The Lazarus Effect An Exploration of the Economics of Heritage Development in Ontario
The Heritage Resource Centre and Architectural Conservancy of Ontario
THE LAZARUS EFFECT
An Exploration of the Economics of Heritage Development in Ontario
Prepared for The Architectural Conservancy of Ontario By Robert Shipley Michael Parsons Stephen Utz of the The Heritage Resources Centre University of Waterloo
Generous support provided by the Ontario Trillium Foundation
January 2006
TITLE
The Lazarus Effect
The Christian Bible contains a well know story of how Jesus brings a man named Lazarus back from the deadÖ in Western literature this story is often a reference when someone or something thought lost is resurrected.
Jesus, once more deeply moved, came to the tomb. It was a cave with a stone laid across the entranceÖ "Take away the stone," he saidÖ When he had said this, Jesus called in a loud voice, "Lazarus, come out!" The dead man came outÖ Bible, New International Version by the International Bible Society Copyright © 1973, 1978, 1984, (John 11, selection from verses 38 to 44) Woodcut by Julius Schnoor von Carolsfeld, originally printed in Das Buch der B¸ cher in Bilden. World Missions Collection Clip Art -- Volume 1, Part C www.wels.net/wmc/ Downloads/202.gif
COVER
c (left c ) The Independent Rubber Co. in Merritton (now part of St. Catharines) c.1900; (centre d) The old mill as it appeared c.1995; e (right e) The KEG Restaurant in 2005 d
Foreword
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surprising and humbling reality. Our developer friends are Lazarus Effect, the title for this research paper, is apropos in indeed our friends, and we must work very hard to bring about so many ways that the analogies flow freely. Since becoming professional alliances where we can work collectively to set the interested in both the plight of heritage preservation in the bar a little higher for conservation of built heritage in this province and the success of many building renovation projects, province. I have often been outraged by the stock phrase of those opposing historic conservation, that it simply is ìtoo expensive This research is the second paper that Dr. Shipley has prepared an endeavour to be taken seriously.î I am probably no less for the Architectural Conservancy of Ontario through the outraged than most of the interested parties who will read this generous support of the Trillium Foundation. This research is report. Most of the collective response from conservationists vital to our cause, and I encourage its wide distribution to aid has always been ëhogwash!í Unfortunately, the people heritage in the dissemination of the fact we all instinctively know ñ that proponents must convince, a group that represents the largest conservation and adaptive re-use of our built environment re- faction of built heritage owners, are not amused by hearsay, or energizes our communities and our lives within them. by merely touring through local successful renovation projects, intriguing as they might be.
Dr. Shipley and his team provide thorough evidence and solid research in this document to prove, conclusively, that in its major centres and even in rural Ontario, preservation of Scott Valens built heritage can be, and is, economically competitive. The President evidence and the research does, however, come up with a Architectural Conservancy of Ontario
NOTE: On April 18, 2005, a few days after the research for this report was completed, the Legislature at Queenís Park passed Bill 60, which amended the Ontario Heritage Act. Among the new provisions under the heritage legislation is the power that will enable municipalities to permanently prevent the demolition of designated structures. This will make the subject and findings of this report even more significant. There will now be a measure of stability for investors and building owners. They will know that certain buildings must be maintained. This should provide more opportunity for genuine heritage development.
Acknowledgements
municipalities of Kingston, Ottawa, Markham, and Niagara-on- This project was carried out under the direction of Professor the-Lake, are worthy of special credit for the contact lists that Robert Shipley, the Director of the Heritage Resources Centre they provided. This project could not have proceeded as (HRC) at the University of Waterloo (UW). Much of the smoothly without their assistance. research and writing were accomplished by Michael Parsons, an undergraduate student, and Stephen Utz a masterís student ñ Furthermore, the writers would like to thank all of those both in the UW School of Planning Program. individuals who took the time to complete either the questionnaires or an interview, from which the bulk of the This research endeavour represented a joint project research was derived. Further recognition for these important between the Heritage Resources Centre and the Architectural individuals is noted in the list of Study Participants (Appendix Conservancy of Ontario (ACO). The HRC staff members are B) at the conclusion of this report. particularly grateful to ACO Manager Rollo Myers, President Scott Valens, Vice-President Catherine Naismith, Past- We would be remiss if we did not make mention of the President Chris Borgal, and former President Patricia Malicki special contribution of Mark Ravelle, Professional Quantity for all of their time and effort to fund and, in other manners Surveyor and Principal of the BTY Group of St. Catharines, further assist this undertaking. In addition, thanks are owed to Ontario. Mark provided us with our primary costing numbers the eleven ACO Branch Presidents for enlisting their members for new build construction, used throughout the report for the to identify heritage development projects throughout the purposes of comparison. province. Our most sincere appreciation is owed to Dolly Coelho and This said, we are especially indebted to Marg Rowell and Selena Santi at the University of Waterloo for their other members of the North Waterloo Region Branch of the administrative support throughout the course of this project. ACO for their help in preparing the Ontario Trillium Recognition is deserved as well for Dr. Susan Sykes, Foundation grant application. Director, and Susanne Santi, Manager of the Office for Considerable gratitude is owed to Community Heritage Research Ethics at the University of Waterloo for their Ontario (CHO) and Heather Thomson, liaison to the CHO from thorough and timely approval of our research design. the Ministry of Culture, for their support in recruiting members Finally, special recognition must go to Nart Stas, a School of this organization to identify projects and developers for our of Planning masterís student who did much work to help purposes. prepare the interview guide. Additionally, Marcus Letourneau, Stuart Lazear, Michael Seaman and Leah Wallace, Heritage Planners for the Executive Summary
There is a wide range of heritage development • What was clear, however, was that even when projects around the province. the cost was greater, developers were generally • Heritage development means the renovation for rewarded with a high rate of return on investment continued use or adaptive reuse of older buildings (generally 50 years or older) Findings • A sample of 132 projects was identified with the Building Type Small Medium Large help of volunteers New Residential Projects often $155 $130 private & too • Only some are capital ìHî heritage properties Reuse Residential numerous $144 $231 (i.e. designated under the Ontario heritage Act) New Commercial $95 $155 $165 Reuse Commercial $111 $169 $102 Gathering financial data on any development is New Institutional $195 $195 Insufficient challenging Reuse Institutional $212 $200 data • Calculations had to be based on a small sample Total cost per square foot to bring property to market. of 23 projects • Some of the projects are at the high end of the Barriers to success can be enumerated market, but by no means all • Uncertainty in financing and difficulty in • Each project is unique but there is a growing borrowing from banks cadre of developers specializing in the field • Contradictions between different government • Some developers said they could complete departments ñ lack of reason in applying the heritage development projects for less money building code, and unreasonableness in fire and than new build other regulations • On average, however, heritage development • Skilled labour shortages projects were slightly more expensive, but only • Community heritage proponents with no slightly more appreciation for practical building concerns
The characteristics of success were made clear • Much of the work falls outside the formal • Having a competent team of specialized heritage process of identification and designation professionals, architects, engineers and skilled • Improving the formal heritage process in order to trades is vital provide a measure of certainty, protection and • Municipalities that are supportive of heritage financial incentives would help stabilize the field development are having better success • Heritage advocates do not always recognize their • Grants, tax relief, tax deferral, waiving of fees, allies in the development world relaxing of requirements and other incentives are • Municipalities receive excellent compensation part of the model for success in many cases, but for incentives or tax relief granted to heritage not all developments; this comes in the form of • Incentives are significant in small and medium increases in property value and local tax sized cities, but less so in metropolitan assessments environments • Long term tenants provide developers with Recommendations income certainty • Municipalities that want to promote smart • Flexibility in the use of space can also make growth, re-urbanization, intensification and renovation viable dynamic places should adopt coherent policies • The existence of dynamic, risk taking, creative that promote heritage development developers with a passion for beautiful old • Municipalities should make the rules clear, some buildings is probably the single most important buildings should be preserved and people who element redevelop them must be supported and their investment protected Conclusions • Building inspection and other regulatory • Most of the buildings that are being given new functions should be reasonable, flexible, creative life in Ontario are private sector projects and better coordinated • There is a healthy and growing business in • Heritage advocates should find and support the heritage development developers who love older buildings and are prepared to spend money on them
Table of Contents
1.0. Introduction 1 5.0. Conclusions & Recommendations 23 1.1. The Story of a Building 1 5.1. Conclusions 23 1.2. Birth 1 5.2. Recommendations 25 1.3. Near Death 1 • Bibliography 27 1.4. New Life 2 • 1.5. This Report 3 Appendices A. List of Identified Projects 31 2.0. Background 5 B. Study Participants 35 2.1. Need for Study 5 C. Questionnaire 37 2.2. Purpose 5 D. Excerpts from Provincial Statutes 2.3. Legal Precedents 5 Relating to Municipal Financial Aid 39 2.4. Existing Literature 6 E. Catalogue of Renovated Buildings 43 2.5. Funding and Administration 6 3.0. Methods 7 • List of Tables and Figures 3.1. Data Gathering 7 Table 1. Adaptive Reuse and Renovation 3.2. Data Analysis 7 Projects Identified 7 3.3. Research Challenges 8 Table 2. Cost of New Construction 8 Table 3. Cost Per Square Foot of Renovation 4.0. Interview & Survey Findings 9 Reported in this Survey 12 4.1. Benefits of Older Buildings 9 Table 4. Cost Difference Between Renovation 4.1.1. Special Character 9 and New Building 12 4.1.2. Building Location & Site Advantages 10 Table 5. Available Incentives 13 4.1.3. Return on Investment (new build) 11 4.1.4. Government Incentives 13 4.2. Constraints of Older Building Reuse 15 4.2.1. Uncertainty & Site Remediation 15 4.2.2. Building Code and Parking 17 4.2.3. Heritage Design Requirements 18 4.2.4. Professional Experience and Skills 20
1.0 Introduction drove the shafts and belts that drove the shifted and a new industry occupied the machines for a range of manufacturing. site. The Independent Rubber Company
