Mayor John Tory has delivered a major speech addressing his plan to pay for the City’s massive $33 billion infrastructure deficit. His plan, if approved by Council, will set the tone for a new era of transit and infrastructure building in Toronto for the next generation.
The focus of Mayor Tory’s announcement was new revenue tools that will be dedicated to pay for transit and other infrastructure. Proposed are:
- Tolls on the Gardiner Expressway and Don Valley Parkway,
- New hotel tax including AirBnB rentals, and
- Eliminating the city’s vacant commercial and industry tax rebate.
At the same time, the Mayor reiterated his pledge to not hike property taxes above the rate of inflation. He also said he does not support the sale of Toronto Hydro.
The Mayor estimated that the road tolls alone would raise more than $200 million a year, helping to support his plans to build SmartTrack, refurbish the Gardiner Expressway, build new affordable housing and long-term care facilities, and provide flood protection for the Don River to redevelop the Toronto Port Lands.
It appears that Mayor Tory is prepared to put his political neck on line to take advantage of new federal funding. The Trudeau government has committed $840 million for TTC repairs and capital, but in order for Toronto to access these funds they have to be able to match it.
This announcement also positions the City to potentially take advantage of the federal government’s newly announced Canada Infrastructure Bank (CIB). The CIB will offer access to a mix of federal and private dollars on investments, especially those with a revenue stream. By tolling the two highways, Toronto is positioned strongly to use this tool to finance massive one-time investments on the basis of those future revenue streams.
Despite Tory’s announcement today, this is not a done deal. City Council needs to approve Tory’s plan, and Councillors on the right are already putting up a fight on Tory’s plan to “raise taxes.” The province must also provide approval. While the Liberal government is not expected to stand in the way, PC leader Patrick Brown already made it clear that he is not onside with road tolls.
Why Does This Matter?
This funding infusion will create many new opportunities for the private sector to partner with the City on new infrastructure projects. Transit construction, road refurbishment, new housing units and flood protection and the associated redevelopment of the Port Lands are all projects significantly more likely to proceed with these new revenues tools to finance them.
With access to the CIB, Toronto may find itself the darling of pension funds and other private investors who are looking to provide capital for infrastructure. While the details of the CIB are being worked out, the scale is remarkable with $35 billion in public dollars and above $100 billion in private funding envisioned.
This also has important political ramifications. There is no doubt Mayor Tory’s proposal will be the central issue of the next Mayoral race. The decision to find new revenue tools takes away a big stick from a challenge on the left, but hands one to a challenger on the right. Ultimately, it will be up to the citizens of Toronto to decide if they accept or reject Tory’s plan in the 2018 municipal election.
Photo Credit: Wikipedia