Evaluation of the Payments in Lieu of Taxes Program (2008-606)

Final Report

March 18, 2010

Table of Contents

• MAIN POINTS
• INTRODUCTION
• PROFILE
• FOCUS OF THE EVALUATION
• FINDINGS AND CONCLUSIONS
  • RELEVANCE
    • The program is aligned with federal government priorities and is consistent with federal roles and responsibilities
    • There is a continuing need for the program
  • Conclusions with respect to Relevance
  • PERFORMANCE
    • The program followed processes to ensure payments were consistently and predictably calculated
    • The majority of variances between payments and applications stemmed from interpretation of the Act
    • PILT were administered in a timely manner
    • Communication was inconsistent across the regions
    • A Dispute Advisory Panel was in place for independent requests for review from taxing authorities
    • The program ensured that payments were fairly and equitably made to taxing authorities in the majority of cases
    • The program does not have a sufficient performance measurement system in place
  • Conclusions with respect to Performance
• GENERAL CONCLUSIONS
• MANAGEMENT RESPONSE
• RECOMMENDATIONS AND MANAGEMENT ACTION PLAN
• ABOUT THE EVALUATION
• Appendix A: PILT Process Map
• Appendix B: Logic Model
• Appendix C: Evaluation Matrix

MAIN POINTS

What was examined

i. Payments in Lieu of Taxes (PILT) is a statutory program established in 1950. Its governing legislation, the Payments in Lieu of Taxes Act, came into effect in December 2000. The purpose of the Act is "to provide for the fair and equitable administration of payments in lieu of taxes." The Act authorises the Minister of PWGS to make payments to taxing authorities in lieu of property taxes on behalf of federal departments and agencies to share in the cost of local government.

ii. The PILT program (the program) is situated within the Valuation and Payments in Lieu of Taxes Program Directorate under the Director General, National Accommodation and Portfolio Management within the Real Property Branch at Public Works and Government Services Canada (PWGSC). The evaluation did not assess the Valuation Program delivered by the Valuation and PILT Directorate, or the Crown corporations operating within the PILT Act.

Why it is important

iii. The program is intended to provide fair and equitable administration of payments to taxing authorities on behalf of federal custodian departments and agencies. The federal government does not pay traditional property tax. Instead, the federal government makes a payment to a municipality or taxing authority in accordance with the Act to share in the cost of local government. These amounts can be considerable and may have an important impact on some taxing authority budgets. The payments are a significant government expenditure; in 2008, 1,253 taxing authorities received nearly $455M in real property payments from the federal PILT program administered by PWGSC. Payments were made in accordance with the Payments in Lieu of Taxes Act and related regulations. Although federal Crown corporations were subject to the Act, they administered their own payments in lieu of taxes.

What was found

iv. The program rationale was sound and relevant and there was a continued need for the program. The administration of PILT payments was a mechanism that allowed the federal government to share in the cost of local government and helped fulfill the federal government's objectives in line with the Good Neighbour Policy of being a responsible property owner and good neighbour. Taxing authorities continued to need the payments made through PILT to help cover the costs of local government. PWGSC continued to need a mechanism through which to pay PILT.

v. The program administered PILT on behalf of federal departments and agencies according to the legislative framework. The program ensured the government had a nationally consistent method to calculate and process predictable and timely payments across jurisdictions. The Minister of PWGS had an independent Dispute Advisory Panel as recourse for taxing authorities who did not agree with payments. Communications with taxing authorities about the PILT process, the Payments in Lieu of Taxes Act, and any specific variances were inconsistent, and in some cases insufficient.

vi. There were a large number of properties with a variance between applications from taxing authorities and PILT calculated payments; however, in most cases, the amount of the variance was relatively low. There were ongoing disagreements between taxing authorities and PWGSC on its valuation of special purpose properties that were not commonly found in private sector portfolios such as national parks and historic sites. For these properties, there was less agreement on valuation practices because there was no market data to use to establish an industry standard.

vii. The program was performing in an efficient way and ensured compliance with the Payments in Lieu of Taxes Act. The program carried out due diligence when reviewing PILT applications and processing payments. The program's operations costed $5.7M (including $500,000 for administration of the Dispute Advisory Panel). For the years 2006 through 2008, the PILT program identified ineligible applications totalling between $29 and $43 million. However, the program did not measure performance sufficiently at the outcome level.

MANAGEMENT RESPONSE

viii. The Payments in Lieu of Taxes Program within the Real Property Branch accepts the evaluation findings and intends to act on the recommendations of the evaluation by implementing their Management Action Plan detailed as follows.

RECOMMENDATIONS AND MANAGEMENT ACTION PLAN

Recommendation 1: The ADM Real Property Branch should develop a strategy for communicating with the taxing authorities on the PILT program and processes.

• Management Action Plan 1.1: Develop and implement an Enhanced PILT Communication Strategy aimed at supplementing our current initiatives (website and letters), with the goal of elevating the awareness and understanding of PILT Program among Canadian taxing authorities. Apects of Enhanced Communication Strategy:
  
  • 1.1.1 Engage the Federation of Canadian Municipalities in discussions of PILT Program and related issues
  • 1.1.2 Develop and distribute a communication package containing information about the Program, its legislation and the application process
  • 1.1.3 Participate at the Federation of Canadian Municipalities Annual Conference and Expo to provide program information and introduce new policies and initiatives (subject to travel funding)
  • 1.1.4 Implement mandatory annual contact with taxing authorities once final payment has been sent and received by taxing authority

Recommendation 2: The ADM Real Property Branch should establish a mechanism to re-engage relevant stakeholders to develop industry accepted standards for the valuation of federal special purpose properties.

• Management Action Plan 2.1: Develop an enhanced engagement strategy and invite the appropriate PILT stakeholders to participate in the Best Practices initiative process. The purpose of this initiative is to further develop industry valuation standards for the valuation of National Historic Sites, National Parks Wilderness lands, Federal Penitentiaries and Military Bases.
  The industry organizations that would steer the revitalized initiative:
  
  • Appraisal Intitute of Canada
  • L'Ordre des évaluateurs Agréés du Québec
• Participation from the Municipal and Assessment Communities who would be invited to participate:
  • Federation of Canadian Municipalities (FCM)
  • Canadian Directors of Assessment
• Federal Participants:
  • PWGSC
• Interested Stakeholder Observers:
  • Selected OGD officials

Recommendation 3: The ADM Real Property Branch should develop and implement a performance measurement strategy to assess the effectiveness of the Program and to track overall performance.

