35% propety tax increase?

[denfromoakvillemilton]

http://www.torontosun.com/2011/08/13/massive-tax-hike-would-be-crushing#disqus_thread

TORONTO - The 35% hike in property taxes that Mayor Rob Ford suggested Friday as an alternative to laying off city workers would effect a wide swath of people.

Matthew Lister, 39, is the new owner of The Loop, a fledgling taproom in east Toronto that, since its opening in July, has seen around 250 patrons a night pass through its umbrella-peppered patio, not including the many who wander in for a quick pint during lunch or the late afternoon.

Really?

 

[denfromoakvillemilton]

A ton of money would come from this though.

 

[dt_toronto_geek]

It's the amount of tax that it would take to balance the budget, but of course that's not going to happen. I'm thinking Ford will have to go with 3-5%.

 

[CanadianNational]

This is a very interesting thing for the Sun to splash across the front page.

It's obviously an outrageous attempt to create shock and fear amongst their readership, as well as foment rabid pressure against unions and the perceived left. But it's so bizarrely crude as a piece of manufacture that it has the weird effect of making the mayor look like he's crazier than the 'lefties'. The cover looks like the kind of arbitrary, outsize insult the Sun would normally throw at someone they regard as an enemy.

So - is this the gun Ford is going to hold to the population's head whenever he wants to get his way?

 

[ibhattac]

so the municipal portion of the tax would go from


Residential 0.56%
Multi-Residential 1.86%
New 0.56%
Multi-Residential
Commercial General 1.83%
Residual Commercial -* 1.70%
Band 1
Residual Commercial -* 1.83%
Band 2
Industrial 1.82%
Pipelines 1.08%
Farmlands 0.14%
Managed Forests 0.14%

to

Residential 0.76%
Multi-Residential 2.52%
New 0.76%
Multi-Residential
Commercial General 2.46%
Residual Commercial -* 2.30%
Band 1
Residual Commercial -* 2.46%
Band 2
Industrial 2.46%
Pipelines 1.46%
Farmlands 0.19%
Managed Forests 0.19%


?

How does that compare to other municipalities? I presume the Provincial education component will remain fixed . . ..Or, at least, subject to a different rate of increase.

 

[taal]

Just look at the commerical rates, compared to Mississauga.
This is including the educational component (i.e. provincial):
Mississauga commercial: 2.28%
Toronto new rate: 3.96%

That's a pretty crazy difference ...

It looks small above but realize that's about 1.8X more ! This amounts to a huge dollar difference.


What impact does this have ?

For land owners to keep their Toronto's commercial properties semi-attractive they need to actually change lower net rental rates.

Total rental rates are (i.e. gross rental rates): net rental rate + operating costs (includes TAX, utilities, ... ).

This is why it's not very attractive to build anything out of the core (where you can get away with charging a higher net rental rate and business will pay). But this doesn't apply outside the core and hence there's been just about 0 development in the last 10 year or so in the outer 416.

 

[denfromoakvillemilton]

Just look at the commerical rates, compared to Mississauga.
This is including the educational component (i.e. provincial):
Mississauga commercial: 2.28%
Toronto new rate: 3.96%

That's a pretty crazy difference ...

It looks small above but realize that's about 1.8X more ! This amounts to a huge dollar difference.


What impact does this have ?

For land owners to keep their Toronto's commercial properties semi-attractive they need to actually change lower net rental rates.

Total rental rates are (i.e. gross rental rates): net rental rate + operating costs (includes TAX, utilities, ... ).

This is why it's not very attractive to build anything out of the core (where you can get away with charging a higher net rental rate and business will pay). But this doesn't apply outside the core and hence there's been just about 0 development in the last 10 year or so in the outer 416.

Kind of shocking. That's why so many corps are in Missy and not Etobicoke.

 

[taal]

Kind of shocking. That's why so many corps are in Missy and not Etobicoke.

