Finally, a federal tax incentive for heritage?

In a surprise move legislation has been introduced in Parliament that would provide income tax incentives for restoring heritage buildings in Canada.

Peter Van Loan, MP for the Ontario riding of York-Simcoe and Conservative Critic for Canadian Heritage and National Historic Sites, introduced a private member’s bill in the House of Commons on December 1st.

Bill C-323 would amend the Income Tax Act to create a 20% tax credit for the costs of rehabilitation of recognized historic places.  It would also provide an accelerated capital cost allowance for capital expenditures incurred in rehabilitation projects. [Note 1]

Passage of Bill C-323 would be a real game-changer for built heritage in this country. To quote the National Trust for Canada: “These two tax measures would transform the economic fundamentals for renewing historic places.” [Note 2]

MP Van Loan, interestingly, has degrees in both law and planning and, before entering politics, was both a planning and development lawyer and a professor of planning.  On introduction of his bill Mr. Van Loan said: “It is designed to help those who invest in our cultural heritage.”  He went on to say:

It is a meaningful measure to strengthen heritage infrastructure. By maintaining historic buildings and undertaking costly heritage renovations, citizens undertake a considerable private burden from which we all benefit through the preservation of our past and the places that have made our country. This bill seeks, in a small way, to provide some support for them for the considerable investment they make on behalf of all of us.

     

With the 150th anniversary of Confederation nearing, this bill is an opportunity for all members of the House to show their support for preserving Canada's built heritage. These changes will help save our most important historical structures for our children and grandchildren to enjoy for generations to come.

It remains to be seen if the legislation has legs.

Very few private members’ bills become law.  And the vast majority that do are for minor things like changing the name of the riding represented by the member.  A bill affecting taxes, and therefore government revenues, is another matter.

The rules governing our Parliament say that a private member cannot introduce bills which impose taxes (this power rests solely with the government).  But private members’ bills which reduce taxes or provide or increase a tax exemption are acceptable… if not usually welcome.

A hopeful sign — the government is so far not openly opposing Bill C-323.

In terms of the timeline, after the Christmas break the House resumes sitting at the end of January 2017.  Sources suggest the bill may be called for Second Reading in February or March — which opens up the possibility that the debate and vote on the main principles of the bill that occurs on Second Reading might even take place during Heritage Week!

If (and it’s a big if) the bill clears that hurdle it would then be sent to committee, probably the House Standing Committee on Environment and Sustainable Development, for more detailed consideration and possible amendment.  At this stage there is also the potential for public hearings on the bill.  [Note 3]

* * * * *

Interior of the Alton Mill Arts Centre, Alton

Bill C-323 cannot proceed without government support.  The government will be waiting to see what attention the bill garners and the public’s reaction.  If they’re taking it at all seriously, you may be sure the legislation is already undergoing scrutiny every which way.  It’s even possible that the government could seize the initiative and introduce their own bill.

This is not so far-fetched.  The previous Liberal government was piloting something very similar.  In 2003, as part of that government’s pivotal Historic Places Initiative, then Minister of Canadian Heritage Sheila Copps announced a $30 million fund for the restoration and rehabilitation of commercial heritage properties.  Known as the Commercial Heritage Properties Incentive Fund (CHPIF), the program reimbursed 20 per cent of eligible costs to a maximum of $1 million.  CHIPIF ran for three years and assisted some 49 projects across Canada including the Distillery District in Toronto and the Alton Mill in Alton.

Toronto's Distillery District

At the time it was widely understood that the Chretien government was using a short-term grant program to test the water before committing to a more permanent U.S.-style income tax incentive … just like that in Bill C-323!

All to suggest there is some reason for optimism about the fate of this initiative.  But — and nota bene — public support early in the New Year will be critical.

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Hard to believe … but this is OHA+M post number 50!! Who knew there was so much to say about heritage policy?!

And so much interest — thank you! This blog (and blogger) could not have made it this far without your encouragement and support.

Happy holidays!