• Management Action Plan 3.1: Expand and implement the profmrance measurement strategy and framework to assess the effectiveness of the PILT Program and track overall performance. Performance indicators currently in place:
  • Number of properties upon which payments are made
  • Percentage of properties for which PILT are made and that are accepted by taxing authorities
    
• Management Action Plan 3.2: Undertake an analysis to identify other appropriate Performance Indicators for the PILT Program. For example:
  • Percentage of tax year applications received that is finalized by March 31 of that corresponding fiscal year
  • Percentage of payments made on time according to the taxing authority due dates and the provisions of the PILT Act
  • Recovery of payments made from Custodiam Departments to balance the PILT Statutory Vote

INTRODUCTION

1. This report presents the findings of the evaluation of the Payments in Lieu of Taxes (PILT) program. The Public Works and Government Services Canada (PWGSC) Audit and Evaluation Committee approved this evaluation as part of the 2008-09 to 2010-11 Risk-Based Multi-Year Audit and Evaluation Plan.

PROFILE

2. PWGSC administers the program on behalf of custodian departments and agencies under the authority of the Payments in Lieu of Taxes Act (2000). The program covers over 24,000 federal government properties owned by the various custodian departments. Through the program, the federal government distributed almost $455M in 2008 to some 1,300 taxing authorities (such as municipalities, provinces, school boards, First Nations, and local services boards).

3. The intent of the program is the fair and equitable administration of payments to taxing authorities. The program employs the same assessment principles used to value privately held properties in the various assessment and taxation jurisdictions. Federal PILT are based on two principles, namely: payments are to be fair and equitable by comparison to taxes paid by taxable owners of similar property and calculated in a similar manner; and the government expects taxing authorities to provide it with equitable access to municipal services.

Authorities

4. The Government of Canada is exempt from paying local taxes, including property taxes, in accordance with section 125 of the Constitution Act (1867). It states, "No Lands or Property belonging to Canada or any Province shall be liable to Taxation". This is based on the principle that different levels of government should not be able to interfere, through taxation, with the use of property by other levels of government.

5. Since 1950, as one of the largest property owners in Canada, the federal government has chosen to share in the cost of local government by making payments to taxing authorities instead of paying taxes. The payments were first made under the provisions of the Municipal Grants Act (1949), then the updated Municipal Grants Act, 1980.

6. In 1999, through a consultative process, Bill C-10 was introduced to modernize the Municipal Grants Act. The aim was to improve the fairness, equity and predictability of federal payments made on behalf of custodian departments to taxing authorities in lieu of taxes. As a result, the Payments in Lieu of Taxes Act came into force in December 2000.

7. The Payments in Lieu of Taxes Act specifies that the Minister of PWGS retains full discretionary power on all PILT for federal departmental properties and no right to payment is conferred. The Payments in Lieu of Taxes Regulations and the Interim Payments and Recovery of Overpayments Regulations provide guidelines for payments.

8. In 1997, Treasury Board transfered the PILT statutory funds to the operating budgets of custodian departments. The PILT statutory vote had been managed by PWGSC, but since the transfer, custodian departments became responsible for funding the PILT from their operational budgets. The reason for this transfer was to make departments more accountable in the management of their respective properties. However, PWGSC remained responsible for the administration of the program.

9. The program makes payments to taxing authorities on behalf of over 35 custodian departments. Memoranda of Understanding are in place between PWGSC and each custodian department, which outline the administration services provided by PWGSC. These include all the administrative activities around the PILT application, payment processes and calculations of payment amounts. PWGSC also offers professional services to custodians such as analysis and review of property inventory, advice on PILT issues and defence of conclusions before the Dispute Advisory Panel. Custodian departments are responsible for providing the program with timely information on planned changes to their portfolio of properties that could influence the value of PILT amounts paid such as occupancy, renovations, sales and acquisitions of properties.

10. Crown corporations operate similar payments in lieu of taxes programs but are not required to have the program administered by PWGSC. They are subject to the same Payments in Lieu of Taxes Act and to the Crown Corporations Payments Regulations. The total PILT by Crown corporations are estimated to be approximately $200M or 30% of total payments. The PWGSC program provides services on a fee-for-service basis to Crown corporations and agencies, including strategic advice, property review and other related activities.

Stakeholders

11. The stakeholders for this program include the taxing authorities, custodian departments and interest groups related to PILT.

• Taxing authorities (i.e., local governments). Taxing authorities levy property taxes within their respective geographic jurisdiction. Based on provincial assessment authority valuations, taxing authorities calculate the amount the federal government is requested to pay for its properties within their respective jurisdictions. They then submit an application to the program for PILT for these federal properties.
• Custodian Departments of the Federal Government. The Minister of PWGS issues the payments and is accountable for the program. Since 1997, each custodian department has been financially responsible for payments made by PWGSC with respect to their properties. In turn, Treasury Board provides the operating budgets for the deparments to reimburse PWGSC.
• Dispute Advisory Panel. The Dispute Advisory Panel is independent from the program and reports directly to the Minister of PWGS. It is authorized under the Payments in Lieu of Taxes Act to hear disputes on PWGSC and Crown corporation PILT. A dispute may arise when there is a variance between a taxing authority applications and the PILT based on property value, property dimension or effective rate applicable to any federal property. The Dispute Advisory Panel members are order-in-council appointees, with two members from each province and territory. The Panel holds hearings as required, and provides non-binding recommendations to the Minister of PWGS following the hearings. The Panel has no ability to make direct changes to the program. The program pays the operational costs of the Panel. The Panel Chair is a Government-in-Council appointment and is responsible for the management of the panel.
• Federation of Canadian Municipalities. With 1,600 members, this is a voluntary association representing municipal interests at the federal level. The Federation has partnered with PWGSC in designing program improvements and discussing issues with good results for both sides.
• Federal Crown Corporations. Crown corporations administer their own payments in lieu of taxes independent of the Minister of PWGS's authority. In accordance with the same Payments in Lieu of Taxes Act, theHeads of individual Crown corporations exercise similar discretion as the Minister of PWGS with respect to their payments and are subject to the Dispute Advisory Panel. While Federal Crown Corporations are a PILT stakeholder, their PILT were not assessed within this evaluation.
• Provincial Assessment Authorities. Assessment authorities are responsible for determining the assessed values that appear on property assessment rolls in accordance with the respective provincial legislation.
• Canadian Taxpayers. Taxpayers have an interest in ensuring that the federal government's payments in lieu of taxes are compliant with the Act. Taxpayers do not likely want to see payments so high as to constitute unfair subsidies to those communities. Neither would they want to see payments so low as to indicate that the federal government is not paying its equitable share for the cost of local government.

