Great timing Mark (see Guelph Aerosol Artists Looking for a Place to Spray in Guelph Mercury).
The City has just recently pulled together an interdepartmental working group, headed up by Culture & Tourism, to begin looking at this very question. The mandate of the committee is to consider the differences between graffiti, street art, murals and public art and to then decide what should be handled through our by-law enforcement process, and what needs a separate policy.
The team consists of staff from Planning, Engineering, By-law, Public Works, Legal, Downtown Renewal and Guelph Police Services.
Our General Manager of Culture and Tourim just attended a seminar about this very issue, discussing the pros and cons of setting aside designated graffiti zones within cities.
Interesting timing! E-mail me Mark and I can get you in touch with the staff person heading up the initiative.