City of Ottawa

[rocketphish]

What's a PILT and why does the mayor think Ottawa is getting shafted
PILT — payment in lieu of taxes — is what the federal government pays instead of property tax.

Blair Crawford
Published Aug 10, 2024 • Last updated 20 hours ago • 4 minute read

The federal government isn’t paying its fair share to Ottawa, Mayor Mark Sutcliffe complained this week, citing a shortfall in money received through “an arcane issue called PILTs.”

PILT — payment in lieu of taxes — is what the federal government pays instead of property tax. Government aren’t allowed to tax each other, so it’s through PILTs that the federal government pays for the services it receives from the municipality.

As the largest property owner in downtown Ottawa, the federal PILT isn’t chump change: It was worth $162 million last year, Sutcliffe said. But eight years ago, the federal PILT was $192 million, $30 million more than it is today. The decrease is due to a number of reasons, mainly that the feds are selling off some properties while others are vacant and valued for less.

But Sutcliffe’s main complaint is that the federal government gets to decide on its own how much its property is worth before applying the city’s tax rate to it. Under the Payment in Lieu of Taxes Act, the PILT “is the value that, in the opinion of the Minister of Public Services and Procurement, would be attributable if the property was taxable.”

It’s as if a homeowner could decide themselves how much their house should be assessed at before calculating their property tax bill.

“Wouldn’t that be a great deal?” Sutcliffe said.

“For decades now, through successive governments representing different parties, the federal government and its many agencies have simply stopped paying their fair share of taxes, or payments in lieu of taxes, in Ottawa.”

A 2020 decision by the Province of Ontario to reduce business education tax rates to provide financial relief to small businesses has also affected PILT revenue since the federal government decided it would calculate PILTs based on the reduced rate.

Kanata-Carleton MP Jenna Sudds, a former Ottawa city councillor who is now Minister of Families, Children and Social Development, said the federal government was doing its part for the city.

“I appreciate the city is in a difficult financial situation. Like many cities, the impacts of COVID linger on all government’s budgets,” Sudds said in an emailed statement. “Our government is doing our part, just as we outlined in this year’s budget, by sticking to our responsible fiscal targets.”

She cited a $50-million federal grant for interim housing and another $173 million for Ottawa from the federal Housing Accelerator Fund.

“As a former city councillor, and now federal minister representing Ottawa, I will always advocate and work for the best interests of Ottawa residents and have strong relationships with the mayor and council, and incredible Ottawa MPs to work alongside,” Sudds said.

“However, we must remember that there is only one taxpayer. The residents of Ottawa have paid their property taxes and they’ve paid their federal tax with expectations that we manage their money well and spend it wisely. We at the federal level take this responsibility seriously, especially at a time when the people of Ottawa are watching their pocketbooks, and the City of Ottawa is not exempt from this responsibility, either.”

In an emailed statement Friday, Guillaume Bertrand, press secretary to Public Services and Procurement Canada Minister Jean-Yves Duclos, said the federal government owned and operated one of the largest and most diverse portfolios of real estate in Canada and made payments in lieu of taxes to more than 1,100 taxing authorities.

“The federal government and the National Capital Commission are committed to work with the cities of Ottawa and Gatineau to make sure all Canadians can be proud of our nation’s capital,” Bertrand said.

“Many local governments across Canada are trying to find new sources of revenues to face the cost-of-living crisis we are experiencing right now. This is a global phenomenon, not one specific to the region or the city of Ottawa. And, while interest rates are going down and inflation is back inside the Bank of Canada target for a sixth month in a row, we understand it remains difficult for many municipal governments.

“PSPC officials continue to work with the City of Ottawa to ensure that payments in lieu of taxes for Crown-owned properties are fair and equitable. Our government has been and will continue to be a committed partner for the city of Ottawa.”

PSPC manages the payment in lieu of taxes budget, doling out nearly $610 million to municipal and provincial governments in 2023, according to its website.

