The Financial Table Is Set. What's Next?

When I decided in June 2018 that I would not run for Mayor again, I knew that this time of transition would occur. Back then we hoped that most tasks would be completed, leaving the next Council the opportunity to follow their own path.

And while we have completed most major projects – including officially opening the new Meridian Community Centre – some important financial and land transactions that will need to wrap up during the new Council term.

I liken it to having the table set and the meal ready to be served. Now the Town is waiting to see what the new Council will do. Will they follow the menu and serve the meal as prepared? Will they scale it back? Will they add to it? Or, will they rip out the table cloth and watch the glasses smash on the floor?

So, what is on the menu and has been prepared? What is in place for the financing for the new Meridian Community Centre and for the Town of Pelham?

You will recall that the financing plan for the $35.5 million Community Centre budget included a number of elements:

Tax Levy Debenture:

The Town took out a $9.1 million 30-year debenture in 2016. This is like a mortgage that you might have on your house, but with two major differences: 1) it’s for a very low rate (3.34%) and 2) it’s the same amount for 30 years. That means that as interest rates increase the Town continues to pay the historically low, locked-in rate. The Town already included the $47 increase for the average home (valued at $309,200 in 2016) in your 2016 property taxes. Your future taxes do not have to be increased any more for this debenture.

This is the only part of the financing for the new Community Centre that is being funded by your property taxes.

Development Charges:

The outgoing Council also set in place the process for new growth in the Town to pay $12.1 million of the new Community Centre via Development Charges (DCs). DCs are charged on each new unit or home built in the Town. A portion of these charges cover the capital costs for “indoor recreational facilities” – in our case for the new Community Centre. Council updated the entire DC Bylaw in 2018 to capture even more funds to cover growth related projects. And, while the DC Bylaw has to be renewed at least every five-years, the financial plan is initiate a “scoped” update – just for “indoor recreational” capital costs – either each year or, at minimum, every two years. At no cost to existing tax payers, an annual update could help to pay down this Centre’s DC component even quicker.

Donations:

You will recall that our initial financing budget hoped for $3 million from community fundraising. Because of a very generous community we actually raised more than $3.3 million in gifts and pledges to date! And, the new Council could promote more fundraising opportunities -- like completing the community seat campaign, for example.

Land Sales:

The initial budget also called for $12 million to be raised by sale of lands. I am pleased to report that we have generated $11.7 million from land sales so far. These are firm offers, but they are conditional. 

This calculation includes the $3.0 million offer of a portion of the former Arena property for a development that will follow the plan generated by the local community. (That community plan calls for selling about 55% of the Haist Street property for single family homes and townhouses, and keeping about 45% in public ownership.)

Some of these land transactions close before the end of 2018, with the rest closing in early-2019. And, the Town still owns approximately 4 acres of lands surrounding the new Community Centre that should be sold in 2019 to generate more revenue.

Costs Under Budget / Revenue Exceeds Costs:

As reported by the Community Centre Oversight Committee, the overall project actually came in at $35.4 million – that’s more than $785,000 under budget. (That’s thanks to the amazing efforts of the Ball Construction, Petroff Architects, the Oversight Committee, and Town Staff!)

If you add up each of the elements above, the revenue comes to $36.1 million and exceeds costs by $700,000.

Now, a few folks might argue that some of the revenue comes in over time – called “deferred revenue” in Municipal Financing parlance. Some of the fundraising, for example, includes multi-year pledges. And, as mentioned, the current land sales will close in 2018 and during the second quarter of 2019.

For the fundraising, this means that the new Council should “steward” the donors – be sure to continue to thank them and honour their agreements – so that their support continues. And, the new Council can continue promoting seat sales in the Accipiter Arena.

As mentioned already, the new Council can continue to sell the additional lands in East Fonthill – and this should more than cover any financing costs for the deferred revenue.

New Revenue from New Development:

While some people don't like the new homes and businesses in the Town, that growth was inevitable. Why? Because the "urban boundaries" -- the areas where new homes and businesses could be built -- was added to the Town in 1990 for Fenwick and in 2000 for East Fonthill.

Our job as a Council was to work with you to plan the development in the best possible way to add to the Town.

And, the hundreds of millions of dollars in the value of those new homes and new businesses, means that the Town will receive millions of dollars of new property tax revenue. Our Council planned on using that revenue to pay down debt and build up reserves.

Impact by the New Council:

Obviously, the new Council will need to get up-to-speed on all elements of this financing plan – how the table has been set and ready to go.

Yet, there is a risk for our community. The new Council could alter these arrangements. 

For example, many recently elected Councillors have said that they don’t want to follow the plan that was developed by the local residents for the former Arena site; some said that they either want to develop another plan or keep the entire site for parkland. If they try to follow through with those statements and stop the land sale, they would hit the community with a multi-million loss of revenue in 2018.

Or, if they decide not to follow legal advice and do something to jeopardize the land-deal closings in East Fonthill, they could cause additional multi-million impacts in 2019.

Whose Issues? Each of Ours:

While I know in my head that after November 30 these are not the problems of myself and the current Council. Yet, I feel in my heart the deep care we each share about the Town’s future.

As a private citizen starting December 1, I will hope that the new Council will accept how the table has been set and follow this financial plan for the benefit of our entire Town.

Pelham’s 2018 Blended Residential Taxes Up 1.9% -- 12 Year Increase Less Than Inflation

If you pay your property taxes by installments, you will know that the second installment of your 2018 property tax bill comes due in two weeks (April 30). With this deadline approaching, I wanted to tell you about Pelham’s 2018 blended residential property tax increase – at 1.9% – and also to compare with other Cities and Towns.

You will recall that the amount of property tax you pay to the Town of Pelham, to the Niagara Region, and to the Province (for Education) is not solely based on the Market Value Assessment of your property by the Municipal Property Assessment Corporation (MPAC); one must multiply your assessment by each of these three tax rates and add them up for your total bill.

With both the Region and the Province making some policy changes and adjustments for rates and tax ratios, we now know that the combined property tax increase for an average residential property (which is valued at $328,138) in Pelham will be 1.9% for 2018. That means an average residential tax bill of approximately $4,187 or an increase of about $79 over last year. (Because of some rates changes, that’s actually a bit lower than the 2% to 2.3% range that I reported to you in February.)

You can consider this $79 or 1.9% a “pocket-book” increase – an increase in the amount it cost an average residential property owner because it’s adjusted for the average MPAC increase in Pelham.

Since Pelham’s portion of your property taxes represents roughly 39% of the total bill, the Town will make use of about $1,618 of the $4,187 for the average residential property.

Who gets the most? The Niagara Region will get about $2,012 or 48% of the total amount. Meanwhile, the Province will receive the remaining approximately $558 (or 13%) to help fund education.

How do we measure whether the increase is “affordable” or not?

One independent way to judge whether Pelham’s taxes are “affordable” is to compare with inflation. For example, the Bank of Canada calculated that, over the last 12 years (February to February), inflation increased the value of goods and services by 22.7%.

Over the same period, Pelham’s combined taxes for the average residential property increased by 22.0% – a bit lower than inflation. Essentially, that means that the average home is paying the same level of taxes in 2018 that they did in 2006!

And, this 22.0% over 12 years includes so many improvements in our community – from renewed Downtowns in Fonthill and Fenwick, to new Fire Halls in Fenwick and North Pelham, from nine renewed playgrounds, to a new skatepark and a new dog park, from a renewed Maple Acre Library to a renovated Old Pelham Town Hall, from 15 km of new sidewalks and 5 km of new trails to the new Meridian Community Centre. And, the list of other infrastructure and services goes on and on.

Another way to judge would be to compare with other Niagara Cities, Towns, and Townships.

Last Fall, the Region published a corrected table of non-blended property tax increases from 2010 to 2017 for local municipalities. If you start at zero in 2010 and add up the cumulative increases, Niagara Municipalities increased their property taxes an average of 35% over those eight years.

