An Act to amend the Income Tax Act (rehabilitation of historic property)

Sponsor

Peter Van Loan  Conservative

Introduced as a private member’s bill. (These don’t often become law.)

Status

In committee (House), as of March 23, 2017

Subscribe to a feed (what's a feed?) of speeches and votes in the House related to Bill C-323.

Summary

This is from the published bill. The Library of Parliament often publishes better independent summaries.

This enactment amends the Income Tax Act to establish a tax credit for expenses related to the rehabilitation of a historic property. It also establishes a tax deduction for the capital cost of property used in the course of such a rehabilitation.

Elsewhere

All sorts of information on this bill is available at LEGISinfo, provided by the Library of Parliament. You can also read the full text of the bill.

Votes

March 23, 2017 Passed That the Bill be now read a second time and referred to the Standing Committee on Environment and Sustainable Development.

October 3rd, 2017 / 5 p.m.
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NDP

Wayne Stetski NDP Kootenay—Columbia, BC

Just to clarify, Bill C-323 just talks about heritage properties, so I guess at some point we'll get into a discussion about private residences versus commercial, if we go there.

Mr. Archambault, I'll ask you the same question. What is the number one thing that we could recommend to help heritage in Canada from your perspective?

October 3rd, 2017 / 4:55 p.m.
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NDP

Wayne Stetski NDP Kootenay—Columbia, BC

Thank you, Madam Chair.

I have three questions for you, Mr. Eisenberg, if I can. We're looking at Bill C-323, which is looking at providing tax credits for private residences to encourage preservation of heritage. Tax credits always cost the government money. One of the things I've been thinking about is whether we should potentially cap the amount an individual can claim for a tax credit. It could be $50,000, it could be $100,000, or perhaps you could have it linked to income testing. I'm curious as to whether a person who is a millionaire and who owns a million-dollar heritage home actually needs a tax credit.

I'm interested in your view on, first, that concept of tax credits, and second, who it should apply to.

October 3rd, 2017 / 4:05 p.m.
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Executive Director, The Canadian Heritage of Quebec

Jacques Archambault

I am sorry, my presentation really was very short.

The first point is about Bill C-323, which proposes tax incentives for private owners. Measures like that would encourage and help a lot of people. The measures should be widely available to all private owners of heritage properties, such as houses, mills, lighthouses or industrial buildings.

Ten or so years ago, a federal government program provided assistance for renovating houses. I was able to take advantage of it and it helped me a lot. If a similar program could be established for heritage houses, that often cost two to four times more than a normal house, it would be a great help.

If they do a quick calculation on the return on investment, real estate developers have little incentive to preserve a heritage house. We have even seen a number of cases in Quebec where they have deliberately been made to disappear. If they could have financial or tax incentives, real estate developers would realize, when they did the math, that it may be advantageous to incorporate a heritage building into their real estate projects or to preserve it.

The idea of historic or heritage property has to be broadened beyond the list in the Canadian Register of Historic Places. The list is very helpful, but it is not complete because it does not include certain buildings.

The department could become a leader in supporting heritage by working together with the various levels of government to establish things like tax incentives. Heritage Montreal, with the appropriate ministry in Quebec, has been working for 10 years to create tax incentives along the lines of the examples in the United States. The National Trust for Canada has also been working on it for a long time.

So other departments must be encouraged to safeguard heritage, but also municipalities, which derive tax revenue from new projects. Clearly, a heritage building brings a municipality much less in taxes than 100 condos in a single building. So all levels of government must support those who are working to safeguard our heritage.

This year, Parks Canada's national cost-sharing program for heritage places has been given $10 million. We have gone from nothing to $1 million and now to $10 million. That is a help, but, one day, we are going to have to stabilize that funding because a lot of people involved with heritage buildings in Canada need support.

Organizations that raise funds also have to be supported. In Canada, fundraising initiatives to preserve natural sites, and other places, have matching gift programs. Natural sites are our natural heritage. If there were similar programs for cultural heritage, it would help organizations like ours that have to raise funds to pay for restoration projects costing hundreds of thousands of dollars, even a million.

The gifts we receive are $30 and $35 at a time. A quick calculation makes you realize that we need a lot of $30 and $35 gifts to raise hundreds of thousands of dollars. It means contacting a lot of people.

In Canada, organizations are putting a lot of effort into conserving heritage buildings, but they are not being recognized. Even in Quebec's Cultural Heritage Act, those organizations are not mentioned. However, a number of organizations like ours are working to conserve heritage buildings and support other owners in their conservation efforts.

In broad terms, those are the points I wanted to bring up. I hope I have given you enough detail.

October 3rd, 2017 / 3:50 p.m.
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Jacques Archambault Executive Director, The Canadian Heritage of Quebec

Good afternoon.

First of all, I would like to thank the members of the committee for the invitation and for giving me the opportunity to discuss the status of heritage conservation in Canada.

I am here to make a brief presentation on heritage in Quebec and to provide suggestions from our organization. The organization is called The Canadian Heritage of Quebec, or CHQ. It is a provincial non-profit and non-governmental organization at the service of heritage in Quebec for more than six decades, more than 60 years.

In those 60-plus years since 1956, the volunteers on our board have been working to preserve about 30 heritage buildings and natural sites in Quebec. In the past, we had some in Ontario. Most of our properties were bought with money from our volunteers or our founders.

The conservation work is done with the equivalent of one and a half employees, a miller, and, of course, many volunteers and artisan-caretakers. We also have partnerships with local, regional, provincial, and even national groups, like the Nature Conservancy of Canada.

The long-term conservation of the CHQ properties is made possible by various heritage protection initiatives, both tangible and intangible, implemented by municipal, provincial or federal governments. For us, that includes a national historic site and a building in Westmount. In other cases, the long-term conservation of CHQ properties is done directly by our organization, to the extent we are able. But, unfortunately, we are running up against serious limitations. In Quebec, there is no mutual servitude to protect for owners, as is the case in Ontario.

CHQ receives no ongoing grants for our annual operations, but we do take advantage of the Young Canada Works program, which allows us to hire two summer students, in two of our 16 properties. Mainly, we fund our conservation activities through donations from the public, from foundations, and from income that we generate ourselves by selling flour from our mill, and by renting out our houses during the summer season, such as Sir John A. Macdonald's summer home in Rivière-du-Loup, which we turn into tourist accommodation for two months per year. The house was officially designated a national historic site in 2015. Some of our sites are also open to the public on payment of a small entry fee.