The City of Ottawa received by far the largest portion of that total, $124 million, followed by Gatineau at $48.5 million and the City of Dorval, site of Pierre Elliott Trudeau Airport, at $35.3 million. (Sutcliffe said Thursday that Ottawa received $164 million. There was no immediate explanation for the discrepancy.)

According to PSPC, Ottawa received $119.6 million in PILT in 2022, $114.6 million in 2021, $124.8 million in 2020 and $122.7 million in 2019.

There are five types of PILT payments: payments in lieu of property tax; payments in lieu of frontage to fund work such as sewer repairs or street lighting; payment in lieu of service charges to pay for things like water service or garbage collection; late-payment supplements for cases where payment has been unreasonably delayed; and payments in lieu of business occupancy tax that are paid by Crown corporations.

Municipalities can and do dispute PILT payments through the Payment in Lieu of Taxes Dispute Advisory Panel.

https://ottawacitizen.com/news/explainer-pilt-mayor-ottawa-shafted

[urbanforest]

Sounds like it would be a good time for Sutcliffe to sell Wellington St to the feds to raise some dollars and get those maintenance costs off his hands

[BlueJay]

Let's get the feds to force their work force that has increased by 40 %, to work in the office five days a week. Transit cuts would not be an issue and would not be needed.

[Marshsparrow]

Originally Posted by BlueJay

Let's get the feds to force their work force that has increased by 40 %, to work in the office five days a week. Transit cuts would not be an issue and would not be needed.

The 40% stat is misinformation.
Not all federal public servants work in the NCR.
Not all federal public servants need to be in an office 5x a week.
Many federal offices are to a state of disrepair people would be surprised at the conditions.
Why doesn't the City force their workers back first 5x a week.

[Proof Sheet]

Originally Posted by Marshsparrow

Why doesn't the City force their workers back first 5x a week.

There are still City Planners who come to the office 2 days a week and are working out of town the other 3 days from where they moved to during Covid (usually cheaper places to live) and they have been known to brag about it on Linkedin etc.. So much for site visits . During Covid, I know of planners who were living in different time zones and/or a 5 + hour drive away. Once again...no feet on the ground in a job where you need to be able to see the area that you are reviewing plans of/making policy decisions on.

Many City staff have this message on their outgoing emails even in 2024. I have my doubts that these people are wearing masks at the supermarket and on transit or are refraining from travel.

During this period of uncertainty due to COVID-19, City staff are following best practices to minimize exposure and risk. I am currently working from home and will respond to any emails as soon as I am able.

[YOWetal]

Originally Posted by urbanforest

Sounds like it would be a good time for Sutcliffe to sell Wellington St to the feds to raise some dollars and get those maintenance costs off his hands

Yes and a face saving way for the feds to help us out.

How do you appraise a streets value though ?

[phil235]

Originally Posted by Proof Sheet

There are still City Planners who come to the office 2 days a week and are working out of town the other 3 days from where they moved to during Covid (usually cheaper places to live) and they have been known to brag about it on Linkedin etc.. So much for site visits . During Covid, I know of planners who were living in different time zones and/or a 5 + hour drive away. Once again...no feet on the ground in a job where you need to be able to see the area that you are reviewing plans of/making policy decisions on.

Many City staff have this message on their outgoing emails even in 2024. I have my doubts that these people are wearing masks at the supermarket and on transit or are refraining from travel.

During this period of uncertainty due to COVID-19, City staff are following best practices to minimize exposure and risk. I am currently working from home and will respond to any emails as soon as I am able.

These seem like issues that need to be managed. I would have thought that site visits would be an essential part of that job, so it should be pretty easy for their managers to insist on it.

Also not sure why working from home would have any impact on email response times.

[FrostyMug]

The mayor bought into the Doug Ford nonsense earlier this year and only now is figuring out that Doug is not going to come through?

Look at Ford's track record. When he wants something done it happens and usually very, very quickly. Ontario Place, Science Centre, takeover of Don Valley and Gardiner expressways, booze in corner stores. The list is long, often Toronto centric and rarely what the public actually wants.

