Hi I am wondering how many people in your area are aware of the move by Municipal Property Assessment Corporation to change the tax category of boarding, lesson, trail rental, camps and therapeutic riding stables in Ontario from Agricultural to Commercial. This results in tax bills of up to 13 times or more what we pay now. I am including a bulletin from the Ontario Equestrian Federation and the Association of Riding Establishments in Ontario. It will affect all horse owners and related businesses and hundreds if not thousands of horses will be sent for slaughter as people can not afford to keep horses boarded and take lessons/ trails. Please read this and pass it onto all your members as soon as possible. There is a letter writing campaign in progress now. Urge all members to send copies of the letters available from www.horse.on.ca This is the address of the OEF. Pat COMMERCIAL PROPERTY TAX ON HORSE FARMS January 28, 2005 In 2003 and 2004, the Municipal Property Assessment Corporation (MPAC) initiated an aggressive program of reassessments across the province. MPAC has begun to apply a little used legislative provision to reassess the property tax classification for boarding and lesson stables. Instead of assessing them as rural residential or farming they are assessing them as COMMERCIAL. This is happening all over Ontario. Many equine-related businesses such as breeding and training horses, or providing services to racehorses are deemed agricultural uses. However, according to a senior MPAC official, Carmelo Lipsi, “any properties that fall into gray areas, like equestrian facilities, automatically default to commercial class.” A commercial classification means that the properties are taxed at a much higher rate. If the property assessment goes from farmland to commercial this can mean an increase of as much as 2600% depending on tax rates in your municipality. In dollars, that translates to tax bills going up by $10,000, $15,000, $20,000 or more. The financial impact is so severe that some horse farms have already gone out of business and many others are sure to follow. On August 18, 2004, the Association of Riding Establishments of Ontario (ARE-ONT) in conjunction with the Ontario Equestrian Federation (OEF) formed a committee to address the property tax issues surrounding horse farms and riding establishments. The mission of the OEF/ARE-ONT MPAC Committee is to research the issues presented, making information available to fellow stable operators, following through with the necessary letter writing and/or petitions, working with other affected groups such as the Ontario Therapeutic Riding Association, and to taking the steps necessary to assist MPAC in making fair assessments of property utilized for equines. Since August, volunteer co-chairs of the Committee, Jim Waechter and Leslie Brooks, have been diligently researching and organizing the steps necessary to make these changes. In addition to meeting with politicians, agricultural groups and members of MPAC itself, Jim and Leslie have spearheaded a letter writing campaign in order to draw attention to the disastrous consequences of the recent property assessments by MPAC on equine establishments. The ARE-ONT & OEF are also working with industry stakeholders in order to have a single strategy to ensure the necessary changes take place. It is important that all equestrian facilities and participants work together on this issue. The letter writing campaign package includes 6 letters that address the Minister of Finance, President of MPAC, Minister of Agriculture and Food, Minister of Municipal Affairs and Housing, Minister of Health and Long-Term Care and Minister of Tourism and Recreation. Historically, a small percentage of the 53,000 horse farms in Ontario have been reassessed as commercial. MPAC says they reassessed 450-500 in 2003 and more in 2004. Some were actually done as far back as the 1980’s. It is impossible to get exact numbers. The OEF/ARE-ONT Committee has documented details of approximately 50 from across the province that have been reassessed as commercial. Horse farm properties are typically on land ‘zoned’ as agricultural but zoning is irrelevant for property assessment purposes. Under the current legislation the property assessment valuation for horse farms that do breeding, racehorse maintenance, and raising/training/selling of horses is farming and as such MPAC usually assesses them correctly as farmland. After this it gets very confusing and inconsistent. If you give lessons or have boarders MPAC says we fall into a gray area and that defaults to commercial. Typically, MPAC seems to be taking all farm buildings as 100% commercial and a number of acres. The rest MPAC may change to rural residential or leave some as farmland and some as rural residential. Whatever the split they do can usually be challenged. It depends on the mix of horses you have on the property and their purpose. The end result could be an assessment where a percentage of the buildings and land is assigned to all three – commercial, farm and rural residential. In addition to the current year increase, MPAC makes the reassessments retroactive up to two years for newly assessed buildings resulting in, for many equestrian facilities, property tax bills for $10's of thousands of dollars, some due and payable in a matter of weeks. Individual barn owners simply don't generate the revenue that commercial property rates were established for. If a reassessment is done on previously assessed buildings, it can be applied to the current year and future years only. The changes for the future years are bad enough but the retroactive