Councillor Josh Matlow

Keeping You Informed & Engaged: My Analysis of the SmartTrack Proposal Before Council this Week


Dear residents,

This week, Council will decide whether to proceed with Mayor Tory’s revised SmartTrack plan as Toronto’s top transit priority. Since the release of the Staff Report, the mayor has received a great deal of criticism for not fulfilling his campaign promise of delivering 22 stations in 7 years with the City’s funding portion completely paid for by Tax Increment Financing (TIF). As I’ve written previously, I commend Mayor Tory for accepting that the Western Spur (new heavy rail line to the airport) portion of his plan is unworkable. As your councillor, the question I’m considering now is whether or not the plan as presented this week is well thought out, reflects Toronto residents’ priorities for transit, has a transparent financing plan and is worth a large investment of your money.

The Plan

The new SmartTrack plan consists of 6 stations added in Toronto to the Province’s GO Regional Electrified Rail (RER) plan and, in lieu of the Western Spur, a western extension of the Eglinton Crosstown LRT (this was part of the earlier “Transit City” Plan). The cost of both projects is $3.7 billion – it is estimated that Toronto is responsible for $2 billion of that total cost.

Additional RER Stations

The Province’s RER plan entails electrifying existing GO tracks, which facilitates new trains that can stop and start much faster than the current diesel trains. This technology makes it feasible to add stations to a line and provide more frequent service. As depicted in the map above, the province is already providing a number of stations in Toronto. Council will consider funding additional stations at St. Clair West, Liberty Village, East Harbour (Unilever site), Gerrard, Lawrence East and Finch East.

While I support the concept of better utilizing existing GO lines to serve Toronto’s transit needs, there is simply not enough information in the staff report provided to Council to determine whether these 6 stations are a good investment. There was a fairly detailed reportpresented to Council in July 2016 that looked at several scenarios for adding additional GO RER stations but none of the scenarios modeled match what’s being put forward now. The report supporting the current plan does not provide ridership projections or apply a social equity lens to determine the demographics of the users. There is no analysis of development potential or even how much it will cost to build each station. It is not yet known how frequently the trains will run or whether accessing trains at these stations will require a TTC or GO level fare. This missing information is necessary to reasonably assess any transit project.

All that Council was provided was a lump sum, preliminary cost for the stations and a basic overview of some design issues at each station.

Eglinton Crosstown West Extension

As shown in the map above, the Eglinton Crosstown West Extension is a continuation of the line currently under construction to at least Renforth Drive in Etobicoke, on Toronto’s municipal boundary with Mississauga. And the at least part is the problem.

The Staff report requests $420 million from the City of Mississauga and the Greater Toronto Airport Authority to cover the cost of the line in their respective jurisdictions. This request was met with surprise and anger by the local mayor and councillors, placing a connection to Pearson in doubt.

I have long been a supporter of extending the Crosstown further west but the utility of the extension is greatly diminished if the line stops short of the airport. Chief Planner Jennifer Keesmaat stated last week that, while the line travels through relatively low-density areas with limited development potential in Etobicoke, reasonable ridership would be generated by the Airport Corporate Centre office district and the airport itself. Both of these trip generators would not be directly connected if the line stopped at Renforth.

Network Approach?

Also absent from this report is any context regarding where these lines fit into Toronto’s transit network. The City’s Planning Division spent years developing the Feeling Congested framework to assess the utility of transit projects.

Top 5 Performing Rapid Transit Projects

A.   Relief Line (subway)
E.   Don Mills LRT
N.   Scarborough Malvern LRT
R.   Waterfront West LRT
V.   Waterfront East LRT

Next 5 Top Performing Rapid Transit Projects

C.   Durham-Scarborough BRT
F.    Eglinton LRT West Extension
K.   Jane LRT
P.    Steeles LRT/BRT West
W.   Relief Line East Extension

(Source: City Planning)

The above map shows the rankings of proposed transit lines using City Planning’s evaluation criteria. The Eglinton Crosstown West Extension is the 7th ranked project and additional GO RER stations aren’t considered.

If Staff are, in effect, recommending that SmartTrack be built ahead of other projects that were deemed to perform better, such as the Relief Line, some explanation needs to be provided.

Equally concerning as the lack of information on the plan itself, is the absence of a clear funding strategy. Even more concerning are some of the financing mechanisms put forward in the Staff report.

Tax Increment Financing

During the 2014 Mayoral campaign, John Tory pledged to fund the city’s portion of SmartTrack entirely through a mechanism never before used in Ontario called Tax Increment Financing(TIF). Under a TIF, infrastructure is funded by capturing property tax revenue in the area surrounding the new asset that presumably wouldn’t have been created without the initial investment.

(Professor Kevin Ward, Dept of Geography, University of Manchester)

A public investment in a new stadium on a greenfield site (for example, the Canadian Tire Centre where the Senators play in Kanata outside Ottawa) is a classic example of how, if employed, a TIF might have had merit. In this example, a TIF may be a reasonable funding tool as any new restaurants, hotels, or souvenir stores in close proximity could reasonably be attributed to the stadium. The idea is that, over time, the government recoups its investment from the new property tax revenue at no cost to municipal ratepayers. As well, the municipal services required in the area could be minimal if it is largely commercial.

(Canadian Tire Centre in Kanata, Ontario)

Using a TIF to fund SmartTrack, however, is deeply problematic.

