Could Doug Ford really sell city real estate to fund his subway plan?
Doug Ford, like his brother Rob before him, is busy promoting a $9-billion, 32-kilometre subway plan that, according to him, would come at no extra cost to taxpayers—even though experts agree that the scheme is, for a huge number of reasons, completely unrealistic. Late last month, Doug offered the public a glimpse into how he hopes to finance the ambitious transit platform. Among other revenue measures, he intends to earmark $540 million of expected revenue from Build Toronto, the organization that sells city-owned real estate, for the sole purpose of building subways. “We want to take the underutilized property in Toronto, sell it at a premium, and make sure that it goes directly to subways,” said Ford, “not the general coffers, where the councillors can get their hands on it and spend it.”
WOULD IT WORK?
Though we wouldn’t put it past him to be, er, “disingenuous” with his numbers, it’s probably fair to assume that, as vice-chair of Build Toronto, Ford is in a position to communicate how much revenue the agency can expect to pull in from its current collection of properties. The first question, then, is whether Build can sell its land and generate $540 million within Ford’s promised timeline: five years.
If history is anything to go by, the odds aren’t good. So far this year, Build has only sold one property, for $3.7 million. In 2013, it didn’t sell anything at all, and actually lost $2.1 million. “There’s absolutely no record of achievement,” says Schulich School of Business real estate professor James McKellar, who attributes Build’s underwhelming performance to political interference. The organization, he says, is not arm’s-length, as it claims to be. For example, last summer, when it was looking for a new CEO, Ford himself was accused of meddling with the process in an attempt to install his preferred candidate. Six of Build’s 13 board members resigned amid the scandal. “That’s indicative,” says McKellar. “I don’t think his behaviour is any different from other councillors in this regard. They all want to have their two cents: ‘Before you get rid of a property in my ward, I want to know about it.’”
That meddling can slow down the selling process, as can a number of other factors. “Selling this real estate is a complex matter fraught with challenges and risks,” McKellar says, including rezoning issues, potential soil contamination and the possibility of community opposition. For one parcel of land, he adds, a sale can take “three to five years, if you’re lucky,” with money typically coming in at the tail end.
That’s assuming, of course, that there’s an interested buyer. McKellar says that, in Build’s current property portfolio, there are a few attractive pieces of land and a bigger handful of less appealing ones that will be harder to sell. “Developers go looking for good sites,” he explains. “And if there are other opportunities that don’t involve the city, they’re going to exhaust those.”
For the sake of the argument, though, let’s imagine Ford managed to work through the political pandering, overcome the site-specific obstacles and find buyers for every one of Build’s properties for a total of $540 million in revenue, all within his first term. Could he dedicate that money to building subways?
In short, no. All of the revenue would need to go through city council’s budget process. In fact, in this case, it already has; city officials confirmed to the Sun that the revenue was allocated for other, non-subway projects back in January.
“It’s a very simplistic view,” McKellar says of Ford’s plan. It relies on a series of unlikely and downright impossible things to happen in succession, and it ignores the fact that Build Toronto, and other organizations like it, have historically failed to deliver at the level that the plan demands. “If Toronto learns how to do [what Ford has proposed],” McKellar says, “they’re going to have other governments rush to their door to ask how.”
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