising dozens of tax jurisdictions marked by a sharply bifurcated property market - one for waterfront, another for everything else. The new assessments will inevitably show waterfront properties appreciating much faster than those inland, with the ultimate result being double-digit tax hikes for them and discounts for their landlocked neighbours. This will happen automatically, no matter what local councillors might do about property tax rates, as a matter of provincial policy.”

I bet many of you didn’t realize that not only will taxes go up for waterfront properties, but that taxes for village properties might actually go down. Mr. Barber explains how such a stupidity is about to happen and apparently it’s all in the law of averages. You see, there is a theory behind provincial tax policy which assumes that, “the assessment of every property in an individual municipality will vary at or near an average rate, with little or no effect on individual tax bills. Indeed that’s the law: When assessments increase a certain amount, provincial law requires municipalities to discount their tax rates accordingly. Thus the province ensures local government reaps no benefit from increased assessment.”

But this theory behind provincial tax policy breaks down in the real-world where there are uneven market value assessments in a jurisdiction. Mr. Barber calls these “lumpy tax jurisdictions, where average assessment jumps - and corresponding tax-rate discounts - are just disembodied numbers”. He says that the theory underlying provincial tax policy does not acknowledge the existence of such lumpy jurisdictions.

What does all this mean to you and me? Mr. Barber explains that, in the context of a city like Toronto, “Every percentage point a house increases in value over the citywide average since the last assessment becomes a percentage point increase in its tax bill - on top of whatever rate hike council might settle on. And every percentage point less than the average increase translates into a corresponding tax discount. Even though such houses also increase in value over years during which tax rates climb, their tax bills often drop.”

Translating this to the Haliburton area, and remembering that Mr. Barber calls cottage country “Ground Zero”, it means that the high increases in the market value of our waterfront properties, which we have always known will result in tax increases for us, will also have the effect of boosting the average for the whole of Haliburton county. Thus non-waterfront properties, whose values have also gone up but with increases that are below the county average, will pay less tax.

Mr Barber finishes his article by saying that “The McGuinty government spared its flock from such worrisome realities by postponing the scheduled reassessment till after its re-election - a cynical ploy that worked marvelously well. But there’s nothing holding it back now.”

On such an unhappy note, let me provide my own commentary on market value assessment. There is no question that the issues regarding property taxes are complicated. I have heard people say that our homes and cottages are worth more than what the government assessment usually comes in at, so why complain about the assessment system. Some people say that the real issue is the mill rate, and that regardless what the government says our homes and cottages are worth relative to what they are likely to bring on the real estate market, the municipalities will just adjust the mill rate to what they need. Others question what owning a house has to do with funding certain programs such as welfare, currently funded by municipalities, since property taxes are the only way for municipalities to raise revenue. All these questions are legitimate and I don’t pretend to have the answers. One only has to open any newspaper to read about deteriorating infrastructure and the impossible financial burdens of municipalities to appreciate that the tax system is broken and badly in need of an overhaul.

I think that, as responsible citizens, all of us are willing to bear the burden of paying for infrastructure and services provided the tax system is fair and equitable. But using market value as a basis for assessing property taxes is unfair because it leads to unfair tax burdens on individual homeowners. There have been numerous stories in newspapers about homeowners hit with tax increases of 20%, 30%, 40%, 50% or more. And it is even more unfair when you consider that basing property taxes on what the market might dictate is, in itself, unfair, because it uses a benchmark, namely what your property might fetch if you were to sell it, even though you haven’t sold it. It’s like charging you for the capital gain as your property has appreciated, even though you haven’t sold your property to earn that capital gain. It’s important to remember that market value for a property that has not been sold is unrealized gain, and therefore using market value assessment as a benchmark for determining property taxes is wrong. For example, a senior living in the same property for 20 years isn’t richer simply because the market around that senior has increased in value, yet the market value assessment charges that senior more in taxes because it deems him or her to be “richer”. Market value assessment leads to unfair tax increases, such as we see in the disparity between waterfront and village properties. In many cases, especially on seniors, it leads to huge tax increases that are impossible to bear. That’s why it is a lightening rod issue.

Now that I have thoroughly depressed you, let me summarize the 2 WRAFT reports which I forwarded to all members on the RLCA email list since the Fall RLCA Newsletter.