The City proposes the establishment of TIF zones around certain stations built as part of SmartTrack. Analysis by Strategic Regional Research Associates (SRRA), under contract by the City, states that 23,737 new condo units and almost 11 million sq/ft of new office space will be built between 2017 and 2042 as a direct result of SmartTrack. The preliminary recommendation of Staff is to capture 50% of the property tax, estimated at $950 million over 25 years, generated by this growth through TIF to fund SmartTrack.

The SRRA report attached to the City’s staff report, however, was produced in January 2016 using the 22 stop version of SmartTrack instead of the pared down version now being considered. The assumptions underpinning the new projections have not been included for consideration. Residents and Council cannot even assess where SRRA are suggesting the new growth will occur.

Based on the January report, one can reasonably assume that most of the growth projected will occur in the sites close to downtown, such as the Unilever site and Liberty Village. In these high growth areas, it is dubious to attribute new development to the introduction of a station. Liberty Village, for example has no problem attracting growth, is almost built out in the residential section, and much of the employment-designated area in the western portion has heritage protection which limits development opportunities. The residents of Liberty Village desperately need new transit because of the density that already exists. To suggest that significant new growth will occur as a result of that needed transit does not match up with the reality on the ground.

(Liberty Village)

report on the use of TIFs in Chicago by the Cook County Assessor’s Office found that the financing tool was ineffective:

“Despite the extensive use of TIFs in Chicago there is little empirical evidence of the effectiveness of TIFs in promoting economic growth, while there is some indication that they benefit disproportionately from already occurring growth.”

Even if new growth could be directly attributed to SmartTrack, capturing 50% of the new property tax specifically for a transit project will require the city to find commensurate funds to provide services for the projected residential communities. Unlike in the previous greenfield arena example, residential development requires libraries, community centres, parks, child care, and other basic amenities that contribute to our quality of life. Former City Manager Joe Pennachetti stated that TIFs are the “same thing” as a property tax increase in an article on TIFs by Daniel Dale in the Toronto Star during the 2014 election.

Next Steps

City Staff have sequenced the project using a “Stage Gate” process that offers Council several points at which it can opt to not continue with SmartTrack. The project is currently in Stage Gate 3, but as previously mentioned, the public is still missing basic information.

I have no doubt the Stage Gate process could have potential benefits for the management of large transit projects but, in this instance, key pieces are moving forward without critical information. Nowhere is this more evident than in the timing of the funding plan. The Staff recommendation states that a firm funding strategy will only be provided after Council completely commits to the project in Stage Gate 5:

18.  City Council direct the Deputy City Manager and Chief Financial Officer to:
…report back to Council with the implementation of this recommended strategy once the capital cost estimates have been refined to a Class 3 level and Council confirms its definitive commitment to the project.”

It is absurd to suggest that the City would obligate itself to invest billions of dollars into a project with no idea how it will be funded.

To further complicate matters, the Province has given the City until November 30, 2016 to decide whether it wants to commit to $71 million in pre-construction work, including planning analysis and property acquisitions, related to the 6 additional GO RER stations. As well, Council is being asked to assume liability for an unidentified amount of sunk costs to be paid to Metrolinx if the City decides at a later date that the project is not worth pursuing.

While I’m unclear as to the reasons why this incomplete report was only provided last week, despite Metrolinx notifying the City in June of the deadline, the result is that Council has been put in an unreasonable position. Either we blindly commit the City to a project with little information or forego a potentially worthwhile transit investment for Torontonians.

On the whole, I believe this to be an even worse process than the one that resulted in Council choosing the One-Stop subway in Scarborough. I’m not suggesting that the SmartTrack project itself is worse, but there was far more information available, as often misleading and incomplete as it was, to the public and Council during the Scarborough transit debate. Prior to the unfortunate Scarborough vote, there was at least a transparent funding plan in addition to some, albeit imperfect, planning analysis. While the report before us this week at Council is named Transit Network Plan Update and Financial Strategy, there actually is no clear and transparent financing strategy included in the document.

The SmartTrack report does not provide the mayor or Council with sufficient information to make an informed decision, given the money and resources being requested.

Some have suggested a distracting and simplistic narrative: that we should simply build anything, just build it. That you’re either for transit or against it. That anyone who raises legitimate concerns about SmartTrack is a “Debbie or Douglas Downer” and only looks for ways to say “no” rather than “yes”. I believe most Torontonians see through that rhetoric and are more thoughtful than that. I also don’t believe that that messaging is fair to those who are raising reasonable and sincere questions and/or concerns.

In fact, that kind of binary decision-making is why we’re still subsidizing the woefully underused Sheppard subway and led us to proceed with spending over $3 billion for one subway stop in Scarborough when there was a demonstrably better option on the table.

I share Toronto residents’ frustration about the lack of progress on public transit over many decades. Far too often, politics has come before people when it comes to transit planning and the decisions made. I want our city to focus on relieving the existing overcrowding on our subway, bus and streetcar lines and expand out rapid transit network to truly connect Toronto’s neighbourhoods. Ultimately, many residents will continue to be reliant on their cars until we finally have a transit system that is accessible, affordable and actually gets people where they need to go.

On your behalf, I will continue to advocate that we move forward now on building transit that’s based on evidence and Toronto’s real and pressing needs, with honest and transparent financing strategies.





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