Background

12. Funds raised through property taxes are used by taxing authorities to help pay for the services provided to its residents, which include: sewer and water, police and fire, emergency and ambulance, library, parks and recreation, waste disposal, road maintenance, and social services. As a means to pay for these services taxing authorities levy taxes property taxes. While Government of Canada property is exempt from taxation, the government shares in the costs of local government by making payments instead of paying taxes. Rather than issue property tax bills to the government, taxing authorities submit an application to PWGSC for a payment in lieu of taxes for each eligible federal property.

13. Some properties covered by the program include military bases, correctional institutions, office buildings, heritage sites, federal parks, harbours and RCMP detachments. Properties that are not eligible for PILT are outlined in the Payments in Lieu of Taxes Act. These properties are generally large structures and include canal structures, docks, wharves, piers, piles, floats, breakwaters, retaining walls, jetties, dry-docks, gasoline pumps, monuments, penitentiary walls, roads, sidewalks, aircraft runways, paving, railway tracks, tunnels, bridges, dams, water mains and sewer mains.

14. In 2008, the program paid out almost $455M in PILT on behalf of federal departments and agencies. Properties with values of over $1M accounted for almost 94% or almost $427M of the total PILT. These properties valued over $1M accounted for less than 5% of the properties. On the other hand, 85% of properties were valued at less than $200,000 and accounted for less than 3% of the total PILT. These values are only for the PWGSC PILT program and do not include the PILT amounts of Crown Corporations.

Expected Results

15. The expected results of the program are:

• Fair, equitable and predictable¹ payments in lieu of taxes for federal properties (comparable to taxes paid by taxable owners of similar property of equivalent value) are received by taxing authorities in accordance with the Payments in Lieu of Taxes Act;² and
• Equal access to services provided by taxing authorities.

16. The purpose of the Payments in Lieu of Taxes Act is to provide for the "fair and equitable administration" of PILT. However, the Act does not set an operational definition of "fair and equitable administration". In the absence of this definition, the evaluation team developed the following criteria to assess the program:

• consistency of federal process;
• predictability of payments;
• timeliness of payments;
• transparency of communication;
• process for dispute resolution; and
• degree of variance between taxing authority applications and federal disbursements.

Governance

17. The program is situated within the Valuation and PILT Program Directorate under the Director General, National Accommodation and Portfolio Management within the Real Property Branch at PWGSC. Each regional office has a PILT Regional Manager reporting to a Regional Director and subsequently to a Regional Director General. Although the regions report directly to the Deputy Minister, they receive national direction and guidance from the Assistant Deputy Minister, Real Property Branch for real property functions including PILT. The National Capital Area and the national region office have a PILT Manager who reports directly to the PILT Program Director.

18. As PILT is a highly specialized activity, national expertise is often required to determine correct payment amounts. The program national office is responsible for program management, including: financial management and accountability; policy development including legislation, regulatory review, and management; and quality control through regional monitoring. The regions and the national office collaborate regularly. A PILT Management Committee comprised of the PILT Director and all managers meets 3-4 times a year (with monthly conference calls) to discuss program operations, policies and governance.

PILT Process

19. The taxing authority applications for PILT detail the specific properties for which PILT is requested and the assessed value as determined by the provincial assessment authority. The program carries out its due diligence and reviews all such applications for accuracy, completeness and compliance with the requirements of the Payments in Lieu of Taxes Act and confirms the tax class, applicable tax rates, and federal property value. The reviews ensure that the applications include federal custodian departmental properties that meet the requirements for payment eligibility. The program then calculates payment amounts in accordance with the Payments in Lieu of Taxes Act, and makes the payments to the taxing authorities (see Appendix A: PILT Process Map for a diagram of the PILT process).

20. If the program cannot meet the tax payment schedule of a taxing authority, the program makes an interim payment, which may be followed with a Late Payment Supplement. Once payments are made, the program invoices federal custodian departments for the amounts paid on their behalf.

21. When taxing authorities disagree with the amounts of the payments they receive, they can first contact their regional PILT office to discuss the values and rates used in the PILT calculations. If the disagreement is not resolved at this level, taxing authorities may request a review by the PILT Dispute Advisory Panel.

22. While waiting for the Dispute Advisory Panel hearing, further discussions often occur between the program, the provincial assessment authority and the taxing authority. These discussions can lead to an agreement prior to a Panel hearing. If a hearing does proceed, the Panel provides advice to the Minister of PWGS, which the Minister may accept or reject. If a taxing authority remains unsatisfied with the outcome of the Panel or the Minister of PWGS's decision, it may seek judicial review by the Federal Court of Canada, which creates PILT jurisprudence.

Resources

23. Payments on property owned by all federal government departments are made by PWGSC against a statutory vote in the consolidated revenue fund. In 2008, PILT to taxing authorities totalled nearly $455M. Custodian departments reimburse PWGSC for payments made on their behalf, but are not charged for PILT administration services. PWGSC receives an appropriation from Treasury Board of Canada Secretariat for program administration. The 2009-10 funding requirements for PILT administration were $5.7M (with $500,000 for the administration of the Dispute Advisory Panel). The program had 56 FTEs that delivered the program nationally, comprised of 12 in the national office, national capital region and 44 in the five other regions.

Logic Model

24. A program logic model was developed based on a detailed document review, interviews with Program managers and interviews with key stakeholders. It was subsequently validated with Program managers (see Appendix B: Logic Model).

25. The activities of the program include custodian department related activities and program management-related activities. These activities lead to program outputs such as PILT, briefings of the program position to the Dispute Advisory Panel, and reports on estimates, actual payments, and valuations.

26. The ultimate outcome for the program is for Canadians to view the Government of Canada as a responsible and trusted property owner making PILT in accordance with the Payments in Lieu of Taxes Act.

FOCUS OF THE EVALUATION

27. The objective of this engagement was to evaluate the Payments in Lieu of Taxes program in accordance with the Treasury Board Policy on Evaluation to determine the program's relevance and performance in achieving its planned outcomes.

28. An evaluation matrix, including evaluation issues, questions, indicators and data sources, was developed during the planning phase (see Appendix C: Evaluation Matrix). More information on the approach and methodologies used to conduct this evaluation are in the "About this Evaluation" section at the end of the report.

29. The evaluation concentrated on the activities and outcomes of the PWGSC PILT program that are within the realm of PWGSC. The evaluation did not assess the Valuation Program delivered by the Valuation and PILT Directorate, or the Crown corporations operating within the PILT Act. Crown corporations manage their own PILT programs and operate independently from the Minister of PWGS.