Conserving heritage buildings is becoming more and more difficult, expensive and complicated. This is the result of requirements and constraints on the owners from government legislation and regulations involving various ministries and sometimes different levels of government.

Restoration projects are very expensive for us, costing hundreds of thousands of dollars, even a million dollars. Sometimes, we receive grants for some restoration projects from the Quebec ministry of culture and communications, sometimes as a joint venture with major cities like Montreal. In theory, in some cases, those grants can cover 40% or 50% of the construction costs, but in fact, the overall cost is much higher, meaning that the percentage of the grant, at its highest, drops to more like 30% and 35%. The percentage also varies depending on the amounts available in the program.

I must mention that, in recent years, we have also obtained some grants for certain development projects, coming either from provincial or federal level, one of which was for a virtual exhibition on Sir John A. and Lady Macdonald. We appreciate that a great deal and are grateful to the Department of Canadian Heritage for it.

Nevertheless, the result is that the CHQ has to resort to fundraising in order to find the hundreds of thousands of dollars we need for our restoration and development projects. That is very difficult and requires years of work, since fundraising is a highly competitive market. This is not to mention that, in the recent past, certain actions on the part of the provincial government have caused us to lose tens of thousands of dollars in revenue, with additional losses already anticipated in the coming years.

In addition, the complexity, the work required, the short timelines and the costs needed to apply for grants has, on a number of occasions, deterred us from starting the process, since the anticipated result was less than convincing. That was the case with the John A. Macdonald House and Parks Canada's national cost-sharing program for heritage sites. In 2015, the entire envelope was $1 million for all of Canada with a maximum of $200,000 per project. Our restoration project was estimated at $200,000 and, according to the department's official, we needed a project with demonstrated urgency, in a very competitive, Canada-wide situation. We also had to ask professionals to prepare research, analyses, reports, plans and estimates, all for a grant that would probably be less than $5,000. Moreover, at that point, it seemed that very few projects would receive the 50% maximum that the program indicated. It turned out to be less than that.

By good luck, by help from a volunteer member of our board, and by virtue of our fundraising efforts, we were able to get some significant donations from some donors and, after a few years, we were able to complete a first phase of the project. Today, we still have to find more than $100,000 so that we can finish it. This is only one building from the 25 that we own.

All that fundraising activity, stretched over a number of years, threatens the proper conservation of the buildings in the medium and long term. Sometimes, it even exacerbates an existing problem and makes it more expensive to fix. So preservation, building maintenance or upkeep, is crucial in the process of conserving a building.

There is no support for that, no grants. What is more, our craftsmen, whom we call our “artisan-caretakers” can no longer do all the work required, because of new government regulations.

So the costs of preservation have doubled or sometimes tripled in the last three years. However, preservation is what prolongs the life of the building and reduces restoration costs. It all complicates our work and our mandate to conserve the built heritage. We often have to choose between investing in conservation or in development.

Faced with that complex situation, and after more than 60 years in existence, our organization began a strategic review of its properties at the beginning of 2017, in order to decide which would be kept and which would be disposed of, sold or transferred, if that is possible, to other institutions, organizations or individuals.

Let us now look at the dynamics of conservation in Quebec. In recent years, a number of heritage buildings have been demolished by property developers to make room for new housing projects, condos, or commercial buildings. There are few incentives to encourage those developers to conserve and incorporate heritage buildings into their development projects. Some financial assistance could encourage them to move towards conserving and rehabilitating heritage buildings.

For private owners, the situation is similarly difficult. A number of them want to conserve the heritage value of their property, to preserve it, to rehabilitate it and to restore it for the benefit of the community—it may be houses, mills, lighthouses, or industrial buildings. However, once more, the high costs of restoration, added to the complexity of grant applications, are deterring them.

So they must also be encouraged in their desire for conservation by financial assistance. The added market value of a restored house has not been proven; the opposite even seems to be the case, at times.

In Quebec, a number of non-profit organizations are trying to support, encourage and guide private owners in good conservation practices. Those organizations are sorely lacking in resources and basically count on volunteers, thereby limiting their mission and their activity. In the last three years, the few grants that some of them were receiving in operating assistance have been cut, making the situation even more critical.

In fact, our organization regularly receives calls from the public and, sometimes, from organizations, including municipalities, looking for support so that their heritage buildings can be conserved.

In 2012, the Cultural Heritage Act was passed in Quebec, transferring to municipalities and to the public more responsibility for safeguarding the heritage, but without the resources and the expertise required. So today, the organizations are called on more than previously to conserve the heritage.

Three years ago now, a dozen or so organizations established the Table de concertation des acteurs nationaux en patrimoine bâti du Québec, in order to discuss their challenges and their common issues, and to provide each other with mutual support. Next November 1, the first national summit on Quebec's built heritage will be held in Montreal, and you are all cordially invited.

I will now provide you with some observations and suggestions for encouraging owners, organizations and individuals. The federal government could implement a tax incentive, as in Bill C-323. That initiative should apply to all private owners by extending it to property developers. The notion of historic or heritage property should be expanded, without simply relying on the lists in the Canadian Register of Historic Places. Your department should become a leader in supporting heritage in the various communities across Canada. The amount available in the national cost-sharing program for heritage sites should be increased and stabilized in the coming years. A program should be developed to support and participate in multiplier effects—by which I mean the matching of donations—for organizers and individuals raising funds for heritage. They should be encouraged and supported by formally recognizing the efforts of, and the considerable role played by, non-profit and non-governmental organizations and private owners. Finally, recognize the preservation of built heritage with a specific horizontal status through all federal departments, perhaps also in concert with the provinces and territories. All this would ease the important work being done for Canada's heritage and would act as an anchor for the concept of Canadian identity.

Canadian heritage knows no provincial borders. That is actually the reason that our founders chose Canadian Heritage of Quebec for our organization's name.

Thank you.

ArchitectureStatements by Members

October 2nd, 2017 / 2 p.m.
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Conservative

Peter Van Loan Conservative York—Simcoe, ON

Mr. Speaker, today marks World Architecture Day. Architects make the framework of our lives and architects dream the future of where we live, work, and play. When architects dream well, their work becomes part of the story of our lives.

