Friday, January 6, 2012
Parker Gallant: Green Energy Agenda usurps Property Assessment and Municipal Tax Base
The Ontario Liberals, via the Ministry of Finance, gave marching orders to the Municipal Property Assessment Corporation (MPAC) yesterday telling them to not increase assessments for “property owners who install renewable energy technologies”.
Property assessments increase when property improvements are made. As soon as a building permit is issued the municipality sends a copy to MPAC. That permit copy is used by MPAC to increase the assessed value of the property and the following year property owners pay additional property taxes because of the increased assessment.
The headline on the Government press release read; “Improving Property Tax System for Green Energy“ but it comes at the expense of others who can't afford the installation costs. This change will impact municipal tax revenue increases that have normally accrued though the issuance of those building permits.
The press release carried the endorsement of Dwight Duncan, the Minister of Finance who will soon be told by economist Don Drummond to slash spending or miss (by years) balancing the budget by 2018. Minister Duncan had this to say in the press release: "Ontario is leading the way when it comes to producing reliable energy from clean, renewable sources. These changes will help ensure that property tax assessment does not discourage property owners from contributing to a green energy system that supports a cleaner environment and healthier families." The message is clear; if you have the money to invest in renewable energy Ontario ratepayers and taxpayers will ensure you earn a healthy return!
As an example; the costs of a solar installation of say 10 kilowatts (kw) will cost from $58/$80,000 depending on location and whether it will track the sun's movement. Under the MicroFIT program the installation is estimated to generate from $93/$150,000 profit (over 20 years) depending on the installation type chosen.
Mr. Duncan's salvo against the municipalities will not help achieve a balanced budget for the province and might make it worse if he weakens the municipalities tax base. Those municipalities (mainly rural) with lots of small installations of wind, solar and anaerobic digestion electricity generation will be knocking on the doors at Queens Park or face the ire of their local property owners who will see the mill rate and their taxes increase. Building permits, which normally signal increased municipal tax revenues will mean nothing other then the fees collected for the permits.
The Association of Municipalities of Ontario (AMO) has an MOU (memorandum of understanding) with the province and their website contains the following message under their “Mandate”; “The MOU provides the opportunity for municipal input and reaction to provincial policy ideas (pre-consultation) so that they are fully informed as part of any provincial policy making process.” We understand that AMO was “aware” of the plan by the Finance Minister to direct MPAC to treat the assessment of renewable energy installations differently but the extent of the “pre-consultation” process was not fufilling and AMO has sought clarity.
AMO has taken issue with many aspects of the FIT and MicroFIT programs as is evident from their submission of December 6, 2011 to the Ministry of Energy and the Ontario Power Authority (OPA) wherein they have made 14 recommendations to improve their role in these programs. It appears the fallout of the Finance Ministry's press release of January 4, 2012 treats the municipalities with the same respect as they were given under the Green Energy Act—absolutely none!
January 5, 2012