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East Bayfront: Bayside (Waterfront Toronto/Hines/Tridel, Pelli Clark Pelli et al)

Glen said:
The commercial rates are the same across the city. What is different is what percentage of the full assessment value they pay. Instead of paying the full tax amount (mill rate * assessment value), properties had what is called capping protection. Basically this meant that since 1998 the move to full CVA was capped to 5% per year. New properties get taxed at the full rate. This is why in Toronto you find most areas have a difficult time supporting new retail and commercial space. The tax rates are to high. Developers are tired of being forced to replace commercial floor space when commercial buildings are converted into condos, as the tax burden makes them unprofitable.

By the year 2015 all properties in Toronto will be taxed at the full CVA rate. With few exceptions, most retail strips/streets in Toronto will be under huge pressure to convert to non commercial use. This will prove to be a disaster to the city's finances. The Duke's example that I like to point out is indicative. Despite being on one of the most viable retail streets in Toronto, the taxes are a major impediment to the development of retail/commercial space. Even the calculations the city used in its reports underpaly the potenital impact.

The old building was paying property tax of (commercial portion) $8,671 per year, based on a 2008 CVA assessment of $654,975. This amount was only 32.6% of the full tax rate, as it was protected by a cap. Unprotected the tax would climb to $ 26,598 per year. The cap was set to diminish over the years until 2016 when all properties in Toronto would be taxes at the full CVA rate. Now, with the building destroyed, any new building will face paying taxes at the full CVA rate. As such the viability of the commercial space is in question.

Councillor Adam Vaughan has been working diligently to help address the difficulties in the redevelopment of these properties. This is what he found….

†Through the process of working with the six property owners of these buildings in the aftermath of the fire, I have discovered that any new buildings constructed on the fire site would pay property taxes at the full CVA rate, and would be ineligible for capping protection. The reality of the significant tax increases facing these property owners threatens the viability of redeveloping these properties with street-related commercial uses. The longer the fire site remains vacant, the more severe the social and economic impacts facing Queen West and the broader neighbourhood become. This is why it is in the City’s interest to facilitate a timely and appropriate replacement of the lost fabric of this street. â€

Think about this. It is not viable to rebuild commercial space on Queen West, on land that is already owned. If the redevelopment of these properties had included the need to purchase the land also, it would have only compounded the problem and made it even more un-viable. The added cherry on top is that the calculation of the new tax burden were based on the 2008 MPAC assessments. In the case of Dukes cycle (623-625 Queen St. West) it was woefully under-assessed. The 2008 assessment has these properties valued at $ 654,975.00. As someone who is very familiar with the area, this assessment does not reflect the market. The Cameron house, a much smaller building of similar age is currently listed for more than 2 million. In light of this it is fair to say that being un-viable at a full CVA tax rate of $ 26,598 per year, think about what might happen with a more realistic assessment. If the commercial portion of the assessment was updated to a more realistic 1.5 million, the taxes would rise to more than $60,000 per year.


What makes anyone believe that Bayside will be able to support the retail/commercial developments proposed. Look to Bremner Blvd. to see what to expect. Bonnycastle St. is going to be two floors of empty retail as opposed to the Toronto norm of one.
Click to expand...

Thanks Glen!

Why even mention Bayside? ... according to your information all properties across the city will face this issue by 2015 and bayside will likely only be complete by then. So this is a city wide issue in that case, I take it that means only high end / retails chains will not be effected (only in the sense that they can swallow the increase) ... honestly bayside is irreverent here, what about all the other retail outlets across the city (many of which are in strip malls and the like probably get way less foot traffic and sale potential then bayside it self which if taxed at the full rate have even less chance then bayside from surviving).

Anyway what plans does the city have to tackle this ? I know the province is equalizing the business education tax rate across Ontario (in particular for Toronto, which pays more for no reason) so this will help a little bit but what about Toronto's own taxes?
 
taal said:
Thanks Glen!

Why even mention Bayside? ... according to your information all properties across the city will face this issue by 2015 and bayside will likely only be complete by then. So this is a city wide issue in that case, I take it that means only high end / retails chains will not be effected (only in the sense that they can swallow the increase) ... honestly bayside is irreverent here, what about all the other retail outlets across the city (many of which are in strip malls and the like probably get way less foot traffic and sale potential then bayside it self which if taxed at the full rate have even less chance then bayside from surviving).

