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REVENUE TOOLS 10 reasons a proposed parking levy is a poor choice for Toronto Real Estate Industry Coalition October 2016
Commentary 1 of 6
About the Real Estate Industry Coalition
The Toronto real estate industry is a key driver of the municipal, as well as provincial, economy.
Functioning efficiently, we can maintain and expand the jobs and industry currently in Toronto while
also promoting the city’s economic growth through attraction of new investment.
In 2016, commercial real estate in the City of Toronto is overburdened. Commercial space is paying
3.84x the rate of residential per assessed value, nearly double the rate of all surrounding 905
municipalities.
In response to Toronto’s review of new revenue options and the release of the June 2016 KPMG
report, our industry has reviewed here an option that raises significant concerns for the health of
Toronto’s real estate and business communities – the parking levy. The levy as proposed would be
an additional daily fee for each parking stall on a commercial property. It is not proposed for
residential properties and would effectively be an increase in commercial property taxes that is only
borne by businesses relying on vehicular traffic.
The Real Estate Industry Coalition includes the Real Property Association of Canada (REALPAC),
the Toronto Financial District BIA, NAIOP Greater Toronto, Building Industry and Land Development
Association (BILD), International Council of Shopping Centres (ICSC), Building Owners and
Managers Association of the Greater Toronto Area (BOMA) and the Retail Council of Canada
(RCC).
Attached as Appendix 1 is a report from Altus Group, “Potential Impacts of Proposed Parking Levy
on Properties in the City of Toronto,” and additional commentary is included in these pages
expanding on their analysis. Appendix 2 is a collection of case studies showing the impact of the
proposed parking levy in Scarborough, North York and Etobicoke. Appendix 3 is a clarification of
revenue projections for the proposed parking levy after common exemptions and the cost of
administrative complexity are included.
Brooks Barnett, Coordinator, Real Estate Industry Coalition Manager, Government Relations and Policy Real Property Association of Canada (REALPAC)
Michael Brooks President and CEO Real Property Association of Canada (REALPAC)
Commentary 2 of 6
FIGURE 2: Levy vs. Sales Tax
2. Failed parking levies often confused
with paid parking “sales tax”
The “parking sales tax” is an additional collection of
revenue on the sale of paid parking spaces and is
common in North American cities. The “parking levy” is a
daily fee for each parking space on a commercial property
– effectively an increase in commercial property tax.
While the parking levy often garners attention due to its
unrealistic revenue projections, it is important to note that
the levy has failed each time it has been proposed in
Canada while mentions of a successful “parking tax”
almost always refer to a sales tax on paid parking spaces.
HISTORY:
PAID PARKING “SALES TAX” Pittsburgh – Miami
Seattle – Los Angeles
FAILED 2006 Vancouver parking levy failed within months due to difficulty of administering tax and significant
opposition from small businesses.
REJECTED 2007 Toronto parking levy rejected due to disproportionate impact on malls and car-based retailers.
REJECTED 2013 Greater Toronto and Hamilton Area parking levy rejected by province due to unacceptable burdens on
retail and industrial. Revenue depletion expected due to administrative complexity.
3. Comparison to failed 2006 Vancouver parking levy shows how unrealistic
revenue expectations and burden on businesses are (KPMG 2016, Pg.51)
Number of parking spaces
Expected revenue
Cost/Stall/Day
FAILED PARKING LEVY
Toronto - Vancouver
1. Benefits must match burdens in plans to improve transit
FIGURE 3: The Vancouver Example
FIGURE 1: 2016 Property Tax Revenue Sources
The City of Toronto intends to raise additional capital to not only fill
an existing budget gap, but also to fund public transit improvements.
If Toronto residents stand to benefit from improved transit options,
why are revenue tools such as the parking levy being prioritized when
they are in effect an increase in tax only borne by commercial and
industrial – our job sources?
At right, residential is a significantly larger part of the Toronto tax
base despite being taxed at a much lower level. Even a modest
increase in residential taxes would provide significant revenue for
transit.
Commentary 3 of 6
BAD FOR OUR INDUSTRY
4. Abandonment of Toronto’s commitment to business tax competitiveness
44% Average increase in taxes paid by businesses across Toronto if a $575 million parking levy were suddenly added to existing tax burden – but only on those relying on parking.
Clear break of tax ratio reduction commitment meant to keep businesses in Toronto In 2005, Toronto began a regime of annual commercial tax decreases that would slowly bring commercial property tax burdens down in relation to residential rates in the city. This was a result of a trend toward businesses relocating to Mississauga due to Toronto’s high commercial property rates. The proposed parking levy would be a clear break from the City of Toronto’s commitment and could result in a replay of the early 2000’s when businesses moved to Mississauga.
Primarily impacts only two sectors, especially in struggling suburbs Increases would be primarily borne by retail and office sectors (Altus 2016, i) and especially suburban properties already competing with lower 905 commercial rates (right). Due to a complex myriad of charges and extractions, the health of entire Toronto industries would be at stake.
5. Taxing the same piece of pavement again. And again.
FIGURE 4: City Relative Property Taxes Despite improvements since 2005, Toronto still lags far behind its 905 neighbours in business tax fairness. (Found, Tomlinson, 2015)
TAX #1 Commercial Property Tax
TAX #2 Proposed Stormwater Levy A suggested tax on storm water runoff that would apply to commercially owned impermeable space.
TAX #3 Proposed Parking Levy
Daily charge per parking stall where the stall is used or not. Only charged to commercial and industrial property.
Commentary 4 of 6
BAD FOR TORONTO BUSINESSES
“We could expect the levy to weigh on the number of firms choosing to operate in Toronto (versus a neighbouring jurisdiction, for example) over time, thereby costing the City jobs.” (Altus Group, Pg. 14)
109% Increase in taxes paid by tenants to City of Toronto with parking levy.
6. Drastic levy expenses mean jobs and businesses could resume leaving Toronto
72 Number of parking spaces shared by tenants.
$39,420 Annual parking levy bill at $1.50/space/day referenced in KPMG report.
$16,750 Annual premium currently paid by this property in Toronto over relocation to Markham.
$56,170 Premium over Markham if parking levy added to commercial tax load.
FIGURE 6: Sample Industrial
A Scarborough property recently on sale for $2.5 million is used as a case study for this section.
8. Levy tilts playing field toward online retail in battle to save
Toronto jobs and tax revenue
7. Levy disproportionately borne by small employers, including smaller
tenants in large malls
In a net lease situation, “many anchor tenants at shopping centres and shopping malls may be exempt from (or pay less than their fair share of) the increased operating costs… Retail property owners will be forced to pass the additional operating cost from the levy to only small tenants.” (Altus Group, Pg. 14)
$167,000 Additional sales required by an average shopping mall tenant (2,000 sq. ft) to cover $10,000 in new costs due to parking levy at a 6% profit margin. (ICSC 2016 and Altus 2016, Pg. 13)
135,973 Net loss of jobs to just one online retailer, Amazon, in 2014. (Civic Economics, 2016)
$1 billion (USD)
Revenue lost to these online sales not paying regional property or sales tax. (Civic Economics, 2016)
$10,000 Additional annual cost to an average Toronto retailer (2,000 sq. ft.) due to proposed parking levy. (ICSC 2016 and Altus 2016, Pg. 13)
FIGURE 7: Sample retail
Commentary 5 of 6
BAD FOR THE CITY OF TORONTO
9. Revenue expectations from a parking levy are wildly inflated.
Exemptions and administrative/legal complexity must be factored in.
