February 20, 2019

Toronto’s Waterfront LRT Can Become Reality by Embracing Innovative Finance and Funding Solutions

by Mark Romoff, President and CEO of The Canadian Council for Public-Private Partnerships

If Toronto is to remain a leader in innovation and technology and attract global talent, it will need to ensure critical infrastructure keeps pace with demand. The Waterfront BIA recently advanced its case for a faster construction timeline for the Waterfront East LRT, with an ambitious completion date targeted in 2025.  More recently, details were published by the Toronto Star of Sidewalk Labs’ draft plan for the waterfront, which raised important issues that need to be discussed.

An LRT is central to growing the waterfront community that includes key tenants like MaRs and the University of Toronto anchoring the Waterfront Innovation Centre to the proposed ‘smart’ Quayside neighbourhood. World class transit is necessary to support the residents, businesses, startups, students and artists who want to call this new neighbourhood home.

This opportunity will be missed if we rely on traditional solutions to infrastructure development. Transit in Toronto is decades behind and tax dollars are rightly going to priority projects like the Downtown Relief Line, Scarborough Subway and the Yonge Extension. Quite simply, the Waterfront LRT is in the back of the queue and completely unfunded.

There are innovative finance and funding solutions that can get the Waterfront LRT built by 2025. The three levels of government have tools that can move this project forward today in partnership with the private sector.

It is conceivable to structure a deal that would see the private sector put significant funds of its own into building the LRT with some combination of a land value capture model and fare revenue to make the project bankable. The land value capture model is already being used by the Ontario government to build the Mimico GO Station, saving taxpayers millions.

The Canada Infrastructure Bank is looking to fill the viability gap in projects with revenue generating potential and the LRT could be a project worth their consideration. The idea behind the Bank is to use the fewest taxpayer dollars possible to bring major projects to market, which is good news for all Canadians.

From a procurement perspective, Infrastructure Ontario is already a recognized global leader in public-private partnerships and has a strong record of on-time and on-budget performance, while ensuring a fair, open, competitive and transparent process. Adopting this approach ensures the Waterfront LRT project will deliver the very best deal for taxpayers. The debate around Sidewalk Labs and ideas put on the table should be part of the discussion, and part of a broader debate on who has the best vision to bring world class transit to the waterfront.    

While the three levels of government would need to sort out the finer details, this approach would reduce the need for taxpayers to shoulder the burden and enable numerous benefits to accrue to citizens. These include lowering greenhouse gas emissions, increasing productivity, creating jobs and housing stock along the Waterfront East LRT corridor. At this stage, all options should remain on the table.

According to the Waterfront BIA report, delaying the LRT until 2045 could cost an estimated 100 million person-hours and billions in lost tax revenue: approximately $3.8 billion for the province, $9 billion for the federal government and $10 billion in potential municipal property taxes.

It is not often that a city has a chance to successfully — and completely — transform a former industrial space into a vibrant home for tens of thousands new residents, next-gen tech companies and grow its tax base by billions. Access to reliable transit is an important springboard for that success and requires innovative infrastructure solutions to make it a reality. All eyes are on Toronto and this once-in-a-lifetime opportunity should not be missed.