Pelham stands as the forth lowest because ours increased 30% – including an increase in funding for the Community Centre in 2016. That’s 14% below the average increase of other Cities and Towns for the same period. Three other growing Towns – Grimsby, Niagara-on-the-Lake, and West Lincoln were lower than Pelham since 2010.

Pelham Council and I continue to work together with staff to ensure that changes in property taxes only minimally impact you and your neighbour while improving the level and quality of services in the Town.


Please check out historic charts or read past columns at www.pelhammayordave.blogspot.ca. Please contact Mayor Dave at mayordave@pelham.ca.

Comparing Pelham’s Residential Taxes

If you pay your property taxes by installments, you will know that your third installment of your 2017 property tax bill comes due on Friday. With this deadline, why not “take stock” of Pelham’s property taxes and compare with other Cities and Towns?

You will recall that the amount of property tax you pay to the Town of Pelham, to the Region, and to the Province (for Education) is not solely based on the Market Value Assessment of your property by the Municipal Property Assessment Corporation (MPAC); one must multiply your assessment by each of these three tax rates and add them up for your total bill.

With the Region and the Province making some last policy changes and adjustments for rates and tax ratios, we now know that the combined property tax increase for an average residential property (which is valued at $316,400) in Pelham is 2.0%. Because of those changes, that’s actually a 0.3% decrease from what I reported to you in April.

You can consider this 2.0% a “pocket-book” increase – an increase in the amount it cost an average residential property owner by adjusting for the average MPAC increase.

How do we measure whether that amount is “affordable” or not?

One independent way to judge whether Pelham’s taxes are “affordable” is to compare with inflation. For example, the Bank of Canada calculated that, over the last 11 years (January to January), inflation increased the value of goods and services by 19.7%. Over the same period, Pelham’s combined taxes for the average residential property in Pelham increased by 19.7% – the same level as inflation. Notionally, that means that the average home is paying the same level of taxes in 2017 that they did in 2006.

And, this 19.7% includes the equivalent of approximately 1.1% (in 2016) to fund the Pelham Community Centre. And, it also includes our annual increases for improved infrastructure – approximately 1.7% over the last three years, for example – supporting new roads, pipes, and other capital improvements.

What about a more concrete way to judge? How about if we compare Pelham with other Niagara Cities, Towns, and Townships?

Last November, the Region published a table of non-blended property tax increases from 2010 to 2016 for local municipalities. If you start at zero and add up the cumulative increases from 2010, Niagara Municipalities increased their property taxes an average of 35% over the last seven years.

Pelham stands-out as the second lowest by increasing at 25% – including funding for the Community Centre in 2016. That’s 27% below the average increase. Only Grimsby was lower than Pelham (at 23%). Even the Region was higher than the Town, at 29% (if you don’t include the benefit of Provincial uploading).

Pelham Council and I continue to ensure that we only minimally impact you and other property tax-payers while we work to increase the level and quality of services in the Town.


Check out historic charts or read past columns at www.pelhammayordave.blogspot.ca. Please contact Mayor Dave at mayordave@pelham.ca.

Pelham’s 2017 Residential Taxes Increase by 2.3%

Two months ago, I wrote about how Council approved our 2017 Operating Budget. Since the Province issued the property tax rate for Educational purposes last week, I can now provide you with an update on the total 2017 residential property tax bill.

You will recall that the amount of property tax you pay to the Town of Pelham, to the Region, and to the Province (for Education) is not solely based on the Market Value Assessment of your property; we multiply your assessment by each of these three tax rates and add them up for your total bill.

The Municipal Property Assessment Corporation (MPAC) – the Provincial body that sets a value your home and property – re-evaluated and assessed all properties in the Province as of January 1, 2016. While this amount will be used as the value of your home in 2017, MPAC phases in any assessment increases evenly over a four-year period.

Despite the recent double-digit home value increases and seller’s market, the MPAC assessment is to represent your property as of January 1, 2016. Further, the Town re-adjusts the tax rate down to compensate for the average overall increase in residential property values across the Town.

