The proposed new parking tax for the Greater Toronto and Hamilton Area (GTHA), floated as a solution to fund Metrolinx’s planned transit infrastructure, is “expensive, complicated and unworkable.”
That is the conclusion of a research report prepared by Altus Group Economic Consulting for a coalition of real estate associations.
The report contends that the parking tax would significantly increase the operating cost for businesses and non-residential property owners by applying a levy on all off-street, commercial and retail parking spaces.
It would be an additional tax on off-street parking and would apply to all businesses, big or small. Metrolinx has claimed the tax will influence the behaviour of motorists, but the study concludes the cost of the tax will be borne by the business owners and not be transparent to drivers. It will therefore not have any meaningful influence on behaviour.
“While we support greater investment in public transit, we believe that financing tools should be fair and transparent and not compromise economic growth of the business community in the GTHA,” said Carolyn Lane, vice-president of membership, marketing and communications of the Real Property Association of Canada (REALpac).
The Altus report is scathing in its criticism of the Metrolinx levy proposal. It’s report, which was presented to a panel investigating how to fund Metrolinx’s “The Big Move” transit plan, states that its flaws are numerous.
The parking levy, which would be applied to all off-street, non-residential parking spaces, would be based on the current value assessment of parking spots across the GTHA.
According to Altus, the levy “will be a poor choice for financing public transit investment.”
Its flaws include:
• The amount of revenue to be raised by the levy will not be predictable or durable;
• The long-term performance of the levy as a financing tool for public transit investment is unproven;
• Administration costs will be substantial and the process will be impractical to manually identify all business parking spaces in the region and assess values of the parking portion of the properties;
• The effect on drivers (getting them to take transit) will be negligible as the cost of the levy would be absorbed by property owners and businesses.
Metrolinx’s Big Move is part of an effort to reduce gridlock in the GTHA. It is estimated that people currently spend 82 minutes per day commuting and that it could rise to 109 minutes in less than two decades without major transportation fixes.
Toronto takes it on chin
The report finds that property owners and businesses in the City of Toronto would disproportionately feel the impact of the levy, generating more than 60 per cent of expected revenue. The rest would come from Peel Region, York Region, Durham Region, Halton Region and the City of Hamilton.
Retail and office sectors would shoulder most of the financial burden of the levy, the report contends. More than one-half of the revenue from the levy would be paid by the retail sector, about a third by the office sector, and over 12 per cent by the industrial sector.
It also argued that potential annual revenue is likely to be less than the $350 million estimated by Metrolinx if institutional properties such as hospitals are exempt.
Altus noted that Greater Vancouver instituted its own parking levy and found it “administratively difficult to implement (and) causes a range of problems and distortions.” (Metrolinx mentions the Vancouver levy in a report. It was instituted in 2006 for non-residential, off-street parking and was replaced with a parking sales tax in 2008.)
Altus and Metrolinx do not even agree on how many parking spots exist in the GTHA, which is a pretty fundamental factor as to just how much money any parking tax would raise.
“Based on Altus Group’s analysis, there are some 3.0 million non-residential off-street parking spaces in the GTHA, which is considerably lower than the 4.1 million estimated by Metrolinx,” the report stated.
REALpac’s Lane added that another flaw of the proposed Metrolinx parking tax is that it would be applied “on all parking spaces, whether they are paid or not and whether they are used or not, for office, industrial, retail, or hotel, (and) whether the location is served by transit or not.”
In many cases, such as a grocery parking lot or at an industrial building, parking is currently free and it is not clear how the tax would be applied, said Lane.
The coalition that commission the Altus study included REALpac, the Building Owners and Managers Association Toronto (BOMA), the International Council of Shopping Centers (ICSC), the Toronto Financial District Business Improvement Area, the NAIOP Greater Toronto Chapter and the Building Industry and Land Development Association (BILD).
Combined, these organizations represent more than $200 billion in real property investment and management in the GTHA.