Correction: Dec. 21, 2016: This column was edited from a previous version that misstated the 1994 price paid for 401 Richmond St.

It is almost unthinkable to consider in today’s Toronto, that in 1994 Margie Zeidler and her family bought the building at 401 Richmond St. — a block-long, five-storey, 200,000-square-foot office building in a former tin lithographing warehouse just south of Queen and Spadina — for $1.5 million.

Such was the derelict state of the building, and the apparently equally derelict prospects for the neighbourhood around it, that you could get 138 warehouse-loft office units in the downtown core, blocks from the financial district, for what today sounds like the price of a house.

Today, of course, it’s a different story. The building’s assessed value is so high, and growing so quickly, that property taxes on tenants are set to virtually triple by 2020, the Star reported last week, essentially pricing virtually all of those arts and culture-industry businesses out. In 2012, the property tax bill for the whole building was $446,689. In 2020, when the latest assessment is phased in, it will be $1,286,800. If I’m doing my math right, that means the assessors say the building is now worth just under $50 million.

Now here’s the thing — the terribly troubling thing: it’s hard to say whether that building would be worth so much today if Zeidler hadn’t bought it when no one wanted anything to do with it, lovingly restored and renovated it, and made it a home to artists and entrepreneurs who couldn’t otherwise afford downtown rents. She has always said that her business model was to, as Jane Jacobs said, take that old building and make it a home to new ideas, by charging enough to earn a profit but little enough to make it affordable. And as the model predicted, that building become a central part of the revitalization of the old Garment District, as it morphed into the Entertainment District, and then became a bursting site of downtown condoland.

We can pause a moment to see how that model shaped the revitalization and growth of the city. The property manager Zeidler worked with in her first year at 401 Richmond left to buy the old Carpet Factory building, which was one of the tech-and-creative industry hub pioneers of what became Liberty Village. The developers CityScape, who bought the 44 abandoned Victorian industrial buildings of the Gooderham & Worts complex in 2001 (for $11 million) specifically name-checked Zeidler and 401 Richmond as a model for using the arts and heritage buildings to spur a neighbourhood’s development when they were building the Distillery District. The trendifying of Beaconsfield Village in the early 2000s, too, was sped on by the artsy renovation of the Drake Hotel by Jeff Stober and the Gladstone Hotel by Zeidler herself.

Restore landmark heritage property, add culture, watch the neighbourhood flower. The 401 Richmond Formula, you could call it, applied liberally with great success across the city.

But Zeidler’s plan had always been to ensure those small enterprises she supported could stay put, even as the area they helped revitalize got more expensive. Her own early investment model seemed to guarantee that she could earn a comfortable profit even while shielding her tenants from normal market forces. She earned far less money than she could have, but enough to make her happy, and her tenants got to keep office space in a high-demand part of town, and the city got to ensure interesting buildings stayed preserved and interesting small businesses remained a part of the urban fabric. Win, win, win, win.

Strange then, that the one factor throwing everything off is the taxman. The provincial MPAC agency assesses commercial property value for tax purposes based on “highest and best use.” That’s theoretical use, not actual use. So if you have a building or a vacant lot downtown that would make a likely site for a 40-storey condo or office tower, then you wind up paying taxes on that 40-storey tower. Even if you’re running a gas station or a parking lot or, say, a small-margin cultural hub charging below-market rent to tiny entrepreneurs and artists.

In some cases, maybe, this is a good thing: maybe it’s in everyone’s interest if vacant lot owners have an incentive to build needed housing or new commercial space on their land to maximize its value. But it becomes a problem in the cases of many types of older buildings we’d like to see preserved: beautiful old banks and theatres that have heritage value to the city, that define the character of a place, for instance.

And landlords who are not trying to maximize their profit, but who are instead trying to preserve excellent architecture and build a community that is interesting and vibrant and affordable, for another instance.

It is the ever-present complaint about gentrification as a process that those who made a neighbourhood a great place to live can no longer afford to stay in it when the market catches on. In this case, Zeidler’s own business model had seemed to provide a shield against the market forces normally at work. But she cannot provide a shield against government policy that seems determined to force people out, even when the market won’t.

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It is up to provincial policy-makers to fix this — and looking at what 401 Richmond has given to the city, and continues to give, it’s clear that it should, and soon.