At least that's one factor yes, a couple other things do factor in. People will always argue ... oh land is more expensive in Toronto, it actually isn't in making cases believe it or not for the exact reasons above, a developer can make more elsewhere and what's what drives pice.

To be a little fair their are other factors, there's not huge swaths of lands in Etobicoke that are not residential or industrial. But take the 404 corridor, lots of empty parcels in employment land that has seen no development south of steeles in 10 years. Go north, up to Hi-way 7 and it's a different story.

I think it's too late to change it now though ... gross rental rates around Hi-way-7 and 404 are actually higher then just about anywhere in eastern Toronto ! So the whole tax mater doesn't even factor in anymore ! It's cheaper to be in Toronto now. But a lot of the office stock is old and not competitive.

Now industry agglomeration factors in. i.e. it's much more desirable for certain companies (tech and the like) to be at hi-way / 404 regardless of rent / quality of office stock / anything else, because there are many other like industries there now. I think in the long run, at best we'll see eastern Toronto maintain the current amount of office space at best and the vacancy rates will remain high (relative to the rest of the GTA).

Here's another problem ... I can see office space lost over the next little while ... as buildings age and know one wants to maintain them anymore they'll be converted to condos or just demoed ... we know of 2 such projects just this year, one office / loft conversion near Shops of Don Mills and another older office building at Eglinton and Don Mills that's being demoed for condos.

 

[denfromoakvillemilton]

At least that's one factor yes, a couple other things do factor in. People will always argue ... oh land is more expensive in Toronto, it actually isn't in making cases believe it or not for the exact reasons above, a developer can make more elsewhere and what's what drives pice.

To be a little fair their are other factors, there's not huge swaths of lands in Etobicoke that are not residential or industrial. But take the 404 corridor, lots of empty parcels in employment land that has seen no development south of steeles in 10 years. Go north, up to Hi-way 7 and it's a different story.

I think it's too late to change it now though ... gross rental rates around Hi-way-7 and 404 are actually higher then just about anywhere in eastern Toronto ! So the whole tax mater doesn't even factor in anymore ! It's cheaper to be in Toronto now. But a lot of the office stock is old and not competitive.

Now industry agglomeration factors in. i.e. it's much more desirable for certain companies (tech and the like) to be at hi-way / 404 regardless of rent / quality of office stock / anything else, because there are many other like industries there now.

Weird to know. So in essence, toronto was more expesive but, now is better because of lack of space.

 

[taal]

Weird to know. So in essence, toronto was more expesive but, now is better because of lack of space.

Yep that's a big factor ... that's why you have to be carefull when comparing gross rental rates i.e. you'll see some parts of Toronto are cheaper then the 905 and wonder ... hey taxes can't be that bad ... but it's really because a lot of properties are old.


Again some areas aren't effected as much, clearly downtown and anyone on Yonge to a certain degree. Though I'd argue I think we would have seen more development downtown if this were not an issue. Also, though vacancy rates are very low along Yonge (north of Bloor) there's also been 0 new projects as we all known in the last 7 year or so - even though NYCC has been fighting hard to get one (or at least prevent condos from taking land that is supposedly reserved for that). But again as these are considered prime locations tenants don't mind or land owners can do improvements because they can charge higher net rental rates.

I don't know the details but I think amalgamation really hurt Toronto bad ... forcing all of Toronto to adopt one rate across the entire city.


Here's another point - on a macro scale ... our tax rates (commercial rates) aren't that bad - Vancouver is very similar actually. But there's a big difference, the greater Vancouver area also has similar commercial rates, so everything is on a even playing field, but here it's the 416 proper that's about 1.5-2X more (which is significant).

 

[taal]

On the other side of things I thought I should throw this in:

There are some who argue tax rates don't really factor in that much, and I can by this to a certain degree depending on what your comparing and what industry.