Dan

Note 1: The bill is here: http://www.parl.gc.ca/content/hoc/Bills/421/Private/C-323/C-323_1/C-323_1.PDF. Note that the measures in the bill are largely aimed at commercial (income-producing) property, although the 20% tax credit would also apply to owner-occupied residential property. While in Ontario Part IV-designated property clearly would be eligible, it is less clear whether properties designated under Part V would qualify.

Note 2: See NTC’s call-to-arms and backgrounder here: 

http://www.nationaltrustcanada.ca/get-involved/hcf-news/voice-your-support-federal-incentives-rehabilitation-canadas-historic-places

Note 3: See: http://www.parl.gc.ca/Committees/en/ENVI. The committee is composed of 10 members: six Liberals, three Conservatives and one New Democrat. One of the ways to kill a bill is to send it to committee but never have it brought back to the House for Third Reading and passage.

The OMB under review (again)

Ontario is in the final stages of the latest public review of the 110 year-old Ontario Municipal Board.

Municipal Affairs Minister Bill Mauro — together with Attorney General Nasir Yaqvi, who is involved because the court-like OMB reports through the AG’s office — released a consultation document on OMB reform in October. [Note 1]

The consultation document sets out a number of changes the government is considering based on what it's heard during previous consultations on the future of the OMB and since the current review was launched back in June. These views include:

• people feel they don't have a meaningful voice in the process
• more weight should be given to municipal decisions
• OMB decisions are unpredictable 
• hearings cost too much and take too long
• there are too many hearings; more mediation should be used 

The document asks 24 questions about the proposed changes and calls for feedback by December 19, 2016.

One change that is not being considered is abolishing the Board altogether. “The Ontario government sees a continuing need for the OMB in Ontario’s land use planning system”, says the discussion paper. [Note 2]  Rather, the focus is on changes to the Board’s scope (what it deals with) and effectiveness (how it operates) within that system.

The most interesting discussion has to do with scope.  Scope in terms of which matters end up coming before the Board, and which don’t, as well as the nature of the Board’s review of those matters — whether the Board continues to deal with these matters de novo (by considering the same issue that was before the initial decider fresh); or whether its authority is restricted in some way, giving the municipality’s or province’s decision more weight.

What could this mean for the conservation of cultural heritage in the province?

Hard to say, but probably not much.

* * * * *

As context, let’s review the ways the Ontario Municipal Board gets involved with cultural heritage resources.

While it also has a role in a number of non-planning matters, the Board’s primary function is that of an appeal body on land use planning issues, and most disputes that come before the Board are appeals under the Planning Act.  The Planning Act provides for appeals to the OMB from decisions on the use of a wide range of planning tools, any of which may have a heritage component or impact.  These include (with approximate figures for the five with the greatest number of OMB files in 2014/15):

• Official Plans/amendments — 180 files
• zoning changes — 350 files
• minor variances — 575 files, by far the largest!
• consents (for severances) — 235 files
• subdivision plans — 80 files
• refusal to approve demolition in demolition control areas (designated for the purpose of protecting residential property)
• refusal to remove holding by-laws
• interim control by-laws
• site plan control
• Minister’s zoning orders  [Note 3]

In hearing an appeal of a municipal or provincial decision on these types of planning matters, the Board’s job first and foremost is to ensure that the decision is “consistent with” the provincial planning policies in the Provincial Policy Statement.  These policies include the five Cultural Heritage Policies in section 2.6 of the PPS, among them the oft-cited policy 2.6.1: “Significant built heritage resources and significant cultural heritage landscapes shall be conserved.”  The Board also looks for compliance with the Official Plan (approved by the province or an upper-tier municipality) and any other applicable plans, such as the Growth Plan for the Greater Golden Horseshoe or the Niagara Escarpment Plan.