Anyway what plans does the city have to tackle this ? I know the province is equalizing the business education tax rate across Ontario (in particular for Toronto, which pays more for no reason) so this will help a little bit but what about Toronto's own taxes?
Click to expand...

You are correct that this issue is not specific to Bayside. I brought up the issue because once again we are given plans, yet it is unrealistic to expect that they will pan out. Will the condo be developed, yes. The offices, maybe. The retail space, maybe but occupied probably not. I like the look of the plans, it is that I doubt they will develop as planned.

While Mayor Miller may frequently comment that he is lowering business taxes, what he is really doing is raising them slower than residential. On top of that, the majority of small businesses in strip retail still face the yearly tax cap claw back. Meaning their taxes increase by 5% per year before any budgetary increases. By 2015 expect may commercial shopping streets in Toronto to be full of boarded up stores.
 
Glen said:
The commercial rates are the same across the city. What is different is what percentage of the full assessment value they pay. Instead of paying the full tax amount (mill rate * assessment value), properties had what is called capping protection. Basically this meant that since 1998 the move to full CVA was capped to 5% per year. New properties get taxed at the full rate. This is why in Toronto you find most areas have a difficult time supporting new retail and commercial space. The tax rates are to high. Developers are tired of being forced to replace commercial floor space when commercial buildings are converted into condos, as the tax burden makes them unprofitable.

By the year 2015 all properties in Toronto will be taxed at the full CVA rate. With few exceptions, most retail strips/streets in Toronto will be under huge pressure to convert to non commercial use. This will prove to be a disaster to the city's finances. The Duke's example that I like to point out is indicative. Despite being on one of the most viable retail streets in Toronto, the taxes are a major impediment to the development of retail/commercial space. Even the calculations the city used in its reports underpaly the potenital impact.

The old building was paying property tax of (commercial portion) $8,671 per year, based on a 2008 CVA assessment of $654,975. This amount was only 32.6% of the full tax rate, as it was protected by a cap. Unprotected the tax would climb to $ 26,598 per year. The cap was set to diminish over the years until 2016 when all properties in Toronto would be taxes at the full CVA rate. Now, with the building destroyed, any new building will face paying taxes at the full CVA rate. As such the viability of the commercial space is in question.

Councillor Adam Vaughan has been working diligently to help address the difficulties in the redevelopment of these properties. This is what he found….

†Through the process of working with the six property owners of these buildings in the aftermath of the fire, I have discovered that any new buildings constructed on the fire site would pay property taxes at the full CVA rate, and would be ineligible for capping protection. The reality of the significant tax increases facing these property owners threatens the viability of redeveloping these properties with street-related commercial uses. The longer the fire site remains vacant, the more severe the social and economic impacts facing Queen West and the broader neighbourhood become. This is why it is in the City’s interest to facilitate a timely and appropriate replacement of the lost fabric of this street. â€

Think about this. It is not viable to rebuild commercial space on Queen West, on land that is already owned. If the redevelopment of these properties had included the need to purchase the land also, it would have only compounded the problem and made it even more un-viable. The added cherry on top is that the calculation of the new tax burden were based on the 2008 MPAC assessments. In the case of Dukes cycle (623-625 Queen St. West) it was woefully under-assessed. The 2008 assessment has these properties valued at $ 654,975.00. As someone who is very familiar with the area, this assessment does not reflect the market. The Cameron house, a much smaller building of similar age is currently listed for more than 2 million. In light of this it is fair to say that being un-viable at a full CVA tax rate of $ 26,598 per year, think about what might happen with a more realistic assessment. If the commercial portion of the assessment was updated to a more realistic 1.5 million, the taxes would rise to more than $60,000 per year.


What makes anyone believe that Bayside will be able to support the retail/commercial developments proposed. Look to Bremner Blvd. to see what to expect. Bonnycastle St. is going to be two floors of empty retail as opposed to the Toronto norm of one.
Click to expand...

Holy Crap. That seems to make a whole lot of sense too.
Thanks for the information on that front!
 
Glen said:
You are correct that this issue is not specific to Bayside. I brought up the issue because once again we are given plans, yet it is unrealistic to expect that they will pan out. Will the condo be developed, yes. The offices, maybe. The retail space, maybe but occupied probably not. I like the look of the plans, it is that I doubt they will develop as planned.