So when he trotted into Ottawa and promised about the 174 and other Ottawa related goodies, the politicians at city hall all lined up to celebrate. What has happened since? Nothing except a nice ad on my social media from the province bragging about a future 416 interchange for conservative voting Barrhaven but with an image of the 174 at Place D'Orleans.

Ford does not care about Ottawa and the mayor's posturing now isn't going to get him anywhere with the province and likely not with the feds as well if I'm reading the tea leaves from the MP from Kanata.

[Proof Sheet]

Originally Posted by phil235

These seem like issues that need to be managed. I would have thought that site visits would be an essential part of that job, so it should be pretty easy for their managers to insist on it.

Also not sure why working from home would have any impact on email response times.

Site visits and not Google Street View visits are an essential part of the job. It is unbelievable how much information City Planners ask of applicants in terms of basic information. I've asked why they want this information when a site visit would answer their questions and there is silence on the video meeting and then they would sheepishly answer that they weren't in Ottawa etc. Often times, I knew this but would bring it up. Escalating this 'remote' work situation to their manager had me being told not to bring it up further.

Also I have no idea how email response times are impacted by COVID unless you have COVID.

[J.OT13]

Here's a nice graph of the Big 6 Canadian City tax increases over the last 10 years. It's almost like our Politicians put us in this mess.


https://x.com/SjamieIt/status/1822337655255822392

Oh shit, that's actually from the City's website:

https://ottawa.ca/en/city-hall/budget-fi...ion-599fef6a-5e4e-40a7-80a0-99b25ca8fdc5

Not something to brag about when you're claiming financial ruin.

Originally Posted by FrostyMug

The mayor bought into the Doug Ford nonsense earlier this year and only now is figuring out that Doug is not going to come through?

Look at Ford's track record. When he wants something done it happens and usually very, very quickly. Ontario Place, Science Centre, takeover of Don Valley and Gardiner expressways, booze in corner stores. The list is long, often Toronto centric and rarely what the public actually wants.

So when he trotted into Ottawa and promised about the 174 and other Ottawa related goodies, the politicians at city hall all lined up to celebrate. What has happened since? Nothing except a nice ad on my social media from the province bragging about a future 416 interchange for conservative voting Barrhaven but with an image of the 174 at Place D'Orleans.

Ford does not care about Ottawa and the mayor's posturing now isn't going to get him anywhere with the province and likely not with the feds as well if I'm reading the tea leaves from the MP from Kanata.

Yeah, like clearly that was a bad deal compared to what Toronto and the GTA got (especially on transit), but you'd still think it would have helped our finances.

I saw that ad on YouTube for the first time the day Sutcliffe had that Presser. It's like Doug had it on the ready as a rebuttal to the Mayor's claims.

In any case, it was a bad look enthusiastically accepting the chump change just to beg for more money a few months later.

[nredding]

The Feds and the province can point to this table as the reason why Ottawa doesn’t have enough money. It’s interesting that, while other cities tax increases vary from year to year, Ottawa’s don’t ( 2% then 3% then 2.5%). It shows that Ottawa property tax increases are based on political reasons, rather than how much money the city needs. It particularly shows up for the last two years, with Sutcliffe as mayor.

[Kitchissippi]

I think a lot of suburbanites are going to be shocked when the next MPAC assessments come out. I think their values sort of caught up with the inner city during the pandemic which hasn’t been factored in. The mayor is probably bracing for the outcry from his base.

[YOWetal]

Originally Posted by nredding

The Feds and the province can point to this table as the reason why Ottawa doesn’t have enough money. It’s interesting that, while other cities tax increases vary from year to year, Ottawa’s don’t ( 2% then 3% then 2.5%). It shows that Ottawa property tax increases are based on political reasons, rather than how much money the city needs. It particularly shows up for the last two years, with Sutcliffe as mayor.

Yes and given the inflation we've seen we have moved backwards.