The November 2007 WRAFT Report referred to the Ontario election outcome as disappointing to say the least, from the point of view of property tax reform. It stated that even a minority government would have given us a good shot at getting an assessment cap in place. The WRAFT report cautioned that, with a Liberal majority and their belief that they have dealt with reform by the combination of the four year phase-in and seniors grant, it is going to be a challenge to make real progress in the year ahead. WRAFT stated the belief that the upcoming assessment, covering the three year period 2005 through 2007 will represent yet another opportunity to demonstrate the critical need for reform. Property owners will receive their 2008 assessments beginning next September. Given the strong real estate markets throughout many parts of Ontario over the past three years there is no question that there will again be a huge disparity in assessment hikes which will result in major tax increases for hundreds of thousands of property owners and massive shifts in tax load from one area to another.

The November 2007 WRAFT report also reported on fundraising efforts that have totaled more than $100,000, and on its efforts in 2006 and 2007, such as input to the Ombudsman’s report, as well as various discussions it had with Government officials. Plans for 2008 include an intention to continue to lobby for a cap on assessment increases. In WRAFT’s view, the government’s return to a four year assessment and phase-in cycle does not deal with the volatility which remains the major flaw in Ontario’s assessment-based property tax regime. WRAFT sees four periods over the next year and a half when there will be opportunities to raise the issue with the media, the government and the public:

• At present there is some media interest in property tax reform as one of the outstanding issues to be dealt with by the Liberal government.
• A report on municipal tax is due early in 2008 and will again highlight problems with the property tax regime and in particular the downloading of social service costs onto the property tax bill.
• Issuance of assessment notices next fall will raise serious concern once again about the current system’s volatility and the general concern with the assessment process.
• Receipt of tax bills in 2009 will drive the message home again.

In the January 2008 WRAFT Report , the following points were outlined:

• In its 2007 budget, the Liberal government tried to make tax burden more predictable in the short run. The 2008 increase, which reflects the rise in real estate values for the years 2005 through 2007, will be phased in over the next four years. Any resulting tax increases will accordingly be phased in over the years 2009 to 2012. Then we will get assessed again in 2012.
• Unfortunately this reform does not bring stability to the property tax system. Assessments will be carried out every four years and will still be subject to the vagaries of the real estate market; the inadequacy of sales transactions and lack of comparability in many areas; and the imprecision that is built into the assessment process. On top of that, less frequent assessment means that property owners in hot urban markets and in many waterfront areas will be clobbered when market highs coincide with the four year assessment cycle.
• 2008 assessments will come this Fall, and WRAFT plans to attempt to determine in advance the impact of that valuation in a few urban and waterfront areas. With that information, WRAFT will make every effort to convince the Ontario Government that further steps are essential to bring stability and long term predictability to the property tax regime. WRAFT continues to hear that municipalities need more funding to maintain infrastructure and tax increases are inevitable. In WRAFT’s view, Ontario homeowners cannot be expected to cover these cost increases and at the same time be exposed to assessment related tax shifts based purely on the vagaries of real estate markets.

Let me end, as I always do by inviting you to go to the WRAFT and CAPTR websites for more information and to continue to do so regularly for updates.

You might also be interested in visiting MPAC’s website.

Background
Since the mid 1970’s the Ministry of the Environment (MOE) have used a water quality assessment model to determine and set a lake’s development capacity. The MOE and the Ministry of Natural Resources (MNR), in conjunction with local municipalities, have used this model to protect inland lake water quality and lake trout habitats throughout Ontario. The model, called the Lakeshore Capacity Assessment, is based on predicting the inputs of mostly man made pollutants as a result from septic systems - known major contributors to water quality concerns. The Lakeshore Capacity Assessment is used as a planning tool to achieve a consistent and fair method across the province to determine development capacities. Readers will recall that RLCA used this model on Little Redstone Lake in the mid 1980’s to reduce the proposed population of lots from 135 to 99.

The model, first developed in 1975, was well received. It quantifies linkages between natural sources of phosphorus to a lake, human impacts from shoreline development, water balance, the size and shape of a lake, refreshment cycles, and the resultant phosphorus concentrations. The model uses a number of assumptions about phosphorus loadings, phosphorus retention, and usage figures. The model allows the user to calculate how water quality in a lake will respond to the addition or removal of shoreline development such as cottages, permanent homes and resorts. It predicts several important indicators of water quality: total phosphorus concentration, algal density (chlorophyll a concentrations), water clarity (Secchi depth), oxygen concentrations in the bottom waters at the critical end of summer period and the volume of lake trout habitat.

