Thursday’s headlines

8 comments

1. Re. New towers have city looking up.

   There is more a sense of inevitability about these towers as opposed to being of sign of things looking up. Like having a pipe burst and declaring it is good that the water is flowing again, sometimes things are not what we are being lead to believe.

   In any city there will always be a large number of firms that need to locate downtown. While Toronto has had stagnant growth, the surrounding regions have boomed. It is inevitable, with this growth and no new office buildings being built in the last twenty years that eventually something would need to be built.

   For Mayor Miller to take credit for these developments he must also then take blame for the loss of 9.1% of the non residential assessment base (as a percentage of the total) that occurred between 2002 and 2007 (I don’t have access to any newer data). Needless to say, that in 2008 the trend continued. Even with the addition of these towers the non residential assessment base has shrunk. This has major implications for the city as it is this assessment base that subsidies residents. Sustainability includes economics.

   The city should be occupied with addressing the loss of the type of businesses that are not attached, know as footloose, to the city. The types that could be in NYCC or Consumers Rd. areas. Those type of businesses (and jobs) have been fleeing Toronto.

   Worrying, Miller has hinted that the program to shift the tax burden to a more equitable ratio between classes, might be put on hold. It was this program that the developers of these towers counted on to make the projects financially viable. Without this re-balancing, Toronto’s high taxes, as seen by the diminishing assessment base, have had their purpose defeated.

   Keynes describes Toronto’s predicament well……..

   “Nor should the argument seem strange that taxation may be so high as to defeat its object, and that, given sufficient time to gather the fruits, a reduction of taxation will run a better chance than an increase of balancing the budget. For to take the opposite view today is to resemble a manufacturer who, running at a loss, decides to raise his price, and when his declining sales increase the loss, wrapping himself in the rectitude of plain arithmetic, decides that prudence requires him to raise the price still more—and who, when at last his account is balanced with nought on both sides, is still found righteously declaring that it would have been the act of a gambler to reduce the price when you were already making a loss.

   re footloose and attached firms….
   http://www.chass.utoronto.ca/~nowlan/papers/commercial_taxes.pdf

2. Glen> Right on. As pleased as I am with the new towers, they pale relative to the number and size of buildings that a peer city like Chicago has added, consistently, over the last decade. Here is a quick list of new large office buildings completed in the Loop since 2001:

   UBS Tower 50 stories, 2001
   191 North Wacker 37 stories, 2002
   Citadel Center 39 stories, 2003
   400 North LaSalle 45 stories, 2003
   ABN AMRO Plaza 29 stories, 2003
   111 South Wacker 51 stories, 2005
   Hyatt Center 48 stories, 2005
   1 South Dearborn 39 stories, 2005
   300 North LaSalle 60 stories, 2009

   That is a lot of catching up to do. (And it’s not like Chicago wasn’t also building condos too.)

   Make no mistake, Toronto’s CBD is in a fight for its commercial life. While some developments like Enwave cooling, new retail and condo infill have arguably made leasing office space downtown slightly more attractive, bigger issues like high taxes, the lack of a Downtown Relief Line, congestion, unattractive streetscapes and the overwhelming numbers of panhandlers and the homeless continue to push company heads to think about moving to some cushy lowrise office park in the 905.

   The stats tell the tale. Can Toronto now keep the commercial towers coming?

3. Re: New Bloor condo tower will be shorter
   Re: New developer takes over site at 1 Bloor East

   Help to build a public square at Bloor and Yonge! We have an opportunity to do something great in the heart of Toronto.

   With the demolition of the south-east corner for the now failed One Bloor East project, we have the opportunity of a lifetime to make Bloor and Yonge the showpiece of Toronto.

   The Toronto Public Space Committee along with its many supporters has taken on a brand new challenge ~ to convince the residents, businesses and politicians of Toronto that we deserve a public square and park in the heart of the city. We aim to create the will and desire to fund and develop a brand new Bloor Yonge Square!

   Join the facebook page at
   http://www.facebook.com/group.php?gid=129501724911

   Visit the blog at
   http://blooryongesquare.ca

   Sign the petition at http://www.petitiononline.com/blyosq/petition.html

4. Glen said:
   Miller has hinted that the program to shift the tax burden to a more equitable ratio between classes, might be put on hold.

   Really? I hadn’t seen that.

5. iSkyscraper,

   Thanks for the outside perspective. Like grass growing, we can’t tell it has stopped until a long time has passed. Some times we need outsiders to tell us what things might have been like.

   There is a fundamental ignorance among most councillors and even city staff about the importance of the non residential base. Before he passed away, I was in correspondence with David Nowaln about quantifying the C/B. Sharing data from other cities. The simple truth is that even with tax rates at par, let alone being 3-4x, it is profitable for the city. The reason is simple, commercial properties and their associated uses do not consume much of the city provided services. When the disparity in rates and service consumption rises to the levels we have in Toronto, you get a situation whereby the addition of residents further declines the fiscal sustainability of the city. That 9.1% decline in the nonresidential assessment base I noted before, must now be funded by the residential class. Now residents will have to pay higher taxes anyway and suffer the associated effects of having jobs move farther away.

   Twenty years for three office towers, one of which is funded by the city, in the city’s main area of strength, is not sign of progress. It is a reflection/symptom of its decay.

6. andrew, I will see if I can find the link.

7. http://www.insidetoronto.com/news/article/71738–city-hall-businesses-could-be-on-the-tax-hook-again-in-2010

   “We have a program to reduce commercial property taxes in Toronto – particularly on small businesses,” said Miller following a special Executive Committee meeting looking at the city’s $8.7-billion operating budget. “That is going fast – we’re cutting faster than we thought. But next year is going to be a tough budget year, and I’m hoping to evaluate whether we can slow that down or not next year.”

   Keep in mind that part of the reason that the program is going ‘faster’ is that once the ratios were fixed changes in the assessment values (by means of appreciation/depreciation) automatically get shifted from one class to the other.

8. What is interesting is comparing Toronto to Mississauga. Between 2000 and 2006, despite being less than half the size of Toronto, Mississauga had five times the amount of office space development. 90 % of the more than 14 million sq. ft. of office spaced developed during that period, within the GTA, occurred outside of Toronto.