Fares, taxes and development fees eyed for transit

New development cost charge for transit among proposals to province from Metro Vancouver mayors

The long wait to resolve the transit funding impasse in Metro Vancouver could soon be over as negotiations intensify between mayors and the province.

Metro Vancouver mayors have spelled out how they want to raise more money to finance the region’s share of transit expansion – this time without rolling the dice on another referendum.

But they say the province so far hasn’t yet stepped up to provide more of the revenue that will be needed, raising the risk that other cities like Toronto will jump ahead of B.C. in the chase for billions of dollars in federal grants for transit.

“We feel we’re in striking distance of making this mayors’ plan a reality but we need a partner with the provincial government and so far we haven’t had that,” New Westminster Mayor Jonathan Coté said. “We know there’s going to be substantial federal money available for transit, the type of money we haven’t seen in a generation. My big concern is if the mayors and the province can’t get together to get an agreement in the very near term the reality is I think that’s going to be a lost opportunity for our region.”

The province said Thursday it would commit $246 million over three years as its one-third share of the capital costs of all the projects proposed by the mayors, which reduces the regional share to 17 per cent after an expected more generous 50 per cent federal contribution.

RELATED: Push resumes for higher TransLink taxes

But the mayors say that provincial commitment is paired only to an initial first phase of federal grants and doesn’t yet extend to later years of the plan, creating uncertainty over how a new Broadway subway and light rail network from Surrey to Langley would actually be built.

And while the mayors have pledged to raise more money from their existing sources – mainly via TransLink property taxes, a fare increase, and the creation of a new regional development charge on new construction – they still want a new provincially approved source as well.

The fare increase would consist of a one-time two per cent hike in 2018, but the plan also assumes additional fare revenue from expanded service that draws more riders onto the system, generating $550 million over 10 years.

TransLink would be allowed to increase its property taxes on existing buildings by three per cent every year, instead of the current automatic increases of two per cent. That extra per cent would lift a typical homes property tax bill to TransLink by about $4 each year from about $250 now. It would generate $339 million over 10 years.

The development cost charge (DCC) for transit would raise an estimated $15 to $20 million per year.

Officials estimate that could be generated by a charge averaging $1,000 on each new residential unit built in the region.

But how it would be structured is to be determined.

It might be a fee just on new residential development, or it could apply to all construction.

It could apply consistently throughout the region, or it could be only charged in defined benefitting areas with transit lines or at least frequent service.

White Rock Mayor Wayne Baldwin suggested a lower DCC apply in areas without frequent transit.

Some mayors, including Lois Jackson of Delta and Nicole Read of Maple Ridge, said they’re uncomfortable with the idea, the risk it could increase housing costs, and the general idea of raising more taxes for TransLink without the province handing back full control of the organization to the mayors.

In addition to those sources, TransLink would sell surplus properties worth at least $100 million, another $400 million would be dedicated to the plan over 10 years from the existing flow of federal gas tax revenue to Metro Vancouver, and the cities of Vancouver and Surrey would be expected to provide land in kind to TransLink to help offset costs for their major rapid transit projects.

Metro mayors also aim to introduce regional mobility pricing by 2021 to expand and improve road and bridge infrastructure. They suggest it could be priced to generate an additional $50 million a year starting in 2022 – over and above money needed to replace existing toll revenue – and estimate it would cost the average household $40 a year.

Those sources cover $200 million of the $250 million that would have been raised through the regional sales tax that was defeated in last year’s plebiscite.

The mayors say the remaining $50 million would have to come from a new provincially approved source.

They argue it should come from existing carbon tax revenues, but it could be a different source, such as a vehicle levy.

TransLink Minister Peter Fassbender said the province won’t dedicate any share of carbon tax to transit in the region, but added Victoria’s commitment now is to fund one third of the entire plan, not just the major rapid transit projects.

Langley City Mayor Ted Schaffer said most mayors support the plan, except for a few holdouts, and he predicted it can pass and be implemented without them.

“Something has to be done,” Schaffer said. “And there’s only so many pockets to get the funding from.”

West Vancouver Mayor Mike Smith said reform of TransLink so there is a clear line of authority of who is in charge is essential to ensure there’s coordination of how regional growth and transportation is planned.

Right now, he said, that’s “virtually impossible” with the province ultimately controlling TransLink.

North Vancouver District Mayor Richard Walton said concepts like road pricing and development cost charges will need much more work to flesh out, but said it’s critical to begin the dialogue.