ENVIRONMENT DEFINED *
Legislation pertaining to heritage property and development can best be viewed in context. It has a relationship with other policy areas, notably with environmental regulation, planning policy etc. Relationships with these high-priority areas sometimes offer tactical opportunities. In order to fully understand Canada's current legislative set-up, it is also useful to assess the policy backdrop from which it emerged.
Relationship with Environmental Policy
Relationship with Planning Policy
What Canadian Heritage Is Up Against
The Connection Between Buildings and Environmental Philosophy
ENVIRONMENT DEFINED
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A Personal View
Courtesy of:
Environment: 1. The aggregate of external circumstances, conditions, and things that affect the existence and development of an individual, organism, or group. 2. Something that environs. 3. The act of environing, or the state of being environed.
It's Sunday afternoon, and there's nothing to do. The munchkins are going wrangy. So dad says to mom, "let's pack Fido and the kids into the station wagon, and go see some environment". Yes, the word "environment" has been entrenched in the Canadian psyche as a synonym for flowers and trees and chirping birds. For some people, it also extends to the air that we breathe, and the (acid) raindrops that keep falling on our heads. But rare, oh so rare, are the Canadians who acknowledge that "environment" also means the ceilings above us and the floors beneath our feet. No, to most people "environment" invariably means "someplace else".
That, for starters, is odd in view of Canada's peculiar demographics. We are among the most heavily urbanized populations in the world: in fact, cities and towns are home for a higher percentage of Canadians than for most other nationalities around the world. That is something which our public mythology overlooks, and even suppresses. We would prefer to think of ourselves as the great outdoorsmen; but for most of us, the definition of a Canadian as a person who can make love in a canoe has faded into wishful thinking. The typical Canadian is unlikely to be constantly surrounded by grass and trees until after he's dead.
Yet for an urbanized society, we pay incredibly little heed to our urbanized environment. Ask someone from Environment Canada what the Department's policy is on "the urban environment", and he will think of pollution or garbage or birdies in the trees ... but not the city itself. Look at the government phone book: although the feds have a "Cosmic Control Officer" (at the Department of National Defence), try to find anyone who is specifically mandated to address "the built environment".
Some Canadians hoped that we would do better after the Brundtland Commission issued its famous call for "sustainable development". In an urbanized society, it seemed only logical that sustainable development would translate into "sustainable urban development". That objective, in turn, would mean that cities would try to capitalize as much on existing resources and infrastructure. Sustainable urban development means finding new uses for old buildings, recycling entire districts, and getting more bang out of existing real estate buck.
But some ecological groups are warning us that "sustainable development", which environmentalists considered a propaganda windfall, may be a trap. For the natural environment, the concept may even be going sour. Until "sustainable development" came along, geographic areas were divided in two: 90% on which there was open season , and 10% which was absolutely protected (and perhaps freeze-dried). With the arrival of Brundtland, environmentalists thought that the protected stuff would remain protected, and that the other 90% would be developed in an "environmentally-sensitive" way. The typical environmentalist, in short, was saying to the developer "what's mine is mine, and what's yours is ours". But other forces, including some senior government officials, have turned the argument on its head. They say that "sustainable development" makes the notion of "protection" redundant. Furthermore, the 90% which is currently subject to open season is subject to "vested rights", so must will continue to be developed; but now the 10% of "protected" space can also be subjected to "sustainable development". It's the developer who says to the environmentalist "what's mine is mine, and what's yours is ours". Ecologists are getting predictably gunshy.
But that's where the natural environment and the urban environment differ. Unlike the case of forests, no one is suggesting that important urban buildings and districts be frozen in time. In fact, the diametric opposite is true, since buildings and districts are in regular need of maintenance, repair, periodic upgrading and investment... and there is a surging number of entrepreneurs who are prepared to do precisely that. The fans of the built environment can therefore make a fuss about "sustainable development" without as many qualms or fears of ambush.
The fact nonetheless remains, however, that such arguments are being debated in a philosophical vacuum so long as Canada fails to recognize that for over 80% of its population, "environmental future" means an urban environmental future. At some point, our officials must surely wake up and notice that our surroundings include mortar and clapboard and pavement and Mrs. McGee's front porch.. Gertrude Stein once said of Oakland, "there's no there there". Government policy says essentially the same about the entirety of urban Canada. It is time for Canadians to say: "Our communities are indeed here. They are in the act of environing. And thanks to them, we enjoy our state of being environed."
THE ENVIRONMENTAL FIGURES *
Courtesy of:
Ever since the Brundtland Commission [ Report of the World Commission on Environment Development, 1987] popularized "sustainable development", there has been increased attention devoted to "sustainable urban development as it affects the built environment". In other words, instead of focusing on a handful of "specimens" of the community's archaeological, architectural and historic "heritage", there has been increased attention to recycling almost the entirety of "the built environment" because
The issue is hardly confined to heritage buildings. This "Big Blue Box Argument" was illustrated in one controversy in Ottawa pertaining to Frank Clair Stadium, home of the defunct Ottawa Rough Rider football team. Although not usually considered a heritage property; the debate over the complex is illustrative of the scale of the environmental problem related to demolition of buildings.
