Canadian Heritage Committee on April 24th, 2018

[Erika Shea]

My sense is that at the provincial level there is a great deal of interest in and optimism about the possibility of bringing together the ability to generate a profit and the mandate to have positive social community impact.

Speaking from the perspective of the Cape Breton Regional Municipality, where we work, I would say that the conversations around any type of tax concession for a for-profit or not-for-profit entity are incredibly constrained because of the economic circumstances in the community. I think that certainly in the CBRM it's not going to make much of a difference in supporting cultural hubs or the creation of cultural districts.

[Gordie Hogg, Liberal, South Surrey—White Rock, BC]

Is there a role that you see the federal government being able to play within that framework?

[Erika Shea]

Within the framework of the CICs, nothing comes to mind.

[Gordie Hogg, Liberal, South Surrey—White Rock, BC]

Thank you.

There have been references to them as hubs and/or districts. Is there a meaningful difference between “hub” and “district”? Is there something tangible or is it just two words being used to reflect the same entity?

[Amy Terrill]

I see a distinction. A cultural hub tends to be multi-tenancy specific and something that's not necessarily within four walls. It might have multiple buildings, but it tends to be under one governance structure, and there would be programming within that hub. The cultural district is more a geographic area and so would have multiple entities and organizations, with a mix of for-profit and non-profit but all within a district.

In music, of course, we deal with a lot of municipal regulations. There are, for instance, noise bylaws, etc., and a municipality can designate specific regulations and bylaws just for that district in order to encourage more of those cultural uses. That, to me, would be the distinction between the two.

[Jacques Primeau]

A difference needs to be made also in that a cultural neighbourhood is not necessarily a neighbourhood where creation takes place. You may have a neighbourhood that disseminates creative works, but a cultural hub or pole implies creation, or a type of living environment where people help each other out and there is interaction among the artists. To create a cultural hub, you have to have that in mind, that is to say be concerned with getting creators together in a neighbourhood like ours.

The Quartier des spectacles has the advantage of being both at once. It is a neighbourhood where there are 30 venues containing a total of 30,000 seats, as well as public spaces that can host hundreds of thousands of people; but there are also creative spaces, and small rehearsal spaces for music or any other artistic medium.

[The Vice-Chair, Conservative, Peter Van Loan]

Thank you very much.

We will move to the next round and hear from the Conservatives.

Mr. Shields, you have seven minutes.

[Martin Shields, Conservative, Bow River, AB]

Thank you, Mr. Chair. I really appreciate the witnesses and the expertise they're bringing today.

There's one issue I'd like to go back to, and that's the municipal issue in the sense of tax changes or tax.... I'm not sure whether I have it right, but if you get a municipal tax break or advantage, that means the property taxpayer is going to have to pick it up. Is that what you're talking about? Or are you talking about equalling it out by some other way? If you're talking about municipalities having to give one sector a break on taxes, somebody has to pick it up, and that's usually the property taxpayer.

Let's start with you, Mr. Pauk, because I think you were saying something about it. Let's see if we can clarify that.

[Oliver Pauk]

I was referring to the creative co-location tax subclass, which was created at the provincial level. I'm not sure whether it was rolled out fully in Ontario, but it was in Toronto. They set it so that it began January 1.

In that example, property owners who own buildings that fit the criteria—there's a long list of criteria—receive a 50% discount on their property tax bill. As I mentioned, an issue we see is that there are very few property owners who own sites that fit the criteria. I believe the final number was between 12 and 15.

That would be coming from the taxpayer, I suppose, in that this revenue is forgone.

[Martin Shields, Conservative, Bow River, AB]

Right: there's only one taxpayer.

[Oliver Pauk]

That's right.

[Martin Shields, Conservative, Bow River, AB]

It all comes out of one pocket.

[Oliver Pauk]

Yes.

[Martin Shields, Conservative, Bow River, AB]

That can be an issue in the sense that if you're looking for an advantage for one, then it has to come out of some other pocket. In the sense of the pool, it's coming from one.

[Oliver Pauk]

That makes sense. We're just pointing out some of the issues that we see with what has already been done.

[Martin Shields, Conservative, Bow River, AB]

Yes.

[Oliver Pauk]

Also, as you've alluded to, there has already been some sort of backlash from other sectors. For instance, those working in social welfare have pointed it out and have said, “Hey, how can you just give this property tax break for artists and creatives and not for us and the important work that we're also doing?” I completely see that.

At the very least, this subclass for taxation in Toronto is a step in the right direction, as we pointed out, but it certainly has its flaws. The main one we wanted to point out is that it doesn't actually go to the creative producers themselves, which is problematic.

[Martin Shields, Conservative, Bow River, AB]

I saw that. Thank you.

Music Canada, you have a world of expertise on this one.

[Amy Terrill]

In terms of tax classes? Yes, on the Toronto music advisory council, we were also concerned about the impact we were seeing, particularly with respect to the building in Toronto that raised the concern, which was 401 Richmond, where the municipal property assessment had been ever-increasing. I think it's the challenge in cities like Toronto where there's a “real estate issue” is the way we describe it. It's the rising cost of real estate. It's assessed at the highest use, so that's why we're seeing the condo developments, etc., starting to squeeze out so many other uses. It's not about just creative uses. It's about small businesses as well. It's tough to put those things back in the bottle.

I think there have been some suggestions around section 37—that was referenced earlier—as well as broadening the use of section 37 so that some of those investments can be put back into creating creative spaces. Those are from the developers. There are some really interesting conversations happening around the world, particularly around the music cities and development communities. They are starting to come together to try to start a conversation to reinforce the importance of creative activity or place-making as well as development. Maybe that's where we find our solutions.

[Martin Shields, Conservative, Bow River, AB]

Thank you.

[The Vice-Chair, Conservative, Peter Van Loan]

You have two minutes left.

Monsieur Fortin.

[Pierre Fortin]

We are currently studying a model in the Quartier des spectacles in Montreal, where real estate prices are increasing very rapidly. That model consists in granting builders advantages, such as the authorization to build higher buildings than normally permitted, on condition that the builder place the less coveted floors of the future building at the disposal of artists and other creators. Montreal is studying that model at this time, but it has not been tested and proven yet.

[The Vice-Chair, Conservative, Peter Van Loan]

We have a minute and 20 seconds, Ms. Shea.

[Erika Shea]

Well, I think that if a municipality decides that it wants to provide tax concessions to a cultural hub or a cultural district, that's a tool that is available to that municipality to realize its vision of a more grand, more solid creative economy. The tax concession is a tool to realize a vision that a municipality has around the creative economy and its positive, long-term financial impact on that community.

As for our experience, we purchased our property in 2012 and we occupied the property immediately. We paid municipal taxes of $27,000, based on the assessment of the building. After our construction, the assessment of the building will mean that we're paying $650,000 a year in municipal taxes, but because we've been occupying the building at the same density for the last five years, we're not consuming any more municipal services or any more water, and we're not asking the municipality to plow any additional roads, it's somewhat arbitrary in terms of that increase in assessment based on the monies we've invested.

[The Vice-Chair, Conservative, Peter Van Loan]

Thank you very much.

We will now hear from Mr. Nantel of the NDP.

Mr. Nantel, you have seven minutes.