Date:March 19, 1998
To:Strategic Policies and Priorities Committee
From:Brenda J. Librecz, Interim Lead, Economic Development
Subject:Business Improvement Areas: Interim Administrative Procedures for 1998 and Municipal Code Amendments
for the (former) City of Toronto
Purpose:
This report outlines the Business Improvement Area Program and recommends interim administrative procedures and
policies for 1998 and process for developing an integrated program across the amalgamated municipality for
implementation in 1999.
Funding Sources, Financial Implications and Impact Statement:
No funding is required. Providing interest-free advances to BIAs as has been requested by the Toronto Association of BIAs
and as is set out in Recommendation 5(c) will result in lost revenue to the City in treasury bill interest on investments. It is
estimated that the net revenue reduction will be in the range of $8,000 to $12,000.
Recommendations:
It is recommended that:
1.City Council request the Minister of Municipal Affairs to amend the meaning of BIA membership set out in Section
220 of the Municipal Act to include all business tenants as well as the assessed owners "of rateable property in the area that
is in a prescribed business property class".
2.to clarify that all business tenants may continue to participate at BIA General Meetings, that authority be granted for
the introduction of the necessary Bills to Council to give effect to an amendment to the (former) City of Toronto Municipal
Code which will delete subsections A, B, C and D of Section 20-10.
3.the City Solicitor be authorized to review Section 20 of the former City of Toronto=s Municipal Code and to introduce
the necessary Bills to Council to bring it into compliance with the amendments made by Bill 106.
4.the Director of Economic Development be requested to review the administrative practices, services and support that
has been provided to BIAs in each of the former municipalities in consultation with the BIAs and the Chief Financial
Officer, Solicitor, Auditor, and other staff involved in administrating the program, and report further recommending an
integrated BIA program for implementation in 1999.
5.the following interim administrative procedures be adopted for the BIA program during 1998:
(a)that BIA levies be included on the final realty tax bill in 1998 due to the late delivery of the assessment roll,
(b)that BIAs be permitted to draw advances of up to 75% of their net levy following approval of their budgets by
Council,
(c)that BIA advances on the first 50% of the net levy be interest free until July 31, 1998, and that interest be charged at
the rate of prime plus one percent on the portion of advances in excess of 50% of the net levy and after July 31, 1998, and
(d)that the balance of the net levy be provided to BIA Boards of Management only when collected.
6.City Council adopt the objective of continuing to serve BIAs with as little disruption as possible during 1998 while the
program review is ongoing, and to that end generally continue to provide each BIA with the same services as were
previously available in its former municipality.
7.Section 86.1 of the Procedural By-law be amended to authorize the Strategic Policies and Priorities Committee to deal
with BIA Boards of Management appointments and the Budget Committee to deal with BIA budgets instead of the Urban
Environment and Development Committee.
8.The appropriate City officials be authorized to take the actions necessary to implement the foregoing.
Background:
Business Improvement Areas (BIAs) play a key role in the beautification, safety, maintenance and promotion of retail
strips and traditional downtowns across Ontario. The BIA program is governed by provincial legislation (Section 220 of the
Municipal Act) and is administered by municipalities. If the majority of businesses in an area are in favour of forming a
BIA, the municipality is permitted to pass a by-law so designating the area. This enables the businesses and property
owners in an area to contribute to a special levy that can then be used to promote the area as a shopping district and to make
improvements to public property. The size of the levy and how it is used is determined by a volunteer Board of
Management made up of BIA members and municipal councillors. The people on the Board of Management and the annual
budget and levy is approved by Council. The levy is collected by the municipality and turned over to the Board of
Management for spending in accordance with the approved budget. Every business property in the area is automatically a
member of the BIA and is required to pay its share of the improvement budget.
BIAs do not receive direct funding from the municipality. Most municipalities provide staff support to the program at no
charge, and many also contribute grants, physical infrastructure (such as enhanced lighting, flower boxes, decorative brick
sidewalks, banners, etc.) and various types of in-kind services (e.g. audit services, office space and services). The amount
and type of municipal support provided varies widely across the province.