The Ministry of Natural Resources use the model to predict the impact that development will have on Lake Trout Habitat in cold water lakes. Lake Trout have two basic habitat requirements - temperature and dissolved oxygen. When phosphorus is added to a lake, it creates algae, and when algae settles at the bottom of a lake it decomposes and consumes available dissolved oxygen. Through research, the MNR have determined that the recommended minimum dissolved oxygen criterion for the protection of lake trout populations is 7 mg L-1. Lake Trout lakes that are below the 7 mg L-1 criterion have no further capacity for phosphorus loading - lakes that exceed the criterion have some capacity.

The issue with the exclusive use of the Lakeshore Capacity Assessment model by municipalities is that land use decisions are based on one component - phosphorus loadings from septic systems. Other factors that help define development capacity of lakes are excluded; advocates of Lake Plans suggest other factors should be included:
• Specific wildlife and fish habitat,
• Vegetation,
• The physical capability of the shorelines,
• Topography, soils, existing development, landscapes,
• Narrow water bodies, steep slopes);
• And social elements such as aesthetics, cultural/historic values, boating limits and crowding.

Water quality remains the only recognized and accepted means on which to base development decisions. This is also a major concern to many due to the introduction of new phosphorus abatement technology. As technology delivers cleaner water, the implication is that any given watercourse can sustain ever-increasing numbers of developments and densities.

FOCA and some cottage associations believe this situation requires the creation of “Lake Plans”, an additional set of considerations useful to Councils when deciding on developer’s proposals.

Emergence of Lake Plans
In preparing the RLCA direction statement, we find that of hundreds of cottagers associations in Ontario, few have lake plans. Most of them are in the formative stages.

The impetus for such lake plans is new, having emerged from interested persons located at Peninsula Lake, adjacent north east of Fairy Lake, which is adjacent to Huntsville. Peninsula Lake has 215 families of which 25% are permanent residents. The remaining residents are “seasonal” rapidly trending to “all season”, a scenario not much different from many lakes including the Redstone watershed. This group of lakes comprising the Township of Lake of Bays, has fully matured in development. These lakes are at the fifth stage of lake development – fully matured, containing marinas, all season residences, luxury homes, luxury resorts, condominiums, high rise structures, golf courses, and back lot developments. Wide scale development and the resultant density of potential population has been a concern to many in these lakes. Lake Plans have emerged as a means of including the desires of the local ratepayers. In recognition of ratepayer concerns, the Township of Lake of Bays has incorporated the concept of Lake Plans in its Official Plan. A number of lake associations in the township, including Peninsula Lake, Harp Lake and Walker Lake have initiated the development of a Lake Plan. Much of the material and frameworks proposed by FOCA and referenced in this document are sourced from the Peninsula Lake Cottagers Association.

Purpose of Lake Plans
A Lake Plan is analogous to an Official Plan administrated at the municipal level. A municipal Official Plan acts like a contract among Municipal Councils, residents, property owners and developers to provide direction on how development will occur. Official Plans are important to lake communities because all development must conform to the policies and direction the Official Plan provides. The issue is that every municipality applies a differing approach to its Official Plan. Most municipalities set “carrying capacities” based on constraints. For lakes, water quality is usually the only constraint established in Official Plans – there is no other criteria to set development. In some cases Official Plans and the council’s policies may be too general - land use decisions are often made after developers submit applications. Lake Plans then are in addition to Official Plans containing additional criteria on which Councils can make decisions. Lake Plans are intended to reflect the preferences of the lake users, providing a guidepost to Councils about developments.

For RLCA members, a Lake Plan at this stage represents a process, to help decide what makes our lake special, and how to preserve these qualities. Formally adapted, our Lake Plan can be incorporated into the municipal lake development policies and the Official Plan. The plan is also likely to create an action plan, to deal with issues that are beyond the scope of an Official Plan, such as:
• Communication and education,
• Rehabilitation or restoration of degraded environments,
• Monitoring programs that measure the health of these values.

