Thank you.
Mr. Chairman, distinguished committee members, thank you for this opportunity to present our recommendations.
The Heritage Canada Foundation is a national non-governmental charitable entity created as Canada's national trust. We believe that historic places are the cornerstones of community and national identity and the key to a sustainable future. We are seeking measures to stimulate private investment in the rehabilitation of historic buildings. This is truly work worth doing on many levels. Rehabilitation creates new jobs because rehabilitation is 66% more labour intensive than is new construction. Further, rehabilitation projects and the jobs they create have been shown to increase tax and tourism revenue and have a positive ripple effect in surrounding areas. Think of places like the Saint-Roch district in Quebec City, Edmonton's Old Strathcona district, or Toronto's Distillery District.
We also know that measures to encourage the rehabilitation of existing buildings will have important environmental benefits. The greenest building is the one that's already built. New construction, no matter how green, cannot compete with the environmental imperative of wisely using the buildings we already have. Yet rising land values and development pressure in urban areas encourage demolition and new construction, and many important historic buildings owned and operated by non-profit organizations are at serious risk due to lack of funding. We need measures that would assist and reward businesses that invest in existing buildings as well as measures that support the efforts of non-profit owners and encourage charitable donations.
Our first recommendation is inspired by special measures already in place in Canada to encourage private sector preservation of Canada's environmental heritage, namely Environment Canada's “ecogifts” program. In contrast, there is currently no tax measure to encourage private sector action for another type of national treasure, Canada's heritage buildings. In fact, the tax system contains powerful disincentives to preservation. For example, the GST new housing rebate favours demolition and new construction and does not accommodate the careful renovation of existing buildings. The unpredictable tax treatment of rehabilitation expenses can result in a variance of as much as 60% in a project balance sheet, a fact that deters investors. And worse, owners of income-producing properties, including houses and apartment buildings, can actually earn a federal tax deduction by demolishing those buildings.
Accordingly, our first recommendation is to introduce a federal rehabilitation tax incentive for heritage properties in Canada. Rehabilitation tax credits have been hugely successful in the United States for over 30 years. In fact, the U.S. historic tax credit program was introduced as an economic stimulus measure in the 1970s and has since leveraged over $25 billion in private investment and created an average of 45 new jobs per project. There is broad support in Canada for such a measure, notably from the Federation of Canadian Municipalities and the Royal Architectural Institute of Canada. The cost to government of such a program can be managed through eligibility criteria and/or by setting ceilings on the amount of credit available per property owner.
Our second recommendation is to build on the success of 2009 funding provided to Parks Canada's national historic sites of Canada cost-sharing program. The cost-sharing program provided up to 50% of eligible costs incurred in the conservation of national historic sites. The program has stimulated private investment in a number of historic sites that will yield spinoff economic activity in addition to the construction costs incurred, sites like the Toronto Power Generating Station at Niagara Falls; the Atlas #3 coal mine in Drumheller, Alberta; and the Légaré Mill national historic site of Canada at Saint-Eustache, Quebec.
There has been very strong demand for this program, and the modest $20 million made available is already fully committed. In fact, applications were received for over 200 sites, seeking a total of $53 million in funding. Those projects, if they had all been approved, would have leveraged an impressive $300 million in construction investment.
We recommend that government continue to fund this program with at least $10 million to $20 million per year, or even better to re-profile it as a national heritage conservation endowment fund. This recommendation is inspired by the Canadian government's significant investment and cost-share funding for the land trust movement in 2007. It's also based on our knowledge of U.S. public-private partnerships, such as Save America's Treasures, established by the White House with seed money from Congress, and successfully attracting funds from individuals, businesses, and foundations.
In closing, I thank you very much for considering our two recommendations, which represent proven approaches to leveraging private sector investment and making heritage and older buildings the cornerstones of a sustainable economy. Thank you.