KPMG report’s expected revenue at $1/stall/day
LESS: 24% - institutional parking spaces exempted (Altus, Pg. 10)
LESS: 10% - institutional spaces on commercial property exempted
LESS: 15% - “First 10” spaces exempted to provide relief for small businesses
LESS: Etobicoke, North York, Scarborough (60% of total) reduced to $0.25/stall/day
LESS: Toronto reduced to $0.50/stall/day. Balance before legal/admin costs.
EQUALS: Realistic parking levy revenue projection. Assumes a conservative $30m annual revenue depletion due to administrative complexity and legal/assessment challenges.
$38.5 million
m Some assumptions made by Real Estate Industry Coalition should be verified in further studies. Assumptions are based on attached Altus Group report, “horse trading” to achieve support of specific business groups, and lessons learned from Vancouver’s 2006 parking levy where administrative and legal costs led to the failure of the revenue option regime within months of implementation. (See Appendix 3)
“The actual effects of the levy on driver’s behaviour is likely to be negligible… A parking levy on parking spaces, especially on free spots, is a hidden tax that is likely to be paid by the property owners and their tenants and then, ultimately, only part of the increased costs will be borne by the consumers.” (Altus Group, Pg. 12)
10. Levy fails City goal of encouraging
behaviour away from driving
Possible revenue depletion scenario:
Commentary 6 of 6
Disclaimer
The information is contained herein has been compiled for the Real Estate Industry Coalition, which includes the Real Property
Association of Canada, Toronto Financial District BIA, Building Owners and Managers Association of Toronto, NAIOP Greater
Toronto, the International Council of Shopping Centres, the Building Industry and Land Development Association and the Retail
Council of Canada, from sources believed to be reliable, but no representation or warranty, express or implied, is made by Real
Estate Industry Coalition, their directors, officers, and staff or any other person as to its accuracy, completeness, or
correctness. The information provided in this report is for comparative and information purposes only. Opinions, estimates,
conclusions, or other information expressed or contained herein constitute the author’s judgment as of the publication date, are
subject to change without notice and are provided in good faith but without representation or warranty as aforesaid.
All amounts in Canadian dollars unless otherwise noted.
Real Estate Industry Coalition nor its directors, officers, and staff or any other person assumes responsibility for the use of, effect of,
or appropriateness of the language, wording, or information contained in this publication or any typographical or printing errors or
omissions. The Real Estate Industry Coalition, as well as its directors, officers, and staff or any other person assumes no liability for
damage or loss arising from the use of information contained herein. Real Estate Industry Coalition is not providing development,
investment, environmental, legal, or tax advice. Readers are urged to consult their own professional advisors for further
confirmation and information.
Copyright
The Real Estate Industry Coalition is the owner of all copyright in this publication. All rights reserved. No part of this document may
be reproduced, transmitted or otherwise used in whole or in part in any form or by any means, without permission from the
publisher. Further, no person shall use this publication, in whole or in part, in any form or by any means, to create any precedent for
resale or license for remuneration.
APPENDIX 1
“Potential Economic Impacts of Proposed Parking Levy on Properties in the City of Toronto.” Prepared by Altus Group. Dated October 4, 2016.
This report was commissioned by the Real Estate Industry Coalition. The report is an update of a similar 2013 report prepared in response to Metrolinx’s proposal of a parking levy as part of its “Big Move” funding options review. The parking levy was not selected as an option in 2013.
Potential Economic Impacts of
Proposed Parking Levy on
Properties in the City of
Toronto
October 4, 2016
Potential Economic Impacts of Proposed
Parking Levy on Properties in Toronto
Prepared for:
Real Property Association of Canada (REALpac)
BOMA Toronto
NAIOP Greater Toronto Chapter
ICSC
RCC
BILD GTA
Toronto Financial District BIA
Prepared by:
Altus Group Economic Consulting 33 Yonge Street Toronto Ontario M5E 1G4
Phone: (416) 641-9500 Fax: (416) 641-9501
altusgroup.com
October 4, 2016
October 4, 2016
Potential Economic Impacts of Proposed Altus Group Economic Consulting
Parking Tax on Commercial Properties in Toronto Page i
EXECUTIVE SUMMARY
The City of Toronto is considering implementing a levy on parking spaces in
the city. This proposed revenue-generating tool would be aimed at funding
an identified budget gap and to help finance investment in public transit. The
policy would likely apply to all off-street commercial paid and unpaid
parking spots and would entail a levy of a certain amount per day. A report
prepared by KPMG for the City of Toronto estimates revenues generated
from the levy of between $192 million and $575 million.
A detailed analysis of this proposed new levy finds that the revised levy
structure will be a poor choice for financing the city’s budget deficit as:
The implementation of the levy would entail significant costs to
create and maintain a parking inventory in Toronto. Furthermore,
experience in other jurisdictions has shown that the implementation
of a parking levy can be complex and confusing;
The “beneficial” effects of the levy on drivers’ behaviour are likely
to be negligible as the cost of the levy is most likely to be absorbed
by property owners and businesses, especially small businesses. The
negative impact would be more pronounced in the suburbs as they
would be more likely to rely on parking for their customers and
employees;
The proposed parking space levy will have a negative impact on
businesses competitiveness and economic development in Toronto,
reducing economic competitiveness of the region;
The proposed parking tax levy fails to satisfy well-accepted general
principles of good taxation. It will be unfair and have negative
impacts on businesses. It represents a “double taxation” problem;
The retail and office sectors will bear most of the increased cost from
the proposed levy;
The City already has existing revenue tools sufficient to raise the
required revenue, and in a manner that is unlikely to cause such
significant distortions;
The implementation of a $1 per day per space levy (for example)
would be equivalent to an immediate increase in the effective
property tax rate on commercial and industrial properties of 25%.
October 4, 2016
Potential Economic Impacts of Proposed Altus Group Economic Consulting
Parking Tax on Commercial Properties in Toronto Page ii
The sudden and immediate imposition of a 25% increase in taxes on
businesses in Toronto would have significant negative impacts on
businesses in the City and runs counter to the City’s efforts to
enhance business competitiveness;
Experiences from the Greater Vancouver’s parking levy illustrates
that a levy is administratively extremely difficult to implement and
causes a range of problems and distortions.
The levy will be charged directly to non-residential property owners. Drivers
will likely not be charged directly in a clear and transparent manner:
For users of paid parking spaces, they will pay for the additional cost
through higher unit parking charges (to the extent that the market
will bear) rather than as a transparent tax; and
Motorists using free parking spaces provided at workplaces, institutions
(such as schools or hospitals) or shopping centres are unlikely to bear
any of the cost of the new tax. It is possible motorists visiting
shopping centres will experience some of the tax burden through
higher retail prices, but even to the extent that may occur, this would
be borne by both drivers and non-drivers alike. To companies that
provide free parking to their employees, this tax will be borne by the
company and act as a further tax on employment. In terms of the
universe of parking spaces in Toronto, free spaces account for the
vast majority.