There are 39 BIAs across the City of Toronto. The largest concentration of BIAs is in the former City of Toronto, as
follows:
Toronto26
North York 0
Scarborough 1
Etobicoke 6
East York 1
York 5
Total -39
The appended map indicates the general location of the City's BIAs while Appendix A lists all of the City=s BIAs and
designating by-laws.
As is summarized in Appendix B, Toronto BIAs collectively raised over $3 million from their business members in 1997
-- monies which were reinvested in upgrading the City=s commercial districts= appearance and services, holding special
events and festivals and in district promotion. About three hundred business representatives served on the volunteer Boards
of Management, contributing thousands of hours of time to developing and implementing BIA programs and representing
the interests of their neighbourhoods.
The BIA program is widely considered to be a successful commercial area revitalization model and has been emulated
around the world. The money and time which the program encourages business to invest in their commercial districts
creates a more attractive ambiance along city streets. Local residents enjoy the many free festivals and special events
sponsored by BIAs. The enhanced appearance and image of the commercial district contributes to the quality of life in the
local community. It also makes the district more attractive to businesses seeking new locations. Local businesses see a
return on their investment as people translate their increased enjoyment of the area into increased visits and increased sales.
In short, a successful BIA program helps anchor an upward spiral of increased business for local merchants and increased
neighbourhood amenity for local residents. It contributes to the local economy by attracting specialty shopping and tourist
expenditures, and by helping to make the City an attractive community in which to live and do business.
The BIA program is affected by two major changes that took effect on January 1, 1998:
1.The changes to the municipal taxation system that were introduced in the province by Bill 106; and
2.The amalgamation of the City of Toronto.
This report summarizes the implications of these changes, and recommends interim administrative procedures and other
actions to reduce their negative impact on the BIA program during 1998.
Comments:
1.Impact of Bill 106
Bill 106, the Fair Municipal Finance Act, eliminated the business occupancy tax and the maintenance of a business
assessment roll by the Province. This necessitated that it also make a number of changes to the BIA program since the
business assessment roll was the basis for determining BIA membership and levies. The amendments and the impact on the
BIA program are summarized in the following table:
| CHANGE |
IMPACT |
| BIA levies were previously billed to business
tenants. With business tenancies no longer
being included on the assessment roll, BIA
levies have become the responsibility of
property owners. The BIA levy will be billed
to property owners, and landlords will be
responsible for paying the levy to the
municipality. |
The municipality should incur significantly
lower costs in billing and collecting the BIA
levy. |
| BIA levies are Adeemed to be taxes@ so that,
if not collected, they become a lien on the
property. The municipality will now be a
secured creditor and the collection of BIA
levies is guaranteed. |
The BIA levy will become virtually 100%
collectable (however, there may still be a time
delay in collections). This contrasts with the
current situation where about 15% of BIA
levies are eventually written off. In many
BIAs, it should therefore be possible to reduce
the amount of levy required to collect any
given budget. |
| BIA membership previously consisted of all
business occupants included on the assessment
roll. Bill 106 changed BIA membership so that
only commercial property owners and business
tenants who are responsible for the payment of
realty taxes through their lease arrangements
are members. Business tenants who are not
responsible for the payment of realty taxes
through their lease arrangements are no longer
qualified to be BIA members. |
BIAs traditionally have been made up of all
business occupants whether they be tenants or
owner-occupants. These have been the
interests who have voted to set up BIAs, who
served as members on the Board, who
determined the improvement program and who
paid the BIA levies. Under Bill 106, property
owners become new key players in the BIA
process.
