Originally Published in the May 1992 issue of The Outfitter Magazine.
Minister Wildman Responds to NOTO’s Waterlot Concerns
Dear Mr. Wisneski:
This is in response to a letter dated October 8, 1991, that I received from your predecessor, Mr. Bill Chambers, advising me of your Association’s concerns about the Ministry’s waterlot policy. I apologize for the delay in responding (Minister’s letter dated March 2, 1992 – Editor).
At a meeting with the Association’s Board of Directors on September 12, 1991, I indicated that the commercial waterlot program would not be cancelled and that I was prepared to have Ministry staff meet with Association representatives to discuss the determination of fair rents. I understand that staff participated in a constructive meeting with the Association on November 12, 1991, at which time it was agreed that a task group would be established to study and report to me on this matter prior to the 1992 convention of the Association.
I appreciate the concerns raised in Mr. Chambers’ letter and would like to respond to each question in turn.
QUESTION ## 1:The MNR’s policy states that “Crown Land under water is essentially no different than Crown uplands”. The logic of this statement begs question. The land under water is of no use to anyone; hence, it is essentially different. The fact that a dock may cover some of the land under water is not of any real significance. Please outline the rationale behind the Ministry’s point of view.
MINISTER’S RESPONSE: While Ministry policy does not state that “Crown land under water is essentially no different than Crown uplands”, that statement is an accurate reflection of the Ministry’s perspective on this issue. It is the Ministry’s view that all land has value, whether economic, environmental, or social. Valuing resources is one of the Ministry’s three supporting strategies which contribute to our central goal of sustainable development.
The Ministry manages public land on behalf of all of the people of Ontario. When the public’s land is used for commercial gain, the public, through the public treasury, is entitled to compensation.
Ministry policy restricts the disposition of water lots to the upland property owner, and it is acknowledged that this restricts the “market”. However, this does not mean that the land is rendered valueless in economic terms.
Just as a tourist outfitter must purchase or rent a sufficient land base to provide for business needs, such as the parking of motor vehicles for guests, an outfitter must also obtain an area for the docking or mooring of boats, if required.
QUESTION ## 2: Who is going to determine the market value assessment (or if usable market data is available) and at whose cost? How subjective is the determination of what is “usable market data”?
MINISTER’S RESPONSE: The term “market value assessment” generally relates to a property tax assessment method used in many parts of the province by the Ministry of Revenue. I believe it is very important to differentiate between taxation and land rental. The Ministry’s water lot policy relates only to the occupation of public lands covered with water, including lands which may subsequently have been filled.
The Ministry may estimate the market value of waterlots in one of a number of ways, depending on the circumstances, just as would be done for dry Crown uplands. These methods include: appraisal by staff of the Ministry of Government Services; appraisal by a qualified fee appraiser; or evaluation by Ministry field staff.
In any of these cases, principles recognized by the Appraisal Institute of Canada are followed in estimating the value of land being appraised. The Ministry does not knowingly attempt to unfairly value land. If a client takes exception to the value, he or she may submit evidence to the Ministry to support an alternative conclusion of value. This would be done by having the client submit, at his or her expense, an appraisal performed by an independent accredited real estate appraiser to assist in fairly valuing the site. I can assure you that the Ministry would have serious regard for an appraisal submitted by an independent accredited appraiser.
The Ministry will provide the initial property evaluation, at its cost, as workload and budgetary considerations allow. If a client’s needs cannot be fulfilled within the Ministry’s timeframe, or if the client wishes an alternative evaluation for comparative purposes, the client, at his or her expense, may submit an appraisal by an accredited appraiser for the Ministry’s consideration.
The term “usable market data” generally relates to “arm’s length” property transactions, which are reasonably comparable to the property being appraised according to standards and principles of the Appraisal Institute of Canada.
QUESTION ## 3: Please provide us with the approximate revenue figure that the Government expects to generate from the waterlot tax.
MINISTER’S RESPONSE: The Ministry does not maintain revenue compilations dedicated to water lot revenues. However, in response to your question, staff compiled a summary of revenues from existing waterlots. I understand that the information was shared with Association representatives at the November 12 meeting.
QUESTION ## 4: Why are some lots already being charged a market value assessment when the program is not scheduled to begin until 1996?
MINISTER’S RESPONSE: The waterlot program is not new. Many industrial, commercial and private waterlots have been authorized since the 1800’s.
The current policy, established in 1985 following extensive consultation with your Association, provides that a rental option of a land use permit, to expire on December 31, 1995, may be offered at a one-time fee, to commercial operators who derive little or no income directly from the use or uses of the waterlot. This would apply, for example, to a dock in front of a lodge or campground store where the dock is simply a convenience for the operator and his or her clients. The intent of this policy was to regularize those particular unauthorized commercial operations, at an administrative fee of $125. This was to ensure that a “level playing field” existed with all operators being authorized, prior to requiring rents based upon market value in 1996. This policy was to be offered to authorize those waterlots occupied for commercial purposes without authority and would be made available as an option to commercial operators with authorized waterlots upon the written request from the operator. The Association was to communicate this information to its members. I believe that this option has been made available to any qualified commercial operator who has requested it.