tax bills can be financially disastrous. If this commercial taxation of horse farms continues, the ramifications will be far reaching. The financial impact is so severe that many horse barns will not survive. In his, "Economic Impact of the Ontario Horse Industry," survey, The Ontario Minister of Agriculture and Food (OMAF) Veterinary Scientist, Dr. Robert Wright, indicates the equine industry's annual economic impact in Ontario is $579.1M annually, with an additional $5.9B invested in fixed assets. Not only will the farming industry, already reeling from it's many challenges, be affected by reduced consumption of hay, feed and bedding material, veterinarians, blacksmiths, equipment suppliers, farm improvement contractors and more than 51,000 people directly employed by equestrian facilities will be hurt by MPAC's decision. There are over 53,000 horse barns across the province and more than 253,000 Ontarians ride horses to enjoy the vigorous physical workout and many other recreational benefits equestrian facilities provide. These reassessments will close the barns and take a healthy lifestyle choice away from thousands of Ontario residents. The province’s “Rural Plan” states that Ontario’s success depends on building strong communities, a strong economy and a healthy environment in rural Ontario. The plan acknowledges the important contributions that rural Ontario makes to the economic vitality of the entire province. Riding establishments are not the playgrounds of the wealthy. Providing riding lessons to children and adults, children’s summer camp programs, therapeutic riding programs for the disabled or boarding and caring for horses is much more a labour of love than a lucrative business venture. Many families make real sacrifices so they can enjoy time with horses in a rural setting. Most stables are small agribusinesses with very high input costs and narrow profit margins. It is simply not feasible to expect that a riding establishment could pass on a commercial taxation rate to their customers and stay in business. MPAC is inconsistent in its evaluations and does not recognize that equestrian facilities have the same agricultural uses and services, as the horse racing industry. A note of support received from Edward Kendall, President of Equine Canada: “ Equine Canada identifies riding establishments as important contributors to the livestock industry. These facilities are part of a value-adding chain that is characteristic of most livestock sectors. Equine Canada supports the recognition of stables as facilities for the intermediate care of horses and thus their inclusion in agricultural property bases.” The OEF & ARE-ONT believe that “Horses are livestock. Livestock farming is an agricultural activity. This activity may include, but is not limited to, the breeding, raising, training, showing and maintenance of livestock.” All horse maintenance should be considered farming for property assessment purposes. Current legislation for property valuation purposes, Section 19(5) of the Act, recognizes racehorse maintenance as farming. We believe it should be ‘horse maintenance’, regardless of what you are doing with the horses. We all have the same issues, similar expenses, and farm chores. The intention is not to change what is defined as ‘farm income’ for Revenue Canada purposes or challenge what determines the Farm Property Class Tax Rate. If a farm qualified before, they will still qualify. The main concern is with Property Assessment Valuations; horse farms are farmlands not commercial. At least with income tax, horse farm owners can make a profit before they pay tax. Under current enforcement, MPAC requires payment of property taxes at commercial rates if you have any dollars coming from lessons or boarders. Profit or no profit. In a tremendous step forward, the OEF met with Ministry of Finance Representative, Nancy Naylor on Wednesday Jan 26th. Naylor, the Assistant Deputy Minister and the Director, Property Tax Policy Branch, met with OEF Executive Director, Marcia Barrett, Past President, Al Patterson, and ARE-ONT/OEF MPAC Committee Chair, Leslie Brooks. It was a very productive meeting. The Ministry was extremely appreciative of the information and said they received a very good understanding of the issues for horse farms and affected parties. Naylor stated that she will be meeting with the Minister of Finance, Greg Sorbara, MPAC leaders and others and hopes to get back to the OEF in as little as 2 weeks. This is extremely fast for government. The OEF & ARE-ONT are cautiously optimistic! The OEF & ARE-ONT have been getting cooperation from all government offices – who need time to process this. They are actually moving very fast! The MPAC Policy Committee has been called back together to discuss the, ‘Definition of a Farm’, and the OEF/ARE-ONT has been asked to participate. Leslie Brooks also discussed issues with ROMA (Rural Ontario Municipal Association) and asked for their support. The Ministry of Finance said they have received many of the Campaign Letters - many from young girls concerned about being able to afford a home for their horse. This has made a big impact on the Ministry and the OEF & ARE-ONT appreciates the support of all the concerned horsepeople that have sent letters in. Please visit the OEF website www.horse.on.ca for updates and the letter writing campaign. Andrea McGill Marketing & Communications Coordinator Ontario Equestrian Federation 9120 Leslie Street, Suite 203 Richmond Hill, ON L4B 3J9 Phone: 905-709-6545 ext. 17 Tollfree: 1-877-441-7112 Email: marketing@horse.on.ca Web: www.horse.on.ca Striding for Equine Excellence!