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Big Move Implementation Economics: Revenue Tool Profiles

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Big Move Implementation Economics: Revenue Tool Profiles Big Move Implementation Economics: Revenue Tool Profiles Project Number: 60236189 March 2013 FINAL REPORT Big Move Implementation Economics: Revenue Tool Profiles Prepared for: Prepared by: Metrolinx AECOM 20 Bay Street, Suite 600 105 Commerce Valley Drive Toronto ON M5J 2N8 Markham, ON, Canada L3T 7W3 In association with: KPMG LLP Metrolinx Big Move Implementation Economics Revenue Tool Profiles Contents A. Introduction to Revenue Tools Profiles 1 B. Tool Profile: Auto Insurance Tax 9 C. Tool Profile: Car Rental Fee 19 D. Tool Profile: Carbon Tax 28 E. Tool Profile: Cordon Charge 35 F. Tool Profile: Corporate Income Tax 51 G. Tool Profile: Development Charges 57 H. Tool Profile: Driver’s License Tax 64 I. Tool Profile: Employer Payroll Tax 72 J. Tool Profile: Fare Increases 82 K. Tool Profile: Fuel Tax 88 L. Tool Profile: High Occupancy Tolls 100 M. Tool Profile: Highway Tolls 114 N. Tool Profile: Hotel & Accommodation Levy 124 O. Tool Profile: Income Tax 132 P. Tool Profile: Land Transfer Tax 139 Q. Tool Profile: Land Value Capture 145 R. Tool Profile: New Vehicle Sales Tax 152 Metrolinx Big Move Implementation Economics Revenue Tool Profiles S. Tool Profile: Parking Sales Tax 160 T. Tool Profile: Parking Space Levy 169 U. Tool Profile: Property Tax 180 V. Tool Profile: Sales Tax 186 W. Tool Profile: Tax Increment Financing (Special Assessment Districts) 195 X. Tool Profile: Utility Levy 204 Y. Tool Profile: Vehicles Kilometres Travelled Fee 210 Z. Tool Profile: Vehicle Registration Fee 217 Appendix: Summary of Revenue Tool Scores 225 Metrolinx Big Move Implementation Economics Revenue Tool Profiles Statement of Qualifications and Limitations The attached Report (the “Report”) has been prepared by AECOM Canada Ltd. (“Consultant”) for the benefit of the client (“Client”) in accordance with the agreement between Consultant and Client, including the scope of work detailed therein (the “Agreement”). The information, data, recommendations and conclusions contained in the Report (collectively, the “Information”): • is subject to the scope, schedule, and other constraints and limitations in the Agreement and the qualifications contained in the Report (the “Limitations”); • represents Consultant’s professional judgement in light of the Limitations and industry standards for the preparation of similar reports; • may be based on information provided to Consultant which has not been independently verified; • has not been updated since the date of issuance of the Report and its accuracy is limited to the time period and circumstances in which it was collected, processed, made or issued; • must be read as a whole and sections thereof should not be read out of such context; • was prepared for the specific purposes described in the Report and the Agreement; and • in the case of subsurface, environmental or geotechnical conditions, may be based on limited testing and on the assumption that such conditions are uniform and not variable either geographically or over time. Consultant shall be entitled to rely upon the accuracy and completeness of information that was provided to it and has no obligation to update such information. Consultant accepts no responsibility for any events or circumstances that may have occurred since the date on which the Report was prepared and, in the case of subsurface, environmental or geotechnical conditions, is not responsible for any variability in such conditions, geographically or over time. Consultant agrees that the Report represents its professional judgement as described above and that the Information has been prepared for the specific purpose and use described in the Report and the Agreement, but Consultant makes no other representations, or any guarantees or warranties whatsoever, whether express or implied, with respect to the Report, the Information or any part thereof. Without in any way limiting the generality of the foregoing, any estimates or opinions regarding probable construction costs or construction schedule provided by Consultant represent Consultant’s professional judgement in light of its experience and the knowledge and information available to it at the time of preparation. Since Consultant has no control over market or economic conditions, prices for construction labour, equipment or materials or bidding procedures, Consultant, its directors, officers and employees are not able to, nor do they, make any representations, warranties or guarantees whatsoever, whether express or implied, with respect to such estimates or opinions, or their variance from actual construction costs or schedules, and accept no responsibility for any loss or damage arising therefrom or in any way related thereto. Persons relying on such estimates or opinions do so at their own risk. Except (1) as agreed to in writing by Consultant and Client; (2) as required by-law; or (3) to the extent used by governmental reviewing agencies for the purpose of obtaining permits or approvals, the Report and the Information may be used and relied upon only by Client. Consultant