01 - January 10, 2017 Special Meeting County Council Agenda Pkg.
ORDERS OF THE DAY
SPECIAL COUNCIL
FOR TUESDAY, JANUARY 10, 2017 2:00 P.M.
ORDER
1st Meeting Called to Order
2nd Disclosure of Pecuniary Interest and the General Nature Thereof
3rd Motion to
4th Presenting Petitions, Presentations and Delegations
DELEGATION:
2:00 P.M. Ed Ketchabaw, President, Elgin Federation of Agriculture with
presentation on Farm Assessments and Taxes (attached)
5th Reports of Council, Outside Boards and Staff (attached)
1)
2) PowerPoint presentation from Chief Administrative Officer and Director of
Fina
3) Report from Director of Financial Services Borrowing By-Law
4) Deputy Warden Rotation Schedule.
6 th Council Correspondence - Item for Consideration (attached)
1) Stephen Molnar, Chair, South Central Ontario Region Economic Development
Corporation (SCOR EDC) with update and request for partner support (reprinted
from November 22, 2016 Council Meeting).
Council Correpondence Item for Information (Consent Agenda) (attached)
1) Jeff Yurek, MPP, Elgin-Middlesex-London congratulating Warden Grant Jones
on being elected as Warden for 2017.
7th OTHER BUSINESS
1) Statements/Inquiries by Members
2) Notice of Motion
3) Matters of Urgency
8th Closed Meeting Item from Director of Human Resources (see separate agenda)
9th Motion to Rise and Report
10th Motion to Adopt Recommendations from the Committee Of The Whole
11th Consideration of By-Laws
12th ADJOURNMENT
CASUAL DRESS PERMITTED
NOTICE:
January 24, 2017 County Council Meeting - 9:00 a.m.
January 29 31, 2017 ROMA Conference - Sheraton Hotel, Toronto
February 14, 2017 County Council Meeting - 9:00 a.m.
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450 Sunset Drive, Suite 228, St. Thomas, ON N5R 5V1
Tel: 519-633-0114
President: Ed Ketchabaw
edandsheri@amtelecom.net
Secretary-Administrator
Roberta Gillard
office@elginfarmers.ca
January 3, 2017
Mark McDonald, CAO
County of Elgin
450 Sunset Drive
St. Thomas, ON
N5R 5V1
Dear Mr. McDonald
Please find attached, the Analysis on Elgin Municipal farm property tax assessment and the
Executive summary for the Cost of Community Services: case study of Municipality of
Bayham, Ontario, 2014. Please forward this information to the County Councillors for their
consideration. Also attached is the complete case study of Bayham for referencing.
If you have any questions, please contact Ed Ketchabaw at 519-866-3478 or email
edandsheri@amtelecom.net
The Board looks forward to discussing this with Council next week.
Sincerely,
Ed Ketchabaw
President,
Elgin Federation of Agriculture
:rag
_______________________________________________________________________________________________________
Farmers Working for Farmers
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FARM ASSESSMENTS AND
TAXES
Presented by Ben Le Fort, Senior Policy
Analyst, OFA
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Assessment Impacts on Property
Tax
The taxable assessment of farmland has increased by an
average of nearly 70% in Ontario.
If Municipal governments choose not to act, there will be a
shift of property tax Burden onto Farmland Property owners.
How much of an impact will depend on the increase in
Farmland values relative to other Properties (residential,
commercial, industrial).
The more disproportionate the increases in farmland values
are in your county, the more tax burden will be shifted to
farmland property owners.
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Impacts on Farm Property Tax:
Elgin County
In Elgin, Farmland CVA has increased by 68%
Residential values of Increased by 8%
Once New Assessments Phase in, increase in Farm Tax Burden
is as follows:
ĻğƩі hŅ ƷƚƷğƌ Ʒğǣ ŅƩƚƒ υ źƓĭƩĻğƭĻ źƓ CğƩƒ ğǣ
ŅğƩƒ .ǒƩķĻƓΫ
ЋЉЊЏ В͵Бі
ЋЉЊА ЊЉ͵Ўі υЋЎЉY
ЋЉЊБ ЊЊ͵Аі υЏЏЎY
ЋЉЊВ ЊЋ͵Бі υЊa
ЋЉЋЉ ЊЌ͵В υЊ͵Ўa
6
ƚƷğƌ Ѝ͵Њі υЌ͵Ѝa
Avoiding a Shift in Property Tax
Burden
To avoid a property tax shift onto farmland property owners
your local county governments will need to adjust the Farm
Property Tax Ratio below the current 25% of residential
taxes.
How much they need to adjust the tax ratio will depend on
the assessment changes in your county.
County governments have full authority to adjust the farm
tax ratio anywhere between 0%-25% of the local residential
tax rate each year.
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Farm Tax Ratio Required in Elgin
For Farm Property Owners to maintain the current proportion
of tax Burden (9.8% of total taxes) would require the
following adjustments to Tax Ratios over time.
2017: 0.22
2018: 0.19
2019: 0.18
2020: 0.16
Note this is not a tax break, farm property owners will still
be paying more taxes each year, they will simply be paying
the same proportion of taxes.
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Cost of Community Services:
Case Study of Municipality of Bayham, Ontario,
Canada
Ben Lefort, Farm Policy Research Group, Ontario Federation of Agriculture
7/17/2014
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Executive Summary ........................................................................................................ 3
Section 1: Introduction to Cost of Community Services Studies .................................... 11
Section 2: Economic Profile of Bayham ........................................................................ 24
Section 3: Discussion and Consideration of Relevant Issues for Adapting the COCS
Methodology in Ontario ................................................................................................. 27
Section 4: Discussion and Allocations of Specific Budget Items and Services ............. 37
Section 5: Results ......................................................................................................... 51
Section 6: Policy Implications, Special Circumstances, and Considerations for Future
COCS Studies in Ontario .............................................................................................. 63
References .................................................................................................................... 67
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Cost of Community Services Studies
Cost of Community Service (COCS) studies were developed by the American Farmland
allocate all municipal revenues and expenditures to these land use categories. COCS
a municipality in a particular year.
COCS studies have been completed in a variety of townships, hamlets, and rural
counties across the .U.S., with varying land use mixes. However, COCS studies have
traditionally been most effective in rural municipalities. Given this is the first full COCS
study completed in Ontario, it was important to ensure the municipality studied
represents a typical rural municipality in the province.
The Municipality of Bayham
The Municipality of Bayham, located on the eastern end of Elgin County, was
established in 1998 through the amalgamation of the former Township of Bayham, the
former village of Port Burwell and the former village of Vienna. Given the relatively
strong presence of agriculture, relatively weak presence of industrial business, and its
municipality in the province.
Study Objectives
Objective #1: Find the net fiscal impact of each land use in Bayham.
This study uses the following land use categories: residential, commercial/industrial,
and farm/forest. After allocating all municipal revenues and expenditures to the three
land use categories, ratios were calculated showing the servicing cost incurred by the
municipality for every dollar of revenue associated with a particular land use.
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U.S COCS studies are remarkably consistent and have revealed interesting and
intuitive facts about the fiscal impacts of different land uses on rural municipal budgets.
Given residents consume a much higher proportion of municipal services, the
residential land use category was revealed to typically contribute a fiscal net loss to
local government. To put it simply; based on the municipal services consumed and the
revenue to the municipality associated with the residential land use category, the
such as recreation facilities, health
and social services are subsidized by the other land use categories,
Commercial/Industrial and Farm/Forest, who do not consume nearly the same level of
municipal services compared to residential, and have been found to
Median results of 151 COCS studies completed in the U.S.
Median COCS ratios (expenses revenue)
$1.40
$1.20
$1.00
$0.80
$0.60
$0.40
$0.20
$-
Commercial/IndustrialResidentialFarm/Forest
Objective #2: Evaluate the appropriate revenue source for government services.
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By allocating municipal revenues and expenditures to each land use category, COCS
studies can illustrate which municipal services are most heavily related to property. This
report investigates the appropriateness of revenue sources, emphasizing where
property tax dollars are the best source of revenue, and where provincial funding is
needed.
Adapting this research to the Ontario context required background research on the
history of municipal finance in Ontario, with a primary focus on property taxes and
varying service delivery and funding agreements between the municipalities and the
province.
Two common principles with respect to the efficiency and fairness of revenue for
. A
taxation. A long list of economic literature has shown that using property value as a
method of determining property taxes (the method currently employed in Ontario) has a
2012).
sis, property tax revenue
should primarily be used to fund government services related to property such as critical
infrastructure like roads and bridges and other property related services such as
building inspection and planning and development. Services that are primarily used by
people should not be funded through property taxes .
the benefit principle, rural municipalities have not seen the direct benefit that urban
municipalities have experienced. This is because many lower-tier rural municipalities
were not spending on such programs in the first place, and are marginalized when the
Ontario Ministry of Finance states that it has increased support to municipalities by
uploading responsibilities. Furthermore, the Ontario Municipal Partnership Fund
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(OMPF) phase-down has caused significant financial strain for many rural municipalities
across the province.
Objective #3: Provide a blueprint for future COCS studies to be completed in Ontario
and across Canada
Consistent results from over 150 U.S COCS studies have provided enough data to
definitively state the fiscal impacts different land uses have on rural municipal budgets.
These studies have become widely adopted in rural areas partly because they are cost
effective compared to other studies, and can therefore be easily implemented in rural
municipalities which may have fewer resources to dedicate to research.
This report details the considerations and relevant policies that should be considered
when conducting a COCS study in Ontario. Section 6 suggests future research
considerations on conducting additional COCS case studies in Ontario.
Results and Conclusions
Objective #1: Find the net fiscal impact of each land use in Bayham.
After analyzing the data, consulting with municipal staff and the advisory committee, all
revenues and expenditures were allocated amongst the three land use categories. A
final ratio () was calculated to determine the net fiscal impact of each land
use. When all expenses and revenues were included the final ratios are as follows:
Residential ($8,091,195 / $7,491,294) 1.08
Commercial/Industrial ($385,431 / $1,039,883) 0.38
Farm/Forest ($521,744 / $1,039,883) 0.50
The above ratios indicate: the municipality spent $1.08 to service the residential
category for every dollar of revenue associated with the residential category; the
municipality spent $0.38 in servicing costs on the commercial/industrial land use
category for every dollar of revenue associated with the commercial/industrial land use
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category; and the municipality spent $0.50 servicing the farm/forest category for every
dollar of revenue associated with the farm/forest land use category.
In 2012, the municipality collected approximately twice as much revenue
associated with the farm/forest category than it spent on servicing farm/forest
lands. Farm/forest land uses, along with commercial/industrial uses, effectively
e have claimed that farm/forest uses are
subsidized by a tax rate that is equal to 25% of the residential rate, this study
demonstrates that the farm/forest category has more than paid its way.
Objective #2: Evaluate the appropriate revenue source for government services.
The two major findings in relation to the second objective were to the funding of
protection services (police costs in particular) and education through property taxation.
Ontario Provincial Police (OPP)
The Municipality of Bayham utilizes the Ontario Provincial Police (OPP) service to
provide local policing services. While OPP services certainly benefit property, the
primary users of OPP services are people. All residents throughout the province
demand access to police services. Speaking with OPP officials revealed that many calls
for OPP services in Bayham in 2012 related to highway accidents, most of which
involved people not residing in Bayham.
Not only is police servicing a benefit to all residents in the province, but policing
standards are provincially mandated. A service demanded by all residents throughout
the province, whose standards are mandated by the provincial government, should not
be financed by municipalities, whose primary ability to pay these costs is through
property tax.
Policing services represent a large proportion of rural, lower-tier municipal budgets. In
2012 Bayham spent $743,586 (10% of its operating budget) on OPP services.
(road network, water network, and sanitary network) in the municipality is currently
facing an annual funding deficit of $726,000. If the province uploaded local policing
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infrastructure expenditures, while increasing efficiency by linking the funding of services
to the primary service users.
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Education
The (partial) funding of education through property taxes faces the same fundamental
issues as discussed with respect to policing services. In fact, education has less direct
relationship with benefits to property than police services. The only land use that is a
potential user of education would be the residential land use category, given many
residents have children attending local schools. However, not all residents have children
attending public schools and the delivery of public education is administered at the
provincial, not municipal, level of government. The educational portion of property taxes
had no correlation with providing school services, particularly for the
Commercial/Industrial and Farm/Forest land use categories.
In 2012, the municipality collected $1,367,221 in educational property taxes. If the
province fully uploaded the funding responsibility of education, these funds could be
rebated to property owners or redirected to infrastructure projects or other government
services related to servicing property.
Objective #3: Provide a blueprint for future COCS studies to be completed in Ontario
and across Canada
The final report details the relevant procedures and information required to conduct a
COCS study in Ontario.
necessary to conduct any COCS study, instructions of how to use and interpret COCS
study results, the limitations of COCS studies, and a detailed literature review of past
COCS studies.
Section 2 presents an economic profile of The Municipality of Bayham, providing
context to the specific fiscal and economic circumstances of the municipality. Every
municipality faces unique challenges in the delivery of government services. A better
understanding of the circumstances of the municipality in which a COCS study is
conducted will provide important contextual information for both the researcher and the
reader.
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Section 3 discusses policy issues relevant to adapting the COCS methodology in
Ontario, including how they impact municipal service delivery. Section 4 details the
allocation decisions for all municipal revenue and expenditure items, including all
relevant municipal documents and reports as well as correspondence with municipal
staff, which helped decide the allocations. Section 5 details the results, while Section 6
discusses potential policy impacts, and offers advice on future Ontario COCS studies.
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The American Farmland Trust developed the first Cost of Community Service (COCS)
studies specifically measure the net fiscal impact of existing municipal land uses. COCS
-
exhibits the total revenues and expenses associated with each type of land use. The
COCS ratio is the standard measure of the net fiscal impact a particular land use has on
a municipal government for one year.
The COCS ratio is derived by calculating the total dollar amount of municipal services
received by a particular land use and dividing by the total revenue the municipality
collects associated with that land use. A ratio greater than one suggests that the land
use receives more than one dollar of municipal services for every dollar of revenue the
municipality collects associated with that land use,. Put simply, if a particular land use
has a ratio greater than one, that land use has a negative net-
budget. Conversely, a COCS ratio less than one would imply a particular land use
receives less in municipal services than it contributes in revenue to municipal budgets.
A COCS ratio of less than one implies a particular land use has a positive net-impact on
1), then one dollar and twenty cents worth of municipal services are received by the
residential category for every dollar of revenue the municipality collects from the
residential category.
land uses; commercial, industrial, residential and working land (farm and forest). In rural
municipalities, with often little commercial and industrial activity, these land uses are
combined into one category (commercial/industrial).
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Section 1.1 How to conduct a COCS study
Every COCS study has four essential steps;
1. Define land use categories
2. Collect data on local revenue and expenditures
3. Allocate revenue and expenditures to each defined land use category
4. Analyze the data and calculate an expense/revenue ratio for each defined land
use category.
Step1: Define land use categories:
Farmland Trust.
