Miller unveils city efforts to ease access to services for residents, businesses during economic downturn

By Jennifer Lewington – Globe and Mail

A 4% property-tax hike for Toronto homeowners, a smattering of new services and some new user fees are among the measures in the 2009 city budget unveiled last week.

With residents rattled about the sagging economy, rising unemployment and plummeting home sales, the spotlight now turns to city budget actions by Mayor David Miller and his council to blunt the recession.

“It’s a new order, a new reality and a new set of circumstances,” said Toronto Board of Trade president Carol Wilding of the task facing city hall. “So it’s not business as usual and a budget can’t be built that way.”

Before the rollout of the estimated $8.6-billion budget for day-to-day operations, Mr. Miller announced city efforts to give residents and businesses easier access to programs and services to help them weather the downturn.

In the run-up to the announcements, city officials and the mayor’s allies were extraordinarily tight-lipped on details. Even budget chief Shelley Carroll (Ward 33, Don Valley East) directed inquiries to the mayor’s office.

A 4% residential rate translates into a 1.3% hike for the corporate sector, as part of an ongoing effort to more fairly share the tax load carried by businesses. Each 1% rise in property taxes on homeowners and businesses generates a total of $20.7-million for city coffers, according to officials.

Last week, with Mr. Miller returning from a mayors climate-change conference in Europe, executive assistant Bruce Scott said the budget “will not only describe the [economic] context, but show how the city is responding to it.”

For the second year in a row, Mr. Miller pledged to introduce a balanced budget at the start of the process, not when council votes on the package in early April. Since municipalities cannot run deficits, he avoids the embarrassment of past years when the city had to publicly beg Queen’s Park for one-time funds to fill a multimillion-dollar hole. The negotiations, though still needed, now take place quietly behind closed doors before the introduction of the budget.

The mayor has already promised to freeze transit fares, but city sources suggest there may be some increase in user fees that could raise up to $6-million more in revenue in 2009. Such an increase would not be as high as in past years. Sources also suggest the potential for a modest amount of new spending of about $20-million for the mayor’s priorities, such as help for poor neighbourhoods.

Though the mayor’s 2008 fiscal review panel urged cuts of $150-million this year, the budget is believed to call for $40-million in savings.

The mayor’s allies were reluctant to speak, but others spelled out top budget wishes. The Toronto Real Estate Board wants the city to suspend – and ultimately repeal – its land-transfer tax on the purchase of a home.

“Right now there is an economic slowdown and the land-transfer tax is not helping,” said TREB spokesman Von Palmer. Last week the board reported 1,106 January home sales in the city, down from 2,128 in January, 2008.

But the cash-strapped city is not about to relinquish a new province-approved tool that was expected to raise about $155-million last year and $240-million by 2010.

City projections of future revenues were made before the economy turned sour. TD Economics senior economist Derek Burleton said his bank forecasts a rise in unemployment in Toronto to 9 per cent this year, up from the current 7.8 per cent.

That puts financial pressure on the city, which currently pays 20% (the province pays 80%) of social assistance benefits. In January, the city’s caseload of Ontario Works recipients rose to 81,067 from 74,726 in January, 2008, a jump of 8.5%.

“It’s a new pressure and adds to a list of spending challenges,” Mr. Burleton said. The city also has to set aside funds for new labour contracts in 2009.

Meanwhile, the board of trade is keen for the city to tap new infrastructure funds in the federal budget. “The city will have to find matching funds, but we don’t know where they are going to come from,” Ms. Wilding said.

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Maureen O’Neill
TREB President’s column as it appears in the Toronto Sun

In recent weeks, I have focused this column on the need for governments at all levels to take action on the economy by recognizing the important role of the housing industry. As I reported last week, the federal government’s budget took important steps in this direction. Unfortunately, the same cannot be said about the City of Toronto’s recommended 2009 Budget.

I’ve said this before, but it warrants saying again: the housing industry is critical to the economy. Simply put, when people buy and sell homes, they are helping to create thousands of jobs by spending money on things like renovations, furniture, and appliances. In fact, a study conducted for the Canadian Real Estate Association found that the average resale housing transaction in Ontario generates over $33,000 in this type of spending. For Toronto, in an average year, this means that re-sale housing sales pump over $2 billion into the economy.

You don’t have to be an economist to realize that this is economic activity that Toronto City Council cannot afford to risk. To the contrary, they should be trying to encourage it, which is why Toronto Realtors are disappointed that the City’s recommended 2009 Operating Budget, unveiled earlier this week, doesn’t propose bold actions that could help home buyers and owners, and, in turn, the economy.

