Driftwood Cove Will Generate Much More Revenue As A National Park, The Legacy Of Former Reeve Brad Davis!

By John Francis

You’ve probably heard the story that when Parks Canada bought the Driftwood Cove property, it cost our municipality a quarter million a year in taxes. This is a zombie story — no matter how many times you slay it, it keeps coming back.
If you look up the numbers (I did) you will find that municipal revenues will actually rise substantially with Parks Canada owning the property. The Government of Canada pays PILT — Payments In Lieu of Taxes — on all federal lands in our municipality. The municipal revenue from PILT will be more than three times as much as the residential taxes would be.
So how did that happen?
The Federal/Provincial Agreement that created the National Parks was negotiated during the tenure of St Edmunds Township Reeve Brad Davis. Reeve Davis was a strong supporter of National Parks but also a very shrewd negotiator. He made sure the Township of St Edmunds would benefit — permanently — from welcoming the National Parks into our midst.
So all you really need to know is two things: three times as much revenue and Reeve Brad Davis. But if you want all the nitty-gritty details, keep reading. Warning: it’s complicated.
First: a quarter million a year. That’s based on a back-of-the-envelope guesstimate that runs like this: taxes are around 1%, the property is worth $25 million, so we’re losing a quarter million a year. That number is based on several incorrect assumptions. Residential taxes are indeed just under 1% (.938089%) but the municipality only gets to keep .387396% — barely a third of the overall taxes. The rest goes to Bruce County and to education. The municipal allotment from the Driftwood Cove properties added up to $26,859 in 2018, based on an appraised value of $7,056,000. (If you do the arithmetic, you will note that 2018’s mill rate was incrementally different than this year’s.) The assessment of the property is done by MPAC; the assessment will probably rise somewhat in response to the purchase price of $22.5 million. But there was a bidding war on that property; the asking price was only $20.6 million and most asking prices are well above appraised values. The revised assessment is more likely to fall in the $12 to $15 million range.
However: the key thing here is not the property value itself but rather the mill rate. That’s where Brad Davis worked his magic.
All federally and provincially owned properties make Payments In Lieu of Taxes (PILT) on their appraised values. PILTs make up 13.54% of our municipality’s annual revenue stream.
Our two national parks differ from other federal properties in that they pay PILT at the commercial rate rather than the usual residential rate. There are four different commercial tax rates; they vary from 65% higher than residential to more than double residential tax rates. But the portion the municipality gets to keep is much the same; most of the extra taxes on commercial properties go towards education. That’s where the magic asterisk kicks in.
The magic asterisk says that on Federal PILT payments, the municipality does not have to remit the education portion. We get to keep it. The overall mill rate is either 1.988229% (Occupied Commercial) or 1.546260% (Vacant Commercial). Of that, the municipality gets to keep either 1.507698% (occupied) or 1.209389% (vacant). Bean counters in Ottawa will spend months deciding which of these numbers to apply to which portions of the property. Eventually they will come up with a PILT figure for 2019. Either way it will be at least three times the .0387396% we’d have gotten from residential taxes.
But it’s actually much better than that. There is a Conservation Land provision in the Province of Ontario that allows landowners to apply for an exemption from municipal taxes on lands that are maintained as wilderness. If Driftwood Cove had remained a wealthy person’s cottage — and if that wealthy person had a decent accountant — they would have been granted an exemption on about three quarters of the value of the property. (It is not clear why the previous owner never applied for this exemption; possibly because they harvested the timber on the property.)
So in summary: a rich person would have paid .38% per year on one quarter of the value, whereas Parks Canada will pay at least 1.21% per year on the full value. That’s twelve times as much.
So raise a glass to the memory of St Edmunds Reeve Brad Davis. He did us proud.