Credits, Benefits & Incentives

In drafting Community Improvement Plans (CIPs) with the intention of providing brownfield redevelopment tax assistance, municipalities have sought clarification on a number of issues. Answers to these questions are provided below.

1. What assistance does the BFTIP provide?
2. What eligibility criteria must a BFTIP applicant meet?
3. Can Landowners or Developers apply directly to the Brownfields Financial Tax Incentive Program?
4. When developing a Community Improvement Plan with BFTIP provisions, are there any specific information requirements?
5. What is the maximum length of matching education property tax assistance?
6. Can a property in tax arrears qualify for BFTIP?
7. Under what conditions will education property tax assistance end before the date specified in a by-law?
8. What is the difference between a Tax Increment Equivalent Grant program (TIEG) and property tax assistance through BFTIP?
9. What are eligible costs under BFTIP?
10. Can upper-tier municipalities participate in BFTIP?
11. Can multiple properties be considered under a single by-law application?
12. Can a by-law be used to outline site-specific conditions?

Community Improvement Plan (CIP)

Agreement between Municipality and Landowner

Municipal by-law drafted

BFTIP Application

Approval by Minister of Finance

Municipal by-law passed. Remediation period begins.

1. What assistance does the BFTIP provide?
   
   BFTIP supports local municipal tax assistance programs for brownfield remediation. If approved, BFTIP will match (on a proportional basis) the property tax assistance a municipality chooses to provide with the education portion of the property tax. The goal of the BFTIP program is to encourage the clean-up and revitalization of brownfield properties and to attract third-party funding by providing tax assistance early in the clean-up process.
   
   
2. What eligibility criteria must a BFTIP applicant meet?
   
   The following conditions must be met before a site will be eligible for property tax assistance under BFTIP
   
   
   • A Phase II environmental site assessment has been completed for the property (more information on the environmental site assessment process can be found here);
     
     
   • The property failed the Phase II environmental site assessment;
     
     
   • The property is located within the area designated by an approved Community Improvement Plan (CIP);
     
     
   • The CIP includes provisions for financial tax assistance for brownfield remediation; and,
     
     
   • The property has been approved for the local municipal property assistance program.
     
     
   The Minister of Finance will consider whether a property qualifies for education property tax assistance on a case-by-case basis.
   
   
3. Can Landowners or Developers apply directly to the Brownfields Financial Tax Incentive Program?
   
   No, only a municipality can apply for BFTIP on the landowner's behalf for matching education property tax assistance. The landowner must have already been approved for a municipal tax assistance program before the municipality can apply to the Ministry of Revenue on their behalf.
   
   Landowners wishing to apply for property tax assistance should contact their local municipality for more information on possible tax assistance available for their property.
   
   
4. When developing a Community Improvement Plan with BFTIP provisions, are there any specific information requirements?
   
   Yes, at a minimum, use of BFTIP legislation requires the following information as part of the CIP:
   
   
   1. A reference to the enabling legislation for municipal property tax assistance, section 365.1 Municipal Act, 2001;
      
      
   2. An acknowledgement that timing and conditions for matching education property tax assistance may differ from conditions required by the municipality;
      
      
   3. An acknowledgment that Minister of Finance approval is required for matching education property tax assistance; and,
      
      
   4. A reference to the potential for involvement from an upper-tier municipality, where applicable.
      
      
   Additional provisions may be left to the municipal by-law stage or appended as administrative detail.
   
   Further information and standard wording suggestions are provided at the bottom of the FAQ section, here.
   
   
5. What is the maximum length of matching education property tax assistance?
   
   While the Minister of Finance will generally not approve tax assistance for a period longer than three years, municipalities may also present a business case for a longer period of matching education property tax assistance. The business case should explain the exceptional circumstances that require an extended development period.  For example, an extended development period may be the only reasonable way to offset higher-than-average estimated eligible expenses.
   
   If interested, municipal staff should contact the Ministry of Revenue BFTIP Coordinator directly on this point.
   