The OMB also hears appeals from decisions on the exercise of some (although not all) heritage mechanisms under the Ontario Heritage Act:

• refusal to approve the demolition of a building or structure designated under Part IV of the Act
• refusal to approve the alteration of property, the demolition of a building or structure, or new construction in a heritage conservation district designated under Part V
• designation of a heritage conservation district
• designation of a heritage conservation district study area (for the purpose of prohibiting or restricting alteration and development for up to a year)

* * * * *

A major thrust of the provincial discussion paper is reminding the reader what the province has already done to address the concerns with the OMB cited above. It’s almost as if the province is saying, we’ve made many, many changes previously but for those who think there’s still a problem we’re prepared to consider some further things… what do you think of these ideas?

To my mind, the ideas for the most part amount to little more than tinkering.

A prime example has to with the “scope” issues.  The changes the province is floating include:

• limiting appeals to the OMB on more provincial land use planning decisions: Minister’s zoning orders could not be amended by the OMB; provincial decisions on OPs could not be appealed to the OMB (appeal of entire OPs or their approval by the province is already verboten; this change would simply allow the province to say which parts of its decision, i.e. on which parts of the plan, could not be appealed) 
• no appeal of a municipality’s refusal to amend a new secondary plan for two years 
• no appeal of a municipal interim control by-law

No bold moves here — like, say, removing appeals to the OMB on minor variances or consents, major items contributing to the OMB’s heavy workload (not that this would be a good idea necessarily, but it’s not even considered). [Note 4]

Now consider the discussion of the question of de novo hearings and giving more weight to municipal decisions.

As the paper points out, since 2007 the OMB has been required to "have regard to” the earlier decision that is being appealed. (This has always struck me as somewhat disingenuous: how could an appeal body not pay attention to the decision it was asked to overrule?)

Now the government is looking at a further “possible change” to move the Board away from de novo hearings.  “If this were to occur, it would mean the OMB would focus on the validity of the decision under appeal instead of seeking the ‘best’ decision.”  How might this be achieved?  The documents suggests two ways:

• requiring the OMB to review municipal/approval authority decisions on a standard of reasonableness. That means OMB hearings would examine whether the original decision was within a range of defensible outcomes within the authority of the municipality/approval authority.  If the decision is found to have been made within that range of outcomes, the OMB would not be able to overturn it

• authorizing the OMB to overturn a decision made by a municipality/approval authority only if that decision does not follow local or provincial policies. This would mean that the Board would have to be convinced that the planning decision under appeal is contrary to local or provincial policies. Examples might include approvals of proposals for development in a flood prone area or a provincially significant wetland, or an official plan that does not meet the Growth Plan for the Greater Golden Horseshoe intensification targets [Note 5]

Oh dear.  These strike me as ways of just doubling down on the current “have regard to” requirement.  With the first… well, more time will be spent on arguments over whether the decision under appeal is “reasonable” — and therefore not within the Board’s power to overturn — than on the planning issue itself.

The second is no better.  In a policy-led planning system, which is supposedly what we have, what kind of restriction is it to tell the OMB it can overturn a decision “only” if the decision doesn’t follow provincial or local policies.  Seriously, who goes before the Board and argues, “I know this decision complies with the OP and the PPS, but it’s bad so please overturn it”?

I suspect the government knows this and is just trying to appear to be open to change.  Unlike in other areas, it is careful not to say that it is proposing these reforms, just that here are some ideas “if” there is to be a shift away from de novo hearings.

I for one hope there isn’t.

Thoughts?

Note 1: See: http://www.mah.gov.on.ca/Page15027.aspx

Note 2: Page 3. The main reason seems to be that the existence of the OMB minimizes impacts on the courts. Also note that municipalities have had the power since 2007 to establish their own appeal bodies to deal with consent and/or minor variance appeals. Doubtless because of the expense involved, none have so far done so, although Toronto apparently has the process underway.

Note 3: Source for numbers: “Planning Act Files Received by the OMB by Application Type” on page 11 of the discussion document. The total number of OMB Planning Act files for 2014/15 was 1,535.

Note 4: See Note 2 re the scope of municipal appeal bodies.

Note 5: Page 19.