The single most important thing that Toronto City Council can do to help home buyers and owners is to roll back the Toronto Land Transfer Tax. For a Toronto home buyer purchasing a home priced at about $400,000, this tax would mean an additional $4,000 in up front costs, and as the price of the home goes up, so too does the tax. For example, on a $600,000 home, the tax would be about $8,000; for an $800,000 home, it would be about $12,000. What makes this even worse is that the Toronto Land Transfer Tax is on top of the provincial land transfer tax, effectively doubling these amounts. Toronto Realtors feel strongly that this is an unfair tax that is hurting Toronto’s economy and spoke strongly against it when the City first proposed it. This tax didn’t make sense then, and, given current economic challenges, it makes even less sense now.

A recent study conducted by the C.D. Howe Institute and Economics Professors from the University of Toronto determined that the Toronto Land Transfer Tax is having a significant impact on Toronto’s real estate market, reducing housing sales by 16% and values by 1.5% in 2008 alone. Based on this, TREB estimates that the Toronto Land Transfer Tax has cost the City’s economy about $200 million in consumer spending and has reduced Toronto home owners’ net worth by $3.5 billion in lost equity when selling their homes, and less credit available to them, further reducing spending and economic activity.

Clearly, City policies can impact the housing sector and, thus, the economy. In fact, the City even recognized this reality, recently, by calling for a freeze on City development charges, which can add thousands of dollars to the cost of a newly constructed home. Toronto Realtors hope that Toronto City Council will build on this initiative and acknowledge the significant role of the resale housing sector by also recognizing the impact of its land transfer tax and then rolling it back.

Last year, an independent panel appointed by the Mayor reviewed the City’s finances and recommended numerous options, which, according to the Panel, could save the City at least $150 million this year, an amount that is equivalent to what the City expected to collect in Land Transfer Tax revenue in 2008. Now, more than ever, it is important for the City to move in this direction, instead of options that reduce economic activity, like the Toronto Land Transfer Tax.

Maureen O’Neill is President of the Toronto Real Estate Board, a professional association that represents 28,000 Realtors in the Greater Toronto Area.

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Contact the Jeffrey Team for more information – 416-388-1960

By Maureen O’Neill
TREB President’s column as it appears in the Toronto Sun

It is always rewarding when hard work produces results. That’s why Toronto Realtors are proud of the work they did to make sure that the recently announced Federal Budget recognized the importance of the housing sector to the economy. I’m happy to say that these efforts helped to produce a Budget that puts more money in the pockets of home buyers and owners.

One of the most important announcements in the Budget was a change to the Home Buyers’ Plan that Toronto Realtors have long been calling for. Specifically, the Budget proposes to increase the maximum amount that individuals can withdraw, tax-free, from their RRSP to put towards the down payment on a home, from $20,000 to $25,000. Toronto Realtors worked hard to ensure that the government understood that, while this program has been extremely successful since it was first implemented in 1992, its usefulness to home buyers was deteriorating because the withdrawal limit had not kept pace with inflation. The increase in the limit announce with the Budget addresses this concern.

Another important Budget announcement for home buyers is a tax credit that will help to offset the closing costs associated with housing purchases. Closing costs can include things like legal fees and land transfer taxes. They can represent a significant cost for many buyers. The Federal Budget recognized this and includes a First-Time Home Buyers’ Tax Credit of 15% on up to $5,000 of costs associated with the home purchase. This means that first-time home buyers could be eligible for a tax credit of up to $750.

The Federal Budget also includes an initiative that helps both current home owners and home buyers considering properties that may benefit from renovations. The Home Renovation Tax Credit provides a 15 per cent credit that can be claimed on the portion of eligible home renovations exceeding $1,000, but not more than $10,000, which means that home owners could be eligible for a tax credit of up to $1,350. This credit would apply to eligible home renovation expenditures, after January 27, 2009 and before February 1, 2010, on one or more of an individual’s personal use properties.

While it is encouraging to see the federal government take action to help home buyers and owners, it is important for all levels of government to do their part. This is especially true in the City of Toronto, where the Toronto Land Transfer Tax discourages home ownership. Like the federal government Toronto City Council should recognize the importance of the housing industry to the economy, and the best way it can do this is to roll back the Toronto Land Transfer Tax.

By helping to create thousands of jobs, buying or improving a home is not only an investment in a property; it is also an investment in the economy. Toronto Realtors are encouraged that the Federal Budget recognized this reality and will continue to work hard to represent the interest of home buyers and owners at all levels of government.

Toronto Realtors’ interaction with governments occurs in many forms, but probably the most critical is the work they do to ensure that politicians consider the impact of their decisions on home buyers, home owners, and real estate markets. With this in mind, Toronto Realtors and their professional associations such as the Canadian Real Estate Association, Ontario Real Estate Association, and the Toronto Real Estate Board are constantly monitoring government proposals and actions, and are ready to spring into action.

