Highrise buildings: A slow poison to downtown vitality

By: Jeff McLaren

ABSTRACT:
Evidence from Toronto suggests that the way MPAC calculates assessments will drive out business when there is a new highrise building

Kingston City Council may be on the verge of adding a slow but deadly poison to downtown vitality. It is commonly heard that we need more people living downtown in order to help keep the downtown healthy and vibrant. It often follows that therefore high-rise buildings downtown are good for this goal. 

While it is true that seeking more people living downtown is a good goal for the community, the attached sentiment, “in high-rise buildings,” is detrimental to the sustainability of business downtown, as well as the authentic character of downtown, and its sense of place. 

It is often assumed that high-rises are the only way to raise density and that they will be helpful to local business. Neither of these assumptions is necessarily true.

The provincially mandated Municipal Property Assessment Corporation’s (MPAC) assessment of commercial and residential properties is influenced by the value of nearby properties. If a 2 storey building is replaced with a 20 storey building it is very likely that the value of the new building will be at least 10 times (if not more perhaps much more) of the old building. This means that a building downtown will have its MPAC property assessment go up significantly if a high-rise goes up nearby. This is more of a curse on small business than a boon because it is more likely that the property assessment will go up by much more than the best-case increased revenue for small businesses. 

Evidence from Toronto indicates that business sales activity does not keep up with the increase in the property tax assessments of properties close to high-rise buildings. In Toronto some businesses along Yonge St. have closed due to reported 100% to 500% property tax increase as a result of a new condo tower nearby. The same rules apply in Kingston: for small business, a new high value property near theirs will increase their property’s tax assessment. This will force landlords to increase their lease rates thereby undermining business revenue gains from increased sales.

This is critically important because if tax assessments are rising faster than sales revenue then more local business will find it harder to make ends meet. This is one factor that leads to greater business stress. Higher density is generally good in appropriate amounts. Super high density, as with high-rise buildings, is the equivalent of taking too much of a good thing such that it becomes toxic. 

As evidence of this trend is the fact that there are more people living downtown today (since the development of Block D, the old locomotive works) than ever before but the constant refrain that I, as councillor, keep hearing is that business is precarious; that businesses are struggling more than ever. The increased value of Block D has increased the assessed property tax value of all of downtown and businesses feel it when their lease rates go up. If we believe the refrains then it would appear that, in real terms, the tax assessments have gone up faster than business revenue in Kingston.

The issue of tall buildings downtown is also time sensitive because City Council is expecting to vote on several new applications and policies. 

Low and midrise buildings will minimize the tax assessment increase while still allowing more people to live downtown. The current zoning bylaw in the downtown core allows for up to 2 to 4 times the average height and density we have now. The difference between a tax bill increase for a building that meets the bylaw and some of the proposed high-rise buildings is huge. Small business will soon feel a similarly huge increase in the tax portion so landlords can pay their property tax. High-rises are not very good for downtown affordability or sustainability when they raise everyone’s cost of doing business.

As long as height and density restrictions are believed to be unlimited, land holders can ask for sky-high prices from developers. A stable, consistent, and firm policy for low rise and mid-rise will have a price stabilization effect on the market. Land price stabilization is a critical component of long-term urban planning and sustainable business growth which will encourage more people to invest in a more affordable downtown. This would be the result of the current bylaw if it were followed. Council needs to hold the line on the current bylaw or risk damaging downtown success.

The point of the Mid-rise and Tall Building Policy is to help make Kingston more livable for all. High rises are proposed because they are more profitable for developers, but they will slowly kill the vibrancy of downtown. We can help downtown by bring more people to live downtown in more low- and mid-rise buildings where the likely tax assessment increase will be lower than the increased business revenue. In other words, it is possible to bring more people to live and shop downtown without undue tax pressure on existing business and economic development – but not in high-rises buildings.

Added on: 2020-03-10 15:56:23