The American Farmland Trust has completed nearly 200 COSC studies over the past
20 years. These studies have been adopted as a helpful planning tool in rural
municipalities. Therefore this study uses the COCS handbook as a guide for basic
parameters and definitions, while making some changes along the way to adapt the
Given the similarities of land uses in the U.S and in Canada, this study employed the
following COCS handbook land use definitions:
Residential
All single and multifamily residences and apartment buildings, including farmhouses,
residences attached to other kinds of businesses and rental units; all town owned
property used for active recreation or social functions.
Commercial/Industrial
All privately owned buildings and land associated with business purposes, the
manufacturing of goods or the provision of services, excluding agricultural and forestry
purposes.
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Farm/Forest
All privately owned land and buildings associated with farming and forestry; i.e., land
classified under the farmland tax code (FT) and the managed forest tax code (TT).
It is important to note that farmhouses are included in the residential category. As a
s only to the productive, working land and
outbuildings. Because farmhouses in Ontario are placed in the residential property
assessment class and pay the full residential tax rate, they are included in the
residential category for this study. Also of note, the commercial and industrial
classifications were combined into one category. This is common COCS procedure
when studying small, rural communities, like the Municipality of Baynham, with limited
commercial and industrial assessment.
Steps 2, 3 & 4: Collect data on local revenue and expenditures, Analyze the data,
Allocate revenue and expenditures to land use categories, and calculate COCS
ratios. When considering the ideal municipality to adapt the COCS methodology in
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Ontario for the first time, the fir
which was willing to participate in the study. Fortunately, the Municipality of Bayham,
located in the eastern portion of Elgin County, agreed to participate in the study. A full
demographic and economic profile of Bayham is included in Section 2. Bayham has
limited commercial and industrial assessment and is therefore primarily reliant on
residential property taxation and user fees for its financing. Considering its assessment
patterns and its low population density, The Municipality of Bayham fits the bill as a
meeting, the COCS methodology was explained, and each department head was given
specific requests for data. Municipal staff was given the opportunity to ask questions
the
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To date only one complete COCS study has been completed in Canada. It was conducted in Red Deer,
Alberta in 2006 by Guy Greenaway and Stephanie Sanders.
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department heads knew who used their services. The guidance of municipal department
heads was the driving force in determining proportional usage of municipal services by
each land use.
The initial group meeting with the municipal department heads was followed up with
phone calls and e-mails to each department head. The department heads provided
detailed year-end reports and suggested allocations based on their knowledge and
expertise. Allocations were determined using municipal data and/or municipal staff
Section 1.2: Important considerations for COCS studies
Fallback percentages
In certain circumstances, it is impossible or inappropriate to allocate particular budget
items to a particular land use category. In these circumstances the COCS methodology
Handbook provides a definition of fallback percentages, and offers guidance of when
and how they should be applied. Fallback percentages are specifically designed to
avoid impacting the final COCS ratios.
The use of fallback percentages allow all expenditures and revenues to be included in
the analysis, even those that cannot be allocated specifically to land use categories. To
illustrate the importance of fallback percentages, consider the impact on the analysis if
expenditure side data was missing data but all revenue data was included, the missing
expenditure data would change the final ratios and potentially skew the results.
Fallback percentages play a critical role in ensuring reliable results, but effort should be
made to determine actual percentages whenever possible. Credit must be given to the
municipal staff of Bayham, the information they provided minimized the need to use
fallback percentages to only a few areas where it was inappropriate or impossible to
allocate by land use. As a result, over 86% of revenues and 91% of expenditures were
allocated using means other than fallback percentages.
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A common COCS procedure is to define fallback percentages as the proportional
amount of property taxes paid by each land use category. In 2012, the municipality
received $3,045,040 in direct lower-tier property tax revenue. Of that, $2,485,317
(81.62%) came from the residential category, $327,316 (10.75%) came from the
commercial/industrial category, and $232,407 (7.63%) came from the farm/forest
category. These relative contributions to the total lower-tier tax levy determined the
fallback percentages used. For example, if a $100 budget expense was left unallocated
among the land use categories, the total expense would be allocated as follows; $81.62
to the residential category, $10.75 to the commercial/industrial category, and $7.63 to
the farm/forest category.
Figure 1: Fallback Percentages
Land Use CategoryLower Tier Taxes Paid
Fallback Allocation
Residential $2,485,317 81.62%
Commercial/Industrial $327,316 10.75%
Farm/Forest $232,407 7.63%
Total$3,045,040100%
COCS studies allocate service costs based on use not value received
services provided as opposed to the value those services provided to each land use
and the collective society. Put in relatable terms, the value of various municipal
government services may be greater than, equal to, or less than the costs incurred by
the municipality to provide those services. The objective of a COCS study is to
determine municipal service usage by each land use category and allocate expenses
and revenues associated with that service to each land use based on its proportional
service usage.
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Section 1.3: Limitations of COCS studies
Although COCS studies have been proven to be an exceptionally useful and reliable
tool in linking a mun
type of research has limitations in terms of its interpretations and implications. Due
consideration must be taken when interpreting the results of any COCS study.
Predictability
As
discussion outlining any unusual or extenuating circumstances that may have impacted
the results must be included in any COCS study. Misinterpretation of COCS results can
occur without this type of clarification. This further highlights the crucial role played by
municipal staff when conducting a COCS study. They can best judge what events
occurred during the study period that may impact the allocation of
revenues/expenditures for their department, and whether those events represent typical
or exceptional circumstances in a given year.
Externalities
Municipal services are targeted towards property owners and residents of the
municipality. However, other people benefit from those municipal services. Similarly, not
all municipal revenues are directly raised from property owners and residents, an
example is, provincial funding transfers the municipality received.
As explained in Section 1.1, COCS studies allocate all municipal revenues and
expenditures to specific land use categories. This is valid because property owners and
residents are the intended recipients of municipal services. However, unintended
recipients and third-party contributors, who are neither property owners in the
municipality nor residents living in the municipality, remain external to the COCS
categories.
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Externalities are defined as effects, either positive or negative, on parties not directly
considered in allocative outcomes. These are also sometimes referred to as third-party
effects. Calculating the cost of some externalities, such as the negative effects of
pollution from municipal vehicles, proves difficult or impossible. In the case of COCS
studies, the externalities of primary interest are measurable, but remain as third-party
effects because the unintended recipients and third-party contributors are not assigned
a COCS category.
Grouping unintended recipients and third-party contributors into a COCS category
would internalize these third-party effects. Unfortunately defining such a new category
would prove difficult. Allocating revenues and expenditures to this new category would
also prove challenging. Interpreting this
impossible in the absence of a clear category definition and a sound allocative rationale.
Although allocating revenues and expenditures to unintended recipients and third-party
contributors is beyond the scope of COCS studies, including this study, this report
discusses some third-party effects. Third-party effects are significant because third-
party revenues and expenditures remain assigned to the existing land use categories.
For example, the cost of municipal services related to people was allocated to the
residential land use category even though some people using those municipal services
reside outside of the municipality.
Marginal impacts
COCS studies should not be used to argue the impact of marginal changes in land use.
For example, if a COCS study finds that the residential ratio for the residential category
is 1.85 (to 1), this ratio does not predict the fiscal net-loss a municipality will incur from
the development of an additional residential unit. COCS ratios look at the cumulative
average of an entire land use and therefore only general observations about a particular
land use as a whole can be made. Using the earlier example of developing one
additional housing unit, the net impact that house will have on municipal budget
depends on a number of factors, and if that house is built in a densely populated area
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and can be served by existing municipal service capacities, it may be expenditure
neutral.
fails. The Brighton Study, employed similar methodology as COCS studies, however,
the authors used the results to make the unsubstantiated claim that incremental
residential development would be a net drain to rural municipalities.
Section 1.4: Study objectives
Objective #1: Find the net fiscal impact of each land use in Bayham.
Although there has been only one COCS study in Canada, over 150 COCS studies
have been completed in the U.S. Those studies have been completed in a variety of
townships, hamlets, and rural counties across the country, with varying land use mixes
and service delivery responsibilities. With remarkably consistent results, U.S. studies
have revealed interesting and intuitive facts about the fiscal impacts of different land
uses on rural municipal budgets. One intuitive result being that given residents consume
a much higher proportion of municipal services, the residential land use category was
revealed to typically contribute a fiscal net loss to local government. To put it simply;
based on the municipal services consumed and the revenue to the municipality
associated with the residential land use category, the residential land use category does
The first objective of this study was to uncover the net fiscal impact that the three land
use categories had on the Municipality of Bayham in 2012.
Objective #2: Evaluate the appropriate revenue source for government services.
municipalities, but to also to evaluate the appropriate source of funding for government
services.
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Adapting this research to the Ontario context required background research on the
history of municipal finance in Ontario, with a primary focus on property taxes and
varying service delivery and funding agreements between the municipalities and the
province.
The most efficient and fair source of revenue for any government services should be
primary recourse for raising funds for service delivery is through property taxation. A
long list of economic literature has shown that using property value as a method of
determining property taxes (the method currently employed in Ontario) has a weak
best suited to fund
should primarily be used to fund government services related to property such as critical
infrastructure like roads and bridges and other property related services such as
building inspection and planning and development. Services that are primarily used by
people should not be funded through property taxes.
The second objective of this study was to evaluate how closely the funding for
governmental services meets the benefit or use principle and to identify key services
that warrant major changes in their source of funding.
Objective #3: Provide a blueprint for future Ontario COCS studies
Consistent results from over 150 U.S studies have provided enough data to definitively
state the fiscal impacts different land uses have on rural municipal budgets.
These studies have become widely adopted in rural areas partly because they are cost
effective compared to other studies, and can therefore be easily implemented in rural
municipalities which may have fewer resources to dedicate to research.
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Section 6.1 details the considerations and relevant policies that should be considered
when conducting a COCS study in Ontario, and suggests future research
considerations on conducting additional COCS case studies in Ontario.
Section 1.5: Literature review of past COCS studies
U.S. COCS studies
In the USA, COCS studies are widely used to evaluate the net-impact various land uses
have on municipal and county budgets. Since initially developing the COCS study
concept, the American Farmland Trust has conducted more than 150 COCS studies
throughout the United States (American Farmland Trust, 2010). The median results of
these COCS studies have shown a remarkably consistent result; the residential
category, due to its high usage of services is a net loss for rural municipal budgets,
while both the farm/forest and commercial/industrial categories contribute net gains to
municipal budgets. Below are the median results of the 151 COCS studies conducted
by the American Farmland Trust as recently as 2010.
2
Figure 2: Median results of 151 COCS studies completed in the U.S
Median COCS Ratios
(expenses revenue)
$1.20
$1.00
$0.80
$0.60
$0.40
$0.20
$-
Commerical/IndustrialResidentialFarm/Forest
2
Data obtained from American Farmland Trust
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Over the years, the reliability and popularity of COCS studies have grown. COCS
studies have been commonly conducted by academic institutions, government
agencies, and third party research institutions. Kotchen and Schulte (2009) conducted a
statistical analysis of all of the COCS studies completed at that time. They used
regression analysis to determine the impact that various variables (population density,
who conducted the survey, what level of local government was included in a study, etc.)
had on final COCS ratios. Kotchen and Schulte found the level of governance included
in COCS studies (local municipalities, or county governments) had little impact on
COCS ratios. This finding is of interest because, along with the Municipality of Bayham,
which is a lower-tier municipality, the upper-tier municipality (County) of Elgin also
provides services to the residents of Bayham but is not included in this case study. The
results found by Kotchen and Schulte indicate that although different levels of
government provide different services, the upper-tier municipality of Elgin, if included in
the study, may only result in only a minor impact on final COCS ratios.
The most predictable result they found was that including education had a positive and
highly significant impact on residential ratios. This is because all properties pay a
portion of the educational tax, but only the residential land use category uses the
service. On average, including education had a 15% increase on residential ratios.
Kotchen and Schulte also found consistent and statistically significant results pertaining
e land
land use appeared to not receive a proportional increase in expendit
finding, as it mirrors the dramatic increases in taxable farmland assessment released by
MPAC in 2012, and a corresponding absence of increased service levels to farms.
These assessments and the accompanying increase in property tax burden on Ontario
farmland (assuming no action is taken), will have a significant impact on any future
COCS study conducted in Ontario and will be discussed in detail in Section 3.
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The final relevant finding by Kotchen and Schulte (2009), as it pertains to this study,
was the statistically significant differences in COCS ratios depending on which
organization was sponsoring the study. It was found that studies sponsored by the
American Farmland Trust found lower COCS ratios for the residential land use category
compared to studies sponsored by local governments. This suggests that sponsors
have made conservative allocations even though these allocations are counter to their
farmland; they hold the position that residential development in rural areas has negative
fiscal impacts on rural municipalities. The fact that COCS studies sponsored by the
American Farmland Trust tended to find lower COCS ratios for the residential land use
category, compared to studies sponsored by local government, is contrary to what one
might expect. The likely reason for this result is that COCS studies rely heavily on the
guidance and recommendations of municipal staff, and do not rely heavily on any
potential bias of the researcher. This finding speaks directly to the credibility of COCS
studies, and is of particular relevance for this study.
This study was sponsored by the Ontario Federation of Agriculture (OFA). The OFA
worked to ensure this study meets the highest academic standards and objectivity.
While the research was sponsored by the OFA, the development of all methodology and
rd
this report itself was reviewed by a 3 party advisory committee. The advisory
e research results were accurate and unbiased.
The advisory committee members were:
Wayne Caldwell, who holds a PhD in Rural Studies and is a professor in Rural Planning
at the University of Guelph;
Arthur Churchyard, who is a land use planner with Huron County; and
Barry Sinclair, who is currently a financial advisor for Ontario farmers and is formerly
Manager of Property Tax and Farm Finance within the Policy Division of the Ontario
Ministry of Agriculture, Food and Rural Affairs (OMAFRA).
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Canadian COCS studies
While COCS studies are a well-established research tool in the United States, only one
full COCS study has been completed in Canada. Greenway and Sanders (2006)
authored the study, which wa
results were in line with the median results found in the COCS studies in the United
Sates. The Commercial/Industrial and farm/forest land use categories pay more in
revenue than they consumed in county services, while the residential land use category
consumed more in services than it paid in revenue. This is especially true when
educational costs are included (the residential ratio rises from 1.66:1 to 1.81:1).
In 1988, the Ontario Ministry of Municipa
OCS study seeks to discover, whether different land uses
property was estimated to contribute a net benefit of $191 while each farm (land and
residence) contributed a combined $79 net benefit. Although the Brighton report
mistook average net benefits for marginal net benefits when drawing its conclusions, its
average net benefit observations were generally consistent with those of the COCS
studies.
Given the changes to the property tax system and municipal service responsibilities, an
updated study was warranted to determine whether the Brighton township study
findings are still valid today.
