F O R B U I L D I N G O W N E R S , A S S E T A N D P R O P E R T Y M A N AG E R S
VOL. 25 NO. 4 • SEPTEMBER 2018
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TABLE OF CONTENTS
CONTENTS 04
11 13
COVER STORY
04
BEYOND REPEAL Energy and water conservation programs escape the fate of wind and solar generation
IN THIS ISSUE
08
VETTING THE VESTIBULE Toronto Fire Services warns against combustibles in evacuation routes
11
SEASONAL DILIGENCE Hot weather plans advised for building services
13
TACKLING TAX INEQUITIES Ontario commercial ratepayers confront location-based education levies
“WE NEED TO WORK WITH THE GOVERNMENT AND TRY TO MAKE SURE THEY UNDERSTAND THE NEED TO CONTINUE CDM, AND THE BENEFICIAL IMPACT IT HAS ON COMMERCIAL REAL ESTATE AND THE ECONOMY.” BALA GNANAM VP, ENERGY, ENVIRONMENT AND STRATEGIC PARTNERSHIPS BOMA TORONTO
ENERGY MANAGEMENT
BEYOND
REPEAL
Energy and water conservation programs escape the fate of wind and solar generation
BY BARBARA CARSS
T
he mandate for some of Ontario’s key energy and water conservation programs will remain enshrined in provincial legislation despite the dismantling of the Green Energy Act, which formally began earlier this fall. Selected provisions of the former Liberal government’s legacy will be transferred to the Electricity Act. This will leave energy efficiency standards for equipment and appliances intact,
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and uphold requirements for reporting buildings’ energy and water use. The Ontario government will also retain regulatory authority to promote conservation, demand management and renewable energy, even if further investment in generation projects is unlikely to be on its agenda any time soon. “Well-connected energy insiders made fortunes putting up wind farms and solar panels that gouge hydro consumers in order
to generate electricity that Ontario doesn’t need. Today, we are proud to say that the party with taxpayers’ money is over,” Minister of Infrastructure Monte McNaughton pronounced, as Bill 34, the Green Energy Repeal Act, was introduced in the Ontario legislature. The legislation is no surprise. It was sketched out during the provincial election campaign last spring and follows the July cancellation of
ENERGY MANAGEMENT
758 renewable energy contracts the former government had awarded. Now, electricity customers are watching to see how the new Progressive Conservative government will deliver on its oft-repeated promise to cut hydro rates by 12%. Part of the strategy unveiled during the election campaign involves transferring the funding mechanism for conservation and demand management (CDM) programs from the electricity rate structure to the general tax base. This was promoted as a potential $43 annual saving on electricity for the average residential household, but that figure has been questioned. Based on current yearly province-wide program costs of about $400 million, the average household consuming 750 kilowatt-hours of electricity monthly would save less than $28 over the course of a year if CDM costs were removed from hydro bills. “For almost a decade, conservation has been effectively invested at a rate of 2 to 4 cents per kilowatt-hour (kWh). That’s by far the lowest-cost energy in Ontario,” says
Andrew Pride, an engineer and energy management specialist who consults on strategic conservation planning and sustainability. DECIPHERING THE GLOBAL ADJUSTMENT The opaqueness of the Global Adjustment (GA) — the bucket of various contracted, program and capital costs that now account for 80 to 90% of the commodity price of electricity — perhaps contributes to less-thanprecise interpretations of each component’s share of the total cost. The Independent Electricity System Operator (IESO) breaks the GA down to three somewhat hazy line items, each with its own contributing elements. Notably, the cost of nuclear power shows up in two GA line items with the Darlington and Pickering generating facilities allocated to Ontario Power Generation (OPG), and Bruce Power allocated to other contracts approved through the former Ontario Power Authority (now merged with the IESO). The latter blanket category also encompasses: renewable generation; natural gas-fired
generation; energy from waste and biomass; the ongoing costs of an unfolding multi-year nuclear refurbishment program; and CDM programs. In total, the GA amounted to about $876 million in August, and has ranged from a low of $787 million in January to a high of $1.15 billion in June thus far this year. The big numbers and broad categories inspire assorted opinions about what’s driving costs. ASSIGNING COSTS, DEBATING TRIGGERS In a September 20 condemnation of what it terms “the disastrous feed-in-tariff program” and “wasteful energy projects”, the Ontario government reports: “Wind and solar represent just 11% cent of total generation in Ontario, but reflect 30% of Global Adjustment costs that are borne by electricity customers.” A spokesperson for the Ministry of Energy, Northern Development and Mines points to an Ontario Energy Board (OEB) document as the source of that information. It presents six contributors to the supply mix — nuclear, www.REMInetwork.com
