GM3.3
STAFF REPORT
ACTION REQUIRED
Largest Property Tax Debtors with Tax Arrears Greater
than $500,000 as at December 31, 2014
Date:
March 19, 2015
To:
Government Management Committee
From:
Treasurer
Wards:
All
Reference
P:\2015\Internal Services\rev\gm15009rev (AFS20244)
Number:
SUMMARY
This report provides information on property tax accounts with outstanding receivables of
$500,000 or more as of December 31, 2014, and reports on the total outstanding tax
receivables as at December 31, 2014.
RECOMMENDATIONS
The Treasurer recommends that:
1.
Government Management Committee receive this report for information.
Financial Impact
There are no financial implications arising from this report.
The Deputy City Manager and Chief Financial Officer has reviewed this report and
agrees with the financial impact information.
Staff Report for action on Largest Property Tax Debtors - December 2014
1
DECISION HISTORY
In accordance with Council decisions, the Treasurer reports to Government Management
Committee twice a year providing a list of properties with tax arrears greater than
$500,000. The list identifies the assessed property owner, the efforts that have been
made to collect the unpaid taxes, and whether a bailiff has been used in collection efforts.
For those properties that are owned by an individual (as opposed to a corporation) the
listing is submitted in camera in accordance with privacy legislation.
To view these previous Council decisions and reports online please follow the links
below:
http://www.toronto.ca/legdocs/2000/agendas/council/cc/cc001003/adm19rpt/cl002.pdf
http://www.toronto.ca/legdocs/2004/agendas/council/cc041130/adm9rpt/cl034.pdf
http://app.toronto.ca/tmmis/viewAgendaItemHistory.do?item=2007.GM3.16
In addition, Council has approved procedures in cases where properties with unpaid taxes
are known or suspected to be affected by environmental contamination, including the
registration of a Tax Arrears Certificate against title to the property. To view this report
and Council’s approval, please follow the links below:
http://www.toronto.ca/legdocs/2006/agendas/committees/adm/adm060105/it007.pdf
http://www.toronto.ca/legdocs/2006/agendas/council/cc060329/cl001.pdf (page 64)
ISSUE BACKGROUND
Outstanding property tax receivables continue to be monitored and acted upon in a timely
manner. The largest debtor accounts continue to be a priority for collection action.
Given that property taxes form a first priority lien on the property, the City’s tax
receivables are secure with little or no risk of loss. The Revenue Services Division uses
both internal collection procedures (e.g., the mailing of overdue notices, telephone
contact and ultimately the municipal tax sale process) and bailiffs to collect on unpaid
property taxes. In addition, the City charges 15% interest per year on overdue taxes.
Penalties are applied at a rate of 1.25% on the first day of default and at the beginning of
every month thereafter.
The use of municipal tax sale proceedings, as prescribed in the City of Toronto Act, 2006,
is a proven and effective tool in the collection of unpaid property taxes. Once taxes are
three years or more in arrears, a municipality may register a tax arrears certificate on title
to the property. The debtor has one year from the date of registration of a tax arrears
certificate to pay the full cancellation price (the total of all unpaid taxes, all accrued
penalties/interest and any costs incurred by the municipality related to the property).
Failing payment within that one year period, or the entering into of an extension
agreement, the Treasurer is required to proceed to a sale of the property through a public
auction or public tender.
Staff Report for action on Largest Property Tax Debtors - December 2014
2
COMMENTS
Attachment 1 to this report provides a list of properties owned by corporations with tax
arrears of $500,000 or more as at December 31, 2014. There are 20 properties with a tax
receivable balance of $500,000 or more, totalling approximately $26.9 million.
•
Four (4) properties with approximately $4.0 million in unpaid taxes were billed to
tenants of federally owned crown corporations located at 1133 Sheppard Avenue
West, 75 Sheppard Avenue West, 39 John Street - Ground Floor and 1 Queens
Quay West. Revenue Services staff are working with Legal Services Division to
resolve the outstanding taxes on these properties.
•
One (1) property located at 186 Bartley Drive with approximately $3.3 million in
unpaid taxes and associated interest is the subject of an agreement approved by
Council that includes environmental clean-up and payment arrangements.
•
Three (3) properties with approximately $9.5 million in unpaid taxes and
associated interest were offered for sale in a “Sale of Land by Public Tender”,
however, there were no successful tenders submitted. The three (3) properties are
located at 99 Toryork Drive, 290 Old Weston Road and 23 Brydon Drive.
