[Glen]

Until I see some kind of study that investigates how decisions are made and relates the two, then all I see is two phenomenon that occurred at the same time. It's junk science to assume causality.

http://fmwww.bc.edu/EC-P/WP532.pdf

Two results were particularly striking. First, in all the numerical examples, the revenue-maximizing tax rate was lower than the actual effective property tax rate employed in many jurisdictions, suggesting that some jurisdictions may be 9on the wrong side of the Laffer curve: with respect to property taxation.

http://faculty.maxwell.syr.edu/jyinger/E-Books/Housing_And_Commuting/Chapter_5.4.pdf

http://www.mitpressjournals.org/doi/abs/10.1162/003465304323031120
http://tigger.uic.edu/~gkarras/mybook.html



http://www.gutenberg.ca/ebooks/keynes-means/keynes-means-00-t.txt

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 to-day 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.

 

[Glen]

98-2000 also happens to be the tail end of the dot-com boom.

AoD

The dot-com boom was not specific to Toronto, so does little to explain why its commercial sector appreciated at twice the average rate. It is also the only time during the last twenty years where Toronto's commercial assessment base increased more that that of surrounding regions and the city's own residential class.

Class A Commercial Office Inventory
Developed Pre1960-1997

Toronto 80% Surrounding Region 20%

Class A Commercial Office Inventory
Developed 1998-2005

Toronto 20% Surrounding Region 80%

http://www.canurb.com/media/pdf/TO-OfficeCoalition-report.pdf

 

[AlvinofDiaspar]

Demonstrating a mechanism - which is what these papers and text does - is different from demonstrating that this is in fact the primary driver behind the stated employment gain - when it is so stated that the timing also resembled macroeconomic trends at the time.

Actually, what I am curious about is whether the differential in tax rates exist prior to 1989 between 416 and 905. That perhaps is an even better indicator than selective citation of stats.

AoD

 

[Glen]

Demonstrating a mechanism - which is what these papers and text does - is different from demonstrating that this is in fact the primary driver behind the stated employment gain - when it is so stated that the timing also resembled macroeconomic trends at the time.

Sorry, I thought you were referring to the assessment growth, not employment.

 

[Glen]

Actually, what I am curious about is whether the differential in tax rates exist prior to 1989 between 416 and 905. That perhaps is an even better indicator than selective citation of stats.

AoD

It is hard to make any comparisons Pre CVA due to the distortions the outdated assessments caused. Are you selectively forgetting that?

 

[AlvinofDiaspar]

Glen:

I am sure suitable adjustments in data can be made - surely, difficulty in getting the data doesn't mean it shouldn't be researched, considering the importance of such in this continuing debate in laying out the trajectory of commercial development in the GTA? Besides, are you arguing that somehow 416 commercial properties are underestimated in value and/or undertaxed in comparison to their 905 counterparts pre-1989?

AoD

 

[Glen]

Glen:

I am sure suitable adjustments in data can be made - surely, difficulty in getting the data doesn't mean it shouldn't be researched, considering the importance of such in this continuing debate in laying out the trajectory of commercial development in the GTA?

There were differences prior to 1989 on the same streets in Toronto let alone across municipal boundaries. You had some old properties paying taxes based on assessments that were more than forty years old. At the same time newer buildings were assessed much higher and taxed accordingly. The same goes for residential. You had Rosedale Mansions paying $1000 per year in property tax while bungalows in burbs were paying 2x-3x times the amount. North York, by nature of being younger than the old city of Toronto, had a more homogeneous assessment base, as such the attractiveness for office development there was set in place. After amalgamation, and dilutions in the fairness provisions, North York fell under the onerous tax climate of Toronto and saw commercial development turn to residential.

Besides, are you arguing that somehow 416 commercial properties are underestimated in value and/or undertaxed in comparison to their 905 counterparts pre-1989?

Yes. Many older properties, both commercial and residential, were under taxed in Toronto prior to CVA.

