An article was published in The Star last week, outlining the tax hikes that tenants of the arts and culture hub in 401 Richmond will face in coming years. Our Community Manager contacted Adam Vaughan, Liberal MP of the Spadina-Fort York area. Here’s what he had to say about the looming changes and how tenants and members of the Toronto community can direct their efforts for change.
To: Adam Vaughan, Liberal MP for Spadina-Fort York (Ontario)
From: Lauren Rabindranath, Community Manager at The Station
Date: December 16, 2016
Hi Mr. Vaughan,
I am writing to express my concern about upcoming tax hikes to the historical arts and culture hub at 401 Richmond St. West.
It is easily one of the most distinct, beautiful, and important sites of culture in Toronto. Squeezing out artists, community organizations, and important members of the community in what is currently an alarming real estate market sets a dangerous precedent for future developments in the city.
Are we building a city for people in Toronto or for absent investors and burgeoning bank accounts?
Please help us protect this important landmark and the community that calls it home and amend the excessive tax hikes slated for 2017.
Response From: Adam Vaughan, Liberal MP for Spadina-Fort York (Ontario)To: Lauren Rabindranath, Community Manager at The Station
Date: December 16, 2016
Some thoughts on the tax situation;
Thanks for your letter about 401 Richmond Street. The building is a landmark in the riding Margie Ziedler is a good friend of the family and I have also worked in the building as well. Keeping centres like 401 open and accessible to Arts organization and social enterprises are key to sustaining a healthy downtown core and a livable city. I can’t imagine Toronto without 401.
The issue of property tax increases is a complex one. The provincial agency known as MPAC (Municipal Property Assessment Corporation) that assigns values to individual buildings across Ontario is compelled by law to tax at the highest and best value. The zoning area that is home to 401 is a distinct planning district defined by the city and known as King Spadina. Heights and densities in the area are what‘s driving the spike in valuations. 401 is not alone. In my last term we had several of these cases and we had enlisted the planning Department help property owners successfully appeal and lower evaluations based on the heritage and physical realities.
There is a history to what is happening here. The area used to have height limits for buildings in this neighbourhood. It was set in the mid 30m mark, (corner buildings and some heritage sites had exemptions) the arrival of the Bell Light Box and Festival Tower development, the Shangri la Hotel and an OMB decision on the M5V project King blew height limits into the sky. The projects ended up setting a new height precedent for the area east of Spadina. MPAC now assess each property regardless of what is on site as essentially a forty story tower. 401 Richmond had its assessment capped until recently and tenants were shielded by the capping provisions. Above average increases have been handed out for over a decade but once the property got close to the “actual” value (determined by MPAC) the caps came off. The subsequent assessments were then made free of the caps and market forces drove the taxes up. Way up.
The city has power to fix this. What it doesn’t have is the political will. City Council could have re-visited its cap policy. It hasn’t. The city could split commercial properties into different strata. For example they could divide commercial properties into small medium and large businesses or they could do it by age (i.e. Pre and post-war buildings) – each could pay different rates etc. In the same way that multi residential buildings pay a different tax rate than single family homes do. The City, historically, hasn’t done this. It would require that council raise taxes elsewhere to benefit a single owner of a single building.
The local councillor could still try to solve the problem this way. He could carve out buildings with a heritage designation and lower the tax rate as applied against the assessed value and in doing so cut taxes for all commercial heritage buildings in Toronto. The offset required by law would be to shift that tax burden to all non-heritage buildings in the same class. There are also programmes available that allow the city to give annual grants to heritage building owners, grants effectively equal to the tax increase. Council would have to agree to all of these tax increases to offset the taxes being cut. We tried a combination of these adjustments on Queen Street west a decade ago after the devastating fire that destroyed six heritage buildings near Bathurst. We got it through council but it was only a temporary measure. It did not need provincial consent.
While the city has some authority the province has even more. Heritage advocates have argued for years for Queen’s Park to step in. The province could tell MPAC to exempt properties with heritage status from the highest and best use provisions of the Property tax regulations. They could require heritage easement agreements registered on title as part of this solution. This might reduce revenue to the city in the long term and prove to be a financial disincentive to designate buildings for fear that the city would lose tax revenue, but in the long run it would promote heritage conservation, and protect and make affordable the ownership of such buildings. It would also free up funds for restoration. If the province wants to help this is what they could do quickly. Take note, the province gets its funds for Public Education from the same property tax system, incentivising Heritage protection would cost them money. It’s also important to remember that Queen’s Park could also reform or eliminate the OMB. This would protect neighbourhoods and control density booms, the likes of which are hurting this neighbourhood.
The one level of government with next to no powers in this conversation is the Federal Government. Parliament does provide funds directly to municipalities to do planning and the property tax system is an area of provincial jurisdiction. The Heritage Minister does provide some grants for preservation, but only for capital costs and taxes are an operating pressure. Our last budget did significantly increase funds to municipalities, these funds have an indirect impact, but in the end cities must resolve these issues themselves and provinces can help by have more proactive heritage policies.
I hope the city can solve this. I hope the province is engaged and MPAC should certainly smarten up. To lose this magnificent centre of imagination and innovation because City Hall and Queen’s Park can’t create a solution would not be ironic. It would be tragic.
Published with permission.