City moves to save 401 Richmond and other cultural institutions
In the wake of a huge tax hike on the downtown arts hub, city council is asking the province to give cultural institutions a break.

TheStar.com
Jan. 31, 2017
Murray Whyte

In the wake of a huge tax hike on downtown arts haven 401 Richmond, Toronto has appealed to the province with a plan to save cultural spaces like it from vanishing in the city core.

City council unanimously passed a motion late Tuesday afternoon that asks the province to change Ontario’s tax code regarding heritage properties and those used to house cultural agencies and activities.

The motion is a direct run-off from the revelation in December that 401 Richmond St. W., a long-standing haven for artists, small-scale craftspeople and non-profit cultural organizations, was facing a property assessment that would more than double its annual tax load, endangering its ability to continue to provide below-market rents to those tenants.

“City council has delivered a clear statement to the province: New provincial tax policy is necessary if we are going to protect and support important buildings like 401 Richmond,” said Ward 20 Councillor Joe Cressy, who tabled the motion. “Bottom line: the province must act, but the city will not let 401 Richmond fail,” he said.

David Plant, the executive director of Trinity Square Video, one of the many non-profit organizations at 401 Richmond, called the motion an important first step.

“The main thing is that council realizes that this is a problem,” he said. “Yes, the city has some powers, but it doesn’t have the powers the province does to fix this. So I’m really hoping this indication of solidarity on behalf of the city will move the province to take action.”

While the motion takes aim broadly at the tax regime for such properties — including those owned by not-for-profit developer Artscape — 401 Richmond has become an emblem of rapidly vanishing affordable space for artists and arts organizations in the city core.

The property’s owner, Urbanspace, had long charged its largely culture-sector tenants below-market rent, but is now faced with significant rent increases to cover the sudden spike in its tax burden.

The city immediately assembled a package in support of an appeal Urbanspace has made to the province’s Municipal Property Assessment Corporation (MPAC). But the problem is not unique to 401 Richmond.

“The situation exposed the failings on the heritage side, but also on the commercial rent side,” Cressy said. “We want to incentivize these kinds of uses, and right now we have exactly the opposite.”

MPAC, an agency of the province, had used its “highest and best use” measure for the assessment, meaning the property value was determined using not the actual building at 401 Richmond, a four-storey, heritage-designated, century-old brick warehouse, but the site’s potential use as a significantly larger office or condominium tower.

As a result, 401 Richmond tenants are this year seeing their tax bills jump by about 85 per cent.

The city’s motion says new property assessments like this “serve as a disincentive to retain heritage.” It mentions 401 Richmond directly, saying that the building has “allowed a vibrant arts and culture centre to develop.” It urges the province to change the tax code to enable such properties to continue to provide havens “for dynamic purposes, including the arts, as opposed to just ‘highest and best use.’”

The motion comes as Toronto faces a significant crisis in affordable space for small-scale creative enterprises of all kinds. In the fall, dozens of artists, designers and craftspeople were given 30 days notice to vacate their studios on Wallace Ave. as its landlord made way for Ubisoft, a video-game maker from France.

It was only the most recent in a growing list of such evictions, as commercial rent soars well beyond the means of most small-scale, independent creative businesses. A year ago, tenants at 213 Sterling Rd., a shabby former transformer factory in the city’s west end, were met with sudden notices that their rent would as much as triple.

The city can’t do anything to restrict rents increases. Commercial leases, unlike residential, are subject to no restrictions on how much a landlord can charge.

Cressy’s motion is aimed directly at MPAC, not property owners, in an effort to lessen the tax burden on landlords who are willing to take on tenants unable to afford market rates.

“There’s an appetite to solve this issue across the city, and across the province,” Cressy said.