The stadium's owner, the City of Ottawa, proposed demolition. This was not supported by the Regional Municipality of Ottawa Carleton, which is responsible for
Ultimately, the city and regional governments reached an agreement that spared the complex.
In 1994, Finance Minister Paul Martin established a task force which would advise him on various ways of making the tax system more "green". The task force submitted its report in November 1994, under the title Economic Instruments and Disincentives to Sound Environmental Practices. It included a unanimous recommendation to the effect that since buildings represented such a disproportionate component of the waste stream, an update of the tax system to deal with re-use versus demolition was advisable. ["Restructure Tax Accounting of Buildings, " Final Report of the Task Force Economic Instruments and Disincentives to Sound Environmental Practices. Ottawa. November 1994, p. 35]
Restructure Tax Accounting of Buildings
" The existing tax system could be examined to determine the extent to which it might encourage the premature demolition of buildings. If the tax system is found to encourage premature demolition, then remedial measures would need to be developed.
There has been a suggestion that the existing federal tax structure might encourage the premature demolition of buildings,. Construction and demolition debris comprises a large portion (roughly 30 percent) of the Canadian solid waste stream. If the tax system does encourage premature demolition of buildings, then it could be contributing to the solid waste problem in Canada. Reform of this aspect of the tax system could, therefore, reduce the amount of solid waste generated in Canada. However, there has been very little work in Canada examining this issue. The Task Force recommends that the government work with relevant outside experts to examine this issue."
Paul Martin, Art Eggleton
The federal minister who was then responsible for the Treasury Board, the Hon. Art Eggleton, put the issue succinctly at the unveiling of a former army hospital (called Wallis House), which was being converted to condos (and which sold out all available units within the first hour) [the Minister is quoted in "Ottawa's Wallis House", New City Magazine, Fall/Winter 1995]:
"In 1993, when my colleagues and I were drafting our book "
Creating Opportunity
", we expressed a commitment to "sustainable development". This evening, we are witnessing that
commitment: because "sustainable development" isn't a priority just in the countryside, where
there is
natural
habitat; it is also a priority here, in buildings (and cities) -- the
human habitat.
As a country, we haven't just undertaken to "re-use and recycle" items as small as pop bottles and
tin cans, but also items as large as the building we are standing in, and the city which surrounds it.
Cities (and their buildings) are the largest objects which our civilization produces; and this helps
explain why I believe that Wallis House, and what it represents, should be an example to the
country in ways that go well beyond architecture - as important as that is.
Let me offer just one example of this importance, based on personal experience. I had the honour
to serve as mayor of the city with Canada's largest population -- and Canada's largest waste
disposal problem. One-third of all deposits in Canadian landfill sites is composed of "used
construction material". If this building had been demolished, can you imagine how many
dumpsters would have been required just to cart it away?
There was a time when the deliberate waste of buildings (and even entire neighbourhoods) was
not only acceptable but fashionable in some circles. That day is past. The "re-use and recycling' of
Wallis House is, I trust, the symbol of a new partnership between the public and private sectors,
to bring our commitment of "sustainable development" to where people live. I am delighted to see
the efforts of the private sector in that direction; and it is my sincere hope that you will enjoy the
fullest cooperation of every branch of the Government of Canada.
One last point. I have spent many years of my life devoted to the quality of urban life. The
renovation of buildings like this will add immeasurably to the fabric that gives this city its
particular character and charm."
REGULATING AND ENCOURAGING "QUAINTNESS"
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Courtesy of:
THE RAW MATERIALS:
IS GRAND ARCHITECTURE ESSENTIAL TO VISUAL ATTRACTIVENESS?
Over the years, some places have been prepared to do almost anything to promote their distinctiveness as destinations. Obviously, a location's buildings are very important to its visual appeal, and the tourist's impression of how photogenic it is.
Some governments focused their campaigns on the grand "monuments"; but that is not necessarily what tourists were looking for. It has become increasingly apparent that what many tourists enjoy is what, in French, is called dépaysement -- the feeling of being in a place that is different from home. This explains how some areas in Canada, which are properly marketed, can attract tourists even if they are neither architecturally grand nor profoundly ancient. Canada's Yukon gets three stars in the influential Michelin Green Guide, even though most of its cabins were built in the twentieth century. One of the most striking examples of translating distinctiveness into tourist dollars is Old Town Yellowknife, also in northern Canada: it has capitalized on the mystique of its prospector past -- even though its oldest building dates only from 1934, and its legacy of architectural "monuments" is described by the name of its main street (Ragged Ass Road). The residents have even become so enthused that they have, on their own, posted signs in front of their houses saying that this is where legendary prospectors lived, drank and died, though not necessarily in that order.
Old Town in Yellowknife has benefited from imaginative strategy
In short, a successful tourism policy is less the result of great architecture than of great strategy.
IDENTIFYING THE POTENTIAL
The first step in developing a strategy to capitalize on its buildings is for the local authority to have faith in its own building stock. This is sometimes difficult; in fact, almost all major tourist districts in North America (and many in Europe) were at one time slated for demolition. This is because the potential of "quaint areas" is usually difficult to see: older buildings may have been disguised by years of grime or other clutter. The commitment to re-use these buildings for the embellishment of the community is often based on a leap of faith, or on colourful imagination.