FINDINGS AND CONCLUSIONS

30. The findings and conclusions below are based on multiple lines of evidence used during the evaluation. They are presented by evaluation issue (relevance and performance) in accordance with the Treasury Board of Canada Secretariat Directive on Evaluation.

RELEVANCE

31. Relevance is measured by the extent to which the program: is aligned with federal government priorities and departmental strategic outcomes; is an appropriate role and responsibility for the federal government; and addresses a demonstrable and continuing need.

The program is aligned with federal government priorities and is consistent with federal roles and responsibilities

32. The program remains grounded in the Constitution Act and the Payments in Lieu of Taxes Act. The administration of PILT is mandated by the Payments in Lieu of Taxes Act and fulfills the federal government's objectives of being a responsible property owner and good neighbour. The program is also aligned with the government priority of strengthening sustainable communities. The 2007 Speech from the Throne stated, "Our Government believes that the constitutional jurisdiction of each order of government should be respected."

33. Although exempt from local taxation, including property taxes, in accordance with section 125 of the Constitution Act (1867), the government voluntarily makes payments on behalf of custodian departments that correspond to the local taxes paid by other taxable owners of similar property. PILT are, in effect, the federal government's payments for its share of the cost of local government.

34. It should be noted that the Federation of Canadian Municipalities indicated it would like to see properties that were excluded under Schedule II of the Payments in Lieu of Taxes Act, such as wharves, drydocks, and gasoline pumps, which in private circumstances would be taxable, become eligible for PILT. This would increase PILT payments to taxing authorities with these federal structures in their jurisdiction.

35. Overall, the role of maintaining federal property, including payments to taxing authorities in which they are located, is an appropriate role and responsibility for the federal government.

There is a continuing need for the program

36. The federal government's custodian departments own over 24,000 PILT-eligible properties. These properties access services from the taxing authority where they are located. Municipalities rely heavily on property taxes to pay for the costs of local governance. On average, Canadian taxing authorities obtain over one-third of their revenues from property taxes.

37. In municipalities with large and numerous federal properties PILT can be substantial. In 2007, the City of Ottawa received by far the largest annual payment at more than $117M. Montreal was second at almost $33M. The next largest payments went to Gatineau ($24M), Halifax ($15M), Toronto ($14M), Winnipeg ($14M) and Esquimalt ($13M). Many small municipalities receive payments of only a few thousand dollars or less.

38. PILT are made in proportion to the value of federal properties within the jurisdiction of a taxing authority. The reliance on PILT is higher in small taxing authorities with a population under 20,000. In highly dependent taxing authorities, PILT revenue from custodian departments can cover as much as 88% of that taxing authority's expenditures.

39. In 2007, the per capita PILT in each taxing authority ranged from zero to over $2,000. If PILT were not made on federal departmental properties across Canada, it would have a negative impact on Canadian citizens, particularly those living in areas with significant federal properties. Either private property owners would have to make up the difference through their property taxes or taxing authorities would have to reduce the amount of services they provide.

Conclusions with respect to Relevance

40. The program rationale and relevance remain grounded in the Constitution Act and the Payments in Lieu of Taxes Act. Its mandate is legislated. The program helps fulfill the federal government's objectives of being a responsible property owner and enables the federal government's custodian departments to help municipalities pay for the costs of local governance. This confirms that it should be managed at the federal level.

41. The program remains relevant and the federal government's custodian departments have a continuing need to make payments through PILT to help cover the costs of local government. PILT is a significant contributor to the overall budget of some taxing authorities. PILT is beneficial to Canadians, particularly those living in areas with significant federal properties, who would face an increased tax burden or lower levels of service if the program did not exist.

PERFORMANCE

42. Performance is measured by the extent to which the program is effective in achieving results and outcomes, and the degree to which it is able to do so in a cost-effective manner.

The program followed processes to ensure payments were consistently and predictably calculated

43. The evaluation found that the program had a process in place to determine amounts owed to taxing authorities (see Appendix A: PILT Process Map). When the program received a taxing authority application for a custodian department's property, it calculated the payment. To calculate the payment, the program applied the appropriate federal and provincial legislative frameworks and principles to determine property values and mill rates across jurisdictions. If the calculated payment did not correspond with the application amounts, a variance was created between the payment and the taxing authority application. PILT on similar properties might have differed between jurisdictions due to differences among assessment and taxation regimes; however, the federal law and the program's principles used to determine values and rates were applied in the same manner. As the payments are discretionary, payments were made based on the program's calculated amounts rather than the Taxing Authority application amounts. This process led to payments that were higher and lower than application amounts from taxing authorities.

44. The file review of key documents revealed that in a few cases the files did not contain copies of all steps in the process. According to the established process, a valuation review could be performed and documented if a property value other than the assessment roll value is used. There were 30 files that did not contain the notification of valuation review that were to be sent to Taxing Authorities when an alternate value was used than was determined in the assessment of the PILT. The program's head office files indicated that only five files did not receive the notification.

45. Between 2002 and 2008, regional monitoring sessions occured every two years to ensure that professional standards were followed to process applications and to determine property values and effective rates on federal custodian departmental properties. The monitoring sessions reviewed files from several larger taxing authorities in each region and provided recommendations to ensure a consistent process across regions. In some provinces, the program pre-negotiated values with the assessment authorities prior to the assessment roll and going to the taxing authorities. This increased the predictability for taxing authorities because applications would be based on the program's approved property values on the assessment roll.

46. From 2004 and 2008, more than 90% of taxing authorities received payments within $5,000 of the previous year. In addition, the program provided estimates to the custodian departments on expected payments so that the custodian departments could budget for their PILT. From 2004-2008, 84% of estimates were within 10% of the final payment amount.

The majority of variances between payments and applications stemmed from interpretation of the Act

47. The evaluation team randomly sampled properties with a variance to examine the reasons for the variance. As shown in Exhibit 1, the most common reason for variance in 2007 was different interpretations and interpretations of tax mitigation measures. In many of these cases, measures applied to private property owners were not applied to federal departmental properties. For example, in 2007, Saskatchewan provided an education property tax credit to private property owners. This rebate was not applied to federal property in taxing authority PILT applications but was applied by the program in calculating the payment, resulting in a variance.

48. Over a quarter of the variance observed in the data was due to the program's IT system. In 16% of the files reviewed, the PILT system rounds at a different decimal place which creates a variance of a few cents. In 12% of the cases, the PILT system displays a variance but the hardcopy files do not reflect any variance. As well, depending on the valuation methods, the values determined by the reviews could vary from the provincial assessments used by taxing authorities to calculate their PILT application.

