Metro Vancouver missing out on millions in transit corridor taxes

Images of a speeding SkyTrain with slogans promising that transit would deliver commuters to their front doors helped sell hundreds of condos along the Evergreen Line, which opened in December.

Developers used the shiny new stations as buyer bait.

But some say cities are not cashing in on valuable transit corridors as much as they could, and suggest taxing all those condos and using that money to fund transit.

"Should we have a tax on development for transit? Yes!" said UBC urban planning professor Patrick Condon, who says once a city commits to high transit costs they are almost bound to tax the towers that will follow.

Mayors, desperate for new funding, and with capital projects looming, are now looking to Toronto where a transit tax is on track to plough millions back into the system.

Coquitlam developers saw the dollar-train coming a long way off, lining up to build clusters of condo towers after the 11-kilometre Evergreen line extension to connect Coquitlam to Port Moody and Burnaby was announced in 2012.

But the only substantial private contribution to the $1.4-billion transit project came from the Coquitlam Centre mall owners who kicked in $28-million for the Lincoln Station.

Next door, Port Moody did not get funding for its station and the city is just now planning to increase city development fees with 3,400 new units on the horizon if the 31-acre Flavelle Mill site goes ahead.

"I don't think we've missed the boat," said James Stiver, Port Moody's general manager of development.

"Despite a lot of resistance to it, development pressure is continuing. There's lots of opportunities to address this going forward and we're working on it."

Missed opportunity

"I've been screaming that we ought to be pushing harder on the possibility that the land . . . around stations is where there's a whole bunch of money," said Coquitlam Mayor Richard Stewart, a member of the Mayors' Council.

No wonder. Coquitlam had the busiest condo pre-sale market in B.C.last year selling 1,861 units. Another 1,202 are expected this year.

None of those condos will feed transit with dollars.

There is a plan underway, but some say it's too late.

The first phase of the mayor's 10-year transit plan outlines transit-tied fees to be put in place by 2020 and net $15-$20 million per year across the region.

It's seen as a crucial funding tool, but relies on provincial and industry approval.

Meanwhile Toronto is poised to reap revenues with an approved plan to plough a projected $857-million back into transit debt financing from the new SmartTrack extension over the next 25 years.

Part of the problem is B.C.'s provincial legislation that prevents municipalities from collecting taxes for transit, so cities here don't have the same creative tools in their belts as Toronto, which has been able to collect transit taxes for 20 years.

So what's the delay?

The province has to enact enabling legislation to change the rules, something it plans to do before the new Surrey light rail expansion breaks ground in 2018.

Talk of any corridor-linked fees is controversial in Canada, despite being commonplace in Hong Kong.

In Kitchener-Waterloo Region, a 1.2 per cent property tax linked to the corridor was finally approved along a light rail expansion expected to open soon.

Cash grab or public good?

"I think they are a good thing," said Sean Hertel of the Ontario Professional Planners Institute.

Any extra fees rely on a "pent up" demand for development along a specific corridor, Hertel said, something not in short supply in Metro Vancouver, where demand for affordable condos is strong.

But builders want details about any new fees.

"Yes we support it. The concept we support, but there's a lot of work to be done," said Anne McMullin, of the Urban Development Institute.

McMullin could envision extra fees in some cities, but not Vancouver where higher development fees would cool sales.

Cookie-cutter taxes tied to transit corridors are too simplistic, given the vast differences between cities, she said.

So did some cities miss out?

McMullin agrees some cities were not ready, and lost chances.

"Some [cities] have done a better job than others, planning ahead," said McMullin.

For example, contributing cash for specific stations is becoming more common.

Surrey's Gateway Station and Coquitlam's Lincoln Station got some funding, and the future Capstan station in Richmond is getting a $25-million infusion from developers.

Plus, negotiations continue around the next phase of Canada Line stations on Cambie Street.

Balancing act

Industry critics are wary of new fees or taxes tied directly to transit corridors, warning consumers will ultimately pay that bill.

"The market will decide whether the number is too much, " said Bob de Wit of the Greater Vancouver Home Builders' Association. "If the tax is too high then you just won't have developers developing and there won't be homes to buy."

Planners and city finance experts agree that developers can probably absorb levies of between $5,000 to $10,000 a unit in a red hot condo market.

So while it is a balancing act, it could well be time to find the sweet spot before another condo boom leaves the station.