Preserving our built heritage benefits all Canadians. That is why I introduced Bill C-323, which would create a tax incentive for Canadians who restore and rehabilitate their heritage properties. This bill has the support of the Royal Architectural Institute of Canada, which said it was good news and an opportunity for all members of all political parties to support the retention of Canada's historic buildings.

Canadians care about outstanding architecture around them. We are worse off when magnificent buildings are demolished or neglected. We now have an opportunity to support Canadians working to preserve historic buildings so they can be enjoyed by generations to come.

On World Architecture Day, I encourage all members to help preserve our built heritage and support Bill C-323

September 28th, 2017 / 10:15 a.m.
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NDP

Wayne Stetski NDP Kootenay—Columbia, BC

That would be great.

I have a quick question for you, Mr. Smith. Did you say that the tax credit should focus only on income-producing properties, or don't forget income-producing properties when we come to Bill C-323?

September 28th, 2017 / 9 a.m.
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Chris Wiebe Manager, Heritage Policy and Government Relations, National Trust for Canada, As an Individual

Sure.

Thank you very much for this opportunity, and thank you for your interest in historic places. The heritage field is diverse, with different ownership circumstances, and the threats and potential solutions are various. I can see that you are grappling with the question of where the federal government can make the greatest difference.

This morning I want to hone in on two areas that haven't really been explored as much in these hearings. Those are commercial heritage properties and properties owned by charities and non-profits. To assist, I have provided a handout detailing some of the existing incentives, and I'll refer to that throughout my presentation.

There are 440,000 pre-1960 commercial buildings in Canada. If we assume that about 5% to 15% of these could potentially be of heritage interest, there would be 22,000 to 66,000 buildings in this class across Canada. This is a substantial group of community-defining buildings on Canada's main streets.

But why do they need incentives in the first place? What are the disincentives that hamper their survival? First let me run through a few of them. Return on investment: heritage rehabilitation is often considered risky because there are unknowns, unlike for construction on bare ground. Construction costs: while some heritage rehabilitation projects cost less, others cost more, and then these ambiguities serve to suppress demand. Then there's financing. The big banks for the most part do not want to be involved in “staged” investments and are not prepared for the risks that come with adapting older buildings. There's some discussion around rural areas, in that they will not invest in older buildings in smaller communities at all. The fourth reason is lack of ease of property development. Investors are often discouraged by real or perceived restrictions on altering heritage properties. Fifth, there is the current federal tax system itself, which presents problems, including the inability to get a clear explanation from tax officials about which types of rehabilitation work are immediately expensable in a given tax year and which must be capitalized. There are also new-construction biases within the GST rules themselves.

So are there good examples of places where incentives have tipped the balance away from these disincentives? As Julian and others have mentioned, in the United States there has been a booming and competitive industry over the past 40 years because of the establishment of federal tax credits there for the rehabilitation of heritage buildings at a 20% level. This program stimulates private investment in abandoned and underperforming properties. Over the years, $24 billion in credits have generated more than $28 billion in federal tax revenue, and leveraged $131 billion in private investment, an impressive number. This is a 5:1 ratio of private investment to tax credits, and it has created 2.5 million jobs and preserved 42,000 historic properties.

It's important to note that there has been tremendous rural impact from this program over the past 15 years. Over 40% of U.S. tax credit projects are located in communities with populations of less than 25,000.

If you refer to the chart I provided, the one with the five circles on it, you can see that the larger projects typically have a limited ratio of incentives available as a result of caps on programs. I've chosen the $2.2 million level for a commercial project because that was the average cost of the CHPIF, commercial heritage properties incentive fund, projects back in the mid-2000s.

By comparison, have a look at the pie on the right; with all three levels of government in the United States contributing, the picture is very different. Federal tax credits of 20% can be stacked with state credits for a combined 40% to 45%. You should note that 34 states out of the 50 have these stackable credits.

My consultation across the country has shown that it is on these larger projects, those of two and a half million dollars and things of that nature, that a tax credit is needed. For example, the Farnam Block on Broadway Avenue in Saskatoon was demolished in 2015. Repair costs were estimated at $700,000. The city was able to bring forward only $150,000, and the building came down. Or take something like the Calgary Brewing and Malting site, which is sort of like the Distillery District in Toronto in the making. It's languishing for lack of a substantial incentive to give it some velocity.

What can the federal government do? Essentially there are only two mechanisms for the federal government to intervene in the commercial property market, and those are income tax measures or grants and contributions. You've heard about the CHPIF fund and its success as a pilot program for a tax credit program. Analysis by Deloitte and Ernst & Young concluded that refundable tax credits would be more effective than would a grant program. A refundable tax credit offers a number of advantages to the private sector that a contribution program does not. It offers predictability and timeliness. Contribution programs often require more than double the time for approvals on the front end. It leverages existing familiarity with the tax system, creating investor confidence. It also offers flexibility: it works well for large or small projects.

Understandably, the potential cost of implementing a tax credit has been raised at this committee. Deloitte's analysis of the estimated cost of a historic rehabilitation tax credit in Canada found that, far from being a cost to government, these tax credits for commercial properties would create net revenue growth from corporate income tax, GST, and additional personal income tax stemming from new employment.

When we model for a universe of 22,000 commercial properties, we see that these tax credits cost $3.8 million in year two and $55 million in year five. However, these credits generate net revenue growth of $3.4 million in year two, rising to $14 million by year five. The modelling for a universe of 66,000 commercial properties follows a similar trajectory. For broader impact, the government could consider extending a rehabilitation tax credit to heritage homeowners, like that introduced by Bill C-323.

Let's shift quickly to not-for-profit and residential buildings. Tens of thousands of heritage buildings in Canada would not benefit from a tax-based measure because they are not used for revenue-producing purposes. Such heritage buildings include places of worship, historic house museums, and former residential schools.

If you look at the other side of my handout, with the three circles on it, you'll see a sample of incentives from a number of cities. Let me remind you that each of these shows the best-case scenario for grants or tax breaks, but these are often limited by annual budgets for granting programs, such as in Nanaimo, where there is a limited amount every year, and in Halifax, where there is the same situation. We wanted to be fair, so we wanted to have the best possible scenario there.

At current levels, these incentives are not game-changing or behaviour-changing. We are hearing that they are helping already-willing owners but not pushing others. You will notice that the federal government is missing from this incentives picture, and there is no dedicated fund for places outside of the national cost-sharing program for historic places, as these are only for national historic sites, including heritage railway stations and lighthouses.