Exhibit 1: Reasons for variances between PILT payments and taxing authority applications in 2007

Reason for Variance	% of Properties
Different interpretation and application of tax mitigation measures	33%
Valuation	21%
PILT system rounding errors	16%
System shows variance but files do not	12%
Excluded property because there is a third party tenant (leases)	9%
Item is not eligible under the Payments in Lieu of Taxes Act	8%
Wrong tax class or tax rate applied	6%
Effective dates of eligibility (acquisition or disposal)	3%
Discount for early payment	2%
Errors in physical facts concerning property (dimension or area)	2%
Property not federal property	2%
Apportioning or factor errors	1%
Arithmetic errors in assessment calculation or application	1%
Other	4%

Source: File review (n=98) based on 2007 files
Numbers will not total 100% due to ability to select more than one reason for variance.
The sample did not include Crown Corporation properties.

49. Taxing authorities and the Federation of Canadian Municipalities indicated that discrepancies in property assessments existed most frequently on special purpose properties. Special Purpose properties are types of federal departmental real property inventory that do not resemble privately owned taxable properties (e.g. national historic sites and national parks). Traditional valuation approaches do not apply to these properties. These properties represented the majority of the properties with high variance.

50. A best practices study was started for special purpose property types. The study found that assessment authorities often had differences of opinion with the government in the interpretation of the PILT Legislation, particularly with regard to valuation methods and the definition of value under assessment. The initiative effectively ended unresolved when the Federation of Canadian Municipalities withdrew in 2006 because it believed the process was developing new practices unique to certain federal properties rather than best practices. The Federation of Canadian Municipalities raised concerns that the recommended practices would result in significantly reduced assessments of key federal properties and reduced PILT to taxing authorities. The program continued to operate in the absense of an agreed upon national industry standard.

51. Overall, there was no evidence to show that valuation was being used to keep federal departmental property values from increasing. The average increase in the program's assessed value of federal departmental property from year to year between 2004 and 2008 was 10%. In comparison, Cansim data shows that the total value of non-residential structures in Canada increased during the same period at a rate of 6.9%.

PILT were administered in a timely manner

52. The Payments in Lieu of Taxes Act, updated in 2000, added provisions for "late payment supplements" when payments were delayed. If a payment had been unreasonably delayed, a late payment supplement of the interest on the unpaid balance would be made.

53. In the majority of cases, payments were being made according to the taxing authorities' tax schedules. From 2007 to 2009, the program made late supplemental payments to approximately two percent of taxing authorities. The average late payment supplement³ made during this three-year period was just under $2,000 and ranged from $3.68 to $48,600. In order to reduce the effect of late payments, in situations where a final payment could not be made on time, the interim payment made was to be as close as possible to the estimated final amount of the annual payment.

54. Interviews conducted with the taxing authorities that were among the largest recipients of PILT indicated that the program consistently made payments that adhered to taxing authority tax schedules.

Communication was inconsistent across the regions

55. The program regularly communicated with the taxing authorities regarding payments. The program provided taxing authorities breakdowns of payments by property showing the value and tax rate used to calculate payments. In cases where there was a variance between the application and what was paid, communication was inconsistent as there was a large disparity across the regions in what was provided to the taxing authorities. Explanations varied from no mention of the variance to customized letters.

56. Communication on processes and variances was a useful tool to resolve or prevent taxing authority dissatisfaction, but was inconsistent across regions. Of the 20 taxing authorities interviewed where variances existed, eight were satisfied after communication with the program. Fifteen of 31 taxing authorities (with and without variances) interviewed agreed that their level of knowledge about the program's procedures and practices increased through the program's communication efforts. However, ten of the 31 taxing authorities responded that they were not aware of any of the program's communications efforts regarding PILT procedures and practices.

A Dispute Advisory Panel was in place for independent requests for review from taxing authorities

57. A Dispute Advisory Panel (DAP) was established as an independent advisory body to provide advice to the Minister of PWGSC with respect to the resolution of disputes between the PILT Program and taxing authorities, concerning the property value, property dimension or effective rate applicable to any federal property. The program paid the salaries of the DAP which amounted to approximately $500,000 in FY 2009/10. Since 2003, 26 taxing authorities⁴ requested reviews of 450 federal properties, representing less than 2% of all federal properties. As of August 28, 2009, there remained $3.9M in dispute before the panel for the 2007 year.

58. A July 2009 DAP report indicated that of the 26 taxing authorities that requested DAP reviews, four taxing authorities had hearings, 15 taxing authorities had withdrawn part of, or the entire, dispute and three had cases declined on basis of eligibility for the 2007 calendar year. The remaining four remained before the Panel.

59. According to the Panel's July 2009 report, the average time for the resolution of a dispute, including cases that arrived at a negotiated settlement before the hearing, was 129 weeks. The average time for a dispute to arrive at a hearing was 151 weeks. As of August 28, 2009, seven taxing authorities had applications for 136 federal department properties in dispute before the Panel. The disputes related to property value and effective rates.

The program ensured that payments were fairly and equitably made to taxing authorities in the majority of cases

60. In 2007, 495 (33%) of the 1,520 PILT made on behalf of federal custodian departments were equal to the applications by the taxing authorities. PILT were less than taxing authority applications in 907 (59%) of the cases while PILT exceeded taxing authority applications in only 118 (8%) of the cases.⁵ As Exhibit 2 illustrates, in the instances where PILT were less than taxing authority applications, 612 (67%) were within $5,000 while 66 (7%) exceeded $100,000. In the instances where PILT were greater than taxing authority applications, 106 (90%) were within $5,000.

Exhibit 2. Number and Percent of Instances where federal departmental PILT Varied from Taxing Authorities' Applications by Variance Amount for 2007

	PILT > TA Application		PILT < TA Application
Variance (%)	#	%	#	%
<$5,000	106	90%	612	67%
$5,000 - $100,000	11	9%	229	25%
>$100,000	1	1%	66	7%
Total	118	100%	907	100%

Source: PILT database

61. Exhibit 3 shows the annual variance between PILT applications and payments for federal custodian departmental properties from 2006 to 2008. The administration costs for PWGSC to operate the program were approximately $5.7M for the 2009/10 fiscal year, with $500,000 used for the salaries of the DAP⁶. Each year, through the valuation work performed on selected federal properties, the program disallowed payments that were in excess of the amount to which taxing authorities were entitled under the Act.

