I'm really in your hands. I was asked to be here. This is not really a deputation.
I will tell you some of the challenges we face. I'll try to make it reasonably quick, and I'll do it in more of a point form rather than a discussion.
Our company has been restoring old buildings for 40 years now, and we do it for profit, although we would do it for nothing because my partner, Michael Cruickshank, and I love what we do. I just want you to know that this is a profitable endeavour, and one can do very well indeed restoring and retrofitting these older buildings.
There are several costs associated with restoration, renovation, and retrofit that distinguish the process from new construction. The design process, for example, ends in a new building when you get your permits. It begins in an older building when you get your permits because you have no idea what you're going to come up against. That causes unforeseen expenses. Borrowing costs are generally higher for older buildings.
The building code and municipal objectives follow a labyrinthine zoning bylaw, especially here in Toronto, and the building code was not designed, really, for a retrofit of older buildings. For example, we may be asked to do earthquake protection to one of these older buildings, and the building was never really designed to accommodate that kind of interior structure. It can be very expensive and awkward because you might find pipes all of a sudden or beams and columns threatening to go across windows and obscure the very historical things that you wanted to protect.
Adding insulation to roofs increases the snow load because the heat doesn't escape to the roof to melt the snow, and these buildings were not built to withstand the kind of snow loads that adding insulation to the roof entails. We have been asked to green our roofs, which we do, but when you green a roof, the same thing happens. It involves extra insulation just by adding the earth and the greenery, and there are structural anomalies characteristic of older buildings.
Then we have the labyrinthine zoning bylaw. I'll just give you a couple of quick examples. We may be asked for a payment in lieu of being able to provide parking. These buildings are often built lot line to lot line, and often the sites that house older buildings just don't accommodate the required parking. Now all of a sudden you're stuck with a payment for which you get no benefit.
On parkland dedication for change of use, there is no predictable way of knowing whether a use within our building is industrial or office, but to change from industrial to office may be considered to be intensification, which may require parkland dedication development fees, and it may not even conform to the zoning bylaw because it may be zoned industrial. I'll give you an example of the kind of thing I'm talking about. We have a printer in our building, and because printing today is now done on computers, it is absolutely an office use. There is no question. There are no three-coloured presses or anything like that. It is an office, and in fact, all other customers are office, but guess what? That's considered industrial. We have a customs broker in one of our buildings, and all of his customers are, in fact, industrial. They're importing largely from the United States, and they work with industrial uses, but guess what? They're called “office”. If we were to convert from the printer, which is an office use, to technically an industrial use, it could involve all kinds of things. It can be six months before we get approvals, and by that time, you've lost your tenant prospect.
Concerning realty taxes, properties are now taxed at their highest and best use, so if we have a building that doesn't maximize density for the site, we may be taxed as though it did. In many cases our rental rates are lower than they would be for conventional new buildings, yet we would be taxed as though it was a conventional new building because that would be its highest and best use. In many cases the realty taxes are unreasonably high.
There are other things, too. For example, the historical board at the city—it's now called heritage—might require us to restore the old building or the old windows. Well, it can cost a couple of thousand dollars to restore an historical window. To replace that window with thermal pane, by the way, might cost a quarter of that.
One of the things we've done at the Toronto Carpet Factory, an office complex of 140 businesses, is restore an old chimney. That chimney is 150 feet high and it is a historical chimney. It speaks of the historical background of this particular property. It's absolutely elegant. We've spent over $150,000 restoring that chimney. It would have cost us about $50,000 to tear it down.
We've even restored a railway track. They used to bring the bolts of carpet and the thread, the raw materials, up on this railway. We've not only restored it, we've put in a brick bed to house that. There's absolutely no commercial value for us to have done that.
Getting to where the government might come in, it would be, first of all, to encourage municipalities to simplify the building code and make it more conducive to the restoration of old buildings, simplify the zoning bylaw, but also where they've required things such as the restoration of old windows, there should be perhaps a subsidy for doing just that. If they want special locks and special equipment for the doors and air conditioning units that no longer work and don't conform to the historical nature of the building, there should be some kind of compensation.
I can't speak directly of the types of compensation, but I know realty taxes have been used as an inducement to restore old buildings, and obviously direct subsidies and any kind of other tax break, as well as low-interest loans, for example, to compensate for the fact that mortgage companies are loath to lend to some of these historical buildings.
That's not a very colourful or dramatic exposition, but perhaps that's helpful to you.