Overall, this report concludes that a parking space levy is a poor financing
tool to help the city fund its budget gap.
October 4, 2016
Potential Economic Impacts of Proposed Altus Group Economic Consulting
Parking Tax on Commercial Properties in Toronto Page iii
TABLE OF CONTENTS
Page
EXECUTIVE SUMMARY ................................................................................. i
1 INTRODUCTION ..................................................................................... 1
1.1 Study Purpose ................................................................................................................. 1
1.2 Scope of Study ................................................................................................................. 1
1.3 Caveat ............................................................................................................................... 2
2 BACKGROUND ......................................................................................... 3
2.1 Parking Levy and parking Tax ...................................................................................... 4
3 PRINCIPLES OF GOOD TAXATION .................................................... 6
3.1 Simple and Understandable .......................................................................................... 6
3.2 Fairness ............................................................................................................................ 6
3.3 Impacts on Business ....................................................................................................... 8
3.4 Double Taxation .............................................................................................................. 8
4 ASSESSING THE TAX USING CITY OF TORONTO CRITERIA ... 9
4.1 Revenue Potential ........................................................................................................... 9
4.2 Administrative Complexity ..........................................................................................11
4.3 Economic Distortions ....................................................................................................12
5 PROPERTY TAX AS ALTERNATIVE REVENUE SOURCE ............ 17
5.1 Residential Property Tax Considerations ...................................................................19
5.2 Commercial and Industrial Property Tax Considerations .......................................20
6 OUTCOMES FROM OTHER JURISDICTIONS ............................... 21
6.1 Greater Vancouver .........................................................................................................21
7 CONCLUSION ......................................................................................... 23
October 4, 2016
Potential Economic Impacts of Proposed Altus Group Economic Consulting
Business Parking Levy in the Greater Toronto and Hamilton Area Page 1
1 INTRODUCTION
1.1 STUDY PURPOSE
One of the revenue-generating tools that the City of Toronto is considering
implementing is a levy on parking spaces in the city. This proposed revenue-
generating tool would be aimed at funding an identified budget gap and to
help finance investment in public transit. A coalition comprised of REALpac,
BOMA Toronto, the Greater Toronto Chapter of NAIOP, ICSC, RCC, BILD
GTA and the Toronto Financial District BIA asked Altus Group Economic
Consulting to examine the potential economic impacts of the implementation
of the levy.
The levy is proposed to apply to all off-street commercial paid and unpaid
parking spots and entails a levy of a certain amount per day. A report
prepared by KPMG for the City of Toronto estimates potential revenues
generated from the levy of about $192 million, $383 million or $575 million
based on per space per day levy rates of $0.50, $1.00, and $1.50.
1.2 SCOPE OF STUDY
The proposed parking levy will have substantial financial and business
impacts on the local economy. This report evaluates the proposed parking
space levy based on:
An assessment of the levy based on the criteria set out by the City of
Toronto including revenue potential, administrative complexity and
economic distortions created;
An assessment of the levy on several widely-accepted principles of
good taxation;
An analysis of the potential magnitude and distribution of revenue
that will be generated by the levy by property type; and
Review of lessons learned from other jurisdictions, where a parking
levy has been imposed.
The report highlights the difference between a parking tax and a parking
levy. A parking tax is not the same thing as a parking levy, though the two
distinct revenue-generation tools are sometimes used interchangeably in the
October 4, 2016
Potential Economic Impacts of Proposed Altus Group Economic Consulting
Business Parking Levy in the Greater Toronto and Hamilton Area Page 2
media . It also examines property taxes as an alternative revenue-generation
tool.
1.3 CAVEAT
This report relies on information from a variety of primary and secondary
sources. While every effort is made to ensure the accuracy of the data, we
cannot guarantee the complete accuracy of the information used in this
report from these secondary sources. This report is intended to be used for
the purposes outlined herein and is not to be relied upon by any other party
without the prior written consent of Altus Group Economic Consulting.
https://www.thestar.com/business/2016/06/24/dont-impose-parking-tax-coalition-urges-city.html
October 4, 2016
Potential Economic Impacts of Proposed Altus Group Economic Consulting
Business Parking Levy in the Greater Toronto and Hamilton Area Page 3
2 BACKGROUND
In the past few years, the City of Toronto has announced several large-scale
infrastructure projects as well as other public priorities. However, the City
has suggested that it lacks sufficient long-term revenue sources to pay for
these initiatives. At the 2016 budget launch on December 15, 2015, the City
identified a significant preliminary operating budget shortfall of $57 million .
Subsequently the City revealed that it had a hefty $29 billion worth of
unfunded capital requirements . The City of Toronto is examining a wide
array of options, including those under the City of Toronto Act (COTA), in
order to address their funding gap.
COTA was signed into law on January 1, 2007 and sets out a legislative
framework for the City to implement various revenue-raising tools. To-date,
eight different tools are permitted under COTA. Three have been already
implemented including:
The Municipal Land Transfer Tax;
The Personal Vehicle Tax. This tax was repealed three years after its
implementation; and
The third-party Sign Tax.
Not implemented but permitted under COTA include:
An Alcohol Tax;
A Tobacco Tax;
An Amusement Tax;
A Road Pricing Tax;
Parking Levy;
A parking levy is one of the tools that the City is examining and this is not
the first time it has been considered. In 2013 Metrolinx recommended
imposing a “Business Parking Levy” on all non-residential parking spaces in
the Greater Toronto and Hamilton Area (GTHA) in order to assist in the
financing of its planned transit infrastructure investments. The levy was to be
based on the current value assessment of parking spaces across the GTHA.
City of Toronto, 2016 Operating Budget Briefing Note, January 2016, page 3
City of Toronto, The City of Toronto’s long-term financial direction, May 2016, page 2
See http://www.metrolinx.com/en/regionalplanning/funding/investment_strategy.aspx
October 4, 2016
Potential Economic Impacts of Proposed Altus Group Economic Consulting
Business Parking Levy in the Greater Toronto and Hamilton Area Page 4
An Altus Group report found that the proposed levy would be unfair,
negatively impact businesses, be administratively complex to administer and
generate less revenue than anticipated . It was ultimately rejected by the
province.
2.1 PARKING LEVY AND PARKING TAX
The City does not currently have the authority under COTA to charge a
parking tax on commercial parking revenues. However, they do have the
authority to implement a parking levy on a per stall or area basis.
Importantly, parking taxes and parking levies are substantially different
instruments. They differ in a variety of ways. For example:
Parking levies are implemented as a fixed amount per space or based
on the size of the parking area. The City of Toronto is considering a
parking levy for both paid and unpaid spaces. Parking taxes are
generally imposed as an ad valorem (i.e., percentage) charge on paid
spaces. Therefore, the subset of parking area subject to a new charge
would be smaller under a parking tax regime, negatively impacting
the CRE industry to a lesser extent
A parking tax would not require the creation of a detailed parking
inventory listing in order to implement it;
Research has shown that the implementation of a parking tax has
some ability to influence driver behaviour . However, as set out in
Section 4.3 of this report, parking levies are unlikely to influence
driver behaviour at all; and
Parking levies introduced in North America – such as in Vancouver –
have generally been repealed while parking taxes implemented in
jurisdictions such as Pittsburgh, Miami, Los Angeles and Seattle
continue to exist today;
As parking taxes do not require the cumbersome task of creating a parking
inventory, can influence driver behaviour, would be imposed on a smaller
subset of spaces and have had staying power in various North American
jurisdictions, they are a more favourable revenue generation tool than a levy.
Altus Group, Potential Economic Impacts of Proposed Business Parking Levy in the Greater Toronto and
Hamilton Area, August 2013
AECOM & KPMG, Big Move Implementation Economics: Revenue Tool Profiles, March 2014, pg 166.
October 4, 2016
Potential Economic Impacts of Proposed Altus Group Economic Consulting
Business Parking Levy in the Greater Toronto and Hamilton Area Page 5
The remainder of this report evaluates the proposed parking levy in the
context of:
Several widely-accepted principles of good taxation;
The criteria set out by the City of Toronto including its revenue
potential, administrative complexity and economic distortions
created by its implementation; and
The potential magnitude and distribution of revenue that will be
generated by the levy by property type;
October 4, 2016
Potential Economic Impacts of Proposed Altus Group Economic Consulting
Business Parking Levy in the Greater Toronto and Hamilton Area Page 6
3 PRINCIPLES OF GOOD TAXATION
This section provides an assessment of the proposed parking levy against
several widely-accepted principles upon which to evaluate tax measures.
3.1 SIMPLE AND UNDERSTANDABLE
As a general principal of good taxation, taxpayers should be able to
understand the tax structure and the policy rationale behind it. While the
proposed levy on parking spaces in the city appears simple and
understandable when proposed in generality, it becomes a very complicated
tax upon implementation.
Experience in other jurisdictions has shown that if on the surface a levy
seems simple and understandable, once implemented, things quickly become
complicated and confusing:
In Vancouver, there were insurmountable difficulties estimating the
annual levy on a property-by-property basis with continued
uncertainties over such issues as the role of walkways, driveways
truck bay turn-arounds, etc., in the calculations; and
A growing number of exemptions over time increased the complexity
of the levy’s structure.
3.2 FAIRNESS
Issues of fairness will arise from a flat levy applied city-wide. The levy is
unfair in that owners of properties with a lower usage of their parking spaces
would have to pay the same rate as those who have a higher usage.
The City of Toronto governs parking standards for commercial properties
through its zoning by-law. It sets different minimum parking space
requirements based different zoning policy areas . For example, an office in
policy area 1 would have to provide a minimum of 0.35 parking spaces for
each 100 sq. m. of gross floor area. Conversely, an office in policy areas 3 and
4 would have to provide 1 space per 100 sq. m. of gross floor area. Applying
a flat-levy would unfairly penalize businesses who are required by City by-
law to maintain relatively more parking spaces.
See City of Toronto Zoning By-law 569-2013, Chapter 200 – Parking Space Regulations.
October 4, 2016
Potential Economic Impacts of Proposed Altus Group Economic Consulting
Business Parking Levy in the Greater Toronto and Hamilton Area Page 7
The City of Toronto examined the potential utility of using a commercial
parking levy as a means of funding investment in public transit
infrastructure . Some of the revenue raised by introduction of the new levy
could go towards funding the large-scale public transit infrastructure projects
in the city., Economic principles state that the financing of the public transit
investment should be closely aligned with the beneficiaries. It is only fair to
ask those who benefit to pay for the public transit investment.
There are two groups that benefit from public transit:
Public Transit Users: They benefit from the public transit investment
directly; and
Everyone in the Community: New transit not only provides a direct
benefit to commuters, but also generates positive spill-over effects on
the whole community through:
Absorbing traffic from other parts of the transportation
system and reducing congestion and traffic accidents;
Reducing automobile emissions and improving air quality
with public health benefits across the community;
Improving workplace productivity, encouraging sectoral
clusters and other economic development effects;
Facilitating economic growth, creating jobs and attracting
new business investment; and
Increasing access to community facilities such as recreation
centres and amenities.
Investment in public transit should be financed by public transit users
(through user fees) and everyone in the community (through general
taxation applied to everyone in the region). To tax only non-residential
properties (and their predominately small business tenants), the proposed
commercial parking levy fails to have a direct tie-in to this important finance
principle.
City of Toronto Item EX31.3, Metrolinx Transportation Growth Funding – Dedicated Revenues, May 2013
October 4, 2016
Potential Economic Impacts of Proposed Altus Group Economic Consulting
Business Parking Levy in the Greater Toronto and Hamilton Area Page 8
3.3 IMPACTS ON BUSINESS
Good taxation should not create a large competitive disadvantage either for
particular business sectors or in terms of economic development potential
across the region. The proposed levy on parking spaces will increase
significantly the operating cost for non-residential property owners and
tenants in Toronto while increasing the attractiveness for businesses of
neighbouring jurisdictions not subject to the tax
If the proposed parking levy is to generate between $192 million - $575
million per year, as estimated by KPMG for a report commissioned by the
City of Toronto , it means that businesses in Toronto would face substantially
increased operating costs each year. This will result in less business
investment in the region as the new parking levy will reduce the financial
return to business, especially small business. Additionally, these higher
operating costs would likely result in lower employment in the city than
would otherwise have been the case.
3.4 DOUBLE TAXATION
The proposed parking levy will cause a “double taxation” problem. The levy
would likely be added to the annual commercial property tax bill . When
added to the existing property tax, non-residential property owners
effectively pay twice for owning a property.
Governments should avoid tax systems that lead to double taxation – non-
residential property owners already pay for owning parking spots through
property taxes since the number of parking spots affects property values.
Under the proposed parking levy, those non-residential property owners
have to pay another parallel fee for owning parking spots, effectively paying
twice for the same item. This violates fairness principles and is
administratively burdensome.
This section has assessed the proposed parking levy against several widely
accepted principles upon which to evaluate tax measures. It concludes that
the levy will fail to satisfy those principles. It will be complex to administer
and have negative impact on businesses. In addition, it will cause a “double
taxation” problem.
KPMG, City of Toronto Revenue Options Study, June 2016, page 55
KPMG, City of Toronto Revenue Options Study, June 2016, page 49
October 4, 2016
Potential Economic Impacts of Proposed Altus Group Economic Consulting
Business Parking Levy in the Greater Toronto and Hamilton Area Page 9
4 ASSESSING THE TAX USING CITY OF TORONTO
CRITERIA
In a 2016 budget briefing note, City of Toronto staff assessed the potential
utility of revenue tools available under the City of Toronto Act. According to
City staff, key considerations for determining the suitability of each tool,
including the proposed parking levy, include :
Revenue potential;
Administrative complexity; and
Economic distortion.
This section assesses the proposed parking levy against the three criteria to
determine whether it is an appropriate revenue tool to meet the City’s goals.
4.1 REVENUE POTENTIAL
In a recent report commissioned by the City of Toronto, KPMG examined
revenue options under the City of Toronto Act , it was estimated that
parking levies charged on paid and unpaid parking spaces at:
$0.50 per space per day would generate $192 million in gross
revenue;
$1.00 per space per day would generate $383 million in gross
revenue; and
$1.50 per space per day would generate $575 million in gross revenue
for the city.
Altus Group estimated the number of parking spaces fitting the criteria for
the proposed levy based on an array of factors likely to be related to the
quantities of non-residential off-street parking, including the amount of non-
residential space, level of employment, and typical parking to employment
and workspace ratios by sector (i.e. retail, office, industrial, and others)
across in Toronto.
Altus Group estimates that there are 1.01 million parking spaces that the levy
could apply to. Using a generous assumption that the City is able to
City of Toronto, 2016 Operating Budget Briefing Note, January 2016, page 3
KPMG, City of Toronto Revenue Options Study, June 2016, page 55
October 4, 2016
Potential Economic Impacts of Proposed Altus Group Economic Consulting
Business Parking Levy in the Greater Toronto and Hamilton Area Page 10
enumerate these properly and to collect the desired tax revenues, then the
following describes the characteristics of these revenues:
$185 million in gross revenue under a $0.5 per day per space regime;
$369 million in gross revenue under a $1.0 per day per space regime;
and
$554 million in gross revenue under a $1.5 per day per space regime;
Under each regime, some 60% of tax revenues would be generated by retail
and office properties (Figure 1). As such, these businesses will bear the
majority of the cost under the proposed parking levy.
Shares of Proposed Parking Levy by Property Type
35.0
24.0
17.0 19.0
5.0
0.0
15.0
30.0
45.0
60.0
Retail Office Industrial Institutional Other*
Percent
Source: Altus Group Economic Consulting
* Includes Toronto Transit Commission, Toronto Parking Authority and other unique parking lots (i.e. parking
at the Canadian National Exhibition)
4.1.1 Important Considerations
The City of Toronto has noted that exemptions to the levy will likely be
sought for municipal organizations, universities, schools and hospitals as
well as for Toronto Parking Authority and TTC lots . Under these
exemptions, Altus Group estimates that there would be nearly 225,000 less
parking spaces that the levy would be applied to. As a result, the amount of
revenue that the City can expect to generate from the parking levy will be
significantly lower than what is estimated in the KPMG report. Furthermore,
City of Toronto, 2016 Operating Budget Briefing Note, January 2016, page 3
Figure 1
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as the Vancouver experience has shown, it is possible that over time,
additional exemptions could be applied to a wider range of non-residential
properties.
In the 2016 budget note, the City indicates that revenue potential may decline
as a result of the levy . As such, the structure of the tax also seems self-
defeating if it results in a reduction of its own tax base.
4.2 ADMINISTRATIVE COMPLEXITY
Implementation of the levy would involve having to manually enumerate all
non-residential off-street parking spaces in Toronto in order to generate a
parking spaces inventory, a task that could result in significant
implementation costs and extended timelines for implementation . The City
considers the parking levy to be a “moderately difficult” option to pursue,
which must be carefully structured and could be subject to legal challenges
and policy issues .
Experience in other jurisdictions suggests that the administration of parking
levys is difficult. For instance, there were substantial difficulties in instituting
the off-street parking levy in Greater Vancouver, with a large number of
appeals in the system as walkways, driveways, truck bay turn-arounds and
other areas were accounted as parking space. Implementation of the
proposed levy on commercial parking spaces in Toronto is expected to face
many of the same problems.
The experience in Greater Vancouver demonstrates that despite the many
alterations in design, the parking levy was met with considerable opposition.
Of the 29,600 assessment notices delivered by TransLink in December 2005,
up to some 5,100 were appealed. Various industry groups also spoke out
against the levy. The provincial government eventually introduced
legislation in November 2007 to completely eliminate the unworkable idea of
a parking levy and replace it with the “replacement tax”.
City of Toronto, 2016 Operating Budget Briefing Note, January 2016, page 9
KPMG, City of Toronto Revenue Options Study, June 2016, page 54
City of Toronto, 2016 Operating Budget Briefing Note Revenue Tools under the City of Toronto Act 2006,
January 2018, page 9
TransLink is Metro Vancouver’s regional transportation authority.
Transport Canada, TransLink Parking Tax Case Study, October 2006.
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The replacement tax is a dedicated property tax, collected from both non-
residential (excluding institutional) and residential properties. Currently, the
total amount of the tax is limited to $18 million per year, similar to the
expected amount under the initial parking levy.
4.3 ECONOMIC DISTORTIONS
The City of Toronto expects that the levy is “pro-transit” and will help to
reduce congestion . However, in order to reduce congestion, the measure
would have to have the effect of changing driver behaviour. The proposed
levy is unlikely to affect driver behaviour at all and there is limited room for
property owners to respond with the elimination of parking spaces as they
are often codified in leases and are also required to comply with City by-
laws. Unless people drive less and demand fewer parking spots, the number
of parking spots will not decline significantly. Thus, the key for the proposed
parking levy’s success as a price signal to encourage efficient travel choices is
its ability to affect drivers’ behaviour. A levy does not provide such a signal.
Due to its design, the actual effects of the levy on drivers’ behaviour are
likely to be negligible. The proposed levy on commercial parking spaces is
charged to property owners, instead of drivers. Thus, a parking levy on
parking spaces, especially on free spots, is a hidden tax that is likely paid by
the property owners and their tenants and then, ultimately, only part of the
increased costs will be borne by the consumers, drivers and non-drivers alike
through a pass on to the price of goods and services. Therefore, the parking
levy’s ability to send price signals to drivers is negligible.
For example, shopping centres are unlikely directly to recover the fee from
customers who drive:
According to International Council of Shopping Centres (ICSC), most
shopping centres have anchor leases that prohibit property owners
from collecting parking fees. As a result, parking will continue to be
free to motorists after the implementation of the parking space levy;
In addition, the retail sector in Toronto is very competitive. This
indicates that retailers, who will bear the cost of the new parking
space levy, may be limited in their ability to pass on the cost to
City of Toronto, 2016 Operating Budget Briefing Note Revenue Tools under the City of Toronto Act 2006,
January 2018, page 9
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consumers, with the extent to which it is passed varying across the
city based on the degree of local competitiveness. Even if they do
pass on some of the cost, consumers are unlikely to be aware that the
increase is due to their choice of transportation; and
Therefore, the levy on free parking spaces has negligible effects on
those users’ driving behaviours.
Similarly, companies, which provide free parking for their employees, could
face higher rents and are unlikely to charge their employees (i.e. parking
users) for the levy.
In addition, the levy’s effects on users of paid parking spaces may not be as
substantial as policymakers have hoped. It is unlikely that the full levy
would be passed onto end users even in the traffic zones where parking is
already subject to a charge.
