What is the test to meet in Ontario when only a portion of a
commercial building is vacant? Does the space have to be separated
by walls? Does it have to be empty? Not necessarily on both counts.
It all depends on the facts and, a word of advice, take photos to
document the vacant state.
Vacant unit rebate applications for the 2013 tax year are due
February 28, 2014. The vacant unit rebate program is found under
Section 364 of the Municipal Act, 2001, S.O. 2001, c.25
and Section 331 of the City of Toronto Act, 2006, S.O.
2006, c.11. To qualify, the vacant space must be "eligible
What is "eligible property"? Section 1(2) of O.Reg
325/01 under the Municipal Act, 2001 and Section 38 (2) of
the O. Reg. 121/01 under the City of Toronto Act, 2006
defines what is "eligible". In the case of a partially
vacant commercial building. These sections provide that:
"a portion of a building on property that is classified in
one of the commercial classes is prescribed to be eligible property
under section 364/[or 331] of the Act for a period of time if the
period of time is at least 90 consecutive days and through the
period of time:
the portion of the building was not used and was clearly
delineated or separated by physical barriers form the portion of
the building that was used; and
the portion of the building
was capable of being leased for immediate occupation,
was capable of being leased but not for immediate occupation
because it was in need of or undergoing repairs or renovations or
was under construction, or
was unfit for occupation."
The phrase "clearly delineated" was addressed in the
2008 Ontario Assessment Review Board ("Board") decision
in L. Corso (Audia Court) Investments Ltd. v. Municipal
Property Assessment Corp., Region No. 14,  O.A.R.B.D.
No. 292. The Board found that where two industrial plants were
within the same building but not separated by walls, Plant A and
Plant B, they were clearly delineated by the design, layout, column
sizes and number of bays. In this case the photos and architectural
plans in evidence showed a clearly delineated space between the
occupied Plant A and vacant Plan B. The architectural plans showed
a narrow space or dividing line between the 17 inch columns of
Plant A and the 10 inch columns of Plant B, which clearly outlined
each plant. The Board found that the narrow "space (or
dividing line) starts from the wall of the office at the front and
runs all the way back to the back of the plant, clearly
differentiating the two plants and supporting the definition of
The matter of whether or not space was capable of being leased
was considered by the Board in 2013 in Manheim Auto Auctions
Ltd. v. Municipal Property Assessment Corp., Region No. 19,
 O.A.R.B.D. No. 178 where workstations were dispersed here
and there through the administrative offices. The Board found that
"the appellant failed to prove ... that the vacant space is
available or eligible for lease" and that while "making a
good case that the space was empty and unused, failed to persuade
that there was a real opportunity to lease the space to
anyone". At para. 23 the Board stated that "being
available for lease is not the same as being appropriate for
lease." In this particular case, given the nature of location
of the dispersed workstations, the Board asked itself the following
question; "what company, regardless if they are automotive
based or not, would lease the available space in this instance?
There would be no coherence or semblance of order, with employees
spread out and intermingled with the appellant's
employees." There is one troubling paragraph in
Manheim. Para. 31 seems to suggest that the Board required
the owner to actively market the space for lease. This, however, is
not a requirement under the relevant legislation.
In the 2011 decision in Vaspan Developments Ltd. v. London
(City),  O.A.R.B.D. No. 294 the Board dealt with a case
where the City of London denied a vacant unit rebate application on
the basis that there were fixtures and chattels that remained on
site. The Board found that "the word vacant refers to whether
the property or portion of the property is being used. If the owner
is not using the property for its own purposes and it is available
for lease to tenants, in the Board's view that property is
vacant. The Board does not read the Act or the regulation to mean
'without contents or empty'." The Board went on to
state that it "does not interpret the Legislation enabling a
vacant unit rebate and the accompanying regulations to force an
owner to do what is not reasonable and empty the unit of such
valuable chattels in order to qualify for the program."
Russell v. Township of Georgian Bay provides a useful reminder of the fact that while municipal officials sometimes appear to hold all of the cards in disputes with home owners, that is not always the case.
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