Letter to Residents and Business Owners in The Municipality of Port Hope

October 14, 2013
Dear Residents and Business Owners in The Municipality of Port Hope,

This letter is to inform you about Council’s proposed shift of nearly $1 million of tax-burden away from Ward 1 and onto Ward 2 and how this situation has arisen. It raises issues of trust that need to be considered by residents of both Wards. We ask you to review the letter and our Area Rating Response document (download in PDF) that spells out the detail behind the decisions that will affect all of us. Please pass this along to your friends, colleagues and neighbours in the Municipality.

HISTORY:
In 2001 when the then Town of Port Hope and then Township of Hope amalgamated, an Area Rated cost-sharing formula was instituted that represented a fair and equitable distribution of tax-burden between what became the new Municipality’s two wards. This distribution was fair and equitable to both Wards because it reflected the combined, actual cost experiences of the two former municipalities. The Area Rated formula allocated roughly 85% of the costs to Ward 1 and 15% to Ward 2 (“85-15”). It was not dreamed up out of nowhere, nor was it arbitrary. No data exists to show there has been a shift in operating costs between the two wards since that time that would warrant a change in the allocation of costs.

Had costs been allocated according to Weighted Assessment at amalgamation, Ward 1 would have paid about 70% of the costs, and Ward 2 would have paid roughly 30% (“70-30”). However, such a formula was not used at the time because it would not have reflected actual experience, and would not have been a fair distribution given the costs incurred by urban and rural communities for their services like parks, libraries, roads, police and fire protection. Generally, municipal services for rural communities cost 60% of what urban services cost.

A 70-30 split based on Weighted Assessment is no more appropriate today than it was at the time of amalgamation. There is no justification for Council’s plan to add nearly a million dollars of costs each year to what the residents of Ward 2 already pay.

CURRENT SITUATION:
$1 million is what it would cost Ward 2 residents and business owners, which represents more than a 40% increase in the municipal portion of their tax-bills. Council and Staff have blindly followed a legal opinion that says the Municipal Act requires them to do this but only tells half the story. Section 326 of the Act allows the Municipality to “area rate” any service that is provided at different levels in Ward 1 and Ward 2, for example Policing, Library, Transit, Parks & Recreation, Business Park, to name a few.

Council and Staff insist that most costs are deemed “Common”, but this is because they use an awkward book-keeping system they call “one set of books”. The Area Rating Working Group was working towards a simple, fair and equitable distribution of tax-burden and spent many of their 22 meetings trying to accommodate the bookkeeping system.

It should be noted that Ward 2 members and the three members of Council agreed to a 82½-17½ allocation for the 2013 tax year.
A few weeks later, the buzz word suddenly became “Compliance”. The three Council members of the Committee decided the Working Group was unable to come to a conclusion to their liking, and arbitrarily announced that the Working Group was disbanded after the July 22 meeting. Their report to the Budget Committee on October 8th states “the citizen members have no further Working Group responsibilities.” With Compliance replacing fair & equitable, the three members of Council and Staff have moved the discussion to one of how quickly they could increase the Ward 2 taxes, which they call phasing. The options put forward by Staff and the three Council members of the Working Group differ only with regard to timing and how much of Ward 2’s LLRW interest would be used to soften the blow.

There are “Area Rating” provisions in the Municipal Act which are designed for exactly the circumstances present in this Municipality, and these provisions should be used.

  • With distinctly different service levels in the two Wards, Section 326 of the Act allows the costs to be apportioned. The three Council members and Staff claim it is presently not possible to analyze most of the costs attributable to each Ward, except for policing and transit because of the awkward accounting system. It is also impossible for them to prove that a shift of the tax burden of this magnitude is warranted at all.
  • Council and Staff are pushing to get more money from Ward 2 simply to reduce the unsupportable tax burden they have put on the Ward 1 Ratepayers. They have doubled or tripled the money spent by every service department over the past 12 years!
  • We agree that compliance is necessary, but Council and Staff cannot cherry pick one section of the Act and ignore the next.

LOW LEVEL RADIOACTIVE WASTE (LLRW) INTEREST
Most of the options plan on using interest from the $10 million granted to the Ward 2 Ratepayers by the Federal Government in return for agreeing to store the Low Level Radioactive Waste at the Baulch Road Site (LLRW Funds). Each of the two former Municipalities received $10 million for this but the two funds have been co-mingled and the interest spent over the past years in clear violation of the spirit and intent of the agreement between the Federal Government and the then Hope Township. The Federal Government granted the money to the residents of Hope, not the Municipality, and solely for the purpose of offsetting the residents’ future tax bills. The agreement was very specific about this use of the funds, but Staff and the three members of Council now argue that the interest can be spent at Council’s discretion and for the benefit of either Ward because:

  • The Trustee was changed from a trust company to an investment management company in 2003.
  • When the storage site was licensed in 2009 and it was no longer necessary to return the $10 million to the Federal Government, the Municipality erroneously concluded that restrictions on the use of the funds were also removed.