manufactured boots and a boiler and a 1.1. The Story of a Building Merritton, named after the mastermind behind the building of the tall chimney were added to the Perhaps the best way to introduce the canal, was a village at the base of the facilities. By the 1940ís, conditions had concept of heritage development, Niagara Escarpment, ideally located to changed once more and paper which involves building renovation and prosper in that era of opportunity. manufacturing replaced rubber. adaptive reuse, is to follow the Another former cotton mill on an adventures of a specific building adjacent site became home to the through the story of its life. Domtar Paper Company, and the former Independent Rubber mill This is the story of the Merritton became a storage facility. Cotton Mill in what is now part of St. Catharines. In an almost mythic tale, 1.3. Near Death the origins of the factory are said to It was while being used as a warehouse have involved capital from the that disaster struck the complex in the Confederate States during the American Civil War and plots to early 1960ís. Locals who remember circumvent the U.S. blockade. that night recount that it was youngsters Before the great fire of the 1960s smoking in the building who set off the The truth that is more certain is that destroyed the larger part fire. By the time the professional the completion of the first Welland of the mill firefighters arrived from St. Catharines, Canal in the 1820ís provided the two many local residents had already elements necessary for industrial 1.2. Birth gathered. Among them were members growth. The canal itself allowed the of the old Merritton volunteer fire It is uncertain what the first generation cheap movement of raw materials and brigade. This department had recently of buildings on the finished goods - not only around the been disbanded when the independent St. Catharines site looked like, but in Great Lakes but indeed to the wider town of Merritton was amalgamated 1884 a stunning set of red sandstone world. At the same time, the pond into the larger City of St. Catharines. structures rose beside the canal. The system and water supply, required to While many of these men knew the largest section of this textile mill was a operate the canal, provided hydraulic buildings well and had worked in them, four storey block with impressive power as a side benefit. The constant they are said to have refused to help the central towers. Beside it was a smaller, water supply drove the turbines that professional firemen since their two-storey structure. By the turn of the th services had been rejected by the 20 century, market conditions had
1 enlarged city. Fact or tall tale, the result Other factors were at work as well. to protect the mill from the wreckerís was that by morning only a A group known as the Welland Canals ball. At one stage the company actually smouldering shell remained of the once Preservation Association had been hired the construction crew of the beautiful four storey part of the old formed by some energetic citizens who Welland Canals Preservation mill. The smaller section had survived. had the dream of developing the old Association, who were building the abandoned canal lands as a linear parks nearby hiking trail, to replace part of system and historic site. A hiking and the buildingís roof. biking trail along the old canal passed close to the old mill and made more 1.4. New Life and more people aware of the beautiful, All of these things conspired to save if run down, old structure. The old mill the old Independent Rubber Company
was soon included on inventories of building until the day came that Domtar historic buildings and several times decided to cease papermaking became the subject of innovative operations in design proposals. St. Catharines. The old building may
have then entered its most dangerous Reconstruction begins about 2001 phase. There was a buyer eager to
What began then was a long, slow acquire the site, flatten the building and decline as the buildingís maintenance put in a plaza. was neglected and time began to show. But a local entrepreneur with Nevertheless, the building survived for experience in both building restoration a number of interesting reasons. For and the restaurant business was also one thing, the Domtar Paper Company eyeing the site. His promise was to try was well aware that their industrial his best to keep the building and process was not without impact on the develop it. The City of St. Catharines neighbourhood. Papermaking is not was also now responding to years of A new roof and repairs to the chimney without its unpleasant environmental citizen calls for respecting heritage and side effects. It was in Domtarís interest Like many old treasures that seeing the cultural as well as economic to keep the old building on the property survive, however, there are hidden value of older structures. as a kind of buffer zone between the stories. It is known to only a few that a plant and the surrounding residential couple of Domtarís local employees A coalition of interested parties area. Several times they refused to sell were lovers of old buildings and behind came together to pursue ideas for the the property for re-development. the scenes they may have done things siteís potential reuse. Domtar Paper
2 was anxious to leave the city with a structures are also properties that have good reputation. The business an economic as well as cultural development office understood that this dimension. one interesting building might provide This report will explore the nature, a model for the redevelopment of other trends and details about heritage sites. Those interested in heritage development as it is unfolding in conservation were delighted that they Ontario today. We will look at many were finally being taken seriously. The successes but, of course, building reuse Mayor worked with all the parties and does not always work. The old Preston eventually the project got off the Hotel in Cambridge has languished for ground. years after several false starts. There is nothing easy about this The KEG in 2005 We will look at the economic kind of venture. There was ground realities that exist and consider the contamination from the various former From the start, the buildingís prospects for the future of our past. industries that had dumped waste into developer had had his eye on the ideal the old canals. There were questions of occupant for such a landmark. He fire safety and structural soundness persisted and eventually he persuaded relating to the building itself. But The KEG Restaurant to become the slowly the old mill emerged from tenant. Today, the restaurant is the top dereliction and decay ñ and reasserted grossing member of the chain in the itself as the beautiful red sandstone country and both the tenant and the monument that it is. People could building owner are making a handsome hardly believe the lustre of the old profit. The cost of bringing the building stone once it was cleaned. When the into productive use was less than it years of refuse and brush was cleared would have cost to build new. from around the walls the building literally came back to life. That is the The Preston Hotel has yet to be completed image that gives this report its title ñ 1.5. This Report after several attempts at redevelopment Lazarus ñ the Biblical figure brought Saving and giving new life to the older . back to life. buildings that give character and The transformation, however, was continuity to our communities has not just architectural. Any building immeasurable social and cultural value. must have a life and earn its keep. That goes without saying. But these
3
4 2.0 Background premises of choice for the most issue. As such, the specific purposes of dynamic businesses. this report are: Found primarily in the downtowns of 2.1. Need for Study • To determine as far as possible our urban centres, older buildings This is an important debate for a what the characteristics of represent an important aesthetic, number of reasons. Recently, successful renovation projects are cultural and economic resource ñ as researchers and policy makers have in terms of factors such as building well as a non-renewable one. recognized the necessity of having type, architectural and marketing Yet dozens, and perhaps even more residents in downtowns as a approach, financing and the hundreds, of historic buildings have catalyst for central business district regulatory environment; • been demolished in Ontario over the revitalization (Bunting 2000). To analyze and present the findings past decades because owners, bankers Similarly, the recently adopted concept in a form that will be useful in and developers have argued that the of Smart Growth has done much to informing debate and decision- costs of renovating and adapting these spur the redevelopment of brownfield making on specific development buildings for new uses is too high. sites (Ontario Government, 2005). opportunities and proposals; and Demolition of the existing buildings • To make recommendations on It is difficult to balance the desire to and replacement with new structures, future research, public policy and preserve older buildings for historical the story goes, is the only way for effective citizen involvement. and aesthetic reasons, the need for investors to make a reasonable profit regeneration and the legitimate But perhaps the greatest driving from the use of the subject land. Some requirement of owners and developers factor of all is that Municipal Councils, even go as far as asserting that new- to make their properties economically the Ontario Municipal Board and other build is always more economical, viable. Further complicating the matter decision makers are generally presented renovation universally more expensive. is the fact that sometimes these aims only with the owner/developer/lenderís At the same time, a number of are incompatible, while sometimes they cost analysis and are therefore unable reputable developers, architects and are complementary. to make truly informed judgments. This investors in Ontario seem to be able to report will attempt to more fairly complete exciting and profitable 2.2. Purpose balance the arguments on both sides. projects which feature innovative The need for this study to examine the 2.3. Legal Precedents building renovation. Many older costs of heritage development, which buildings are not only suitable for new consists of building renovation or Developers and municipalities are not uses but often become key sites in adaptive reuse, stems from the fact that alone in reaching varying opinions on renewal schemes and can become the a cacophony of information clouds this heritage development. From a legal standpoint, as George Rust-DíEye
5 (2004) explains, the Courts and the Preservation states, ìthe idea that business of adaptive reuse and Ontario Municipal Board have It is adaptive reuse is universally cost renovation. alternated between a stance favouring prohibitive is one of the single greatest The excellent review of literature preservation and supporting demolition. myths in the development world today on the economics of historic restoration (2002, 7-8).î As Friends of Eden Mills Inc. v. prepared by Randal Mason for Eramosa (Township) (1998) found, the Brookings Institution in Washington argument for demolition of the townís Historic preservation is typically judged to D.C., however, lists 272 works but bowstring bridge was greater in the be a sound investment. By most accounts, it appeared after this report was is more efficient and profitable to preserve a divisional courtís mind than the case to completed. Mason lists only two historic building than to construct a new one. preserve it. Central to this case was the Designating a landmark or district as Canadian studies (Shipley, 2002; conclusion that failure to consult with Ashcroft 2002). He concludes that historical typically maintains if not boosts the local heritage committee (LACAC) the value of the property, and as an economic much more research needs to be done. and to follow specific steps found in development tool, historic preservation has It is hoped that this list of readings will the Ontario Heritage Act did not render proved its worth. Nearly any way the effects be helpful to those interested in the the demolition decision null and void. are measured, be they direct or indirect, historic preservation tends to yield field but it is evident that more Conversely, in Toronto College significant benefits to the economy. Canadian work on the practical matters
Street Centre Ltd. and City of Toronto of heritage development is needed. et al. (1986), the Court of Appeal held Mason, R., (2005). Economics and Historic that the reasons for designating the Preservation, Washington D.C.: Brookings 2.5. Administration and Funding interior of the building under the Institution A review of 272 studies. This investigation into the myths and Ontario Heritage Act were plain to see facts surrounding heritage development and that the Act allowed for a broad What is unfortunate is that architectural represents a joint project between the interpretation of a heritage designation. conservation groups such as the ACO Heritage Resources Centre (HRC) at This success story led years later to the seldom have the financial resources to the University of Waterloo and the opening of the Carlu Centre. hire lawyers to contest decisions about Architectural Conservancy of Ontario It is interesting to note that in each building demolition. (ACO). case which appeared before a judicial Funding for the project was 2.4. Existing Literature body, the developer has put forward an provided through an Ontario Trillium economic argument to support The bibliography at the end of this Foundation grant awarded in November demolition even though this concept report lists 41 books and articles that 2004 to the ACO. Dr. Robert Shipley, has repeatedly been refuted. As the US relate to heritage development. Only 12 Director of the HRC, was assisted by National Trust for Historic are Canadian. Only a few explore the students and volunteers.