SOME REASSURING FACTORS
Some local authorities, however, have been prepared to make that commitment independently of the tourism issue:
HURDLES TO OVERCOME
NON-RECOGNITION
By the reasoning described above, one would have expected most local authorities to be falling over one another to induce more renovation investment. This has not happened. In countless municipalities, "renovation" is not even mentioned in their official plan, despite its economic importance.
Sometimes this is the result of mere oversight, or of ill-informed antiquated economic thinking. In other cases, it may be that the local authority simply does not know how to mobilize its own population to renovate its own buildings.
THE REGULATORY HURDLE: CONSTRUCTION STANDARDS
Some officials seem to have a low opinion of property-owners, and to believe that the only way to assure the quality of an area is to regulate it. The problem with that theory is that many cooperative owners would not be allowed to do good renovation even if they wanted to because the government's own building standards prevent it:
In countless places, the standards are designed exclusively with new buildings in mind: the owner who wants to renovate must meet the same construction specifications as those of a building built today.
These standards disregard the fact that older buildings were often built with good but different technologies, and could be made just as safe as new buildings if alternative technologies were used -- but these are not allowed.
When a local authority allows only a single kind of technology in its construction specifications,
FURTHER HURDLES: LOCAL EFFORTS SABOTAGED BY THE TAX SYSTEM
To add insult to injury,
TAKING CORRECTIVE ACTION
The encouraging feature, however, is that these problems are all correctible:
STRATEGIES FOR POSITIVE ACTION
SOME CLASSIC LOCAL MEASURES
Having removed some of the negative obstacles to the re-use and embellishment of buildings and districts, local authorities can turn to more positive inducements. This goes beyond merely supervising the quality of hotels and restaurants.
Obviously, a first step is to assure that any official plan for the area makes proper mention of the authority's objectives.
Beyond that, communities have typically taken a wide variety of measures to stir up interest both among tourists and the local population:
The problem with this class of measures, which in Europe is sometimes called animation culturelle, is that it goes only a certain distance in improving the tourism potential of the area. Admittedly, the activities are "fun"; but certain fundamental economic problems remain. There is a danger in focusing only on the cosmetic features of a tourist district -- what the New York Times called "creeping cutesy-poo".
"COMPLEMENTARY" USES
It takes more than cosmetic measures to convey life and vitality. Unless the buildings in the area have a solid and diversified economic base, the businesses in them will be prone to failure. This is because many tourist areas have a business cycle which is far more extreme than the normal business cycle. Many tourist areas in North America have ground floors devoted to restaurants, bars, arts, crafts and souvenirs, while the upper floors are occupied by pigeons. The common theme among the ground floor uses is that
In short, business patterns in many tourist areas are not merely cyclical: they are manic-depressive.
The primary way that a local authority can at least mitigate this pattern is to encourage a diversification of uses within the area. This means
OVERCOMING ECONOMIC ARTIFICIALITY
This concern about avoiding economic artificiality has a second element. Countless governments have subsidies and grants to encourage owners to repair or embellish their buildings. The problem with subsidies and grants, aside from the fact that they cost the governments money, is that they are so obviously artificial: when governments go through hard times and introduce austerity budgets (as so many governments are doing now), it is the "artificial" programs which are usually the first to be cut.
Many local grants and subsidies might not even be necessary if the country has designed its tax system correctly. In some places, the courts have stated that
In other countries however, the central tax authorities have refused to treat such work as a tax-deductible "repair", so the owner had higher taxable income (and higher taxes) accordingly. Clearly, it is in the local authority's economic interest to make sure that the country's tax system is favourable to its goals, not against them.
Another concern, relating to economic artificiality, is the level of merchant organization in a tourist area. If the merchants are disorganized, then they cannot participate in publicity campaigns together, they cannot synchronize sales or even hours of opening and closing. Programs such as the "Main Street" projects in Canada and the United States were designed to help merchants in such areas to get as competitive as merchants in a shopping mall are; and the result has been a significant improvement in economic activity in such areas.
OVERCOMING VISUAL ARTIFICIALITY
Along with economic artificiality, there can be a concern about visual artificiality. Although this had novelty appeal, it is not clear that this approach would produce major long-term tourism benefits. In other countries, cultural officials have taken stringent measures to prevent work which would distort the true character of the community.
The problem with this approach, however, is simple: it may tell owners what not to do, but it tells them nothing about what they should do to upgrade their buildings to today's standards of habitability or use.
On the other hand, some local authorities have provided advisory services to show owners
In some other communities (including our old friends in Yellowknife) the local authority has gone even further: it has promised that owners who undertake defined desirable work on their buildings will get a "fast track" for permits and approvals. This cuts down on both the uncertainties and the "holding time" of the owner. When we remember that permits and approvals in some European downtowns can take five years, the advantage of such an approach is obvious.
CONCLUSION
For those people who came to hear predictions on how local authorities could improve the tourism potential of "quaint" areas, the message is simple:
The first steps are clearly:
Beyond that, a local authority may wish to launch a variety of measures for "animation culturelle"; it may even introduce grants or tax breaks; but long-term prosperity depends on
It is not enough to tell owners what they cannot do: a local authority can
There was a time when these kinds of strategies would have been considered beyond the abilities of a local authority. Times have changed. In this new world of market competitiveness, it is not enough to merely pray for the success of tourist areas. It is necessary to take measures to create a positive economic climate. With the right strategy, local authorities can do marvels. As artist Salvador Dali once said "by daring the possible, we create the impossible".
