City Council unanimously approves new Area Rating Model

This morning, the City of Hamilton’s General Issues Committee unanimously approved recommendations to area rate Recreation, Fire, Streetlights and Sidewalks on an urban/rural basis. A decision to area rate Transit services on an urban/ rural basis has been deferred. The Committee also approved a motion that would reinvest area rating tax savings from the former City of Hamilton to address significant infrastructure deficiencies in the old City. These monies will be reinvested in the old City of Hamilton to improve and repair infrastructure like roads, bridges, sidewalks and other facilities.

The adoption of this area rating model will shift some of the tax burden from the former City of Hamilton and rural areas, to some of the urban areas of the suburbs. These impacts are being phased in over four years. With a draft 2011 budget impact of only 0.8% currently under consideration by Council – the lowest in 10 years – the impacts to citizens once area rating is factored in will be kept to an inflationary level or lower for all our communities.

“I’m so proud of City Council to have had this kind of discussion at the end of this long and difficult road,” said Mayor Bob Bratina. “This decision is as much about City building as it is about tax fairness. Staff and Council have spent the last number of months working on a solution that we could all approve and today you saw that with unanimous Council approval.”

The following highlights some of the draft total 2011 tax impacts (includes budget, reassessment and area rating):
• In the urban areas, tax increases for 2011 range from a high in Glanbrook and Dundas of about 3.0% to a low of 1.2% for Ancaster and 0.9% for Hamilton.
• It should be noted that, under the previous method of area rating, the total tax increase for the former City of Hamilton would still have been 0.9% for 2011.
• In the rural area, impacts range from a high of about 1.2% in Glanbrook, to a low of about -0.6% in Ancaster.
• The impact in the rural areas of Flamborough and Stoney Creek will only be approximately a 0.5% increase.

“Rural residents have long had concerns about services that they are taxed for, but not receiving or receiving at a very different level”, said General Manager of Finance & Corporate Services Rob Rossini. “The area rating model approved today at committee, addresses many of these concerns and puts a framework in place to recognize the very different service requirements between the urban and rural areas on a go forward basis. This recommendation also addresses what we have been saying for years – that we need to find a solution for the infrastructure deficit particularly in the old City of Hamilton.”

Background:

• At amalgamation in 2001, area rating was used as a means to mitigate some of the tax rate increases that were occurring by assigning a lower amount of costs for certain services to the suburban municipalities based on former area municipal boundaries.
• While the model served the required purpose at amalgamation, it was not envisioned as a permanent model and over time it became clear that taxation was not matching service levels. Changes to the service delivery and user fees over the last 10 years for Recreation, Fire and other services meant some areas were receiving service levels comparable to the former City of Hamilton, but paying much less.
• In April 2006, Council directed staff to begin looking at alternative area rating models including an urban / rural method of taxation.
• The urban / rural model of area rating taxes is very common in Ontario municipalities with both significant urban and rural areas.
• In November of 2009, Council received a comprehensive report on area rating options which recommended an urban / rural model for Fire, Transit, Streetlights and sidewalks. The report was referred to a Citizen’s Forum consultation process. This process of citizen engagement was quite extensive involving input from hundreds of citizen’s, interest groups, business and community leaders.
• In February of 2011, the Citizen’s Forum report was submitted to Council. The majority of recommendations by the Citizen’s Forum supported the concept of an urban / rural area rating model.

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