6 .3.0 Methods project and then sent a questionnaire to be filled out at the respondentsí Table 1: Projects Identified Medium: convenience. In some cases Small: Large: 3.1. Data Gathering 18000- respondents received follow-up calls. <18000 >50000 50000 sq.ft. sq.ft. In evaluating the cost of adaptive reuse Approximately 60 questionnaires sq.ft. in Ontario, volunteers from across the were distributed and, in the end, we Residential province were recruited to assist in the received 24 completed surveys; a 17 9 collection of data. The volunteers were response rate of roughly 40%. The Commercial 8 19 4 recruited through the partner questionnaire was two pages in length organizations; the Architectural and consisted of 14 questions (see Institutional 10 8 Conservancy of Ontario and Appendix C). Community Heritage Ontario, through Over the course of the research, 16 municipal planning departments, and 3.2. Data Analysis through personal contacts. The people were interviewed. Seven of the volunteers were asked to provide lists interviews were conducted in person For the purposes of analyzing the data, of adaptive reuse projects with the while the rest were conducted by each project was categorized by its size associated contact information of the telephone. Most of the in-person in square feet. The difference between developer or owner of the projects. interviews were conducted on the small and medium size categories was heritage development sites, allowing determined by applying the provisions Over the course of the research, 132 the interviewee to describe the projects of the Ontario Building Code (18,000 projects were identified. For 75 of in detail and provide insight into the sq. ft.). The Large category (greater these, information about size and key aspects and challenges. than 50,000 sq. ft.) was arrived at in building type was available (Table 1). Each person interviewed for the consultation with architects. The A sub-set of 23 of these examples had information was then placed in a 9 cell floor space, building type and cost data research is a player in this emerging heritage development market. Our list matrix indicating residential, available for analysis. Because some of commercial and institutional type those providing data requested that we of candidates was not exclusive, and the criteria for conducting an interview properties in each of the three maintain anonymity, we are not able to categories, small, medium and large identify specific sources. generally came down to that of time availability and willingness to be (Table 3). Two of the cells, small The research team contacted interviewed. residential and large institutional, individual developers to describe the remain blank since in the first case
7 most projects are private and too 3.3. Research Challenges skilled labour and other factors vary numerous while in the latter there was It was not difficult to find examples of widely even within a single jurisdiction insufficient data to report. heritage development projects from such as Ontario. To the best of our ability we have across Ontario. It was, nevertheless, Notwithstanding these limiting tried to express the financial data difficult to find people willing to share factors, this study has undertaken to provided in a common form the detailed financial information that gather as much hard data as possible representing the total cost per square we wanted in order to compare these within Ontario ñ and to present it in a foot to complete a project and bring it projects with other property standardized form, in order to allow as to market. That includes purchase as investments. We are not alone in facing fair a comparison as possible. this problem. In his analysis of almost well as hard and soft costs and takes Because each of the projects 300 studies relating to the economics of into account any incentives, such as the surveyed are unique we have historic preservation, Mason found that, waiving of fees. The average costs per concentrated much of our interpretation ìthe methods of determining the value square foot for new development were on the interviews with developers of historic preservation vary widely, provided by Mark Ravelle, a which were rich in opinion and and several challenges persist in Professional Quantity Surveyor informed by a great deal of experience. working in St. Catharines. They are applying economic methods to the field estimates for the whole province. (2005).î Table 2: Cost of New Construction While it is agreed that heritage What is adaptive reuse? development has economic value, it is Medium: Small: Large: more difficult to determine whether the Old buildings often outlive their 18000- <18000 >50000 original purposes. Adaptive Reuse, or 50000 preservation or adaptive reuse of a sq.ft. sq.ft. Re-use, is a process that adapts sq.ft. particular property is more beneficial than an alternative use. Because these buildings for new uses while retaining Residential $155 $130 issues are subject to many local their historic features. An old factory conditions, studies from other may become an apartment building. A jurisdictions can be interesting and rundown church may find new life as a Commercial $95 $155 $165 instructive ñ but their conclusions restaurant... And a restaurant may cannot simply be applied in another become a church. Institutional location. Similarly, the market $195 $195 conditions, land values, availability of About.com, Architecture Glossary ñ What is Adaptive Reuse?, March 2005
8 4.0 Interview & Often the potential for heritage to accommodate new uses by simply development comes from some unique moving partitions and replacing Survey Findings quality in the style, construction or entrances. character of the structure itself. When A particular advantage of Toronto developer Harry Stinson had 4.1. Benefits of Older Buildings renovating existing buildings that was the chance to purchase a building site explained to us is sequential near the corner of King and Yonge redevelopment. Tenants can be 4.1.1. Special Character Streets in downtown Toronto, a site accommodated in one part of a ì Fundamentally, builders love that provided the opportunity for multi- building, providing ongoing income, buildings.î story tower, he looked at what was next while other parts of the structure are door. The former Dominion Bank - Harry Stinson, March 16, 2005 being remodelled. As well, there can be headquarters not only had room for a sequential upgrading of facilities and about 200 condo suites but the grand Developers interviewed as part of this the resulting increases in rent. An open old banking halls on the ground floors research told us that it is the building space suitable for tenants such as a would provide a spectacular entrance to itself that usually catches their interest dance studio or gym, for example, a luxury hotel. first. might subsequently be divided into The process of heritage Not all unique heritage features that separate offices. might provide character, sales appeal or development, the refurbishment of As long as the building fabric is convenience need to be so spectacular. older buildings or their adaptation to solid and the essentials are there, older Many existing warehouse-type new uses, often begins somewhat buildings can become new assets ñ if buildings simply provide big, open, differently than other projects. Real there is a good location and potential flexible spaces that can be used in a estate development usually involves a occupants. The soundness of the variety of ways. This is the case with use in search of a site. In the case of structures as well as their unique and the old Carpet Factory buildings near heritage development the situation is interesting features was something we King and Dufferin Streets in the east almost always a site in search of a use. heard about often from people in the end of Toronto. Scott Valens, an field. ìYou just canít find buildings ìYou have to have the vision. The architect and tenant in one of these today that are built as well and as ability to see the opportunity where York Heritage Properties buildings, beautifully as a place like the former others do not,î suggested Margie points out how easy and relatively Victoria and Grey Canada Trust Zeidler of Urban Space in Toronto. inexpensive it has been for the owners building,î said Muky Pundaky,
9 manager of the landmark on Londonís developers tend to engage in these section of this report, is a great main downtown street. ìIt is largely types of development projects because example. In spite of its apparent modeled after the Empire State they are passionate about buildings and advanced state of decay, the building Building in New York.î the opportunities that they present. featured an old chimney that was in clear view of the major north/south Principally, those we interviewed highway that cuts across the Niagara suggested that they took great pride in Peninsula. Developer Nino Donatelli, achieving sound heritage development with his background in restaurant projects in spite of the hurdles before operation, could see the marketing them. As Paul de Haas, developer of potential of the site. The chimney now the Bridgeport Lofts in Waterloo sports the characteristic illuminated red explained, ìPride is an important factor sign of The KEG restaurant chain. ñ to think of what it looked like then and what it looks like now. We assist Marketing is not the only location with the municipal vision by taking an advantage that a potential heritage eyesore and turning it into gold.î Other development site might have. Often an developers and architects noted that existing building, by virtue of its heritage development provided a The Lofts on Mansion project, Kitchener construction having pre-dated current special opportunity to make a statement zoning, might present a density and also to employ a set of skills that opportunity. The Lofts on Mansion 4.1.2. Building Location & Site are far from universal. Their personal building in Kitchener has four floors, Advantages drive and commitment to achieve their but is located in a neighbourhood of vision trumped other considerations. ìWe found out as time went by that the single-family residences with good market value was higher than access to transit and amenities. The This is not to suggest that these expected.î building offered developer Paul individuals fail to pursue financial gain. DeHaas and his partners a chance to Quite the contrary, some projects are - Ed Newton, February 23, 2005 create an exciting project. It has been selected almost exclusively because a As with other real estate ventures the possible to add a floor and develop 30 tremendous profit could be realized old adage - location, location, location, new units without disrupting the and/or because the value of the on-site - often applies to heritage development. surrounding neighbourhood since the materials alone negated some of the The former Merritton Cotton Mill in St. building was already there. financial risk. Nevertheless, heritage Catharines, described in the first
