B.C.'s TransLink Minister is exploring whether to require developers who build dense projects near transit to contribute some of their profits back into the transportation system.
Peter Fassbender's proposal for a "transit-supporting levy," which he has been pitching to cities and developers, is the latest idea for how to continue expanding transit in a huge region with a growing population, but where local governments have few ways to raise money for major infrastructure projects.
"If you build transit corridors and you invest billions of dollars in transportation, there is a benefit to densification as a result of that, and should a portion of that benefit accrue to the very transportation corridors that have helped to build that?" Mr. Fassbender said in an interview.
Mr. Fassbender said he has already conducted two roundtables about the idea in the past six months with cities, developers and others, and he is planning another one for this month. He acknowledged that one of the big challenges of this new levy is possible resistance from municipalities, who will worry that the province is taking away revenue that some of them are already using to solve other problems.
The minister's suggestion follows years of fierce debates over funding transit improvements, including a failed plebiscite two years ago that rejected an additional sales tax in the Vancouver region. Other ideas have included additional gas taxes, a regional carbon tax, a vehicle levy or mobility pricing – a complex system for charging drivers based on where and how far they drive. The province has rejected most of those.
Other cities, notably Metro Toronto, have considered this kind of "land-value capture" system for financing transit, as well. Some look to the City of Vancouver's existing method of community-amenity contributions as a model. Vancouver negotiates with developers to give back community benefits equivalent to 75 per cent of the land-value increase they see when their land is rezoned.
Vancouver is especially likely to be concerned how its approach would be disrupted by a new transit levy.
The city collected $105-million in 2015 in community amenity contributions from developers who got rezonings. Half of that went to an affordable-housing fund, while the remainder was spent on heritage, parks, community centres and child-care facilities.
Some, though not all, other cities in the Lower Mainland negotiate similar deals with developers getting rezonings.
Mr. Fassbender said he recognizes that.
"I don't want the cities to feel like we're trying to rob their piggy-bank. But we're trying to have a really open and far-reaching discussion of what is the art of the possible," Mr. Fassbender said.
"We are at a very opportune time to have some of those broader, deeper, far-reaching discussions because we know we can't just find money all over the place," he said.
And, if governments are going to invest billions in new rapid-transit lines, rapid-bus lines, ferries, trains and more, there needs to be a negotiation about "a benefit back to transportation if we're going to build densified communities." The minister said the transit-supporting levy could be applied, not just to rapid-transit lines in the Lower Mainland, but also to rapid-bus lines and other improvements, and to cities such as Victoria and Kamloops.
He insisted the levy wouldn't go to the province's general revenue fund, but would be dedicated to transportation.
Mr. Fassbender's exploration of the idea comes as the province and cities are waiting to see how much money the federal government is going to commit to transit in this February's budget.
The federal Liberal government, which campaigned in the west specifically on a platform of investing in transit, already committed $340-million last year to a first phase of transit investment. The province put in $246-million and local cities $125-million.
But everyone is expecting much bigger numbers for Phase 2 in this year's federal budget.
Local mayors, gritting their teeth and doing something they said they were opposed to, agreed last December to raise property taxes and fares to come up with more money to throw into the Phase 2 spending. The mayors also asked for another new tax, a development fee on all building projects that would go directly to transit.