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TTC chair Josh Colle says city hall would have to vote on whether money from development deals would go back to the TTC.Fred Lum/The Globe and Mail

The TTC is keen to capitalize on the development potential of its real estate, but significant hurdles remain before the transit agency could see the substantial benefits.

The provincial agency Metrolinx is expected to release later this week a request for proposals to develop sites around four future transit stations, an experiment it hopes will help pay for a small part of the Eglinton Crosstown light rail line. It's an effort other transit agencies will be watching closely.

With the TTC hungry for funding, its leaders hope that more can be done to take this sort of advantage of the agency's development potential.

"If someone came to me with a mouth-watering offer to build above one of our stations that would enable us to use that revenue to do something else that we need to do, and bear in mind we've got a huge capital deficit, then I'm not going to say no," said TTC chief executive officer Andy Byford.

TTC chair Josh Colle explained that there are a few roadblocks to tapping this source of revenue in a big way.

First, there has to be philosophical shift at the city that makes it take seriously development near transit. As an example of where it's gone wrong, he said he "could not think of a worse use" for a site beside St. Clair subway station than the multi-storey parking lot currently there.

The next issue is that such development would be handled through Build Toronto, an arm's-length real-estate corporation. The money it raises would then go to the city in general, and not necessarily be allocated to the TTC.

"If there's some way to kind of earmark it back to transit investment, I think that would go a long way to helping some of the chronic underfunding that we do face," Mr. Colle said, adding that it would be a council decision to do so.

This concept of linking development and transit has gained new prominence as Metrolinx moves to capitalize on its $5.3-billion Eglinton LRT. It's a model that is used effectively in cities such as Hong Kong and Singapore. However, Mr. Byford warned that not even the densest, and thus most expensive, parts of Toronto can compare.

"There's not a clamour for us to sell our real estate," he said. "I've said to Build Toronto, 'If you can get people that want to do that, then fantastic, let's talk about it.' But at the end of the day our primary role is to move people from A to B, not to be a real-estate developer."

Blogger and transit authority Steve Munro warned that the idea of developing transit stations sounds good but might not generate as much as proponents believe.

"The parts of the city that have any kind of density on which you're going to get big bucks for redevelopment are already developed," Mr. Munro said. He noted that many stations on the Bloor-Danforth or Spadina subway lines, decades after being built, have attracted little development interest around them.

"NIMBYism hasn't even had a chance to kick in," he said, "because nobody's standing there with a development proposal sign saying 'coming soon.'"

Editor's note: A previous version of this story incorrectly identified the real-estate corporation Build Toronto.