Financing transit...

[afransen TO]

Land taxes near transit development levies to fund projects have been discussed several times and dismissed as unrealistic. I'm not so sure. In the small town of Wainfleet where my parents live, there is a large amount of cottage-like development along the shore of Lake Erie. Sewage and groundwater quality has been an increasing issue as formerly seasonal dwellings have become year-round housing for local families and new housing has been built. The Region of Niagara has dictated that a sewer line be put in along the lakeshore to link this area to the neighbouring town of Port Colborne. This improvement is being funded by a levy of approximately $10,000 on each unit that will be served. While extremely controversial, I'll claim that if such a model is possible in a very small town, it should be possible in a more urban location, where the infrastructure will be much better utilised.

If the City of Toronto's share of transit projects were levied from existing a new housing built within a certain radius of new subway stops or new LRT lines (not bus, of course, as it is too transient). It could be something on the same level, something in the neighbourhood of $10000 per unit, as I'm sure the increased access to transit is certainly worth that much in property values. It would also make sense to levy additional development charges on new housing in the area above the ambient rate for the city. This would help capture the positive externality of the transit service and make the senior levels of government the bottleneck in terms of provision of new service, and not lack of funds at the local level. Toronto's share (33%) of a $2 billion 6km subway line at $10,000 per unit would require about 66,000 existing and new units along the corridor. This seems attainable in many areas. If more units that this are expected, of course the levy could be lower, or be used for ongoing TTC maintenance. It would also make increased LRT service more realistic, as people would probably clamour for a cheaper alternative if subway were prohibitive in less dense areas.

Thoughts?

 

[CSW24]

I'm not convinced that this a sustainable funding tool to finance transit, especially if taxes were levied on existing development/units.


I think it is premature to assume that Toronto's share is only 33% per cent of major infrastructure investment like the Spadina expansion. It will probably rain cats and dogs for a month (literally, cats and dogs not just the expression) before this *new* federal government ponies up 33% of anything for Toronto.

I believe that a coordinated market approach using development incentives and major public sector investments is the best way to finance new transit expansion over the long term. This is needed to stimulate intensification (consistent with the PPS, Official Plan and Growth Plan) along corridors and transit nodes, especially in suburban or regional transit stations along GO and the TTC. Dallas had a program targeted at developers to stimulate transit-oriented development by providing financial incentives (and regulatory steamlining/priorities) for TODs as well as to provide/advertise appropriate sites near station areas. There is also a built-in series of summits designed to share best practices, experiences and methods for TOD development among the development community. The idea is to stimulate private sector investment near transit. The city gains through property taxes and section 37 benefits.

Beyond planning/zoning changes, tax increment financing is another tool that should be considered in the Toronto context. Basically, TIF assumes the future tax revenue based on the improvement to the sites where the public investment is being made and assumes that during the financing process. The future increased revenue along the corridor is used to finance debt issued to pay for the project. This, combined with incentives for developers to intensify near corridors and nodes are probably better methods to finance transit infrastrucure expansions.

Of course there are a number of unmentioned barriers in what I've presented. Mainly market barriers for buyers who do not wish to live near transit or in high density buildings. But if the province maintains its urban boundary eventually the tax burden on current residents saved by forcing infill could pay for the investments. It is an allocation argument. Also, public investment is still needed to stimulate nodal/station area development beyond planning changes. Toronto will need to ensure that local amenities are provided along expansions and that the subway/lrt/brt lines actually serve bi-directional, all day usage.

Those are my thoughts.