10 In fact, the neighbourhood itself can motivating factor in taking on an scale, a developer told us of earning a be a key component in the decision to adaptive reuse project is the return that 22% return on an investment of redevelop an older building. Alex can be made on the investment. Due to $1,300,000, which equated to Speigel, principal architect for the the level of risk involved in the real approximately $300,000 over an eight condominium conversions of the estate market, the expected return on month period. investment (ROI) is significantly higher Loretto College and Tip Top Tailor Overall, the figures we gathered than that expected from paper buildings in Toronto, says ì They are in and interview responses indicate that investments such as mutual funds, established, desirable neighbourhoods. the business of adaptive reuse seems to bonds, and stocks. They pre-sold in a week.î be very lucrative, if not always Other respondents echoed these Yet with the limited information immediately. Margie Zeidler of Urban points, citing location, historical faÁades we received, it proved difficult to reach Space, discussed the risks involved in and the right combination of market a single, precise conclusion of the adaptive reuse, ìOur pro forma and demand as equating to success. return on investment anticipated by indicated that 401 Richmond would However, each older building is, in developers. Some developers suggested have made more money as a parking fact, unique. There are very few rules, that a 20% to 30% ROI is the industry lot. We had to believe that the use for very few easy answers when it comes standard when investing in real estate. the building was there.î to either refurbishing them for a However, a small group of other Comparing the costs of heritage continuation of their former use or developers suggested that 10% to15% development to new build represented adapting them for new purposes. is the expectation. one of the most interesting aspects of There is, of course, a continuum this investigation. The range of that ranges from loss to bonanza. One responses from those interviewed 4.1.3. Return on Investment developer interviewed forecast an ROI varied greatly. While some developers ì Within ten minutes, I can figure out if of 60% at the beginning of the project. focus only on heritage development, the project will make sense As the project progressed, the forecast others make comparisons constantly in financially.î ROI was reduced to 20%, and in the preparation to approach banks and - Ed Newton, February 23, 2005 end, the developer claims to have made others for project backing. only a 10% ROI. The reason for the Some claim that ROI is enhanced While it was not easy to get developers lower return was that the project ran because of the savings involved in to share the financial details of their three years over the original time reusing existing buildings. Shawky projects, it appears that a central projection. At the other end of the Fahel, who has worked in Kitchener,
11 Waterloo and Brantford, claims that On the other hand, it was reported to the purchaser are higher, all of those reusing existing buildings generally that some conversions can cost as much we spoke to had confidence that the represents a savings of between 10% as twice that of new build scenarios. market would bear the elevated costs. and 12% over building new. Carlos The estimated total cost to convert The The top end of this market is found in Ventin, one of Canadaís leading Lofts on Mansion in Kitchener was Torontoís 1 King West project where restoration architects, was quoted by estimated to be $7.9M, as compared to Harry Stinson has spent up to $300 per the London Free Press saying that approximately $4M for a brand new square foot to bring condo units on line ìusing existing buildings can cut building of the same size. However, as but has sold most of them for over $500 construction costs by as much as 22% project manager Carl Dawson stated, per square foot. At the other end, we because you already have walls and a ìThe retail value of loft units is already might find the Bridgeport Lofts in roof and floors. (June 31, 2004)î higher than conventional units and Waterloo that were built for university Toronto architect Scott Valens points rising further still.î Margie Zeidler, students and less than $400 covers a out that if any of the existing building commenting on the renovations of 401 monthís rent. Yet both were profitable. Richmond and 215 Spadina in Toronto, systems (hot water heating, plumbing, This is not to conclude that profits said ì Heritage buildings are less etc.) can be reused, it can result in from heritage development are efficient, but not so much so as to considerable savings. automatic. Heritage development prevent the business plan from Table 3: Cost Per Square Foot of working.î Renovation Reported in this Survey Table 4: Cost Difference Between The numbers we collected echo Medium: Renovation and New Building Small: Large: the comment of Ms. Zeidler that, even Medium: 18,000- Small: Large: <18,000 >50,000 when the costs of conversion are 18,000- 50,000 <18,000 >50,000 sq.ft. sq.ft. somewhat higher, there is not much 50,000 sq.ft. sq.ft. sq.ft. Too difference (see Tables 3 & 4). In fact, sq.ft. Residential $144 $231 the average figures show that in two numerous Residential categories reuse cost less, while in -8% +44% Commercial $111 $169 $102 three other categories the difference was eight percent or less. Commercial +15% +8% -38% Institutional $212 $200 Little data So even in the cases where the Institutional +8% +2% conversion costs for redevelopment and, therefore, the price passed along
12 projects in Ontario range dramatically redevelopments are the ones that Table 5: Available Incentive in scope. While major loft conversions benefit most and have been most active Government Level Value and prestige offices come immediately in assisting potential investors. There to mind, our surveying found that the are provisions in the Planning Act, the Federal total project costs can range from as Municipal Act and the Development Infrastructure Canada $40,000+ little as $12,000 to $25,000,000. Charges Act that facilitate incentives including the Heritage Property Tax Industry Canada (FedNor) Materials 4.1.4. Government Incentives Rebates, provisions for brownfield Millennium Fund $95,000 ìThe Seagram Lofts was the most development and fee waivers (Table 5 challenging project we had ever been & Appendix D). Canada Parks TBD involved in. We wouldnít have gone With Seagram Lofts, the City of Provincial near it unless there had been a huge Waterloo waived development charges, SuperBUILD TBD endorsement by the municipality both which would have amounted to at the Council level and the staff levelî approximately $700,000. Prior to the Northern Ontario Heritage Fund TBD - Andrew Lambden, November 20, 2004 adaptive reuse, the site was taxed as a Corporation vacant lot. The site now contains Ontario Heritage Foundation $150,000 Municipalities can be very helpful in approximately $24,000,000 of real providing encouragement through estate and is generating approximately Trillium Funding $75,000+ incentives for adaptive reuse projects $270,000 a year in tax revenue ñ a Municipal that are mutually beneficial to both the significant increase from prior income. city and the developer. Incentives can The City of Brantford, in its efforts Waived Development Fees $20,000 - act as a kind of loss-leader ñ Municipal Act Section 365.(1) $700,000 encouraging development that has been to encourage downtown revitalization, granted developer Shawky Fahel 25% Property Tax Rebates $103,760 shown to more than recoup its value for Municipal Act Section 365.2(1) of total development costs for Lawyerís the local government through increased Grants and Funding $150,000 - property values and corresponding tax Hall under the Downtown Business Ontario Heritage Act Sections 39. $317,000 revenues (Barber 2003). Performance Grants Program. Along (1) & 22 with that direct grant of $317,000, the Planning Act Part IV Community Cities faced with the challenges of City of Brantford also waived their Improvement Section 28.(1) (7) intensification, downtown usual development charges. Development Charges Act Section improvement, and brownfield 5, subsections (1)(10) and (6)(3)
13 Incentive programs are not offered often unavailable in Toronto, so the urban redevelopment. Ed Newton, in every municipality. Shmuel Farhi, a City must look to other means if they project co-ordinator for the Seagram major owner of older properties in want to assist developers. Height and Lofts, stated that ìThe City of Waterloo London, wishes that city would take a density bonusing under Section 37 of was on side, mostly because we had position similar to other places on the the Planning Act is an option. In that such a positive attitude going into this matter of incentives. arrangement a developer is allowed to project. They saw that we were going build a taller building on some other to finish the project and that they would
site in return for saving an existing be thrilled with the results.î Shawky building. Fahel echoed the same sentiment in Table 5 indicates some of the describing his interaction with the City of Brantford, where he says the Cityís incentives available at the municipal level but shows that Federal and co-operative attitude made all the Provincial funds are also a growing difference in the success of his renovation of the Lawyers Hall. factor in the financing of restoration and reuse.
