City council has tentatively approved a tax exemption for a financially beleaguered affordable housing complex.
At Monday’s council meeting, city politicians approved forgiving more than $189,000 in back taxes and up to $77,000 in future taxes as Hillcrest Lodge works to regain tax exempt status.
Hillcrest provides affordable housing for 31 seniors, and the organization has been in a bind since its 10-year property tax exemption with the city expired in 2019.
Since opening in 2008, the organization has managed to keep its housing and operational costs low on the strength of a 10-year tax exemption from the city and a $1/per year property lease with the building's owner, Toronto United Church.
Once that tax exemption expired, however, the Municipal Property Assessment Corporation (MPAC) deemed Hillcrest Lodge ineligible for tax exemption because it does not own the property.
Although churches qualify for tax exempt status, Hillcrest does not qualify because the organization itself is not a church, city staff explained at Monday’s council meeting.
Without tax forgiveness, Hillcrest Lodge would likely go bankrupt, organization officials said in a presentation to council in February.
In order to gain tax exempt status, Hillcrest needs to assume ownership of the property, which a previous term of council recommended upon the expiry of their agreement with the city.
Although Hillcrest has been working with Toronto United Church to acquire the property, the transaction has yet to take place, and it accrued a significant property tax bill through that time.
At Monday’s meeting, council approved funding the tax exemption from the city’s tax rate stabilization reserve fund as Hillcrest works to acquire the property.
Councillors generally agreed with the notion of helping Hillcrest, noting the development’s paramount importance to its residents, but they had differences on how to approach the situation.
Coun. Ralph Cipolla wanted to defer the request until the affordable housing committee could meet and look for an alternative route for Hillcrest to gain tax exemption.
“I really have a problem with the church not being able to be tax exempt, and there's got to be a solution to that,” Cipolla said.
“I'm just wondering if we delay this, and we have an alternative come up soon, the affordable housing committee might solve (it) because this is using taxpayers money to pay the city and it's not what I had in mind,” he said.
Other members of council noted the decision will not be ratified until April 3, which gives time for a change in direction if new information comes to light.
Mayor Don McIsaac, though sympathetic to the situation, expressed concern the city might be in the same situation in the future, as Hillcrest has failed to acquire the property in more than three years since its tax exempt status expired.
“Three years is a long time. I mean, handing over a deed is not a complex action, and I think we'll be sitting here in three years for the same question,” he said.
City staff pointed out that the mortgage holder, First National Bank, might have issues with transferring the property while it has outstanding taxes, and also highlighted the pandemic as part of the delay.
“I know in speaking with the United Church … they weren't sure how the mortgage holder would take that there were outstanding taxes,” said senior planner Jill Lewis.
Beyond approving the funding, council agreed to have the city’s affordable housing coordinator — once hired — work with Hillcrest to facilitate the land transfer. Mayor Don McIsaac will also draft a letter of support to First National Bank.
Council’s decision is subject to ratification on April 3.