Now that the Region draft-approved the property tax rates and ratios and that the Province set their rate this month, we know that the combined property tax increase for an average residential property (valued at $316,400) in Pelham will be 2.3%.

Please note that this 2.3% is what folks term the “pocket-book” increase – the amount it cost an average residential property owner by adjusting for the average MPAC increase.

How do we measure whether that amount is “affordable” or not?

One independent way to judge whether Pelham’s taxes are “affordable” or not, is to compare them with inflation. For example, the Bank of Canada calculates that, over the last 11 years, inflation increased the value of goods and services by 19.7%. Over the same period, Pelham’s combined taxes for the average residential property in Pelham increased by 20.1% -- only 0.4% above inflation.

And, this 20.1% includes the equivalent of approximately 1.1% (in 2016) to fund the Pelham Community Centre. And, it also includes our annual increases for improved infrastructure – approximately 1.7% over the last three years of this 20.1% was for increased sustainability – supporting new roads, pipes, and other capital improvements.

Pelham Council and I continue to direct staff to ensure that we only minimally impact you and other property tax-payers while we increase the level and quality of services in the Town.

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26 June 2017 Update:
With the Region and the Province making some last policy changes and adjustments for rates and tax ratios, we now know that the combined property tax increase for an average residential property (which is valued at $316,400) in Pelham is 2.0%. Because of those changes, that’s actually a 0.3% decrease from what I reported to you above. Please see new chart and comparisons by clicking here.

Assessment Only Half the Picture

Have you received your new residential property assessment notice from MPAC – the Ontario Municipal Property Assessment Corporation? (If you own a farm, business, or multi-residential property, you should receive your assessment mid-October.)

Updated for the first time since 2012, your notice will outline MPAC’s determination of the market value of your property as of January 1, 2016.

MPAC considers many factors when assessing property values, such as the sale prices of comparable properties in your neighbourhood, and the age, location, characteristics, and size of your property and home. In essence, MPAC strives to base their value on the amount your property could have sold for on the open market.

Just like in 2012, property assessments will remain the same for the next four years – from 2017 to 2020. However, if the value of your property increases, that increase will be phased in over the four years; if the value goes down, you will immediately see a reduction.

For example, if the value of your home increased by $20,000 over its current assessment, the value for determining your property tax will increase by $5,000 per year over the next four years.

If the value of your home goes up, does that mean that your property taxes will also go up?

No, not necessarily. Market Value Assessment is only one half of the property tax equation. The amount you pay to the Town of Pelham, to the Region, and for Education is based on the Market Value Assessment of your home multiplied by the three tax rates and added together.

Say the Town budgeted for revenues of $10 million from property taxes in 2017. If all assessments double, the Town would cut the tax rate in half to collect that $10 million. If everyone’s assessments went down, we would increase the rate to collect the same $10 million.

But, what if your assessed value increases more than the average?

The property tax system is a bit of a blunt instrument. Municipalities set the tax rate based on the average assessment for each of the tax classes – residential, multi-residential, commercial, industrial, farm/managed forest, pipelines.

If your property’s assessed value increases more than the average, you will likely pay more than the average tax. By the same token, if your assessed value increases less than the average, you will likely pay less tax.

What if you don’t think the MPAC assessment on your property is correct? You can issue a “request for reconsideration” before November 30, 2016 for residential properties so that MPAC will review your assessment. (Owners of farm, business, and multi-residential properties must file reassessment requests 120 days from the assessment issue date.)

Please check out MPAC’s website (www.mpac.on.ca) and your notice for more information.

Pelham’s 2016 Residential Taxes Increases by 2.4%

Two months ago I wrote about how Council approved our 2016 Operating Budget. Since the Province issued the property tax rate for Educational purposes last week, I can now provide you with an update on the total 2016 residential property tax bill.

You will recall that the amount of property tax you pay to the Town of Pelham, to the Region, and to the Province (for Education) is not solely based on the Market Value Assessment of your property; we multiply your assessment by each of these three tax rates and add them up for your total bill.

