Google sister company Sidewalk Labs is offering up to $ 100 million to help finance a portion of the LRT that’s critical to its planned “smart city” neighbourhood on Toronto’s waterfront, but the public sector could still have to come up with hundreds of millions of dollars to complete the full line.
The Waterfront LRT that would serve the Quayside and Port Lands sites Sidewalk wants to develop isn’t currently among the city or province’s transit priorities, meaning the viability of the company’s proposal could now hinge on city hall and Queen’s Park agreeing to change course.
The 6.5-kilometre LRT would run from Union Station to the Port Lands along Queens Quay, and is estimated to cost more than $ 1.2 billion. Although the city has been studying it for more than a decade, the line is unfunded and there is no firm timeline for its construction.
A highly anticipated master plan Sidewalk released Monday describes new rapid transit as a “linchpin for waterfront growth,” and the LRT as essential to the tech giant’s vision to create a 190-acre Innovative Development and Economic Acceleration (IDEA) District on the derelict Port Lands.
Waterfront Toronto, the tripartite government body tasked with overseeing the revitalization of lakeshore lands, hasn’t approved the contentious proposal, which oversteps earlier plans by proposing a much larger development on City of Toronto-owned lands.
Doctoroff told the Star in February that the company planned to make an “extraordinary commitment” to “essentially ensure the financing of the LRT.”
However, according to the master plan, Sidewalk is proposing a more modest contribution, in the form of up to $ 100 million in “credit support” to help build the transit line.
A spokesperson for the company asserted Monday it had never proposed providing all the upfront costs of the LRT, and its credit support proposal was consistent with Doctoroff’s previous comments.
According to the master plan, a government-appointed public administrator would oversee the design and implementation of the LRT, which would be financed through a mechanism called tax increment financing (TIF). Once built, it would be publicly owned and operated.
Under TIF, the proponent of a project, usually a government, issues debt which it then recoups over a period of years through the tax revenue generated by new development near the line.
Investors in a TIF scheme typically require the government to provide a “backstop” to pay them interest during the period after the project has begun but before development has arrived to generate new tax revenue.
Sidewalk’s $ 100 million in credit support would replace the government backstop, and the company says it could help get the LRT built “years ahead of schedule,” with construction to begin by the early 2020s.
Importantly, Sidewalk would only provide the credit support for the portion of the LRT that would directly serve the IDEA District. This section of the line would connect to the existing streetcar network via Cherry St. and Broadview Ave., and run along Commissioners St. Sidewalk estimates this segment would cost about $ 406 million to construct.
Sidewalk isn’t making any specific financial commitments to the segment of the LRT outside of the IDEA District, including the crucial link to the transit hub at Union Station and the portion running along Queens Quay between Bay St. and an area near Sherbourne St.
This segment is estimated to cost about $ 700 million, and would be paid for by traditional funding agreements between the city, provincial, or federal governments.
However, the company’s master plan notes that these sections “are nevertheless critical to the viability” of its redevelopment plan, and “Sidewalk Labs is therefore open to discussing how it could assist financially.”
Sidewalk is asking for a government commitment to build an LRT as a condition of proceeding with its plans.
Councillor Joe Cressy (Ward 10, Spadina-Fort York), who sits on the board of Waterfront Toronto, agreed that “we desperately need transit” connecting to Quayside and the Port Lands, but warned against making any Sidewalk development deal contingent on the LRT’s construction.
“When you make a land deal conditional on the opening of new transit, in effect we could put that piece of property on ice for decades if transit isn’t built,” he said, arguing it would make more sense to proceed with new development while simultaneously working to build new transit.
Tapping government coffers for any part of the LRT would likely require changes to the city’s and province’s existing transit priorities, which are already the subject of heated debate between city hall and Queen’s Park.
In 2016, city council voted to designate a Waterfront transit network as one of its key transit priorities eligible for federal funding. But in April, Premier Doug Ford unveiled a new $ 28.5-billion transit plan for the GTA that left Waterfront transit off the map, and council subsequently voted to remove it from projects slated for federal funding.
The provincial government will likely have the final say on what new transit gets built. Legislation the Ontario Progressive Conservatives passed earlier this month gives Queen’s Park the authority to take control of new transit projects in Toronto, and to order the city and TTC to stop work on lines it doesn’t support.
The Ontario government didn’t respond to questions about whether Sidewalk’s offer of credit support would induce it to pursue waterfront transit.
“We have received the proposal from Sidewalk Labs and are looking forward to reviewing it. This is an exciting time for Toronto’s waterfront. Once the public has provided input and the evaluation process has concluded, Waterfront Toronto’s board of directors will decide on the future of the proposal in question,” said Infrastructure Minister Laurie Scott in a statement.
A spokesperson for Mayor John Tory said he was committed to getting the LRT built.
With files from Donovan Vincent.Ben Spurr is a Toronto-based reporter covering transportation. Reach him by email at firstname.lastname@example.org or follow him on Twitter: @BenSpurr