Churchyard and Caldwell (2011) conducted a preliminary COCS study in Cavan-
Monaghan, Ontario. The report thoroughly reviewed the COCS literature and
considered the requirements to conduct a COCS study in Ontario. Churchyard and
Caldwell identified several considerations if conducting a COCS study in Ontario:
farmland taxation, the Ontario Municipal Partnership Fund (OMPF), population density
and median home values, whether to count farm residences in the residential category,
23
31
whether to include education in the analysis, whether to include county revenues and
services or alternatively lower tier municipal revenues and services, whether to conduct
interviews or attribute expenses and revenue using other means. The work completed,
and questions posed by Churchyard and Caldwell acted as a blue print for the COCS
study of Bayham.
3¤¢³¨® ΑȀ %¢®®¬¨¢ 0±®¥¨«¤ ®¥ " ¸§ ¬
population in 2006 was 6,727, up 5.5% from 2001 and representing 7.9% of the
population in Elgin County. According to projections from the Ontario Ministry of
Finance, Bayham is expected to see an annual population growth of approximately
1.1% over the next seven years. This is will result in a projected population of
approximately 8,200 residents by the year 2021.
In 2006, 24.2% of Bayham residents were under the age of 15, which is a high
proportion compared to both the county (19.8%) and provincial (18.2%) averages.
Bayham also has a comparatively low proportion of senior citizens. In 2006 less than
11% of Bayham residents were over the age of 65, compared to an average of 14% for
the County and 13.6% for the Province. In 2006, less than 50% Bayham residents were
between the ages of 25-64, compared to 53% for the County and 55% for the Province.
Future population demographics in Elgin County are expected to follow the provincial
trend; a high proportion of seniors, and a lower proportion of youths. By 2021, the
population percentage 15 and under is expected to decline, while the population
percentage of residents aged 65 and older is expected to rise.
Bayham has the lowest levels of educational attainment throughout Elgin county. In
2006 46.5% of Bayham residents had not received a high school diploma, while only
3.9% had rece-
Province.
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3
Figure 3: Level of educational attainment of people 15 years and older in Bayham
Highest Educational Attainment
3.90%
0.50%
15.20%
No High School
Highschool
Trade Certificate
46.50%
9.00%
College
University below Bachelor level
University Degree
24.70%
The Municipality of Bayham has little commercial and Industrial activity. For the fiscal
year 2012 the total CVA assessed value of all commercial and Industrial properties in
Bayham totaled slightly over $31.5 million, which is represents approximately 5.5% of
the total CVA assessment of all properties in the municipality.
Given the lack of commercial and industrial activity and low levels of educational
Municipality of Bayham lag behind County and provincial averages. In 2006, the
unemployment rate in Bayham was 7.1%, the highest of any municipality throughout the
County. The unemployment rate for the County was 5.5% and 6.4% for the province.
However, the unemployment rate in Bayham is trending downwards and fell over 3%
from its high of 10.2% in 1996. Bayham also has a relatively low labor force participation
rate (64.8% in 2006) compared to the County (67.9%) and the Province (67.1%). The
primary industries (including agriculture) are the main source of employment in Bayham.
3
Data obtained from 2006 Census, Statistics Canada
25
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4
Figure 4: Unemployment rate (%) over time
11%
10%
9%
8%
7%
6%
1996
5%
2006
4%
3%
2%
1%
0%
ProvinceCountyBayham
The average household income in Bayham was $46,069 in 2006, approximately 8%
below the County average of $49,771. Despite these income numbers, Bayham has
5
among the lowest proportions of low income residents in the County. In 2006, only
4.9% of Bayham residents were considered to have low income. This is a relatively
small percentage considering the county average of low income residents was 6.2%
and provincially was 11.2%.
Figure 5: Comparison of low income residence as % of total population in 2006
Proportion of Low Income Residents
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
ProvinceCountyBayham
4
Data obtained from 1996 and 2006 Census, Statistics Canada
5
Statistics Canada defines
is likely to spend 20 percentage points more of its income on food, shelter and clothing than the average
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34
Despite relatively low levels of education, commercial activity, and employment, the
Municipality of Bayham is fiscally sound. Driven by large farm and residential
assessment bases, combined with additional revenues from grants and local user fees,
the municipality collected $8.2M in revenue, excluding education taxes, in 2012. With
the efficient delivery of municipal services, Bayham enjoyed a surplus of $548,145 in
2012.
3¤¢³¨® ΒȀ !£ ¯³¨¦ ³§¤ #/#3 -¤³§®£®«®¦¸ ¥®± /³ ±¨®
Section 3.1: Farm assessment and taxation
Farm Property Class Tax Rate Program
Under the rebate program, eligible farmers would pay the full residential tax rate to
municipalities on all of their farmlands and farm buildings. They would then receive a
75% property tax rebate from the province. The rebate program was problematic on a
number of levels. It was complex and required farmers to fill out additional paper work to
receive the rebate. It also restricted the cash flow and liquidity of farmers, and it placed
farmers in the position of essentially acting
province to the municipalities, which is not a desirable position for any business owner.
The rebate program was always intended to be a temporary program until permanent
property tax reforms could be implemented, which finally came in 1998. In January 1998
the rebate program was replaced with the Farm Property Class Tax Rate Program.
Under the new tax rate program, eligible farmers may apply for the Farm Property Class
Tax Rate Program and based on the legislation pay no more than 25% of the local
residential tax rate on their farmland and farm buildings. The farm residence plus one
acre remains in the Residential Property Class and continues to be taxed at the full
residential tax rate. The farm tax ratio of 25% is the maximum tax ratio that can be
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35
applied to eligible farmland, and can be adjusted downwards to avoid excessive tax
burden shifting to farmland. The authority to alter the farm tax rate is given solely to
upper/single tier municipalities. Although, an upper tier municipality may delegate its
authority to its lower tiers.
To be eligible under the Farm Property Class Tax Rate Program, farmer-owned and
rental farms must meet specific requirements. One requirement for entry into the
program is for the farmland to be be farmed by a farmer with a Farm Business
Registration (FBR) number. To obtain and annually renew an FBR number, the farmer
must have reported a minimum of $7,000 in gross farm income to the Canadian
Revenue Agency (CRA) in the previous taxation year.. FBR numbers are issued by the
government agency Agricorp. Payment of the FBR fee, currently set at $195, also
makes a farmer eligible to apply to join the Ontario Federation of Agriculture (OFA) or
another accredited farm organization. Farmers not eligible to obtain an FBR, such as
beginning farmers, may apply directly to the Farm Property Class Tax Rate Program if
they meet the eligibility criteria for an FBR exemption. The Ontario Ministry of
Agriculture, Food and Rural Affairs (OMAFRA) administers the Farm Property Class
Tax Rate Program. After the farmland owner has satisfied all program requirements,
OMAFRA notifies the Municipal Property Assessment Corporation (MPAC) that portion
of the property is to be identified and taxed at the Farm Property Class tax rate.
2012 Farm Assessments
The Municipal Property Assessment Corporation (MPAC) assesses all Ontario
properties on a four-
Act and its regulations. The most recent property assessments conducted by MPAC,
with a valuation date of January 1, 2012, resulted in farmland valuation increases
outpacing the increases in the residential class in most municipalities. The primary
concern is not necessarily that the taxable farmland values have dramatically increased,
but rather that the increase in taxable farmland values have dramatically outpaced
increases in residential assessments. The farm tax rate is a ratio (no more than 25%) of
the residential tax rate. Assuming no downward adjustment of the farm tax ratio, the
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36
disproportional increase in taxable farmland values will result in a shift in the property
tax burden onto Ontario farmers, over a four year period (2013-2016).
The current method MPAC uses to value farmland for property tax assessment
,551
qualified sales over a five-year period the scarcity of data poses a serious challenge to
five qualified farm to farmer sales occurred
within 108 of the 228 geographical bands MPAC uses to conduct its farm valuation
assessment.
MPAC has six classes it uses to asses farmland based on its productivity, with class
one being the most productive and class six being the least productive. Figure 6
illustrates the massive increases in farmland valuation throughout the province.
Figure 6: Average Ontario farmland assessment increase by productivity class
Productivity2008 value per acre2012 value per acre %Increase
Class
1 $4,051 $7,323 81%
2 $3,429 $6,665 94%
3 $2,639 $5,425 106%
4 $1,591 $2,546 60%
5 $1,105 $2,003 81%
6 $421 $1,008 139%
The recent substantial increases in farmland valuation for tax purposes had no impact
on the final COCS ratios in this study. All data used for this analysis are for the 2012
before the phase-in of increased assessments beginning in 2013. However, since no
fundamental change in the services provided to farmland in Bayham has occurred,
these increased assessments will lead to farmland paying increased tax revenue in any
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37
COCS study that uses more recent fiscal data. As mentioned in Section 1.5, Kotchen
and Schulte (2009) conducted a statistical analysis of all COCS studies completed to
particular land use, the land use appeared to not receive a proportional increase in
Based on the results found
by Kotchen and Schulte, the increase in property tax burden to the Ontario farmland
would imply that the COCS ratio for the farm/forest category would fall. In other words,
an updated COCS study in 2013 would likely conclude that the farm/forest category
contributed an even greater fiscal net-benefit to the Municipality of Bayham than in
2012.
Section 3.2: Municipal Expenditures
The appropriate function of property taxand fiscal challenges facing rural Ontario
It has been argued that the appropriate use for revenue generated from property
taxation should fund services related to that property type (AMCTO, 2009). These
with property. Classic examples of these services include water distribution,
sanitation/sewer services, and solid waste and recycling services. On the other end of
These people services include; social services, health
services, public transit, parks, recreational, and cultural facilities. No connection exists
between these services and local properties. Another category of municipal services
that are a benefit to, and are used by, both people and property include protection
services (police, fire), transportation services (roads and bridges) and planning and
development.
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38
The many services that are used jointly by people and property, including protection
services (police and fire), transportation services (roads and bridges), and planning and
development are in high demand. These items also tend to represent the majority of
expenditures in lower tier, rural municipalities. In 2012, Bayham spent approximately
60% of their total operating expenses on these three areas of service. Greater support
from the province in funding these services would significantly alleviate the financial
burden being faced by rural municipalities.
Police services are a prime example of a service that certainly warrants provincial
funding, if not a complete cost upload from the municipality to the province. Police
services benefit both property and people, therefore, placing the financial burden of
these costs with municipalities, whose primary source to generate revenue is property
taxes, is not appropriate.
Furthermore, police standards and practices are determined by the province. These
provincially controlled police services represent a large proportion of rural municipal
budgets. In 2012, Bayham spent $743,586 (10% of total expenditures) on contracted
OPP services. These funds could be put to infrastructural items that are currently
underfunded.
In December 2013, Bayham released its Asset Management Plan. The Asset
Management plan revealed the current working condition and funding of infrastructure in
the municipality are inconsistent. Overall, the municipality received a D+. The two major
determinants of this grade came from the funding (compared to required funding for
ongoing support of infrastructure) and current condition (compared to minimum
standards).
The infrastructural services examined in this report included the road network, bridges
and culverts, the water network, and the sanitary network. Focusing on the funding of
these infrastructural services, the results are highly variable between asset classes. It
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39
was determined that the municipality faces an overall annual funding deficit of
$726,000, in order to adequately maintain these assets.
he
annual funding for various infrastructural services matches up with required annual
2012 operating expenses was its road network, which also happens to be the only
infrastructural item that meets average minimum funding requirements. In fact, it was
greater than the minimum funding required to maintain them. Bridges and culverts, on
the other hand, were determined to be in an average annual funding deficit of $154,000.
However, if bridges and culverts are considered part of the total road network, the
annual deficit would drop to $102,000 (when the $52,000 annual surplus in road funding
is applied).
road and bridges network is currently at 80% of its required funding. These
infrastructure items are funded through a combination of local property tax revenue and
federal grant revenue. The presence of functional roads in Canadian municipalities is a
benefit to and is used by citizens locally, throughout the province, and throughout the
country. Increased annual grants/transfers from the province to municipalities who face
funding challenges related to their network of roads and bridges could be an excellent
way to address the inequities between rural and urban municipalities, which have
occurred due to the recent changes to the Ontario Municipal Partnership Fund (OMPF)
and provincial uploading of social services.
The greater infrastructural funding challenge Bayham faces is associated with its water
and sanitary networks. It was determined that the water distribution/transmission
networks in the municipality face an average annual funding deficit of $240,000, while
nnual minimum funding requirements. The
services (road, water, and sanitary networks).
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For Bayham to bring its water and sanitary networks up to minimum funding
requirements would require a 60% increase in rates for sanitary services and 44%
increase in rates for water services over the next 10 years. Assuming no additional
transfers from the province exist, any shortfall would have to be financed through the
general tax levy or reserve funds. However, an uploading of police costs ($743,586 in
entire shortfall in annual funding of infrastructure ($726,000).
Figure 7: nfrastructure funding: Average annual surplus/deficit
$600,000
$500,000
$400,000
$300,000
$200,000
Funding Surplus
$100,000
Funding Deficit
Funding Avaliable
$0
-$100,000
RoadBridges &WaterSanitary
-$200,000
NetworkCulvertsNetworkNetwork
-$300,000
-$400,000
Total annual deficit: $726,000
People services
Compared to municipalities in other provinces, municipalities in Ontario have
traditionally spent a greater proportion of their total budgets on people services
as health, social, housing and recreational services.
The Ontario government has committed to uploading a large proportion of these
expenditures. According to the province, this should result in an average net gain for
municipal budgets in Ontario. However, since the vast majority of these service
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41
expenditures are concentrated in urban areas, rural municipalities will see little to no
direct financial gain from these provincial uploads. It is appropriate for the province to
strengthen the link between the broad scope of people services with the broader scope
of provincial revenue sources. However, further support to rural municipalities in this
direction is imperative.
Section 3.3: Municipal revenue
Education portion of property tax
The education portion of property taxes presents a difficulty when considering whether
or not to include in a COCS study. In past COCS studies completed in the U.S,
education was included without a problem as the revenue collected and the
expenditures related to education are often the responsibility of local municipalities.
In Ontario educational services have been uploaded to the province, while a proportion
of funding for education comes from local property taxes. This presents difficulties as
one of the revenue sources for education in Ontario (local property taxation) is
disconnected from where the usage of educational services is coming from. This not
only presents a challenge in allocating educational revenues and expenditures in this
study, but also illustrates that property taxation is not an appropriate source of funding
Greenaway and Sanders (2006) offered insight on how educational revenues and
expenditures can be allocated in a COCS study adapted for Canadian circumstances.
Their argument for including education was based on three principles. The first is that
the usage of educational services is directly linked to changes in land use. The larger
the residential class, the greater the need for schools in a municipality. The second is
that revenues are in fact, based on property tax with different educational tax rates for
different properties; this is true both in Alberta and Ontario. Finally, the municipality is
responsible to collect tax revenue destined for education. Greenaway and Sanders
acknowledge the argument for excluding education from the analysis all together and
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42
therefore they generated two separate ratios for each property class, one including
education and the other excluding education. Since the treatment of education, as it
relates to municipalities, is broadly similar in Alberta and Ontario and given the study
authored by Greenway and Sanders is the sole Canadian COCS study ever completed
to date, this Bayham study adopts the same methodology for allocating revenue and
expenditure as it relates to education.