The Municipal Property Assessment Corporation (MPAC) – the Provincial body that sets a value your home and property – re-evaluated and assessed all properties in the Province as of January 1, 2012. While this amount will be used as the value of your home in 2016, MPAC phases in any assessment increases evenly over a four-year period. The Town uses that changing assessment value when we calculate your property taxes each year.

When Town Council approved our 2016 Operating Budget in February, we didn’t know neither the Regional nor the Provincial rates.

Now that the Region approved the property tax rates and ratios last month and that the Province set their rate last week, we know that the combined property tax increase for an average residential property (valued at $309,200) in Pelham will be 2.4%.

Please note that this 2.4% is the “pocket-book” increase – the amount it cost an average residential property owner by adjusting for the average MPAC increase.

(I am sure that you would be interested to know that approximately 1.1% of this 2.4% is attributable to the one-time increase for the Pelham Community Centre.)

How do we measure whether that amount is “affordable” or not?

One independent way to judge whether Pelham’s taxes are “affordable” or not, is to compare them with inflation. For example, the Bank of Canada calculates that, over the last 10 years, inflation increased the value of goods and services by 17.7%. Over the same period, Pelham’s combined taxes for the average residential property in Pelham increased by 17.4% -- slightly less than inflation. And, this includes the amount already included in the Town’s 2016 budget to help fund the Pelham Community Centre.

Pelham Council and I continue to direct staff to ensure that we only minimally impact you and other property tax-payers while we increase the level and quality of services to the Town.

Pelham's 2016 Operating Budget Approved

Council recently approved the Town’s 2016 Operating Budget. The new budget translates into an increase of approximately 7.86% (or $107.44) on the Pelham portion of your property tax bill for the average residential property (assessed at $309,200).

Since Pelham’s portion of your property taxes represents roughly 37% of your overall residential tax, we anticipate the average “blended” increase – including the Regional and Provincial portions – to be around 2.9%.

In preparing for the operating budget, Council directed Staff to review all expenditures against customer service needs and the Town’s strategic plan.

The overall budget increased by $792,873 (net). The major increases over 2015 include:
• A $269,830 transfer to the capital reserves to help enhance and maintain our excellent infrastructure and build on the $175,979 that we added to capital reserves last year;
• $79,629 for increased maintenance and $49,731 for increased utility costs for Town facilities;
• $11,007 to increase the Pelham Public Library grant to fund the Library’s cost-of-living-adjustments (COLA) and to double the hours of the renewed Maple Acre Library branch – from 14 to 28 hours per week – starting in November.
• $250,786 for Staff wage and benefit increases. This includes a 1.3% COLA increase, performance management compensation, and required benefits increases (of approximately 10%).
• And $416,984 for additional principal and interest payments. (See below for more details.)
These net to an increase of $792,873 because of the benefits of new assessment growth ($184,469) and of other expected revenue increases ($100,625).

As I wrote about a few weeks ago, Council earmarked $37 million in the Town’s 2016 Capital Budget toward constructing a potential Community Centre. We did this because we are getting close to a final draft design and so that we might be “shovel ready” for potential investments from upper-levels of government.

So that we might be further ready, Council now earmarked operating funds for principal and interest payments that would allow the Town to purchase at least a $5 million, “re-payable,” 30-year debenture from Infrastructure Ontario (at an estimated rate of 3.48%). Council would only approve this debt if we proceed with a proposed Community Centre; if we do not proceed in 2016, the funds will accumulate in a special reserve.

Draft Designs Soon: On a final note, the Architect and Construction Manager anticipate that they can present draft designs, including elevations and more accurate construction cost estimates, by March 21. Council wants to understand your thoughts and feelings on the proposed design and financing of a potential Community Centre in late-March and early-April before we make further determinations. We look forward to that informed discussion!

For more information about Pelham’s Operating Budget, please click here.

1.92% Tax Increase for Average Pelham Residential Property

We approved the 2015 Operating Budget during our Town Council meeting on February 17. It translates to an increase of 1.92% for the average residential Pelham property (assessed at $302,815).

