Report to: Development Services Committee Report Date: February 3, 2009

SUBJECT: Federal Tax Incentives for Heritage Properties

Landmarks Not Landfill Campaign - Heritage Canada

PREPARED BY: Regan Hutcheson, Manager-Heritage Planning, ext. 2080

RECOMMENDATION:

Whereas according to the Heritage Canada Foundation, Canada has lost more than 20% of its pre-1920 heritage buildings to demolition over the past 30 years;

Whereas the Heritage Canada Foundation has stated that urgent action is needed to stop the demolition of Canadian landmarks, to restore and re-use them, and to acknowledge their value as a reminder of our origins and cultures;

Whereas heritage buildings are also a valuable economic development resource which supports re-urbanization initiatives and tourism, stimulates adjacent development, increases property values, all while providing environmental benefits by way of reducing landfill, preserving natural resources and promoting sustainability;

Whereas there are currently no federal financial incentives to encourage private sector investment in the rehabilitation of heritage properties; and

Whereas Heritage Markham, Council’s heritage advisory committee, has requested that the Town of Markham pass a resolution requesting the Federal government to introduce financial incentives which would encourage private sector investment in the rehabilitation of historic properties;

Be it resolved that the Corporation of the Town of Markham endorse resolutions by the Heritage Canada Foundation and the Federation of Canadian Municipalities that request the Federal Ministers of Finance and the Environment to establish tax incentives which would encourage private sector investment in the rehabilitation of heritage properties;

That this motion be forwarded to local Members of Parliament and Greater Toronto Area (GTA) municipalities for their support;

That the Association of Municipalities of Ontario be requested to support the work of the Heritage Canada Foundation and the Federation of Canadian Municipalities regarding the need for federal tax incentives by endorsing a resolution at its Annual Convention;

That Staff be authorized and directed to do all things necessary to give effect to this resolution.

EXECUTIVE SUMMARY:

Not applicable

1. Purpose 2. Background 3. Discussion 4. Financial 5. Others (Strategic, Affected Units) 6. Attachment(s)

PURPOSE:

To obtain a resolution requesting the Federal government to introduce financial incentives to encourage private sector investment in the rehabilitation of properties of heritage value.

BACKGROUND:

Heritage Canada has asked for Markham’s support

The Heritage Canada Foundation contacted Heritage Section staff in December 2008 as a Prince of Wales Prize municipality, and asked for Markham’s support to encourage the Federal government to introduce financial incentives to encourage private sector investment in the rehabilitation of historic properties.

Rehabilitation of heritage properties has many positive effects

Canada’s communities contain heritage properties that define our local and national identity and give shape and texture to our urban and rural neighbourhoods. The rehabilitation of heritage buildings stimulates the economy, revitalizes communities, and creates jobs. It also supports sustainability by consuming less than half the energy of new construction and reusing existing municipal infrastructure.

There are currently no federal financial incentives

Many provinces and municipalities are doing their part to protect and rehabilitate Canada’s heritage buildings. However, they are missing an important partner – the Government of Canada. The federal tax system is a significant instrument shaping the direction of the Canadian economy and private investment decisions. But, unlike measures to support cultural and environmental heritage, there are currently no federal measures to encourage the rehabilitation of Canada’s heritage buildings.

The United States has federal financial incentives

Other countries have federal incentives for rehabilitation of heritage properties that have been extremely effective. Among G-8 countries, Canada alone lacks a national system of funding policies and programs to preserve its heritage properties.

In 1976, the United States established the Federal Historic Preservation Tax Incentives Program which provides a 20 percent federal tax credit for rehabilitation of heritage buildings and a 10 percent tax credit for the rehabilitation of non-heritage, non-residential buildings built before 1936. Results are visible in every region of the United States:

· Over 32,000 properties rehabilitated by the private sector

· Over $36 billion in private investment in historic buildings leveraged ( with a 5 to 1 ratio of private investment to federal tax credits)

· An average of 45 new jobs created by each project (Source: Heritage Canada)

· Over 350,000 housing units created, 60,000 of them low and moderate income housing

· Reduced landfill

· Increased property values and enhanced state and local tax revenues

Many Canadian municipalities have already demonstrated their support

As part of Heritage Canada’s Landmarks Not Landfill campaign, the Foundation has been encouraging municipalities to pass resolutions calling on the federal government to establish tax incentives for the rehabilitation of heritage buildings. A growing number of Canadian municipalities large and small have passed such resolutions, including Victoria, Winnipeg, Kitchener, Region of Waterloo, Toronto, Regional Municipality of Niagara, Welland, Thorold, Township of Wainfleet, Niagara-on-the-Lake, Port Colborne, Charlottetown, and St. John’s.

Federation of Canadian Municipalities (FCM) has also supported this initiative

In September 2008, the National Board of Directors of the FCM endorsed the City of Thorold’s resolution on tax incentives for heritage rehabilitation (see Appendix ‘A’). This resolution has been forwarded to the federal finance minister.

OPTIONS/ DISCUSSION:

Markham should take a leadership role and support this initiative

Markham is acknowledged as a leader in heritage conservation initiatives and programs, and was the first recipient in 2000 of Heritage Canada’s Prince of Wales Prize. Markham received the award for outstanding stewardship of its built heritage and exemplary commitment to the preservation of the built heritage within its boundaries.

At the local level, Markham has introduced a number of municipal financial incentives such as:

Ø Heritage Loan Program

Ø Heritage Property Tax Reduction Program

Ø Commercial Façade Improvement Grant Program (Heritage Districts)

Ø Commercial Signage Replacement Grant Program (Heritage Districts)

However, a municipality can only do so much in providing financial incentives for heritage resource rehabilitation. As a leader in heritage conservation, it would be appropriate to call upon the Government of Canada to establish financial tax incentives for the rehabilitation of heritage buildings which would encourage private sector investment in our historic landmarks. Heritage Markham has supported this initiative.

The motion should also be forwarded to local Members of Parliament and area municipalities in an attempt to secure their support for this initiative. It would also be beneficial if the Association of Municipalities of Ontario (AMO) would support the work of the Heritage Canada Foundation and the Federation of Canadian Municipalities regarding the need for federal tax incentives by endorsing a resolution at its Annual Convention.

FINANCIAL TEMPLATE

Not applicable.

ALIGNMENT WITH STRATEGIC PRIORITIES:

The support of this resolution aligns with our strategic priorities associated with appropriate growth management including the preservation and re-use of heritage resources, as well as our objective of protecting and preserving our environment.

DEPARTMENTS CONSULTED AND AFFECTED:

Heritage Section staff has consulted with Heritage Markham and the committee fully supported the proposed resolution at its meeting of January 14, 2009.

RECOMMENDED

BY:

Biju Karumanchery, M.C.I.P., R.P.P. Senior Development Manager

Jim Baird, M.C.I.P., R.P.P. Commissioner of Development Services

ATTACHMENTS:

Appendix ‘A’ Letter and resolution from Federation of Canadian Municipalities

Q:\Development\Heritage\SUBJECT\Heritage Canada\DSC report on tax incentive resolution Feb 2009.doc