Property tax exemption for Yorkville landowner could end soon

The provincial Liberals are looking to close a loophole that currently exempts a major Toronto landowner from city taxes.

Victoria University, a college of the University of Toronto, owns a half-block stretch of Bloor Street between Bay Street and Queen's Park Crescent on which The Colonnade sits.

The upscale shopping complex includes a number of retail outlets, including designer brands such as Cartier, Prada, Michael Kors and Chanel, among others.

But the provincial Victoria University Act of 1951 exempts the school from the regulations that require universities in Toronto to pay property taxes on lands they own and do not actively use.

In the pre-election budget they unveiled Wednesday, the governing Liberals signalled their intention to close that loophole.

On page 297 of the budget, the government said the city has "raised concerns with the property tax treatment of businesses located on land owned by Victoria University."

"This has raised concerns of inequity with respect to business properties and reduces revenues to the city that could be used to fund important services," the budget reads.

In an effort to ensure equity in the property tax system "where everyone pays their fair share," the government will put forward amendments to the Victoria University Act to "ensure the municipal tax exemption applies only to lands owned and occupied by the university.

"This will enable the City to treat tenanted portions of land owned by Victoria University fairly and consistently with other public institutions and businesses."

The tax changes would be phased in "over a number of years," the budget note adds.

Victoria University says it has worked with federal and provincial governments over the past 18 months "to manage the effects of any policy change relating to our tax treatment" and add they are working to implement the changes quickly.

"We are obviously concerned about any change that will reduce the funding we have to deliver on our educational mission, but we are confident that we can manage this change," Victoria College spokesperson Jennifer Little said in a statement to CBC Toronto on Thursday. 

"Victoria University is a not-for-profit educational institution, and all of the proceeds of our land holdings go to advance our educational mission." 

Last month, Victoria University president William Robins said the school used its tax-exempt status to develop The Colonnade in the early 1960s "in a neighbourhood that was struggling at the time." 

"As a result of these buildings, 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 as student residences."

Robins's statement acknowledges that the university "does receive income from its real estate portfolio, 100 per cent of which is used to fund its core education mission, including academic programming and student support."

The University of Toronto benefits from a similar piece of provincial legislation. However, city documents said the U of T pays compensation to the city voluntarily every year.

In a statement Wednesday, the University of Toronto's vice president of university operations Scott Mabury said that U of T "voluntarily" pays about $230,000 a year to the city "in lieu of taxes on the small number of commercial spaces in its buildings."

"This payment is the equivalent of what we would pay without the exemption," Mabury said, adding that it also makes payments to the cities of Toronto and Mississauga in lieu of municipal taxes based on student enrollment numbers, at a rate of $75 a head, for a total of about $6 million a year.

That didn't extend to Victoria College as Little said no voluntary payments to the city were made by the college in lieu of taxes. 

"Ontario passed legislation relating to Victoria University that exempted some of its lands from paying city property tax," she added. "Since that time, no city property tax was payable on University lands that were used for non-educational purposes. The purpose of the policy was to encourage the rejuvenation of that part of Bloor Street," 

A city document released last month indicates The Colonnade property had an assessed value in 2012 of $142 million. The city estimated that under normal circumstances, the university would have had to pay about $12 million in taxes on the property between 2009 and 2015.

"We can't afford to lose that amount of tax revenue," Coun. Janet Davis, a member of the city's government management committee, told CBC Toronto last month.

"Those millions of dollars could be spent on programs that serve our most vulnerable, whether it's housing, child care, long term care — those are the services we're desperately short of in the City of Toronto."