Allocating revenue towards education is straight forward and simple. Given each land
use pays a specified amount of property tax towards education, the amount each class
paid in education taxes was allocated as revenue for that land use category towards
education.
of property taxes paid by all classes was allocated as an educational expense to the
Sources of municipal revenue
for Bayham, and the average for all municipalities in Ontario, B.C, Alberta and Quebec.
Bayham generated a larger proportion of its total revenue through property taxes and
user fees than the average municipality in Ontario. Bayham also generated a larger
proportion of its revenue from other municipalities, which, in 2012, came primarily from
providing road related services to neighboring municipalities.
Considering the proportional contributions of property taxes, user fees, and revenue
collected from other municipalities, Bayham is much less reliant on outside funding
sources compared to the average municipality in Ontario. Bayham generated 72.3% of
municipality in Ontario.
amount of revenue received through
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43
came from federal grants, primarily for maintenance of paved roads. Federal transfers
accounted for 5.1% of total revenue for the average municipality in Ontario.
In 2012, Bayham received $1,412,356 (17.1% of its total revenues) from provincial
transfers. The bulk of these transfers came through the Ontario Municipal Partnership
Fund (OMPF). Given the OMPF transfer payment phase-down (discussed in detail in
Section 4), Bayham may be forced to rely more heavily on property taxes and user fees
in future years.
6
Figure 8: Municipal revenue by source*
Revenue source (%
BayhamOntarioB.CAlbertaQuebec
of total)
Property Taxes &
40.8% 38.2% 46.0% 39.4% 64.1%
Payment-In-Lieu
User fees 25.4% 18.2% 31.1% 21.1% 13.2%
Federal transfers 6.4% 5.1% 2.3% 2.3% 0**
Provincial transfers 17.1% 20.8% 6.3% 18.2% 15.7%
Revenue from other
municipalities 6.1% 1.8% 1.3% 0.5% 0
Other sources 4.2% 15.9% 13.0% 21.5% 7.0%
Total100%100%100%100%100%
*Data for British Columbia, Ontario, Alberta from 2010, Quebec Data from 2009,
Bayham Data from 2012
**All federal transfers to Quebec must pass through the provincial government
6
Data obtained from Statistics Canada
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3¤¢³¨® ΓȀ $¨²¢´²²¨® £ !««®¢ ³¨®² ®¥ 3¯¤¢¨¥¨¢ "´£¦¤³ )³¤¬² £
3¤±µ¨¢¤²
Section 4.1: Ontario Municipal Partnership Fund (OMPF) grants
In 2012, the municipality received $1,099,600 in funding through the Ontario Municipal
Partnership Fund (OMPF). The OMPF serves as the primary transfer of funds from the
Province to the municipalities. The OMPF had four major grant components; the Social
Programs Grant, the Equalization Grant, the Northern and Rural Communities Grant
and the Police Services Grant. Of these four grants, the municipality received funding
from all but the Social Programs Grant. The Social Programs Grant contributes funding
to municipalities who spend a larger proportion of their budget on social programs. This
Grant is only available to upper and single tier municipalities, who generally spend a
large proportion of their budgets on social programs.
The following briefly describes each OMPF component from which Bayham received
funding including how the level of funding was determined and how the allocations of
these funds between land uses was determined.
1. Equalization Grant: The Equalization Grant contributes funding to municipalities
that have limited assessment base through two separate components; the
Assessment Equalization Grant Component and the Farmland and Managed
Forest Assessment Grant Component.
I. Assessment Equalization Grant Component
The Assessment Equalization Grant Component contributes funding to municipalities
with limited property assessment base due to lower assessed property values, and
limited non-residential assessment. The grant amount is determined by calculating the
total differential in assessment below the threshold assessment of $238,000 per
ial
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results in an additional $37 in funding per household. In 2012, the municipality received
$413,900 through the Assessment Equalization Grant Component based on the
average property assessment of $194,395 and the 2,565 Bayham households that year.
Given the grant funding for this component is calculated using total assessment value of
all properties, it would be inappropriate to allocate this revenue to a single land use
category and therefore the use of fallback allocations is most appropriate.
II. Farmland and Managed Forest Assessment Component
The second Equalization Grant component was the Farmland and Managed Forest
Assessment Component. This component, which was eliminated in 2013, (the year
following this study) contributed additional funding to municipalities with a significant
amount of farmland and managed forest properties. If farmland and managed forest
properties accounted for more than 20% of the municipalities tax base than the
municipality would receive additional funding equal to 300% of municipal taxation of
farmland and managed forest properties. Funding was scaled down for municipalities
with lower proportions of farmland and managed forest assessment. Figure 9 illustrates
how funding allocations to municipalities was determined, based on its dependence on
farm and managed forest properties for tax revenue.
Figure 9: Funding formula for Farmland and Managed Forest Grant Component
Taxes generated by farmland and Taxes allocated as grant funding (%)
managed forest properties
5%-7.4% 0%
7.5%-9.9% 50%
10%-12.4% 100%
12.5%-14.9% 150%
15%-17.4% 200%
17.5%- 19.9% 250%
20+% 300%
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In 2012, Bayham received $127,400 in revenue through the Farmland and Managed
Forest Assessment Component, because the farmland and managed forest classes
contributed 7.7% of the tax revenue collected that year.
Given these funds are calculated based solely on the presence of farmland and
managed forest land within a municipality, the entire $127,400 in revenue received
through this component was allocated to the farm/forest land use category. However,
since this OMPF component has since been eliminated, with no plans to reintroduce it,
two sets of ratios were developed for final reporting, one set includes the OMPF
funding, and the second set excludes it. As the final ratios indicate, this has the
expected result of increasing the COCS ratio of all land uses. However, with or without
this OMPF funding included, the COCS ratio for the farm/forest category remains less
than one.
2. Northern and Rural Communities Grant Component
Component. To c
calculated by first dividing a municipality into small geographic areas. Then these
sub areas are classified as rural if they fit one of the following criteria: They have a
population density of less than 400 per square kilometre, they cannot be grouped
with other adjacent areas to produce a total population concentration greater than
-
area that meets one of the above classifications of rural determines the final RSCM
figure. In 2012, the municipality received an RSCM rating of 100%. A municipality
with an RSCM of 75% or greater receives $156 per household in funding. In 2012,
Bayham received $400,200 through this grant based on its RSCM of 100% and the
fact 2,565 households resided in the municipality.
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3. Police Services Grant
The Police Services Grant was designed to partially offset the costs of police
services in rural municipalities. Like the Farm and Managed Forest Grant, the Police
Services Grant has since been removed from the OMPF. Municipalities with an
RSCM of 75% or greater receive funding based on the following calculations: 50% of
-$750 per household, and 75% of eligible
policing costs above $750 per household.
provided by the Ontario Provincial Police
(OPP) to meet the service standards defined in the Police Services Act. This means
that services provided and charged by the OPP that were considered to have
exceeded the standards of service were ineligible for funding.
amount of $158,100 through the Police Service Grant. This offsets 21% of the
$743,686 Bayham paid for police services in 2012.
Allocating the revenue contributed through the Police Service Grant was fairly
straight forward as the amount of revenue generated from the grant was directly tied
to the provision of police services in Bayham. As need for police services increases,
the cost to a municipality for police service increases. As the cost to a municipality
for police services increases, the size of the Police Services Grant increases as well.
Based on the proportional usage each land use had for police protection services in
2012, the Police Service Grant was allocated 94.39% to the residential category,
4.5% to the commercial/industrial category, and 1.1% to the farm/forest category.
revenue allocation were prepared by the Ontario Ministry of Finance. Please see
Appendix-C for further details of the calculations.
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Changes to OMPF and provincial uploads of social programs
The OMPF is currently in a transitional period that will see the total provincial OMPF
transfers fall to $500 million by 2016. This will be accomplished by reducing total OMPF
transfers by at least $25 million per year between 2013 and 2016. At the same time, the
province will upload a number of social services previously delivered at the municipal
level.
The uploaded social programs include the Ontario Drug Benefit (ODB), the Ontario
Disability Support Program (ODSP), Ontario Works (OW) and court security and
prisoner transportation. These uploaded services were estimated to save municipalities
approximately $1.4 billion throughout the province in 2013.
The province estimates that support to municipalities, which they now measure as the
remaining OMPF transfers plus the estimated costs of uploaded social services, will
reach $3.7 billion on an annual basis by 2016. The province claims this will be a 240%
increase in support to municipalities compared to 2003.
The overall impact of the OMPF phase-down combined with the provincial uploaded
services is expected to be positive for Ontario municipalities in aggregate. According to
scheduled uploads are complete by 2018, municipalities are projected to enjoy a net
annual benefit of $1.5 billion (compared to 2007).
In aggregate, these changes represent a net benefit to municipalities. However, these
-tier, rural municipalities are
negatively impacted by these changes, while larger, upper and single-tier municipalities
in urban areas are coming out as winners. This becomes evident when you consider
who benefits most from the uploading of social services and who is hurt by the OMPF
phase-down.
Lower tier municipalities in rural areas, such as The Municipality of Bayham, are
typically not responsible for the delivery of any of the social programs that are being
uploaded to the province. These rural municipalities enjoy little to no direct financial
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gain from these uploads. The majority of financial gains from uploading these social
services will be enjoyed by Toronto, Ottawa, Hamilton, London and other large urban
municipalities. To illustrate this point, in 2012 the Municipality of Toronto spent over
$2.8 billion (28% of total expenses) on social programs. In comparison, the Municipality
of Bayham spent nothing on social programs in 2012.
Not only are small rural municipalities excluded from the direct financial gain of
uploading social programs, they take the largest financial hit from the OMPF phase-
down. Effective in 2013, both the Farm and Managed Forest Assessment grant
component and the Police Services Grant component have been removed from the
OMPF. These two grants were exclusively designed for funding of rural municipalities.
These two grants contributed $285,500 (approximately 4% of all expenses) in funding to
the municipality in 2012. Furthermore, while the province is uploading the costs of many
social services, it has maintained the OMPF grant to help municipalities pay for Social
Programs. It is curious that the province does not cut out the social program funding
grant to help pay for the cost of uploading these services, but instead decides to cut
grants that benefit rural municipalities and have no direct association with service
delivery of social programs.
Section 4.2: Focus on agricultural demand for municipal services.
municipal services that they receive in the fiscal year the study is conducted. However,
a COCS study does not estimate potential demand land uses have for a service that
they do not receive.
As an expansion of the COCS methodology, a survey of local Bayham farmers was
conducted to determine the municipal services they do and do not receive for their farm
business. The survey had two objectives:
1. Gain a better understand of what municipal services farmers are receiving, but
may not be demanding; and
2. Gain a better understanding of what services farmers are not receiving, but have
a demand for.
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Appendix B contains a copy of the survey. The survey questions were designed to
determine the willingness to pay for municipal services. Farmers are not only business
owners, but a
same parcel of land as their farm business, separating the demand for services as a
resident from their demand for services as a farm business owner was necessary. To
accomplish this, the survey asked local farmers each question twice; once from the
perspective as a residents, and a second time from the perspective of a farm business
owner.
Several questions had nearly unanimous results. When asked if their household
received solid waste
when asked if they would be willing to pay additional property taxes in exchange for
receiving municipal solid waste collection associated with their farm business, all
When asked if their property was hooked into municipal water distribution, all
property taxes to receive municipal water distribution, separately for their farm business
o
90% of respondents would not be willing to pay additional property taxes to have gravel
roads paved, for use by farm machinery. Additionally, only 22% of respondents would
be willing to pay additional property taxes for increased maintenance of paved roads
used by their farm machinery.
Most local Bayham farmers felt satisfied with the quality of service they received, but felt
their property taxes were much higher than their own municipal service level
requirements. The results in Section 5 reinforce the idea that farm properties are
generating more municipal revenue than they cost the municipality to service farm
businesses.
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Section 4.3: Allocation of service expenditures, conditional grants, user fees and
miscellaneous items.
When allocating revenues and expenditures associated with a particular municipal
service, to particular land uses, the guiding principle is based on each land uses service
usage. Once the proportional usage for each service has been determined, it is possible
to allocate revenues and expenditures directly associated with that service. For
example, municipal records and conversations with the Bayham fire chief indicated the
provision of fire protection services could be allocated 11.8% to farm/forest, 4.3% to
commercial/industrial and 83.9% to the residential category.
This proportional usage for service is used to allocate all expenditures directly related to
fire protection. Additionally, any revenue that was specifically linked to fund fire
protection services (conditional grants, user fees, revenue from other municipalities)
would also be allocated based on usage, this is common COCS methodology that
embodies the principle of letting the provision of services determine allocations, as
discussed by Greenway and Sanders (2006). In this section, the methods for
determining the proportional usage (and thus allocations) for each major municipal
service are discussed.
Water Services
In 2012, the municipality generated $954,686 in revenues from providing water services
to its residents. $763,783 of the total revenue came directly from user fees for the
service. Additionally, the municipality collected $57,127 through a provincial capital
grant and $133,776 through a provincial capital grant.
The total expenses the municipality incurred to provide this service totaled $624,068.
After reading municipal reports outlining distribution and service of municipal water
services it quickly became evident that the majority of the provision of municipal water
services could be attributed to the residential category. After several discussions with
the environmental services department, it was agreed that approximately 98% of the
municipal water usage as well as waste water services usage came from the residential
category with the remaining 2% coming from the commercial/industrial category.
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Discussions with the environmental services department revealed only one farm in the
- Given it represented
1 out of approximately 780 service recipients and the anomaly of farm out-buildings
receiving municipal water services, this farm property was treated as an outlier.
Wastewater services
Revenue collected relating to the wastewater services included $643,881 in user fees
and $21,560 in connection fees for a total of $665,441. The delivery of wastewater
services was significantly higher than water services, totaling $889,396, leaving a deficit
of $223,955 relating to service delivery.
As previously stated, after several conversations with the environmental services
department, it was determined that 98% of wastewater services were provided to the
residential category while the remaining 2% of usage was allocated to the
commercial/industrial category.
Solid waste collection and waste diversion
The municipality contracts curbside pickup and disposal of garbage and recycling
services to Norfolk Disposal Services Ltd. In 2012 Bayham spent $536,515 on solid
waste collection (garbage) and Waste Diversion (Recycling) services. $493,709 was
spent on contracted services with Norfolk Disposal Services Ltd, $5,055 of municipal
wages were allocated to these services, and $37,751 was spent on materials
associated with these services.
blic works department liaises with Norfolk Disposal Services Ltd, and
provided a report detailing total tonnage of solid waste collected from residential and
commercial/industrial land uses. Farm properties do not receive municipal solid waste
services in Bayham.