Tenant businesses are entitled to remain
involved only if their leases require that they
pay realty taxes. Such leases are rare in small
commercial properties such as typify most
BIAs. Many people who currently are active
BIA leaders are no longer automatic members
of the BIA. They may continue to participate
only if they are nominated by a BIA member to
represent his/her interests. |
| Landlords are responsible for identifying and
informing the City Clerk of those tenants in
the business property class who, under their
lease are required to pay all or part of the taxes
on the property. There is, however, no
incentive for landlords to provide this
information or recourse if they don=t. |
The municipality and BIA boards of
management can no longer readily identify
which business tenants are BIA members and
which are not. |
Although the increased collectability of the BIA levy is welcomed, the Toronto Association of Business Improvement
Areas (TABIA) is extremely concerned about the impact that the change in membership may have on the success of the
BIA program. It is their experience that absentee property owners usually have not been involved or interested in BIAs. The
program has been developed and operated to serve the interests of the business community. TABIA is concerned that
property owners and business operators often have been shown to have different priorities. They see a potential for absentee
owners to opt for cost-minimization, and to force BIAs into inactivity by overwhelming the business interests and voting
down their budgets or initiating dissolution procedures. The fact that a portion of the BIA levy will be charged to vacant
floor space may increase this risk.
TABIA's concerns are shared by many BIAs in other parts of the province.
There also are significant administrative complications introduced by the distinction between tenants whose leases do and
do not require them to pay their property taxes. The municipalities and boards of management will have to create and
maintain their own lists of tenants qualified for BIA membership if they are to keep them informed about BIA activities,
notify them about meetings, and verify their eligibility to serve on boards of management. The only way to verify eligibility
may be to require that tenants provide copies of their leases to the municipality.
Over the last year, TABIA has devoted considerable energies towards bringing their concerns to the attention of provincial
and municipal officials and in proposing alternative solutions. Although the Province declined to make amendments that
would secure the participation of all business occupants in BIA programs before Bill 106 came into force, provincial
officials did indicate that additional changes to the Municipal Act were contemplated in 1998, and that this would provide
an opportunity to address the issue.
Most recently, on February 5, 1998, the Minister of Finance announced that changes would be made to enable all business
tenants to become full members of BIAs. He also indicated that legislation would be introduced to enable landlords to
recover property tax increases from all tenants regardless of the provisions in their leases.
However, at the present time, BIA membership is still limited to property owners and those tenants whose leases require
that they pay realty taxes. After considerable consultation with TABIA, it was determined that the problems this presents
for BIAs could be reduced if all business operators could continue to vote on the budget and on which BIA representatives
should be on the Board of Management. This is possible under current provincial legislation since the Municipal Act
indicates only that BIA Boards of Management must submit to Council budget estimates for the current year. It does not
specify how those estimates are to be determined. Nor does it specify how Council should choose which BIA members
should be on BIA Boards of Management.
However, the former City of Toronto has set out a more detailed process for holding elections to BIA Boards of
Management and approving budgets in Section 20 of its Municipal Code. It requires BIAs to hold General Meetings of the
membership at which elections to the Board are held and the annual budgets are approved. It also requires that the Board
send a meeting notice to all BIA members by pre-paid post at least ten days before the Meeting. Although these provisions
have better ensured that BIAs follow a democratic process and fully inform their membership when making key decisions,
they now pose an additional constraint on the ability of business owners who are tenants not required to pay realty taxes to
participate in BIAs. Therefore, it is recommended that these provisions be deleted from the Code (Section 20-10
subsections A, B, C and D).
While these provisions can be deleted from the Code, it is not possible to replace them with provisions that would
implement the intent that all business tenants continue to be informed and involved in the process as well as BIA members.
The problem is that BIA Boards of Management are "Bodies Corporate", and therefore cannot formally be required by
legislation to involve people who are not members of the Corporation in their decision-making processes.
This notwithstanding, TABIA=s desire that all business operators continue to be involved in electing the Boards of
Management and voting on BIA budgets can be achieved if the General Meetings are viewed as giving advice to the Boards
of Management and Council. Each Board of Management should officially approve its budget after the General Meeting is
over, and final authority to approve the BIA=s budget rests with City Council.
The By-laws in effect in Scarborough, Etobicoke, East York and York do not require their BIAs to follow more detailed
election and budget approval procedures than are set out in the Municipal Act. Therefore City Council action is not
necessary to permit their BIAs to involve all business operators as well as property owners to the extent that they currently
do.
