Toronto arts hub 401 Richmond getting property tax relief

After the Star reported on tax hikes to the downtown arts hub, the province says it will work with Toronto to create a new property tax category, giving 401 Richmond and other arts venues a break.

Thestar.com
Sept. 26, 2017
By Kristin Rushowy

Tax relief is on the way for Toronto's culture hubs, with the province giving the city the go-ahead to start creating a special category for buildings that house artists and non-profits.

Such a move will help places like 401 Richmond St. W., which has struggled to afford its tax bill amid sky-high assessments in a hot real estate market.

"This is a tremendous day - this has been a year in the works," said downtown Ward 20 City Councillor Joe Cressy, who has been behind the push for the separate tax assessment category. "We've been seeking to finalize an arrangement with the province whereby we would create a new subclass for creative hubs.

"With this announcement, we're ready to go."

Cressy will formally propose a motion at council in two weeks' time to work with the province, and said a draft definition is already in the works, that, if accepted, would mean about 17 buildings in the city could qualify for the "creative hubs" tax class - if they are more than 5,000 square feet, have multiple tenants (with at least half of them non-profit/charity/individual incubators) and offer free public programming, among other criteria.

"The challenges facing 401 Richmond are not unique to 401," Cressy said. "Our intention is to develop a financial model that encourages and incentivizes more of these creative hubs, as opposed to risking the loss of the few we have."

Trinity-Spadina MPP Han Dong, who made the announcement at Queen's Park on Tuesday, said rising real estate prices have left cultural groups feeling the tax crunch.

While the city already has the ability to grant tax reductions to charities and heritage properties, Dong says a unique classification is needed to support arts and culture facilities. He hopes other municipalities will also be able to create one.

"It's important that the city moves fast to define this new tax class so culture hubs, like 401 Richmond, can continue to work without the worry of property tax assessments and uncertainties of whether they will continue to operate," said Janice Solomon, who heads the Entertainment District Business Improvement Area.

401 Richmond, an old factory, sits amid pricey condos and office space and is home to a number of non-profits and culture groups. Over the years, the owner has shouldered much of the increased tax bill. This year's alone was estimated to be more than $846,000.

The owner, UrbanSpace, was recently successful in appealing its tax assessment, and is to receive refunds back to 2013.

The building was initially assessed at $57.6 million in 2016, which has now been reduced to $33.2 million.

"Cultural hubs matter deeply to me and to all Ontarians, and opportunities to showcase our talent should not be limited by what funding they receive and what tax they pay," said MPP Dong. "The province does not want our culture community feeling crushed by tax burdens when their focus should be on creating."

He noted the culture sector pumps $25 billion into the provincial economy and provides jobs for 28,000.

"It's not fair in my mind to ask a creative industry - many of them are startups and incubators - to be looking at a commercial rate, and we know that the commercial rate in Toronto is quite high compared to other municipalities," he said. "It's just not sustainable under the pressure of the current real estate hype."

Cressy said buildings that could benefit from the new tax class are Daniels Spectrum, Artscape Wychwood Barns and the Centre for Social Innovation.

"We have a flaw in the assessment process that is negatively impacting arts and culture and the creative economy," Cressy said. "With this fix, not only are we protecting arts and culture, but we're going to drive the economy forward."

He said any tax reduction won't result in less revenue for the city, as the amount will be covered by taxes paid by other commercial properties.

"The province and city have long recognized the one-size-fits-all approach to taxation disadvantages a number of different sectors," he added.