On February 12, 2018, the City of Toronto passed a by-law that could reduce property taxes by 50 per cent for some culture hubs and creative spaces. By-law 168-2018 amends Municipal Code 767, Taxation, Property Tax, by adding a new property tax subclass for creative co-location facilities under the Commercial Residual and Industrial property tax classes. The new Creative Co-location Facilities subclass will reduce property taxes by 50 per cent for those properties that qualify.
Property owners seeking inclusion in the subclass will need to demonstrate that they satisfy the city's eligibility criteria via an application process. Properties in the Commercial Residual or the Industrial property tax classes must meet the following criteria in order to qualify:
§ 767-35 Qualifying Properties
All or a portion of a Property1 qualifies for inclusion in the Creative Co-location Facility subclass of the property tax class in which the Property is otherwise located, if:
- the Property has:
- a minimum net rentable area of 10,000 square feet and a minimum of 5 full time tenants that are Creative Enterprises2;
- is owned by the City, has a minimum net rentable area of 5,000 square feet and a minimum of 5 full time tenants that are Creative Enterprises; or
- has a minimum net rentable area of 5,000 square feet and a minimum of 40 full time tenants that are Creative Enterprises;
- a minimum of 51 per cent of the tenants of the Property are Creative Enterprises;
- Creative Enterprises occupy at least 51 per cent of the Property's net rentable area;
- a minimum of 12 cultural programs are offered free of charge to the public at the Property over a minimum of 10 months in each calendar year; and
- the Landlord has applied to the City for inclusion in one of the Creative Co-location Facility subclasses in the form and by the deadline required by the City.
§ 767-36. Portion of qualifying property that is within the Creative Co-location Facility Subclass.
The portion of a Property qualifying under § 767-35 that is eligible for inclusion in the Creative Co-location Facility subclass of the property tax class in which the Property is otherwise located, is the sum of Subsections A, B and C as follows:
- All space occupied by the Landlord for non-commercial activity up to a maximum of 10 per cent of the total net rentable space;
- All leased space that meets the following criteria:
- Is leased to a Creative Enterprise for a minimum term of 5 years, or has been occupied by a Creative Enterprise for a continuous period of 5 years prior to application;
- The Creative Enterprise occupies the leased space for the purpose of providing the services of a Creative Enterprise;
- The lease requires the tenant to pay rent at a Below Average Market Rent3 level; and
- The Landlord or a group of tenants provides at least two of
subsections (a) through (f) to the tenant:
- free use of meeting or conference space;
- free or subsidized use of office equipment;
- consolidated buying power for office and other supplies;
- access to free professional development and training or access to subsidized accredited professional services such as accounting or legal services;
- co-ordinated support for public programming; and
- co-ordinated marketing initiatives or shared security, cleaning, reception, mail or catering services.
- The proportion of the common space and shared elements of the Property which is in the same proportion as the leased space identified in Subsection B is to the total net rentable area of the Property.
The General Manager, Economic Development and Culture is delegated the authority to review and accept applications for inclusion in the Creative Co-location Facilities subclass. If it is determined that a property is eligible for inclusion in one of the Creative Co-location subclasses, then the property will be included upon enactment of a by-law by city council specifying that the property is so included for the calendar year.
Property owners of culture hubs and creative spaces are advised to review the criteria mentioned above to determine if they qualify for the new property tax reduction.
1 Property is defined as a property that is in the Commercial Residual or the Industrial property tax classes.
2 Creative Enterprises are defined as entities that produce cultural goods or services as defined by the Canadian Framework for Cultural Statistics.
3 Below Average Market Rent is defined as net rent that is at least 30 per cent lower than the average market net rent for a similar space in a similar neighbourhood, and is 30 per cent below the net rent paid in the same property by tenants that are not Creative Enterprises.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.