Mayor 'optimistic' SmartTrack will only cost city $1.2B, but staff flag risks in funding plan
City plans to pay for new stations with proceeds from development
City staff have released new details about how to pay for and maintain SmartTrack, Mayor John Tory's signature transit plan, but note the mega-project doesn't come without risks.
SmartTrack involves the creation of six new stations along the Kitchener and Stouffville/Lakeshore East GO corridor, and it will use eight existing stations.
"I sought this office on a pledge to build SmartTrack because I knew it was the right thing to do," Tory said from a Tuesday morning news conference in Liberty Village.
"The city had allowed development to take place, where whole new wonderful, vibrant, dynamic communities had been created, but without the kind of transportation … to make for a complete community."
Tory said the city will spend $1.2 billion on SmartTrack's capital costs, and the cost will be capped at that number. The city has also dedicated $268 million for any station improvements needed.
The federal government is expected to cover 40 per cent of eligible costs.
How will the city pay?
A new city staff report suggests Toronto pay for its share by relying on development charges and tax increment financing (TIF), which is anticipated increased tax revenue coming as a result of new development.
The report notes there are several "funding risks" when depending on development charges and TIF.
Development charge revenue, for example, will depend on what actually gets built. Meanwhile, the funds accumulated through tax increment financing, estimated at $292 million over 25 years, could change over the long term.
Coun. Josh Matlow agreed with assessment, saying the city can project what it might get, but it may not materialize.
"It's pie in the sky. We don't know what will happen in the future," he said.
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.—@JoshMatlow
Matlow added committing uncertain money now might have a negative impact on other projects down the road.
"What happens in several years when the city needs that property tax revenue? Will the property taxes go up exponentially, or will we have a dearth of revenue to support things like libraries and recreation, fixing roads, transit projects?" he said.
The report recommends using a property tax increase to provide the additional funds needed for the SmartTrack bill, however that could come from the existing City Building Fund, established in January of 2017 — a 0.5 per cent fee tacked on to property tax bills.
"What I said about SmartTrack was that it would be built without a tax increase being imposed on the people of Toronto, a property tax increase, and that is the case," Tory said.
Metrolinx will operate SmartTrack
The report also notes Metrolinx will take full responsibility of operating and maintenance costs associated with SmartTrack once it's completed.
"This simplified funding relationship will ensure that there is no long-term financial impact on the city once SmartTrack is built," Tory said.
Tory referenced a Metrolinx study released earlier this year, which notes the future SmartTrack stations are expected generate $4.58 billion dollars in social and economic benefits.
The report will be debated at Executive Committee on April 17 before heading to full city council later this month.
Tory said he's confident in the city's growth.
"It will produce the additional tax revenues that will benefit the city in many respects, including paying for a portion of SmartTrack," he said.
If the plan moves forward, the city will begin to solicit bids to begin the construction phase of the project.
"My optimism is as high as it's ever been," Tory said. "We need this transit."