One of the ways that governments can become involved in reuse projects
is as tenants. When this works, such as the case of the old Waterloo County Waterloo School of Architecture, Cambridge Gaol in Kitchener ñ where provincial court functions are the long term We have found that incentives are tenants ñ it can ensure success. In the mainly offered in secondary markets case of the Elgin County Court House such as Brantford, Hamilton, and in St. Thomas, however, refusal of the Kitchener. Primary markets are faced Province to sign a long term lease may with similar challenges, though, as jeopardize the project. The Carpet Factory in Toronto Toronto developer Harry Stinson said, ìtax or grant incentives are Committed developers represent insignificant for projects of the some of the strongest allies for magnitude of 1 King West.î They are municipalities and collaboration with them can be a very powerful force in
14 4.2. Constraints of Older Beck II Power Generating Station ñ the banks justified in their reluctance to Building Reuse where the owner (Ontario Power readily support heritage development? Generation) is able to entirely finance Developers we spoke to made it the project. Typically, private 4.2.1. Uncertainty & Site clear that there are always unexpected developments require bank loans. Remediation costs that pinch their carefully Banks are particularly hesitant to conducted pro formas. In some cases, Fundamentally, all development finance adaptive reuse projects because such as the Seagram Lofts in Waterloo, projects have to show the promise of they believe the level of risk is higher unanticipated costs and delays reduced making money ñ otherwise they will than other real estate investments or the bottom line to the extent that the not proceed. Similar to other development. Often, banks will place project became only marginally development types, our interviewees conditions on the financing and this can profitable. This project was saved only indicated that there is a range of pose a challenge, as was the case for Ed by the fact that the market valued the profitability attached to adaptive reuse Newton of the Seagram Lofts. ì Before converted lofts more highly than had but usually a greater degree of the bank would approve the loan, 65% been expected. uncertainty. There are a number of of the units had to be pre-sold,î he reasons for this, including unforeseen Many heritage developments do in explained. To reduce their level of risk, costs and site contamination ñ but the fact involve certain cost premiums. In banks will often issue demand loans, a result is often difficulty in securing some cases, these additional expenses type of loan with no established financial backing. arise from the inefficiencies of the maturity period that can be repayable building shape. As Harold Ensslen, Three sources for financing heritage on the demand of the lender at any chief architect for the Ontario Power development were identified by the time. At the very least, banks usually Generation (OPG) office building interviewees: personal equity, private require the developer to have available conversion in Niagara Falls said, investment, and bank loans. A fourth a minimum of 25% of the total project ì Heritage buildings are not purpose source was noted by about a third of the cost. built.î Therefore, inefficiencies become survey respondents as part of their Some developers of adaptive reuse virtually unavoidable when the required fiscal plan - the availability of federal projects have a limited track record in amount of floor area is spread out over or provincial financing and/or this type of real estate investment ñ but more storeys. Costs can rise by 10% or municipal government incentives. even with experienced practitioners, the more in these cases for hallways and There are very few instances ñ like banks can be difficult to convince. Are washrooms. the adaptive reuse of the Sir Adam
15 In the case of the Bridgeport Lofts, faced with an unforeseen site In three major renovations in one of the main challenges was dealing remediation problem. The site was Toronto, Alex Speigel has seen his with the foundation and faÁade. The formerly home to the Merritton Cotton share of site remediation costs. service bay, where trucks used to load Mill and the Independent Rubber ì Environmental issues are the most and unload goods during the buildingís Company. The factory was surrounded common,î he says. ì PCBs and previous incarnation, was located on by reservoir ponds for the locks system asbestos, or lead based paint on the the front of the building. The prior of the former Welland Canal. The plant walls. The trouble is that you have to configuration of the building obstructed discharged effluent into the ponds budget for this type of stuff.î the aesthetic appeal and hampered during its operation and when the old Because of the difficulties in transformation to residential use. To Canal was diverted, the reservoir ponds securing bank loans, developers overcome the challenges in changing were filled with waste and debris. The sometimes seek private financing for uses, the development team decided nature of the disposed material was their projects to avoid restrictions and that they would cover up the service discovered in the soil during time limitations on project bay with recycled stone and bricks, at a construction and the developer was management. We found this to be the cost of approximately $400,000. faced with the cleanup of these ponds, case more often in the smaller and From the 24 questionnaire at a cost of nearly $200,000. medium sized markets but even in respondents, we learned that the Torontoís 1 King West project the adaptive reuse of buildings required a financing was primarily private. complete gutting of the interior in eight Nonetheless, those involved in this cases and major interior work in type of development found demand another four. While exterior work was significant enough that the market less frequently required, where would bear the additional costs that applicable it involved one or more of: arose from uncertainty. No project brick cleaning, structural repairs, investigated failed to report moderate foundation improvements and to high income generation and many landscaping. developers feel that bank reluctance to One of the largest costs that can recognize the value of heritage and Bridgeport Lofts loom over many adaptive reuse projects adaptive reuse projects, especially is site contamination. In the case of The where experienced project management KEG restaurant, the developer was
16 is involved, is unjustified and fails to also separate fire regulations and KEG Restaurant in St. Catharines, not recognize good business opportunities. planning considerations such as site only was fire separation between the plan approval and zoning. In the floors a critical component of Code
opinion of many developers the compliance, it was also necessary to 4.2.2. Building Code and Parking necessity of complying with the Code add fire-rated windows adjacent to the and other regulatory requirements fire escapes. ìThe code is problematic; it should be frequently results in major expenditures While unusual circumstances and handled case by case and not by fitting that could not have been foreseen at the timing of inspection were the project in to a very general earlier stages of projects. mentioned by some of the people we category.î In the case of the Seagram Lofts, spoke with, nothing was touched upon - Ed Newton, February 23, 2005 the original plan called for using timber more frequently than the lack of to support mezzanine floors. coordination between inspectors and Ontarioís Building Code is a set of Unfortunately, the Code was the various enforcement agencies. regulations guiding almost all interpreted as requiring that beams be Harry Stinson, developer of I King construction in this province under the constructed out of steel ñ in spite of West, as well as many other Toronto enabling legislation of the Building research that shows timber beams are projects, suggested that, in some Code Act. The Act, and by extension just as fire resistant. The same aspects of the project, he found the the Code, are meant to create certain inspector then required that the inspectors to be too lax in not requiring standards for safety, but are also mezzanines be fire separated ñ the structural and safety aspects that he designed to be sufficiently flexible so same way continuous floors are even installed anyway. At other times, he as to permit the adaptive reuse of though they were open at one end and found them unduly restrictive. Time buildings. could not have stopped a fire going delays from the lack of coordination To this end, it is Section 11 of the from level to level. represent part of the reason why costs Code that is most critical to heritage In other cases, fire exits proved to escalate. developers because of the discretion be the greatest problem. For the In the end, perhaps it was Shawky that it allows the individual building Ontario Power Generation building in Fahel who best reflected the overall inspectors to accept variations in Niagara Falls, the exceptionally small mood of the interviewees in stating that standards when faced with existing building footprint made it difficult to ì Building development agencies need structures and inherent constraints. provide the requisite number of to be a friendly partner.î Along with the Building Code there are emergency exits. Similarly, for The
17 Over and over again, we heard People in Toronto, where there is 4.2.3. Heritage Design Requirement developers talk about the matter of extensive public transit, are beginning ìThe current Ontario Heritage Act has parking. Even when people want to to see they can get along without cars led to a culture of compromise.î live, work and shop in the middle of but except for student accommodation cities, they seem to be unable to free such as the Bridgeport Lofts in -Catherine Nasmith, March 14, 2005 themselves from their auto dependence. Waterloo and Lawyers Hall in Generally speaking, developers and This means that even if municipalities Brantford, this is not the case in most architects working on adaptive reuse are willing to waive parking other parts of the Province. Creative and restoration undertakings do not requirements, many potential buyers or solutions need to be found for this have to contend with any heritage renters insist on parking spaces. dilemma. Municipal parking structures, requirements since only a few of the London developer Joe Carapella says, in which developers can buy spaces to buildings they are working on are ì itís very naÔve to suggest youíre going meet their requirements, are one designated under the Ontario Heritage to have a building you can renovate and alternative. Act. However, they are loath to rent out without parking available. Handicap accessibility is a further adversely affect a buildingís Thatís a non-starter. (London Free barrier to the success of many potential appearance and/or structure. It is in Press, June 31, 2004)î renovation projects. If a space is going their interest to preserve the aesthetic to be rented or leased to a public quality of their buildings, since it is agency then wheelchair accessibility those details and character elements
will be a requirement. That can impact that attracted them in the first place and a building in at least two ways. There which will be integral to the market are aesthetic considerations regarding value of the finished product. how ramps alter the appearance of a In cases where the buildings being structure. Secondly, there are also cost refurbished are designated there are implications if, for example, an few problems. The transformation of elevator is mandatory. However, like the Old Waterloo County Gaol in other challenges, these considerations Kitchener, owned by the Region of can be accounted for through a Waterloo and converted into court combination of innovative design and Post House in Branford is now part of facilities for the Provincial Attorney Wilfred Laurier University flexible enforcement of regulations. Generalís Department, was marked by