QUESTION ## 5: Why do quit claim letters patent apply in other parts of Ontario and not in the Northwest? Is this a fair situation?
MINISTER’S RESPONSE: The Public Lands Act provides that a quit claim may be issued to a person where the Crown’s right to recover the land is barred under the Limitations Act. The Limitations Act bars the Crown from commencing an action for the recovery of the land after 60 years of qualifying uncontested possession. Any commercial occupant who feels he or she is qualified for a quit claim should discuss the issue with legal advisers. Any occupant of Crown land who feels qualified for a quit claim also has the additional option of applying through the judicial system for a declaration of ownership.
QUESTION ## 6: Would the Minister be prepared to make the waterlot policy an equitable one by extending it to all docking facilities, private and commercial (note that very few tourist operators in Northern Ontario derive significant benefit from the use of land under water)? Furthermore, who is to determine what constitutes “significant benefit”?
In addition, a number of private cottages have docking facilities that exceed those of many tourist operations. Many of these cottage owners also operate a “cottage industry”, renting out their private cottage while they are not using them personally. This remains an uncontrolled and untaxable situation.
MINISTER’S RESPONSE: The Public Lands Act provides that it is unlawful to occupy Crown land without authority. Some limited uses, such as private docks, are authorized in accordance with the Ministry’s free use policy. I am not prepared at this time to extend that benefit to commercial uses of Crown land because those uses relate to individual business benefits.
Private cottage docks do not generally contribute to a land use dedicated to commercial enterprise. While some private cottage lots may have limited revenue generation through rental, this use is incidental to the private cottage use. The Ministry does not have a means to identify this incidental revenue generation nor the resources to pursue authorization of an estimated 400,000 cottage properties.
The Ministry’s policy direction providing eligibility to rent a waterlot at a special administrative fee applies to commercial waterlots which do not enjoy a “significant benefit”. The policy is applied when, in the opinion of the local District Manager, the waterlot is not essential to the business, or use of the waterlot yields less than 20 percent of the business revenue.
QUESTION ## 7: Is the Ministry prepared to assess a waterlot fee with the stipulation that it is not subject to further provincial, municipal or school board levies?
MINISTER’S RESPONSE: It is outside the authority of the Ministry to exempt waterlot occupations, or any other occupation of Crown land, from taxation.
In view of your concerns about property taxation, you may wish to contact the Fair Tax Commission in writing at Fair Tax Commission, 1075 Bay Street, 6th Floor, Toronto, ON, M5S 2B1, or at telephone number (416) 325-8222.
QUESTION ## 8: Why is it that outposts will simply have their Land Use Permits extended to cover the waterlot and will not be subject to this policy? Is it equitable that what is arguably the most lucrative part of North Tourism will not face any additional fee, while the remaining tourism operations will be charged a fee (perhaps with GST and land, municipal and school board taxes on top of it as well)?
MINISTER’S RESPONSE: Crown outpost camps are not exempt from this policy. The policy is intended to authorize waterlots and collect rent attributable to the occupation of Crown land. By including the waterlot within the boundaries of the land use permit area the goal of authorization is achieved. In most cases, this practice has not resulted in additional rents because rents have been calculated according to a formula that reflects an administration fee and an area or size based land contribution value. This practice results in no additional administrative cost, hence no change in the administrative fee and, frequently, the total parcel size does not exceed the minimum area. If the addition of the waterlot area results in an increase to a larger area class, an ensuing rent increase will occur.
Any GST owing on land rented by GST registrants, for business purposes, may be claimed as an input tax credit or as a rebate. This practice ensures that GST is paid by the final domestic user, rather than the commercial operator, if the operator is a GST registrant.
I hope that the task group to be established to review this program will make constructive recommendations on the treatment of Crown waterlots associated with tourist operations. I look forward to reviewing the task force’s findings.
Again, thank you for apprising me of the view of the Northern Ontario Tourist Outfitters Association.
Bud Wildman, Minister
UPDATE: The NOTO representatives on the waterlot task force are: Mal Tygesson, NOTO Vice-President (Vermilion Bay); Lloyd Lindner, NOTO Past President (Birch Island-Manitoulin Island); and Bud Dickson (Atikokan). Three MNR representatives also sit on the task force, including Jim Grosnell, Manager, Lands Policy Section, who chairs the committee. The NOTO representatives have asked for a meeting of the task force prior to the end of April, although no date has been set. NOTO will keep its members up to date on any important developments as they occur. Please contact the NOTO representative nearest to you or the NOTO office, if you have any further questions or comments about the waterlot program.