A creative tax concept
Council’s plan intended as way to stop exodus of cultural locations
Last week, Oliver Pauk and Michael Vickers, the two partners who run Akin Collective, got some welcome news: The notice of eviction on the shared studio property they run for a few dozen artists on Dufferin St. had been extended from the first of February to the first of March.
While it might be hard to see the sunny side of an eviction notice, for once, there’s a glimmer of silver to the stubborn black cloud that has been hanging over the city’s cultural communities for at least a generation.
“The story for all these places has always seemed so doom and gloom,” Vickers said, looking around the scruffy expanse of white that at one time housed a furniture factory. “But for the first time, I’m feeling quite hopeful more generally about what the future holds.”
In due time, this entire chunk of Dufferin, a stretch of nearly 300 metres along its western curb just north of Queen St. W., will be hundreds of new condos, fitting an old story with a familiar conclusion.
But Vickers’ optimism is anchored in a determined bureaucratic effort to start writing a different ending to a shopworn tale of urban change.
In February, city council is expected to approve a new tax class for commercial properties — and it’s meant to significantly reduce the tax burden on landlords who let their buildings be colonized by cultural hubs. It will take immediate effect: For qualifying properties, the class will apply to their 2018 tax bill.
In exchange for providing belowmarket leases — in a commercial rental market characterized, in some cases, by bidding wars and rates that routinely double at each renewal — landlords will see their tax bills substantially reduced.
For some, such as Akin, that could mean the migratory ways they’ve come to accept as a fact of life could well change into permanence. If the new tax class comes to pass, having Akin as a tenant is likely to bring substantial tax breaks to landlords at each of their portfolio of spaces across the city (they currently run shared studio hubs at a half-dozen properties citywide, providing workspace to hundreds of artists).
The city’s not saying much about the details just yet, but Pat Tobin, its director of arts and culture services, offered some broad strokes. Qualifying properties will have a minimum of three tenants, with most being arts and culture non-profit organizations; the properties will have space and programming open to the public; and they will charge a rental rate below market average.
The city hasn’t offered a hard number yet, but some familiar with the process have said it will represent at least a 40 per cent reduction for those properties that qualify. Tim Jones, the chief executive officer of Artscape, is “putting forward a strenuous argument” to the city to consider lowering the new tax rate for affected spaces to those charged to residential properties, which are pegged at about one-third of commercial properties’ rates. That would mean a property tax reduction of 67 per cent for eligible buildings.
“It’s just absolutely crippling for small non-profits and individual artists to pay the kinds of rates we’ve been faced with, so this is huge,” Jones said (as is the case with many commercial landlords, Artscape, a non-profit, charges tenants belowmarket rent, but those tenants pay a proportional share of the property tax separately). One of their new projects, the under-construction City of the Arts on Queens Quay E., was facing an annual tax bill of $427,000.
Artscape, whose portfolio of properties includes YoungPlace on Shaw St. and Wychwood Barns, has been appealing its tax assessments quietly for several years. But Jones has been on the front lines of the affordability crisis for cultural activity in the city for decades. He remembers quick fixes over the years not delivering on their initial promise, and wants this one to have staying power.
“We need to get this thing to the finish line in a way that we’re not kicking the can down the road a couple more years and finding ourselves in the same dilemma,” he says, asking “What kind of city do we want to have? When you look at the new condos, and you wonder why all you see are Subways and Tim Hortons, that’s because the taxes price everybody else out.
“What we want is for this to set a process forward to reset the thinking on what can happen here.”
Independent culture, generally, has been struggling to maintain a foothold in the city core for decades. From Yorkville in the ’70s to Queen St. W. in the ’80s, and then further west in the ’90s, cultural activity has dispersed both north, near Dupont and Dufferin Sts., and as far as the suburbs.
But it didn’t reach the level of a crisis public enough for the city to act until last December, when the Star revealed that 401 Richmond, a storied hub of arts and culture and home to dozens of non-profit cultural organizations, had reached a breaking point: Between 2012 and 2016, UrbanSpace, which owns the building, saw its tax bill balloon from $446,689 to $846,211. Without some kind of government intervention, that would have hit $1,286,000 by 2020, effectively purging all its nonprofit culture sector tenants.
(UrbanSpace, the company that owned it, had absorbed the increases for years, but the dramatic spike upward had made it untenable.)
The city was faced with a paradox: A landlord willing to collect rents far less than the market would bear for the good of the culture sector was on the cusp of seeing its goodwill undermined by provincial policy.
Faced with looming mass exodus of culture-sector tenants from the building that had served them as a safe space for more than 20 years, city council acted quickly.
Councillor Joe Cressy mobilized his staff to draw up a solution, but with a broader intent.
“This is not intended as a get-outof-jail-free card for one good building,” he said at the time.
“It’s meant to incentivize exactly the kind of spaces we need across the province.”
The hope continues to be that the tax savings provided by the new class won’t just shelter existing cultural properties from tax spikes, but encourage others into its tent. Given the city’s recent decision to stop pro- viding tax breaks for buildings to remain vacant, the confluence of factors could well see more such properties coming online quickly.
While that bodes well for the future, what about those for whom it’s already too late?
Liberty Village, an ad hoc haven of independent cultural activity throughout the ’90s, became a forest of condominiums underpinned by high-end retail almost overnight. On Sterling Rd., spurred in no small irony by the pending arrival of the Museum of Contemporary Art, Canada, a mass exodus of independent cultural activity recently occurred as landlords capitalized on the area’s sudden cachet by more than doubling rents.
More recently, on Wade Ave., a storied studio building went through a purge of artists and other independent creative enterprises on 30 days’ notice as its owner hustled to make more space for the French videogame giant Ubisoft.
Even now, pockets of cultural activity appear poised to dissolve: Just off St. Helen’s Ave., the low-slung cinder-block building that houses Scrap Metal Gallery, as well as a cluster of artists’ studios, went up for sale this week for $9.5 million.
What’s more, the tax class may not capture all of the activity it appears aimed at. Mercer Union, a venerable artist-run centre now housed in an old movie house on Bloor St. W., is spiritual kin to the dozen or so artistrun centres within 401Richmond, all of whom were targeted as most in need of the proposed tax break. But Mercer is outside the current thinking for the criteria as a stand-alone enterprise, but engaged in exactly the activity the city hopes to preserve. With its lease due in July, it’s in the same straits as the others the city arrived too late to save.
So while it’s not a cure-all, it’s a step. “The initial thinking for a lot of property owners was to get us in and cover their taxes while they figure out what to do, and then move us out,” Pauk said.
“Maybe now, there’s an incentive, maybe, to keep us around. That seems like a step in the right direction.”
“For the first time, I’m feeling quite hopeful more generally about what the future holds.” MICHAEL VICKERS PARTNER AT AKIN COLLECTIVE