Toronto's $7 billion Gardiner/DVP windfall

Fixing Toronto Part 15

For the life of me I can’t understand what the apparent resistance to toll roads is, when Canadian taxpayers are prepared to pay user fees for so many other elements of their daily life. This isn’t the first time I’ve brought this up (see prior post “Bring on the toll roads” Sept 10-07), but there’s never been a better time to tackle the topic.

An extra garbage bag this week? There’s a user fee once you’ve blown through your annual allotment of two freebie tags. Park on the street in front of your house overnight if your 1890s era Annex home doesn’t have a parking spot? You need to buy a permit every 6 months. Ride the subway two stops? $3.00 please. Renovate your home? Permits will cost you. These are things we take as being part of the cost of city life.

I commend Mayor Ford’s advisor Gordon Chong for recognizing that toll roads are an obvious answer to partially finance the huge capital expenditure needs of the City of Toronto over the next five years. Here’s the thing. The opportunity is bigger than it has ever been, in that the current ultra-low interest rate environment makes the DVP and Gardiner more valuable than ever before.

If the City of Toronto would only grab the opportunity, selling Canadian pension funds a 75 year concession on the DVP/Gardiner would generate an immediate $5 billion payment for the local treasury. During the next 75 years, these pension funds would be responsible for all operational and maintenance costs of the DVP / Gardiner, which would save the City an estimated $1.2 billion to $2.2 billion (present value) over the life of the concession. And the profit on those tolls? They would help fund Canadian pensions; a virtuous circle.

What would the City do with a $5 billion cheque? Whatever it wants:
– Pay off the City’s debt.
– Build new subways.
– Reduce property taxes.
– Upgrade City roads that are currently part of the $400 million “State of Good Repair Backlog” outlined in the 2011 City of Toronto Transportation Services Recommended Operating Budget.
– Reduce TTC fares and/or upgrade rolling stock.
– Rebate some or all of the toll road fees paid by users of the DVP/Gardiner who also happen to be City of Toronto taxpayers.
– Rebuild a portion of Toronto’s decaying underground infrastructure.
– Build new affordable housing.
– etc., etc.

The annual savings that would flow to the City budget by not having to maintain these highways each year amounts to tens of millions of dollars. That frees up real dollars for new programs, lower taxes, or both. I’m all for fixing the structural deficit and general waste at City Hall, and I voted for it, but let’s not do so with a blind eye to the obvious fix to our capital expenditure budgetary challenges. At a time when low interest rates have boosted the value of our asset by more than a billion dollars.

When I bounce the idea off elected people around town, the nay-sayers usually throw up the standard line that John Tory used with me during his Mayoral run: “I’m against asking taxpayers to pay for things twice.” Some sitting council members agree with that sentiment. But, if we extend that concept to the TCC, why do I pay a fare every time I ride the Yonge Street line? The taxpayers of the 1950s and 1960s paid to install that subway, after all. Just as previous generations of Toronto taxpayers paid to build the Gardiner.

Sure, there’s a cost to operate the TCC buses and subways. But there’s also a $50-100 million annual cost to operate, clean and maintain the DVP/Gardiner (depending on how much capex is done each year).

The difference is that half of the Gardiner’s daily car traffic involves folks who live outside the City…and don’t contribute a dime to the upkeep of Toronto’s key road artery system. An Oakville resident who relies on the Go Train pays to ride the Rocket from Union Station to his/her workplace, but the car commuter get a free pass. Because our City won’t charge them. Go figure.

The first two massive Canadian institutional investors I bounced this idea off of said they would pay the number. That means there’s a $5 billion cheque sitting on my desk (figuratively speaking). All we taxpayers need is the will to cash it.

MRM

(disclosure: this blog, as always, reflects a personal view and is not meant to represent the views of the TPA, its Board/Staff or the federal government)