Urban Planning and the Re-use/Rehab of Buildings
Little House on the Prairie Meets
Monty Python's Flying Circus
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Courtesy of:
For over forty years, conventional wisdom dictated that new construction was "where the action was" in the housing industry. That is where construction money was being invested; that is where planners and architects were getting business; and that is where professionals could watch the drama of unfolding urbanization. New construction was divided between suburban development and downtown redevelopment; either way, the idea was to start with raw land, and build from scratch.
Occasionally, some atypical observer might ask what we were supposed to do with what we had already built. How would we keep it in good repair? How would we give new uses to buildings which had outlived their original function? How would we systematically upgrade substandard premises? For forty years, however, these kinds of questions wound up in the dustbin of the Canadian academic community, in both architecture and planning programs: until the 1980's, there was not a single university course in Canada which even purported to address these issues. Let's face it: to work with tabula rasa is less confining and, to most people, more dashing than working with a scenario already cluttered with existing artifacts. Among architects, professional vanity was also involved: to ask an architect to work with another's building gets a reaction akin to asking Escoffier to work with Kraft Dinner. Deep down, the Canadian university system functioned for decades with a secret sympathy for Nero: how nice it would be to get rid of the status quo altogether, to give ourselves free rein to recreate the urban world in our own image! To this very day, only four Canadian universities have systematized courses on how to deal with the existing building stock...and even there, the operative rationale is not socio-economic, but "cultural". Aside from the voices of a few heritage fans, the message for forty years was clear and constant: old isn't sexy.
But every society ultimately gets what it deserves. In the 1980's, Canada woke up to discover that it couldn't ignore its existing building stock any longer. In fact, the planners had lobotomized themselves for so long that by the time someone took note of the state of the country's infrastructure, the situation was almost beyond repair. Elevated freeways were literally collapsing; downtown sewage systems were still reminiscent of The Phantom of the Opera; and the whole mess would now require, in the view of the Federation of Canadian Municipalities, a repair bill of no less than $15 billion.
The housing stock was facing a similar predicament. Because of changing demographics, new housing starts were drying up. According to the Canadian Home Builders Association, new housing starts would drop from their 1987 high of 247,000 to a 1990's constant of 190,000 per year (they actually dropped much further than that). Not surprisingly, that has repercussions for the overall aging of the building stock. In 1982, only 21% of Canadian homes were over 40 years old; but that figure is jumping to 40% by 1999.
Meanwhile, while Canadian planning schools were still doggedly pursuing the issues of the suburbs and of core redevelopment, another phenomenon of awesome proportions was occurring under their very noses, with barely a peep of notice. That was the renovation boom. In fact, the "reno industry" was acquiring such proportions that in terms of overall investment, it passed new residential construction in 1982, and has stayed ahead almost continuously ever since. It already employs over 200,000 Canadians directly; dollar for dollar, it creates over twice as many jobs as new construction; and it is growing at twice the rate of new construction.
It is tentatively estimated that in North America as a whole, "the reno industry" (residential and non-residential alike) will witness one trillion dollars worth of investment over the next decade on the structural side, and four trillion dollars on the non-structural side. That is almost two hundred times the annual national deficit of Canada. Yet in Canada today, there is only one university which offers a single course on the systemic aspects of the renovation process.
Someone has been asleep at the switch.
Canadian bureaucracy has watched this phenomenon with mixed emotions (when it has watched it at all). Officialdom was prominent after last fall's California earthquake: building inspectors and engineers were falling over one another to emphasize that Canada had a large proportion of substandard buildings which could be wiped out by any Act of God (whether it was an earthquake, fire, flood or whatever). The conclusion was that unless we are ready to write off much of Canada's pre-WWII building stock (at a replacement cost of over $120 billion) and start over, we have no choice but to upgrade the existing stock. Yet despite that, the 1995 National Building Code still doesn't contain a systematization of acceptable renovation practices. It is only now that the National Research Council, to its immense credit, is making up for lost time -- in the preparation of what promises to be the world's most advanced building code.
The track record of municipalities in this area is as weak as that of universities and national institutions. How many municipalities have even taken the trouble to formulate a strategy on the subject of renovation? City councils will gladly allocate funds to attract business and investment, or even sports events; but when it comes to the activity which produces the greatest net increase to the municipal tax base, i.e. reno, the level of disinterest in renovation has again been baffling. Admittedly, there are exceptions: Montreal, for example, has had a longstanding policy of emphasizing reno on its overall development strategy; and Yellowknife has boldly introduced progressive measures to address districts like Old Town, which contains some of the most dauntingly problematic housing stock in Canada. Yet in the overwhelming majority of Canadian municipalities, there is not only a failure to strategize; there is even a failure to recognize that renovation investment is as significant as it is. As a result, municipal governments are incurring a major opportunity cost. The accountancy firm of Arthur Andersen & Co. estimated that Canada's pre-WWII building stock alone could easily absorb over $36 billion in short-term investment; so why aren't municipalities busily plotting to cash in?
This collective somnambulism, on the subject of the multi-billion dollar phenomenon called renovation, has been only modestly less severe among housing officials; but that quarter's reaction, such as it was, has been one of crossed signals. On one hand, some thinkers have assumed that renovation was an integral part of the "normal" upkeep of the national housing stock. These same people were at the root of programs like the Neighbourhood Improvement Program of the 1970s and the various incarnations of the Residential Rehabilitation Assistance Program (RRAP). Thanks to these programs, it is now almost universally agreed that renovations are an essential component of any government's housing strategy.
Private-sector renovation has not been viewed in the same light. Some have argued that it is an inauspicious component of the antisocial process of gentrification. A fair body of literature has indeed been produced in Canada on that subject. For example, it has been demonstrated convincingly that renovation is frequently used as a pretext by landlords to avail themselves of disproportionate rent increases or even of legal evictions. Furthermore, there are indeed well-documented cases of widescale renovation leading inexorably to increases in occupancy costs, which in turn displace low-income occupants. That is incontestable. What is more dubious, however, is the tacit conclusion that the above is a rationale for putting the brakes on all renovation projects.
The unsavory fact is that buildings do deteriorate unless they receive ongoing investment. That is dictated by the laws of physics and chemistry, particularly in the Canadian climate. If we do not want Canada's housing stock to look like Calcutta's, there must be a constant infusion of cash for repairs and periodic upgrading; and in a market economy, that cash has to come from somewhere. The difficulty, in the gentrification debate, is this: if on one hand we don't want housing to deteriorate, but on the other hand we don't want to incur substantial costs which might be passed on to occupants, what do we do? The notion of freeze-drying the building stock is no solution, and that inference in the literature again underlines the paucity of thinking which has gone into the subject.
A question of similar dimensions to the quantity of renovations is the issue of their quality. That is a topic which affects almost every home in Canada: there is hardly a property-owner in the entire country who has not been approached, at some time or another, by a would-be renovator who would do something or other...as long as it was done on the sly and there was no record of the transaction. When the work falls apart and the consumer tries to complain, he discovers that his contractor has disappeared, gone out of business, or moved to Brazil. This kind of phenomenon has propelled home renovators into the same league as car mechanics, in terms of the number of complaints lodged with consumer protection officials. The renovation industry has been accused of harboring the largest single black market in Canada outside the drug trade. The people most directly harmed, aside from the consumers, are the legitimate contractors for renovation: not only do the fly-by-nighters make the entire industry look bad and hence dampen the market, but they also engage in unfair competition. According to organizations like the Ontario Home Builders' Association, that situation has worsened since the Goods & Services Tax produced, they claim, an increase in "off the record" and barter transactions.
Even when contractors operate in perfect good faith, do they have the technical or the business skills to stand behind their contract? As just one technical example, Canada has witnessed many masonry buildings whose facades gradually turned to pablum when the renovator erroneously picked the wrong cleaning technique. On the business front, the renovation industry is extraordinarily undercapitalized and fragmented. Despite strenuous efforts by trade associations over the past few years, reno is still probably the most disorganized major industry on the continent. A decade ago it was estimated that even despite the renovation boom, over 80% of renovation contractors were such naive businessmen that they went out of business within their first year of operation Educational efforts by the Canadian Renovators' Council and CMHC may have improved those prospects (along with consumer education efforts like the homebuilders' Get It In Writing campaign), but there is still much work to be done. With a profile like that, one might say that a major drama which will be played out in the arena of Canadian housing stock, over the next decade, could be entitled Little House on the Prairie Meets Monty Python's Flying Circus.
Not surprisingly, major associations like the Canadian Home Builders Association have been trying to explore and deliver possible remedies (e.g. training courses, warranties, etc.); but the subject has turned out to be filled with more traps and pitfalls than ever anticipated. What kind of moral support has emanated from academia and officialdom for these efforts? Almost none. Although CMHC and some provincial governments have made an earnest effort to see whether they could introduce remedies (in tandem with legitimate contractors), there has again been a paucity of in-depth thinking, and the subject is still in its infancy. At stake is the question of whether a significant proportion of Canada's renovation investment will wind up doing more harm than good; and considering that total residential and non-residential renovations amount to $35-40 billion annually in this country, those stakes are indeed high.
So what should we do? Our first step, as a country, should be to acknowledge that some 90% of the homes which will house Canadians in the year 2020 have already been built, and are in various states of disrepair; and we have perhaps another 10% left to build. That ratio of 90%-10% is often replicated in the staff of planning departments, housing authorities and (particularly) university programs...but it is not 90% for B} existing stock and 10% for new, but the other way around! Although a reversal of those figures would be inappropriate, the present-day allocation of expertise and resources drastically shortchanges our existing building stock. The monomania with new construction, at the expense of treating existing structures, simply fails to make sense in light of current statistics, economics, and demographic trends. Housing strategies that fail to fully capitalize on existing districts will go the way of Urban Renewal; and university programs which are geared to replicating Mississaugas will discover that an increasing proportion of their graduates are unemployable. That prise de conscience is not widespread today.
The second step is to acknowledge that the renovation industry is a nation-wide phenomenon which is far more complicated than it looks. On one hand, its sheer monetary volume should attract attention; on the other hand, the business of renovation has a variety of unique problems which demand solutions. In all probability, successful approaches will not be developed until there is more cohesive liaison between officials, trade associations, interested citizens' groups and academics. That level of liaison is not evident today either.