Overall, the effects of the proposed parking levy on individual’s travel
choices would be minimal as the cost of the levy is most likely to be absorbed
by property owners and businesses.
4.3.1 Pushing up the Operating Cost for Businesses
The proposed commercial parking levy will increase significantly the
operating cost for business property owners and tenants in the City of
Toronto. The annual amount of the parking space levy could sum up to
millions for large shopping centres and major office complexes. In the case of
shopping malls, the ICSC estimates that a levy of $1 per day per space would
cost an average mall tenant $10,000 per year for a 2,000 sq. ft. space, meaning
that they would have to generate $167,000 in additional sales to cover the
cost.
Manufacturers will also incur a substantial annual cost increase under the
proposed parking levy. It is estimated that industrial property
owners/tenants will contribute 17% of the total expected revenue , which is
approximately $62 million, based on the assumption of a $1 dollar per day
per space levy.
To put this amount into perspective, in the 2013 Provincial Budget, the
Ontario Government included the measure of extending the accelerated
International Council of Shopping Centres, 2016
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depreciation for manufacturing and processing equipment through to this
year to facilitate industrial development in the province. The measure was
estimated as potentially saving Ontario manufacturers $265 million over
three years.
In this scenario, the expected increase in the annual operating cost of $62
million from the parking levy will be equivalent to over half of all the
presumed annual tax savings estimated by Ontario Government from the
accelerated depreciation program. The increase in the annual operating cost
would be even higher, should a higher rate scheme be implement. The levy
creates a large cost disadvantage to manufacturers in Toronto. In addition,
the levy will continue to be charged to the manufacturers in the region even
after the tax saving measure expires this year.
Research has shown that there is a negative relationship between business
tax rates and the number of firms that choose to operate in a given location.
Given this, we could expect the levy to weigh on the number of firms
choosing to operate in Toronto (versus a neighbouring jurisdiction, for
example) over time, thereby costing the City jobs.
4.3.2 Negative Impacts on Small Businesses
Small businesses will also be significantly impacted by the proposed parking
space levy. Anchor tenants at shopping centres and malls are able to dictate
terms of their leases as they are they are the primary customer draw. At the
margin, an increase in operating costs such as the proposed levy will be
disproportionately passed on to the smaller tenants . As a result many anchor
tenants at shopping centres and shopping malls may be exempt from (or pay
less than their fair share of) the increased operating costs due to the
proposed parking levy. Retail property owners will be forced to pass the
additional operating cost from the levy to only small tenants.
This will magnify the financial impact on small retail/commercial service
businesses and could make those businesses economically unprofitable. To
the extent that this could lead to a higher number of small and medium sized
business failures, this could have significant negative consequences to
Toronto’s economy.
Ontario Ministry of Finance, A Prosperous & Fair Ontario, 2013 Ontario Budget, May 2013.
Institute on Municipal Finance and Governance, The Reform of Business Property Tax in Ontario: An
Evaluation, 2012
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Strip malls would also be substantially impacted by the levy as they house
several small businesses and a have a relatively large amount of parking.
Using estimates of the number of parking spaces in Toronto and total
revenue generated by the levy from the KPMG report, a strip mall with 50
parking spaces could face an additional $27,375 in operating costs annually.
Small businesses operating outside of strip malls and shopping centres who
have their own parking would also feel a large impact. For example,
automotive sales and service retailers operating in suburban Toronto with 30
spaces would face an additional operating cost (over and above property
taxes) of $16,425 dollars . Small retailers such as these would be unlikely to
charge for parking and as such, would have to either absorb the additional
cost or pass it through to its customer.
4.3.3 A Drag on Long-Term Economic Growth
Increasing costs for businesses, especially for large manufacturers, in Toronto
will unequivocally have a negative effect on economic development by
pushing industrial development further out of the region. Manufacturers
already face much higher land prices in Toronto compared to other
municipalities in southern Ontario. The proposed parking space levy will
further increase the development and operating costs of industrial properties.
The levy may distort the behaviour of employers, who may move office
locations to other municipalities in order to avoid the parking levy. It is of
note that pushing investment and employment further out is contrary to
provincial objectives of generally increasing the density of development,
especially around transit infrastructure, and will promote, rather than
prevent “leapfrog” development patterns.
In 2011, the provincial government lowered tax rates on businesses and has
maintained these lower rates in order to help stimulate investment in the
province. The proposed parking space levy will partially undo the Ontario
government’s efforts of establishing Ontario as a business-friendly market, as
the business community may interpret the levy as another tax on business.
Overall, the proposed parking space levy will have a negative impact on
Calculation is based on a $1.50 per space per day levy.
The example is based on an actual automotive sales and services retailers in the City. The
calculation is based on a $1.50 per space per day levy.
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businesses and economic development in Toronto, reducing economic
competitiveness of the region.
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5 PROPERTY TAX AS ALTERNATIVE REVENUE SOURCE
Aside from assessing a levy of commercial parking spaces, the City of
Toronto has alternative means of raising revenues, one of which being a
greater reliance on the property tax base. This section of the report assesses
the property tax impact related to generating the same amount of revenue as
would be raised by instituting the proposed levy.
Data from the Ontario Financial Information Return (FIR) are used in the
analysis. The FIR reports on property tax collected by the City of Toronto and
the assessed taxable value of residential, commercial and industrial
properties in the City. Data from 2014 is used, as that is the last available
period of information.
The 2014 FIR indicates a phased-in taxable assessed value of about $448
billion for properties in Toronto, which breaks down into:
About $353 billion for residential properties; and
About $65 billion for commercial and industrial properties;
The 2014 FIR also indicates that taxes collected by the City (for own-purpose
revenues) equalled:
$1.8 billion for residential properties; and
$1.5 billion for commercial and industrial properties.
City of Toronto property tax rates for own-purpose revenue in 2014 were:
0.52% for residential properties ;
1.6% for commercial properties ; and
1.6% for industrial properties.
However, for the purposes of the analysis, effective property tax rates on
these property types are calculated and used. Dividing the amount of taxes
collected by the assessed value yields effective property tax rates of:
The City of Toronto applies different tax rates to properties it classifies as “residential”, “multi-
residential”, and “new multi-residential”. The analysis uses property tax rates charged on the
“residential” property category.
The City of Toronto applies different tax rates to properties it classifies as “commercial – general”,
“residual commercial – band 1” and “residual commercial – band 2”. The analysis focuses on the
“commercial – general” property tax group.
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0.52% for residential properties; and
1.55% for commercial and industrial properties.
The amount by which property taxes would have to increase on residential,
commercial and industrial properties to match the revenues estimated to be
generated from the proposed parking levy is shown in Figure 2.
Residential*
Commercial /
Industrial** Blended
City of Toronto Tax Rate 0.52% 1.60% n.a.
