Bunkhouse delivers a taxing surprise

Thursday, September 30, 2010

by SUSAN MANN

Marshall Schuyler’s construction of a new bunkhouse for his seasonal farm workers last year lead to a nasty tax assessment surprise.

That’s because he was recently notified by the Municipal Property Assessment Corporation (MPAC) the new bunkhouse would be placed in the residential tax class. MPAC is the non-profit corporation responsible for assessing and classifying all properties in Ontario.

Schuyler, who grows fruits and vegetables in Norfolk County, says the other four bunkhouses on his farm, which have been around for 40 years, are and have always been taxed at the farm rate. “Why would this one be any different?” he asks.

He’s filed a notice of reconsideration with MPAC and is waiting for a reply in the mail. But he’s been told verbally they don’t agree and will tax the new bunkhouse as residential.

“What they have said is when they interpret the regulations” all bunkhouses should be assessed as residential, he explains. But the only reason the bunkhouses are there “is for the farm operation.”

Schuyler doubts his current assessment problem is related to his previous fight with MPAC to change the reclassification of his cherry pitting operation back to farm from industrial. Schuyler and his partners eventually won that fight.

Rose McLean, MPAC director of legal and policy support, says their policy has always been to classify farm bunkhouses as residential. McLean explains that MPAC assessors will first determine a market value for properties and then put the value in a classification for tax purposes. In the case of agriculture the value is based on the property’s use only for farm purposes. What tax rate classification to apply to the property’s different components is the next step. “We would value it (the bunkhouse) as a farm building and the land under it as farm land,” she says, “but not classify it that way.”

Schuyler’s assessment would increase “because that bunkhouse wouldn’t have been assessed before,” she says. “We would assess it and when we assess it we would put it in the right class and the correct class is residential.”
 
McLean says most of the bunkhouses in Ontario are assessed as residential “and have always been. There’s been no change in our policy.” The classification of bunkhouses is “residential because there’s a regulation that tells us what falls within the residential class.”

Farm groups, including the Ontario Federation of Agriculture, the Ontario Fruit and Vegetable Growers’ Association, the Ontario Tender Fruit Producers’ Marketing Board and the Ontario Agricultural Commodity Council, are trying to arrange a meeting with provincial Finance Minister Dwight Duncan and the Ontario Tender Fruit Producers is finalizing a letter to the provincial finance ministry. The groups argue the buildings should be assessed as farm and farmers should pay the farm tax rate for them rather than the residential tax rate.

Federation vice chair Mark Wales says they’ve been trying to get the policy changed for the past five years.

Adrian Huisman, manager of the tender fruit board, says the situation intensified this year when MPAC began classifying newly constructed bunkhouses as residential. “They may well be correct in what they’re doing. Unfortunately it’s a hardship on our farmers.” The farm groups are now lobbying the finance minister “to change the definition of a bunkhouse so that in all cases they’re assessed as part of the farm,” he says.

Huisman disputes McLean’s assertion that all bunkhouses in Ontario currently are classified as residential. So does Brian Gilroy, chair of the Ontario Fruit and Vegetable Growers’ Association.

“Most bunkhouses in the province have not been (classified) as residential units,” Gilroy says.

Finance Ministry spokesman Scott Blodgett says “there are no plans to change the current (assessment) policy.”

Farm bunk houses are used to house seasonal agricultural workers brought in by farmers from the Caribbean and Mexico to help with crop planting, growing and harvesting. The seasonal agricultural worker program requires farmers to provide housing for workers.

There are about 15,000 seasonal workers coming into Ontario annually. Schuyler estimates taxing existing bunkhouses at residential rates would add $50 to $60 per worker annually to farmers’ operation expenses. It will be an extra tax burden on farmers.
   
Gilroy says bunkhouses should be classified as farm because they’re used as farm buildings. They’re used for the purpose of growing food.

Federation president Bette Jean Crews agrees. Bunkhouses aren’t residences. “These are used for housing for, at the top, eight months out of the year for workers.”

McLean says it doesn’t make a difference that bunkhouses are only used to house workers for part of the year. Seasonal cottages are also classified residential, she points out. BF