Staff Report: Monthly Preauthorized Tax Prepayment Plan Bylaw Amendment

TOWN OF VIEW ROYAL COMMITTEE OF THE WHOLE REPORT

TO: Committee of the Whole DATE: June 12, 2014 FROM: Jeannie Beauchamp, Director of Finance MEETING DATE: June 17, 2014

MONTHLY PREAUTHORIZED TAX PREPAYMENT PLAN BYLAW NO. 749, 2010, AMENDMENT BYLAW NO. 892, 2014

RECOMMENDATION: THAT the Town of View Royal Monthly Preauthorized Tax Prepayment Plan Bylaw No. 749, 2010, Amendment Bylaw No. 892, 2014 be given first, second and third readings.

CHIEF ADMINISTRATIVE OFFICER’S COMMENTS:

I concur with the recommendation.

PURPOSE OF REPORT: To provide Council with information regarding Monthly Preauthorized Tax Prepayment Plan Bylaw No. 749, 2010, Amendment Bylaw No. 892, 2014.

INFORMATION:

Under the Town’s Monthly Preauthorized Tax Prepayment Plan Bylaw No. 749, 2010, preauthorized payments are currently calculated as 10/11 of the prior year’s net taxes (the Collector’s estimate of the net taxes for the following year). Preauthorized Tax Prepayment Plan Bylaw No. 749, 2010, Amendment Bylaw No. 892, 2014 would amend this calculation to be based on the full amount of the prior year’s taxes, rather than 10/11th. Under the amendment bylaw, the Town will receive a greater portion of property taxes throughout the year, and residents on the program will have a smaller outstanding balance to be paid for July 2.

HISTORY:

In a March 4, 2010 Committee of the Whole report staff recommended a bylaw enabling the Town to implement a Property Tax Prepayment Plan. This bylaw was adopted by Council on April 6, 2010 and is currently Preauthorized Tax Prepayment Plan Bylaw No. 749, 2010.

The maximum monthly payment calculation recommended was based on an estimate researched at that time by staff. This estimate is noted in the bylaw as being calculated as follows:

4. The Collector is hereby authorized, on or after the fifteenth day of August in each year, to accept equal monthly payments in an amount of not less than $10.00 and not more than an amount which in total would exceed the sum of 10/11 of net taxes for the following year as calculated by the Collector, to be applied against taxes due in the following year.

Recently the finance department has received a number of comments from residents related to this estimate. A significant number of residents have indicated that their preference would be for the Town to increase the current maximum estimate to minimize the resident’s chance of having a large outstanding balance due July 2.

Due to the number of comments received from residents staff has recently researched how other local municipalities are calculating this estimate and found that the maximum varied from 90% to 105% of the most recent tax levy (minus the Home Owner Grant). The Town’s maximum monthly payment is currently at the low end of this range.

IMPACT ON RESIDENTS:

The new maximum estimate:

1. will provide residents with less chance of a “surprise” outstanding final payment due July 2 resulting in fewer resident complaints during this busy period for the Town, and
2. will not impact residents who would prefer to pay a lower monthly payment as it only increases the maximum monthly payment amount accepted by the Town.

Preauthorized payments are currently non-refundable, which is consistent with the majority of local municipalities with a preauthorized payment plan. Due to the fact that these payments are non-refundable, residents increasing their preauthorized payments may be concerned about what will happen to their credit balance if they sell their home. This concern can likely be resolved, as other municipalities have done, by providing further information to residents clarifying what happens when they sell their home. When a resident’s property is sold the lawyer (or notary public) is provided with a tax certificate from the Town that shows the credit on the resident’s account. The lawyer then adjusts for this credit on the Statement of Adjustments and the credit is thus purchased by the new owner. Staff is currently looking into the most appropriate way to provide this information to potentially concerned residents.

RECOMMENDATION: THAT the Town of View Royal Monthly Preauthorized Tax Prepayment Plan Bylaw No. 749, 2010, Amendment Bylaw No. 892, 2014 be given first, second and third readings.

SUBMITTED BY: J. Beauchamp, Director of Finance

REVIEWED BY: K. Anema, Chief Administrative Officer