Battle brews between city, Toronto Parking Authority over revenue

A battle is brewing between the City of Toronto and one of its own agencies over how to share 10s of millions of dollars in profit generated by publicly-owned parking lots.

The Toronto Parking Authority wants to keep more of the cash it makes for the city. It's warning that it will need to defer over $14 million in capital spending this year if a new profit sharing agreement isn't reached in the next few months.

Those "material cuts" could hurt the city's Bike Share and electric vehicle charging programs, the agency says.

The last agreement between the city and TPA expired in 2019 but the terms remain in effect. It requires the agency to give the city either $38 million a year or 85 per cent of the agency's profits, whichever is greater.

The Toronto Parking Authority declined an interview request by CBC Toronto. But at a recent board meeting, executives made the case for a new agreement.

"The time for that new deal is now," Jeffrey Dea, the TPA's vice president of growth and strategy, said at the March meeting.

In a report, the agency says the profit sharing arrangement, which was reached in 2017, is obsolete. It did not account for the expanded duties given to the parking authority by city council in the years since.

Those include operation of Toronto Bike Share and the expansion of its electric vehicle charging station program, programs which cost it millions. The agency says it is grappling with a $300 million state of good repair backlog for its parking lots over the next decade. It also needs to replace over 3,000 Pay & Display machines reaching the end of their life.

"The 85 per cent tax is punitive given the expanded mandate that we have," Dea said of the arrangement.

The parking authority said it has contributed $1.4 billion to the city through the dividend since 2002. That has been used to fund "other municipal services and programs, including public transit, housing and parks."

The talks come at a time when the city is struggling to address large structural deficits every year and contemplating the creation of new taxes and fees to address the gap.

The negotiations between the city and parking authority have been underway for two years. They were projected to wrap up ahead of the 2024 budget cycle earlier this year, but Dea told the board that work to address the city's $1.8 billion deficit delayed discussions.

TPA at a 'breaking point': Bradford

Coun. Brad Bradford, who is a member of the TPA board, said the agency is at a "breaking point."

"The TPA simply cannot continue to deliver on the things that city council has directed them to, including electric vehicle infrastructure, and a bike share network that's expanding across the city, without retaining more of that revenue," he said.

But Coun. Paula Fletcher, who is also a member of the TPA board, pushed back against concern over the lengthy talks. The agency made $6.5 million more year-over-year, she said.

"The parking authority is not in free fall," she said. "As a matter of fact, it's in pretty good shape. And they're doing everything that we've asked them to do."

Coun. Paula Fletcher says she's fine with the protracted talks between the city and TPA over a new profit sharing agreement, adding that the agency is in good financial shape. (Grant Linton/CBC)

Fletcher said the city's expectation is that the TPA will manage its portfolio and pay the dividend, because that is the agency's mandate.

The talks are all part of the push and pull of relations between the city and its agencies, the veteran councillor added.

"There's often tensions with city agencies that sometimes would like to be further away from the city and city control," she said. "The city has spent time now bringing agencies much closer in order to have that kind of oversight, including the TPA."

More details coming at next TPA meeting: city

The city said in a statement that it continues to work with the parking authority to finalize an updated profit sharing agreement.

More information will be provided at a May 28 meeting of the TPA board, spokesperson Laura McQuillan said.

The protracted talks have caught the eye of several advocacy groups around City Hall. Cycle Toronto's Alison Stewart said the Bike Share program cannot be "held hostage" as part of the strained negotiations. She urged the two parties to come to an agreement that protects the program.

"Toronto Parking Authority is a public agency and their mandate is for advancing the public good," she said.

"And to hold (back) investment in their most successful program, Bike Share, if they don't get a new agreement with the city, seems a little bit disingenuous and inappropriate."

HousingNowTO's technical lead Mark Richardson said part of the conflict lies in the agency's resistance to shifting its mandate to accommodate the city's other goals, like building housing. The TPA has said a city council-approved plan to possibly convert more than 130 parking lots it owns to housing puts its facilities "at risk."

Richardson said if that plan moves ahead, it could reduce the agency's profits. Housing will eventually generate higher revenue in property taxes than parking lots, but that will take years, Richardson added.

"By extracting that amount of dividend from these arm's length businesses that the city owns, it does limit your options when you want to use their lands," he said.

"So, it's about how do you innovate the Toronto Parking Authority so that it remains relevant? And how do you make best use of its assets?"