The City of Toronto’s Government Management Committee voted to continue negotiations with Victoria University about the loss of property tax revenue due to exemptions granted by the Victoria University Act.
The motion set a deadline for September 30, 2017; the City Treasurer is authorized to request that the provincial government remove the exemptions from the Victoria University Act if city staff fail to reach an agreement with Victoria University by then.
This comes after a vote by City Council last summer directing the treasurer to examine the tax implications of the Victoria University Act. A report on these implications was supposed to have been presented at the November 14, 2016 meeting of the Government Management Committee, but according to the City, “additional time was needed in order to allow the City to hold further meetings with Victoria University and to evaluate, clarify and respond to a proposal put forward by Victoria University.”
The Victoria University Act, enacted in 1951, exempts the college from property taxes on all properties owned by Victoria University including land that is not occupied and used by the college. This stands in contrast to other universities, like York University, OCAD University, and Ryerson University, who only enjoy exemptions on properties occupied and used by the universities.
U of T, through the University of Toronto Act, also enjoys the same exemptions as Victoria University. However, U of T has been making voluntary payments to Toronto on their properties that are leased to third parties at fair market rental since 1949.
According to Victoria University, the province implemented the tax exemption to encourage the revitalization of the then-struggling Bloor Street West neighbourhood and “such development would also provide an income stream for post-secondary education, and a new revenue stream for the City of Toronto.”
The City estimates that between the 2009 and 2015 tax years, land owned by Victoria University at 131 Bloor Street West, which is leased to Revenue Properties Company Limited, the owners of the Colonade, has been exempted from a total of $12,213,171 in taxes.
The city estimates foregone 2013–2015 tax revenue on other lands owned by Victoria University and at least partly occupied by third parties to be worth $2,715,409. This includes the lands at 151 Bloor Street West leased to GE Canada Real Estate Equity Holding Company; 153 Bloor Street occupied by Club Monaco; 8 St. Thomas Street currently under construction by Kingsett Capital, and 110 Charles Street West occupied by consulting firm McKinsey & Company.
All the lessees of Victoria University lands pay property taxes on their buildings. The tax exemption applies only to the land owned by the college. The college believes that as a result of the development encouraged by these tax exemptions, “the City of Toronto has gained millions of dollars in tax revenue that it would not have received if those properties had continued to be used for student residences.”
Councillor Janet Davis, Vice Chair of the Government Management Committee, weighed in on the matter.
“These are very large and valuable properties, we understand that we don’t want to tax the parts of those properties being used for educational purposes but those properties that are being leased to commercial entities, where they are making significant returns on that commercial use, those properties should be taxed and the people of Toronto should be able to benefit from that commercial enterprise and not be exempt from taxes,” Davis said.
William Robins, President of Victoria University, attended the meeting in support of the motion.
Robins said that the college “recognizes that over time, circumstances change and policies need to be re-evaluated” and that more time was needed to continue discussions.
“As a not-for-profit public sector institution dedicated to higher education, our task is to find and implement a resolution that will not have an adverse impact on the university’s mission or its students,” Robins told the committee, adding that all lease income went to “delivering on our postsecondary educational mission.”
Ward 28 Councillor Pam McConnell believes that this gives Victoria University an unfair advantage over other university students, saying, “I suppose Ryerson would like that too and so would U of T and so would OCAD. The fact of the matter is the rents can go into supports for students but not the taxes.”
“The issue is: do you pay your taxes for all of the things students need outside the academics, such as recreation, roads, fire, police, or do we skim it off and say that this university shouldn’t have to do that because they’re advantaging their students? Well, the City of Toronto is not in the business in funding universities, that’s not our job,” she said.
The meeting later went in camera so that the committee could ask staff confidential questions about the progress of the negotiations.
“We’re happy that the committee passed the staff recommendation to give us more time to talk with the city to resolve this issue,” Robins said after the vote. “We’ve been having very productive discussions, there’s a lot of momentum and I’m optimistic we’ll be able to reach a resolution by the date.”
On March 4, The Toronto Star reported that a confidential City of Toronto staff report stated that Victoria University is offering the city $100,000 annually for up to five years, in exchange for its tax-exempt status.