Since the Municipal Act indicates that only BIA members and members of Council can be appointed to BIA Boards of
Management, any business tenants not required to pay their realty taxes that the membership elects to the Board of
Management at a General Meeting will need to be a nominee of a BIA member. Economic Development division staff are
verifying the eligibility of all persons elected to BIA Boards, and will ensure that anyone who is not a BIA member as set
out in the revised Municipal Act is a person who has been nominated by a BIA member before forwarding their names to
Council for approval.
The amendments to BIA membership and procedures introduced by Bill 106 make some subsections of the former City of
Toronto=s Municipal Code obsolete. It is recommended that the City Solicitor be authorized to review the Municipal Code
and make the amendments necessary to bring it into compliance with Bill 106.
2.Billing the BIA Levy
Since the BIA levy is now charged to property owners, it can be included as a line item on the realty tax bill. This will
significantly reduce the City=s costs since it will not be necessary to send out a separate bill or to process separate BIA levy
payments.
In 1999 the City may have the option of including all or a portion of the levy on the interim tax bill. This was not
possible in 1998 because of the late delivery of the assessment roll. Therefore, it is recommended that the 1998 BIA levy be
included on the final realty tax bill. This will delay the collection of funds until several months later than has been the
norm. In view of this delay, it is recommended that BIAs be permitted to draw advances of up to 75% of their approved
budgets in 1998.
In the past, the former City of Toronto charged its BIAs interest at the rate of prime plus one percent on any funds they
requested in advance of levy collections. Scarborough, York and Etobicoke provided interest free advances, while East
York did not previously provide advances. The Chief Financial Officer recommends that this practice be harmonized in
1998.
At its Annual General Meeting on February 17, 1998, TABIA adopted a motion to request that the City provide advances of
up to 50% of BIA budgets interest-free in 1998 due to the late billing of the BIA levy. It previously was possible for the
City to bill BIA levies in March. Due to the late delivery of the assessment roll, in 1998 the bills will be sent out at least
three months later than normal. TABIA questions the equity of requiring BIAs to pay additional interest charges for a delay
in receiving funds that is beyond their control.
It is recommended that interest be charged on BIA advances in excess of 50% of their net levy at the rate of prime plus one
percent.
Providing BIAs with interest free advances is a cost to City since the receipt of investment interest on those funds is
foregone. The cost will depend on the amount of advances requested by the BIAs and the length of time the advances are
outstanding. It is recommended that the City put a time limit on the interest free period. July 31, 1998 is suggested since it
is expected that payment of two thirds of the levy will be due by this date.
The absolute maximum cost of providing interest free advances until July 31, 1998 will be $16,850. This amount will only
be incurred if no portion of the levy is collected before July 31 (this is unlikely since the due date for payment of the first
one third of the levy is expected to be June 30) and if all BIAs immediately request the maximum interest-free advances.
This amount will be reduced to the extent that levy payments are received by the City before July 31 and that BIAs delay or
do not request advances or request advances in excess of 50% of their levies (and pay interest on those portions). All three
of these things are likely to happen, and a more realistic estimate of the cost of providing interest-free advances to BIAs
probably is in the $8000 to $12000 range.
It is anticipated that the need for BIA advances will be reduced in the future if the levy or a portion thereof can be included
on the interim tax bill. Policy respecting interim billing and the charging of interest on advances are among the issues to be
addressed in the review of the BIA program discussed in the following section of the report.
3.Issues Related to Amalgamation
It is considered desirable that the BIA program be administered consistently across the new City of Toronto. However,
each of the five municipalities within the new Toronto that have BIAs have dealt with them in different ways in the past.
Some of the municipalities have their own by-laws governing the program while others do not. Different services are
offered and fees charged from area to area. Before an integrated program can be developed, considerably more review and
discussion is needed to evaluate which practices are the most efficient and which services are the most cost effective and
important to offer within the context of limited resources. Therefore, it is recommended that 1998 be considered a
transition year during which BIA practices will be reviewed with the objective of bringing forward recommendations for an
integrated program in time for 1999 implementation.