   
6. Can a property in tax arrears qualify for BFTIP?
   
   It's possible. Although a landowner cannot have any outstanding property taxes levied during the rehabilitation and development periods covered by the by-law, it should be noted that property tax assistance may be used to address tax arrears existing at the outset of the rehabilitation period. This can be found in section 365.1 (21) of the Municipal Act, 2001:
   
   

   "...the local municipality may,
   
    b) credit the amount to be refunded to an outstanding tax liability of the owner of the eligible property with respect to the property, if the taxes have not been paid."

   
   It should also be noted that payment of outstanding property taxes does not constitute an eligible remediation expense.
   
   The municipal by-law requires a clause explicitly stating that a property owner must not owe taxes levied during the time periods covered by the by-law,
   

   "all tax assistance for a subject property will be suspended in cases where a landowner has not paid all of the taxes on a subject property for the previous years in the rehabilitation and development periods (subject to any specific exceptions provided for in the by-law or in an agreement under the by-law.)"

   
   Landowners receiving property tax assistance should continue to pay outstanding property taxes levied during the rehabilitation and development periods that are not cancelled or deferred by the by-law. However, specific terms and provisions for tax assistance placed on eligible properties will vary by municipality.
   
   
7. Under what conditions will education property tax assistance end before the date specified in a by-law?
   
   Matching education property tax assistance will end before the date specified in a by-law if a property owner does not fulfill the agreed upon conditions, or:
   
   
   • At the point of severance or subdivision;
     
     
   • At the point of sale or conveyance; or
     
     
   • At the date that tax assistance equals accumulated costs of contaminant reduction action taken to permit the filing of a Record of Site Condition for the property.
     
     
   Please note that education tax assistance cannot be transferred to another landowner upon conveyance of the land.
   
   
8. What is the difference between a Tax Increment Equivalent Grant program (TIEG) and property tax assistance through BFTIP?
   
   In short, a TIEG rebates property taxes previously collected but not cancelled, while a tax assistance program leads to the cancellation of property taxes.
   
   Under section 365.1 of Municipal Act, 2001, municipalities can now offer property tax assistance to encourage environmental remediation. Previously, only a loan or grant was possible under section 28 of the Planning Act.
   
   When developing their financial programs to support brownfield redevelopment, municipalities should be mindful that the Province cannot provide matching education property tax assistance to a grant program. In order to take advantage of matching education property tax assistance, the municipality must agree to provide tax assistance involving the immediate or eventual cancellation of agreed upon property taxes. 
   
   
9. What are eligible costs under BFTIP?
   
   In some cases, costs that a municipality may deem to be eligible expenses under their tax assistance program may not be eligible costs under the BFTIP. Eligible costs for matching education property tax assistance are limited to:
   
   
   • Costs related to any action taken to reduce the concentration of contaminants on, in, or under the property to permit a record of site condition to be filed;
     
     
   • Environmental consultant fees; and,
     
     
   • Costs for property insurance during the remediation period.
     
     
   Eligible costs for matching education property tax assistance typically do not include the construction of public works, demolition of existing buildings or other costs that are not related to the environmental remediation of the soil for a property in order to complete a Record of Site Condition.
   
   
10. Can upper-tier municipalities participate in BFTIP?
    
    As part of the tax assistance provided to a landowner, a lower-tier municipality may also seek participation from the upper-tier municipality. If asked by the lower-tier, the upper-tier has the option of providing for the cancellation of all or a portion of the taxes levied for upper-tier municipal purposes. Upper-tier assistance may be delivered differently than the assistance provided by the local municipality and may be subject to additional conditions. 
    
    An example of a potential upper-tier Council Resolution on the provision of tax assistance for a specific property is provided below:
    
    Council Resolution Example:

WHEREAS [lower-tier municipality] intends to pass the attached By-law pursuant to subsection 365.1(2) of the Municipal Act, 2001;

AND WHEREAS [lower-tier municipality] has provided a copy of the By-law to Council pursuant to subsection 365.1(4) of the Act;

NOW THEREFORE BE IT RESOLVED THAT, pursuant to subsection 365.1(4.1) of the Act, Council agrees that the By-law may apply to taxes levied for upper-tier purposes.