Competition for mainstream federal funding is fierce. For example, the Canada 150 community infrastructure program requires not-for-profits with modest heritage projects to compete with those with projects for arenas, pools, and sports fields. Earlier this year, FedDev's website reported 1,100 applications, requesting more than $260 million in funding, for their first intake—almost six times more than the available funding. It's a difficult environment for heritage places to get heard in.

Here are the two things the federal government can do to ameliorate the situation for non-profit buildings. The first is to create a source of federal matching funds to leverage investment by other governments. Corporations and individuals could actually help encourage this kind of philanthropy. Funding could be distributed using modern approaches like crowdfunding, which is currently being used successfully by places like National Trust for Canada under the banner of This Place Matters. Over the past three years, the trust's investment of $300,000 has leveraged over $1.1 million in donations for heritage sites. Similarly, Save America's Treasures was a decade-long program in the United States that invested $318 million in federal funds to leverage $400 million from private sources, resulting in the preservation of 1,200 important historic structures and 16,000 jobs. There are also Canadian precedents for using federal matching funds in this way, including the Department of Canadian Heritage's existing matching donations program, which is restricted to endowment matching and for which only arts organizations are eligible, or the government's response to Syrian refugees or disasters and crises.

The second thing the government could do is to provide steady increased funding for the national cost-sharing program for heritage places. I think this has been mentioned on other occasions. The available funding has ranged from zero dollars for some years to as little as $1 million for other years. The current $10 million per year for this year and next year is an important piece of the puzzle, but there are more than 700 properties eligible, and many have been underfunded for decades, so $10 million per year is really a drop in the bucket. The program is already heavily oversubscribed, as Parks Canada mentioned the other day. By contrast, the Canada cultural spaces fund recently received $84 million a year for two years, so there's an order of magnitude there.

In summary, we would recommend the following. First, we would recommend implementation of a federal heritage rehabilitation tax incentive, such as the measures recently proposed in Bill C-323. That is a proven way to attract private and corporate investment to privately owned historic places and to give them vibrant new uses. Two, the government could consider extending a rehabilitation tax credit to heritage homeowners to get more impact. Three, federal investment in seed funding for creative financing mechanisms like crowdfunding could help many more charities and not-for-profits attract private donations and would save and renew some of the thousands of other heritage buildings that make up the fabric of our communities. Finally, an increase in federal cost-shared funding available for the national historic sites heritage places program would help turn the tide of neglect for these important national icons as well.

Thank you very much.

September 28th, 2017 / 8:50 a.m.
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Julian Smith Director, Centre for Cultural Landscape, Willowbank, As an Individual

Thank you very much, Madam Chair. It's an honour to be here.

I'm going to start with some images. The reason I use images is that I sometimes have a hard time explaining how much the field of heritage conservation has changed in the time I've been involved with it, which is now about 50 years.

Here is a drawing of the 1950s. The modernist movement was in full swing. This is when I grew up. This is a modern building and a modern floor plan. But this also shows the hierarchies that existed between blue collar and white collar; between elementary school, high school, B.A., M.A., Ph.D.; the legal system, with yes-no answers to questions; and all kinds of hierarchies that existed. There were the ideas of the nuclear family, the suburb, the prohibition in the U.S. against racial intermarriage, concerns about gay and lesbian couples, and so on.

This next image illustrates the 1960s, when you began to get grassroots movements, both on the left.... I'm using the yellow for the environmental field. People began to protest the loss of wetlands, and the use of DDT. There was Rachel Carson on the heritage side. On the blue side there was Jane Jacobs and The Death and Life of Great American Cities. It was the beginning, again, of a grassroots cultural heritage protection movement. Both environmental heritage and cultural heritage were very grassroots. They didn't fit the system; there were outsiders. This was coming, as I say, from communities.

Next is the 1970s and 1980s. This brings the introduction of heritage legislation and environmental legislation in all the provinces. Those two fields, the environment field and the heritage field, became part of the system. With the laws in place, you began to have lawyers who specialized in environmental law and in heritage law. You began to have B.A., M.A., and Ph.D. programs in environment and in cultural heritage. There was the idea of joining the system and becoming part of these boxes, shown here.

The boxes really also represent the university and the academic system, which classifies knowledge into disciplines and categorizes books in libraries; and also the museum world, which is all about objects and classifying and putting them into systems.

Next comes development in the 1990s, the idea of cultural landscapes, which really was a concern to UNESCO with the World Heritage List. They didn't know how to deal with sites that were important, both from a natural heritage point of view and a cultural heritage point of view. Cultural landscape ideas were about the relationship of people and the natural environment and about human habitat and a more holistic way. They didn't fit the model very well. I think first nations communities began to be much more a part of the conversation about heritage generally, and for them, this nature-culture distinction had always been a problem.

The idea of cultural landscapes really pushed the boundaries and pushed us, as I show in this next image, to I would say the 21st century. I spend all day with 20- and 30-year-olds at Willowbank, where I teach and where I've been the executive director for the last 10 years. This image shows a program for young people interested in questions of human habitat.

I'm going to stop there. I'll leave that image up.

I have some observations. I would say that young people are interested in this kind of ecological and more holistic approach to human habitat. They want to get over the culture-nature distinction, which is so Eurocentric and which has been such a barrier to coming to terms with sustainability. They want planning, development, and design approaches that respect traditional knowledge and existing patterns, and within those, to figure out how you add contemporary layers and levels without simply erasing everything that's there and starting over again.

They want to shift from a utopian view of the world, which is always about monocultures, to a more organic way of development that is more about diversity. They want to knit back together working with hands and working with the mind and overcoming this distinction between design and build, between blue collar and white collar, between intellectual activity...and also between apprenticeship and academic ways of learning. Not only are these people interested in this, but they're demanding it, because they see an urgency to coming to terms with questions of sustainability.

In terms of my observations or offerings to the committee, I would say a couple of things. I want to make reference to Bill C-323, which, in the slides, is back here. This is really a chance for Canada to catch up to where most other countries moved in the nineties, of saying, “We recognize built heritage as being fundamental.”