18 cooperation and good will between the All that meant that compromises about which clear heritage legislation might Region and local heritage advocates. the details of renovation were often be of help to them, while heritage That situation is not always made in a way which pleased no one. advocates did not seem to appreciate repeated. Part of the problem lies with With the passage of important the passion and commitment to Ontario Heritage Act. Because, in the amendments to the Ontario Heritage architecture demonstrated by many past, it provided for the recognition of Act in April 2005, a much greater developers. An example of this was buildings as historically valuable to the degree of clarity around what can and seen in London where Shmuel Farhi community but did not prevent their cannot be done to recognized heritage complained that he could be ì thrown in demolition, it led to a measure of buildings will go a long way to jailî under provisions of the revised uncertainty that was not conducive to stabilizing the situation and providing Heritage Act requiring proper building either architectural conservation or the certainty heritage developers need maintenance. But, next door to his good business. Toronto architect in making business decisions. While beautifully restored Scott Building on Catherine Nasmith says ìthe old this still impacts only some heritage Londonís Dundas Street was a derelict Ontario Heritage Act led to culture of developments where properties are and dangerous building. It was pointed compromise.î Proposed changes to designated, those buildings will serve out that, should the street become a officially designated buildings had to as demonstrations projects in the heritage district, the provisions of the be reviewed by Municipal Heritage industry. There is also the opportunity Heritage Act were aimed not at him but Committees and approved by to forge new working relationships at the building owner next door. Mr. Municipal Councils; but when owners between heritage advocates and Farhi began to see the potential or developers became frustrated by the developers. advantages. The derelict building was process, the Act only allowed clearly diminishing the value of his In our interviews, we found that municipalities to postpone demolition. property. Heritage developers were also many developers were antagonistic Developers did not want to face delays generally unaware of the ways in which toward local heritage committees and and heritage experts knew that, in the strong heritage legislation had proven historical preservation groups. At the end, their Councils could not prevent advantageous to building owners in same time, it is not uncommon for the loss of the structures. In fact, a 2003 places like New York City where members of the heritage groups to be study found that over 400 designated or developers seek architectural listing. suspicious of those in the land listed buildings in 22 Ontario development industry. Many developers related bad communities had been demolished over experiences in dealing with some a 15-year period (Shipley & Reyburn). What was clear was that developers members of the heritage community. were often unaware of the ways in
19 Londonís Joe Carapella says that called ì tweedy academics,î argued for the obstacles to be overcome for worthwhile buildings have ìgot to have a year with him, and amongst heritage development projects are all an architectural style, from a certain themselves, about the proper way to the more acute. As a consequence it is period in the cityís history, or a famous proceed. Not only did this cost him often difficult to find adequately skilled person attached to it. Just because itís money in lost time but, in the end, the and experienced people all the way been there a long time doesnít make it a outcome was to demolish the building, from architects and engineers to heritage building. (London Free Press, dump the broken fabric into Lake appropriate trade workers. June 31, 2004)î Ontario and put up a plaque.
But heritage proponents and The Historical Board may have a developers do not simply disagree different story but the point is that no about what makes a building common ground was found between worthwhile saving. Sometimes those who see themselves as defenders confrontations over design elements of heritage and someone who was can seriously jeopardise entire projects. prepared to spend his money to Sometimes site plan control protects accomplish at least a measure of the exterior shell of the building and, in conservation. The clarity of the revised the words of Alex Speigel, ìit can be a Heritage Act which allows for challenge to deal with the heritage demolition control will hopefully bring preservation people. Sometimes they a new spirit of cooperation. are very inflexible and our experience is that flexibility is design.î 4.2.4. Professional Experience and Process of demolition- construction in the Skills case of the Seagram Lofts More alarmingly, developer Harry Stinson still bristled telling about a ìHad no work been completed, the One architect recalled a project he debate with the Toronto Historical building would not likely be standing had taken over part way through Board over the treatment he proposed today.î completion. Due to lack of knowledge about heritage buildings, the previous for a downtown storefront years after - Ed Dreidger, February 4, 2005 the ordeal. His plan was to reconstruct architect had advised the owners that the faÁade set back from the street and Challenges can surface in any they needed to replace all of the 102 enclosed in a glass atrium. He says profession at any time. However, in the windows in the building with metal Historical Board members, whom he opinion of those with whom we spoke, ones costing $600 each. Our
20 interviewee was able, in the end, to other detailed construction work. There point, employing those who do not repair the existing windows at a cost of is such a critical shortage of these have such familiarity. To continue the $200 each. workers - the average age of sports metaphor ñ everyone has to start bricklayers in Canada is 58 ñ that a as a rookie. Adapting buildings for new uses is special task force on the subject has a very challenging and complex It was not just the skill and been organized by the federal process. Compared to new experience of people working within governmentís Human Resources development where construction begins the development industry that was Development Canada (HRDC). from the ground up, adaptive reuse addressed in our interviews. Developers we spoke to valued their projects are unique and, therefore, Undoubtedly, the most significant skilled craftsmen highly and were require a creative process in comment that we heard regarding the anxious to find and, if necessary, train overcoming building challenges. value of experience came with respect more skilled workers. to the banking industry. Here In the case of the Seagram Lofts, The analogy was made, and experience seemed to mattered little the faÁades of the two warehouse confirmed by the majority of those because the banksí set pro formas did buildings were to be left intact. The interviewed, that building a successful not allow the lenders to see the conventional method for reinforcing heritage development team evolves in advantages of heritage development ñ faÁades during construction is in the the same approach as creating a good even for projects directly parallel with use of shoring with steel support sports franchise. As one developer put those successfully (and profitably) beams, where the interior can then be it, ìwe have a pretty good group and completed. completely gutted prior to construction. everyone has a specific role.î In this The development team created a type of environment, with daily process of demolition followed by challenges and unanticipated problems, construction in a series of phases, it is generally held that experience is of which eliminated the need for shoring. benefit through transference of skills This creative process saved the and knowledge. Naturally, this leads to developers approximately $500,000. an unavoidable conundrum. It is Just as important as architects, impossible to have the experienced engineers and project supervisors are professionals and trade workers that the skilled trades that undertake the many consider to be a necessary carpentry, brickwork, plastering and component of success without, at some
21 22 5.0 Conclusions & look like and they value that. The for regulatory approvals and scolding heritage developer sees what the municipal governments for not Recommendations place might look like in the future. providing relief from taxes and fees, The hard-nosed business sense are all parts of the marketplace 5.1 Conclusions required of successful developers can haggling behaviour that occupies much of developersí time and energy The existence of dynamic, risk- be a bit frightening. One of our interviewees told a story about how ñ and these habits are hard to taking and creative investors, with a abandon when being interviewed. passion for beautiful older buildings, he asked two roofing contractors to is probably the most important single show up at the building site. When What is clear, however, is that element in the heritage development they were both there with their crews, there is a healthy and growing industry. We found most of these he negotiated the best price. Is this business in heritage development and entrepreneurs to be a volatile mix of business practice at the edge of the people we talked to are in the vision, hard-nosed business practice, ethics? Perhaps yes but, in some vanguard of that business. According and bravado. cases, it may be what is required to to the numbers of projects identified get the job done. in different building type categories, Vision is the ability and perhaps, the bulk of the action seems to be in Bravado is probably a common more importantly, the inclination to medium and large residential projects trait amongst many successful see what a project will look like when (medium 18,000 sq. ft., to 50,000 sq. business people across the economic it is completed. Many people are ft., and large, over 50,000 sq. ft.), spectrum. One has to be confident, impressed with renovated older medium sized commercial and small forceful, and daring to survive when buildings when they visit them in institutional (Table 1). other cities or even other countries, taking chances and risking ones own but the same people will look at money and reputation are daily In terms of cost comparison with derelict or rundown premises in their occurrences. Part of the reason it new build, the numbers prove own neighbourhood and think they proved difficult for us, in the course interesting (Tables 6). In the medium should be torn down. The heritage of this research, to collect actual costs residential category, reuse actually developer sees past the current state of various aspects of development comes out to be a lower cost than of the building and can imagine its projects was that our interviewees new build. To some extent, that potential. This is somewhat similar to often gave contradictory information. reflects projects such as the student many heritage advocates but they Lamenting the high price of labour, housing developed in Waterloo and tend to see what the building used to complaining about the length of time Brantford.