11. Can multiple properties be considered under a single by-law application?
    
    Yes. Although tax assistance is enabled by means of a municipal by-law, a single by-law can provide tax assistance for multiple properties if the by-law lists each individual property.
    
    Municipalities are also free to use individual by-laws for each site or attach individual conditions to each property. However, the program is designed to allow a municipality to specify which individual properties could receive tax assistance for the purposes of environmental remediation under a single by-law.
    
    
12. Can a by-law be used to outline site-specific conditions?
    
    Yes, there may be site-specific conditions imposed and listed in the by-law, including the requirement for landowners to enter into an agreement with the municipality in order to be eligible for property tax assistance.

Standard Wording Suggestions for BFTIP in Community Improvement Plans (CIPs):

1. Enabling Legislation/Legislative Authority
   
   
   

   Property tax assistance for __________ (name of program) is provided under the authority of section 365.1 of the Municipal Act, 2001, which enables municipalities to cancel all or a portion of property tax levied on eligible brownfields property.

   
   section 365.1 of the Municipal Act, 2001 enables municipalities to pass a by-law providing tax assistance to an eligible property in the form of a deferral, freeze or cancellation of part or all of the taxes levied on that property for municipal and school purposes. This ability under section 365.1 of the Act is different from the broader ability of a municipality to provide grants and loans or refund planning and building fees under section 28 of the Planning Act. The latter ability has already existed for municipalities for quite some time, and it is not connected to the Brownfields Financial Tax Incentive Program, which became active in the fall of 2004.
   
   In addition to the requirements of section 365.1, Ontario Regulation 274/04 specifies additional information that the municipality must provide to the Minister of Finance when tax assistance is applied for. It is necessary that this information be provided regardless as to whether or not there is education property tax assistance.
   
   
2. Timing and Conditions of Matching Tax Assistance - Potential for different schedule and/or conditions
   
   

   "The Minister of Finance may approve matching education property tax assistance for an eligible property. The matching education property tax assistance may be provided on a different schedule from the assistance provided by the municipality and may be subject to additional conditions."

   Approval from the Minister of Finance is only required for each municipal by-law in cases where the municipality wishes to provide tax assistance to a landowner using the education portion of the property tax.
   
   Conditions imposed by the Minister of Finance for matching education property tax assistance under section 365.1 of the Municipal Act, 2001 may be different from those outlined by the municipality's CIP. Additional conditions the Municipality may want to impose on the property owner, as part of the tax assistance agreement, can be contained in the by-law.
   
   The matching education property tax assistance would be provided once a municipal council passes a by-law approved by the Minister of Finance for an eligible property. The matching education property tax assistance may take the form of a tax deferral, followed by a tax cancellation once the appropriate conditions are met. During the deferral stage, the landowner would not be required to pay the education property taxes that have been deferred by the municipality.
   
   Municipalities also have the option of granting conditional property tax assistance, which means that the tax assistance would not be provided until the landowner has satisfied conditions described in the municipality's by-law.
   
3. Minister of Finance Approval
   
   

   "Approval from the Minister of Finance is required for matching education property tax assistance."

4. Upper-tier Involvement
   
   

   "As part of the tax assistance provided to the applicant, the _______ (lower-tier municipality) may also seek participation from the _______ (upper-tier municipality) in order to provide for the cancellation of all or a portion of the taxes levied for municipal purposes by the _______ (upper-tier municipality). Upper-tier assistance may be delivered differently than the assistance provided by the municipality and may be subject to additional conditions."

   As part of the tax assistance provided, the lower-tier may also seek participation from the upper-tier municipality. If asked by the lower-tier, the upper-tier has the option of providing for the cancellation of all or a portion of the taxes levied for upper-tier municipal purposes. Upper-tier assistance may also be delivered differently than the assistance provided by the municipality and may be subject to additional conditions. Potential wording for an upper-tier council resolution is provided here.