I would make two observations about it. One is that I would hope the emphasis, if there are tax credits, is on income-producing properties. Among the concerns that have been raised about somebody owning a beautiful historic home in Westmount or Rockcliffe or Shaughnessy or whatever is whether they should be getting a tax credit for work on that house. The idea that the U.S. adopted, that it should be for income-producing properties, has put the focus on tax credits for the rehabilitation of commercial buildings, of main streets in little towns, of urban neighbourhoods, abandoned industrial places. What the statistics show pretty clearly...and we recently completed a study for the UN Habitat Conference in Quito on the North American situation in terms of culture, heritage, and sustainability. Older districts with these older buildings have a richer texture to them. They provide 30% to 40% more employment per square metre of building, they have more minority owners, they have more women owners, they have more young people, they have more age diversity, they are more walkable neighbourhoods, and they have more public transit. These are areas that we need to understand and deal with, and there needs to be encouragement for doing so. It's in income-producing properties that you get the real swings in urban areas that are either going to allow places to continue to exist or not.

The other point I would make is that if you look at the American situation, since they've had so many years—and I'm sure you've heard the statistics about tax credits—you see that those tax credits generate so much other tax revenue. There are very few tax credit programs that have been so productive—seven to ten times the amount of private investment.

There are related things. Federal accommodation should happen in existing buildings, unless there aren't existing buildings available. Federal programs that support seniors housing and low-income housing should prefer existing buildings unless there are none available. This is something the U.S. has been doing for 40 years.

When I practised, very early in my career I was down in the U.S., in Massachusetts. If you wanted to do low-income housing, you had to look for old schools or old abandoned industrial buildings, because they tended to be in downtown areas with good public transit. When I came to Ontario, land value was a key component. In the first project we did, the developer moved the project at the last minute to a farmer's field, because it was cheap land and allowed them to meet the budget. These were low-income people out in the middle of nowhere without transportation.

With these other programs, the national building code needs to be adapted for existing buildings. There are many government initiatives. The environmental assessment process could knit together the culture and nature part of it, and it should be called a sustainability assessment. Unfortunately, when people think of the environment, they think of the natural environment and not the cultural part of it.

At the more general level, if we go to this other image, which is not just about historic buildings, I think we need to engage Canadians, particularly young Canadians, on the question of more sustainable human habitats.

This shows a start. ICOMOS advises UNESCO on cultural heritage, and IUCN on natural heritage. Parks Canada needs to engage in that nature-culture dialogue in a really important way, because Canada is looked at as being a potential leader in the world in this field, and yet we have national historic sites and we have national parks that tend to be two solitudes, as is the case in much of society.

That engagement has to be shared with the non-profit sector. The non-profit sector, when I was growing up, was almost irrelevant—sort of cookie sales, and hat held out to get donations. The non-profit sector has grown remarkably. I've worked part time in the academic sector, the public sector, and the private sector, and in my view the non-profit sector has become a much more important actor in this whole thing.

I think there should be consideration of an agency of the federal government that deals with urban and rural development, partly so that the federal government can connect to municipalities, to townships, to villages, to reserves, to places in which the innovation is happening. This has to be gathered on a national scale in order for Canada to contribute to the dialogue that's happening around the world, which is really a critical dialogue about sustainability. We have to integrate some of the programs with Canadian Heritage, Parks Canada, and Environment Canada so that we deal holistically with the heritage field and with the confluences that these pieces have together.

I'll stop there. I think it's an amazing time. I think we're in a period of transition. If you look at government departments, agencies, and programs, I think they reflect this image. I think we need to move to this one.

Thank you.

September 19th, 2017 / 9:05 a.m.
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Richard Alway Chair, Heritage Designations and Programs, Historic Sites and Monuments Board of Canada

Thank you very much, Madam Chair.

I'm sure members of the committee are used to getting a tremendous amount of information in a short period of time, but information overload, I know, is always a problem on these occasions.

Just to identify myself more completely, I'm actually president of the Pontifical Institute of Mediaeval Studies at the University of Toronto. It was sort of my retirement project when I retired as president of the University of St. Michael's College after almost 20 years, which is federated in and with the University of Toronto. I was asked to do the research institute as a retirement project, but after nine years, I think it's more of a second career.

From your point of view, my role as chair of the Historic Sites and Monuments Board of Canada is the relevant one. The board advises the Minister of Environment and Climate Change, who is the minister responsible for Parks Canada, and the Government of Canada, therefore, on the commemoration of places, persons, and events of national historic significance. It has done this since 1919, when it was founded by an order in council.

I also, at the moment, serve as vice-chair of the advisory committee on the official residences of Canada at the National Capital Commission, and previously I had two terms as CEO and chair of the Ontario Heritage Foundation, now the Ontario Heritage Trust, which is that province's lead agency for the protection, preservation, and promotion of cultural and natural resources of significance.

First of all, I want to congratulate the committee on undertaking this work. It's a great opportunity. I think a report that is broad, comprehensive, yet practical, and that might even have recommendations that would need to be phased, is really what is called for if one can hope for such an outcome. I think it's important to recognize that it was—and it's been mentioned twice already this morning—the 2003 report of the Auditor General that gained the attention of Canadians and focused it on heritage and the threat to Canada's built heritage that existed. It indicated very strongly that two-thirds of Canada's national historic sites in federal ownership were in fair-to-poor condition, many in poor condition. It was very critical of the federal government's described neglect in the area, and it advocated very strongly for a reinforced legal framework for protection, in other words, for legislation.

When the report came out, you may recall, it got a lot of attention. There was a flurry of interest. It didn't last terribly long because there was a lack of a coordinated, coherent response on the part of individuals across the country. Indeed, surveys taken more recently indicate that there is still broad support among Canadians for built heritage generally, but that when it's placed against competing interests from time to time, that's where it loses out.

I think this committee has a chance to be able to promote and analyze the role of heritage within the general cultural framework of the country.

What was the Auditor General's report really based on, and what is the narrative for historic heritage protection in Canada?

Beginning in 1908, the national battlefields of Quebec act was a piece of legislation dealing basically with the Plains of Abraham. In 1919, there was an order in council that founded the Historic Sites and Monuments Board of Canada, which started the program of federal commemoration of nationally significant persons, places, and events. In 1953, the Historic Sites and Monuments Act provided a statutory basis for the federal government to commemorate with plaques and occasional acquisitions—that hasn't happened very often recently—places, persons, and events of national significance.

In 1973, Natalie's organization, Heritage Canada—its original name—was founded by a federal government order in council. In 1982, the federal heritage buildings policy was founded, which does deal with federally owned structures. It asks for a heritage evaluation for all buildings 40 years old and older and for the production of a statement of heritage significance for each building, but there are two things here: one is a sort of registration of buildings and one is classification. For registration, there is basically no significant protection involved, and nothing of significance regarding conservation of the resource. If the building is classified, there is some degree of protection, in that demolition is made fairly difficult, but it's very incomplete.