Exhibit 3. Total Variance in PILT Application Amounts Requested and Paid for federal custodian departmental properties from 2006 to 2008⁷

Tax Year	ApplicationAmount (in millions)	Amount Paid (in millions)	Variance (in millions)
2006	$494	$459	$34
2007	$501	$458	$43
2008	$483	$455	$29

Source: PILT System (PS/SP)

62. Payments on property owned by all federal custodian departments were made by PWGSC from a statutory vote similar to a revolving fund, which is separate from the operating fund used for administration costs. Under the Memoranda of Understanding, federal custodian departments reimbursed PWGSC for payments made on their behalf. The program had a comprehensive financial process to ensure that all payments made on behalf of custodian departments were recuperated from the custodian departments. At the end of the 2008-2009 financial year the statutory vote for the program balanced to zero.

The program did not have a sufficient performance measurement system in place

63. The evaluation found that the program was only monitoring one performance indicator beyond the output level. This metric, which was "the Percentage of total number of properties for which PILT payments were made that have been accepted by taxing authorities," only measured data at a national level and reported on an annual basis, which was not conducive to ongoing performance measurement. In addition, this outcome level metric used data from the PILT System (PS/SP), which the evaluation found was not reliable for all output level data. The system was not robust enough to incorporate changes made to calculations of real property tax; as noted in Exhibit 1, PILT system rounding errors led to variances 16% of the time and the system showed variances but the files did not in 12% of the cases.

64. The program acknowledged that there are limitations within its system. System funding had not been directed towards upgrades to capture the ever changing requirements and unique attributes of each taxing authority.

65. As previously mentioned, the program had regional monitoring sessions which occured every two years to ensure that professional standards were followed to process applications and to determine property values and effective rates. The monitoring sessions only reviewed files from larger taxing authorities in the regions which did not ensure performance measurement across all eligible properties.

Conclusions with respect to Performance

66. Based on the evidence, the program administered PILT in accordance with the legislative framework. The program administered timely, predictable payments according to a consistent process. The Federation of Canadian Municipalities expressed concerns about the fairness and equity of the Act and its administration. The evidence supports that in most cases, payments were fair and equitable by the evaluations standards outlined above⁸. When there were disputes on payments, there was an independent dispute mechanism, albeit lengthy.

67. Communication was used to resolve or prevent issues before they arose at the Dispute Advisory Panel. Communication with taxing authorities was inconsistent across regions and, in some cases, insufficient at explaining variances.

68. Variance between applications and payments were mostly the result of the interpretation of the Payments in Lieu of Taxes Act. Federal property being treated differently than taxable property by taxing authorities and valuation were two of the largest reasons for variance. There were no national best practices related to special purpose properties where valuation techniques were more likely to vary.

69. The program, through its valuation and due diligence activities, ensured that payments were being made in the amount corresponding to the terms of the legislative framework. Over the three years examined, the program operated at an average overall cost of about $5.7M (with $500,000 for the DAP) and disallowed applications between $29M and $43M. The program was lacking performance measurement at the outcome level.

GENERAL CONCLUSIONS

70. Overall the program functions in accordance with the Payments in Lieu of Taxes Act and demonstrates relevance, as well as effective and efficient performance.

71. The program rationale and relevance was grounded in the Constitution Act and the Payments in Lieu of Taxes Act. The program helped fulfill the federal government's objectives of being a responsible property owner and continued to help cover the taxing authorities' costs of local governance. PILT was found to be beneficial to Canadians, particularly those living in the areas with federal properties, who would face an increased tax burden or lower levels of service if not for the federal government.

72. The program administration followed the legislative framework; however, the Federation of Canadian Municipalities asserted that the federal government was not paying its fair share of property taxes. Most taxing authorities received payments within $5,000 of the amounts applied for. Variances between payments and applications were primarily a result of the application of the Payment in Lieu of Taxes Act. Differences in opinion regarding the appropriate valuation approach led to variances for special purpose properties. Communication with the taxing authorities regarding variances was not always sufficient. Although the Dispute Advisory Panel provided recourse for taxing authorities in dealing with the program, it can be a lengthy process.

MANAGEMENT RESPONSE

73. The Payments in Lieu of Taxes Program within the Real Property Branch accepts the evaluation findings and intends to act on the recommendations of the evaluation by implementing their Management Action Plan detailed as follows.

RECOMMENDATIONS AND MANAGEMENT ACTION PLAN

Recommendation 1: The ADM Real Property Branch should develop a strategy for communicating with the taxing authorities on the PILT program and processes.

• Management Action Plan 1.1: Develop and implement an Enhanced PILT Communication Strategy aimed at supplementing our current initiatives (website and letters), with the goal of elevating the awareness and understanding of PILT Program among Canadian taxing authorities. Apects of Enhanced Communication Strategy:
  
  • 1.1.1 Engage the Federation of Canadian Municipalities in discussions of PILT Program and related issues
  • 1.1.2 Develop and distribute a communication package containing information about the Program, its legislation and the application process
  • 1.1.3 Participate at the Federation of Canadian Municipalities Annual Conference and Expo to provide program information and introduce new policies and initiatives (subject to travel funding)
  • 1.1.4 Implement mandatory annual contact with taxing authorities once final payment has been sent and received by taxing authority

Recommendation 2: The ADM Real Property Branch should establish a mechanism to re-engage relevant stakeholders to develop industry accepted standards for the valuation of federal special purpose properties.

• Management Action Plan 2.1: Develop an enhanced engagement strategy and invite the appropriate PILT stakeholders to participate in the Best Practices initiative process. The purpose of this initiative is to further develop industry valuation standards for the valuation of National Historic Sites, National Parks Wilderness lands, Federal Penitentiaries and Military Bases.
  The industry organizations that would steer the revitalized initiative:
  
  • Appraisal Intitute of Canada
  • L'Ordre des évaluateurs Agréés du Québec
• Participation from the Municipal and Assessment Communities who would be invited to participate:
  • Federation of Canadian Municipalities (FCM)
  • Canadian Directors of Assessment
• Federal Participants:
  • PWGSC
• Interested Stakeholder Observers:
  • Selected OGD officials

Recommendation 3: The ADM Real Property Branch should develop and implement a performance measurement strategy to assess the effectiveness of the Program and to track overall performance.

• Management Action Plan 3.1: Expand and implement the profmrance measurement strategy and framework to assess the effectiveness of the PILT Program and track overall performance. Performance indicators currently in place:
  • Number of properties upon which payments are made
  • Percentage of properties for which PILT are made and that are accepted by taxing authorities
    
• Management Action Plan 3.2: Undertake an analysis to identify other appropriate Performance Indicators for the PILT Program. For example:
  • Percentage of tax year applications received that is finalized by March 31 of that corresponding fiscal year
  • Percentage of payments made on time according to the taxing authority due dates and the provisions of the PILT Act
  • Recovery of payments made from Custodiam Departments to balance the PILT Statutory Vote

ABOUT THE EVALUATION

This evaluation was approved by the Audit and Evaluation Committee of Public Works and Government Services Canada as part of the 2008-2011 Risk-Based Audit and Evaluation Plan.