23 Table 6: Findings however, the reviews are mixed. Some developers and architects, in
Building Type Small Medium Large the cases involving public sector New Residential Projects often $155 $130 projects, have enjoyed good working private & too relationships and have been able to Reuse Residential numerous $144 $231 cooperate around issues of proper,
New Commercial $95 $155 $165 highly authentic restoration. Quite often, there are additional funding Reuse Commercial $111 $169 $102 sources to deal with such things as
New Institutional $195 $195 the restoration of the paintings in Insufficient data Castle Killbride, a 19th century Reuse Institutional $212 $200 mansion which became part of the
Wilmot Township Administrative In the case of large residential, the The majority of buildings that are Complex in Baden near Waterloo. cost in our sample is considerably being given new life in Ontario are On the negative side, a number of higher on average for reuse projects. private sector projects. As well, many developers have had bad experiences But here we found that mainly loft of the buildings are not formally with work on designated buildings. style condos were bringing a much recognized as ì heritageî properties These ranged from delays caused by higher rate of return in spite of (or through designation under the the time required for reviews of plans perhaps because of) the larger Ontario Heritage Act. This is not by committees to squabbles over investment. The same seems to be particularly surprising, since the great design. Developers also complain, true in the medium sized commercial majority of designated properties are not about the Building Code as such, projects ñ where a slightly higher cost private homes which have been left but about applications of the code and is generally rewarded by high rent, out of this study, while many of the other regulations that are inflexible lease or sale prices. The number for adaptive reuse projects involve and unresponsive to the situation. large commercial is somewhat former industrial buildings which skewed by the small sample size, have often been left out of the With regard to incentives, there is while for large institutional projects designation process. very good evidence from the United States and British Columbia that there was only one example and so no Where designated buildings are municipalities receive excellent calculation of average cost was the subject of heritage development, possible. return for tax relief and other
24 financial measures designed to 5.2. Recommendations Building inspection for code stimulate building renovation and compliance, fire inspection and other reuse (U.S. national Trust; Barber, Municipalities that want to promote regulatory functions should be 2003, Mason 2005). These gains are re-urbanization, smart growth, coordinated in a way that encourages realized largely through increases in intensification and dynamic place safe and functional structures. This assessment and, therefore, in tax making should appreciate the role should be performance-based rather revenues. Of course, this benefit that can be played by heritage than rule-based. There should be a comes in addition to the primary development. Instead of adding to the commitment on the part of aspect of building reuse, the current trends that are promising to municipalities to provide these maintenance of cultural integrity, remake cities in a better way, many inspections in a timely way. livability of urban spaces and planners and political leaders see Heritage advocates should find aesthetic continuity. heritage - the valuing of existing and support the developers who love We concluded that heritage structures - as an impediment. older buildings as they do ñ and are advocates do not always seem to Heritage considerations are not prepared to find new uses for them, recognize that they have very attempts to freeze urban change but bring their development skills to bear dynamic and creative allies in the only to direct it in constructive and on them, and spend money on them. rational ways. Municipalities should development world. Heritage developers do not pretend to be adopt coherent policies that promote "The preservation movement has one great cultural experts. Their interest in building reuse as an integral part of their smart growth strategies. curiosity. There is never retrospective older buildings is more instinctive, controversy or regret. Preservationists are but they see value in these structures Municipalities should make the the only people in the world who are as much as the heritage community. rules for heritage development clear. invariably confirmed in their wisdom after They see it in a different way ñ often Some buildings should be preserved. the fact." perhaps, more like the original Some neighbourhoods and districts builders themselves. We would not should be subject to design guidelines J. K.Galbraith, Canadian born economist advocate that developers always have that protect the character of the area and writer, quoted in 1999 by Richard their way in the realm of urban and, therefore, protect the investment Moe, President of the US National Trust planning and city building. But what of those who have maintained or for Historic Preservation. they do, they do well and they are renovated properties. awesome to watch when in full flight.
25 26
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Ascroft, S. (2002). Preservation Pays: The Economics of Bunting, T.E. (2000). Housing Strategies for Downtown Heritage Conservation. Ottawa: The Heritage Canada Revitalization in Mid-Size Cities: A City of Kitchener Foundation. Feasibility Study. Canadian Journal of Urban Research 9 (2). Pp 45-175. Austin, L.R. (1988). Adaptive Reuse: Issues and Case Studies in Building Preservation. New York: Van Nostrand Chen, K. (1996). Dollars and Sense of Historic Preservation. Reinhold Company. The Importance of Historic Preservation in Downtown Richmond. Washington, D.C: National Trust for Historic Ball, R.M. (1995). Charting the uncharted; vacant industrial Preservation. premises and the local industrial property arena. Policy and Economic Development. Routledge, London. City of Kitchener (2003). The Edge: Encouraging Development for Growth Efficiency. Department of Braber, S. (2003). Municipal Tax Incentives in Victoria, British Economic Development, City of Kitchener, Kitchener, Columbia ñ A Case Study Plan Canada. 43:2, pp 20-22. Ontario.
Bartsch, C. (1996). Paying for our industrial past. Commentary, Clarke, A. (2000). Economic Benefits of Historic Preservation 1996 Winter, pp 14-23. in Georgia, A Study of Three Communities. In Dollars & Bartsch, C. and Collaton, E, (1996). Coming Clean for Sense. National Trust For Historic Preservation Press. Economic Development. Washington, DC: Northeast Coulson, N. and Lahr, M. (2005). Gracing the Lands of Elvis Midwest Institute. and Beale Street: Historic Designation and Property Values Bartsch, C. C., Andress, C., Seitzman, J. and Cooney, D. in Memphis, Real Estate Economics. 33 pp 487-507. (1991). New life for old buildings: confronting CMHC (1997a). Conventional and Alternative Development environmental and economic barriers to industrial reuse. Patterns-Phase 1: Infrastructure Costs report prepared by Washington. DC: Northeast- Midwest Institute. Essiambre-Phillips-Desjardins Associates. Blackburn, L. (1983). What Developers Think of Historic CMHC (1997b). Conventional and Alternative Development Preservation. Urban Land. November 1983, pp 8-11. Patterns-Phase 2: Municipal Revenues report prepared by Brown, F. (1983). Historic Preservation Promotes Profits, Hemson Consulting. Widespread Rehabilitation. Journal of Housing. October 1980, pp 513-517.
27 Delafons, J. (1997). Politics and Preservation: A Policy Mason, R. (2005). Economics and Historic Preservation: A History of the Built Heritage 1882-1996. London: Guide and Review of the Literature. A Discussion Paper Chapman & Hall. Prepared for the Brookings Institution Metropolitan Policy Program, Washington D.C.: Brookings Institution. De Sousa, C. (2002). Measuring the public costs and benefits of brownfield versus Greenfield development in the Greater Toronto area. Environment and Planning B. Vol 29. pp 251-280.
De Sousa, C. (2001). Contaminated Sites: The Canadian Situation in an International Context. Journal of Environmental Management, 62, pp 131-154. De Sousa, C. (2000). Brownfield Redevelopment versus Greenfield Development: A Private Sector Perspective on the Costs and Risks Associated with Brownfield Redevelopment in the Greater Toronto Area. Journal of Environmental Planning and Management. 43(6). pp 831- 853. Friedman, D. Oppenheimer, N. (1997). The design of Renovations. NY, NY: W.W. Norton & Company. Howland, M. (2003). Private Initiative and Public Responsibility or the Redevelopment of Industrial
Brownfields: Three Baltimore Case Studies. Economic Development Quarterly, 17(4), November 2003. pp 367- 381. Kincaid, D. (2002). Adapting Buildings for Changing Uses: Guidelines for Change of Use Refurbishment. London, UK.: Son Press. Professor Masonís review of the literature concerned with the economics of historic preservation is probably the most complete work on the subject to have appeared recently.