While Council approved a minimal impact to you and other property tax-payers, we did increase the Town’s level of service and support the ongoing sustainability of our infrastructure.

First, the budget again required Town departments – including the Library – to hold at a zero budget increase while continuing to develop efficiencies and cost savings.

Second, we allowed only “uncontrollable” increases – like for WSIB (Workplace Safety & Insurance Board) coverage, Canada Pension Plan, or insurance premium – and a cost of living adjustment (COLA) equivalent for Staff. (I use the word “equivalent” because over the last 18 months the Town developed a Staff Performance Management system to foster innovation and exceptional service and to discourage mediocre work.)

Third, based on increased service requests from the community, Council approved adding two Equipment Operators to the Public Works department. These new, front-line staff will help the Town maintain our infrastructure and better serve the public. (Applications close March 13 at www.pelham.ca/career-opportunities.)

Finally, because of our ongoing commitment to improve Town infrastructure – like roads, sidewalks, and parks – we again added a 5% increase on the transfer to our 2015 capital budget.

As a result of these and other initiatives, Council approved a net budget increase of $336,887 (on a $10,085,969 net budget) or 3.46% BEFORE adjusting for real assessment growth.

Real assessment growth – from new businesses, new homes, or improvements to existing properties – was valued at $98,478 or 1.01%. (This growth has nothing to do with MPAC’s changes in market value assessment of existing properties.)

After accounting for that growth, the net effect on the tax levy will be $238,409 or an overall 2015 Operating Budget increase of 2.45%.

What does that mean for your pocket book, you ask?

Well, the average residential property value for 2015 is expected to be $302,815. If your home and property were assessed at that value, you would be paying an additional $26 – or 1.92% – for a total of $1,381 for the Pelham portion on your property tax bill.

From what we are seeing, Pelham will likely be the lowest or second lowest increase in Niagara again this year.

I will write more about your total property tax impact after Regional Council approves the 2015 rates and ratios later this spring.

For more information about Pelham’s Operating Budget, please check out www.pelham.ca/town-hall/budgets-reports.

Fiscally Responsible with Pelham’s Property Taxes

At our March 20 Regional Council meeting, we approved the 2014 Property Tax Rates and Tax Ratios. These rates and ratios apply to all property tax classes across the Region.

What does it mean for Pelham?

Reassessment Year:

As I wrote about last spring, 2013 was a “reassessment” year. That meant that the Municipal Property Assessment Corporation – the Provincial body that sets a value your home and property – re-evaluated and assessed all properties in the Province as of January 1, 2012. While this amount will be used as the value of your home in 2016, MPAC phases in any assessment increases evenly over a four-year period. The Town uses that changing assessment value when we calculate your property taxes each year.

Property Tax Calculation:

The amount of property tax you pay to the Town of Pelham, to the Region, and to the Province (for Education) is not only based on the Market Value Assessment of your property; we multiply your assessment by each of the tax rates and add them up for your total bill.

Despite your tax rate being set by each entity for their services, the Town collects the taxes and distributes it appropriately.

2011 to 2014:

When Town Council approved our 2014 Operating Budget in February, we anticipated that the Pelham portion of your property tax bill would increase by 1.5%. Now that the Region has set rates, we know that the combined property tax increase for an average property in Pelham will be 0.9%. We anticipate being the lowest or second lowest again this year.

But, what about over a longer period of time? Let’s compare this term of Council with the last term of Council, and with inflation.

The average increase of property taxes on your combined residential property tax bill for the last four years was 1.5% (total increase 6.0%); for the previous four years – from 2007 to 2010 – it was 1.8% (total increase 7.3%).

Lower than Inflation:

How do we measure whether that is “good” or not? Another important comparator would be inflation. Inflation for the last four-year period was 7.35% or an average of 1.79% per year.

I hope you too are pleased that our residential tax increases have been 1.35% below inflation for the last four years. Please see the chart for more information.

Pelham Council and I continue to direct staff to ensure that we only minimally impact you and other property tax-payers while we increase the level and quality of services to the Town.