Effective Tax Rate 0.52% 1.55%
Res: 0.3%
C & I: 0.4%
Tax Rate Incremental Impact Analysis
0.05% 0.20%
Res: 0.04%
C & I: 0.04%
0.11% 0.40%
Res: 0.09%
C & I: 0.08%
0.16% 0.61%
Res: 0.13%
C & I: 0.12%
* Residential calculations are based on the City of Toronto's "Residential" property tax rate
** Calculations are based on the City of Toronto's "Commercial - General" property tax rate
Source: Altus Group Economic Consulting based on City of Toronto and Ontario Financial
Information Return
Property Tax Rate Analysis
Scenario 1
($0.50 per space per day generating $192 million)
Scenario 2
($1.00 per space per day generating $383 million)
Scenario 3
($1.50 per space per day generating $575 million)
The effective property tax rate on residential properties would have to
increase by a range of 0.05 percentage points (pp) to 0.16 pp to bring in the
same amount of estimated revenues from the proposed levy.
Meanwhile, the effective property tax rate on commercial and industrial
properties would have to increase by a range of 0.20 pp to 0.61 pp to match
the revenues estimated to accrue from the proposed levy. This is a
significantly higher increase compared to the residential scenario.
The final column of the table shows the amount by which residential and
commercial and industrial property taxes would have to rise to match
estimated revenues from the proposed levy if the burden was shared
amongst property types according to their proportion of overall assessed
value. For example, residential properties accounted for about 80% of
assessed value in 2014. In Scenario 2, where $383 million is estimated to be
generated by the levy, approximately 80% of that value is assumed to be
Figure 2
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raised by increased residential property taxes while the remaining 20%
comes from higher commercial and industrial property tax rates.
5.1 RESIDENTIAL PROPERTY TAX CONSIDERATIONS
KPMG reviewed 2015 residential property tax rates in several jurisdictions
surrounding Toronto. Toronto’s rates were the lowest at 0.51% compared to
an average of 0.86% across jurisdictions outside of Toronto . Furthermore,
the property tax burden on the average household, expressed as a percentage
of income, was well below the average of municipalities reviewed and was
the third lowest across the whole region . Therefore, there is considerable
scope to rely further on the property tax base to achieve revenue goals.
KPMG estimated how much residential property taxes would have to
increase to match the same annual revenues (net associated costs) obtained
from implementation of the parking levy. Their estimates are significantly
higher that Altus Group’s, with the required increase in property taxes
ranging from 6.5% - 20.3%. They obtained these estimates through the use of
a rule of thumb approximation that every 1% increase in residential property
taxes generates $26.4 million for the city . However, they note that “[i]n
order to bring the typical tax burden as a percentage of household income in
Toronto in line with the typical tax burden in other jurisdictions, the
municipal component of the residential property tax would have to be
increased by 32%” . Thus, even when considering KPMG’s higher estimates,
there is still room to increase residential property tax rates. Furthermore,
doing so would help the City align with its goal of reducing property tax
ratios in order to improve business competitiveness. Property tax ratios
measure the gap between non-residential and residential tax rates. An
increase in the ratio indicates increased non-residential taxes relative to
residential taxes. Higher residential property taxes would help narrow the
gap, consistent with the City’s goals.
KPMG, City of Toronto Revenue Options Study, June 2016, page 167
Ibid, Page 168
Ibid, Page 166
Ibid, Page 168
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5.2 COMMERCIAL AND INDUSTRIAL PROPERTY TAX
CONSIDERATIONS
Research has shown that the City of Toronto had the 4th highest commercial
property tax rate in the GTHA in 2014 while having the 14th highest
industrial property tax rate . As such, the scope to raise commercial and
industrial property tax rates is relatively limited, particularly in the case of
commercial rates.
The implementation of a $1 per day per space levy would be equivalent to an
immediate increase in the effective property tax rate on commercial and
industrial properties of 25%. The sudden and immediate imposition of a 25%
increase in taxes on businesses in Toronto would have significant negative
impacts on businesses in the City. For context, the Municipal Property
Assessment Corporation (MPAC) phases-in increases in assessed property
values for property tax purposes over 4 years, a policy that recognizes that
tax stability and predictability are important .
As previously mentioned, the City of Toronto has a goal of lowering non-
residential property taxes relative to residential taxes (i.e. lowering its tax
ratio). The imposition of a parking levy would be the equivalent of a
significant increase in commercial and industrial property tax rates and
would run counter to the City’s goals of enhancing its business climate
through a reduction in its tax ratio.
Novae Res Urbis Publishing, Greater Toronto Area Edition, August 2014
See https://www.mpac.ca/PropertyOwners/FourYearCyclePhaseinProgram
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6 OUTCOMES FROM OTHER JURISDICTIONS
Various government-funded studies have mentioned the existing experience
in other jurisdictions who have implemented a commercial parking levy.
This section provides an analysis on the experience in Greater Vancouver.
6.1 GREATER VANCOUVER
6.1.1 Introduction of the Parking Levy
Legislation was first enacted in 1998 giving the Greater Vancouver Transit
Authority (now “TransLink”) the authority to levy taxes on either parking
spots or parking areas. The tax was originally envisioned to be on a per spot
basis, but was implemented on an area basis, when it became apparent that
many businesses do not provide marked stalls.
The levy was implemented in January 2006. The original rate of $1.02 per sq.
m. was reduced to $0.78 per sq. m. as the TransLink Board wanted to limit
the total revenue from levy at $20 million.
The levy was designed to raise funds to help finance part of TransLink’s 3-
year, $1.9 billion road and transit expansion plan.
6.1.2 Structure of the Levy
The structure of the TransLink levy underwent several transformations and
changed at one point from being based on parking spots to being based on
the parking area of a business. The move to levy based on area rather than
spots stemmed from the difficulty of estimating the number of parking
spaces in the region.
Initially the TransLink levy was applied to all non-residential properties.
Over time, a wide array of exemptions were included in the increasingly
complicated levy design as political issues related to increased taxation on
properties such as schools and hospitals emerged. Exemptions included :
Metrolinx, Revenue Tools: Parking Space Levy, 2013 and AECOM and KPMG, Big Move Implementation
Economics: Revenue Tools Profiles, March 2013.
Transport Canada, TransLink Parking Tax Case Study, October 2006.
Ibid.
Ibid.
Victoria Transport Policy Institute, Parking Taxes, Evaluating Options and Impacts, August 29, 2013
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On-street parking;
Institutional building exempt from general property taxes (schools,
churches, etc);
Parking facilities used for vehicle retail and rental business inventory
storage, impounded vehicles, trailers of tractor-trailer units, vehicle
servicing and fuelling;
Parking owned by Translink;
Ferry loading queuing areas;
Campgrounds;
Despite the many alterations in design, the parking levy in Greater
Vancouver was met with considerable opposition. Of the 29,600 assessment
notices delivered by TransLink in December 2005, up to some 5,100 were
appealed. Various industry groups also spoke out against the levy. The
provincial government eventually introduced legislation in November 2007
to completely scrap the unworkable idea of a parking levy and replace it with
the “replacement tax”.
6.1.3 Lessons Learned
There are a number of lessons learned from the failed experience of the
TransLink’s parking levy:
It is administratively difficult to charge the levy based on the number
of parking spots; and
The levy causes a wide array of distortions and assessment appeals.
Transport Canada, TransLink Parking Tax Case Study, October 2006.
