Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: September 11, 2019

FILE NO.: WR 161642

Assessed Person(s): D. D.

Applicant(s): D. D.

Respondent(s): City of Hamilton

Property Location(s): Withheld

Municipality(ies): City of Hamilton

Roll Number(s): Withheld

Appeal Number(s): 3369568

Taxation Year(s): 2018

Hearing Event No.: 720467

Legislative Authority: Section 357.(1)(d1) of the Municipal Act, 2001, S.O. 2001, c. 25 as amended

Heard: July 05, 2019 in Hamilton, Ontario

APPEARANCES:

Parties	Representative
D. D.	Self-represented
City of Hamilton	Irwin Sampat

DECISION OF THE BOARD DELIVERED BY DAN WEAGANT

INTRODUCTION

1D. D. filed an application to the City of Hamilton (“City”) to have his 2018 taxes reduced, cancelled or refunded because he was unable to pay due either to sickness or extreme poverty, under s. 357(1) (d1) of the Municipal Act, 2001, S.O. 2001, c. 25 as amended (“Act”).

2The City has passed a by-law, delegating its authority to determine such applications to the Assessment Review Board (“Board”) under s. 357(11) of the Act.

ISSUE

3The issue before the Board is, whether or not the Applicant’s 2018 property taxes should be cancelled, reduced or refunded because of the Applicant’s inability to pay for the reason of sickness or extreme poverty. This requires the Board to determine a number of things. First the Board must determine, based on the evidence at the hearing, if the Applicant was unable to pay his 2018 property taxes. If the Board determines he was unable to pay his property taxes, the Board must then determine if the reason he was unable to pay was either sickness or extreme poverty.

4If the Board determines that the reason he was unable to pay was sickness or extreme poverty, the Board must then decide on the amount of the taxes levied to be cancelled, reduced or refunded.

DECISION

5The Board finds that the Applicant was unable to pay the property taxes levied in 2018. The Board finds further that the reason the Applicant was unable to pay was extreme poverty. Accordingly, the 2018 property taxes levied are refunded in the amount of $2,297.84.

REASONS FOR THE DECISION

Was the Applicant able to pay the Property Taxes levied in 2017?

6The Applicant lives alone at the subject property. The 2018 property taxes levied were $2,297.84. The Applicant reported a total annual income for 2018 of $20,168.69, or $1,681 per month (rounded). This income was generated as follows:

• Employment income: $ 4,375
• GST / HST Rebates: $ 430
• Local / provincial support payments: $ 696
• WSIB pension: $ 14,097
• Refund of federal taxes for 2017; paid in 2018: $ 571

7From time to time throughout 2018, the Applicant testified that he augmented his monthly income by drawing on a personal line of credit that was secured by the subject property. These funds totaled $2,909.37 in 2018 and were transferred to the Applicant’s chequing account when there was a danger that the account might go into overdraft.

8The Applicant reported that monthly financial activity for his household is transacted through a single checking account. The balance on that account on January 1, 2018 was $1,126.99. The balance on December 31, 2017 was $1,177.97.

9In 2018, the Applicant’s house has an assessed value of $193,250 with $101,846.17 in principal yet to be paid on the mortgage. He owns a 2004 Ford Explorer that he uses for his transportation needs. There is no value attributed to this vehicle by the Applicant.

10Monthly expenses reported by the Applicant for 2018 totaled approximately $2,005 per month. These expenses are summarized as follows (all rounded to the nearest dollar):

• Mortgage payments - $525
• House and auto Insurance - $226
• Groceries - $400
• Household supplies - $75
• Clothing - $50
• Utilities (heat, hydro water and sewer) - $158
• Car expenses - $200
• Cell phone, telephone, cable and internet - $107
• Bank fees - $11
• Reliance home comfort rentals - $42
• Medications not covered by social programs - $20
• Property taxes - $191

11The Applicant submitted that he was faced with some building repairs that explain the amount in 2018 for ‘household supplies.’ In addition, he testified that the house is in poor condition and he doesn’t have the funds to make the necessary repairs. Instead he takes stop gap measures in the hopes that his financial situation will change and that he’ll be able to keep up with the necessary maintenance as a result.