While Mayor Miller may frequently comment that he is lowering business taxes, what he is really doing is raising them slower than residential. On top of that, the majority of small businesses in strip retail still face the yearly tax cap claw back. Meaning their taxes increase by 5% per year before any budgetary increases. By 2015 expect may commercial shopping streets in Toronto to be full of boarded up stores.
Click to expand...


Does the retail rate vary from the office rate by much btw, doesn't seem like it from?
http://www.toronto.ca/taxes/property_tax/tax_rates.htm

One question though, there have been new developments with retail that are doing fine - I can point out examples in NYCC for example, are these being taxed in full? Maybe there's enough pedestrian activity in these locations to allow these operations to handle the high rate - but most of these are mom and pop setups ... pretty high turnover in a lot of these though so I do think they really need to do well.

Sorry but any idea regarding the provincial education tax rate? I can't really find any information other then it was suppose to be reduced (by 2014 or so) - it's not a Toronto wide thing it's across Ontario but it effects Toronto the most ... yet there's no mention of Toronto specifically - will it equalize our rates with the 905?
 
taal said:
Does the retail rate vary from the office rate by much btw, doesn't seem like it from?
http://www.toronto.ca/taxes/property_tax/tax_rates.htm

One question though, there have been new developments with retail that are doing fine - I can point out examples in NYCC for example, are these being taxed in full? Maybe there's enough pedestrian activity in these locations to allow these operations to handle the high rate - but most of these are mom and pop setups ... pretty high turnover in a lot of these though so I do think they really need to do well.

Sorry but any idea regarding the provincial education tax rate? I can't really find any information other then it was suppose to be reduced (by 2014 or so) - it's not a Toronto wide thing it's across Ontario but it effects Toronto the most ... yet there's no mention of Toronto specifically - will it equalize our rates with the 905?
Click to expand...

There is no retail rate. Just the classifications in the link that you provided.

WRT NYCC, Yes there are some pockets of ground floor retail that appear to be doing OK, and these are paying the full rate. Though they are probably valued at <$200 per sq. ft.. The relativ3e success of this area may be misleading though. There has certainly been a decline in the nieibhorring area so they might have beneifited from a shrinking base of competitors. Add to that the entrapernural spirit of the communities in the area.

Keep in mind that just because they are occupied does not mean such development is succsessful. Most GFR is sold below cost. Developers were asking the Planning and Growth committe last week for some flexability in having a requirement to replace commercial floorspace when new developments occur on commercial sites (like shopping plazzas). Even the city's Mid-Rise synposium and Avenues studies have examined and propsoed tax breaks for GFR to be viable.

On the final issue, yes the province has been screwing Toronto with a hihgher education tax rate for years now. There is plan in place to equalize the rate (IIRC at 1.6%) province wide over a few years.
 
Glen said:
There is no retail rate. Just the classifications in the link that you provided.

WRT NYCC, Yes there are some pockets of ground floor retail that appear to be doing OK, and these are paying the full rate. Though they are probably valued at <$200 per sq. ft.. The relativ3e success of this area may be misleading though. There has certainly been a decline in the nieibhorring area so they might have beneifited from a shrinking base of competitors. Add to that the entrapernural spirit of the communities in the area.

Keep in mind that just because they are occupied does not mean such development is succsessful. Most GFR is sold below cost. Developers were asking the Planning and Growth committe last week for some flexability in having a requirement to replace commercial floorspace when new developments occur on commercial sites (like shopping plazzas). Even the city's Mid-Rise synposium and Avenues studies have examined and propsoed tax breaks for GFR to be viable.

On the final issue, yes the province has been screwing Toronto with a hihgher education tax rate for years now. There is plan in place to equalize the rate (IIRC at 1.6%) province wide over a few years.
Click to expand...


What about Toronto it self ... it does have a plan in place:
http://www.toronto.ca/finance/tax_policies.htm

I'm sure you're aware of the details so I won't mention anything in particular other then there is no plan to lower rates ... only to equalizes them over time by razing residential tax rates more ... so in 10-15-20 ...

Now, it also states any new construction ... I think this is for offices, will get tax breaks as well which are more in line with what the reduced rates would be eventually?
 
Last edited:
taal said:
What about Toronto it self ... it does have a plan in place:
http://www.toronto.ca/finance/tax_policies.htm

I'm sure you're aware of the details so I won't mention anything in particular other then there is no plan to lower rates ... only to equalizes them over time by razing residential tax rates more ... so in 10-15-20 ...