The objective of this engagement was to evaluate the Payments in Lieu of Taxes program in accordance with the Treasury Board Policy on Evaluation to determine the program's relevance and performance in achieving its planned outcomes.

The evaluation concentrated on the activities and outcomes of the PWGSC PILT program that are within the realm of PWGSC. The evaluation did not assess the Valuation Program delivered by the Valuation and PILT Directorate, or the Crown corporations operating within the PILT Act. Crown corporations manage their own PILT programs and operate independently from the Minister of PWGS.

In the PWGSC Program Activity Architecture, the program is situated under the Accommodation and Real Property Assets Management program activity.

Approach

The evaluation was conducted in accordance with the Evaluation Standards of the Government of Canada and the Office of Audit and Evaluation of PWGSC. The evaluation took place between June 2008 and January 2010 and was conducted in three phases: planning, examination and reporting. To assess the evaluation issues and questions, the following lines of evidence were used.

Document Review: An initial document review provided an understanding of the program and its context to assist in the planning phase. Documents reviewed included documents provided by the program, as well as documents written about the program.

Literature Review: The review focused on contextualizing the program both nationally and internationally. It also was directed at determining alternative delivery models.

Data Analysis:Once the logic model and evaluation matrix were developed, a more comprehensive document review was conducted to collect and assess program data (such as payments made versus applications by taxing authorities, Dispute Advisory Panel request records, and other types of data already collected by the program). Data from the existing PILT System (PS/SP) database was analysed to obtain information on payments and variances. The PS/SP also provided the information base from which to develop the sample frame for the file review.

File Review: A random sample of 97 files from 2007 relating to PILT eligible properties across all regions was reviewed. The review provided in-depth information on the PILT process.

Interviews: Twenty-six interviews were conducted during the planning phase with senior-level PILT program officials; officials with similar programs operating in Canadian provinces; officials with Crown corporations; representatives of taxing authorities; and assessment authorities. These interviews provided a broad perspective of the context in which the program operates. Client interviews sampled six PILT clients, namely custodian departments to interview. The qualitative analysis of the interviews provided information about the performance of the program from the perspective of program users. Also, a sample of 39 taxing authorities was selected from four provinces, 33 of which agreed to be interviewed. The provinces with among the highest and lowest number of taxing authorities with variances were selected, as well as two provinces representing the average numbers of taxing authorities having variances. The qualitative and quantitative analysis of the interviews provided information about the performance of the program from the perspective of beneficiaries.

Limitations of the Methodology

Document Review: Efforts were made to ensure that all data provided about the program were reviewed and documented. It is possible that elements of some documents were not integrated into the findings. However, every effort was made to systematically identify and categorize data from documents.

Literature Review: Only a limited amount of relevant literature was found. Due to the variety of programs used internationally for payments in lieu of taxes, truly comparable programs were not found.

Data Analysis: Negotiated settlements were still occurring during the analysis of the data. Payments made after the analysis may alter some of the figures quoted in this report.

File Review: A relatively small sample of files was drawn. Therefore, findings from the paper files are a rough estimates. Due to the nature of the work, some key documents may be filed in different tax years than the reviewed year. Thus, a document absent from the 2007 file does not indicate that it is absent from the program records.

Interviews: The sampling technique identified a range of program staff, clients and taxing authorities so that the broadest range of experiences would be documented. Although the number of people interviewed was substantial it represents only a small proportion of the taxing authorities. The responses have no statistical interpretation however narrative answers were analysed using a qualitative approach. Additionally, individuals sometimes represented their own opinions and experiences within the program, rather than that of the organization in which they worked.

Reporting

We documented our findings and conclusions in a Director's Draft Report, which was internally cleared though Office of Audit and Evaluation's Quality Assessment function. We provided the program's Director General with the Director's Draft Report with a request to validate facts and comment on the Report. A Chief Audit Executive Draft Report will be prepared and provided to the Office of Primary Interest's Assistant Deputy Minister of PWGS for acceptance. The Office of Primary Interest will be asked to respond with a Management Action Plan. The Draft Final Report, including the Management Action Plan, will be presented to PWGSC's Audit and Evaluation Committee for the Deputy Minister's approval in November 2009. Once finalized, the Final Report will be submitted to the Treasury Board of Canada Secretariat and posted on the PWGSC website.

Project Team

The evaluation was conducted by employees of the Office of Audit and Evaluation, overseen by the Director of Evaluation and under the overall direction of the Deputy Chief Oversight Officer.

Appendix A: PILT Process Map

A larger image and text description of Appendix A is available on a separate page. Due to the size of the image, it may not display properly.

Appendix B: Logic Model

A larger image and text description of Appendix B is available on a separate page. Due to the size of the image, it may not display properly.

The Payment in Lieu of Taxes Logic Model

A logic model is a visual tool that links a program's activities, outputs and outcomes. The logic model illustrates the program theory by showing the logic of how a program, policy or initiative is expected to achieve its objectives. It also provides the basis for developing the performance measurement and evaluation strategies.

Activities

The activities of the program include custodian department related activities such as forecasting and estimating PILT payments, administering the PILT process on behalf of custodian departments, maintaining a federal property database, monitoring regional PILT service delivery, liaising with custodian departments, managing memorandums of understanding with custodian departments and reporting to custodian departments on payments made to taxing authorities. PILT program management related activities include developing work planning to determine priority properties, addressing regional PILT concerns and sharing best practices with all regions, and managing federal/taxing authority and federal/provincial relationships. PILT taxing authority related activities include reviewing and processing applications, providing estimates on payments in lieu of taxes to taxing authorities, authorizing payments, responding to questions and challenges from taxing authorities, preparing briefs and defending PILT payments before the Dispute Advisory Panel and liaising with taxing authorities.

Outputs

Outputs produced by the program include reports on estimates and actual payments made to taxing authorities on behalf of custodian departments, fair and equitable PILT payments delivered on time to taxing authorities, as well as briefings of PILT program position to the Dispute Advisory Panel. In addition, the program provides valuation reports on selected priority properties and information on PILT process and policy for distribution to taxing authorities.

Outcomes

This logic model has three levels of outcomes: immediate, intermediate and ultimate. The program has more direct influence over the immediate or short-term outcomes, which occur within a year. This is followed by the intermediate or medium-term outcomes, which generally occur in the following one-year to two-year period. The ultimate or long-term outcomes often take two years or longer to achieve and generally are subject to influences beyond the program.