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7 CONCLUSION
In order to raise revenue to fund an identified budget gap and to likely help
finance investment in public transit, the City of Toronto is considering
implementing a levy on parking spaces in the city. The policy would likely
apply to all off-street commercial paid and unpaid parking spots and would
entail a levy of a certain amount per day. A report prepared by KPMG for the
City of Toronto estimates revenues generated from the levy of about $192
million, $383 million or $575 million based on per space per day levy rates of
$0.50, $1.00, and $1.50.
A detailed analysis of this proposed new levy finds that the revised levy
structure will be a poor choice for financing the city’s budget deficit as:
The implementation of the levy would entail significant costs to
create and maintain a parking inventory in Toronto. Furthermore,
experience in other jurisdictions has shown that the implementation
of a parking levy can be complex and confusing;
The actual effects of the levy on drivers’ behaviour are likely to be
negligible as the cost of the levy is most likely to be absorbed by
property owners and businesses, especially small businesses;
The proposed parking space levy will have a negative impact on
businesses competitiveness and economic development in Toronto,
reducing economic competitiveness of the region;
The proposed parking tax levy fails to satisfy well-accepted general
principles of good taxation. It will be unfair and have negative
impacts on businesses. In addition, it will cause a “double taxation”
problem;
The retail and office sectors will bear most of the increased cost from
the proposed levy;
Similar revenues can be obtained by the city by utilizing existing
revenue tools, such as altering residential property taxes, in a manner
that is unlikely to cause the significant distortions; and
Experiences from the Greater Vancouver’s parking levy illustrates
that the levy is administratively difficult to implement and causes a
range of problems and distortions.
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Overall, this report concludes that a parking space levy is a poor financing
tool to help the city fund its budget gap.
APPENDIX 2
Case Studies: Impact of proposed parking levy on properties across the City of Toronto
These case studies as well as many others were prepared for City councillors to highlight the impact of the proposed parking levy on their businesses.
CASE STUDIES: Ward 2 – Etobicoke North
Who is impacted by a parking levy?
136parking spaces
$74,460annual cost of $1.50/space parking levy (on top of
property taxes)
Retail complex on La Rose (6 tenants)
Retail complex on Islington (multi-tenant)
961parking spaces
$526,148annual cost of $1.50/space parking levy
(on top of property taxes)
Retail and Community Centre (2 tenants)
192parking spaces
$105,120annual cost of $1.50/space parking levy (on top of
property taxes)
Office complex on Ronson
495parking spaces
$271,013annual cost of $1.50/space parking levy (on top of
property taxes)
CASE STUDIES: Ward 12 York South-Weston
Who is impacted by a parking levy?
65parking spaces
$35,588annual cost of $1.50/space parking levy
(on top of property taxes)
Car service centre on Ingram (3 tenants)Grocery store on Eglinton
493parking spaces
$269,918annual cost of $1.50/space parking levy
(on top of property taxes)
Shopping complex on Eglinton (9 tenants)
313parking spaces
$171,368annual cost of $1.50/space parking levy
(on top of property taxes)
Church on Connie
90parking spaces
$49,275annual cost of $1.50/space parking levy
(on top of property taxes)
CASE STUDIES: Ward 40 – Scarborough-Agincourt
Who is impacted by a parking levy?
252parking spaces
$137,970annual cost of $1.50/space parking levy
(on top of property taxes)
Packaging company on ProgressShopping complex on Kennedy (9 tenants)
1,355parking spaces
$741,863annual cost of $1.50/space parking levy
(on top of property taxes)
Church on Sheppard
168parking spaces
$91,980annual cost of $1.50/space parking levy
(on top of property taxes)
Medical centre on Ellesmere
198parking spaces (not including
additional pavement not marked as parking
spaces, roughly 200)
$137,970annual cost of $1.50/space parking levy (on top of
property taxes)
APPENDIX 3
Revenue Projections:
The Real Estate Industry Coalition believes that the potential revenue projections attached to a parking levy are inaccurate. The Coalition asserts that a number of likely exemptions to the parking levy will affect the overall viability of the parking levy as a municipal revenue tool. The identified exemptions are suggested by the Coalition, and are reflective of exemptions considered or implemented by other jurisdictions. The commercial real estate industry coalition suggests that municipal policymakers consider the variety of factors that will compromise the overall revenue raise of a parking levy, and consider alternative measures that meet the city’s budget and funding objectives.
PARKING LEVY STARTING POINT: $383.3 million(KPMG 2016, Pg. 50)
Expected revenue from Toronto’s 1,050,000 parking spaces @ 1/stall/day
EXEMPT INSTITUTIONAL PROPERTIES: ($92 million)24% of all City properties exempted immediately as institutional classification. (Altus 2016, 10)
EXEMPT INSTITUTIONAL PROPERTIES
LEASING COMMERCIAL SPACE: ($38.3 million)10% of all City exempted due to medical centres, social services, funeral homes,
community centres and cultural/religious institutions owning/leasing commercial space.
EXEMPT FIRST 10 PARKING SPACES
FOR EACH LOT: ($57.5 million) 15% of all City spaces exempted as ‘First 10’ spaces in order to protect businesses with small parking lots.
EXEMPTIONS OR LOWER RATES FOR
SCARBOROUGH, ETOBICOKE AND NORTH YORKAssuming Downtown Toronto has 40% and Scarborough,
Etobicoke and North York each have 20% of parking spaces.
Downtown Toronto @ $1, rest of City @ $0.50 $136.9m
Downtown Toronto @ $1, rest of City @ $0.25 $107.5
Downtown Toronto @ $1, rest of City exempted $78.2
Downtown Toronto @ $0.50, rest of City @ $0.25 $68.5
REVENUEafter exemptions,
before admin/legal
PARKING LEVY REALITY:
Revenue expectations fall short
** Some assumptions made by the real
estate industry group should be verified
in further studies.
2
PARKING LEVY REALITY:Where exactly are all the ‘big offices’ and ‘big malls’ that provide all the revenue?
‘JUST THE FINANCIAL CORE’ 43 million sq. ft. office space in ‘Financial Core’ (SRRA March 2015, pg. 16)
17,000 parking spaces (estimate based on estimate of 395 parking spaces per 1 million sq. ft.)
Entire ‘Financial Core’ @ $1.50/stall/day = $9.3m
@ $1.00 = $6.2m
@ $0.50 = $3.1m
‘JUST THE BIG MALLS’ Based on estimate of 3,500 parking spaces per large regional mall.
5 ‘Big Malls’ @ $1.50/stall/day = $9.6m
@ $1.00 = $6.4m
@ $0.50 = $3.2m
‘ALL THOSE BIG BOXES’ Based on an estimate of 750 parking spaces per ‘big box’ location.
30 ‘Big Boxes’ @ $1.50/stall/day = $12.3m
@ $1.00 = $8.2m
@ $0.50 = $4.1m
$20.8
million
Available revenue from
a $1/stall/day parking
levy on all parking
spaces in the financial
core, regional malls and
suburban big boxes.
** Some assumptions made by the real
estate industry group should be verified
in further studies.