Item - 2014.ED30.6

4.         City Council request the General Manager, Economic Development and Culture Division to:

a.         Establish a working group with community groups, BIAs, other interested non-governmental organizations that are working on innovative initiatives to incubate small business and cultural activity in vacant storefronts, to further develop new models for the Property Tax Rebate for vacant commerical and industrial buildings that encourage community and local economic activity;

b.         Undertake analysis of the current utilization of the Property Tax Rebate for Vacant Properties and other research to examine any trends or patterns of use that would help inform the work underway on this policy;

c.         Differentiate, as appropriate, the small retail class of businesses from larger commercial industrial properties in further work on this policy issue, recognizing the different conditions and needs of these property owners and businesses; and

d.         Request consideration for a temporary exemption from the current legislative provisions in order to undertake pilot projects in the City of Toronto in further discussions with provincial officials.

The Economic Development Committee:

1.         Requested the General Manager, Economic Development and Culture to submit a report to the May 6, 2014 meeting of City Council on a breakdown of vacancy rebate amounts paid by commercial vs industrial and by geographic area.

2.         Invited Mr. Kevin Lee, Executive Director, Scadding Court Community Centre to give a presentation to the Economic Development Committee meeting on June 24, 2014 on businesses out of the box.

At its meeting of February 20th 2013, City Council in endorsing its new economic growth and job creation strategy, Collaborating for Competitiveness, adopted Recommendation C.1.2 directing City staff to request that the Province of Ontario consider amending the legislation governing the Property Tax Rebate for Vacant Commercial and Industrial Buildings that would permit municipal councils to establish graduated vacant unit rebates to induce and incent owners and tenants to meet eligibility criteria that align with the municipalities economic growth and job creation objectives.

As part of the general economic churn businesses open, close, expand, contract and relocate.  This ongoing process creates vacant space for periods of time within commercial (including retail) and industrial properties.  Some of these spaces remain vacant for a relatively short period of time as owners seek new tenants, renovate or otherwise upgrade their property.  However some commercial / industrial space remains vacant for extended periods of time with little apparent activity.  Older industrial buildings with lower ceiling heights and short column spans that are no longer desirable for modern manufacturing uses and many retail areas throughout the city have been noticeably impacted by long term vacancies. 

In addition to lost revenue to property owners, buildings that remain wholly or partial vacant for long periods of time can, and usually do, have negative impacts on the surrounding business area and community.  Municipalities around the world are implementing creative strategies and programs to bring these spaces back to vibrant economic use.

In Toronto, the current provincially legislated commercial / industrial vacant property tax rebate program provides a rebate to owners of eligible vacant buildings, but does not address the negative impacts on the surrounding businesses and community or provide an incentive to encourage temporary productive uses that would create employment benefiting the property owner, local business area, and community.

Between 2002 and 2013, the City of Toronto rebated approximately $367 million in property tax revenue ($198 million representing municipal taxes and $169 million in education taxes funded by the province) to owners of vacant commercial / industrial space.  At the same time rebates are provided for vacant space, there is demand for affordable space to support entrepreneurs and emerging small businesses.

This report recognizes vacant commercial / industrial buildings as under-utilized assets that have the potential to foster job creation and economic growth; discusses creative approaches to re-purposing these spaces to encourage productive employment that would benefit the property owner, local business area, and community; and seeks City Council approval of a framework to guide discussions between City of Toronto and Province of Ontario staff in regard to potential amendments to current legislation and regulations.