 

[AlvinofDiaspar]

There were differences prior to 1989 on the same streets in Toronto let alone across municipal boundaries. You had some old properties paying taxes based on assessments that were more than forty years old. At the same time newer buildings were assessed much higher and taxed accordingly. The same goes for residential. You had Rosedale Mansions paying $1000 per year in property tax while bungalows in burbs were paying 2x-3x times the amount. North York, by nature of being younger than the old city of Toronto, had a more homogeneous assessment base, as such the attractiveness for office development there was set in place. After amalgamation, and dilutions in the fairness provisions, North York fell under the onerous tax climate of Toronto and saw commercial development turn to residential.

As I recall, however - office space development in downtown wasn't at a particular disadvantage in comparison to the 416 burbs during that period - and perhaps same goes in comparison in North York; and was the tax rates comparable between say North York and the 905?

Note that office developments in say NYCC followed similar patterns as SCC and MCC - it more or less halted after 91 - and that the same trend towards residential development occurred - with commercial development in the 905 more or less being completely greenfield, at the periphery. Why is that?

Yes. Many older properties, both commercial and residential, were under taxed in Toronto prior to CVA.

So much so that it offers an advantage over greenfield development in the 905 (assuming we are comparing the same type of comemercial development)? If so - it wasn't the tax rates were high per se - but the fact that the assessment wasn't up-to-date. So basically, the advantage the city offers for some should have been negated a long time ago if taxation is based on CVA (though I find it hard to believe, considering development in NY is already slow even prior to amalgamation). Beyond that, did anyone actually study the typology of commercial/industrial space development - as to what's built where and why? I have a feeling it's not just a matter of taxation.

AoD

 

[Glen]

As I recall, however - office space development in downtown wasn't at a particular disadvantage in comparison to the 416 burbs during that period - and perhaps same goes in comparison in North York; and was the tax rates comparable between say North York and the 905?

Note that office developments in say NYCC followed similar patterns as SCC and MCC - it more or less halted after 91 - and that the same trend towards residential development occurred - with commercial development in the 905 more or less being completely greenfield, at the periphery. Why is that?[

A Lot of the office space downtown was built during a speculative boom. There is a point though that needs to be considered. That is the the necessity of a number of firms to be located downtown (attached). There will always be a number of companies which will pay the premium to be in a central location. When that market is saturated it is easier to make comparisons.

The rates were comparable, at that time between North York and the 905.



Lots, but certainly not all were greenfield. I know of lots office space developed south of Major Mac during this time period. All the while approvals in place in NYCC were converted into residential. Let me ask you this, why is land in a greenfield on the periphery of an outer suburb worth more money per acre than the Kodak lands or many other commercial zoned lands in Toronto. In most other areas greenfield development takes place because it is cheaper. In the GTA you pay a premium to locate out side of the city.

So much so that it offers an advantage over greenfield development in the 905 (assuming we are comparing the same type of comemercial development)? If so - it wasn't the tax rates were high per se - but the fact that the assessment wasn't up-to-date. So basically, the advantage the city offers for some should have been negated a long time ago if taxation is based on CVA (though I find it hard to believe, considering development in NY is already slow even prior to amalgamation). Beyond that, did anyone actually study the typology of commercial/industrial space development - as to what's built where and why? I have a feeling it's not just a matter of taxation.

AoD

Most class A had newer assessments. Other classes faced re-assessments if renovations were done. So taking advantage of properties holding an older assessment was a niche.

Of course locations are based on more than just taxes. The problem here is that the differences are not mere percentages ..... Form the staff report...

One of the continuing reasons for the stagnation of employment and of associated commercial construction is the cost differential between development in the city and the directly abutting regions. The net impact of the differential in both municipal and provincial education tax rates is obvious and annual – currently a firm located in a 250,000 square foot office constructed north of Steeles Avenue will save over $800,000 per annum in property taxes when compared to locating south of Steeles Avenue.

 

[Glen]

Perhaps. But the report you linked to gives only estimates, while the annual employment surveys have a consistent methodology and give exact numbers year after year. So I'd rather trust those numbers.

Perhaps a better way to compare is to look at the Unemployment rate, as it will take into account population growth. In 1989 if was 3.9% for Toronto in 2008 it was 7.5%.