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Hamilton Tenants Pay Much Higher Property Taxes
January 31, 2005


Skyview Towers, on Melvin Avenue. With annual property taxes of $168,480, the bill per tenant household is $1427.79.

Property taxes for Hamilton tenants are more than two-and-a-half times the rate charged homeowners. And according to Tom Cooper of the McQuesten Legal and Community Services, that's an important part of the local poverty equation.

Cooper spoke to councillors in a public session last week on the budget and he presented detailed tax information on a sample apartment tower. The 118-unit building at 355 Melvin Avenue is assessed at slightly over $4 million. With annual property taxes of $168,480, the bill per tenant household is $1427.79.

Cooper pointed out that's about $560 more than the same value unit is charged in Toronto. As a result, for most tenants, property taxes amount to about one-fifth of their rent.

According to city of Hamilton documents, apartment buildings pay 2.74 times the tax rate of single-family homes, despite several years of pressure from the provincial government to equalize tax rates. The Harris government passed legislation in the late 1990s banning tax increases on any property class with a rate higher than the provincial average.

That prevented tax hikes on industrial, commercial and multi-residential property in Hamilton for four years. City council responded in 2000 with a Business Tax Reduction (BTR) program that has cut industrial and commercial taxes by more than 30% in the last four years.

After hearing Cooper's presentation, west end councillor Brian McHattie asked if city staff could "develop a multi-residential tax reduction program". Budget director Tony Tollis told McHattie the city has no way to ensure that tax cuts would be passed on to the tenants. "There's no real mechanism for us to force them to pass it on," Tollis said. "I don't believe there is a way that we can specifically monitor that".

Both Cooper and Mayor Di Ianni immediately contradicted the budget chief. Cooper pointed to the Ontario Tenant Protection Act which states: "If the municipal property tax for a residential complex is reduced by more than the prescribed percentage [2.5%], the lawful rent for each of the rental units in the complex is reduced in accordance with the prescribed rules." The provincial legislation also specifically instructs cities to notify tenants in writing about tax cuts and the resulting rent reduction.

At present, however, the city doesn't provide any tax information directly to residential tenants, so most don't know that they are paying far higher rates than people who own their own home. And since reductions must be passed on to the tenants, landlords don't have a financial incentive to complain about the high rates, although the tax penalty may be a factor in convincing some tenants to buy new houses.

Tenants pay elevated rates in other municipalities, but Cooper says Hamilton's overcharging is extreme - more than double the rate in Burlington and Oakville and nearly triple the level in Mississauga. Toronto's rate is 2.52% versus the 4.16% in Hamilton.

Ironically, servicing tenants would appear to cost less for the city than single-family homes. Apartment dwellers have far fewer cars per household and their concentration in small areas means shorter water and sewer pipes, higher transit efficiencies, and garbage that's easier to pick up. Large apartment buildings also pump their own water at their own cost, even though the city pumps much higher up the escarpment to service mountain homes without imposing a surcharge.

The tax differentials are long standing. Most tenants didn't get the right to vote in city elections until the early 1970s, and even today, election turnouts in apartment buildings are much lower than average - partly because tenants never see their tax bills.

Tenants make up about one-third of the households in Hamilton. Nearly half of the 65,000 families are classified as having a housing affordability problem because they are using more than 30% of their income to pay the rent. Almost one-quarter are using more than 50% of their income for shelter - a level that puts them at risk of homelessness.

© Citizens At City Hall (CATCH)