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ENERGY MANAGEMENT
hydroelectric, gas, wind, solar and bioenergy — in chart form, showing their proportion of total supply and the total GA. Separating wind from solar, the OEB document shows that wind power, at 9% of supply and 15% of the GA, performs somewhat similarly to gas-fired generation, at 8% of the total supply and 14% of the GA — except, of course, in greenhouse gas output. Meanwhile, CDM’s share of the GA is excluded from the tabulation. Another government assertion — “In 2017, 26% of electricity generated from wind and solar was curtailed, or wasted. This is electricity that Ontarians paid for, but didn’t need or use” — doesn’t fully explain the IESO’s economic and logistical rationale for choosing this option. Ultimately, the system needs the capacity for higher levels of consumption at certain times of the day and/ or during heat waves and cold snaps when demand can soar, as well as manoeuvrability for the periods when demand drops. “At off-peak, they keep nuclear running and pay others to curtail more flexible sources of generation because it would be untenable to shut down nuclear operations
and then risk blackouts later while waiting for it to restart,” Pride observes. “So, there’s a good argument that curtailment costs should be attributed to the nuclear baseload, not renewable power.” Regardless, GA costs related to nuclear power are destined to rise as the province embarks on a projected $25-billion refurbishment — if it stays on budget — of 16 of 18 existing nuclear reactors. Nor is curtailment the only liability that’s obscured through reassignment. “The GA does not capture the full costs of waste fuel decommissioning, where the Province gives an unconditional guarantee to cover all costs if Ontario Power Generation’s funds turn out to be inadequate, or insurance risks, which are capped federally,” explains Mark Winfield, a professor in York University’s Faculty of Environmental Studies and cochair of its Sustainable Energy Initiative. A CASE FOR CONSERVATION Although disappointed, green energy advocates are now turning from a debate that’s over, at least for awhile, to the one they can still sway.
“We need to work with the government and try to make sure they understand the need to continue CDM, and the beneficial impact it has on commercial real estate and the economy,” reiterates Bala Gnanam, vice president, energy, environment and strategic partnerships, with the Building Owners and Managers Association (BOMA) of Greater Toronto. Uncertainty elsewhere may actually position energy efficiency’s proven paybacks as the safest bet. “Premier Ford’s move to rescind the Green Energy Act signals investors: Don’t invest in Ontario. Contracts aren’t worth the paper they are printed on,” submits Marion Fraser, a consultant with 40 years’ experience working in Ontario’s energy sector. “Ontario is spending billions on generation, while the money we’re spending on conservation is really measured in the millions,” muses Scott Rouse, managing partner with the consulting firm, Energy@ Work. “Yet, for every $1 million we spend on conservation, the impact on Ontario revenue in terms of averted spending is at least two to one.” ■
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VETTING THE
VESTIBULE
Toronto Fire Services warns against combustibles in evacuation routes BY MICHELLE ERVIN
S
ome condo and apartment building lobbies may be looking spare lately, and it has nothing to do with minimalist design. The lounge furniture that usually occupies these spaces is being targeted as a fire risk. Toronto Fire Services now instructs its staff to look at the flammability of seats, tables and cabinets that display decorative objects for the purposes of enforcing a provincial regulation that prohibits the accumulation of combustible materials in means of egress. A new guideline, issued last year, establishes criteria for hallway and lobby furnishings located in routes occupants may use to evacuate multi-residential buildings including long-term care, nursing and retirement homes. It also offers a list of compliance options, such as installing overhead sprinklers.
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The move responds to a very real life-safety issue — furniture has been implicated in three serious fires — but it has also caught many landlords and condominium boards off-guard. Although it has been shared with industry stakeholders, the engineering technical bulletin that details the new guideline is an internal document of Toronto Fire Services, so property managers are sometimes seeing a copy for the first time at the same time they’re receiving a notice of violation. For property managers who have received notices of violation in the last several months, the quickest short-term fix has often been to remove furniture from affected hallways and lobbies until the best long-term solution can be determined.