accepts no responsibility, and denies any liability whatsoever, to parties other than Client who may obtain access to the Report or the Information for any injury, loss or damage suffered by such parties arising from their use of, reliance upon, or decisions or actions based on the Report or any of the Information (“improper use of the Report”), except to the extent those parties have obtained the prior written consent of Consultant to use and rely upon the Report and the Information. Any injury, loss or damages arising from improper use of the Report shall be borne by the party making such use. 1 Metrolinx Big Move Implementation Economics Revenue Tool Profiles A. Introduction to Revenue Tools Profiles The purpose of this document is to provide readers with detailed information about each of the revenue tools that have been used in other jurisdictions to support the development of transportation infrastructure. These “Revenue Tool Profiles” have been developed through consultation with members of the Metrolinx and AECOM teams, extensive research of leading practices in transportation funding instruments, detailed review of jurisdictions where these revenue tools have been or are currently being implemented, and through the practical experience of the AECOM team members. The intention of these Revenue Tool Profiles is to provide adequate revenue estimates and create a basis to evaluate qualitatively the tools to help inform the development of Tool Kit options for funding the Metrolinx Investment Strategy. The assumptions used in developing the revenue estimates have been laid out for each revenue tool, using the best information available publicly, and were used for the sole purpose of creating an adequate basis to assess the revenue potential of the tools. The implementation scopes identified in the Revenue Tool Profiles do not constitute recommended implementation scopes and would require further examination for each tool selected. In some instances, valuable features for the scheme were identified and stated as “smart design features”. As revenue tools are shortlisted and Tool Kit options are brought forward, detailed implementation and legislative considerations will need to be considered. Throughout this document, several of the tools are referred to as a “tax” or “levy”. For the most part, the naming conventions used in this document are based on common terminology used to identify the revenue tools in other jurisdictions where the tools are in place. In other instances, such as the sales tax, the tool is leveraging a mechanism that is already in place and has therefore been identified using the same naming convention. It is worth noting that in light of legislative and other considerations, various implementation schemes and structures may be envisaged for the desired tools, which may lend themselves to different naming conventions. A.1 Overview of Tool Part 1 of the Revenue Tool Profiles provides an overview of the tool including how the tool works, where it is being used in other jurisdictions, and how it is being considered for the purposes of this analysis. The purpose of this section is to ensure the reader has a basic understanding of how the tool can be used to generate revenues for use in funding transportation initiatives. A.2 Tool Evaluation Results Part 2 of the Revenue Tool Profiles provides readers with the evaluation results for each tool including a brief discussion outlining some of the key characteristics for why a particular score was given. At a high-level, the evaluations looked at the following criteria for each tool: 1 Metrolinx Big Move Implementation Economics Revenue Tool Profiles • Revenue potential; • Two concepts in this section that warrant a description are the static and dynamic revenues. For each tool, a static revenue estimate for 2014 has been provided that indicates the revenue potential of the tool without adjusting for any feedback effects on revenue due to changes in the behaviour of people affected by the tool. The majority of the tools also indicate a dynamic revenue estimate which are calculated in the same manner as the static revenue estimates, but have been adjusted to account for changes in demand and travel behaviour stemming from the implementation of the tool. Both revenue estimates are presented in current year currency (i.e. nominal figures) and do not account for any costs associated with collecting or processing the revenues . • Incremental costs; • These consist of additional capital, operating, maintenance and compliance costs required to implement the tool and collect the revenue over the economic useful life of any investment required. Compliance costs refer to the time, effort and any out-of-pocket costs borne by those who pay the charges. • Impact on travel behaviour and transportation network performance; • Impacts on travel behaviour and network performance (mode shifts, time savings, changes in auto usage costs and environmental impacts) are conceived relative to a base case characterized by the absence of the proposed revenue tool. • Scheme design; • A number of the tool profiles reference smart charges or dynamic pricing while discussing the scheme design.
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