Originally Posted by Kitchissippi

I think a lot of suburbanites are going to be shocked when the next MPAC assessments come out. I think their values sort of caught up with the inner city during the pandemic which hasn’t been factored in. The mayor is probably bracing for the outcry from his base.

Good point and also all the new houses are carrying a lot of the load as they are more accurately valued as well.

[Truenorth00]

Originally Posted by Kitchissippi

I think a lot of suburbanites are going to be shocked when the next MPAC assessments come out. I think their values sort of caught up with the inner city during the pandemic which hasn’t been factored in. The mayor is probably bracing for the outcry from his base.

Do you know how mill rates work?

[Truenorth00]

Originally Posted by nredding

The Feds and the province can point to this table as the reason why Ottawa doesn’t have enough money. It’s interesting that, while other cities tax increases vary from year to year, Ottawa’s don’t ( 2% then 3% then 2.5%). It shows that Ottawa property tax increases are based on political reasons, rather than how much money the city needs. It particularly shows up for the last two years, with Sutcliffe as mayor.

Exactly what happened in the 905. For years lower taxes than the 416. Then slowing growth and aging infrastructure caught up with them. Now five figure property tax bills aren't uncommon in the 905. Coming soon to Ottawa.

[Kitchissippi]

Originally Posted by Truenorth00

Do you know how mill rates work?

Yes I know how mill rates work. The current assessments are still based on the 2016 baselines when most suburban properties were valued almost half that of inner city homes. That was a point when my assessment went up almost 40% and my brother’s larger house in Orleans only went up less than 20%. My taxes went up significantly, his went down slightly.

Assessments were paused for the pandemic to “give people a break”, but like a lot of the schemes from that period there’s going to be some reckoning.

[J.OT13]

Sean Devine's response to the Mayor's press conference. Well balanced and thought out. Mostly agrees on the transit inequities, but brings up unnecessary projects (Lansdowne) and limited tax increases as points that defeat much of the Mayor's arguments.

https://www.seandevine.ca/newsletter_13_...3&utm_medium=email&utm_source=seandevine

[Truenorth00]

Originally Posted by Kitchissippi

Yes I know how mill rates work. The current assessments are still based on the 2016 baselines when most suburban properties were valued almost half that of inner city homes. That was a point when my assessment went up almost 40% and my brother’s larger house in Orleans only went up less than 20%. My taxes went up significantly, his went down slightly.

Assessments were paused for the pandemic to “give people a break”, but like a lot of the schemes from that period there’s going to be some reckoning.

If you know how mill rates work then you should know that huge tax increases aren't automatic. Mill rate is only driving relative value for tax calculation.

[YOWetal]

Originally Posted by Truenorth00

If you know how mill rates work then you should know that huge tax increases aren't automatic. Mill rate is only driving relative value for tax calculation.

You're kind of both right. People totally don't understand city taxes thinking they are like income taxes. But relatively matters when we haven't updated assessements since 2016. A huge number of people will see increases with suburban assessments especially needing to catch up. If it's done fairly and accurately there should be some substantial tax drops for those in more central areas and condos.

[Kitchissippi]

Sheesh, I’ve been paying property tax for many decades and mill rates are far easier to understand than income tax: it’s the amount of tax payable per dollar of the assessed value of a property. The city’s budget is divided up according the total assessed values of all properties, so if the city’s budget goes up 2% and everyone’s property values went up evenly 20%, everyone gets a 2% increase. The issue I point out is that since the early 2000s, the property values in the inner city have gone up proportionately higher than the suburbs and have carried the bulk of the tax increases (my property tax has gone up 400% in 25 years).

Since Covid and the WFH trend, the suburbs with its larger homes have become more desirable and pushed up values to at least double their 2016 assessment, and as I pointed out with the suspension of the 2020 assessment cycle, this has not been factored in.

As an aside, if the city really wants to encourage densification, it should have a lower mill rate for condos. I boggles me that a 2 bedroom high rise unit that requires less for the city to service can pay more property tax than a SFH+2car garage in the suburbs.