The third step is for the above interests to work cooperatively on tackling the glitches in the renovation process. That is the only way for Canada to feel confident that it knows how to deal with the unavoidable realities of structural deterioration and the necessities of periodic upgrading in its building stock.
We have no choice. We simply have too much invested in our existing buildings to go on forgetting about them as soon as the capping-off ceremony is over. The development of intelligent strategies in this regard is not only an imperative of a maturing housing supply; it is a function of a maturing society.
JOB CREATION
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Courtesy of:
The task of identifying the employment multipliers, associated with the rehab of older buildings, is hampered by the lack of a proper "Employment Generation Model" for the sector. The preparation of such a model, at least in the residential renovation field, has been urged for some time.
In the meantime, observers must therefore resort to employment generation models which are as close as possible (in terms of sector and date) to today's rehab industry. At this point in time, according to the Canadian Housing Information Centre, it would appear that the closest relevant indicator is the one provided in a 1993 analysis done for Canada Mortgage and Housing Corp.(CMHC). This report, entitled Economic Impacts of Residential Construction, covered "alterations and improvements" as of 1992, but its focus was on the residential side of the industry only. Although the non-residential and institutional side would appear to be ripe for further research, it is arguable that the figures from these sectors would likely be comparable, and that for the time being, the following figures nonetheless convey a reasonable general profile. The consultants (DRI Canada) used a methodology which was different from the one used by other organizations, and this gives rise to another caveat. Organizations like CMHC and the Canadian Home Builders' Association (CHBA) often refer to "the reno sector" as including
DRI did its calculations based on the first and second components, but there was no apparent reference to the third. Furthermore, unlike the computations at Statistics Canada, the DRI figures do not include "self-supply". This would automatically mean a different set of figures for contributions to GDP (Gross Domestic Product) -- and a different point of departure for employment figures.
Nonetheless, DRI demonstrated that its chosen component of the reno sector (residential alterations and improvements) had a higher multiplier than the new construction sector: roughly 1.6 versus 1.5. In other words, a given expenditure on rehab would have a greater domino effect on the economy as a whole than an identical expenditure on new construction. However, since there were significant discrepancies in definitions of the industries surveyed, such figures must be approached with caution. In particular, one may note that the DRI findings are fundamentally different (in both methodology and outcome) from those of the previous leading report, published by CMHC in 1986. That report entitled The Canadian Renovation Market had calculated that direct renovation employment generated by a given amount of investment was over twice the direct employment provided by an identical investment in new construction; and that the total employment (direct, indirect via suppliers, and induced through related economic activity) was still substantially higher, in the case of reno as opposed to new construction.
With a figure of almost 60 jobs per million dollar investment (1986) the CMHC findings indicated that reno's job spin-offs were not only better than manufacturing and new construction, but also BETTER THAN ALMOST ANY OTHER INDUSTRY IN CANADA. The DRI figures, however, point in a more conservative direction because of the different definitions. According to DRI, new construction and renovation wind up in virtually a dead heat: for each million dollar expenditure (in 1986 dollars, $1,339,000 in current dollars), new construction produces 29.88 jobs whereas reno produces 29.74. In other words, if one disregards any discrepancies emanating from the use of the base year of 1992 for employment data and the base year for dollars of 1995, one could reach the following approximate estimate: in the case of both new construction and rehab, the DRI figures would suggest that a full-time job is created in Canada with each investment of slightly less than $45,000.
There are, however, some dramatically important qualifiers which must be imposed on the above: by omitting maintenance, repair and self-supply from the calculations, DRI left out factors which would have significantly improved the relative figures for the renovation sector; and in the case of the rehab sector, the total employment generated tends to be far more local than in the case of new construction, where indirect and induced job creation (notably building materials) are concentrated in only a handful of locations. This has implications for the equitable distribution of economic opportunity.
In other words, if these other factors are taken into consideration, the overall picture looks much closer to what had been predicted in the earlier employment generation models, i.e. a distinct advantage to the reno sector, at least as it relates to the local economy.
WHAT CANADIAN HERITAGE IS UP AGAINST
*
Courtesy of:
INTRODUCTION
There are people who argue, with conviction, that since our heritage is beyond price, the question of the economics of heritage should be irrelevant. Unfortunately, as much as a one may wish to sympathize with that sentiment, the fact remains that those who wish
The obstacles faced by heritage buildings and districts, in winning support and investment, are real. Furthermore, they are widespread. Unless heritage policy is to descend into glibness, these challenges must be faced directly.
Much of the response by the heritage community takes an adversarial stance (or a perceived adversarial stance) toward owners, contractors, developers and the private sector generally, with a political price to pay accordingly. There are complaints that heritage continues to be perceived as anti-development, anti-property, and a delaying tactic for approvals.
To the extent that economics gets mentioned at all, the Pavlovian reflex is usually: tourism. Although the cultural tourism argument has demonstrable merit, there is a risk in confusing
The tourism argument can therefore come across as glib to the business community. The fact that heritage might or might not induce tourists to visit the community is cold comfort to a developer who is trying to fill an office building, or is losing two or three lots in a subdivision because there is a heritage property there.
