TORONTO

Toronto will need about $900 million to pay its portion of SmartTrack, report says

Chris Fox CTV News Toronto
Published Tuesday, April 10, 2018 3:39PM EDT

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The city will have to come up with nearly $900 million to pay for its share of SmartTrack as well as some related infrastructure improvements but staff contend that about two-thirds of that can be recouped through an expected increase in property tax revenue and proceeds from development charges.

A staff report released on Tuesday morning pegs the total cost of the six new SmartTrack stations being paid for by the city at $1.19 million. The report also says that the city will spend an additional $268 million on other infrastructure related to the new stations, such as pedestrian bridges and bus loops.

The report, however, notes that 40 per cent of the cost is expected to be paid for by the federal government through the Public Transit Infrastructure Fund, bringing the city’s share down to $878 million.

Of that remaining total staff say that $292 million is forecast to be recovered over a 25-year period using tax increment financing, wherein a municipality borrows money for a given project and later repays it with money set aside from an associated rise in property taxes.

Staff say that a further $290 million of the cost will be funded through city-wide development charges. That would leave a potential shortfall of $318 million, which staff say could be paid for through revenue from an existing property tax levy known as the City Building Fund, eliminating the need for “additional dedicated or special property tax increases.”

“The SmartTrack Stations Program is expected to have a transformative city-wide impact, and so the City Building Fund is an obvious choice for funding a share of the project,” the report states.

Tory campaigned on tax increment financing funding SmartTrack

During the 2014 election campaign, Mayor John Tory did say that SmartTrack could be paid for entirely through tax increment financing but on Tuesday he rejected suggestions that the financing plan amounts to a broken promise.

He said that what residents “really care about” is that tSmartTrack gets built without the need for a property tax increase.

“What I said about SmartTrack was that it would be built without a tax increase being imposed on the people of Toronto and that is the case,” he told reporters near the site of one of the planned SmartTrack stations in Liberty Village. “While there is less of that (cost) made up from tax increment financing than might have been the case in earlier calculations it is also true to say that as a result of increased development charges that a substantially increased amount is coming from that source.”

Report warns of uncertainty in forecasting redevelopment

Though the funding arrangement contained in the staff report would allow the city to build SmartTrack without any additional property tax increases, it may not be without risk.

The staff report does point out that there is “considerable uncertainty associated with any longer-term forecast of redevelopment” and therefor there is a “potential variability” in revenue that would be obtained through development charges and tax increment financing.

In a message posted to Twitter on Tuesday, Ward 22 Coun. Josh Matlow called the funding model “unrealistic” and accused Tory of backpedaling on what he proposed during the 2014 campaign.

“There’s no such thing as SmartTrack. The current plan is nothing like what was promised during the 2014 mayoral election. It’s a costly rebrand of the provincial RER with an unrealistic TIF funding proposal. This is what happens when you try to make reality conform with fantasy,” he wrote.

According to the staff report, a request for proposals (RFP) for the construction of the new SmartTrack stations will be released in the first quarter of 2019 with construction expected to begin sometime in 2020.

The report says that the stations would then be completed in 2024 and 2025.

Tory said that the “important” aspect with the plan is that the capital cost of the construction of the stations is “capped” with Metrolinx absorbing any increases in cost.

Metrolinx would also assume the operating and maintenance costs for all SmartTrack stations, Tory said.

The six new stations being built within the city as part of SmartTrack are as follows: