OPINION: How Alto’s land value capture model could harm Smiths Falls
Editor’s note: The below is a submitted opinion piece from Lanark-Frontenac MP Scott Reid on how the Alto rail project could affect Smiths Falls and surrounding area. The views and opinions expressed do not necessarily reflect those of Lanarkist.
At first glance, the decision of Smiths Falls town council to break ranks with the rest of Lanark County and to pass a resolution conditionally endorsing the Alto High-Speed Rail project seems to make a certain amount of sense, on the basis of the following logic.
First, Smiths Falls is largely insulated from the menace of expropriation. Other municipal councils along the route have been preoccupied with the fact that the federal government has given to Alto the tools to expropriate whatever it wants, without the need to negotiate a mutually acceptable price. But expropriations are likely to occur to rural farmers and landowners unfortunate enough to live along the projected route. Towns have more people in less space, so expropriations are less likely.
And second, unlike other Lanark towns, Smiths Falls currently has a Via Rail station. If Alto is actually built, the station will almost certainly be closed. Transport Canada’s website is explicit on this point, stating: “Following the transfer of VIA Rail’s Québec–Windsor Corridor operations into the Alto HSR Initiative, VIA Rail will no longer operate or provide passenger rail services within the Quebec-Windsor Corridor.”
(This, by the way, is why Transport Minister Steven MacKinnon’s June 22 announcement has been regarded as a big deal: a year after announcing that his government would be closing all train stations between Ottawa and the outskirts of Toronto, he was dangling the possibility of reopening the one in Kingston.)
But Kingston is an hour’s drive from Smiths Falls. Saving the existing train station, and maybe getting a repair facility as well, seem like worthwhile goals.
So, back in April, Smiths Falls Town Council adopted a resolution that reads: “Resolved: That Smiths Falls Council expresses its support for the high-speed rail project, provided there is a rail system presence in Smiths Falls….”
The resolution also points to a very particular benefit that Council is hoping to secure for the town: “The establishment of maintenance and storage facilities to support Alto service in Smiths Falls presents a significant opportunity….”
This sounds pretty good. But Smiths Falls residents should be worried about what will happen if Town Council gets its wish. In the event that Alto does decide to locate a station and a repair facility in the town, Smiths Falls property owners could face a wave of expropriations, under the same expedited rules that apply to any other land that Alto wants.
That’s because the Alto business model is based on a concept known as “Land Value Capture,” or LVC. The LVC model holds that the best way for governments to finance new transportation infrastructure is by preemptively expropriating the relatively low-priced land surrounding any planned station, and subsequently generating profits by reselling the land at a vast markup, after the presence of a new train stop has boosted the value of the surrounding land.
The LVC model originated in Hong Kong, where it was put to use to finance the 1998-2013 expansion of the city’s Mass Transit Railway system. By expropriating the lands above and around each new subway stop, and then reselling the land at its new, higher value, the government was able to generate over $15 billion (in Canadian dollars) in revenues, thereby avoiding the need for taxpayer subsidies.
Here are some examples of how the LVC model is now being used and/or discussed in Canada:
- A 2023 study for the Canada Infrastructure Bank, titled Land Value Capture Study: Paying for Transit-Oriented Communities, advocates using the model here;
- Montreal’s new regional rail network, the Réseau express métropolitain, is partly funded by the resale of expropriated lands at a marked-up price;
- When Toronto’s Metrolinx was chaired by Robert Prichard (who is now the board chairman at Alto), Metrolinx published a study advocating the use of LVC.
- McGill University’s Transport Research Centre has published a paper claiming that Alto will be financially viable if it adopts the LVC model and expropriates aggressively at every spot where it builds a station.
Finally, and most alarmingly, a background paper on Alto’s potential economic impact, produced for the federal government in 2024 and made public via an Access to Information request, includes a graphic representation of the entire existing neighbourhood that currently surrounds Ottawa’s Tremblay Road railway station, torn down and replaced by high-rise condominiums.
Should this come to pass, it will obviously be a catastrophe for the current residents of this neighbourhood. And it could be a catastrophe for homeowners in any other town unfortunate enough to be seen as useful by Alto. When dealing with a corporation as ruthless as this one, caution is advised.
Scott Reid, Member of Parliament, Lanark-Frontenac
Share your views! Submit a Letter to the Editor or an Op/Ed article to Lanarkist’s Editor-in-Chief Hollie Pratt-Campbell at hollie@hometownist.com.