April 2 2013
David Rider and Jessica McDiarmid
A confidential staff report going to city council Wednesday says Ottawa owes the city about $31 million in payments in lieu of property taxes on the island airport, covering 1999-2012.
The report, according to a source who has read it, states the Toronto Port Authority (TPA) has already paid $2.5 million and proposes to pay another $2.77 million, for a total of $5.27 million. The city would essentially write off the remaining $26 million.
In its proposed settlement, the port authority wants to pay the city 94 cents per air passenger, for an estimated total of $13.77 million between 2013 and 2021.
The report notes that the port authority has increased its offer from 80 cents per passenger.
City solicitor Anna Kinastowski is recommending council approve the deal, which was endorsed by the city’s government management committee, chaired by Councillor Paul Ainslie, on Feb. 25 without amendment.
Canadian airports are not usually taxed on a current value assessment, the source said, noting the report mentions precedents including one in Gander, N.L.
However, the value of land on Toronto’s waterfront is a far cry from Gander’s.
Councillors are expected to have tough questions for city staff during an in camera session expected Wednesday.
“In general, the TPA would like to pay only a percentage of the arrears that it owes in property taxes and so council has to decide whether or not a negotiated deal is adequate, or should we push for them to pay the many millions of dollars that it owes the city,” said Councillor Josh Matlow, who declined to discuss the proposal in detail.
“Unless I hear a remarkable argument that I haven’t considered yet, I don’t know anyone, including my neighbours, that could get away with telling any government that they’d like to bargain their way to paying less tax than they owe.”
The port authority trumpeted the tax deal in newspaper ads this week, saying the airport will contribute $1.9 billion in annual economic output and 5,700 jobs to the Toronto-area economy.
It noted the 94-cent-per-passenger charge is the same paid by Pearson airport.
“It’s a very good deal for both parties, and we hope and expect that councillors will support the motion,” said Pamela McDonald, director of communications for the port authority.
The TPA said its payments to the city for all its waterfront properties since 1999 are “among the highest paid” by a port authority in Canada.
The litigious tax dispute between the city and port authority has been ongoing since 2003.
A city report has asked that TPA payments be based on total tax rates and property values. The port authority’s payments have been based on property values “significantly lower” than those used by the city.
Issues involving other port authority properties are currently before the Federal Dispute Advisory Panel.