Transit can pay its own way with Land Value Capture

Imagine a new streetcar or subway line were built and extra money started magically appearing in cash registers of businesses along it; along the route, especially at stops, landlords suddenly got a cash bonus with their monthly rent cheques. Meanwhile, businesses along this line saw costs drop because they needed to provide less parking for employees and customers even as employee retention and sales traffic went up, further boosting bottom lines.

If all this were clearly marked as coming from the transit service, which the government paid to install and run, would it be fair for businesses or landlords to pocket that cash? Would it make more sense for that free extra money to be collected by the government that created it? Of course it would, and doing so would let transit pay for itself without expensive taxpayer subsidies.

This approach is called Land Value Capture (LVC), and is how Ontario should finance improvements in transit. The beauty of LVC is that it doesn’t increase anyone’s real tax burden at all, it just reclaims some of the extra revenue public infrastructure creates from the landowners who didn’t do anything to earn it.

How would it work? The existing market value property assessment system could track how much prices of land near new transit rose beyond normal property value rise. That extra increase would clearly be the result of the improved transit, and be recaptured through a surtax on the extra land value.

Landowners along that route would already be charging higher rents to businesses or residents reflecting improved access to these sites, normal practise in a market economy like ours. But instead of pocketing extra unearned rent, landowners would remit most of it as an LVC surtax. There would be no extra tax burden on the businesses or families renting those properties, and landowners would still keep the basic rent they were already charging before the increase.

People living in their own house or condo would have the option of deferring all of their LVC until they eventually sold the property; accumulated LVC would add up to less than the rise in their land value since the transit was improved. Thus they would still keep all the value they had invested in their property, and even pocket the general increase not due to transit. If, for some reason, their property’s market value stayed flat or went down, there would be no LVC assessed, as there would be no extra value to capture.

Sadly, the province is leaning towards a gas tax of 10 cents per liter. While I believe energy prices are too low, any increase should be used to reduce job-killing taxes like HST or payroll taxes, not to increase overall spending and taxation.

Transit should be financed by those who benefit financially from it, the landowners along or near the transit route, not by taxing everyone near and far. The purpose of transit is to move people along it, but if we go the gas tax route (or increase HST, another proposal) we’ll be moving money from the general taxpayers into the pockets of privileged landowners!

Land value capture was mentioned in Ann Golden’s Transit Panel report and I know Ontario’s Transport Minister, Glen Murray, is familiar with it from when he proposed land value taxes as Mayor of Winnipeg. I can’t imagine why he isn’t championing it now, so transit can pay for itself instead of putting the burden on all regardless of benefit. There is still time before the province finalizes plans in the spring; I hope they seriously reconsider using LVC to finance transit from unearned income instead of the tax dollars of hard-working Ontarians.

Publised as my Root Issues column in the Barrie Examiner as "Transit costs need review / Ontario's transit plan needs tweaking" or "Not all taxpayers should pay for transit costs" 

Re-posted by request at Loonie Politics

Erich Jacoby-Hawkins is a director of Living Green and the Robert Schalkenbach Foundation.

Barrie is becoming the home town I hoped it would be

Although I grew up in a small town, I often visited relatives in downtown Toronto, staying there all summer for student jobs, so I was always comfortable in a big city. I chafed at things my rural hometown lacked, like a movie theatre, comic or game or used book store, or even (at times) a bowling alley or video arcade. Especially in the tween and teen years before I could drive, my small town felt stifling. The big city always seemed the place where anything was possible and compatriots could be found to share any interest, unlike the comparatively limited activities and views small town life offered.

After high school, I lived in cities like Kitchener/Waterloo, Windsor, and Toronto. Then a small Korean town followed by a megacity: Seoul. In Korea, even small towns connected to major cities with frequent and affordable transit.

Returning to Canada, we settled in Barrie, which certainly billed itself a city. But I was disappointed to learn it lacked many urban attractions I expected of a community of 100,000+. Instead, it seemed trapped in some sort of limbo between town and city, with a nasty undercurrent of anti-urbanism.

Luckily, over the following decade-plus, Barrie has managed to grow in urban offerings and diversity, even faster than the actual growth in population. The arts scene is improving, despite continuing push-back around City funding of the Maclaren Art Centre or arts grants. The Barrie Film Festival has expanded the number and scope of their offerings, adding the annual Reel Stories documentary festival and a series of outdoor screenings. The first Barrie International Comedy Festival was a great success, portending a new annual tradition. The Mady Centre is constantly busy hosting productions by several theatre companies and musical series. We even finally have a second library branch(!)