Maureen O’Neill is President of the Toronto Real Estate Board, a professional association that represents 28,000 Realtors in the Greater Toronto Area.

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Contact the Jeffrey Team for more information – 416-388-1960

In advance of the release of the City of Toronto’s recommended 2009 Operating Budget tomorrow, Toronto’s Realtors are calling on the City to do its part for the economy by making home owners and buyers a priority in the City’s budget.

“We have seen governments at all levels taking action on the economy, and we’re hoping that the City will do its part too. We’re looking to the City to make this a home owners’ budget,” said Maureen O’Neill, President of the Toronto Real Estate Board (TREB). “The housing industry is critical to Toronto’s economy. It generates billions of dollars of spending and creates thousands of jobs. One of the best things that the City can do for the economy is to roll back the Toronto Land Transfer Tax.”

A recent study conducted by the C.D. Howe Institute and Economics Professors from the University of Toronto determined that the Toronto Land Transfer Tax is having a significant impact on Toronto’s real estate market, reducing housing sales by 16% and values by 1.5%.

A separate recent study, conducted for the Canadian Real Estate Association, determined that every resale housing transaction in Ontario generates approximately $33,425 in economic spin-off activity on things like renovations, furniture, and appliances. Based on these studies, TREB estimates that the Toronto Land Transfer Tax has cost the City’s economy about $200 million in consumer spending and has reduced Toronto home owners’ net worth by $3.5 billion in lost equity when selling their homes, and less credit available to them from equity lines of credit, thereby reducing spending and economic activity.

“City polices impact the housing sector. It was encouraging to see this recognized recently with action on development charges. We hope City Council will also recognize the impact of the Toronto Land Transfer Tax,” said O’Neill.

TREB is calling on the City to use its 2009 Operating Budget process to continue implementing recommendations made by the Mayor’s Fiscal Review Panel one year ago.

“The City has fiscal options. The Mayor’s Fiscal Review Panel pointed out that the City should be able to find $150 million in budget savings this year. Now, more than ever, it is important for the City to move in this direction, instead of options that reduce economic activity, like the Toronto Land Transfer Tax,” said O’Neill.

Toronto Realtors look forward to providing input during the City’s 2009 Operating Budget consultations.

Greater Toronto Realtors are passionate about their work. They adhere to a strict Code of Ethics and share a state-of-the-art Multiple Listing Service. Serving over 28,000 Member in the Greater Toronto Area, the Toronto Real Estate Board is Canada’s largest real estate board.

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Contact the Jeffrey Team for more information – 416-388-1960

From Victor Carvalho – Manager, TDResidential Mortgages
416-536-9762 | victor.carvalho@td.com

The Budget proposes a temporary Home Renovation Tax Credit (HRTC), which will provide a 15% non-refundable income tax credit on eligible home renovation expenditures for work performed, or goods acquired, after January 27, 2009 and before February 1, 2010, pursuant to agreements entered into after January 27, 2009. The credit may be claimed on the 2009 tax return for the portion of eligible expenditures that exceeds $1,000 but is less than $10,000, and will provide up to $1,350 in tax relief (i.e., 15% multiplied by ($10,000 minus $1,000)).

Family members will be subject to a single limit based on their pooled expenditures. For this purpose, a ‘family’ will generally be considered to consist of an individual, his or her spouse or common-law partner, and their children who were, throughout 2009, under the age of 18 years. Eligible dwellings are generally restricted to personal-use homes including houses, cottages, and condominium units.

Expenditures eligible for the HRTC

The HRTC is generally restricted to enduring renovations and alterations. Individuals will need to keep receipts for all expenditures.

Certain expenditures will generally be considered eligible, including renovating a kitchen, bathroom or basement, purchasing new carpet, hardwood floors, a new furnace or water heater, building an addition, deck, fence or retaining wall, painting the interior or exterior of a house, resurfacing a driveway, or laying new sod. Most costs associated with such projects will be eligible for the credit, including the cost of labour and professional services, permits, building materials, fixtures, equipment rentals and incidental expenses.

However, certain expenditures will generally be considered ineligible, including the cost of routine repairs and maintenance normally performed on an annual or more frequent basis, carpet cleaning, financing costs associated with a renovation (e.g. mortgage interest costs), the purchase of furniture and appliances (e.g. a refrigerator, stove or couch), audio-visual electronics, tools or construction equipment or maintenance contracts such as furnace cleaning, snow removal, lawn care and pool cleaning.

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Contact the Jeffrey Team for more information – 416-388-1960