Immediate outcomes for custodian departments are their increased understanding of the impact of their PILT payments on their budgets and their increased trust of the program. Taxing authority immediate outcomes are increased knowledge of PILT and their increased acceptance of PILT explanations when there are variances between their application and the PILT payment.

Another immediate outcome is a Dispute Advisory Panel hearing and recommendation to the Minister of PWGS. In turn, the taxing authority may accept the Minister of PWGS's decision or may seek judicial review.

There are two intermediate outcomes. The first is increased ability by custodian departments to be accountable for the cost-effective management of their properties. A second intermediate outcome is that taxing authorities would have an increased perception that the Government of Canada is fair and equitable in making predictable payments in lieu of taxes.

Risk areas observed by the evaluation team include changes in: provincial assessment legislation and policy; taxing authority payment schedules; taxing authority property mill rates; some taxing authorities do not believe that the Payments in Lieu of Taxes Act allows for fair and equitable payments. Other risks include Treasury Board Secretariat of Canada not increasing custodian department budgets in a timely manner to reflect increases in property valuations, and taxing authorities believing that they could earn higher revenues if federal properties in their jurisdiction were under different ownership or use.

Appendix C: Evaluation Matrix

Evaluation Issues and Questions	Indicators	Data Collection Methods and Data Sources
Relevance
1. To what extent is the PILT program appropriate to the federal government and a core federal role, and linked to a Government priority?	Documented evidence of the legislative, regulatory, or policy authority for the PILT program Expressed support for the program by Central Agencies and government senior management Alignment of the program's objectives and expected results (i.e., to deliver fair, equitable and predictable payments in lieu of taxes to taxing authorities, and for the GC to be viewed as a responsible and trusted property owner) with Government and departmental mandate, policies and priorities as referenced in strategic documents Alternative service delivery or outsourcing	1) Document Review Constitution Act Payments in Lieu of Taxes Act PILT program documents and policies PILT program website and communication material Memoranda to Cabinet, Treasury Board Submissions 2) Interviews with Key Stakeholders Senior PILT program Managers Senior PILT valuation officers PWGSC Senior Real Property Branch Managers Treasury Board of Canada Secretariat Custodian departments Crown corporations 3) Comparative Analysis Crown corporations Provincial PILT programs Other jurisdictions
2. To what extent does the program continue to address a demonstrable need and is responsive to the needs of taxing authorities and Canadians?	Changes to the Payments in Lieu of Taxes Act, policies and procedures in response to the needs and concerns of taxing authorities Dependency of taxing authorities on PILT Taxing authority per capita PILT Value of PILT made to top 5 recipients	1) Document Review Payments in Lieu of Taxes Act, Municipal Grants Act and similar provincial acts PILT program documents and policies PILT program website and communication material Memoranda to Cabinet, Treasury Board Submissions 2) Interviews with Key Stakeholders Senior PILT program Managers Senior PILT valuation officers PWGSC Senior Real Property Branch Managers Custodian departments Provincial assessment authorities Taxing authorities
Performance
1. To what extent is the PILT program achieving its expected outcome to provides fair, equitable and predictable payments	Compliance with the Payments in Lieu of Taxes Act Taxing authorities with no or small variance % of payments within $5000 of the previous year Taxing authorities with variance in which taxing authorities understand/accept the amount paid and/or reason Communication from PILT program to taxing authority explaining variances % of times variance was explained in communication to taxing authorities Perception by taxing authorities of the quality and effectiveness of PILT communications (Extent to which the PILT program has contributed to increased knowledge of its processes and procedures among taxing authorities) Did not complain or appeal further Complained further to PILT and/or Dispute Advisory Panel # of Dispute Advisory Panel cases reviewed Number of judicial review cases # of Dispute Advisory Panel disputes that have been settled through negotiation # of taxing authorities that had unresolved issues with PILT payments that do not go to Dispute Advisory Panel # of Dispute Advisory Panel reviews requested vs. the number of applications received by PILT Average length of time from a taxing authority submitting a Dispute Advisory Panel request until a settlement is reached or Dispute Advisory Panel provides advice to Minister of PWGS # of Late Payment Supplements (including base amount, interest and other penalties) issued over the past 3 years Average delay for late payments (e.g., days, months and years) Consistent national valuation approaches/practices for large, complex, special-purpose properties Reasons for variance consistent with the Payments in Lieu of Taxes Act Increase in property values % of properties with values assigned by PILT different from values assigned by assessment authorities Reasons for variance consistent with PILT Act % of times PILT paid without an application % of times eligibility was confirmed prior to payment % of high variance that are special purpose properties % of properties where tax rates in applications and payments are the same	1) Document Review Payments in Lieu of Taxes Act PILT program documents and policies PILT program Website and Communications material Cases submitted to the Dispute Advisory Panel 2) Interviews of Key Stakeholders Senior PILT program Managers Senior PILT valuation officers Regional PILT program managers and staff Custodian departments Treasury Board of Canada Secretariat Taxing authorities Federation of Canadian Municipalities Provincial assessment authorities Crown corporations Dispute Advisory Panel chair 3) Data Analysis Program performance measurement data Dispute Advisory Panel Reports Provincial Assessment Authority Data CANSIM data 4) File Review Worksheet Files Confirmation Files
2. To what extent does PILT demonstrate efficiency and economy?	Value of PILT program demonstrated by amount of PILT payments that exceed what is entitled under the Act relative to the cost of operating the program % of time estimates within 10% of actual time spent Dollar value of savings per dollar of effort % of custodian estimates within 10% of actuals Statutory vote reconciliation	1) Document Review PILT program documents and policies MOUs with departments 2) Interviews with Key Stakeholders Real Property Branch Senior Managers Senior PILT Program Managers Senior PILT Valuation Officers Regional PILT Program Managers Custodian departments Treasury Board of Canada Secretariat 3) Data Analysis Historical data on the cost of operations Program performance measurement data Financial data on statutory vote

¹Paragraph 42 defines fair, equitable and predictable for the purposes of the evaluation
²According to the Treasury Board Secretariat's Guide to the Management of Real Property “The PILT program is based on equity with other property owners and fairness to municipal governments”.
³These amounts do not include Late Payment Supplements that were a result of unpaid tenant taxes or the Dispute Advisory Panel reviews.
⁴New Brunswick is counted as one taxing authority
⁵Figures may not total 100% due to rounding
⁶There are costs incurred by the custodian departments for their own administrative purposes which were not examined by the evaluation.
⁷This table does not present the variances in PILT paid by Crown corporations operating within the PILT Act.
⁸See paragraph 42