IGNITION AND HEAT RELEASE On Feb. 5, 2016, at 1315 Neilson Rd. in Scarborough, four people died after someone deliberately set fire to combustible chairs located at the intersection of two hallways on the top floor of a five-storey seniors building. A pair of subsequent blazes in high-rise buildings shared the same fuel source: furniture. “The fires TFS has responded to in hallways and corridors have been intentionally set,” said Deputy Chief Jim Jessop, Toronto Fire Services, speaking June 7 at an Institution of Fire Engineers Canada Branch event designed to bring building owners and managers up to speed on the new guideline. “We can’t stop individuals from committing a criminal act. What we can do is remove the fuel and reduce the subsequent impact of that criminal act.”
HEALTH & SAFETY
“THERE IS CERTAINLY AN IMPACT ON PEOPLE WITHIN A CONDOMINIUM WHO ARE USED TO THAT BIG, CUSHY LEATHER CHAIR AND NOW THEY’RE GOING TO GET A WOODEN BENCH THAT’S SIMILAR TO SOMETHING THEY COULD SIT ON WAITING FOR A TTC BUS.” This doesn’t mean building owners have to junk all their lounge furniture. What it does mean is that they have to select one of seven compliance options to mitigate the fire risk. Showing that combustible furniture falls within prescribed limits for heat release is one way to do this. The guideline points to two standards that subject furniture to open-flame testing to measure how quickly the furniture would release heat if it was involved in a fire. The guideline permits combustible furniture that building owners can prove passes the Flammability Test Procedure for Seating Furniture for Use in Public Occupancies described in the State of California Department of Consumer Affairs, Bureau of Home Furnishings and Thermal Insulation Technical Bulletin 133-91 (TB 133). Alternatively, the guideline permits combustible furniture that building owners can prove achieves similar results under ASTM E1537-16, the Standard Test Method for Fire Testing of Upholstered Furniture. EAGER ENFORCEMENT Complying with the guideline can be as simple as checking furniture for a label attesting to the fact that it meets TB-133. However, property managers could also find themselves rifling through old files to track down supporting documents from interior designers for custom pieces. “You rarely see a board of directors go out to the Brick and pick up a $1,299 couch and throw it in their lobby, so the financial and resident comfort impact is significant,” said Michele Farley, president and senior code consultant at FCS Fire Consulting Services, speaking after the Institution of Fire Engineers event. “And in a lot of cases, removal of the furniture is not warranted, because the furniture is actually certified.” Farley acknowledged the basis for the guideline, but added that it has been enforced quickly, without much warning, in some cases
forcing affected property managers to hire movers and store furniture while they weigh next steps and at least temporarily leaving residents and visitors without places to sit and socialize or wait for transportation. She said that she has also encountered varying opinions as to what’s acceptable as notices of violation have come across her desk over the last six months. “Some of the inspectors are interpreting anything in a lobby as combustible and they want it out,” said Farley. “Others are saying, ‘You have an eight-foot marble path between the two carpeted areas that have your couches in them, and you have containment, there’s smoke detection here, there’s 24/7 security, and
the furniture is out of the way, so I don’t consider this a means of egress, so you can leave your furniture there.’” Provided there is an evacuation route that bypasses the lobby, having fire separation between the lobby and the sections of corridor that serve suites is another compliance option if building owners can’t prove combustible furniture falls within prescribed limits for heat release. This compliance option, and several others, are contingent upon meeting a list of conditions, including that the area be equipped with either a smoke alarm or smoke detector, depending on whether it’s possible to connect to an existing fire alarm system. “We’ve been very aggressive in terms of what we will permit or not permit. I know it’s
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sort of sent shockwaves through the industry,” Deputy Chief Jessop acknowledged, adding that Toronto Fire Services has done outreach to apprise stakeholder groups such as the Greater Toronto Apartment Association of its expectations. GUIDANCE ON COMPLIANCE The guideline cites Sentence 2.4.1.1.(2) of Division B of the Ontario Fire Code, which prohibits the accumulation of combustible materials in means of egress, among
other areas, except when the design of those spaces addresses those materials. Convictions for violations of the Ontario Fire Code carry a maximum fine of $100,000 for corporations and $50,000 for individuals, who also face a maximum term of imprisonment of one year. However, Deputy Chief Jessop said Toronto Fire Services is trying to work with building owners by explaining notices and orders and giving them time to remove furniture.