Transit links are improving, the bus system evolving from suburban-style hub-and-spoke toward urban-style grid. GO train service is restored and growing at two new stations, offering north-south travelers a pleasant rail alternative to the daily 400 grind. City council seems to have lost some of their past small-town fear of higher density development or tall(ish) buildings, and are tackling problems through forward-thinking plans instead of the reactionary responses or head-in-sand approach of past decades.

Meanwhile, my daughters enjoy weekly German classes offered free by the local school board, where the most wonderful teacher helps them connect with family roots; the program offers instruction in a variety of other languages to offer the same benefit to families of many backgrounds.

But what really brought it home for me today is food. Three years of shopping & cooking in Korea instilled Korean cuisine habits in my family that we had to satisfy with periodic shopping trips to Toronto’s “K-town”. Just recently, several of our Korean staple ingredients have become available at Barrie locations like Local Foods Mart and Wholesale Club, which means we can now get by with a lot fewer grocery runs to the Big Smoke. On top of that, downtown Barrie (I refuse to call our lowest elevation “Uptown”) now features a real Korean restaurant, right at the Five Points, named (appropriately enough) “home town house” (Ko Hyang Jib).

Finally Barrie is becoming the home town I hoped it would be when I settled here. I now feel confident that whatever your particular interest, be it a genre of jazz or blues or chamber music, or a flavour of ethnic cuisine or a style of theatre or comedy or film, if you can’t find it here now, you will soon.

Published as my Root Issues column in the Barrie Examiner.

Erich Jacoby-Hawkins is a director of Living Green and the Robert Schalkenbach Foundation. 

Who da man!

The 21st Doctor and her faithful K9 companion

Recently a wonderful franchise celebrated its 50^th anniversary. It’s called Doctor Who, a British television show launched by the BBC in 1963. Originally intended to combine science fiction with historical information to create an interesting and educational show for young people, historical elements soon dwindled in the face of fantastical story-telling, but the show has nonetheless remained wonderfully educational, in a different way. And that’s why I’m so happy that my own young daughters are now big fans of the show and of the title character, “The Doctor”.

I grew up loving many sci-fi programs: space operas like Star Trek, Battlestar Galactica, and Buck Rogers, along with super-hero shows like Wonder Woman, the Incredible Hulk, Spiderman, and the Greatest American Hero. These were all the product of the American mind, so problems were resolved when the hero out-shot or out-fought the enemy. With a few notable exceptions, in the vast majority of stories, the heroes won the day by destroying their enemy in battle, albeit using superior tactics or even strength of character to overcome unfavourable odds or find the enemy’s weakness and amplify the effect of their own weapons.

But Doctor Who had a different, British sensibility. Unlike the armed-to-the-teeth spaceships of American sci-fi, the Doctor’s time and space-travelling TARDIS didn’t mount any weapons, and didn’t look like a battleship or missile-with-windows. Instead, it had adopted the camouflage appearance of a normal police box, and although it got stuck in that shape, seeming out-of-place in other places or times, it never looked threatening. The Doctor’s first response to meeting anyone was either to start up polite conversation or run away quickly, depending how dangerous the situation. He would never shoot first, and in most cases, never shot at all, which was helped by the fact that he didn’t carry a weapon. His primary prop was his touch-free “sonic screwdriver”, although his long scarf also saved the day many times.

The Doctor solved most dilemmas by getting the enemy to retreat, or destroy themselves, or simply bringing both sides together in peace. Often the alien threat turned out to be a case of confusion or mistaken identity; once resolved, what seemed a horrible monster was just an alien creature that went away peacefully, freed from a trap or from domination by someone exploiting it for their own evil ends.

And unlike American sci-fi heroes backed by teams of loyal (if less-skilled) soldiers, the Doctor’s companions were just everyday civilians even more inclined to run from danger. His loyalty to them and willingness to risk his own life for theirs demonstrated that despite his talk & run modus operandi, he was no coward.

It was this willingness to talk first, to retreat when possible rather than fight to the death, a will to get to the root of conflict in order to ease it instead of a drive to dominate and defeat, that was the truly educational power of the Doctor Who series. Raised on both American and British sci-fi, my own instincts are mixed, but I try to consider the Doctor’s approach. I’m glad my own children can grow up watching the new stories, as part of the renewed Doctor Who series, instead of filling their minds with the more militaristic, black-and-white, destroy-the-enemy approach that still tends to characterize most American action shows. And I hope in future we all learn to avoid conflict, find the root causes, and reconcile both sides whenever we can instead of instinctively jumping to destroy the “other”.

Published as my Root Issues column in the Barrie Examiner as "Dr. Who can offer some sound advice"

Erich Jacoby-Hawkins is not a time-travelling alien with two hearts, but he does wear colourful scarves.