In 2012, Norfolk Disposal Services Ltd collected 1,187 tonnes of garbage for the
municipality. Of this total, 1,121.71 tonnes were collected from the residential category
and 65.29 tones were collected from the commercial/industrial category. This
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breakdown indicates the proportional usage of garbage collection services by the
residential and commercial/industrial category. 94.5% of the usage of garbage collection
and disposal services came from the residential category, and 5.5% came from the
commercial/industrial category. This proportional usage was used to allocate
expenditures related to garbage collection and disposal services. The proportional
usage of garbage collection and disposal services was the same in 2011 and 2012
(94.5% to residential).
To determine the proportional waste diversion (recycling) usage, Norfolk Disposal
Services Ltd detailed the total net cost of providing services to the residential category.
In 2012, the cost for providing waste diversion services to the residential category in
Bayham was $163,629.61. The cost to service the residential category was 89.15%
($163,629.61/$183,538) of the total contracted services Norfolk Disposal Services Ltd
provided to Bayham for waste Diversion services in 2012, with the remaining 10.85%
allocated to the commercial/industrial category. These proportional costs for contracted
services was also used to allocate costs for materials ($37,751) and grant revenues
($63,221 in provincial grants and $8,259 in tangible capital assets) directly related to
waste diversion services.
General government
Expenses relating to the general governance of the municipality totaled $746,924 in
2012, including labour related expenses ($518,620), with direct user fees paid by the
residents totaling $47,860.
Since municipal staff and councilors work on behalf of all residents and businesses
(including farms) within their jurisdiction, to allocate all governmental services to any
one specific land use would be inappropriate. Therefore, the common COCS
methodology of using fallback percentages to allocate general governmental services
was applied.
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Protection Services
Total expenditures on protection services in Bayham totaled $1,464,197 in 2012. 85%
of this total was attributed to fire services and police services, which amounted to
$498,580 and $743,586 respectively. The OMPF Police Services Grant Component
partially offset the costs of police services. In 2012 Bayham received $158,100 from this
grant component.
The Elgin County OPP 2012 Year-end report revealed the total calls for service in
Bayham totaled 1355 in 2012. Interviews with local OPP administrators revealed that 15
of these service calls could be attributed to farmland, while 1279 were attributed to the
residential category and 61 were attributed to commercial/industrial category.
Allocations to each category were based on the number of calls to service attributed to
each category proportional to the total number of calls. The resulting allocations were as
follows farm/forest: 1.1% (15/1355), commercial/industrial: 4.5% (61/1355), residential:
94.4% (1279/1355).
Similarly, allocations for fire protection services were also determined by the
proportional number of calls attributed to each category. Bay
statistics for the number of calls to service the fire department received. Conveniently,
the data was already tracked by property class. In total, the fire department received
159 calls in 2012. Of these calls, 14 were attributed directly to the farm/forest category,
5 calls were attributed directly to commercial/industrial category, 99 calls were attributed
The fire chief indicated that the majority of the 41 calls cla
response to roadway motor vehicle accidents. These 41 calls were allocated to the
Based on the number of calls attributed to each land use, 8.8% (14/159) of fire
expenditures were allocated to the farm/forest category, 3.1% (5/159) was allocated to
the commercial/industrial category and 88.1% (140/159) was allocated to the residential
category.
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Transportation services
Road expenditures were the largest budget item and the most difficult to allocate. Road
expenditures represented approximately 1/3 of the total spending by Bayham in 2012.
The difficulty of allocating road expenditures came both from the nature of roads and
the available records on road expenditures for 2012. Functional roads are a public good
used by the residents and local businesses within a municipality, as well as residents
from the rest of the province and the entire country. Roads play a crucial role in every
developed civilization; they allow citizens the opportunity to seek greater employment
potential, they facilitate trade and commercial activities. Roads allow citizens personal
freedom and mobility. All Canadian citizens and businesses benefit from the provision of
well-maintained roads.
In 2012, the municipality spent over $2.56 million on road related expenditures. Bayham
received little to no direct funding from the province intended to cover road related
expenditures. However, the municipality received a federal grant of $423,466 intended
to partially offset the costs of paved road maintenance. These federal funds covered
approximately 16.5% of municipal expenditures related to road maintenance, leaving
the remaining 83.5% to be recovered from municipal funds.
When it came to allocating road related expenditures, the objective, as with all other
budget items, was to estimate the usage each land use category has for the municipal
road network in Bayham. The most common method of accomplishing this in the COCS
methodology is to estimate the proportional amount of traffic generated by each land
use on municipal roads. In Canada, information tracking traffic from the perspective of
each land use is lacking.
Greenaway and Sanders (2006) used a statistical method with data from the U.S to
using statistical methodology to make such approximations may be informative,
Canadian traffic patterns may not necessarily reflect U.S. traffic patterns revealed in U.S
data. If the same type of traffic data was available in Canada, Greenaway and Sanders
statistical method may be a useful tool for future COCS research.
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Given the lack of dat
local traffic came from discussions with local public works department staff. Those
discussions resulted in estimating proportional use of local roads to be 88% from
residential, 2% from commercial/industrial, and 10% from farm/forest. These
proportional usage estimates were used to allocate expenditures and revenues related
to the road network.
Health services & recreation and cultural services
Expenditures on health and recreational services were simple to allocate as they are
commercial/industrial or farm/forest properties. These services are consumed by
Bayham residents and are therefore allocated entirely to the residential category.
Health services represented a relatively small budget item, with total expenditures in
spent on the maintenance of local cemeteries.
Expenditures related to recreation and cultural services totaled $308,764 in 2012. The
major recreational budget items related to recreation facilities ($114,320), parks
($92,299), museums ($64,092) and libraries ($24,119).
Planning and Development
s planning and Development department incurred expenses and collected
revenue related to three primary areas of service: Planning & Zoning, Commercial &
Industrial, and Agriculture & Reforestation.
Planning and Zoning services allow Bayham residents to have planning applications
processed. Planning applications include zoning by-
amendments, minor variance, plans for sub-division applications, development
agreements, copies of county and municipal maps and so on. In 2012 Bayham incurred
$113,925 in expenses and collected service charges of $17,717 related to delivery of
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planning and development services, all of which were allocated to the residential
category.
Further discussions with the Planning and Development department revealed that
commercial and industrial services refer to a shared commercial tourism and marketing
initiative the municipality is engaged in with the Township of Malahide and the Town of
Aylmer. In 2012 Bayham incurred $122,755 in expenses and collected service charges
of $2,365 related to delivery of planning and development services, all of which were
allocated to the commercial/industrial category.
Agriculture and Reforestation services refer grants to agricultural societies, drainage
work done under the Drainage Act, reforestation, weed control and tree cutting and any
other revenues and expenses related to agriculture and reforestation. In 2012, the
municipality incurred $139,356 in expenses and collected $317,729 in revenue related
to these services. Since all of these services are directly linked to farm and forest
properties, all expenses and revenues related to this service were allocated to the
farm/forest category.
User Fees, Conditional Grants, Revenue from other municipalities
All revenue generated from conditional grants, user fees/service charges, and revenue
Information Return. After determining the usage of each municipal service, allocating
these revenues was simple. For example, after determining the proportional police
services usage (based on examination of police records and discussion with local OPP
officials) to be 1.1% for the farm/forest category, 4.5% for the commercial/industrial
category, and 94.39% for the residential category, any revenue directly tied to police
protection services (the OMPF Police Services Grant component) was allocated based
on each land uses proportional usage. As noted by Greenaway and Sanders (2006) this
is common procedure under COCS methodology, and highlights that a COCS study
measures the provision of services as opposed to the value of service
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3¤¢³¨® ΔȀ 2¤²´«³²
Section 5.1: Analysis of revenue and expenditures
Figure 10 details the total revenues Bayham collected in 2012. As expected, property
taxes accounted for the greatest proportion of total revenues at 41%. In fact, if user fees
and revenue collected from other municipalities is included, 69% of revenue collected
by Bayham in 2012 was internally generated. On the other hand, 23% of total revenue
was externally generated through federal conditional grants (10%) and OMPF funding
(13%).
Figure 10: Total 2012 revenue by source (Bayham)
Total Revenue Sources
$566,937
7%
$497,214
Taxes
6%
OMPF
$3,334,229
41%
Conditional Grants
$1,859,264
23%
User Fees
Revenue from Other
Municipalities
Other Revenue
$822,050
$1,099,600
10%
13%
considering the effects
of including and removing education from the analysis. In reality Bayham is not
responsible for educational expenditures, that responsibility was uploaded to the
province. However, all property within the municipality pay educational property taxes,
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so education is included in the budget in a separate analysis to illustrate its potential
impact.
Transportation services were the largest expense Bayham incurred in 2012,
representing 35% of all expenditures. Following closely behind was environmental
services at 27% and protection services at 19% of total expenditures.
Figure 11: Municipal 2012 expenditures by source (Bayham)
Municipal Expenses (without
education)
$276,230
4%
General
$746,924
$308,764
Governance
10%
4%
$49,545
Protection
$1,464,197
1%
Services
19%
Transportation
Services
Environmental
Services
Health Services
Recreational
$2,049,979
Services
27%
Planning
Services
$2,635,510
35%
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Figure 12: Municipal 2012 expenditures by source (Bayham)
Municipal Expenses (All Data)
$376,230
$746,924
Total General
4%
8%
$1,367,221
Governance
15%
Total Protection Services
$1,464,197
16%
$308,764
Total Transportation
4%
Services
Total Environmental
Services
$49,545
Total Health Services
1%
Total Recreation and
Cultural Services
Education
$2,049,979 Total Planning and
$2,635,510
23% development
29%
Figure 13 shows the proportional level of lower tier property taxes each land use paid in
2012. As discussed in Section 1.2, these proportional tax revenues were used to
calculate fall back allocations when a particular budget item could not be allocated by
land use.
Figure 14 shows the total dollar amount and proportional amount of educational taxes
paid by each land use in 2012. In comparing the proportional amount of property taxes
paid by the residential category (Figure 13) with the proportional amount of educational
taxes (Figure 14), 81% of lower tier property taxes (which Bayham collects as revenue
to help fund its services) are paid by the residential category, while only 64% of
educational taxes are paid by the residential category. Considering education is a
people service provided to residents, it is questionable why the commercial/industrial
category assumes a much larger proportion of the educational tax levy (30%) than the
lower tier tax levy (11%).
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Figure 13: Lower tier property tax revenue by land use
Property Tax Revenue
$232,407
$327,316
8%
11%
Commercial/Industrial
Residential
Farm/Forest
$2,485,317
81%
Figure 14: Education property tax revenue by land use
Educational Tax Revenue
$82,314
6%
$410,582
30%
Commercial/Industrial
Residential
Farm/Forest
$874,325
64%
Figures 15 and 16 show the total dollar and proportional contributions each land use
has to the total revenues collected by Bayham in 2012. Obviously the residential
e of total revenue drops by 3% by including education in the analysis.
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This is further evidence to suggest that the educational services provided to residents
are subsidized through properties which do not consume these services.
Figure 15: Total revenue by land use
Total Revenue (All Data)
$1,015,338
$1,039,883
11%
11%
Commercial/industrial
Residential
Farm/Forest
$7,491,294
78%
Figure 16: Total revenue by land use
Total Revenue (without education)
$604,756
$957,569
7%
12%
Commercial/Industrial
Residential
Farm/Forest
$6,616,969
81%
Figures 17 and 18 show the final allocation of expenditures by all three land use
categories. The results are consistent with proportion shown in Figures 16 and
17, the residential category accounts for the vast majority of municipal
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expenditures. A familiar result is shown when the analysis includes education;
the residential portion of total and proportional expenditures increases.
Figure 17: Total expenditures by land use
Total Expenditures (All Data)
$385,431
$521,744
4%
6%
Commercial/Industrial
Residential
Farm/Forest
$8,091,195
90%
Figure 18: Total expenditures by land use
Total Expenditures (without education)
$521,744
$385,431
7%
5%
Commercial/Industrial
Residential
Farm/Forest
$6,723,974
88%
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Section 5.2: Final COCS ratios
After allocating all expenditures and revenues, the expenditure-to-revenue ratios
can be calculated. When interpreting these results, recall that the ratios show
how many dollars of municipal expenditures each land use consumes for each
dollar of revenue it contributes to the municipality.
For example, A COCS ratio of one would imply that for every dollar of municipal
services a land use consumes, it contributes a dollar in revenue. A COCS ratio
less than one implies a land use consumes less in services than it contributes in
revenue. A COCS ratio of more than one implies a land use consumes more in
municipal services than it contributes in revenue.
Another important point to consider when interpreting the COCS ratios is the fact
that Bayham had a $548,145 surplus on its operating budget in 2012. This
influences the resultant COCS ratios. A surplus indicates that revenues
exceeded expenditures, and therefore most COCS ratios should be lower than if
the municipality had run a deficit.
Finally, when interpreting the results it is important to keep in mind, there are
rd
expenditures consumed and contributions to revenue by 3 party contributors
(outside the municipality). As discussed in Section 1.3, these externalities are
primarily related to people services, and therefore primarily allocated to the
residential category.
Figure 19 displays the total revenue, total expenditures, net contribution or loss,
and the final COCS ratio of each land use, using all data in the analysis.
As previously discussed, the residential category accounted for the largest
proportion of both revenues and expenditures. With all data included in the
analysis, the total expenditures allocated to the residential category were
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$8,091,195 compared to the attributed revenues of $7,491,294. The residential
category had a net loss of $599,901 and a COCS ratio of 1.08.
$385,431 in expenditures and $1,015,338 in revenue were allocated to the
commercial/industrial category. The commercial/industrial category contributed a
net of $629,907, with a COCS ratio of 0.38.
Expenditures of $521,744 and revenue of $1,039,883 were attributed to the
farm/forest category. Driven by large user fees and property taxes, and the lower
usage levels of municipal services, the farm/forest category contributed a net
$518,139 with a COCS ratio of 0.50, meaning that the municipality provided
$0.50 of services to the farm/forest category for every dollar of revenue the
farm/forest category brought to Bayham in 2012.
Figure 19: COCS ratios using All Data
FIR 2012ResidentialCommercial/IndustrialFarm/Forest
Total Revenue $9,546,515 $7,491,294 $1,015,338 $1,039,883
Total
$8,998,370 $8,091,195 $385,431 $521,744
Expenditures
Net
Contribution $548,145 $(599,901) $629,907 $518,139
(loss)
1.080.380.50
COCS Ratio
As discussed in Section 4.1, the Ontario Municipal Partnership Fund (OMPF), the
primary source of funding from the province to rural municipalities, has drastically
changed in recent years. Given the OMPF phase-down, analyzing the impact of
completely removing OMPF funding is informative.
Since this exercise involves removing a significant source of revenue (nearly 15% of all
revenue) without removing any expenses, all COCS ratios rise, and the net contribution
(loss) of each land use will fall (rise), therefore these figures are only for information
purposes and should be viewed as reflective of the current situation.
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By removing OMPF funds from the analysis, the $548,145 surplus that Bayham had in
importance to rural municipalities; even a fiscally sound municipality like Bayham would
have an insufficient ability to cover its annual expenditures without dramatic increases in
property taxes and service fees, in the absence of adequate support from the province.