12The Applicant testified that he sustained a work injury in 2005 and since then he has had difficulty holding down a full-time job. He submitted that his affliction gets worse over time and in recent years he has been able to perform less and less strenuous work. He is trained in warehousing, shipping and receiving but finds that work to be too physically demanding.

The City’s Submissions

13The City did not refute the Applicant’s testimony of his financial situation in 2018. The City confirmed that D. D. has been assisted by the City for home repairs at the subject property. The measure is called an ‘emergency loan’ and is structured to be paid back to the City if the property is sold within ten years of the date the loan is advanced. If the recipient retains ownership of the property for at least ten years, the loan is forgiven.

14The City asked the Applicant if he had considered taking in a boarder, or somehow renting part of the house to generate some additional income. The Applicant replied that he would be open to that, but in 2018 the house was unfit for rental accommodation.

15The City took no issue with the testimony of the Applicant with respect to his financial evidence or testimony.

The Board’s Analysis

16The Applicant’s monthly income is approximately $324 less than his expenses. The Board notes that, even if the Applicant hadn’t paid his property taxes, his monthly expenses would have exceeded income by approximately $133.

17When asked by the Board how he manages to pay his taxes, the Applicant responded that by re-negotiating his mortgage to consolidate debt, he was able to access a line of credit to cover monthly shortfalls. He added that he realized that approach couldn’t go on forever, but he hoped for better days ahead.

18The Board views this situation as a clear case of an Applicant accumulating debt to pay taxes. His testimony about the condition of the house indicates that he has not been able to keep up with its maintenance owing to restricted resources. It is equally clear from the evidence that the Applicant was unable to pay his taxes in 2018 with the resources he had available, without incurring additional mortgage debt. In 2018, the subject property had $91,400 in equity when the remaining mortgage balance is subtracted form the assessed value. This equity is further reduced by the amount of the emergency loan owing to the City.

19The applicant testified that he considered renting a part of the house to raise additional funds to meet the ongoing needs of the household. However, he viewed the house to be of substandard condition for renting to others. The Board accepts the uncontested testimony of the Applicant regarding the condition of the house and finds that, in 2018, renting a portion of the house to raise additional income was not an option for the Applicant.

20The Board finds that the Applicant was unable to pay his property taxes in 2018 because:

• his monthly expenses regularly exceed his monthly income;
• to meet monthly obligations, the Applicant regularly access further mortgage debt; and
• owing to safety and property standards concerns, renting a room or larger portion of the house in 2018 was not a reasonable means of accessing income.

Was the reason the Applicant could not pay either sickness or extreme poverty?

21This Board has frequently held that, in order for a condition of extreme poverty to exist, there must be a gap between regular income and expense. Further, the Board has held, these expenses need to meet the necessities of life. In this case, the Applicant’s unrefuted evidence shows that day to day expenses exceed his income. The testimony also shows that the expenses incurred by the Applicant were for basic needs.

22The Applicant testified that he meets his monthly obligations each month, but to do so requires him to borrow further funds in the form of an additional mortgage encumbrance. In reviewing the list of expenses, the Board finds that these are related to the necessities of a modern life in a modern city in Ontario. While the Applicant has a vehicle that costs over $300 per month to operate, his transportation needs, if met by an alternative would have likely been higher, given that he travels at all hours of the day to various locations to fulfill temporary employment placements. Accordingly, the Board finds that thee Applicant has demonstrated that he is in a condition of extreme poverty.

What is the amount of the taxes to be reduced, refunded or cancelled?

23The Board finds that, while the Applicant did pay the taxes in 2018, he did so under financial duress. The amount of taxes to be refunded is the amount paid by the Applicant in 2018, or $2,297.84.