In 1985 to 1988, as we've heard, the Heritage Railway Stations Protection Act came in, and then the lighthouses in 2008. Both were private members' bills, which is very interesting, but I would note for the interest of the committee that neither involved significant a federal outlay of money, and none involved diverting federal revenue in any way. The finance department is always interested in this. Both those pieces of private member's legislation went through.

Bill C-323, which is very current, of course does involve a tax incentive. It will be interesting to see what happens with that. I certainly would advocate that kind of approach, but I think it's much more difficult to do, particularly as more or less a first step.

What would make great sense today?

First of all, I would say that the legislation to protect federally owned national historic sites, 171 owned by Parks Canada and 65 by other federal departments, should include protections for UNESCO world heritage sites. We go to a great extent to try to add to the Canadian list in this area, as it's thought to be a very good thing, but we offer no guaranteed protection once they're on the list. We're really the only G8 country that doesn't have federal legislation protecting nationally significant places. I think this is a huge gap that could be filled fairly easily, and I suspect the government would be open to that type of recommendation.

It also should ensure any legislation measures to prevent adverse federal action on the over 730 national historic sites that are owned by somebody other than the federal government, some by provinces and most by private individuals. There is only so much one can do, as property rights in Canada, through the BNA Act and the Canadian Constitution, are assigned to provinces and territories. There's a limit here to what the federal government can easily accomplish. I think it is important to have protection for archaeological resources on federal lands and under waters as well.

I think cost-sharing has been mentioned before. The federal provision here was as much as $6 million or $7 million going back to maybe 15 years ago. It declined to $1 million for several years just a few years ago. Now we've had two years at $10 million, but that's about to expire. I think it's important to recommend an extension of cost-sharing, and let's say for five years at a $10-million level. That's as close as one gets to making a program permanent, and I think it's well merited.

Tax incentives would complete the picture of tools here, but I think it's harder to achieve that and I think we need to be practical. I would hope that the committee would sketch out broad recommendations that could carry this area forward into the future in a comprehensive manner, recognizing that some of the recommendations might have to be phased in their execution.

I wish the committee well. You have an important task. I thank you for the opportunity to say my piece.

September 19th, 2017 / 8:55 a.m.
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Natalie Bull Executive Director, National Trust for Canada

Madam Chair, members of the committee, thank you so much for this opportunity. Thank you for your interest in historic places and for undertaking this milestone study.

I'm here today representing the National Trust for Canada, a national membership-based, not-for-profit, non-government organization and registered charity established in 1973. As part of a global network of national trusts, we provide tools and resources to citizens to help them save places that matter, and we inspire Canadians with great places to live, work, and play. We are a proud partner with government in programs including Young Canada Works and Canada Historic Places Day.

In the 30 years between 1970 and 2000, Canada lost more than 20% of its historic buildings. Losses continue apace today. Provinces, territories, and municipal governments are doing their part. Federal leadership is urgently needed.

In this presentation I will do my best to provide an overview of historic places in Canada, review the challenges faced by those who try to save and renew them, and offer recommendations for federal leadership. We are talking about a broad range of places owned or managed by at least four different types of owners. Taken together, the places owned by NGOs and charities, private owners, provincial and municipal governments, and the federal government make up a potential universe of many thousands of historic places, perhaps half a million or more. Some of these places are already designated, usually by a municipal bylaw established under a provincial heritage act. Thirteen thousand are currently listed on the Canadian register of historic places, an important national databank and reference.

Designation often brings with it some access to financial incentives—grants, tax measures, and other sweeteners—offered as a carrot to compensate for the inconvenience or extra cost associated with heritage compliance. Indeed, the carrot and the stick are at the heart of most jurisdictions' heritage strategies. We know that incentives are rarely available in amounts sufficient to influence an unwilling owner's decision to invest or demolish, and heritage designation generally does not bring absolute protection against demolition. The protection of historic places is a challenging business.

Why would a parliamentary committee be concerned with the state of historic places in Canada? I think there are lots of great reasons. For a start, there is the potential for positive impacts on climate change. Canada's buildings are the third-largest greenhouse gas emitting sector, and the reuse and renewal of heritage buildings capitalizes on materials and energy already invested, reduces construction and demolition waste, and avoids the environmental impact associated with new development.

In addition to climate change benefits, historic places can contribute to a strong economy. Rehabilitation projects generate up to 21% more jobs than the same investment in new construction. They're a great stimulus measure, and they typically use local labour and materials, such that 75% of the economic benefits of heritage rehabilitation projects tend to remain in the communities where these buildings are located. This is a great stimulus measure. A related economic impact comes from cultural tourism. For example, U.S. travellers seeking heritage experiences in Canada are expected to reach 12 million by the year 2025.

These places also matter to our national identity, and they have a social value, often as the last bastions of affordable housing or a low-cost base for start-ups. However, there are many barriers and disincentives that make it difficult for private sector owners to save and renew historic places, including rising land values in big cities that encourage owners to demolish existing buildings in order to maximize development on the site, and an often unpredictable bottom line, which can deter developers and even lenders. There are insufficient incentives to counteract these barriers, so we lose buildings like the 1898 Etzio building in Edmonton's Old Strathcona district, the landmark Stollery's department store at Yonge and Bloor in Toronto, and Ottawa's Somerset House, where we witnessed demolition by neglect.

NGOs and charities working to maintain and renew historic places also face financial barriers. Competition for grant funding is fierce. Just last week, after decades of effort, the building rehabilitation society in Guysborough County, Nova Scotia, was forced to accept the demolition of the 1888 Hazel Hill Commercial Cable Building, where the message of the sinking of the Titanic first reached land.

The only federal funding program dedicated to historic places is the cost-share program for national historic sites, federally designated railway stations, and lighthouses, as Joëlle described, but it is limited to just a few hundred places and they're not-for-profit owners. The funding available has ranged from zero dollars for many years to as little as $1 million a year, and the current $20 million over two years has been a really important boon, but we're very concerned about the notion of it returning to just $1 million next year.

