Subject:                   municipal cost apportionment

 Background:

 Since the inception of the Algoma District Services Administration Board (ADSAB), a municipal cost apportionment formula has been in place. 

 Existing Formula

 The existing modified weighted assessment version was developed, approved by a double majority vote, and is as follows:

 Step#1

The database used for calculating weighted assessment is the assessment roll as delivered by the Assessment Commissioner in December of the year prior to the year applicable to the Municipal cost apportionment.

 Step #2

The share payable by the Province on behalf of the unincorporated townships is determined by comparing the gross assessments for the unincorporated townships with the gross assessments for the entire ADSAB jurisdiction. The balance of the costs is divided among the incorporated areas as follows.

 Step #3

The municipal current value assessment (CVA) is categorized in accordance with each municipality’s tax ratio by-law for the year for which the municipal cost apportionment is to be applied, followed by the calculation for weighted assessment.  The calculation for weighted assessment includes all properties as well as those which have a payment in lieu (PIL) assigned to them. 

 Step#4

Once the total weighted assessment for each municipality is calculated, each municipality’s percentage of the total District weighted assessment is determined and that percentage is the portion municipalities pay as their share towards the ADSAB’s municipal levy. 

Presenting Problem – Bill 140

 An issue regarding power dams has been raised for 2001 and subsequent years.  Power dams for 2001 are exempt from direct taxation under Bill 140.  This exemption leads to an issue as to how the municipal levy should be collected by ADSAB.

 We have been advised that municipalities with power dams have been promised by the Provincial Government that the revenue lost from the power dam exemption would be paid to the municipality in a cash payment equal to the loss in taxes.  Due to the power dam exemption, some municipality’s CVA would decrease and directly affect their apportionment of ADSAB municipal costs in 2002. This reduction would then be distributed among the remaining municipalities in order to acquire revenues equal to our municipal levy requirements. 

 The attached spreadsheet labeled Analysis of Bill 140 Impact and Apportionment Alternative details how the municipal levy will be affected and provides an alternative apportionment model.  The spreadsheet was constructed based on the approved 2002 budget but still uses the 2001 tax ratios as the 2002 tax ratios have not yet been received from municipalities. The alternative apportionment model is as follows:

 Alternative Apportionment Model

 Following discussions at the February 28 Board meeting, the following optional process is being put forward as a possible response to the impacts of Bill #140.

 Step #1

 The information received from the Municipal Property Assessment Corporation (MPAC) will be used to identify the power dam properties affected by Bill #140. 

 Step #2

 The 2000 gross assessments for these power dam properties in each of the five areas impacted by Bill #140 will be multiplied by the 2001 tax ratios for those types of properties for each area.  This will then create a power dam properties weighted assessment for each of the five areas.  The properties affected by Bill #140 in the unincorporated will be calculated using gross assessment to be consistent with the existing apportionment model.

Example Area #1  

Area #1 power dam properties gross assessment from 2000 tax roll X 2001 power dam properties tax ratio for area#1 creating a power dam properties weighted assessment for that area#1.

 Step#3

The financial impact of the tax revenue from these properties for the five areas on the ADSAB 2001 levy will be calculated by using the power dam properties weighted assessment to determine what portion of the 2001 levy was attributable to the power dam properties in each of these five areas.

 Example Area #1

Take Area #1 power dam properties weighted assessment for area #1 as developed in Step#2.  Compare that weighted assessment to all weighted assessment to get a percentage. 

 Step #4

Take the resulting percentage in Step #3 and multiply it by the 2001 municipal levy to determine the dollar amount these properties contributed to the ADSAB levy in 2001.

 Example Area #1

Take the percentage for Area #1 produced in Step #3. multiply it by the 2001 levy to get a dollar amount generated by these power dam properties in 2001

 Exception #1

 If the current year municipal levy falls below the 2001 base year levy amount, then this calculation will be to take the resulting percentage in Step #3 and multiply it by the current year municipal levy to determine what the dollar amount would have been in 2001 if the 2001 levy was equal to the current year levy.  The effect is to reduce the amount of the onetime grants for any year in which the current year levy is less than the 2001 base year.  This will prevent any municipality from contributing too much in any year which the current year levy is below the base year amount.

 Example Area #1

Take the percentage for Area #1 produced in Step #3. multiply it by the current year levy to get a dollar amount generated by these power dam properties in 2001 based on the current year levy.

 Exception #2

 If the Bill #140 grant for any municipality affected by Bill #140 goes up or down, the amount of the offsetting grant flowed to the Board will be increased/decreased by the proportionate amount of the change to the grant.

Example Area #1

If the Bill #140 grant goes down by 10% then the amount as calculated above would be reduced by 10%.

 Step #5

The ADSAB revenue generated in 2001 from these five areas as calculated in Step #4 will be collected in 2002 and subsequent years prior to the division of the remaining costs.  In other words, all the funding calculated in Step #4 for the five areas will be deducted and paid by each of these five areas before distributing costs based on the current year apportionment among all 20 member municipalities. The municipal current value assessment (CVA) is categorized in accordance with each municipality’s tax ratio by-law for the year for which the municipal cost apportionment is to be applied, followed by the calculation for weighted assessment.  The calculation for weighted assessment includes all properties as well as those which have a payment in lieu (PIL) assigned to them. 

 Example Area #1

Area #1 will be billed and pay the amount calculated in step #4.  They will also be billed a percentage of costs based on their portion of the current year weighted assessment excluding the exempt power dam properties.

 Under this Alternative Apportionment Model, any increases in the Board levy after 2001 will be apportioned to the Member Municipalities with a Bill #140 impact.  This means that the increase will be apportioned with the Bill #140 properties being exempted. 

 Note re approval process

Should the Board decide to accept this change to the apportionment formula, a double majority vote is required.  A double majority vote is the majority of electors in the District and a majority of Municipalities in the District. 

Keith Bell, C.A.
Director of Finance
Algoma District Social Services Board
Telephone 705 842 3370 Extension 247
FAX 705 842 3747