Feature Article October 2, 2003
LAND O' LAKES NewsWeb HomeMPAC Angers ForestersIt is not only residential property owners that have questions about the functioning of the Municipal Property Owners Association (MPAC). Woodlot owners who have taken part in the Managed Forest Tax Incentive Program (MFTIP), set up in 1997 to encourage sustainable forestry practices in the province, are angry as well.
Woodlot owners who use the program saw some unexpected increases in their tax assessments last fall, and reported this to the Ontario Woodlot Association (OWA) and the Ontario Forestry Association (OFA).
The Ontario Woodlot Association began making inquiries to MPAC, but it took until April 3, 2003, before MPAC issued an explanation. It turned out that MPAC had changed from assessing managed woodlots in the same way farmland is assessed, to market value assessment. The assessment changes may force landowners to cut their forests or sell land to pay increased property taxes, according to a press statement by the Ontario Foresters Association.
Since 1997, farmland assessment has evaluated woodlots in terms of the financial value of the trees, the way farmland is valued according to the cropping potential of the land. The new MPAC approach will now use the same sales comparison approach it uses for residential and commercial property.
Sustainable forestry advocates see this as government betrayal. It runs counter to the goals of the program that was set up in 1997, says Wade Knight, the Executive director of the OWA, pointing out that in order for woodlot owners to qualify for the tax incentive program, they must produce a forest management plan every five years, and must pay to have a certified inspector evaluate their woodlot. Maintaining a sustainable forest requires a large commitment of time, and a lot of hard work, says Arthur Mathewson of Crow Lake, who has been nurturing his 600-acre forest since 1962.
Woodlot owners who participate in the tax incentive program, which includes 9,770 properties and over 1.7 million acres throughout Ontario continue to pay a low mil rate, 25% of the normal mil rate, for their managed forest properties, as do farmland property owners, but the assessments applied to that mil rate are jumping higher with this change in MPAC policy.
The OFA notes several negative outcomes from market value assessment of woodlots. They say the benefits offered to people who entered the program are now lower than promised, and that to access a lower tax class, forests may be converted to farmlands. As well, the OFA worries that forests on waterfronts will be fragmented as a result of cottage development that will be caused by the prohibitive tax burden of maintaining forestland, and that forest properties in the shadow of urban areas will receive significant assessment increases that may make them too expensive to maintain as natural areas.
The OFA also thinks this change will hurt the forest industry in south-central Ontario, and worries that future tree planting initiatives will be jeopardised because farmers will be unwilling to take marginal farmlands out of production if they are faced with increased property assessments for forested lands.
The OWA and the OFA have appealed to the Ministry of Finance, who sets policies for MPAC to follow, asking them to prescribe that MPAC reverse course and assess forestlands in an identical manner to farmlands. Interestingly enough, sustainable forestry advocates have found an ally from within the provincial government itself, in the Ministry of Natural Resources (MNR).
On May 7, MNR minister Jerry Ouellette wrote a letter to Finance Minister Janet Ecker, in which he said, MPACs most recent valuation procedures are contrary to the government direction for MFTIP This is of particular concern for land located near urban and/or recreation areas where woodland values were elevated because of market forces.
Ouellette goes on to say that MNRs preliminary analysis indicates that: properties that are 100% eligible for the Managed Forests program will have increased assessments in the 2004 taxation year. Some will be very significant.
The letter concludes by noting the government has invested significant resources in developing and managing the MFTIP. Landowners have invested significant time and money to enter and stay in the program we have been receiving negative publicity because of MPACs valuation procedures that run counter to the governments intent for the MFTIP ... I believe that it is in our mutual best interest to seek ways of resolving this growing issue.
The OFA and the OWA did manage to have a meeting with Ministry of Finance Officials on September 2, where they asked the Ministry to provide direction to MPAC on this matter, but the provincial election was called the very next day. Wade Knight of the OWA says we havent heard a word from the Ministry of Finance since then, but we will be calling whoever is in charge as soon as the provincial election is over.
There are 26,414 acres of forest within the MFTIP in Frontenac County, 9,831 acres in Lennox & Addington, and 34, 508 in Lanark County.