Removal of the OMPF from the analysis dropped the total revenues allocated to the
residential category to $6,677,603. With no corresponding reduction in expenditures,
the residential category would contribute a net loss of over $1.4 million, and the COCS
ratio for the residential category would rise to 1.21.
The commercial/industrial category would see a reduction of $94,622 in allocated
revenue, but would still contribute a net benefit of $535,285 with a COCS ratio of 0.42.
Removing OMPF funding from the analysis would reduce the net fiscal contribution of
the farm/forest category from $518,139 to $326,852, and the COCS ratio for farm/forest
would rise to 0.61.
.
Figure 20: COCS ratios without OMPF
FIR 2012ResidentialCommercial/IndustrialFarm/Forest
Total
$8,446,915 $6,677,603 $920,716 $848,596
Revenue
Total
$8,998,370 $8,091,195 $385,431 $521,744
Expenditures
Net
Contribution $(551,455) $(1,413,592) $535,285 $326,852
(loss)
COCS Ratio 1.210.420.61
Finally, the impact of removing education from the analysis is considered.
Unsurprisingly, removing education from the analysis has a favorable impact on the
residential category and an unfavorable impact on the commercial/industrial and
farm/forest categories.
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oss to the municipality falls from $599,901 to
$107,005 when the analysis excludes education. Additionally, the residential COCS
ut in the education scenario it comes very close to doing
so.
The impact on removing education from the analysis is most dramatic when considering
the impact on the commercial/industrial category. The net fiscal contribution of the
commercial/industrial category falls from $629,907 when including all data, to $219,325
when removing education. The commercial/industrial COCS ratio also rises accordingly
from 0.38 to 0.64. This is unsurprising when we consider that commercial/industrial
properties paid 30% of educational property taxes, a service that it these properties do
not consume.
The impact removing education from the analysis has on farm/forest properties is
similar (but less dramatic) to the impact on commercial/industrial properties. The net
fiscal contribution to the municipality by farm/forest properties falls from $518,139 to
$435,825, while the COCS ratio rises from 0.50 to 0.54.
The impact education has on all three land uses illustrates the inefficiency of funding
people related services with tax on land and properties that do not consume the service.
Figure 21: COCS ratios without education
FIR 2012ResidentialCommercial/IndustrialFarm/Forest
Total Revenue $8,179,294 $6,616,969 $604,756 $957,569
Total
$7,631,149 $6,723,974 $385,431 $521,744
Expenditures
Net
Contribution $548,145 $(107,005) $219,325 $435,825
(loss)
COCS Ratio 1.020.640.54
which details all of the revenue the municipality collected and shows the final allocation
in total dollars and as a percentage of the total to each land use. Figure 23 details all of
the expenditures the municipality incurred, and shows the final allocation in total dollars
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and as a percentage of the total to each land use. Finally, Figure 24 summarizes the
final COCS ratios of all three land uses under all scenarios. For additional information
on the allocation of expenses and revenues, please see the expanded versions of these
charts in Appendix A.
Figure 22: evenue allocations
Revenues (Lower Tier only)TotalResidentialCommercial/IndustrialFarm/Forest
Education$ 1,367,221 $ 874,325 $ 410,582 $ 82,314
64%30%6%
Total LT Taxes collected$ 3,334,229 $ 2,664,725 $ 380,246 $ 289,258
80%11%9%
Total 2012 OMPF$ 1,099,600 $ 813,691 $ 94,622 $ 191,287
74%9%17%
Total Condtional Grants$ 822,050 $ 699,877 $ 68,223 $ 53,950
85%8%7%
Total Revenue From Other Municipalities $ 497,214 $ 412,825 $ 48,581 $ 35,808
83%10%7%
Total User Fees and Service Charges$ 1,859,264 $ 1,498,803 $ 37,682 $ 322,779
81%2%17%
Total Licences Permits, Rents Etc..$ 221,679 $ 191,802 $ 13,184 $ 16,693
87%6%8%
Penalties and Interest on Taxes$ 104,699 $ 85,454 $ 11,254 $ 7,991
82%11%8%
Total Other Revenue $ 240,559 $ 196,342 $ 25,858 $ 18,359
82%11%8%
Total Revenues (All Data)$ 9,546,515 $ 7,491,294 $ 1,015,338 $ 1,039,883
78%11%11%
Total Revenues (Without Educ)$ 8,179,294 $ 6,616,969 $ 604,756 $ 957,569
81%7%12%
Total Revenues (Without OMPF)$ 8,446,915 $ 6,677,603 $ 920,716 $ 848,596
79%11%10%
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Figure 23: xpenditure allocations
Expenses (Lower Tier only)TotalResidentialCommercial/IndustrialFarm/Forest
Total General Governance$ 746,924$ 609,632$ 80,287$ 57,005
82%11%8%
Total Protection Services$ 1,464,197$ 1,336,003$ 59,478$ 68,716
91%4%5%
Total Transportation Services$ 2,635,510$ 2,164,088$ 275,682$ 195,740
82%10%7%
Total Environmental Services$ 2,049,979$ 1,978,362$ 71,617-
97%3%-
Total Health Services$ 49,545$ 49,545--
100%--
Total Recreation and Cultural Services $ 308,764$ 308,764--
100%--
Education $ 1,367,221$ 1,367,221--
1%--
Total Planning and development $ 376,230$ 113,925$ 122,755$ 139,550
30%33%37%
Total Operating Expenses (All Data)$ 8,998,370$ 8,091,195$ 385,431$ 521,744
90%4%6%
Total Operating Expenses (withouteduc)$ 7,631,149$ 6,723,974$ 385,431$ 521,744
88%5%7%
Total Operating Expenses (Without OMPF) $ 8,998,370$ 8,091,195$ 385,431$ 521,744
90%4%6%
Figure 24: Final land use COCS ratios
1.4
1.2
1
0.8
C/I
0.6
Res
0.4
F/F
0.2
0
All DataWithout EducationWithout OMPF (informational
(informational purposes)purposes)
62
70
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#®²¨£¤± ³¨®² ¥®± &´³´±¤ #/#3 3³´£¨¤² ¨ /³ ±¨®
Section 6.1: Farmland taxation
When the Farm Tax Rebate Program was enacted in 1970, the reasoning for a rebate
at the rate of 75% was that the services provided to farmland were perceived to be 25%
of the services provided to residential areas (Werrsink & Van Donkersoged, 1997).
However, no Cost of Community Services study was conducted to directly compare the
services provided to farmland and the residential category.
d because the farm ratio is set at no more than 25% of the local
its fair share of taxes. The COCS ratio for the farmland/forest illustrates that with a tax
ratio at 25% of the residential rate farm and forest lands received less than $0.50 in
services from the municipality for every dollar of revenue they contributed to the
municipality.
Section 6.2: pays for w
In 1997 the provincial and municipal governments agreed upon a new alignment of
realign delivery of government services in a more efficient manner.
In Ontario, apart from user-fees, the only means municipal governments have within
their control to generate revenue is property taxes. However, taxation of property is not
an appropriate form of revenue to pay for services provided to people. Unless the
province empowers municipalities with alternative means of generating revenue, it is
discussed earlier, the province is in the process of, once again, uploading the costs and
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71
responsibility of many social programs such as Ontario Works, Disability Support, child
care, etc.
However people services still exist that are financed either completely or partially
through property taxes. The most significant of these services include education and
policing services.
Education
Given municipalities do not play any meaningful role in the delivery of educational
services in Ontario, having local property taxes remain a funding source for the
provincial education system is questionable.
The Provincial government, the entity responsible for delivery of educational services,
has more options to generate revenue (through income tax, for example) than municipal
governments, whose, primary source for generating revenue is though property
taxation.
Police services
Prior to the 1997 government service delivery realignment, the majority of municipalities
received OPP services paid for by the province. The downloading of OPP services has
resulted in financial difficulties in many rural municipalities.
As discussed in Section 3, the recent changes to the OMPF coupled with the uploading
of many social program expenditures to the province have favored urban municipalities
while compounding the funding challenges of many rural, lower tier municipalities.
Section 3 also highlighted several municipal services that would warrant additional
provincial funding or a complete service cost upload to the province. Police services are
of particular interest because of their widespread benefits.
Police services benefit both property and people. All people, not just local residents, can
access police services. It is not just Bayham residents who benefit from having police
services available locally, but anyone who travels through the local policing service area
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benefits from the knowledge that if they need it, local police are available to serve them.
Imagine if residents only had access to police services within their local municipal
boundaries.
Not only is police servicing a benefit to all residents in the province, but the policing
standards are provincially mandated. Having a service, which is provided to both
residents and non-residents, as per standards mandated by the provincial government,
primarily financed through municipal property tax levies is not appropriate. Police
services represent a large proportion of rural, lower-tier municipal budgets. In 2012
Bayham spent $743,586, which is equal to nearly 10% of its operating expenses. on
OPP services.
The uploading of policing expenditures to the province could be a perfect and logical
way for the province to support rural municipalities (who pay a higher proportion of their
budget for policing services compared to urban municipalities) and allowing property tax
revenue to be allocated towards services that are more directly linked with property.
Section 6.3: Considerations for future COCS studies in Canada
This study serves as the second fully completed Cost of Community Study completed in
Canada, and the first in Ontario. Future Ontario COCS studies may wish to consider
several issues.
The first would be a further expansion of the survey implemented in this study to include
all land uses. While COCS studies express the proportion of each municipal service,
they do not estimate the marginal demand each land use has for services. By finding
out if each land use would be willing to pay more (less) for additional (less) services,
municipalities could gauge the appropriateness of their services and service levels.
They may discover that they are providing too much of a particular service to a land use
which does not demand the level of services they are receiving. While at the same time,
they might put those resources into providing additional services to a land use that
demands more of a particular service then they are currently receiving. By conducting
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73
these types of surveys, annually, for each land use, municipalities might better allocate
their financial resources and increase the overall satisfaction of local property owners
and residents.
As discussed, gaining a better understanding of the demand each land use has for
particular municipal services may help guide municipalities. One municipal service area
in particular suffers from a lack of knowledge of demand from a land use perspective.
This municipal service is also the largest budget item on most rural municipal budgets,
the local road network.
rd
Whether developed by the province, the municipalities, or 3 party researchers, a
process to monitor local road traffic generated by the three major land uses would
simplify allocations of road related revenues and expenditures in future COCS studies,
while also providing valuable information to the municipalities when setting their annual
budgets.
Given the seemingly constant changes in service and funding agreements between the
municipal and provincial levels of government, any future COCS study conducted in
Ontario (or any other province) will need to carefully consider these arrangements in the
and therefore, its results can change dramatically as policy changes. For example, if the
province uploaded the policing costs in 2014, a COCS study conducted in Bayham in
2015 would likely produce largely different results.
Analyzing both the lower tier and upper tier (county) municipalities in Ontario would be
useful future COCS research. Such a case study could offer valuable information
regarding the relationship between the county and its lower-tier municipalities, which
could further improve delivery of municipal (both upper and lower) services, saving local
taxpayer dollars
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2¤¥¤±¤¢¤²
Association of American Farmland Trust . (2001). The Cost of Community Services in
Middleborough, Massachusetts.
American Farmland Trust. (1999). Cost of Community Services: Skagit County
Washington. Northampton: American Farmland Trust.
American Farmland Trust. (2010). Cost of Community Services Fact Sheet.
Applieo Research Associatesm Inc. (2008). Estimation of the Representative
Annualized Capital and Maintaenance Costs of Roads by Functional Class.
Ottawa: Transport Canada.
Churchyard, A., & Caldwell, W. (2011). The Cost of Community Services in the
Township of Cavan Monaghan: A literature review of the fiscal impacts of land
use for municipalities in Ontario, Canada. The Monieson Centre at Queen's
School of Business.
Door County Land Trust. (2004). The Cost of Commumity Services in the Tows of
Gibraltar and Nasewaupee.
Edwards, M., Jackson-Smith, D., Ventura, S., & Bukovack, J. (1999). The Cost of
Community Services for Three Dane County Towns: Dunn, Perry, and Westport .
Greenway, G., & Sanders, S. (2006). The Fiscal Implications of Land Use: a "Cost of
Community Services" Study for Red Deer County. Calgary: Miistakis Institute.
Innovative Natural Resource Solutions LLC. (2008). Cost of Community Services Study:
Town of Hooksett, New Hampshire .
Kitchen, H., & Slack, E. (2012). Property Taxes and Competitveness in Brirish Columbia
. BC Expert Panel on Business Tax Competitiveness .
Ministry of Municipal Affairs . (1988). Financial Analysis of Residential Development .
MMK Consulting . (2007). City of Vancouver: Consumption of Tax-supported Municipal
Services . Vancouver : Financial Planning and Treasury: City of Vancouver .
MMK Consulting. (2004). Consumption of Tax-supported Municipal Services In The
District of North Vancouver. Vancouver : North Shore Waterfront Industrial
Association.
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Municipal Managers, Clerks, and Treasurers of Ontario. (2009). Property Tax Reform:
The need for Property Tax Reform in Ontario.
Ontario. Ministry of Finance . (2012 ). OMPF 2012 Allocation Notice: Municipality of
Bayham .
Ontario. Ministry of Finance. (2012). Ontario Municipal Partnership Fund: 2012
Technical Guide.
Ontario. Ministry of Municipal Affairs and Housing. Municipal Finance Policy Branch.
(2013, January ). 2012 Financial Information Returns Instructions .
Public Sector Digest. . (2013, December ). The Asset Management Plan for The
Municipality of Bayham. London, Ontario.
Renkow, M. (2009). The Cost of Community Services in Franklin County.
Rosengard, J. (2012). The Tax Everyone Loves to Hate: Principles of Property Tax
Reform. Harvard Kennedy School .
Statistics Canada . (2009, 06 16). Local General Government Revenue and
Expenditures, Current and Capital Accounts, by Province and Territory.
Retrieved March 26, 2014, from http://www.statcan.gc.ca/tables-tableaux/sum-
som/l01/cst01/govt46b-eng.htm
Taylor, D. T. (2012). Cost of Community Services Study: Windham, New Hampshire .
The Corporation of The Municipality of Bayham. (2012 , May 17). Budger 2012 .
The Corporation of The Municipality of Bayham. (2012, December 31 ). Consolidated
Financial Statements .
Weersink, A., & Van Donkersgoed, E. &. (1997). Municipal Finance Issues with Who
Does What. Critical Change In Rural Ontario Conference .