SO HOW DO WE MAKE HERITAGE INVESTMENT MORE ATTRACTIVE?
Instead of facing these challenges directly, we have heard heritage fans over the years invoking three arguments:
But what about the real issue: at the scale of individual properties, does heritage pay?
If we start from the premise
The irony is that not only is heritage a form of development ; but in many areas, it is actually the most viable form of development. This investment in the older building stock generally, in the form of periodic rehabilitation work including restoration, upgrades of mechanical and electrical systems, and improvements to building amenities, represents hundreds of millions of dollars to the construction industry.
If we are to consider a true economic strategy, we must clearly distinguish between three sets of economic challenges:
1. MYTHS
One of the most persistent myths has been that it would invariably cost more to repair an older building than to destroy it and replace it with new construction of comparable dimensions. That notion has been debunked repeatedly; but the problem is that the correct technical information does not necessarily reach contractors or consumers.
The key to success is a proper system of communications, which relays best practices to the industry and the public. Those kinds of partnerships are currently under exploration.
Finally, there is currently no systematized referral system that can bring together consumers of heritage rehab projects and competent contractors or real estate professionals. The process is strictly hit-and-miss.
2. ARTIFICIALLY-CREATED OBSTACLES
The initial mistake that is often made, in discussing the economic challenges facing heritage properties, is to assume that these are either
This is simply not true. The threat to this country's heritage was, in large part, the conscious and intended result of specific historical events, which can be summarized as follows.
The theoretical rationale for the systematic elimination of older buildings in Canada was based upon two principles:
Although these ideas gained currency in the 1920's and 1930's, it is during World War II that specific measures were taken to lay the groundwork for this outcome.
At the end of World War I, the theorists who were subsequently labeled "Heroic Modernists" by architecture schools dismissed previous architecture as the work of "latent criminals" (according to Adolf Loos), "pathological cases" (Loos) and "perverts" (Walter Gropius).
This view came to be accepted by opinion-leaders in Canada. According to the Journal of the Royal Architectural Institute of Canada (RAIC) in 1929, Victorian and Edwardian architecture were "composed of endless mongrel combinations of shooting roofs, gabbing gables and strutting bow windows... that move the viewer almost to tears." According to the editorial page of the Toronto Mail (1932), it was "architecture at its worst.... Facades bulged with huge bay windows and ponderous cornices. Grotesque bumps and knobs... stuck out everywhere. Squat towers and turrets often gave the finishing touch of ugliness to the abortions."
So what would be done? By World War II, opinion-leaders were proposing that the best thing would be annihilation of this architecture. "There is obviously no sense of remorse for the loss of Regent Street (in London during the Blitz). We would gladly join with thousands and light a cracker and wave a flag over the ruins of the monstrosities... We see no point in weeping over a ruin of the Albert Hall or the Albert Memorial, as yet unhappily spared." (RAIC Journal, 1940) "The sight of acres laid waste by bomb and fire... can be much more a positive and creative inspiration for everybody than a street of our buildings.... The dead hulks that make up Yonge Street are much more pathetic than a bombed out area if only because more time must go by before anything intelligent is done about them." (RAIC Journal, 1942)
McGill Principal Cyril James therefore told a prestigious Toronto audience (1943), "You recognize a comparative misfortune, in that none of the Canadian cities have yet been leveled by the war, but are eager, as soon as war has finished, to wipe out much that is unsatisfactory from one end of this Dominion to the other, in order that you may rebuild effectively the cities and communities of which you have long been dreaming."
This might have remained mere talk, were it not for the intervention of one economic theory stemming from Black Friday 1929. Many economists came to believe that in order to avoid future depressions, industrial economies would need to avoid periodic over-supply through what was later called "planned obsolescence".
These two theories came together in the person of federal official Clifford Clark. In 1938 he dismissed Canadian housing as the product of "processes that catered to our forefathers prior to the Industrial Revolution." Instead, he wanted cities that would reflect "machine production, standardization and technological advance.... " "The challenge ", he concluded, was to model the building of cities on "that rugged young interloper, the automobile industry."
As it turned out, during World War II it was Clifford Clark (as Deputy Minister of Finance) who supervised the drafting of the "temporary" Income Tax Act. By the end of that task, Canada had a system in which
The impact on the demolition of Canada's older building stock, in the decades following World War II, is a matter of public record. It was planned that way.
Countries like the United Kingdom, which structured their income tax legislation differently, encountered significantly different patterns of development.
It was the public, not the "official thinking", which began to challenge this vision on a large scale during the emerging renovation boom of the 1970s. However, it was not until the 1980s that the "planned obsolescence" theory of economics was put definitively to rest (notably by the Brundtland Commission), and was replaced by the more current objective of maximizing economic benefit by extending the longevity of investments, including investment in buildings and cities. The staggering economic costs of planned obsolescence (e.g. in terms of waste and of investment capital) are no longer considered acceptable. Unfortunately, not everyone has updated their economic thinking yet.