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“You’re allowed to come forward, we’ve accepted alternatives, we’ve helped people, which is what we want to do,” said Deputy Chief Jessop. “We’re not charging people, so let me be very clear: We don’t walk in, see a couch and take you to court. We don’t do that.” Property managers can also call the fire prevention division of Toronto Fire Services for guidance on compliance. Although she has yet to see any violations taken to court, Farley urged property managers to address notices promptly. “They have to evaluate what their options are, swiftly, because there may be a risk and because the fire department will be back in a couple of weeks to see what you’ve done,” said Farley. Farley said she has one client who plans to fight a violation because the client believes she has the documents to demonstrate that her furniture does in fact comply with the guideline. Others, meanwhile, are looking at how much it will cost to install sprinkler systems in affected areas. Some of the compliance options may be more desirable than others. “What they’re allowing in is unpadded wooden furniture and just some of the things they’re saying would be reasonable for people to have in their lobbies isn’t very comfortable,” said Farley. “There is certainly an impact on people within a condominium who are used to that big, cushy leather chair and now they’re going to get a wooden bench that’s similar to something they could sit on waiting for a TTC bus.” “A lot of thought, planning, design and cost goes into condo lobbies and that should be taken into consideration when working towards evaluating existing materials and complying with the fire code.” PROVINCIAL REGULATION POSSIBLE Condos outside of Toronto could be forced to confront the fire risk posed by combustible furniture in the future. A provincial regulation inspired by the local guideline, which would have had a similar effect, was on the cusp of being adopted prior to the provincial election. Toronto Fire Services has also issued an updated version of its guideline that has been adjusted to better align with the proposed provincial regulation in case it gets revived by the new Ontario government. ■
HEALTH & SAFETY
SEASONAL DILIGENCE Hot weather plans advised for building services BY BARBARA CARSS
H
eat generally trails heights in the hierarchy of workplace hazards that window cleaners encounter, but summer 2018 had many employers refreshing the hot weather plans that Ontario Ministry of Labour investigators would look for if they were ever called to a work site. That’s a matter of stating the criteria — usually threshold humidex readings and/or smog alerts — that would then trigger the plan’s documented steps for reducing workers’ vulnerability to heat stress. Under Ontario’s Occupational Health and Safety Act, employers are required to take every reasonable precaution to protect their workers, including, as the Act spells out, “developing policies and procedures to protect workers in environments that are hot because of hot processes and/or weather”. The referenced standard from the American Conference of Governmental Industrial Hygienists (ACGIH) has a goal to maintain a core body temperature no higher than 38° Celsius, or one degree Celsius higher than what’s considered normal. Workplace health and safety practitioners advise that measures to safeguard building services personnel could include: adjusting working hours to cooler times of the day; working in the shade when possible; extra rest periods; and ensuring they drink water even if they don’t feel thirsty. Complementing the last point, workers should be trained to recognize
the symptoms of heat stress, both personally or if they need to assist a co-worker. DUAL-DIRECTIONAL RISKS “The dilemma on a swing stage is: where do you go to rest? Do you need to bring it all the way down to ground level?” says Warren Clements, Occupational Hygiene Specialist with Workplace Safety & Prevention Services. “The other challenge is that you’re wearing fall protection so that adds some additional weight.” Especially on glass facade buildings, window cleaners are subject to heat from two directions as the sun beats down from above and reflects back from the building surface. Since glass facades are designed to deflect much of the solar load, that surface can become very hot. “It is quite possible, under the right conditions, that the temperature of the glass could rise by as much as 40 to 50 degrees Celsius,” says Hitesh Doshi, an engineer and Professor in Ryerson University’s Department of Architectural Science. “The good thing is that the sun moves during the day so it’s not a permanent condition. You can work around it. If possible, start somewhere where the site is in the shade and move with it.” Perhaps for this reason, Clements — who frequently consults in very hot workplaces such as foundries, bakeries and sites using industrial
