Moving Toward a New Tenure Mechanism

T

he need for a more secure business environment has been a concern of the nature and outdoor tourism industry for many years. Although land tenure is not the only aspect of that concern, it has been seen as a significant issue for many years. We recently came across some old press clippings raising the issue in the mid 1980s. It certainly formed a major part of the discussion at the original Ignace meeting in July of 2005, and it has been a major part of the work of the Provincial Resource-Based Tourism Working Group since then.

Land Use Permits have been the most commonly used form of tenure on crown land for our industry, despite the fact that LUPs are issued yearly and provide very little security. As a matter of provincial government policy, they are not considered appropriate in cases where significant improvements will be constructed on the land. They have been issued by local MNR offices, which made them appear to be an easy and convenient mechanism to use, and the fees were very low. The current fee essentially reflects an administrative fee and not a market based approach as required by government policy.

For a number of years the provincial government has been working toward bringing all tenants on crown land into conformity with government policy. This policy requires that all tenants on crown land pay rental fees that are based on the appraised market value of the property they occupy. The rate is different for LUPs and leases, but both are based on the same appraised value.

NOTO engaged in discussions with MNR on this issue several years ago, but when agreement could not be reached on a mechanism for establishing land values, MNR moved on to the other remaining group without an agreement, the marina operators. Now that they have a negotiated agreement with the marinas, we are the last remaining group on crown land that does not have a system in place that is based on market values.

In advance of developing a new tenure mechanism based on market values, MNR has already taken steps toward simplifying the land tenure process. Where tourist operators formerly received a separate land use permit for every property, sometimes from multiple districts, LUPs are in the process of being consolidated onto a single document. New ten year multi-site LUPs will be issued from Peterborough in the future. Although fees are still paid annually, operators receive a single annual bill for all LUPs.

The major stumbling block to moving from LUPs to leases, which provide much more security to operators, has been the issue of land appraisal. MNR recently commissioned another appraisal report, and NOTO is now working with MNR to refine the results. The marina industry chose to adopt what is essentially income based approach, basing their fee structure on the number of feet of dock space. Our industry, however, has consistently resisted all income based approaches to property value assessment, both in our dealings with MNR and in dealing with MPAC on property tax assessments.

Like the marina operators, however, we believe that it is important to arrive at a system that is simple and predictable. Although it may not be perfect in every circumstance, a single value for outpost lots throughout the north is likely the best approach. Available appraisal values from the MNR consultants support this approach, since values do not vary all that much by region or for other reasons.

How does this relate to leases vs. LUPs? It is MNR’s intention to make leases the preferred form of tenure for our industry. It is already government policy that fees be based on market value, 5% of market value per year for Land Use Permits, and 7% for leases. We can expect the move to the new fee structure to be implemented over the next several years, with the option to convert from LUP to lease available to operators at any time. It is also hoped that virtually all of the ten-year LUPs will be converted to leases some time before the end of their ten-year terms.

The downside of all of this, of course, is that MNR finally intends to impose the market value fee structure on our industry that we have managed to delay for a number of years. However, we have been able to negotiate a system that would see our industry move to long-term lease as the preferred form of tenure. The industry has been asking for more than twenty years for the opportunity to replace the unpredictability of LUPs with the improved stability that would be provided by long-term leases. Although we are still working on the details around land value determination, phase-in mechanisms and other practical matters, it appears that we are very close to having an agreement that addresses one of the long term concerns of our industry.


This article was taken from page 7 of NOTO's "The Outfitter" publication, Spring 2007 Issue

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