Scope of a Lake Plan
The RLCA is a plan, structured to reflect the interest of the majority of stakeholders in the Redstone watershed.

The Plan is:
• A living document with content that reflects the majority position of Redstone Lake stakeholders,
• A criteria, characteristics, elements, frameworks, to establish meaningful guidelines that serve as constructs and imperatives to a plan,
• A part of the collection of artifacts that comprise the Intellectual Capital of a Municipality on which development decisions are based,

The plan is not:
• A set of rules or formally adopted bi-laws,
• Governance,
• Reflective of a minority or special interest within the RLCA, or meant to be exclusive - favoring groups or views or prejudice,
• Meant as a tool to correct perceived issues,

A Lake Plan Framework
FOCA and Mr. Randy French, French Planning Services have proposed much of the following framework. A Lake Plan will include elements that describe the built and physical environment as well as the natural heritage of the lake. It will also identify the social values of the lake community, the agreed upon development potential of the lake, and an implementation approach for the Official Plan.

The Plan elements are considered and established as to the following proposed four constructs:
1. Natural Heritage
• Water quality allocations,
• Drainage basin and related watercourses,
• Wetlands,
• Shoreline constraints and influences,
• Fish and wildlife habitat,
• Littoral vegetation, (first 10 meters of land from shoreline)
• Riparian vegetation, (vegetation thriving on the banks of watercourses)

2. Community Social Values
• Aesthetics
• Cultural & historic development or built heritage artifacts,
• Crowding,
• Boating capacity / limits,
• Community assembly,
• Recreation activities / opportunities,

3. Built and Physical Environment
• General location and access,
• Distinct areas or neighborhoods,
• Distinct physical features and landscape,
• Soils,
• Location in watershed
• Narrow water bodies
• Shoreline features and hazards
• Topography
• Land capability
• Existing land usage and designated developments
• Public access points and / or trails,
• Hazardous areas

4. Development Potential
• Official Plan policy recommendations and zoning standards,
• Land use inventory and identification of contentious areas,
• Education and communication approaches and vehicles,
• Restoration and rehabilitation plans,
• Monitoring program

The above 4 constructs and criteria are proposed, and can be modified as stakeholders decide.

Stakeholders
For the Lake Plan to be effective and a useful process, it is incumbent on RLCA to recognize the larger audience of stakeholders in the creation of a plan. The plan cannot reflect one view, or an exclusive subset, or the plan will not likely be recognized. The Lake Plan should not be seen as a cottage association document, but a consensus of the views of stakeholders. In going forward, the plan should consider the views of the following proposed stakeholders:
• RLCA Members,
• Non-members of RLCA,
• Municipality of Dysart et al, (Council)
• Municipal planners,
• Itinerant recreational users to the watershed such as campers, canoeing enthusiasts, hikers,
• Developers,
• Full time residents,
• Commercial operators,

Proposed Direction for an RLCA Lake Plan
We propose the following process to start towards the creation of a draft document:
a. Adapt as a working framework, the above noted 4 constructs that will comprise the artifacts for an RLCA Lake Plan,
b. Select a working committee from RLCA or key interested people,
c. Facilitate a workshop to gain consensus on terms of reference; criteria, interests, issues, and draft artifacts,
d. Communicate the intention to create a plan to as many stakeholders as is reasonable,
e. Open formal discussions with FOCA and Peninsula Lake representatives,
f. Develop a list of a cross section of stakeholders who wish to attend a strategy workshop, to be called the Steering Committee,
g. Seek the input of experts,
h. Facilitate a one-day planning workshop to first find common ground among stakeholders and criteria.
i. Develop deliverables on common constructs and criteria,
j. Establish a working relationship with Council using the common and agreed to factors, to measure cooperation and acceptance,
k. Build a plan to facilitate delivery of remaining factors,

Administration of the Lake Plan
It is proposed that RLCA provide the administration to support the creation of all draft artifacts and to maintaining the Lake Plan living documents.

Proposed Action Items
a. Create a statement of direction, draft
b. Present the concepts and gain concurrence at the AGM July 13, 2002
c. Seek volunteers to a working team August – September
d. Facilitate a ‘terms of reference’ workshop October
e. Facilitate a Strategy Workshop of the Steering Committee 1st Qtr 2003