The objectives of the review are to develop a program which (a) supports the ability of BIAs to contribute towards the
economic health of the City; (b) provides the required municipal administrative support efficiently and economically; and
(c) encourages BIA Boards to be accountable to their members. The issues and services that will be addressed include:
- election and budget approval procedures,
- the role of the municipality in monitoring Board practices and expenditures,
- policies and procedures respecting audits, access to insurance coverage, billing and collecting the levy, transferring
funds to the BIAs, and the charging of interest on advances
- procedures for forming new BIAs,
- the need to maintain a list of businesses in BIAs,
- the need for a municipal BIA by-law,
- the provision of municipal services to BIAs and the charging of fees,
- the provision of commercial revitalization and economic development advice and assistance to BIAs, and municipal
expenditures on special grants and services (e.g. municipal contributions to streetscape improvements).
It is recommended that the review be co-ordinated by Economic Development staff, in consultation with the BIAs and all
other staff who are involved with administering various aspects of the program.
While this review is underway, it is recommended that each BIA continue to be served in accordance with past practices.
The Boards will then be in a better position to plan their budgets and programs knowing (for example) that the municipality
will or will not pay for banner installations or the planting of trees in 1998 if that was the practice in the past.
Notwithstanding this general approach, the process for securing Council approval of the BIA Boards of Management and
budgets and levies can be harmonized immediately without affecting service to the BIAs. Section 86.1 of the Procedural
By-law indicates that BIA Board appointments and budgets be reported to Council through the Urban Environment and
Development Committee. However, this is the only aspect of the BIA program that is dealt with by that Committee. The
remainder of the economic development program reports to Council through the Strategic Policies and Priorities
Committee. It would be more efficient for staff and probably more rationale for Committee members if the Strategic
Policies and Priorities Committee were to deal with BIA Board appointments as well as other aspects of the program. Staff
in the Finance Department are of the view that BIA budgets should be reviewed by the Budget Committee instead of the
Urban Environment and Development Committee. It is recommended that the Procedural By-law be so amended.
Conclusions:
BIAs play a significant role in helping the City maintain a healthy community and economy. It is important that their
effectiveness not be undermined by the changes that have been made to the property tax system and structure of municipal
government. The interim administrative procedures and program review set out in this report are intended to serve this
objective.
Contact Name: Judy Morgan; phone number 392-1003; fax number 392-0675; E-mail address
jmorgan1@city.toronto.on.ca
Brenda J. LibreczVirginia West
Interim LeadCommissioner
Economic DevelopmentUrban Planning and Development Services
Wanda A. Liczyk
Chief Financial Officer and City Treasurer
Ref.: ECO-98-05
Appendix A
Business Improvement Areas
Name of BIADesignating By-law
City of Toronto
Bloor-Bathurst-Madison1995-0688
Bloor By The Park117-87
Bloorcourt Village495-79
Bloordale Village150-76
Bloor West Village 30-86
Bloor-Yorkville302-87
Corso Italia807-83
Danforth by the Valley611-86
Dovercourt Village549-84
Eglinton Way662-86
Elm Street171-85
Forest Hill Village 8-79
Gerrard India Bazaar590-81
Greektown on the Danforth319-86
Harbord Street555-85
Hillcrest Village808-83
Junction Gardens 8-73
Little Italy497-85
Old Cabbagetown 1-82
Parkdale Village497-78
Queen/Broadview Village263-80
Roncesvalles Village169-90
St. Clair Gardens 59-85
St. Lawrence Neighbourhood1994-0572, as amended by 1996-0406
Upper Village810-83
Yonge/Queen-Dundas531-86
City of Etobicoke
Lakeshore Village2702
The Kingsway2968
Mimico by the Lake1985-286
Village of Islington1986-130
Village of Long Branch1987-20
Mimico Village1997-210
City of Scarborough
Kennedy Road18758
Borough of East York
Pape Village25-86
City of York
Weston2245-75
Upper Village (York)3298-96 as amended by 3370-96
Mount Dennis2012-74
York-Eglinton3964-81 as amended by 2605-92
Keele-Eglinton3652-97
Appendix B
Summary of Business Improvement Areas and
1997 BIA Levies by Area Municipality