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Appendix A
CommercialBasis for
Municipal Revenues Total Residential Farm/Forest
/Industrial Allocation
Data obtained
Property Tax $3,045,040 $2,485,317 $327,316 $232,407 from Bayham's
FIR2012
Other Taxes
Supplementary Taxes $46,970 $38,336 $5,049 $3,585 Fallback Allocation
Sewer and Water
$46,626 $45,693 $933 Fallback Allocation
service Charges
Sewer and Water
$87,654 $85,901 $1,753 Fallback Allocation
connection Charges
Correspondence
Municipal Drainage
$54,894 $2,287 $52,607 with Municipal
Charges
Staff
Railway Rights-of-
$8,638 $7,050 $928 $659 Fallback Allocation
way
Data obtained
Education $1,367,221 $874,325 $410,582 $82,314 from Bayham's
FIR2012
Payments in Lieu of
Taxation (sheet 24A)
Data obtained
Residential $140 $140 from Bayham's
FIR2012
Data obtained
Commercial $44,267 $44,267 from Bayham's
FIR2012
Total Payments in
$44,407 $140 $44,267
lieu of Taxation
Total Lower Tier
$3,334,229 $3,539,050 $380,246 $289,258
Taxes collected
Ontario Municipal
Partnership Fund
(OMPF)
Assessment
Equalization $413,900 $337,821 $44,490 $31,589 Fallback Allocation
Component
Farmland and
Managed Forest $127,400 $127,400 100% Farm/Forest
Component
Rural Communities
$400,200 $326,639 $43,017 $30,543 Fallback Allocation
Component
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Each land use's
Police Service Grant $158,100 $149,231 $7,115 $1,755 calls for service in
Bayham in 2012
Total 2012 OMPF $1,099,600 $813,691 $94,622 $191,287
Conditional Grants
(Sheet 12)
Ontario Conditional
Grants
Correspondence
Roads (paved) $708 $623 $14 $71 with Municipal
Staff
Correspondence
Water Treatment $23,046 $22,585 $461 with Municipal
Staff
Water Correspondence
Distribution/transmis$110,730 $108,515 $2,215 with Municipal
sion Staff
Correspondence
Waste Diversion $63,221 $56,362 $6,859 with Municipal
Staff
Allocated 100% to
Commercial and Commercial/Indus
Industrial (planning & $2,689 $2,689 trial based on
Development) purpose of the
grant
Agriculture and Allocated 100% to
reforestation Farm/forest based
$21,577 $21,577
(planning & on purpose of the
Development) grant
Total Ontario
$221,971 $188,040 $12,300 $21,631
Conditional Grants
Ontario Grants for
Tangible Capital
Assets
Correspondence
Water Treatment $57,127 $55,984 $1,143 with Municipal
Staff
Correspondence
Waste Diversion $8,259 $7,363 $896 with Municipal
Staff
Allocated 100% to
Commercial and Commercial/Indus
Industrial (planning & $8,366 $8,366 trial based on
Development) purpose of the
grant
Total Ontario Grants $73,752 $63,347 $10,405
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for Tangible Capital
Assets
Canada Conditional
Grants
People service,
Allocated 100% to
Libraries $17,033 $17,033
the residential
class
Total Canada
$17,033 $17,033
Conditional Grants
Canada Grants for
Tangible Capital
Assets
Correspondence
Roads (paved) $423,466 $372,650 $8,469 $42,347 with Municipal
Staff
People service,
Allocated 100% to
Recreation Facilities $35,828 $35,828
the residential
class
People service,
Allocated 100% to
Libraries $50,000 $50,000
the residential
class
Total Canada
$509,294 $431,457 $45,518 $32,319
Conditional Grants
Total Conditional
$822,050 $699,877 $68,223 $53,950
Grants
Revenue From Other
Municipalities (Sheet
12)
Each land use's
Fire $25,823 $21,438 $1,462 $2,923 calls for service in
Bayham in 2012
Correspondence
Building Permit and
$2,311 $2,101 $38 $172 with Municipal
Inspection Services
Staff
Each land use's
Provincial Offences
$34,312 $32,387 $1,544 $381 calls for service in
Act
Bayham in 2012
Correspondence
Roads (paved) $423,640 $372,803 $8,473 $42,364 with Municipal
Staff
Winter Control Correspondence
(except sidewalks & $11,128 $9,793 $223 $1,113 with Municipal
parking lots) Staff
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Total Revenue From
$497,214 $412,825 $48,581 $35,808
Other Municipalities
User Fees and
Service Charges
(Sheet 12)
General Government $47,860 $39,063 $5,144 $3,653 Fallback Allocation
Each land use's
Fire $4,435 $3,682 $251 $502 calls for service in
Bayham in 2012
Correspondence
Protective Inspection
$1,000 $909 $17 $74 with Municipal
& Control
Staff
Correspondence
Roads (paved) $7,197 $6,333 $144 $720 with Municipal
Staff
Correspondence
Bridges and Culverts $3,562 $3,135 $71 $356 with Municipal
Staff
Waste Water
Treatment and $665,441 $652,132 $13,309 Municipal Data
Disposal
Water Treatment $259,804 $254,608 $5,196 Municipal Data
Water
Distribution/transmis$503,979 $493,899 $10,080 Municipal Data
sion
Waste Diversion $1,513 $1,349 $164 Municipal Data
People service,
Allocated 100% to
Cemeteries $20,981 $20,981
the residential
class
People service,
Allocated 100% to
Museums $5,681 $5,681
the residential
class
Correspondence
Planning and Zoning $17,717 $17,717 with Municipal
Staff
Commercial and Correspondence
Industrial (planning & $2,365 $2,365 with Municipal
Development) Staff
Agriculture and
Information
reforestation
$317,729 $317,729 obtained from FIR
(planning &
instruction manual
Development)
Total User Fees and
$1,859,264 $1,498,803 $37,682 $322,779
Service Charges
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Licenses, Permits,
Rents Etc.
Correspondence
Permits $81,783 $74,348 $1,351 $6,084 with Municipal
Staff
Correspondence
Licenses $35,223 $32,021 $582 $2,620 with Municipal
Staff
Total Licenses and
$117,006 $106,369 $1,933 $8,704
Permits
Rents, Concessions,
$104,673 $85,433 $11,251 $7,989 Fallback Allocation
and Franchises
Total Licenses
$221,679 $191,802 $13,184 $16,693
Permits, Rents Etc.
Penalties and
$104,699 $85,454 $11,254 $7,991 Fallback Allocation
Interest on Taxes
Other Revenue
Investment Income $72,919 $59,516 $7,838 $5,565 Fallback Allocation
Interest earned on
reserves and Reserve $41,191 $33,620 $4,428 $3,144 Fallback Allocation
funds
Donations $61,964 $50,574 $6,661 $4,729 Fallback Allocation
Sale of publications,
$64,485 $52,632 $6,931 $4,921 Fallback Allocation
equipment, etc..
Total Other Revenue $240,559 $196,342 $25,858 $18,359
Total Revenues (All
$9,546,515
$7,491,294 $1,015,338 $1,039,883
Data)
Total Revenues
$8,179,294
$6,616,969 $604,756 $957,569
(Without Education)
Total Revenues
$8,446,915
$6,677,603 $920,716 $848,596
(Without OMPF)
CommercialFarm Method used for
Municipal Expenses Total Residential
/Industrial /Forest Allocation
Government
General Governance $77,666 $63,390 $8,348 $5,927 Fallback Allocation
Corporate Management $669,258 $546,242 $71,939 $51,078 Fallback Allocation
Total General
$746,924 $609,632 $80,287 $57,005
Governance
Protection Services
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Calls to service from
Fire Services $498,580 $439,249 $15,456 $43,875
each land use
Calls to service from
Police Services $743,586 $701,945 $33,461 $8,179
each land use
Conservation Authority $75,761 $61,835 $8,144 $5,782 Fallback Allocation
Protective Inspection and Correspondence with
$54,157 $49,234 $895 $4,028
Control Municipal Staff
Building Permit and
$92,113 $83,739 $1,523 $6,851 Allocation of Permits
Inspection Services
Total Protection Services $1,464,197 $1,336,003 $59,478 $68,716
Transportation Services
Correspondence with
Total Roads (paved) $2,376,304 $2,091,148 $47,526 $237,630
Municipal Staff
Correspondence with
Total Roads (unpaved) $75,219 $66,193 $1,504 $7,522
Municipal Staff
Total Bridges and Correspondence with
$26,547 $23,361 $531 $2,655
Culverts Municipal Staff
Correspondence with
Total Winter Control $86,655 $76,256 $1,733 $8,666
Municipal Staff
People Services
Total Street Lighting $70,785 $70,785
allocated to residents
Total Transportation
$2,635,510 $2,164,088 $275,682 $195,740
Services
Environmental Services
Waste Water Treatment
$889,396 $871,608 $17,788 -Municipal Data
& Disposal
Water Treatment $102,823 $100,767 $2,056 Municipal Data
Water Distribution /
$521,245 $510,820 $10,425 Municipal Data
Transmission
Solid waste Collection $315,226 $297,889 $17,337 Municipal Data
Waste Diversion $221,289 $197,279 $24,010 Municipal Data
Total Environmental
$2,049,979 $1,978,362 $71,617
Services
Health Services
People Services
Public Health Services $9,991 $9,991
allocated to residents
People Services
Cemeteries $39,554 $39,554
allocated to residents
Total Health Services $49,545 $49,545
Recreation and Cultural
Services
People Services
Parks $92,299 $92,299
allocated to residents
People Services
Recreation Facilities $114,320 $114,320
allocated to residents
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People Services
Libraries $24,119 $24,119
allocated to residents
People Services
Museums $64,092 $64,092
allocated to residents
Cultural People Services
$13,934 $13,934
Services(Materials) allocated to residents
Total Recreation and
$308,764 $308,764
Cultural Services
People Services
Education $1,367,221 $1,367,221
allocated to residents
Planning and
Development
Correspondence with
Planning and Zoning $113,925 $113,925
Municipal Staff
Commercial and Correspondence with
$122,755 $122,755
Industrial Municipal Staff
Info obtained from
Agriculture and
$139,356 $139,356 FIR Instruction
Reforestation
Manual
Tile Drainage and
$194 $194
Shoreline Assistance
Total Planning and
$376,230 $113,925 $122,755 $139,550
development
Total Operating
$8,998,370 $8,091,195 $385,431 $521,744
Expenses (All Data)
Total Operating
$7,631,149 $6,723,974 $385,431 $521,744
Expenses (without educ)
Total Operating
Expenses (Without $8,998,370 $8,091,195 $385,431 $521,744
OMPF)
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Appendix B
each land use categories proportional demand for municipal services. However, a
COCS studies have not been used to estimate potential demand land uses have for a
service that they do not receive.
As an expansion of the COCS methodology, a survey of local Bayham farmers was
conducted to determine the municipal services they do and do not receive for their farm
business. The survey had two objectives:
1. Gain a better understand of what municipal services farmers are receiving, but
may not be demanding; and
2. Gain a better understanding of what services farmers are not receiving, but have
a demand for.
This type of survey could be extremely useful for the Municipality of Bayham to send to
all local property owners in all land use categories. In doing so they may uncover
valuable information that will save tax payer dollars and increase customer satisfaction.
QuestionYesNoUnsure
Would you be willing to pay additional property taxes to have gravel
20%
roads paved, for use by local residents? 20% 60%
Would you be willing to pay additional property taxes to have gravel
roads paved, for use by farm machinery? 10% 90%
Would you be willing to pay additional property taxes to have
increased maintenance of paved roads for use by local residents? 40% 50% 10%
Would you be willing to accept a reduction in the amount of
maintenance paved roads receive, for use by local residents, if it also
40% 60%
meant a reduction in your property tax bill?
Would you be willing to pay additional property taxes to have
increased maintenance of paved roads for use by farm machinery? 20% 70% 10%
Would you be willing to accept a reduction in the amount of
maintenance paved roads receive, for use by farm machinery, if it
50% 40% 10%
also meant a reduction in your property tax bill?
Would be willing to pay additional property taxes to have increased 40% 40% 20%
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maintenance of local bridges for use by local residents?
Would be willing to accept a reduction in the amount of maintenance
of local bridges, for use by local residents, if it also meant a reduction
30% 60% 10%
in your property tax bill?
Would you be willing to pay additional property taxes to have
increased maintenance of local bridges for use by farm machinery? 10% 80% 10%
Would you be willing to accept a reduction in the amount of
maintenance of local bridges, for use by farm machinery, if it also
40% 50% 10%
meant a reduction in your property tax bill?
Would you be willing to pay additional property taxes, for increased
snow plowing for local residents? 20% 70% 10%
Would you be willing to accept less frequent snow plowing for local
residents, if it also meant a reduction in your property tax bill? 40% 50% 10%
Would you be willing to pay additional property taxes, for an increase
in snow plowing for local farm businesses? 90% 10%
Would you be willing to accept less frequent snow plowing for local
farm businesses, if it also meant a reduction in your property tax bill? 40% 50% 10%
Does your household receive curbside pickup of garbage and
recyclables? 100%
Would you be willing to accept less frequent curbside pickup of
household garbage and recyclables for local residents, if it also
70% 30%
meant a reduction in your property tax bill?
Would you be willing to pay additional property taxes to receive
curbside pickup of your farm garbage and recyclables? 100%
Do you have municipal water?
100%
Would you be willing to pay additional property taxes to have your
residential dwelling receive municipal water services? 20% 80%
Would you be willing to pay additional property taxes to have your
farm buildings receive municipal water services? 18% 82%
Would you be willing to pay additional property taxes, for an increase
in OPP services to local residents? 30% 70%
Would you be willing to accept a reduction in the amount of OPP
services to local residents, if it also meant a reduction in your
50% 50%
property tax bill?
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85
Would you be willing to pay additional property taxes, for increased
OPP services to local farm businesses? 20% 80%
Would you be willing to accept a reduction in the level of OPP
services provided to local farm businesses, if it also meant a
50% 50%
reduction in your property tax bill?
Would you be willing to pay additional property taxes for an increase
in fire protection services of residential dwellings? 20% 80%
Would you be willing to accept a reduction in the amount of fire
protection services of residential dwellings, if it also meant a
60% 40%
reduction in your property tax bill?
Would you be willing to pay additional property taxes, for increased
fire protection services of farm buildings? 20% 80%
Would you be willing to accept a reduction in the amount of fire
protection services of farm buildings, if it also meant a reduction in
40% 50% 10%
your property tax bill?
Would you be willing to pay additional property taxes for increased
maintenance of municipal drains and ditches? 20% 70% 10%
Would you be willing to accept a reduction in the maintenance of
municipal drains and ditches, if it also meant a reduction in your
60% 30% 10%
property tax bill?
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Appendix C-
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REPORT TO COUNTY COUNCIL
FROM: Jim Bundschuh, Director of Financial Services
DATE: January 3, 2017
SUBJECT: Impact of 2016 MPAC Reassessment
INTRODUCTION:
The Municipal Property Assessment Corporation (MPAC) province-wide assessment
update is completed every four years. The January 1, 2008 valuation date affected the
2009-2012 tax years, the January 1, 2012 valuation affected 2013-2016 and the latest
valuation on January 1, 2016 will affect 2017-2020. The 2012 and 2016 valuations have
seen significant increases in farm land.
Based on current ratios, this translates into a tax burden shift to the farm class.
Properties experiencing a market increase in the latest valuation will have the valuation
phased-in for property tax calculation purposes over the four year tax cycle. As a result
the tax burden shift to farm will not happen instantaneously in 2017, but rather will be
phased in over four years to soften the impact.
