The ongoing debate about trasnsit funding produced a few rather strange proposals recently.
On April 1, writing in Metro, John Sewell suggested that the “crybabies on Council” who think Transit City is so important should just raise property taxes by $500 per house to generate $400-million/year. This is a ridiculous proposal for many reasons, notably that a jump of that magnitude would not be politically saleable to anyone on Council. This year’s increase is far, far lower, and even that produced howls of outrage from those who claim the city taxes too much already.
If taxes were raised enough across the board to generate $400m, that would be a 14% increase. I can hear the Board of Trade screaming now about how uncompetitive Toronto would be. If the whole load goes on the backs of the residential taxpayers, the percentage increase would be much higher.
Sewell, of course, is setting up a phony argument here by saying Toronto taxes are so low relative to those in the GTA, and if only we would raise them to the average, we would have all the money we need. Does he honestly think voters would tolerate such a change? If he were still mayor, would he run on that platform?
Meanwhile, over at The Star, Royson James writes about the shortcomings, as he sees them, and suggests a $100m/year subway building program. Once upon a time, spending at that rate would give us something we could actually ride fairly soon, but with subways now coming in at $300m/km and climbing, we would wait a very, very long time before we actually ride anything. The Spadina extension to Vaughan would have taken a quarter-century to complete. The Eglinton subway would be at least four decades in the making — the central 12km alone would take 36 years to build. The downtown relief line would ease the pain of commuting for children, no, grandchildren of today’s riders.
The key line in James’ article is:
… our political leaders are not bold enough to tax us to generate the funds or innovative enough to seek other funding options with the private sector.
I think we know why our political leaders are not bold enough to tax us. He need only read his own newspaper and those of his colleagues who rail against high taxes and wasted spending.
As for the private sector, they are strangely absent in the discussion. “Alternative financing” is a favourite catchphrase at Queen’s Park, but we tend to see it only for relatively simple, smaller projects like the construction of hospitals or office buildings, things the development industry knows about.
Both the Scarborough RT and the Finch LRT were originally mooted as private sector projects, and yet there is no sign of this in the recent budget cuts or the plans to stretch out delivery of the Metrolinx Big Move. If the private sector were sitting ready with piles of cash to invest in transit, why is the province acting as if the entire burden is on their own books? Could it be that the numbers for “alternative financing” didn’t look quite as rosy as they hoped? Could it be that investors want to take their money elsewhere for a better return?
Another “alternate” scheme proposed by some involves development charges and/or tax increment financing. These represent either up front charges against developments to finance public works, or dedicated tax increases to pay down debt on, say, a new transit line serving buildings on a route. These both run aground for a few important reasons.
Developers are inherently looking to build for as little as possible, and don’t want to pay a premium for their new building that older nearby buildings didn’t pay. Everyone would benefit from a new transit line, but new developments don’t want to be alone in footing the bill. We were supposed to have development charges to pay for the Sheppard Subway, but they were cleverly implemented after, not before, developments along that line were approved.
Tax increments sound good in theory, but they have to generate a lot of revenue, and that revenue will not flow until the new developments are in place. This may take decades (as one can see with the Sheppard and Spadina lines), or may never happen (for lines passing through stable neighbourhoods).
Taxes are also supposed to fund a host of other municipal services, and any transit tax must be a surcharge. People often talk of the benefits of development as tax generators, but this has to be real, new revenue to support a broad range of city programs, not just to service the debt on a nearby subway line.
Again, some context is needed. If we build a line for $4b and finance the lion’s share to be paid back from taxes, we are probably looking at annual carrying costs of around $200m (give or take depending on interest rates). That’s half of the $400m needed just to keep the TTC in a reasonable state of repair, let alone expand the system. If the private sector has so much money to throw around that we might finance a line from nearby development, how does this square with the constant complaints that businesses are already overtaxed?
Finally, Richard Gilbert, also writing in The Star, rails against spending on transit lines that do not serve areas of strong and growing ridership. He has little use for recent transit projects.
The lamentable record began with the decision in the early 1970s to route the Spadina subway line through a low-density residential area that has still not been redeveloped to justify a high-capacity transit service. The result is a hugely underused resource.
Other examples of ineptitude are failure to provide for sufficient development at stations along the Bloor-Danforth subway line; construction of costly, unnecessary streetcar tunnels at Union Station, Bloor and Spadina, and Bathurst and St. Clair; and installation of the absurdly expensive and soon-to-be-replaced Scarborough RT line.
The worst example has been the billion dollars spent on the Sheppard subway line, which has done nothing to increase ridership along that corridor. The $2.6 billion being spent on extending the Spadina subway line could be almost as wasteful, chiefly because there is no plan for high-density redevelopment at its stations to provide ridership sufficient to justify the extension.
Taking his argument back to the 1960s when the BD subway was opened, Gilbert seems to argue that every subway should be built for the sole purpose of redeveloping the neighbourhoods through which it passes. Try telling that to any established community who are about to gain a new subway station.
The streetcar tunnels at Union, Spadina and St. Clair West Stations are not, by any stretch, “unnecessary”. If anything, the connection at Union is far too small, and the TTC has proposed substantial expansion to handle the growing demand new waterfront transit lines will bring. Spadina Station is a major transfer point between the subway and surface network, and again, if anything is too small, but it was shoehorned into available space. St. Clair West Station loop handles a large amount of bus and streetcar traffic, and its underground location freed surface lands for commercial development that would otherwise be impossible.
Gilbert argues that redevelopment of the Eglinton corridor could raise its demand to subway levels and, thereby, justify the cost of underground construction. He completely misses the point that subway lines do not draw their primary demand from “walk in” trade, but from a large network of feeder buses. One need only visit Finch, Kennedy and Kipling just for starters, not to mention many more-central stations like Eglinton, Dufferin and Pape to see where the riders come from. At my home station, Broadview, there is walk-in trade, but the vast majority of riders getting off the subway trains head for the bus and streetcar platforms, not for Broadview Avenue.
As almost a throwaway, Gilbert argues that we should convert Eglinton to a trolleybus line using new vehicles such as are now in Vancouver. He misses his own point that this is already a corridor with streetcar-level demand, and that trolleybuses would limit the capacity for growth while adding the infrastructure needed for a new mode on Eglinton.
A common thread in all of these positions is that there is some magical way to get new money for transit, and it won’t hurt a bit. No. It will hurt a lot, especially if the property tax base is the only way we have to raise revenues.
Oddly enough, nobody talks about the regional context. When will the 905 municipalities step forward with transit funding? York Region doesn’t even want to contribute to the operating costs of the Spadina subway even though Toronto taxpayers will subsidize York’s riders with a single TTC fare all the way to downtown.
A transit network serves the region, as we are so often told by those who want fast routes with widely spaced stations. Funding for that network must also be regional, but it’s a hard sell to 905ers that they should fund construction and operation of a subway on Eglinton, let alone a “downtown relief line”.
Queen’s Park does not want to hear the word “tax” or “user fee” or “toll” until well after the election in 2011. However, if we’re going to have a big shiny new transit network, somehow we have to pay for it.
Yes, the answer in a way is “just raise taxes”, but this must come in a positive, forward-looking context, not as a continued electoral campaign against the Miller regime or claims that somehow we can have a big transit network without somebody to pay for it.