City to axe vacancy rebate tax program

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Blais motion moved timeline up by year

Somerset House, on Bank, has long been one of the properties that has been demolished by neglect, something made easier through the city's vacancy rebate program, says David Jeanes.

Jennifer McIntosh, Ottawa Community News

Dean Karakasis, executive director of Building Owners and Managers Association of Ottawa, said he’s disappointed with the finance and economic committee’s decision to end the vacancy rebate program.

Karakasis said the program is an offshoot of the nineties business occupancy program, which would give businesses a break on their tax bill for vacant buildings.

“The money was never theirs to play with,” Karakasis said of the vacancy rebate program.

The rebate system would return taxes to business owners through a grant if they met certain criteria.

Other municipalities such as Toronto and Hamilton had already voted in favour of phasing out the program.

Rideau-Goulbourn Coun. Scott Moffatt was the only dissenting vote on May 2. The rest of the committee approved the recommendation to phase out the program, which city staff says has paid out $76 million since 2009.

The city’s treasury department recommended the program be phased out over three years, but a motion from Cumberland Coun. Stephen Blais moved the timeline to two years.

In advance of the report to committee, staff said there was very little participation on the surveys they sent out to affected businesses. Only 14 per cent were returned.

The current vacancy rate for Ottawa businesses is 11 per cent, which is far more than the usual three or four per cent, says Karakasis.

Councillors and city staff suggested part of the reason for the higher vacancy rate could be partly due to federal government downsizing.

He says landlords are adjusting to changing trends in the commercial market, such as the growth of online shopping and a decreased reliance on physical retail space.

Karakasis added the city should be a partner and working on some solutions.

Today, property owners can claim a 30 per cent tax break for commercial land and a 35 per cent tax break for industrial land if parts of the buildings are vacant for 90 consecutive days.

West Carleton Coun. Eli El-Chantiry, who works with the city's business improvement areas, said smaller businesses or “mama and papa shops” don’t get to take advantage of the rebate program.

The BIAs don’t have a clear position because the smaller shops don’t benefit, he said.

The committee’s recommended plan would decrease the vacancy rebate to 15 per cent in 2017 and eliminate the discount in 2018.

Capital Coun. David Chernushenko wondered whether getting rid of the program would help fill vacant storefronts in the Glebe.

Chernushenko said the program could mean landlords are more willing to let a space sit idle because they know they can get the rebate.

Causeway offers free bike tune-ups

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May 1 to 19
Mondays to Fridays, noon – 7 p.m.
Ottawa City Hall, Marion Dewar Plaza, 110 Laurier Ave. W.

May 21 – 28, noon – 7 pm
Lansdowne Park, Skating Court, 450 Queen Elizabeth Dr.

Bring your bike for a quick tune-up by a professional bike mechanic from Right Bike. They’ll take a look at your brakes, gears, wheels and tires to make sure that you are ready to ride.

These are quick and free tune ups, so there may be procedures and replacement parts that you will need that are beyond what can be done on site. But that’s okay! The mechanics will tell you what needs to be done and to refer you to a fine bike shop in your own neighbourhood that can help you. Supported by Safer Roads Ottawa. Learn more about rightbike.

Glebe businesses blame rising rent as more chains move in

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'No easy solutions' to changing retail landscape, councillor says

A letter on the door of this closed sushi restaurant on Bank Street in the Glebe shows the owner was in arrears.

A letter on the door of this closed sushi restaurant on Bank Street in the Glebe shows the owner was in arrears. (Waubgeshig Rice/CBC)

By CBC Radio's Ottawa Morning, CBC News

Independent business owners in the Glebe are worried that rising rents for retail properties are squeezing stores like theirs out of the neighbourhood, making room for more chain stores that can afford expensive leases.

Gilbert Russell, owner of Brio Bodywear on Bank Street just south of Clarey Avenue, fears that could become a trend that changes the character of the Glebe.

Some Glebe businesses aren't happy with the recent arrivial of McDonald's at the corner of Bank and Fifth. (Waubgeshig Rice/CBC)

"As long as these rents stay high, the only people that can afford it is somebody that has deep pockets because they've got multiple stores, they can stand to lose money on that store, but unfortunately it changes the complexion of the neighbourhood," said Russell.

He points to the McDonald's that recently opened at Bank and Fifth Avenue as an example.

"It doesn't add to anything. Having another business that draws people is beneficial. Having something that doesn't draw people that's generic isn't beneficial. They're not going to come in just to come down to the McDonald's at Bank and Fifth," he said.

"So it's really sort of the absence of that other impact. And at some point if the ecosystem isn't supportive for an independent business, independent businesses leave. If it becomes a fast food strip, it becomes a chain strip."

'They don't stop'

Although the renewed Lansdowne Park and its major events like football games and concerts draw people to Bank Street in the Glebe, Russell doesn't believe they spend enough time visiting independent businesses there, and Miriam Rangel agrees.

"I just feel the people from the Glebe, from the neighbourhood, feel kind of discouraged to leave home sometimes because during the events, hundreds of people pass by, but they don't stop," said Rangel, owner of Cafe Morala, on Bank near First Avenue.

As a result, visitors stop at chain stores and restaurants they know, and Capital Ward Coun. David Chernushenko recognizes this can be a problem for smaller businesses.

"There's nothing we can do or should do to prevent them [chains] from opening. What we should be doing is encouraging the kind of things that would have the independent business owner and the people that come to them want to be there," he said.

Councillors vote to discontinue expensive tax break for owners of vacant commercial property

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Last year the provincial program cost the city $17 million.

Haley Ritchie, Metro

City councillors voted today to end a property-tax break enjoyed by landlords whose buildings have vacancies.

Last year commercial and industrial property owners in Ottawa submitted 920 applications for the rebate. The cost to municipal taxpayers was $17 million.

City staff had recommended that the program, which until recently was mandated by the Ontario government, be phased out over three years in order to give property owners time to adjust.

At Tuesday's meeting of the city’s finance and economic development committee, however, councillors voted to end the rebate program in 2018.

Property owners who benefit from the program were disappointed.

Dean Karakasi, representing the Building Owners and Managers Association, said the change “will have a negative impact on industry.”

Karakasi said property owners are struggling because of federal-government cutbacks and the ongoing rise of online retailers, whose businesses require relatively little commercial space.

“This is not a good time in terms of industry,” said Karakasi. “This was a nice partnership with the city in terms of transitioning space.”

Several people presenting to the committee expressed hope that the end of the program will motivate landlords to find tenants for vacant properties.

Coun. David Chernushenko said landlords in some areas are being too choosy with tenants, to the “overall detriment to the street health of the retail environment.”

Karakasi said the idea that landlords are forgoing leases so as to realize a 30 per cent of their tax break is “absurd.”

“It may happen, there may be examples, but we can’t quantify them,” he said. “But, overall, why would anybody want to pay a dollar so they get 30 cents back?”

Other Ontario municipalities, including Toronto and Prince Edward County, plan to cut the rebate program as well.

The final decision on the program will be made at city council on May 10.