Now, it also states any new construction ... I think this is for offices, will get tax breaks as well which are more in line with what the reduced rates would be eventually?
Click to expand...

The plan to lower commercial property taxes in Toronto ( ETBC program) will not 'equalize' taxes. The end point is 2.5x residential. It is often repeated that this will bring Toronto's non residential taxes in-line with the 905 average, which is false. To say this the city took Toronto's very low residential tax rate at the beginning of the program and multiplied it by 2.5, which equaled the current rate (at the time) of the 905 average. Conveniently ignored was the fact the the residential rate will have to rise to pay for it. At the end of the program Toronto will still not be competitive. This might not have to much effect for class 'A' office space development in the CBD, it will still prove to be too little too late for the rest of the city. Toronto's already too high unemployment rate of 10.7% will continue to climb and the city will, most likely, spend another generation missing out on economic expansion.
 
Sorry for the tax talk, but the reality is is that the plans as shown will not be viable because of the tax. They might has well have provided renders of a palm tree filled park. Planning cannot take place in a vacuum.
 
CITY COUNCIL APPROVES WATERFRONT TORONTO’S BAYSIDE
DEVELOPMENT PROJECT


Toronto, August 27, 2010 – Toronto City Council has overwhelmingly approved Waterfront Toronto’s selection of premier international real estate firm Hines to develop a prominent waterfront site minutes from downtown. The sale and lease agreements for the city-owned parcel were brought to City Council on the recommendation of Waterfront Toronto following a competitive two-stage bidding process.



The Hines plan will transform the Bayside development site into an active and diverse mixed-use community connected by major parks and public spaces. Complete with 1,700 homes, a bustling main street and office and employment space for 2,400 jobs, Bayside is the single largest parcel of land to be developed by Waterfront Toronto.

“Today’s approval is a huge milestone not only for waterfront revitalization but for the City of Toronto,†said John Campbell, President and CEO of Waterfront Toronto. “With Hines, we can now move forward with reconnecting the city to the waterfront by building a liveable, walkable, community defined by beautiful parks and public spaces.â€

Backed by an $800 million private sector investment, the Bayside development will result in approximately $1.6 billion in total economic activity and $20 million in development charges for the City of Toronto. To promote lasting economic development, Bayside is being targeted as an employment hub on the waterfront, particularly for knowledge-based industries such as information and communication technology companies and the creative sector.


The new neighbourhood, located on a 4 hectare (10 acre) site between Lower Sherbourne and Parliament Streets, is expected to be constructed in phases with first occupancy of buildings and completion of new public spaces as early as 2014. The entire project is expected to be completed by 2021.



"We are delighted with City Council's approval and to be working with Waterfront Toronto in creating a dynamic new live/work/play neighbourhood on the harbour,†said Avi Tesciuba, Hines vice president of Canadian operations. “Bayside is an extremely important development for Hines, and we look forward to the excitement of bringing the vision to fruition."





Hines assembled an internationally renowned design team led by luminary architects Cesar Pelli, Fred Clarke and Stanton Eckstut to develop its plans for Bayside. The plans will deliver a vibrant new neighbourhood built on a human scale, with mews and small streets that promote a sense of closeness and community all year round. The neighbourhood’s main street — Bonnycastle Street — will draw visitors from across the city and will provide connections to neighbouring public spaces, including the soon-to-be-completed Sherbourne Common, Queens Quay linear park, and the Water’s Edge Promenade.



The Bayside development is an integral part of the remarkable transformation already well underway in the new East Bayfront precinct that Waterfront Toronto is developing. Employees have now moved into the area’s first commercial building, Corus Quay, the new headquarters of Corus Entertainment. Construction is well underway on George Brown College’s new state-of-the-art Health Sciences Campus. Canada’s Sugar Beach and the first stretch of the Water’s Edge Promenade are now open and next month Waterfront Toronto will open Sherbourne Common, the area’s other major new park.

The Governments of Canada and Ontario and the City of Toronto created Waterfront Toronto to oversee and lead the renewal of Toronto’s waterfront. Public accessibility, design excellence, sustainable development, economic development and fiscal sustainability are the key drivers of waterfront revitalization.


-30-


High-resolution renderings and a project animation video are available for download at http://news.waterfrontoronto.ca/

To learn more about the developer and design teams:
www.hines.com/canada/bayside
www.pcparch.com
www.eekarchitects.com
http://adamson-associates.com
 
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