Thank you, Mr. Chair.
I'm president and CEO of Woodcliffe Corporation, which owns one of the largest portfolios of heritage properties in Canada. You have before you today copies of our written submission, which I hope you've had an opportunity to review--or will, if you haven't--as well as a list of the municipal tax relief programs for heritage properties currently in operation across the country.
I understand this committee is interested in programs that will be quickly and significantly stimulative economically and provide good value to taxpayers relative to their costs. Our proposal is to modify existing heritage property tax relief programs, or HPTRs, and to create a new federal agency that will manage these programs for profit to the government.
There are currently HPTRs operating across Canada, with the exception of Nunavut and the Northwest Territories. Quebec has programs in all of its municipalities that provide realty tax rebates of between 25% and 50%. Of the remaining 50-odd municipalities across the country, approximately 60% are in Ontario, where rebates of up to 40% are available.
However, none of the programs have been particularly effective to date because they are not coordinated and they provide insignificant financial benefits to property owners. If owners of qualifying properties were permitted to direct proceeds of rebates to lenders over a long period of time, they would be able to borrow sufficient sums at attractive rates to properly restore and maintain their heritage properties. We propose the creation of a new federal agency to coordinate heritage programs across the country and to act as a clearing house, receiving and directing realty tax rebates without incurring any direct financial liability. We believe the proposed program would be cost-neutral and that the monetary profits it will generate can be shared by all three levels of government on an equitable and non-competitive basis.
It's far more expensive to restore and properly maintain a heritage property than it is to demolish and rebuild it. These increased costs and inconsistent regulations act as an obvious disincentive to the private sector. However, a well-coordinated HPTR program can provide significant economic benefits to property owners by bridging the delta between cost and value, and it has the ability to generate significant profits rather than costs to the government.
Aside from appropriate guidelines, what's really missing in the current program is the ability to receive and direct rebates over a sustained period of time on an assured basis. If property owners knew that these benefits were available over a long period of time, provided the specific and uniform guidelines were adhered to and independently certified, and that they could assign the receipt of rebates to institutional lenders as security for financing, they would line up to hand over heritage easements and perform work that would ultimately increase the value of their respective properties.
If lenders knew that rebates were receivable over a sustained number of years and that a federal agency would ensure that payments were properly directed, they would likely lend against these revenue streams at CMHC-equivalent rates. Needless to say, these lending rates are amongst the most favourable in Canada and institutional funds would be readily available.
To be clear, what's proposed is that property tax rebates would be directed by this new agency only to the extent that they are received, since the payment of realty taxes ranks ahead of all other obligations against real property, including mortgages. The federal agency would merely have to act as a clearing house and would not incur direct financial liability.
In exchange for its services, the agency would be entitled to charge fees, perhaps as a percentage of loan amounts secured by the funds that are directed. It's estimated by Heritage Canada that there is currently $8 billion to $10 billion of restoration and deferred maintenance work to be performed across the country. Since the bulk of the cost associated with restoration and maintenance is expended on skilled labour, significant levels of job creation can also be expected. Aside from the fees chargeable by government, increased realty taxes, GST, HST, VATs, as well as significant levels of both corporate and personal income taxes would also be generated.
The amounts of realty taxes that would be rebated by municipalities would ultimately equate to deferrals, since under market value assessment, property taxes would increase exponentially as a result of the restoration work performed. Time doesn't permit me to get into specific examples of how funds would flow, but I can tell you that from our experience, which is considerable in these matters, the economic model is sound and sustainable.
The Richard Ivey School of Business at the University of Western Ontario is currently working on an analysis of our proposal as well as specific recommendations for implementation. Certainly they'd be delighted to share their report with you.
In conclusion, our proposal is to create a new federal agency that would coordinate HPTR programs at the national level. This agency would direct realty tax debates to property owners and/or lenders when and if received and would therefore incur no financial liability to the government. The proposed program would be cost-neutral, would likely generate significant profits for all levels of government, and would create immediate and significant financial, environmental, and cultural benefits for all Canadians.
Thank you.