Tuesday, September 6, 2016

A Congestion Charge for Downtown Toronto: An Analysis

English: Toronto Downtown Core, at nite from C...
English: Toronto Downtown Core, at nite from CN Tower. Español: El centro de Toronto visto de noche. Français : Le centre-ville de Toronto, vu de nuit. (Photo credit: Wikipedia)
Revenue Options Study: Cordon Congestion Charges (185 page pdf, KPMG for City of Toronto, Jun. 2016)

Also discussed here: Report lays out hundreds of millions in potential new tax dollars for Toronto (Jeff Gray, Toronto Globe and Mail, Jun. 21, 2016)

Today we review a report by KPMG for the City of Toronto in which the option of a morning rush hour congestion charge is considered in the Toronto downtown south of the 401 between Bathurst and Bayview. Another road pricing option:applying a toll on the Don Valley Expressway is not included in this study and is being considered separately. A daily charge of $5 to $20 at each cordon would yield up to $377M/year in net revenue with 33% overhead. This in turn would cost the average household in Toronto $120 /year with 35% of the revenue coming from visitors.

The overall conclusion: “In general, a cordon charge would have a positive impact by reducing traffic, decreasing greenhouse gas emissions and increasing transit ridership.” and “The net revenue from cordon charges should have a high degree of stability in the long-term.” Implementation costs for congestion charges are high enough to consider as well the option of increasing parking rates in the downtown which would bring in similar revenues (and this seems to be favoured by the Mayor).

 Key Quotes:


“The cordon charge will be applied only upon entry into the cordon zone between the hours of 6:00 am and 10:00 am on weekdays.”

"An electronic tolling system similar to the Highway 407 ETR will be used, which combines a transponder and licence plate recognition system. “

“The tolling of highways by the City is permitted under COTA; however, the highway or portion of road being designated as a toll road must first be approved by the Province. … COTA may need to be amended for Toronto to have the required authorities.”

 “It may be possible for the City to contract with the owners of Highway 407ETR (407 ETR Concession Company Ltd.) to operate and administer the City’s cordon charge program.
  • An annual commuting cost of $3,954 was used for price elasticity calculations.
  • There are 49 entry points into the cordon, based on the City of Toronto 2011 cordon analysis.
  • A price elasticity of -0.3 was used and compares similarly to London and Singapore’s elasticity.
“The net revenue from cordon charges ($377M/yr with a $20 cordon charge) should have a high degree of stability in the long-term.”

“While a cordon charge has many attractive features… similar benefits may be achieved at lower implementation cost by applying a levy to commercial parking spaces in the downtown core. “

Parking space levy: Other cities, including Vancouver, Los Angeles, Miami, Pittsburgh and Seattle, tax either parking spots or parking revenues. Current legislation would only allow Toronto to levy a per-spot tax on landowners. A $1-a-day per-spot tax could bring in $383-million a year, according to KPMG’s estimates”

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