The legal opinion that says they can do this doesn’t deal with the restrictive terms of the Ward 2 Trust! The suggestion that Council may want to consider consolidating the two $10 million funds into one “Community Fund” would place the Municipality in contravention of the Amalgamation Order.

NEXT STEPS:
We will re-submit a fair, equitable and compliant option that builds on the discussions with the original Working Group, and that was on the table when the group was disbanded.

Please mark your calendar and participate in the following community meetings and forums:

  • Area Rating Open House at the Port Hope Rec Centre 7:30 pm October 21st – held by Council
  • Public information-session with Questions & Answers held by  Port Hopers for Fair Taxes  and chaired by the three Ward 2 members of the Working Group 7:30 pm Monday,  October 28th at the Lions Centre in Port Hope
  • Express your views and concerns to your Council representatives
  • Town Hall Q&A meeting with members of Council, Canton Municipal building 7:30 October 30th.
  • Deadline for opportunity to comment on the Area Rating proposal: November 15th
  • Please review the Area Rating Response document (download in PDF) and consider how the unsubstantiated claims about costing, the self serving legal opinions, and the ongoing misapplication of funds have the potential to hamper the lives and welfare of not just the Ward 2 residents, but the entire Municipality.

Yours truly,
Ian Angus
Bill Bickle
Rick Norman
Members of the Area Rating Committee

6 Responses

  1. Dean Ross

    If memory serves me right, the use of the interest from the Hope Township fund was being mis-used even before the CNSC approval.
    I believe that one of the wrong doings was and still is that every year all of the excess over the $10 million was being used, wheras the Agreement states specifically that only an amount of 8% of the fund could be used with the remainder being returned to the fund. From that I would assume that the fund should have been increasing in value over the years, but I believe that it is still at the $10 million. There were no stipulations on the Port Hope Fund.
    Port Hope residents should understand that they were very fortunate that they did not lose their $10 million which could have happened when they were no longer a “host” for the storage of the LLRW!
    Another issue is that I was told by Mayor Thompson that Ward 2 taxes were paying for some of the cost of the new water storage tank because there as the possabillity that in the future a connection would be made for the residents of Welcome. At the time there was no mention of the provincial government’s edict that all water and sewage costs would be “user pay”.
    I have not checked with my fire insurance company yet about the effect of the fire hall decision but I recall when I first obtained the insurance, one of the items was that we were served by two fire halls about equidistant from our home and the distance was just under the wire, otherwise our rate would have been much higher. When I raised this point during the consideration of the reports and pointed out that the time of response would be greater with the closing of the Welcome hall and builing a new one down Jocyliyn, and I was told that the consultant had taken that all into account. I guess the closing of the Welome hall means that we in Ward 2 wil have to share the cost of the new facility

  2. Bob DeMatteo

    Thank you for your conscientious work on behalf of our community. You have provided an important public service to the people of Port Hope. The actions of the three members of council to impliment a major shift of the tax burden on Ward 2 citizens is indefenceable, dishonest and demonstrates utter contempt for our community. This is no way to build a community based on trust. We are elated that so many of our neighbors have responded in opposition to this bad decision.

  3. Chris Weaver

    Seems to me like we should De-amalgamate. Hamilton township didn’t join cobourg and they seem to be doing just fine on their own.

  4. Sue Stickley

    Your work is exemplary. The broken faith of this Council towards residents of the former Township of Hope, the illegality of their interpretation of the LLRW legal agreement and their potential violation of the Municipal Act with their inadequate and inept bookkeeping system almost seems grounds for impeachment if this shift in tax burden is implemented. Spending by this Council on consultants, infrastructure (Victoria Street palace, business park etc) and proposals has caused the unbelievably high tax burden on Ward One properties. An example is the Fire Station study that said the existing three facilities needed upgrades but were satisfactory. The Fire Chief did not like that study so Council just decided to commission another study resulting in the proposed loss of the Welcome station and construction of another palace. I don’t have the costs for all this but I’m sure others do.
    Keep up the good work. By the way if you had been highly paid consultants you would probably have gotten more respect for your expertise and efforts at 22 meetings.

  5. Dale DeMatteo

    Thank you for the letter providing both background to and workings of the (Port Hope Council) Area Rating Committee and why it was disbanded before consensus could be established. Residents are in the dark about the proposed tax shift and what it will mean in the future. The issue is shaping up as a battle between citizens in the two wards which is not what we want to happen in our lovely community.

  6. Peter Gillespie

    Great work. We must replace present Mayor and most of council next November. This should be first and foremost on your agenda.