The Elgin Federation of Agriculture (EFA) is once again requesting a reduction of the tax
ratio successively over four years down from 0.25 to 0.16 by 2020 to mitigate the impacts
of higher property tax values on the farm property tax calculation. A similar request was
made by the EFA four years ago. At that time, Council agreed with the recommendation
THAT tax ratios for all property classes be maintained at their current level as contained
Impact of 2012 MPAC Reassessment report to Council dated September 14, 2012.
DISCUSSION:
The property tax system legislated by the Province of Ontario attempts to achieve fair
taxation through the use of Current Value Assessment (CVA). In recognition that the tax
impact of changes in valuation will be difficult to absorb by individual property owners in a
single year, the province mandated that increases be phased-in over four years to soften
the increase. If the County and its partner municipalities wished to further reduce the
impact, then changes in the farm ratio could be considered. However, tax ratios are
typically altered either for fairness or strategic reasons.
The farm/managed forest tax rate is currently only 25% of the residential rate, whereas all
other rates are greater than the residential rate. For example, in 2012 a $750,000 farm
business would only have paid $2,700 in tax compared to an equivalently valued business
on Main St. (commercial class) that would have paid $24,000. By the 2020 tax cycle the
CVA of the farm business will have increased to $1.9 million (a $1 million gain in value in
real terms) resulting in taxes of $6,700 based on the current tax ratio. In comparison, the
commercial business lost property value in real terms but would see taxes of $25,000. If
the farm tax ratio was decreased to 0.16, the farm tax would be $1,100 less than it would
be under the 0.25 ratio, and the tax on the property on Main St. would be $500 higher, and
98
similarly residential properties would see a $70 increase on average as a result of such a
tax ratio change.
Although the tax increase on the farm class is significant, it is proportional to the increase
in farm property values and thereby meets the fairness test. The shift in tax burden from
commercial and other property classes to farm is consistent with the taxation system
ability-to- A reduction in farm tax ratio would mitigate this tax shift and
-to- As evidenced by stagnant commercial property
values, these businesses have not had the same economic fortunes these last eight
years as the farm businesses have enjoyed through rising farm property values. A shift
in tax burden by maintaining the tax ratios would reduce the financial pressures on Main
St. businesses, and it is hoped that to some degree this will help this sector remain a
viable component of the community.
The strategic reason for changing ratios would be to attract businesses to the County.
At this time Chatham/Kent is the only comparable municipality with a farm tax ratio below
25%, with their ratio being set at 22%. In a report to Council, titled Tax Ratios dated
th
November 28, 2011, Economic Development department concluded that
tax rates play a minor role in the site selection of businesses, with quality of place being
the primary decision factor. Although the focus of that report was on commercial and
industrial properties, its conclusions apply equally well to farm businesses. Furthermore,
altering the ratio, as proposed by the EFA could set an unwanted precedent in the future.
For example, commercial or residential assessments could rise relative to farm values
driving a demand from these property classes for a change in ratios. This would be at a
time when the economic prosperity of farms has weakened. How would the farming
community react to an increase in the ratio?
CONCLUSION:
Maintaining the current tax ratios results in a shift of tax burden to the farm class from
-to-
the economic advantage farm businesses have gained the last eight years relative to
other classes such as the commercial business class.
RECOMMENDATION:
THAT tax ratios for all property classes be maintained at their current level.
All of which are Respectfully Submitted Approved for Submission
Jim Bundschuh Mark G. McDonald
Director of Financial Services Chief Administrative Officer
99
2017 FISCAL OUTLOOK
January 10, 2017
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2016 HIGHLIGHTS
1.Hired full-time legal counsel available to local partners,
conservation authorities and recently City of St. Thomas
with savings to County/municipalities of approximately
$100,000.
2.Restructuring of Museum and Archives with equal or
better service and cost savings.
3.Grant for new museum will enable better display of
exhibits.
4.Southwold approves construction of new Shedden library.
5.CIP fully subscribed with tangible evidence of local
improvements across the County.
6.Talks with province over lease of court room space are
continuing.
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GUIDING PRINCIPLES YOUR VISION
1 - Maintain service levels
2 - Moderate to high use of reserves
3 - Financial Sustainability
102
ADVANCED PLANNING PAYS OFF
Over $2.8 million in efficiencies found in last seven
budget cycles.
Staff will continue to find $400,000 a year in efficiencies
for the next three years to bring the total to $4 million.
The 2010 Municipal Position of $190.9 million was
allowed to drop to a low of $187.9 by 2012 (through the
use of reserve).
Surpluses to budget have allowed the Municipal Position
to recover somewhat to a level of $193.7 million, a loss
in real terms of $16 million.
A further anticipated surplus in 2016 will further the
recovery.
103
OUTLOOK
Good news:
2016 is an anticipated surplus of approximately $1
million each in operating and capital
Increased Ontario Community Infrastructure Fund (OCIF)
Funding averaging $0.5 million annually through 2019
Additional one time Provincial funding of $0.25 million for
Terrace Lodge
Museum building funding of $0.5 million announced
Shared services agreement with City will see saving grow
to $0.5 million in 2017
Public Health budget revised late in 2016 reduces County
costs by $96,000
Social Service costs reduced due to uploads and the
amalgamation of the Housing Corp saves $270,000
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OUTLOOK
Cost pressures for 2017
Ontario Municipal Partnership Fund (OMPF) reductions
($5.8 down to 0.8 million from 2008-17)
Continued increasing demands from the LHIN
CMI (Case Mix Index) funding from province not keeping pace
with acuity levels
Mandatory training required by not funded by the province
Canada Pension Plan (CPP) changes will cost $0.25
million annually by the end of this ten year plan
Hydro increases seen in 2016 flowing through into 2017
adding $160,000 to the budget
105
THE BIG TICKET ITEMS FOR 2017
Terrace Lodge re-development of $29.7 million plus interest
with slightly more than a third of total cost funded by the
province
New Museum project added to the plan with half funded by
province/feds, a reallocation of museum planned spending and
a use of capital surplus
SWIFT broadband project of $525,000 over five years
Community Improvement Plan (CIP) of $1.0 million compressed
into six years from the original ten years
Elgin Clean Water Program funding ongoing at $40,000
annually
OCIF funding increase of $1.6 million confirmed represents only
40% of estimated project costs for Wonderland Rd.
SCOR request of $25,000 annually needs to be considered
106
THE STARTING POINT FOR THE 2017 LONG-TERM PLAN
a $3.5 million improvement in
2016 budgeted for
Municipal Position, due to a great extent to OCIF funding
for Dexter Line & Miller Road
2017-2020 previously planned for 5% increase in levy
(4% increases on average household)
2021 onward anticipated average household increase at
the rate of inflation
Positive net income planned in each year from 2017 -
2024 resulting in a steady increase in Municipal Position
But the increases will be less than the rate of inflation,
and therefore represents a reduction in Municipal
Position in real terms
107
CONSIDERATIONS
Anticipated 2016 operating and capital surpluses can
be used for special purposes such as:
Self financing a portion of the Museum build
Offset increased capital budget resulting from
uploading of Wonderland
Offsetting negative impacts such as Hydro and CPP
SCOR request of $25,000 annually requires an
incremental 0.1% increase in the levy
108
THE RESULTS
Staff are targeting a $0.4 million reduction in cost again
in 2016 (seventh year at this rate of improvement).
The 2016 capital surplus used to fund new Museum
building and Wonderland Road capital construction
upload.
The 2016 operations surplus combined with the good
news from Public Health and Social Services will offset
cost increases seen through hydro and CPP.
The levy increase for 2017 will be approx. 5% as was
previously planned as part of the 2016 ten year plan.
The impact on the average household will be an increase
of approximately $40 or less than 3%.
Figures are still preliminary and subject to change.
109
Next Steps
Obtain Council direction on SCOR membership
(0.1% incremental levy increase)
January 24 Council Meeting:
2017 Capital Budget
2017 Grants
February 14 Council Meeting:
2017 Operating Budget
Note: All deliberations subject to final approval and
adjustments at February Council meeting
110
REPORT TO COUNTY COUNCIL
FROM: Jim Bundschuh, Director of Financial Services
DATE: January 2, 2017
SUBJECT: Borrowing By-Law
INTRODUCTION:
Every year Council passes a by-law to allow the Warden and Treasurer to borrow up to
$15 million for cash flow and emergency purposes.
DISCUSSION:
The County currently collects $7 million in taxes every quarter. In order to manage cash
flow between receipts of levy payments, the County may from time to time draw on its
line of credit in order to continue to meet its obligations on a timely basis. The County
currently has access to a $2 million line of credit with the Bank of Montreal for this
purpose.
Furthermore, any unforeseen emergency may require the use of the existing line of
credit, or may even require that line of credit be extended to a higher amount. For that
purpose, the attached by-law is passed each year by Council authorizing the Warden
and Treasurer, on behalf of the County, to borrow up to $15 million.
RECOMMENDATION:
THAT up to $15 million of borrowing in 2017 be authorized through the necessary by-
law.
All of which is Respectfully Submitted Approved for Submission
Jim Bundschuh Mark G. McDonald
Director of Financial Services Chief Administrative Officer
111
DEPUTY WARDEN ROTATION SCHEDULE
COUNCILLOR201620172018
CURRIE APRIL NOVEMBER JUNE
ENS FEBRUARY & OCTOBER JUNE MARCH & SEPTEMBER
JONES AUGUST MAY & DECEMBER
MARR JUNE & DECEMBER JULY & SEPTEMBER APRIL
MARTYN JULY MARCH NOVEMBER
McWILLIAM MARCH & NOVEMBER APRIL & DECEMBER OCTOBER
MENNILL JANUARY & MAY FEBRUARY & OCTOBER JULY
WIEHLE JANUARY & MAY JANUARY & AUGUST
WOLFE SEPTEMBER AUGUST FEBRUARY
PLEASE NOTE: THIS SCHEDULE IS FOR THE TERM OF THE CURRENT COUNCIL. IT IS UNDERSTOOD THAT THE
OUTGOING WARDEN WILL TAKE THE INCOMING WARDEN'S ROTATION.
112
113
South Central Ontario Region Economic Development Corporation (SCOR EDC)
4 Elm Street, Tillsonburg, ON N4G 0C4, P: 519-842-6333
Our partner request for 2017 and 2018 has been decreased to $25,000/year from $35,000. A stable base of
municipal partner funding and support will allow the corporation stability in operations and allow us to further
leverage funding to continue to give you the best return on investment.
Below is the operational budget for 2017 and 2018
BUDGET 2017
2017 Operating Budget -Decrease from partners
SCOR EDC BUDGET
REVENUEBUDGET 2017
Carry Over$30,000.00
Partner Contribution$125,000.00
TOTAL$155,000.00
PERSONNEL
Staff wages and benefits$106,500.00
TOTAL$106,500.00
ADMINSTRATION EXPENSES
Project Support$10,000.00
Corporate Costs (insurance, legal, audit, banking, agm)$16,000.00
Rent and facilities (phone, printing, IT support)$10,500.00
computer and websites$4,000.00
Auto Mileage$8,000.00
TOTAL GENERAL EXPENSE$48,500.00
TOTAL EXPENSES$155,000.00
TOTAL$0.00
BUDGET 2018
2018Operating Budget -Decrease from partners
SCOR EDC BUDGET
REVENUEBUDGET 2017
Carry Over$0.00
Partner Contribution$125,000.00
TOTAL$125,000.00
PERSONNEL
Staff wages and benefits$81,500.00
TOTAL$81,500.00
ADMINSTRATION EXPENSES
Project Support$8,000.00
Corporate Costs (insurance, legal, audit, banking, agm)$16,000.00
Rent and facilities (phone, printing, IT support)$10,500.00
computer and websites$4,000.00
Auto Mileage$5,000.00
TOTAL GENERAL EXPENSE$43,500.00
TOTAL EXPENSES$125,000.00
TOTAL$0.00
114
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117
COUNTY OF ELGIN
By-Law No. 17-01
"BEING A BY-LAW TO AUTHORIZE THE WARDEN AND THE TREASURER TO
BORROW UP TO THE SUM OF FIFTEEN MILLION DOLLARS"
WHEREAS pursuant to Section 407 of the Municipal Act, 2001, S.O. 2001, c.25, as
amended, the Council of the Corporation of the County of Elgin deems it necessary to borrow
up to the sum of Fifteen Million Dollars ($15,000,000.00) to meet, until the taxes are collected,
the current expenditures of the Corporation for the year; and
WHEREAS the total of amounts previously borrowed under Section 407, that have not
been repaid are nil; and
WHEREAS the amount of the estimated revenues of the Corporation as set out in the
estimates adopted for the current year and not yet collected (or, if the same have not yet
been adopted, the amount of the estimated revenues of the Corporation as set forth in the
estimates adopted for the next preceding year) is Fifty-Nine Million, Nine Hundred and Eighty-
Eight Thousand, and Four Hundred and Seventeen Dollars.
BE IT THEREFORE ENACTED by the Municipal Council of the Corporation of the
County of Elgin:
1. THAT the Warden and the Treasurer or the Deputy Treasurer of the Corporation are
hereby authorized on behalf of the Corporation to borrow from time to time, by way of
promissory note, from the Bank of Montreal, a sum or sums not exceeding in the aggregate
Fifteen Million Dollars ($15,000,000.00) to meet, until the taxes are collected, the current
expenditures of the Corporation for the year, including the amounts required for the purposes
mentioned in subsection (1) of the said Section 407, and to give, on behalf of the Corporation,
to the Bank a promissory note or notes, sealed with the corporate seal and signed by them for
the moneys so borrowed with interest at a rate not exceeding Prime per centum per annum,
which may be paid in advance or otherwise.
2. THAT all sums borrowed from the said Bank, for any or all of the purposes mentioned in
the said Section 407, shall, with interest thereon, be a charge upon the whole of the revenues
of the Corporation for the current year and for all subsequent years, as and when such
revenues are received.
3. THAT the Treasurer or the Deputy Treasurer is hereby authorized and directed to apply in
payment of all sums borrowed pursuant to the authority of this By-Law, as well as all the other
sums borrowed in this year and any previous years, from the said Bank for any or all of the
purposes mentioned in the said Section 407, together with interest thereon, all of the moneys
hereafter collected or received on account or realized in respect of the taxes levied for the
current year and preceding years and all of the moneys collected or received from any other
source, which may lawfully be applied for such purpose.
th
4. THAT this by-law takes effect and comes into force on January 10, 2017.
TH
READ A FIRST, SECOND AND THIRD TIME AND FINALLY PASSED THIS 10 DAY OF
JANUARY 2017.
Mark G. McDonald, Grant Jones,
Chief Administrative Officer. Warden.
118
CLOSED MEETING AGENDA
January 10, 2017
Staff Report:
1) Director of Human Resources Municipal Act Section 239.2 (b) personal
matters about an identifiable individual, including municipal or local board
employees CAO Succession Planning Continued (circulated under
separate cover)