Provincial designation -- boon or bust? (part two)

As we saw last time, provincial designation was taken out of the draft legislation before it was introduced in 1974.

Thirty years later, in 2004, it was put back! In the drafting of Bill 60, it was added to Part IV as section 34.5 and became law with the passage of the bill in April 2005.

The reasons for this could be summed up as follows:

• every other province had provincial designation; most gave the power to the minister responsible for culture and heritage while one or two gave only the entire cabinet this authority
• in other fields, Ontario had over the years increasingly recognized that certain resources had provincial importance (wetlands, for example) and given the responsible ministry regulatory powers to protect them
• in the long consultations leading up to the legislation there were consistent calls for the province to assume a greater role in built heritage conservation
• the repeated cases since 1975 of municipalities, for one reason or another, failing to recognize and take action to protect cultural heritage of provincial significance and the likelihood of future cases, even with increased municipal powers over demolition.

From a policy standpoint this last point may be the most compelling.

Could municipalities be blamed for not recognizing a building or property of province-wide importance when they saw it?  Even if, as most would agree, a provincially significant property is by definition also locally significant, how were municipalities to know which properties were “more” important (in the sense they were significant to a wider provincial community) and deserving of greater efforts to protect them?

So giving the culture minister the power to designate cultural heritage properties of provincial significance, along with a stop-order power to intervene quickly when necessary, seems the answer.  In designating a property the minister would be required to get the advice of the Ontario Heritage Trust, which has a long track-record of assessing provincial importance for purpose of its own programs, such as its conservation easements program.

But there would be another, more constraining check on these new powers.  To be designated a property would have to meet special criteria for provincial significance set out in regulation (put in place a year later as Reg. 10/06).  Even use of the stop order required the minister to be “of the opinion” that the property might meet the criteria.

These checks and constraints attempt to address two related concerns: (1) that the new provincial powers not unduly intrude on municipal autonomy (after all, with the exception of those in unorganized territory in the North, all heritage properties are located in municipalities); and (2) that the province not be pulled into essentially local heritage controversies where there is no clear provincial interest.

So much for the policy behind the new powers.  How have they worked in practice?  So far, not so well, to say the least.  Whether this is the result of a policy weakness or a political failure, or both, we’ll look into next time.

Next week: Provincial designation — boon or bust? (part three)

Provincial designation -- boon or bust? (part one)

Provincial designation... whew, what a topic!  We might have to take it in parts.

I guess we could start with the 1975 Ontario Heritage Act, which provided for designation by the Minister only of property of archaeological or historical significance under Part VI of the Act.  This power had been in the predecessor legislation, the Archaeological and Historic Sites Act, and had been used just three times before 1975 to designate properties for their archaeological importance. (These three sites were "grandfathered" into the new Act and are deemed to be designated under Part VI).

With respect to what we now call built heritage, what was originally conceived was a binary or two-tiered designation regime like that in other provinces where designation of provincially important property would be the responsibility of the province and designation of locally important property would be up to municipalities.  But the draft provisions that would have given the Minister of Culture and Recreation the power to designate were stripped from the legislation before it was introduced, so only local councils gained this new power.

The reason given for this is that the government caucus of the day, in reviewing the draft bill, was concerned that provincial designation "would unwisely involve the province in the restriction of private property rights.” (see Note 1 below).  This seems odd, as the same argument would have applied to the new municipal designation powers.  One possible explanation is that the proposed provincial powers were stronger than the municipal ones and provided for permanent rather than interim control on demolition.  (Note to self: get to the archives and check this out!)  So too much teeth for the Tories of the day?

In any case it’s clear that from the genesis of the OHA there has been a tension between the roles of the province, which before 1975 had been predominant, and municipalities.  This has manifested itself most starkly over provincial designation (let's just call it PD).

The historic reluctance on the part of the province to be involved in designating property of architectural value does not seem to have an ideological or philosophical basis (unlike the private property rights argument against designation).  The push for designation powers had come from municipalities like Kingston and Toronto and with the passage of the OHA it was felt they should be left to get on with it.  And there was the ministry’s concern, expressed early on (Note 2), that PD would draw the province into “local” controversies.

This concern resurfaced big-time in the policy debate leading up to the 2005 changes and in the 2006 discussions about Regulation 10/06 (the criteria for provincial significance) and the province's process for handling PD requests.   