So that's why I stay away from the downtown Toronto argument but when you refer to the outer 416 you really factor out location less a couple important factors:

What else do businesses care about ? Transportation options and access to potential employees. Nowadays you can argue Hi-way 7 and the 404 has just as many transportation options (including transit) as any place in North east Toronto. Moreover in terms of residents it's a middle / to high end area as well, which compares well if not better to the similar parts of Toronto.

At the very least it's hard to argue they're very different, so if you factor all that out a business will care about things what rents they pay and the quality of space they can get.

 

[denfromoakvillemilton]

Yep that's a big factor ... that's why you have to be carefull when comparing gross rental rates i.e. you'll see some parts of Toronto are cheaper then the 905 and wonder ... hey taxes can't be that bad ... but it's really because a lot of properties are old.


Again some areas aren't effected as much, clearly downtown and anyone on Yonge to a certain degree. Though I'd argue I think we would have seen more development downtown if this were not an issue. Also, though vacancy rates are very low along Yonge (north of Bloor) there's also been 0 new projects as we all known in the last 7 year or so - even though NYCC has been fighting hard to get one (or at least prevent condos from taking land that is supposedly reserved for that). But again as these are considered prime locations tenants don't mind or land owners can do improvements because they can charge higher net rental rates.

I don't know the details but I think amalgamation really hurt Toronto bad ... forcing all of Toronto to adopt one rate across the entire city.


Here's another point - on a macro scale ... our tax rates (commercial rates) aren't that bad - Vancouver is very similar actually. But there's a big difference, the greater Vancouver area also has similar commercial rates, so everything is on a even playing field, but here it's the 416 proper that's about 1.5-2X more (which is significant).

Intresting. So how do we change this?

 

[taal]

Intresting. So how do we change this?

We don't, and you should learn not to care as I have

Seriously, many will argue with you that this is a mute point because of all the development downtown, the rest of Toronto is easy to forget when downtown is doing OK / well.
Also I think all the condo growth throughout Toronto hurts us ... not that it's a bad thing, it's great -but it gives people the impression that there's growth throughout Toronto. Growth isn't the right word ... development ... and it's again easy to forget how there's been little to no commercial development.

I've emailed counselors in the past and haven't really heard much back. There is/was a plan to supposedly help remedy the situation by slowly transfer more of the burden from the commercial side to the residential side ... the problem with this plan is the end goal would still leave Toronto's absolute commercial rate incredibly high relative to the 905 and it would take years (decades actually) to get close.

A couple ideas that would work would be to offer incentive to developers to build new commercial buildings ... but it has to be done extremely carefully ... something along these lines: Something that allows developers and landlords to take in more income (maybe tax relief) but it shouldn't provide any incentive to renters (i.e. business that rent the space) I say this because otherwise everyone who wants to be in Toronto would vacate existing buildings because of the lower rates here. So this would just create new space at relatively higher rates but with relief so developers / landlords can make more profit compared to the 905. These should be targeted in the outer 416 only. Other incentive can be used downtown but these things are already in place.


Anyway, I don't think we'll see any change and we'll continue to see more development in the 905 and downtown Toronto only.

 

[Admiral Beez]

Kind of shocking. That's why so many corps are in Missy and not Etobicoke.

Actually both Mississauga and Etobicoke have Corps. Etobicoke is the new base of the Royal Canadian Infantry Corps' Queen’s Own Rifles. While, Mississauga houses the same Corps' Toronto Scottish Regiment in their brand new Armoury, see http://www.reinders.ca/militaryprojects1.html

Now, the question is, what does the corps in Toronto or Mississauga have to do with Rob Ford?

 

[taal]

Actually both Mississauga and Etobicoke have Corps. Etobicoke is the new base of the Royal Canadian Infantry Corps' Queen’s Own Rifles. While, Mississauga houses the same Corps' Toronto Scottish Regiment in their brand new Armoury, see http://www.reinders.ca/militaryprojects1.html

Now, the question is, what does the corps in Toronto or Mississauga have to do with Rob Ford?

Nothing, but this thread is in regards to the 35% tax increase, who said anything about Ford ?