•
Four (4) properties with approximately $4.6 million in unpaid taxes are for
various commercial condominium units located at 222 Spadina Avenue (units 2325, 19-26, 1-6, 20-22) that have previously been the subject of unsuccessful tax
sales. Tax Arrears Certificates have been registered against the title of all four (4)
properties.
•
One (1) property with approximately $0.6 million in unpaid taxes has a Tax
Arrears Certificate registered against the title of the property that has become
eligible for a "Sale of Land by Public Tender" effective August 2013 with a
property address of 0 Lake Shore Blvd West (next to 453 Lake Shore Blvd West).
•
Four (4) properties with approximately $3.2 million in unpaid taxes have been
paid in full or have suitable payment arrangements in place. These properties are
located at 825 Caledonia Road, 50 Charles Street East, 77 Belfield Road and 55
Hallcrown Place.
•
One (1) property located at 97 Manville Road with approximately $0.6 million in
unpaid taxes is subject to preliminary tax sale proceedings.
•
Two (2) properties with approximately $1.1 million in unpaid taxes are subject to
pending appeals and apportionment. These properties are located at 135 Plunkett
Road and 48 Abell Street.
Table 1, below, contrasts the outstanding tax receivables of the largest debtors for the
period from December 31, 2000 to December 31, 2014.
Staff Report for action on Largest Property Tax Debtors - December 2014
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Table 1: Tax Debtors Greater than $500,000 – 2000 to 2014
2000
Outstanding Tax Account
Receivables
$69.8 million
Number of
Accounts
45
2001
2002
2003
2004
2005
2006
$43.3 million
$42.1 million
$26.8 million
$25.5 million
$24.5 million
$24.4 million
36
31
22
22
23
21
2007
2008
2009
2010
2011
2012
$30.0 million
$20.2 million
$33.6 million
$26.5 million
$23.1 million
$21.7 million
24
18
32
22
18
17
2013
2014
$21.6 million
$26.9 million
14
20
As of December 31
In aggregate, the December 31, 2014 tax receivable for the City’s largest tax debtors has
decreased by $42.9 million when contrasted with the first report presented to Council in
December 31, 2000.
The $5.3 million increase from 2013 to 2014 is largely attributable to taxes and interest
which continues to accrue on accounts from 2013, as well as the net addition of six (6)
properties – seven (7) new properties appear on the Largest Debtor list for the first time
and one (1) property (identified in Attachment 2 of this report) has been removed.
The overall outstanding receivable balance for the seven (7) new properties appearing on
the Largest Debtor list for the first time is approximately $4.9 million. These seven (7)
properties are described below:
•
Four (4) properties with an overall balance of $3.2 million were the result of
levies and adjustments processed onto the tax accounts in 2014. These properties
include properties located at 825 Caledonia Road, 50 Charles Street, 77 Belfield
Road, and 48 Abell Street. The property owner of 77 Belfield Road has arranged
a suitable payment arrangement which is expected to fully pay off the outstanding
taxes by mid-2015. The arrears for 48 Abell Street are expected to be resolved
through the pending apportionment of the outstanding balance to the individual
condominium units. The remaining two accounts (825 Caledonia Road and 50
Charles Street West) have been paid in full during 2015.
Staff Report for action on Largest Property Tax Debtors - December 2014
4
•
Three (3) properties with an overall balance of $1.7 million have seen their
property taxes exceed $500,000 during 2014. These accounts include prior
period combined balances of $0.8 million and 2014 transactions of $0.9 million.
These properties include 97 Manville Road, which is currently in the preliminary
tax sale process; 135 Plunkett Road, which has a pending tax appeal to determine
the amount of taxes owing; and 55 Hallcrown Place, which has been paid in full
in 2015.
Attachment 2 to this report identifies properties which have been removed from the
Largest Debtor list since the last report in December 2013. Attachment 2 lists one
property located at 3500 Eglinton Ave West, which no longer has a balance in excess of
$500,000. Metrolinx purchased this property on January 12, 2012 and from this day
forward this property should have been subjected to a payment in lieu of tax levy. The
property continued to be assessed and billed as taxable up to 2014. Conversion of the
assessment classification of this property from taxable to subject to payment in lieu of
taxes in 2014 resulted in adjustments to the property tax account, leaving an overdue
balance on the account which is significantly less than $500,000.
