Toronto’s impediment to growth: “Policy gridlock, not just traffic gridlock.”

When was there a better time to involve the private sector in the development of urban infrastructure and buildings? There are historically low interest rates, strong GDP growth in Canada, a mature REIT market and 'a wall of capital', both domestic and foreign, looking for investment opportunity.

In spite of ideal economic conditions, Toronto has little to show in the way of recent private sector commercial development. Only one new office tower, the Maritime Life building, has been constructed in downtown Toronto in the past 15 years. Re-development of union Station the heart of the GTA's 'hub and spoke' transit system is on hold. Toronto Waterfront Redevelopment Corporation only recently announced Toronto Film Studio expansion into the Portlands, a success that is tempered by failure to get public support for a district heating plant.

To address the question of how to stimulate private sector development in Toronto, former Toronto Mayor David Crombie now CEO of the Canadian Urban Institute, assembled a panel of experts in urban development to discuss the problem. Included in the panel was John Tabart, CEO, of VicUrban from Victoria, Australia who is responsible for re-development of the Melbourne docklands. Since Tabart's last Canadian visit ten years ago, in contrast to the Toronto waterfront, the Melbourne docklands, redevelopment is well underway with a staged development process to 2020.

Yellow sections indicate development planned for completion between 2005-2010 in the Melbourne Australia portlands.

Tabart attributed success with the Melbourne redevelopment to good planning, co-operation between various levels of governments and private sector and just-in-time infrastructure. Ironically having learned from the Toronto's experience building the Rogers Centre (previously the Skydome), a football stadium with a retractable roof in the Melbourne docklands played a vital role in solidifying public support.

In contrast to the Australian experience, the Canadian panelists had little to brag about. Instead they itemize a litany of 'known problems' with 'known solutions' but none that appear to have taken hold. Two high profile examples of these phenomena are Toronto taxes and the infrastructure deficit.

Toronto's commercial property taxes, the highest in the country, have been blamed as the primary culprit for stalled economic activity in the downtown. High property taxes have discouraged new downtown office tenants and continue to fuel the migration of office uses and jobs to the suburbs. According to Michael Brooks, Executive Director of the Real Property Association (RealPAC), while the City of Toronto finance department is now fully aware of the problem 'it is still going to take 15 years for a change to take effect.'

Paul Evans, Assistant Deputy Minister of Infrastructure, Policy and Planning Division, reiterated the Province of Ontario's committment to spend $30-billion over 30 years on infrastructure projects announced over a year ago. While the money is in place, the Province has yet to setup the Greater Toronto Transit Authority (GTTA) to oversee the allocation of funding to transit projects and its final form is still under consideration. The GTTA is to play a critical role in resolving the regions mounting transportation problems.

Frustration at the lack of tangible progress was summed up by Neil Rodgers, President of the Urban Development Institute of Ontario, who said (in the GTA), "we have policy gridlock, not just traffic gridlock". He elaborated by saying, "the Province has to stop regulating, and start providing incentives" for private sector development.

Rodgers identified two initiatives he thought would help to break the policy logjam. The first is 'pre-zoning of transit corridors such as TTC subway lines, York Region Hwy 7 corridor, Hwy 10 (Mississauga-Brampton) for higher density development'. His second recommendation is to immediately reform the Environmental Assessment Act.

According to Rodgers 'delivery of infrastructure is key to revitalization' and the Environmental Assessment Act is an impediment. It can take 10 years to get an assessment approved, small and large projects are subject to the same procedure and some developments should not be covered by the legislation such as reconstruction of the St. Claire street car line.

John Campbell, President, Toronto Waterfront Revitalization Corporation explained that two years ago there were 390 Federal and Provincial environmental assessments on record in the Toronto waterfront. He indicated that every Federal dollar expended in the waterfront is subject to an environmental assessment. The number of assessments has now been reduced to 150 achieved in part by grouping several assessments together.

Other incentives for private sector investment offered by Rodgers include: limiting environmental liability for Brownfield development, limiting rights of appeal to the Ontario Municipal Board, Alternative Financing Procurement strategies (AFP's), density targets and bonusing,

James Cowan, Managing Director, Macquarie North America Ltd., the sole private sector panel member, emphasized that for the private sector "the key is certainty" that a project will proceed. He suggested that Toronto take the path of least resistance, "Don't do the projects you want to do, do the projects that are the easiest".

Ann launched RENX in 2001 as a part-time venture and has grown the publication to become a primary source of online news for the Canadian real estate industry. Prior to…

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Ann launched RENX in 2001 as a part-time venture and has grown the publication to become a primary source of online news for the Canadian real estate industry. Prior to…

Read more

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