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Ratepayers may be on hook in downtown tax revolt
By JOHN BARBER
Tuesday, April 12, 2005 Page A13
Amid the steady drip of budget shortfalls, pressures, gaps and general fiscal leakage afflicting the municipal government, Toronto is now facing the loss of $60-million in a tax revolt launched by the owners of its biggest and most lucrative commercial properties.
And residential taxpayers will be responsible for making up the loss should the revolt succeed -- an amount equal to a 6-per-cent tax hike, in the worst-case scenario set out in a confidential report from city officials.
The report, signed by Treasurer Joseph Pennachetti, warns that successful assessment appeals by the city's dozen largest office buildings would not only result in a major loss of previously collected revenue -- $120-million in total, including $60-million collected by local school boards since 2001 -- but could also set off a flood of similar appeals, with even more serious consequences for the city treasury and residential taxpayers.
As a result, the treasurer is recommending that the city take the unusual step of attempting to safeguard its revenue by hiring lawyers and experts to join the appeal process.
"Should this group be successful, there's a serious concern that it would cause a cascading effect," Councillor Brian Ashton, chair of council's economic development committee, said yesterday. "The city needs to insert itself into the process."
The assessments under appeal account for virtually all of Toronto's inventory of "triple-A" office buildings clustered in the financial district.
In all, the owners of 13 buildings, including all the major bank towers, have joined the appeal, seeking a reduction in assessments going back to 2001.
Quite apart from its potentially devastating effect on all downtown office assessments, the triple-A tax revolt dramatizes the city's reliance on a financial district that is clearly overtaxed and, just as clearly, has failed to grow in recent years.
Every year, the dozen-odd buildings whose assessments are under appeal produce more than $250-million in revenue for City Hall and local school boards.
Meanwhile, virtually all office development in Greater Toronto is taking place in the outer suburbs.
Saying the current revolt is "not surprising," Phil Gillin of the Toronto Office Coalition warned that excessive taxes on downtown buildings will almost certainly inspire more appeals.
"There's a huge spread between suburban taxes and downtown taxes without a lot of justification," he said.
Businesses that aren't appealing are "voting with their feet," added Mr. Gillin, chair of a group that represents many of the largest commercial property owners and tenants in Toronto.
"You can see it looking out your window," he said.
"There's no commercial development going on in the city. In the 905 zone, there has been 89 office buildings built in the last five years. In the city there has been 12 built over the same time period."
More than 45,000 people work in those new suburban buildings, he added, versus about 6,000 in the city's dozen new office buildings.
The increasing disparity in economic development between the city and the suburbs is "very inefficient from an infrastructure perspective, from a land use perspective and from an environmental perspective," according to Mr. Gillin.
"It's totally inconsistent with planning principles by every government, but it just keeps happening."
For his part, Councillor Ashton blames provincial policies that "allow other municipalities to siphon off the financial core" for this latest assault on city revenues.
"It's what weakened the U.S. cities in decades gone by and it's happening here today," he said. "We can kill our financial district in a whole number of ways."
For now, the blame game is still abstract. But when city officials turn to residential taxpayers to make up "cascading" losses of revenue from commercial properties, it will become desperately real.
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Originally posted by abrowne