28 Meyer, P. and Lyons, T.S. (2000). Lessons from Private Sector Rypkema, D. (1994). The Economics of Historic Preservation: Brownfield Redevelopers. Journal of the American A Community Leader Guide. Washington D.C: National Planning Association, 66, pp46-57. Trust for Historic Preservation. National Trust for Historic Preservation (2002). Appraising Rypkema D, Wiehagen K, (2000). Dollars and Sense of Historic Properties. Report by: Judith Reyholds. Historic Preservation. The Economic Benefits of Washington D.C: National Trust for Historic Preservation. Preserving Philadelphiaís Past. Washington D.C: National Trust for Historic Preservation. Ontario Government, (2005) Places to Grow Act (Bill 136). http://www.pir.gov.on.ca/userfiles/HTML/cma_4_40890_1 Sanderson, E. (1994). Economic Effects of Historic .html Preservation in Rhode Island. Historic Preservation Forum. 9(1). Persky, J. and Wiewel, W. (1996). Central City and Suburban Development: Who Pays and Who Benefits? Great Cities Shipley, R. (2000). The Impact of Heritage Designation on Institute, University of Illinois at Chicago, Chicago, IL. Property Values. International Journal of Heritage Studies. 6(1), pp 83-100. Persky, J. and Wiewel, W. (1995). Brownfields, Greenfields: the Costs and Benefits of Metropolitan Employment Shipley, R. and Reyburn, K. (2003). Lost Heritage: a survey of Decentralization. Chicago, University of Illinois at historic building demolitions in Ontario, Canada. Chicago, Great Cities Institute. International Journal of Heritage Studies. 9(2), pp 151-168. Persky, J., Daniel, F. and Wiewel, W. (1994). A Methodology Sigworth, E.M. and Wilkinson, R.K. (1976). Rebuilding or for Measuring the Benefits and Costs of Economic Renovation? Urban Studies, 4 (2), pp 399-404. Development Programs. Chicago: University of Illinois at US National Trust for Historic Preservation Chicago Centre for Urban Economic Development. http://www.preservationbooks.org/ Powell, K. (1999). Architecture Reborn: Converting Old Walljes, I. and Ball, R. (1997). Exploring the realities of the Buildings for New Uses. New York: Rizzoli. sustainable city through the use and reuse of vacant Rabun, J.S. (2000). Structural Analysis of Historic Buildings. industrial buildings. European Environment. Vol. 7, pp New York: John Wiley & Sons, Inc. 194-202. Rust DíEye, G. (2004). See Heritage Resources Centre Wood, E.B. (1997). The Economics of Rehabilitation. Website: www.fes.uwaterloo.ca/research/hrc/ Preservation. Washington D.C: National Trust for Historic Preservation.
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30 Appendix A – List of Identified Projects
Municipality Project Municipality Project
Alliston The Gibson Cultural Centre London Idlewyld Inn Alton Alton Mill London Sterling Place Brampton Carnegie Library Building London Victoria & Gray Trust Building Brantford Holstein Building London Scott Building Brantford Lawyersí Hall Markham Village Train Station Brantford Odeon Theatre Milford Mount Tabor Church Brantford Old Post Office New Tecumseth Museum Facility Brantford Old Shoe Factory Niagara Falls Ontario Power Generation Offices Cambridge Langdon Hall Niagara Falls Whirlpool Golf Course Club Cambridge School of Architecture North Bay Train Station Cambridge Stone Cottage Ottawa Aberdeen Pavilion Clinton Tavern to Senior Centre Ottawa Canalside Townhomes 30 Driveway Guelph Mill Lofts Ottawa Centre de Jour Guigues Hamilton Rousseau House Ottawa Centretown Infill ñ Flora & Somerset Kingston Artillery Park Barrack House Ottawa Dalhousie (281) Infill Kingston Belvedere Hotel Ottawa Dominion Chalmers Kingston The Woolen Mill Ottawa Glebe Community Centre Rehab Kingston Victoria Public School Ottawa National Research Council Building Kingston Wellington Street Brewery Ottawa Plant Bath & Rehab Kingston Whig-Standard Building Ottawa Real Lofts Kitchener Arrow Lofts Project Ottawa Royal College of Physicians Kitchener Berlin Interior Hardwood Ottawa St. Charles School Lofts Kitchener Gaol and Governors House Ottawa Sandy Hill Infill Kitchener Kaufman Lofts Project Ottawa The Loft Tradition Kitchener Mansion Lofts Project Ottawa The Stables Rideau Hall Ottawa Wallis House
31 Appendix A – Identified Projects (continued)
Municipality Project Municipality Project
Paris Arlington Hotel Toronto 200 Clinton Paris Art Gallery Toronto 289 Sumach Picton Merrill House Toronto Candy Factory Picton Quaker Meeting House Toronto Carpet Factory Picton Ross McMullen House Toronto Cathedral Square Picton Warring House Toronto Claremont Hall Queenston Willowbank Toronto Hepbourne Hall Richmond Hill Lloyd Centre Toronto Imperial Lofts St. Catherines Keg Restaurant ñ Merritton Cotton Mill Toronto Kensington Lofts St. Catharines Lincoln County Courthouse Toronto Leadlay Building St. Catherines Lybster Mill Toronto Liberty Lofts St. Catharines Merritton Town Hall Toronto Liberty Village St. Thomas Elgin County Court House Toronto Market Block Building Stratford Avon Theatre Toronto Noble Court Thorold Maplehurst Toronto One Columbus Ave. Thorold The Flour Mill Toronto Richmond Mews Tillsonburg Livingston Centre Toronto Roncarelli Residence Toronto 1 King W Toronto Sears Building Toronto 5 King W Toronto The Soho Toronto 6 Bratlett Ave. Toronto Studio One Toronto 8-16 Croft St. Toronto The Brewery Toronto 10 Sword Toronto The Creed Building Toronto 20 Brockton St. Toronto The Flatiron Building Toronto 41 Shanly Toronto The Gladstone Hotel Toronto 47 Colborne St. Toronto The Industrial Revolution I Toronto 115 Manning Toronto The Industrial Revolution II
32 Appendix A – Identified Projects (continued)
Municipality Project Municipality Project
Toronto The Knitting Mill Windsor Duff Baby House Toronto The Lofts on Frederick St. Windsor Edith Cavell School Toronto The Lofts on Sorauren Windsor First Church of Christian Science Toronto The Loretto Windsor La Maison Francois Baby Toronto The Merchandise Building Windsor St. Genevieve School Toronto The Monarch Building Windsor St. Paul's Anglican Church Toronto The Movie House Windsor Walkerville Town Hall Toronto The Old Spaghetti Factory Restaurant Wingham Railway Station Toronto The Oxford on Markham Toronto The Peanut Factory Toronto The Victorian Toronto The Wrigley Building Toronto Tip Top Lofts Toronto West 833 Toronto Yorkland School Unionville Eckardt/McKay House Waterloo Alexandra School - 35 Alexandra Ave. Waterloo Bridgeport Lofts - 12 Bridgeport Rd. E Waterloo Button Factory - 25 Regina St. S Waterloo Seagram Lofts Waterloo Snyder - Seagram House - 50 Albert St. Waterloo Train Station - 20 Regina St. S Waterloo Waterloo Hotel - 4 King St. N
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34 Appendix B - Study Participants
Survey Respondents Andrew Lambden Jeremy Grant Interviewees Seagram Lofts Monica Alyea The Alton Mill Waterloo Alton Mt. Tabor Community Brian Bechtel Catherine Nasmith Theatre Ted Handy Gaol and Governorís Architect Milford Gibson Centre House Toronto Alliston Kitchener Marvin Barnett Ed Newton Gowlings Building Mac Lewis Carl Dawson Seagram Lofts Hamilton Clock Tower Inn The Lofts on Mansion Waterloo Newmarket Kitchener Rachelle Clayton Muky Pundaky McDonald House William Metz Paul DeHaas Former Victoria and Museum on the Boyne The REAL Lofts Bridgeport Lofts Grey Canada Trust Alliston Ottawa Waterloo London Betty Lou Clark Elizabeth Plashkes Nino Donatelli Alex Speigel 371 Waterloo Ave. Markham Village Train Station The KEG Loretto College River Walk Condo Markham St. Catharines Toronto Guelph Spriet Investments Inc. Harold Ensslin Harry Stinson Hank Doornekamp Sterling Place OPG 1 King West The Woollen Mill London Niagara Falls Toronto Kingston Dr. Wyshinski Shawky Fahel Scott Valens Ed Driedger Cosmetic Surgery Clinic Lawyerís Hall Architect CPR Station Waterloo Brantford Toronto North Bay Ted Taylor Shmuel Farhi Margie Zeidler John Edgar Royal Canadian Legion Elgin County Court House 401 Richmond Artist Studio Picton St. Thomas Toronto Paris
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36 Small: <18000 ft2 Medium: 18,000ñ50,000 ft2 Large: >50,000 ft2 Appendix C - Questionnaire (<1672 m2) (1672-4645 m2) (>4645 m2) HERITAGE RESOURCES CENTRE Residential
Commercial Institutional
10) Please answer the following questions concerning the subject property 1) Name: ______Building type: ______Address: ______Building size (ft2 or m2): ______E-mail: ______Number of units (if applicable): ______Phone: ______Building Height (stories): ______
Occupancy before renovation: ______2) Please indicate if you would prefer that the information concerning the specific name and location of the building remain confidential. (If confidentiality is preferred, the costs provided Occupancy after renovation: ______will be used in a general way to determine trends and patterns) Name of Building: ______