Tax receivables will continue to be monitored and acted upon in a timely manner. The
largest debtor accounts continue to be a priority for collection.
Taxes Receivable as at December 31, 2014
The City bills approximately $5.8 billion in property taxes for municipal and school
purposes each year, of which approximately $3.8 billion is for municipal purposes. Most
property owners pay their taxes on time, with approximately 97% to 98% of the total
taxes levied each year being paid within the year the taxes are billed. The most recent
statistics from the Ontario Municipal Benchmarking Initiative (OMBI), which compares
various performance measures amongst Ontario municipalities, identify that for 2013 the
City of Toronto collected 97.8 per cent of property taxes within the calendar year in
which the taxes were levied. Table 2 below provides a comparison of Toronto's
collection success rate against other Ontario municipalities.
Table 2: Current Year's Tax Arrears as a Percentage of Current Year Levy1
Municipality
Ottawa
London
Toronto
Greater Sudbury
Thunder Bay
Hamilton
Windsor
Ottawa
1.
Tax Arrears as a percentage of current year levy
2011
2012
2013
1.7%
2.3%
2.2%
2.3%
2.8%
4.2%
5.3%
1.7%
1.5%
2.2%
2.0%
2.5%
2.9%
4.8%
5.1%
1.5%
1.6%
2.2%
2.2%
2.6%
3.5%
4.4%
5.2%
1.6%
Source: Ontario Municipal Benchmarking Initiative
http://www.ombi.ca/wp-content/uploads/Taxation1.pdf
Staff Report for action on Largest Property Tax Debtors - December 2014
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Attachment 3 to this report identifies the outstanding tax receivables (including
Municipal Land Transfer Tax) as at December 31, 2014 with comparable tax receivables
for tax years 2010 to 2013 inclusive.
Total unpaid tax receivables as of December 31, 2014 were $257.8 million, representing
an overall increase of $32.2 million (or 14.3%) as compared to December 31, 2013. A
significant portion of this increase relates to increases in Municipal Land Transfer Tax
(MLTT) receivables of $18.0 million, of which a significant portion ($17.6 million) is the
subject of an appeal before the Courts. If we remove the MLTT receivables, the tax
receivables increased by $14.2 million (or 6.3 %) as compared to December 31, 2013.
Attachment 3 shows that the outstanding receivables for both non-residential properties
(commercial, industrial and multi-residential) and residential properties increased from
December 2013 to December 2014:
 Non-residential properties increased by approximately $20.8 million or 20.5 per
cent. This includes MLTT receivables of approximately $17.6 million. If MLTT
receivables are excluded, the non-residential properties receivables increased by
$3.2 million (or 3.2%) in 2014 over 2013; and,
 Residential properties increased by $11.4 million, or 9.2 per cent.
The weakening economic conditions experienced in 2013 continued into 2014. The
economic conditions and the high rate of unemployment are likely contributing factors
for the overall increase to the outstanding tax receivables experienced in 2014.
The increase in unemployment rates experienced in the City of Toronto was identified in
the following three (3) staff reports presented to the Economic Development Committee
and adopted by Council in 2013, 2014 and 2015:
http://www.toronto.ca/legdocs/mmis/2015/ed/bgrd/backgroundfile-76322.pdf
http://www.toronto.ca/legdocs/mmis/2014/ed/bgrd/backgroundfile-66932.pdf
http://www.toronto.ca/legdocs/mmis/2013/ed/bgrd/backgroundfile-56307.pdf
Staff Report for action on Largest Property Tax Debtors - December 2014
6
CONTACT
Casey Brendon
Director, Revenue Services Division
Telephone: 416-392-8065
Fax: 416-696-3778
cbrendo@toronto.ca
Nick Naddeo
Manager, Revenue Accounting
Telephone: 416-395-6789
Fax: 395-6703
nnaddeo@toronto.ca
SIGNATURE
_______________________________
Giuliana Carbone
Treasurer
ATTACHMENTS
Attachment 1:
Properties with Tax Arrears Greater than $500,000, Owned by a
Corporation, as at December 31, 2014
Attachment 2:
Properties removed from the Largest Debtor List since last report
(December 31, 2013)
Attachment 3:
Summary of Tax Receivables as at December 31, 2014 (unaudited),
Compared to December 31 Tax Receivables for Years 2010 - 2013
Staff Report for action on Largest Property Tax Debtors - December 2014
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