Real Estate Industry Coalition

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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

[email protected]

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


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


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


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



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



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



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



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



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



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



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


October 4, 2016



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



October 4, 2016



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;


and


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,


Figure 1

October 4, 2016



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 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.

October 4, 2016



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

October 4, 2016



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

October 4, 2016



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

October 4, 2016



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.

October 4, 2016



businesses and economic development in Toronto, reducing economic

competitiveness of the region.

October 4, 2016



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.

October 4, 2016



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


Scenario 3


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

October 4, 2016



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.


Ibid, Page 168

Ibid, Page 166

Ibid, Page 168

October 4, 2016



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

October 4, 2016



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.


Ibid.

Ibid.

Victoria Transport Policy Institute, Parking Taxes, Evaluating Options and Impacts, August 29, 2013

October 4, 2016



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.


October 4, 2016



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.

October 4, 2016



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


property taxes)

Office complex on Ronson

495parking spaces


property taxes)

CASE STUDIES: Ward 12 York South-Weston


65parking spaces



Car service centre on Ingram (3 tenants)Grocery store on Eglinton

493parking spaces



Shopping complex on Eglinton (9 tenants)

313parking spaces



Church on Connie

90parking spaces



CASE STUDIES: Ward 40 – Scarborough-Agincourt


252parking spaces



Packaging company on ProgressShopping complex on Kennedy (9 tenants)

1,355parking spaces



Church on Sheppard

168parking spaces



Medical centre on Ellesmere

198parking spaces (not including

additional pavement not marked as parking

spaces, roughly 200)


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.

Documents

Real Estate Industry Coalition