What is the federal role in heritage conservation? Canada needs policies that create a strong economy, protect the environment, and avoid climate impacts. Recycling and reusing existing buildings, our largest consumer good, offers a great opportunity for the federal government to achieve these goals. Interjurisdictional collaboration is needed with the province and territories to develop pan-Canadian standards and explore the opportunity for stackable grants and incentives. Many instinctively look to the Department of Canadian Heritage to lead this charge with its many programs that fund, stimulate, and support a vast network of museums, culture, and heritage organizations, but historic places are not generally accommodated in its programs. According to its agency act, it is Parks Canada that has responsibility for historic places in Canada, reporting to the Minister of the Environment. It is confusing for the average heritage advocate, and frankly I would be very happy to see both ministries increasingly embrace the challenges and offer solutions for historic places.

In closing, I would like to offer the Government of Canada a series of priority actions that would do much to support the conservation of historic places inside and outside the federal family, and this is the framework that I think Joëlle referred to as well.

Number one, the federal government can join municipalities, provinces, and territories in offering much needed incentives to attract investment. A range of approaches may be appropriate to reflect the different ownership types and property types. For example, a predictable go-to source of federal matching funds like the cost-share program works well for heritage properties owned by charities and non-profits. Consideration might be given to a mechanism where donations by private individuals and corporations are matched by the federal government as an interesting way to encourage philanthropy. A federal rehabilitation tax incentive like measures recently proposed in Bill C-323 is a proven way to attract corporate investment to revenue-generating historic places, and gives older buildings vibrant, new uses. There's a range of mechanisms available to consider.

Number two, the government can implement two simple federal measures that would have broad benefit for historic places inside and outside the federal inventory. First, a “heritage first” policy requiring government departments to give priority to federal heritage buildings, or even those owned by others, before opting for new construction or leases to fill federal space needs. These measures could help create a new market for heritage buildings overnight. I know a local developer who says that such a measure would really transform the landscape for historic places in Canada. Second, a “do no harm” policy would be interesting to consider the impact of federal actions on all places in the Canadian register of historic places, regardless of ownership. This would help ensure that when the federal government spends infrastructure dollars, for example, they aren't used to the detriment of existing cultural resources. We know that funding for new convention centres, new roads, and infrastructure can sometimes displace important historic places.

Number three, the government can get the federal House in order and be an exemplary heritage steward. Canada is the only G8 nation without laws to protect historic places owned by its national government. As Joëlle mentioned again, in November 2003, the Auditor General of Canada assessed heritage protection practices within several federal departments and agencies and reported that built heritage under federal control will be lost to future generations unless action to protect it is taken soon. Very little has changed since that date. I refer you to the Auditor General's report and urge you to consider a range of measures including statutory protection of historic places on federal lands, national historic sites, and world heritage sites in the federal inventory, and statutory protection of archaeological resources on or under federal lands and waters.

Number four, the federal government can facilitate full participation of indigenous peoples in the identification and protection of their historic places.

Finally, the government can ensure that the Canadian register of historic places and the “Standards and Guidelines for the Conservation of Historic Places in Canada” are enshrined in legislation and adequately funded because they are the essential building blocks and underpinning for all of the recommendations listed above.

Thank you so much for your interest and for your action on historic places.

June 14th, 2017 / 5:25 p.m.
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Liberal

John Aldag Liberal Cloverdale—Langley City, BC

What I had envisioned in the structure of this would be to orchestrate one or two sessions; the way it's laid out now is two. One would be for looking at financial and tax incentives. It would not look specifically at the Van Loan bill but at the types of things that exist now, or it could be in other jurisdictions. The Americans have a similar program to what Bill C-323 proposes.

It would be for us to explore those measures, and then when we actually get the bill for review, we would have some context for how it could fit into an overall—

Environment and Sustainable DevelopmentCommittees of the HouseRoutine Proceedings

June 1st, 2017 / 10:05 a.m.
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Liberal

Deb Schulte Liberal King—Vaughan, ON

Mr. Speaker, I have the honour to present, in both official languages, the seventh report of the Standing Committee on Environment and Sustainable Development in relation to Bill C-323, an act to amend the Income Tax Act, regarding the rehabilitation of historic property. The committee has studied the bill and pursuant to Standing Order 97.1(1), requests a 30-day extension to consider it.

Income Tax ActPrivate Members' Business

March 23rd, 2017 / 3:40 p.m.
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Liberal

The Speaker Liberal Geoff Regan

Pursuant to an order made on Friday, March 10, 2017, the House will now proceed to the taking of the deferred recorded division on the motion at the second reading stage of Bill C-323 under private members' business.

The House resumed from March 9 consideration of the motion that Bill C-323, An Act to amend the Income Tax Act (rehabilitation of historic property), be read the second time and referred to a committee.

Income Tax ActPrivate Members' Business

March 9th, 2017 / 5:50 p.m.
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Liberal

John Aldag Liberal Cloverdale—Langley City, BC

Mr. Speaker, today Canadians proudly stand upon thousands of years of Canadian history and heritage. From the breathtaking totem poles that line the British Columbia coast, to the Algonquin wigwams that housed indigenous peoples on the unceded land upon which this Parliament currently sits, to Cape Spear Lighthouse on Newfoundland's eastern tip, to Fort Rodd Hill on B.C.'s Vancouver Island, to even the Justice Building down the road, the history reflected in our country's built heritage is simply astounding.

In this our nation's capital, we are surrounded by structures whose foundational stones were similarly foundational to the country we now call Canada. They herald the amazing accomplishments we have had together and serve as a reminder of the chapters in our history that we have not yet atoned for.

Throughout my 32 years working with Parks Canada, I was incredibly lucky to come face to face with Canada's built heritage every day. Through my work with the Historic Sites and Monuments Board of Canada and Parks Canada's national historic sites branch, I saw the impact our heritage has on communities and heard the stories people told about their historic sites.

In Saskatchewan, Batoche National Historic Site reminds residents of the independent spirit of the northwest resistance. In Yukon, Dawson City returns us to the excitement of the Klondike gold rush, while in British Columbia, Colwood's Fisgard Lighthouse lets people on the open waters know they have reached home, just as it has done since 1860.

Across the country, Canada's built heritage reminds us of where we came from and where we have been along the way. From the smallest rural towns to our grandest cities, the history contained within these buildings forms what it means to call our communities home.

When I think about built heritage in my riding of Cloverdale—Langley City, I think of George Lawrence House or Matheson House and what these places meant to the origins of both Surrey and Langley. While perhaps only the most ardent heritage buffs across Canada would be able to call upon their history, they have a profound value to the residents of my riding.