ovens for drying processes — reports that neither he nor other colleagues specializing in heat stress exposure assessments have ever been called on to study impacts on workers on glass facades. In keeping with standard health and safety practices, he emphasizes the importance of eye protection to mitigate reflected light and sunscreen to protect from sun exposure. “If you use sunscreen, you don’t get burned,” he says. “If you work Monday to Friday, and your skin gets burnt Monday, you just don’t have much time to recover from the burn.” ACCLIMATIZATION Few building services personnel would be categorized as acclimatized, meaning that their bodies have adapted to higher levels of heat after sustained exposure. Guidance from the Canadian Centre for Occupational Health & Safety estimates this should happen after six or seven consecutive days of experiencing such temperatures and, historically at least, intense heat waves rarely last this long. Even if achieved, acclimatization can dissipate within a few days so employers should consider that when scheduling tasks following a long weekend or supervising workers returning from vacation. Maintenance and service calls on heatabsorbing rooftops can be an intense www.REMInetwork.com
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MARKET& HEALTH TRENDS SAFETY
WORKSITE FIRE SAFETY VIGILANCE By Melissa Daley A Fire Watch inspection program is the regular physical inspection of an area where hot work is being performed to ensure a fire does not start. That is any process involving flame, spark or heat production, including work such as cutting, welding, soldering, grinding etc. Fire Watch work personnel equipped with a fire extinguisher and personal protective equipment (PPE) must inspect such areas on at least an hourly basis while work is in progress and until at least three hours after the work has been completed. The Fire Watch team must consist of three trained individuals, all of whom have the responsibility and authority to stop the hot work if the situation becomes unsafe: • The permit authorizing individual, who is a member of the management team; • The hot work operator, professionally trained for the job; and • The Fire Watch, typically a member of the security team who conducts regular inspections of the area and job.
Prevention Act has been violated, the following penalties can be incurred: • A corporation is liable to a fine of up to $100,000 • An individual is liable to a fine of up to $50,000 and/or • Members of both a corporation or an individual may face up to one year imprisonment In the United States, data from the National Fire Protection Association (NFPA) reveals that fire departments responded to an average of 4,440 structure fires per year involving equipment associated with hot work in the years from 2010 to 2014. This resulted in 12 deaths, 208 injuries and USD $287 million in property damage. Closer to home, more than 300 Toronto building owners were charged with fire code violations in 2016. Fines totalling more than $1.55 million were meted out to Toronto building owners in 2015 for fire code violations, surpassing the $1.46 million in fines levied in 2014.
At minimum, failing to provide Fire Watch documentation of inspections can result in multiple offences and fines ranging from $195 to $295 each. If it is deemed by the authorities that the Fire
Melissa Daley is an account representative with Tap Report, a Fire Watch consultant. For more information, see the website at www.tapreport.io
experience, and working conditions can be even more uncomfortable inside an enclosure around HVAC equipment. “It can be just like a black asphalt driveway, depending on the roofing materials. If there are barriers or enclosures, they will cut off the wind, which eliminates a source of cooling,” Clements observes. Rooftops also make a more significant contribution to the city’s sweltering ambience. “The heat island effect primarily arises from the sun heating up materials on horizontal surfaces. At the hottest time of the day, when the sun is directly overhead, it is perpendicular to the cladding materials [on the facade] so cladding really doesn’t impact the heat island effect as much as the roof element,” Doshi explains. PROOF OF DILIGENCE If workers are alone on a jobsite, it will be even more important to check in on them regularly. Clements suggests hot weather plans should explicitly state how that will be done — i.e. via cell phone — and at what intervals. For their part, building owners/managers should ask contractors for proof of hot weather plans as part of compliance due diligence. They will also need to have their own hot weather plans for in-house operations and maintenance staff. Beyond that, for buildings with WELL certification, optional optimization features could apply. One of those is an emergency preparedness plan, which entails a comprehensive strategy for responding to a range of potential situations, including heat waves. The other is provision of community space to support diversity and public engagement. “In the event of extreme heat, the public space can be turned into a cooling centre to provide the community, including building service providers, with access to a cooler environment,” suggests Kimberley Glassford, Senior Sustainability Consultant with Premier Environmental Services. ■
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TAX TRENDS
TACKLING TAX INEQUITIES Ontario commercial ratepayers confront location-based education levies
