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.
Thank you, Madam Chair, for the opportunity to be with you today and to join you for this important discussion.
I am David Brown. I am the executive vice-president and chief preservation officer for the National Trust for Historic Preservation in the United States. The national trust is a non-profit organization, or charity, chartered by the U.S. Congress in 1949 to protect significant places representing America's diverse cultural experience, by taking direct action and inspiring broad public support.
I'm going to highlight today, from the non-profit point of view, a few key elements of the American preservation experience, which I hope will be helpful to you as you consider roles for the federal government in supporting the conservation of Canada's rich and diverse heritage.
First, I think it's important to note how our concept of historic preservation and heritage conservation in the U.S. has broadened over the past five or six decades, from a handful of iconic architectural masterpieces preserved in amber to vibrant cities and towns, where a wide of range of older and historic buildings are keys to reuse, reinvestment, and revitalization, as we've just heard from our first witness.
In the 1960s, as much of America looked to the future and the frontiers of space and dreamt of a better tomorrow, our national past seemed not a road map for the future but really a burden that had to be overcome. When Jane Jacobs, a visionary important to both Americans and Canadians, wrote in 1961 that communities “need old buildings so badly it is probably impossible for vigorous streets and districts to grow without them”, she was stating a position that was completely at odds with the prevailing belief in urban planning circles at the time. But after many years of hard work, we've reached a different consensus. The virtues of saving and reusing older places are now much more broadly recognized in the U.S. Time and again, preservation has proven an invaluable tool in spurring economic growth, meeting critical social needs, and bringing communities together.
We've seen that change, due to strong collaborations among our federal, state, and local governments, the non-profit sector, and millions of private citizens and business interests. That's my first point for you today. Our work to save the places that matter to our citizens is successful when our government sector collaborates with and supports private sector efforts. Your National Trust for Canada is helping to promote that type of successful collaboration.
A second point I want to make is that our understanding of our diverse American past has been tremendously broadened and enriched over the past five decades, informed by new generations of scholars and continuing struggles for racial and social justice. As one of our pre-eminent historians, David McCullough, put it, “History is no longer a spotlight. We are turning up the stage lights to show the entire cast”. We no longer focus just on places built by one economic class and one segment of our population. We work hard to hear, understand, and honour the full diversity of the ever-evolving American story.
Our understanding of the impact of preservation on American life today is enhanced by the use of increasingly accessible data about cities, where we can explore the connections between the physical character of urban development and a range of economic, social, and environmental outcomes. Our Atlas of ReUrbanism took this data from the 50 largest American cities and found that communities that support dense, socially diverse, architecturally rich, and transit-connected neighbourhoods, with a strong mix of older buildings, are supporting resilient local economies, affordable neighbourhoods that work for everyone, and a distinctiveness that is a real market advantage in today's workforce.
The data reveals that there are more jobs in small businesses and more jobs in new businesses in older mixed-use and commercial areas of communities than you find in areas with a preponderance of new construction. Older, smaller, mixed-aged buildings support more women- and minority-owned businesses than are found in areas with a preponderance of new construction. These areas tend to have more units of affordable housing, as the older stock serves as unsubsidized naturally affordable housing. They're also home to a more diverse population, reflecting the demographic changes that we're seeing in our country and you're also seeing in Canada.
Smart cities and towns across America are looking at how older and historic buildings can provide both a market advantage and the types of vibrant places that are increasingly attractive to millennials and empty-nesting baby boomers.
How are these places supported by our federal government in the U.S.?
First, there's a decades-long grants program called the historic preservation fund, which is used to support preservation activities in all 50 states and within certified local governments. It's authorized at $150 million annually, and it supports both grants and the government programs for preservation.
Second, a review process is designed to ensure that we look at the impacts of government-funded and licenced programs on places of historic significance all across the government.
Third, the United States has had incentives in place through the federal tax code since 1976 to encourage the private sector to rehabilitate and reuse historic properties today and into the future. The federal historic tax credits, often paired with state historic tax credits, have had a remarkable impact in saving historic places.
Each year, Rutgers University looks at the impacts of the historic tax credits, and the analysis really speaks for itself. Since inception, the historic tax credit has been used by the private sector to rehabilitate more than 42,000 historic buildings nation-wide, create 2.4 million jobs, and spur $131 billion of private capital investment. I think, most importantly, the Rutgers' analysis has found that it returns between $1.20 and $1.25 to the federal government for every dollar invested through the tax credit.
The historic tax credit is the key way that our federal government encourages private investment in the rehabilitation of historic buildings. The credit attracts private capital to revitalize often abandoned and underperforming properties that have a financing gap between what banks will lend and the total development cost of the transaction. Incentives such as this can be adapted to provide targeted and timely economic help to areas with special needs. For example, the historic tax credit was temporarily increased to help rebuild New Orleans after hurricane Katrina in 2005.
Finally, these incentives benefit local communities, especially our nation's rural and urban core areas. Over 40% of the projects financed in the last 15 years were in communities with populations of fewer than 25,000 people.
Fifty years ago, when historic places were being lost and destroyed across the U.S. with virtually no consideration of their importance to communities, the drafters of our National Historic Preservation Act envisioned a future where historic places are a living part of community life, and we see that happening now.
As we look to the future here in the U.S., we want to find partners and tools that can help us empower people to tell their stories and engage in saving the places that matter to them. We see preservation as playing an increasingly important role in creating sustainable, resilient, equitable, and livable communities.
Thank you very much.
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 . 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.
I am sorry, my presentation really was very short.
The first point is about Bill , 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.
I know that Ontario has mutual servitude, which protects a building when an owner wants to have it recognized. We don't have that in Quebec.
In terms of the legislation, before 2012, the owners of provincially designated heritage buildings were entitled to a municipal tax credit meant as an incentive for the maintenance and conservation of the building. For reasons unknown to us, it was removed from the new legislation. We lost some money because of that, but there are places like Old Montreal, where there are a lot of heritage buildings and the owners lost a lot of money.
It seems that the money from the tax credit were not being used directly for the maintenance and conservation of the buildings. There could have been other ways to address that issue, because it was a major incentive for the building owners. We know there are many in Old Montreal. They are actually commercial buildings.
So it is important to continue to encourage people, but perhaps by regulating the way it is done and the way the money is used in the end. It is important because it's the people's money. So it has to be properly regulated. It cannot be like signing a blank cheque, far from it.
As I mentioned, in 2012, the provincial government gave municipalities a lot more responsibility for heritage, without transferring the expertise and resources. At the same time, it called on individuals to commit themselves to safeguarding the heritage. As a result, municipalities were faced with individuals asking that the heritage value of a building, site or tangible or intangible property be recognized by municipal bylaw. However, municipalities did not receive subsidies in return. They had to increase their reserve fund or create foundations.
There are cultural development agreements between provinces and municipalities, but culture is very broad. Perhaps heritage represents 10% of the sector. There are schools, the arts, and so on. It is vast.
The amendment to the legislation made the situation difficult.