Which we’ll get into next time…

Note 1: From Victoria Angel's 1999 paper, "The Ontario Heritage Act and the Provincial Program: An Alternative Model for Heritage Conservation", p. 99.   This view is supported by Steve Otto who told me this week that the deletion resulted "not from fears of infringing on local autonomy [as I had supposed] but as an inroad on the rights of owners of private property."  At the time Steve was executive director-to-be of the Ontario Heritage Foundation, now the Ontario Heritage Trust.

Note 2: Victoria Angel's paper quotes a telling 1974 memo from then Assistant Deputy Minister Doug McCullough in which he says, in part: "...the legislation should be worded so that the main thrust is of enabling municipalities to designate...", p. 95.

Next week: Provincial designation — boon or bust? (part two)

Provincial significance and Regulation 10/06

Regulation 10/06 is the companion to Regulation 9/06.  Following a public consultation process, the two regulations were put in place in 2006 to set out the criteria for provincial and municipal designation.

Regulation 10/06 says, in part:

A property may be designated under section 34.5 of the Act if it meets one or more of the following criteria for determining whether it is of cultural heritage value or interest of provincial significance:

1. The property represents or demonstrates a theme or pattern in Ontario’s history.

2. The property yields, or has the potential to yield, information that contributes to an understanding of Ontario’s history.

3. The property demonstrates an uncommon, rare or unique aspect of Ontario’s cultural heritage.

4. The property is of aesthetic, visual or contextual importance to the province.

5. The property demonstrates a high degree of excellence or creative, technical or scientific achievement at a provincial level in a given period.

6. The property has a strong or special association with the entire province or with a community that is found in more than one part of the province. The association exists for historic, social, or cultural reasons or because of traditional use.

7. The property has a strong or special association with the life or work of a person, group or organization of importance to the province or with an event of importance to the province.

8. The property is located in unorganized territory and the Minister determines that there is a provincial interest in the protection of the property.

The question gets asked: why does 10/06 look so different from 9/06, when both are about determining the same thing -- cultural heritage significance -- one at the local/municipal level and one at the provincial level?  Why are there eight criteria instead of three as in 9/06?

Firstly, they're not really different in substance.  Take the first seven criteria (#8 is an anomaly giving the Minister pretty much carte blanche to designate a property in areas where there is no municipality that could designate).  All of the concepts mirror those in the criteria in 9/06 and which fall into three basic categories: design or physical value (#3, #5), historic or associative value (#1, #2, #6, #7), and contextual value (#4).

But, yes, they look quite different. The key thing about the criteria (both sets) is that they were developed for the purposes of designation under Part IV of the Act, and their differences have to do with the distinct designation processes in which they would be used.

The 9/06 criteria were introduced to essentially tighten up and codify the criteria most municipalities were already using to designate property under Part IV.  They were intended not so much to raise the bar for what could be designated (although I think this has been the result -- not necessarily a bad thing? -- especially since the Conservation Review Board has taken them quite seriously and is more likely than previously to recommend against designations on the basis that the criteria have not been met).  Rather, they were intended to prod Ontario municipalities to consider the full range of potential heritage values of a heritage property and to capture that in a more ordered and consistent way, thereby contributing to clearer, more comprehensive and ultimately stronger heritage designation by-laws.

So this explains why the 9/06 criteria -- to be applied by umpteen municipalities -- are more detailed than the 10/06 criteria, designed for the purpose of provincial designation and where you have only a couple of provincial bodies -- the minister/ministry and the Ontario Heritage Trust as advisor -- interpreting and applying the criteria.  And where there was already long experience in assessing provincial significance, since that is the usual threshold for OHT property and easement acquisition.

In other words the primary "audiences" for the two sets of criteria are very different.

Remember too that, unlike municipal designation, provincial designation was a new power. The provincial criteria were intended to establish a pretty high bar and limit the Minister's powers to intervene in most situations.  This is reflected in the use of the terms "importance to the province" and "at a provincial level" in the first seven criteria.

There were questions at the time about whether the criteria were still too broad or loose, potentially allowing for the Minister to be "dragged" into too many local controversies.  The answer given was that the criteria themselves were just the starting point and would be implemented via a rigorous evaluation process undertaken by the OHT to ensure that in practice the steep bar for provincial designation was established and maintained.

Next week: Provincial designation -- boon or bust?

Heritage Property Tax Relief -- slow but steady?

HPTR has been around a long time now -- since 2001, when the then Ministry of Tourism and Culture worked with the Ministry of Finance to develop it.

The timing may seem odd to some -- it was still the Harris era, and in fact Tim Hudak was Minister of Tourism and Culture!  After all the cuts to heritage (and other) programs you wouldn't think a new heritage incentive would be at the top of their list.