There have been some improvements over the past twenty years. The tax deductions, which a person could claim for demolition, were scaled back in 1981 (though not eliminated); and the rate at which buildings were presumed to lose value was also reduced. However, there was no corresponding clarification of the tax treatment of rehabilitation. As of today, there is still nothing that could be called a unifying vision to provide coherent treatment to the restoration or renovation of buildings: there is even no systematic definition of what rehabilitation expenses on a building are tax-deductible, and which ones must be capitalized. [see Durnford "The Deductibility of Building Repair and Renovation Costs", Canadian Tax Journal, 1997 p. 395.]
At the provincial level, the fiscal bias in favour of demolition was at least as overt. In Ontario, a component of the property tax system called Building Occupancy Taxes ("BOTs") was structured so that
The combination of these two factors often proved irresistible. The City of Ottawa conducted a case study on one downtown building; its demolition and replacement with a parking lot would prompt
That is what the heritage supporters had to compete against.
In the words of one municipal official, although BOTs were abolished in 1997-8, "the inequity has been perpetuated." If anything, the situation has gotten worse. Two phenomena have helped maintain the preferential treatment of parking lots:
In Ottawa-Carleton, for example, parking lot owners pay property tax equal to:
"The higher business taxes have not shifted under the new system." Since the preferential position of parking lots applies to the entirety of the property tax bill (not just the BOT), older buildings are threatened even more than they were before.
3. SUBSTANTIVE OBSTACLES
The kinds of economic obstacles described so far are correctable through good organization and through a more even-handed institutional environment. The key to success is in capturing the attention of the decision-makers long enough for them to realize that the status quo is unfairly imbalanced, and that improvements are possible which could prompt a proper level of investment activity in heritage and rehabilitation.
However, some of the obstacles are not organizational or institutional, but technical. Yes, there are still some lingering areas where rehab technology has still not solved certain problems, and where costs therefore remain higher than they should be. However, Canada has one of the most sophisticated systems in the word for construction research and dissemination of solutions -- via both institutions and industry associations. There are excellent prospects for partnership between the heritage community and those who can help solve these economic problems -- if they are invited correctly.
4. POSITIONING
One recurring problem is the fact that the entire subject of "heritage" is often perceived as "anti-development" and hence anti-economical. That political liability is often exacerbated by various pronouncements coming from the heritage supporters themselves.
One topic which is seldom publicized, unfortunately, is the tactical role of heritage restoration as a catalyst to inspire communities (and sometimes entire cities) to invest in upgrading the entirety of their building stock. In the early 1960's, building rehabilitation ("rehab") was marginal to the North American construction industry. Then, at a meeting of American mayors in 1964 (described in the report With Heritage So Rich), many cities decided to use a strategy to confront the trend of decay:
Several Canadian communities did likewise. Despite the occasional problems, on a continent-wide basis the demonstration projects worked: for every heritage building that was restored, there were dozens of others whose owners were thereby "inspired" to reconsider "doing the right thing" with their buildings - and who eventually followed suit and helped ignite an industry which will invest $5 trillion in the North American building stock over the next decade.
It was in the 1970s that North America started to witness a gigantic boom in one important component of that market . This variation, which we will call "heritage- type work" has the following features:
The only significant departures from principles (1) and (2) are usually in kitchens and bathrooms. These are usually remodelled, and even if the work is done on a "heritage theme", it seldom bears any resemblance to what was there before.
This heritage-type work has now grown to a gigantic industry in its own right. It is arguable that this industry would never have reached that level of impact if there had not been a handful of good heritage restorations to give people the "right idea" and start the process off on the right foot.
If the core of the heritage movement is perceived
CONCLUSION
The heritage community can and must attack the specific economic concerns affecting heritage projects. Many of the concerns are based at least partly on a kernel of truth (and sometimes much more), and will not go away until specific measures are introduced to counteract them.
Canada is still long way from solving these problems. However, it has at least grasped the truth of the ancient legal dictum: when one knows how to ask the right question, one already has 75 percent of the answer.
A version of this article by Marc Denhez, author of
The Heritage Strategy Planning Handbook
and the past Chair of the ICOMOS Canada Committee on Law, Finance & Organization
appeared in
Canadian Heritage
magazine, Winter 1989-90, p. 44.
By Marc Denhez, author of
The Heritage Strategy Planning Handbook
and the past Chair of the ICOMOS Canada Committee on Law, Finance & Organization
Address by Marc Denhez, author of
The Heritage Strategy Planning Handbook
and the past Chair of the ICOMOS Canada Committee on Law, Finance & Organization, at the
annual conference of the International Union of Local Authorities, 1992. The author thanks the
Federation of Canadian Municipalities for its assistance in making participation in this meeting
possible.
A version of this article by Marc Denhez, author of
The Heritage Strategy Planning Handbook
and the past Chair of the ICOMOS Canada Committee on Law, Finance & Organization appeared
in
Canadian Housing,
Winter 1989
Assembled by Marc Denhez, author of
The Heritage Strategy Planning Handbook
and the past Chair of the ICOMOS Canada Committee on Law, Finance &Organization.
Extracts from an address by Marc Denhez, author of
The Heritage Strategy Planning Handbook
and the past Chair of the ICOMOS Canada Committee on Law, Finance & Organization, to
Community Heritage Ontario, May 29th, 1999. The evolution of policy in this area, as it relates to
the residential building stock, is described by the writer in his book
The Canadian Home
(1994)
(Mon Oct 23 18:36:19 2000
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