A
n illogical quirk in the apportionment of business education tax continues to undermine competitiveness for some of Ontario’s major cities, advocates for the commercial real estate sector maintain. REALPAC, the organization representing many of Canada’s largest real estate companies and institutional investors, is urging the provincial government to replace the current patchwork of differing tax rates — inherited from the pre-1998 era when property tax directly funded school boards within the jurisdiction where it was collected — with a benchmark rate of 0.86%. “It would bring all Ontario cities to parity and relieve some tax pressure for businesses, small and large,” says Brooks Barnett, REALPAC’s director of policy and government relations. Such a move would simply fulfill the promise made to commercial and industrial ratepayers more than 10 years ago, when the Ontario government of the day announced it
would incrementally reduce higher business education tax (BET) rates over a seven-year period to bring them down to a consistent province-wide maximum threshold. However, that phase-down stalled in 2012 as the Province struggled to balance its own budget. In contrast, all residential and multiresidential property taxpayers have had a harmonized education tax rate since 1998, which was pegged at 0.17% in 2018. Scholars attribute the bumpier commercial/industrial BET landscape to a reluctance to inflict the significant tax increases that a uniform rate would trigger in some municipalities. “Both Progressive Conservative and Liberal governments limited themselves to reducing rate variation. To that end, they deployed tax cuts where rates are relatively high, while avoiding increases where rates are relatively low,” Adam Found of Trent University, and Peter Tomlinson of University of Toronto, explain in a report commissioned
by the Toronto Financial District Business Improvement Area (BIA) last year. Thus, the report recommends the “optimized ceiling rate” that REALPAC is now promoting. That’s essentially a smoothing of tax inequities that Found and Tomlinson calculate could save businesses approximately $966 million per year. This approach would additionally support another long-stated goal of the Ontario government — to narrow the gap between residential and non-residential tax burdens. COMPETITIVE IMBALANCES Today, discrepancies are less pronounced than examples in the early 2000s of commercial/industrial ratepayers in some municipalities carrying a share of the education tax burden 50 times greater than their counterparts in luckier locations. Yet, there are clear competitive imbalances among neighbours. Notably, commercial ratepayers in Halton Region, comprised www.REMInetwork.com
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of the Greater Toronto Area municipalities of Burlington, Oakville, Milton and Halton Hills, enjoy one of the lowest BET rates in the province — set at 0.84% for 2018 — while their peers in neighbouring Hamilton were levied at a rate of 1.09% this year. “Toronto pays 33% more than Halton. Waterloo, Kingston and London pay 62% more than Halton,” Barnett reports. “Why does Ontario exact different rates for similar properties across the province? Business education taxes need to be reformed.” Found and Tomlinson calculate that, in 2017, Toronto businesses paid $280 million more in provincial property tax than they would have if they were located in Halton. Elsewhere within the GTA, York Region — home to Markham, Vaughan, Richmond Hill and Newmarket — boasts one of the more attractive BET rates, at 0.96% for 2018; Durham Region — encompassing Oshawa, Whitby, Ajax and Pickering — shoulders the less favourable rate of 1.07%. “The province uses an arcane ratesetting system that arbitrarily burdens some jurisdictions over others for no added benefit or service,” Barnett asserts. “It is important that the province recommit to gradual BET reductions to reach a 0.86% uniform ceiling rate.” The Toronto Region Board of Trade called for even more aggressive cuts earlier this year, as part of a strategy to capture a larger share of investment and spur economic development. Dubbing it a “competitiveness play” that is, in part, a response to dramatic corporate tax cuts introduced in the United States for the 2018 tax year, the Board of Trade recommended reducing the BET rate to 0.33% — the lowest rate currently levied in the province. (A negligible number of commercial property taxpayers actually benefit from that preferred rate found only in Northeast Ontario’s Chamberlain Township, which registered a population of 332 in the 2016 Census.) Those recommendations arise from the joint efforts of the Board of Trade, the Conference Board of Canada and Council of the Great Lakes Regions to gauge Ontario’s ability to attract business relative to Quebec and 13 U.S. states. The resulting report, released ahead of last spring’s Ontario election, argued that reducing and harmonizing the BET would promote fairness, reduce the overall tax burden on business, and provide a “substantial relief to small businesses, which are most affected by high energy and wage costs”. ■
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