The opportunity arose from the Harris government's goal (obsession?) of reducing taxes, and the resulting predilection to use taxation instead of grant funding to accomplish public policy objectives.  The government was fond of quoting the number of taxes they'd cut!  So HPTR was not such a hard sell.  If memory serves, the City of Toronto was the chief advocate for the measure, and there were precedents already in the Municipal Act.  Ministry of Finance staff were surprisingly supportive.

Section 365.2, "Tax reduction for heritage property", was added to the Municipal Act (later, for Toronto, this became section 334 of the City of Toronto Act).  Minister Hudak made the announcement at the Distillery District in Toronto.  One more tax cut to add to the list!

The common wisdom is that tax measures are less susceptible to political shifts and cost-cutting than grants or subsidies.  Having a legislative or regulatory underpinning, tax tools become more ingrained and are more difficult to change.  While this is not altogether true -- technically it's as easy, say, to repeal a HPTR by-law as it is to axe a grant program -- the optics are different: in one case you're "cutting costs", in the other you're "raising taxes", at least on those benefiting from the program.

It is partly for this reason that Heritage Canada (now Heritage Canada The National Trust) has for decades lobbied successive federal governments to establish an income tax incentive similar to the very successful Historic Rehabilitation Tax Credit in the U.S.  Alas, they have been unsuccessful so far, but we live in hope.  Such an incentive would be a major game-changer for many heritage commercial and industrial projects.

In the long absence of provincial grant programs, HPTR is pretty much all we've got at the provincial level targeted to the preservation of Ontario's built heritage.  According to unofficial numbers from MCTS, at the beginning of this year (2015):

• 42 municipalities had passed a by-law enabling them to provide heritage property tax relief 
• 27 municipalities actually reported providing heritage property tax rebates in 2013 (most recent data available)
• $16.42 million in HPTR was paid out province-wide from 2002-2013, of which about $7.39 million came from the province
• $4.48 million in HPTR was paid out province-wide in 2013, of which $1.86 million came from the province

While individual municipal programs have been successful, overall the use of HPTR in the province, after over a decade, has been muted. Why the lacklustre response? A few things:

• it's seen as not a big incentive
• program design and administration can be complicated
• municipal reluctance to cut into tax revenues

These factors have led to slow, and relatively small, take-up -- both by municipalities and, where municipal programs do exist, by eligible property owners.

Some observations on the design and administration issues.  From the start the requirement for an easement or other agreement with the property owner has seemed cumbersome.  It's worth remembering that in 2001 a heritage building could be demolished without the municipality's consent, nor were there provisions in the OHA for the maintenance of heritage property.  So the main purpose of the agreement was to ensure that a municipal tax rebate did not go to an owner who then went and demolished their designated house!  While today the demolition threat is (largely) gone, maintenance is still an issue and not being well-addressed with property standards by-laws.  It makes sense, then, that this should be the focus of the agreement, which also should be kept as simple as possible.

Another potentially complicating factor is that the legislation gives municipalities almost too much choice in designing their programs.  In addition to the standard requirements of designation and an agreement, the municipality can set "additional eligibility criteria", which leaves the door wide open, as well as choosing the level (or levels) of tax reduction in a 10-40% range.  While this allows for very specific tailor-made programs, it may also present challenges for decision-makers in structuring the program and determining who's in and who's out.

There is also the inherent complication of our municipal structure with most municipalities in an upper tier/lower-tier arrangement. If the local municipality decides on a property tax relief program and the upper-tier doesn't play ball, then of course the tax reduction is less, and less attractive.

Finally, I think it's still not well understood that the province has significant skin in the game! The figures above indicate the provincial share of the costs of HPTR programs is close to 45%.

There's a lot more to be said, but I'll wrap this up by pointing you to three recent reports by municipalities: a program review by the City of Peterborough, which has had long experience with HPTR; a report by the City of Toronto on restructuring their program; and a short report by the Town of St. Marys, which is just looking at establishing a program.  Recommended reading for those contemplating a HPTR program or reviewing an existing one (in addition to the ministry's guidance material of course!).

Peterborough: http://www.peterborough.ca/Assets/City+Assets/Arts$!2c+Culture+$!26+Heritage/Documents/HPTRP+Review.pdf

Toronto: ‎
http://www.toronto.ca/legdocs/mmis/2014/pg/bgrd/backgroundfile-70172.pdf (this link you may have to cut and paste)

St. Marys: https://stmarys.civicweb.net/Documents/DocumentList.aspx?Id=2336&Search=1&Result=4  (scroll down to page 49)

Comments?  Just post below or email me at danschneider@live.ca