Item - 2017.EX29.17

The Executive Committee recommends that:

1.  City Council approve the policy objectives and key eligibility criteria for the creation of a new property class for Creative Co-Location Facilities, as outlined in Appendix A to the report (November 20, 2017) from the Acting Chief Financial Officer and the Deputy City Manager, Cluster A.

2.  City Council request the Province to create a new property tax class for Creative Co-Location Facilities based on the policy objectives and key eligibility criteria set out in this report and that such property class be created as a property class for which municipalities be permitted to establish more detailed local criteria and property-specific by-laws, effective for the 2018 taxation year retroactive to January 1, 2018, and further, the Minister of Finance be requested to allow municipalities to set the tax rate for this new Property Tax Class.

3.  City Council direct the Acting Chief Financial Officer to include, as part of the 2018 tax rate and tax ratio setting process, the Creative Co-Location Facilities tax class, subject to the necessary regulations being approved and filed by the Province before such provision takes effect, with a report to Executive Committee at its meeting of February 6, 2018 as part of the "2018 Tax Rates and Related Matters" report.

4.  City Council direct the General Manager, Economic Development and Culture, in consultation with the Acting Chief Financial Officer and the City Solicitor, to establish detailed eligibility criteria for inclusion of properties in the proposed Creative Co-Location Facilities tax class, together with a process to approve inclusion of such properties in this tax class, and a process to address appeals related to the City's eligibility criteria, with a report to Executive Committee at its meeting of February 6, 2018.

The most recent Provincial property reassessment has resulted in significant assessment increases for many property owners.  Some of these large increases were due to incorrect assessments (e.g. 401 Richmond Street West, downtown Yonge Street retail), which assessments have since been significantly reduced by the Municipal Property Assessment Corporation (MPAC).

Rapidly increasing land values resulting in significant property tax increases is a city-wide issue facing many properties beyond arts and culture facilities.  Similar concerns have been raised respecting organic food growers/retailers (Kensington Market), music venues, and main street retail on a broader scale (e.g. along the Eglinton corridor). 

For this reason, staff will be coming forward with potential options for mitigating tax increases which could include the re-instatement of the tax increase capping protection program for those properties in the commercial, industrial and multi-residential property classes that have previously reached their full Current Value Assessment (CVA) level of taxation and are no longer protected from large re-assessment related tax increases. This proposed policy option together with others will be reported to Executive Committee at its meeting of February 6, 2018, through the "2018 Tax Rates and Related Matters" report to be considered concurrently with the City's 2018 Capital and Operating Budgets.

Notwithstanding this, City Council has previously requested the Province to explore opportunities to support not-for-profit arts and culture organizations and incubators, including through property assessment tools.  The Ontario Minister of Finance has most recently extended his willingness to work with the City to establish a new property class for arts and culture facilities.

To seize on this opportunity, this report presents the City's policy objectives and proposed key eligibility criteria for the recommended new property class for Council approval as a first and required step in this process.  Upon receipt of this formal submission, Ministry staff will work with City staff in developing a regulatory framework for the creation of this class.  If adopted by the Province, the regulatory framework will provide flexibility for the City to design its own eligibility criteria beyond the broad parameters established by the Province.