This is what makes heritage so valuable to maintain across the country. Everyone can think of a few national historic sites that inspire awe and instill wonder, but what makes them so valuable is their effect on the individual. Just as I take pride in the historic sites in my community, I am sure everyone in the House can identify a building, an area, or a district in their own riding without which their community would not be the same.

As the National Trust for Canada said, Canada's communities are made up of historic places that define our cultural identify, give shape and texture to our urban and rural communities, and attract tourist dollars. Yet every day, these places are being destroyed through desertion, decay, and demolition.

Today I would like to discuss Bill C-323 and measures that I firmly believe will benefit all Canadians. This discussion centres on three fundamental considerations concerning how this legislation would create tangible environmental, financial, and social benefits.

Canada's home-building industry is one our country's largest. It provides enormous economic benefits to our national economy and is the livelihood for many thousands of middle-class Canadians. This sector should be stimulated and encouraged, but we must do so in a way that is also environmentally responsible.

In most Canadian municipalities, home building is a major contributor to landfill waste. For example, Alberta's provincial department of the environment found that 25% of the province's landfill waste was generated by construction. By promoting the preservation of existing buildings, much of this discarded waste could be avoided, preserving natural resources and limiting the release of landfill greenhouse gas emissions.

In addition, the preservation and maintenance of existing housing stock has consistently been shown to decrease potential C02 emissions. According to the National Trust, if every heritage property in Canada were to be restored rather than demolished and replaced with a new structure, this would represent the avoidance of C02 emissions equivalent to the annual energy use of approximately 14.83 million homes. To put this in a more familiar context, in the city of Ottawa, which Statistics Canada listed as having 151,495 single detached homes in 2011, this energy savings would meet the energy needs of all of Ottawa's single family homes for approximately 98 years. This is not just a lot of heritage meaningfully conserved. It is an incredibly positive environmental initiative.

Despite this, there is a frequently cited argument that suggests that tearing down heritage properties is in fact environmentally prudent. The logic behind this claims that heritage properties are equipped with out of date furnishings and technology that would otherwise help reduce their environmental footprint. Despite the fact that newly constructed homes are often more environmentally efficient, the resources needed to demolish and construct a new home means that it takes several decades for the new structure to become a net environmental benefit over the existing heritage property.

As the Preservation Green Lab reported in its study, "The Greenest Building", it takes anywhere from 10 to 80 years for a new building that is 30% more efficient than an average-performing existing property to overcome, through efficient operations, the negative climate change impacts related to its construction.

The environmental benefits to heritage preservation are easy to see and an indication of the importance of the federal government's role in actively promoting it as an environmentally superior practice. Just as environmental protection benefits all Canadians, Bill C-323 would lead to equally comprehensive financial benefits.

To more closely examine the economic ramifications of Bill C-323, it is worth looking at the experience of our neighbours to the south. In 1981, the United States passed legislation creating a 25% federal tax credit for restoration of heritage sites. This built on legislation that was first introduced in 1976. In the three and a half decades since then, it is estimated that $23.1 billion in federal tax credits have generated in excess of $120.8 billion in private investment in historic buildings. This is roughly a 5:1 ratio of private to public investment, all of which ultimately ended back in the domestic U.S. economy.

Not only did the U.S. federal government's heritage restoration tax credit benefit the restoration industry, it boosted the entire national economy. This is due to the money multiplier effect, which explains how money being spent in one industry is eventually recycled into the broader civic, provincial, and national economy. If workers are paid to restore a heritage home, they may spend that money at Tim Hortons, whose employees will go on to, say, get a haircut, at which point the barber will buy sports equipment for his daughter. This cycle is essential to a government's economic considerations, and means that money invested in one area will necessarily benefit Canadians across the country.

In the United States, the confluence between public and private investments in heritage restoration has created great economic benefit. As the National Trust for Canada estimated, while the U.S. federal government spent $23.1 billion in restoration tax credits over the last 40 years, this credit resulted in an additional $28.1 billion in tax revenue, a net gain of $5 billion in tax revenue for that country. In short, the U.S. federal government made money by promoting heritage restoration.

In addition, heritage tourism represents a significant contributor to Canada's economy. Tourism is a multi-billion dollar a year industry, and it is estimated that cultural tourism accounts for one-third of that market. Reflecting the importance of this industry, the Canadian Tourism Commission reports that heritage tourism represents the past visitation of 34.5 million Americans and 2.6 million Canadian tourists.

As I have outlined above, I strongly believe that the preservation of Canada's heritage is a noble goal in and of itself. With that being said, however, the United States example shows how heritage preservation creates tangible benefits to society on the whole.

Based on the estimates of the National Trust, whose tireless efforts have left an indelible legacy on Canada's built heritage, since 1981, the United States heritage restoration tax credit has directly led to the preservation of over 41,000 historic properties that would have otherwise likely been left to neglect or demolition. This alone is a remarkable achievement, but it is the impacts on the broader society that make me believe Canada would be well served by a similar measure.

Along with tens of thousands of properties saved, the U.S. tax credit is estimated to have led to the creation of over 525,000 housing units, including 146,000 dedicated to low- and medium-income housing. In every corner of the country, we hear concerns about housing affordability. In my riding of Cloverdale—Langley City, I can safely say it is the topic about which I hear the most from my constituents.

Today, we are debating legislation that would help address Canada's growing housing issue, but this is not the only benefit that Bill C-323 would deliver to Canadians across the country. In tandem with an increase in housing units, the U.S. tax credit is credited with creating 2.4 million jobs. These are reliable, middle-class positions across a multitude of sectors, and would ultimately benefit the entire Canadian economy. This money would overwhelmingly go to small and medium enterprises based in Canada, and the increase in employment would give communities across Canada a welcome boost.

Not only is heritage good for communities as they currently exist, but it benefits community rehabilitation. One can think of communities across Canada, such as Toronto's Distillery District, Winnipeg's Exchange District, and Vancouver's Chinatown, where heritage and culture are inseparably entwined.

This bill would not guarantee the preservation of all heritage buildings in Canada, but it is a great first start. In Canada's 150th year, I can think of nothing more appropriate than signalling our support for both the history of this great country and the welfare of the people living in it today. In this spirit, I offer my support for Bill C-323 and encourage my colleagues in this House to do the same.