B.C. minister Peter Fassbender proposes ‘transit-supporting levy’

VANCOUVER — Special to The Globe and Mail

Published Thursday, Feb. 09, 2017 10:01PM EST

B.C.’s TransLink Minister is exploring whether to require developers who build dense projects near transit to contribute some of their profits back into the transportation system.

Peter Fassbender’s proposal for a “transit-supporting levy,” which he has been pitching to cities and developers, is the latest idea for how to continue expanding transit in a huge region with a growing population, but where local governments have few ways to raise money for major infrastructure projects.

“If you build transit corridors and you invest billions of dollars in transportation, there is a benefit to densification as a result of that, and should a portion of that benefit accrue to the very transportation corridors that have helped to build that?” Mr. Fassbender said in an interview.

Mr. Fassbender said he has already conducted two roundtables about the idea in the past six months with cities, developers and others, and he is planning another one for this month. He acknowledged that one of the big challenges of this new levy is possible resistance from municipalities, who will worry that the province is taking away revenue that some of them are already using to solve other problems.

The minister’s suggestion follows years of fierce debates over funding transit improvements, including a failed plebiscite two years ago that rejected an additional sales tax in the Vancouver region. Other ideas have included additional gas taxes, a regional carbon tax, a vehicle levy or mobility pricing – a complex system for charging drivers based on where and how far they drive. The province has rejected most of those.

Other cities, notably Metro Toronto, have considered this kind of “land-value capture” system for financing transit, as well. Some look to the City of Vancouver’s existing method of community-amenity contributions as a model. Vancouver negotiates with developers to give back community benefits equivalent to 75 per cent of the land-value increase they see when their land is rezoned.

Vancouver is especially likely to be concerned how its approach would be disrupted by a new transit levy.

In 1993, Oregon voters passed measures limiting the amount that assessed property values can increase in any given year, despite warnings by economists that the cumulative effects would cause distortions in the property tax system. Recent research by the Northwest Economic Research Center looked at the impact of Measures 5 and 50, and showed gross inequities in tax burdens across neighborhoods in Portland.