Questions about what the municipality can do to help local businesses stay afloat during the pandemic persisted at the last electronically broadcast Huntsville Council meeting held April 29.
Town manager of finance, Julia McKenzie, responding to questions from community members and councillors, particularly Councillor Tim Withey who has been urging the municipality to do more for local businesses, brought forward a report responding to some of those questions.
Changing the due date for the final property tax bill? “We would recommend maintaining the due date at this time, so keep it at August 31st. This will help reduce cash flow disruption to the Town as those who are able to pay can continue to do so,” said McKenzie.
Council had already agreed to extend the date by which late fees would be applied for interim taxes due at the end of March. The first extension meant those who had not paid by the March 31 due date would not be charged a late fee until the end of May. At its April meeting, council extended that date for another two months to July 31, 2020. “This would continuously be monitored and possibly extended for another 60 days, if necessary,” said McKenzie, adding that other area municipalities have taken the same approach.
Reducing the 2020 tax rate to the 2019 tax rate? McKenzie said that would require an amendment to the approved 2020 budget. She said it would mean a savings of $33 for the year for a home assessed at $300,000. “Although 2020 actuals are expected to be much different from the budget, as programs are able to come back online, we need to ensure that we don’t run into a deficit,” she said, adding that any operating deficits would have to be picked up in 2021, which could amount to greater tax increases next year or a reduction in services.
Increasing the time before tax sales take place for unpaid property taxes? Under current legislation, the municipality is able to proceed with tax sales after a property owner has been in arrears for two years. “In practise, we usually look at this at three years and staff could look at this program and see if we can extend it beyond the three years to allow more time for taxpayers to bring their account into good standing,” said McKenzie.
Property tax discount for qualifying businesses? Where a business can demonstrate significant hardship, can they qualify for a property tax discount? McKenzie said under the Municipal Act municipalities are not allowed to grant assistance by giving a total or partial property tax exemption, or the discount of any other levy, charge or fee, to any manufacturing business or commercial and industrial enterprise. She said the legislation mandates that municipalities must levy taxes based on the entire assessment as a whole, “and cannot differentiate between different classes of properties. So because of these two things, giving these discounts is clearly not allowable under the current legislation,” she said.
Providing a property tax refund to specific businesses for the period of time when they are unable to operate due to COVID-19? Again, McKenzie said under existing legislation that would not be allowed.
Tax relief for individuals? McKenzie said the lower-tier municipalities cannot provide tax deferrals due to financial hardship. They are able to cancel or refund taxes only under circumstances related to illness or extreme poverty. She said if the municipality were to move forward with such a program it would have to designate the Assessment Review Board to adjudicate applications submitted.
“It’s important to note that the people that would be applying to this would have to be providing full disclosure of their financial information, tax returns and can also be required to attend a hearing of the ARB [Assessment Review Board],” said McKenzie. “This is not widely used by any municipalities in Ontario just because of the process and the cumbersome nature of it.”
Defer the portion of the Municipal Accommodation Tax (MAT) that goes to the Town for six months? McKenzie said using the funds to finance a specific accommodation provider may not be seen as being used for the purpose of the program, which is to promote tourism, and would not be allowed. She said the same would apply to all the MAT funds collected.
Suspending the Municipal Accommodation Tax program altogether to encourage more visitors once restrictions lift? “It could be argued that the MAT has not impeded any previous travel to the area, prior to COVID-19, and so it may not have any [negative]impact on promoting tourism in the future. Also, not having these funds available when they are needed in the recovery phase may slow down recovery,” McKenzie said, adding that while it could be further explored, “it does not appear that this option would satisfy the current needs of the local tourism industry and could potentially hinder our future recovery efforts.”
Small business loans? McKenzie said it would constitute bonusing and be specifically disallowed. She said what is being explored is funding for Community Futures where the organization could provide loans to small businesses. “It is being currently discussed at higher levels of government, and I believe it is on the agenda at the District of Muskoka. And it’s important to note that if funds were granted by the Town to Community Futures, this expense would need to be funded from existing or future budgets and if staff are directed to investigate this further, a legal opinion would be required on this.”
Private-public partnerships to support small local businesses? McKenzie said staff could explore partnerships with the Board of MAT and other stakeholder agencies such as the Regional Tourism Organization to identify incentive programs for Huntsville businesses that are allowable under the current legislation and investigate whether Town MAT funds could be used to help in promoting such programs.
McKenzie also noted that the Town can continue to seek funding from Provincial and federal governments. “We have been maintaining records to ensure that we are keeping track of our expenses and lost revenues related to COVID, so in the event that it is required we have that ready,” she said, adding that the municipality is also ensuring that it has shovel-ready projects should infrastructure funding be announced, which could aid the municipality in economic development.
Huntsville Mayor Karin Terziano told councillors that McKenzie’s report is good to keep on hand “because we keep hearing different ideas of things that we should or could do. I know I get numerous emails from taxpayers wondering about what we can do with their taxes… so there’s a lot of things the Municipal Act just prohibits us from doing so it’s good for councillors to know what the answers are, and we do know that the rules might change because we’re in unprecedented times but for now, those are the rules so it’s a good document to keep handy.”
Withey referred to savings incurred by the municipality as a result of the shut-down caused by the pandemic and again questioned if those funds could be used to help small businesses in distress.
McKenzie said savings of approximately $800,000 were anticipated if the shut-down continues until the end of the year, but noted that amount would get “smaller as we start to bring programs back online.”
Withey questioned why there wouldn’t merely be a resumption of costs, once services are brought back, rather than an increase.
Terziano responded by saying that while the cost of running a particular program and the staffing costs associated with the same would resume, the income would not. “People will not have discretionary income to spend on different things and it won’t come back as quickly as [when]we had full facility bookings, they will not automatically be back the day you reopen, so there will be a big gap in the revenue and expenses,” she said.
Withey maintained that while McKenzie’s report indicates what is and what is not allowed under the Municipal Act, the rules are changing. He said he had a long discussion with MPP Norm Miller. “He told me specifically that any ideas any municipality comes up with, they’re all ears and they will work on changing sections of the act to make things happen because they recognize at all levels of government that they probably can’t do it all for the people that we have that are really in trouble and they appreciate anybody bringing forward ideas that might help our citizens along the way,” said Withey. “So you’ve got all the rule books there, I get it, that’s what you do. I just don’t think it should stop us from considering or having discussions about things we can do for people that are really in bad shape, today!”
Later in the meeting, Withey also presented a discussion paper warning that businesses could shutter before the pandemic shut-down lifts while calling on councillors to move forward with some form of assistance quickly, including rolling back the 2.8 per cent levy increase in the 2020 budget to be reflected in the final tax bill due on August 31, 2020.
The motion was not approved by council, but many councillors thanked Withey for getting the ball rolling.
In the end, council voted in favour of setting aside $500,000 from the working capital reserve to help businesses and individuals in the community. It is still not clear how the funds could be distributed and prompted by a question from Councillor Brian Thompson, staff indicated that any unused funds would be returned to the working capital reserve.
Council also approved an economic development advisory group made up of David Caplan, Corey Clarke, Kenneth Donald, Kyra Watters, and Councillor Bob Stone. The group is expected to serve as an advisory body to staff in its attempt to come up with strategies that could enhance economic development opportunities in Huntsville and aid in the economic recovery from the COVID-19 pandemic. You can find the group’s terms of reference at this link.
Municipal staff in collaboration with the Huntsville/Lake of Bays Chamber of Commerce and the BIA have compiled a section comprised of available resources to businesses at this link.
You can also watch the council meeting at this link.
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