Financing the Réseau Express Métropolitain: What About Transportation Dues?

The financing of the REM is a complex matter, because in addition to significant contributions from higher levels of government (more than $2.5 billion from the Government of Quebec and $1.28 billion from the Canada Infrastructure Bank out of a total budget of $6.924 billion), municipal contributions will amount to more than $824.9 million, user contributions will be $887 million and the fuel tax attributed to this network will exceed $132.4 million[2].

A legislative and historical reminder is required at this point:

May 2016:

• Adoption of an Act, aimed primarily at amending the organisation and governance of the public transportation system in the Montreal metropolitan region[3]
• Creation of the Autorité régionale de transport métropolitain (hereinafter referred to as "ARTM") and the Réseau de transport métropolitain (hereinafter referred to as "RTM", or EXO)

September 2017:

• Adoption of the Act respecting the Réseau électrique métropolitain[4], allowing the implementation of the Réseau électrique métropolitain (hereinafter referred to as the "REM", now called the Réseau express métropolitain) by the Caisse de dépôt et placement du Québec (hereinafter the "CDPQ") or a subsidiary and 
• Outcome of the agreements with the ARTM and local municipalities 
• Implementation of a system for the payment of dues for public transportation purposes;

March 2018: publication of 3 ministerial decrees

• M.D. 2018.03 which creates zones within the ARTM area conducive to the coordination of urbanisation and public transportation services;
• M:D. 2018.04 which authorises transportation dues for the REM;
• M.D. 2018.05 which publishes the agreement stipulating the ARTM's financial contribution to the implementation of the REM; the agreement is between the ARTM and REM Inc, a subsidiary of CDPQ Infra);

May 2018:

• the RTM becomes EXO. The RTM is responsible for operating the train, metro and bus networks within the Greater Montreal Area.

$600 Million in Transportation Dues

REM financing outlined in the 2017 constituent act.[5] After an agreement between the CDPQ and the ARTM, the following amounts will be added to the aforementioned revenue:

• $512 million in lieu of property appreciation;
• $600 million from the collection of transportation dues over a 50-year period;
• A sum of $1.283 million as a down payment from the State in relation to financing the REM project.

The financing of some REM costs through transportation dues is outlined in Ministerial Order AM-2018-04, which became the By-law respecting transportation dues regarding the Réseau express métropolitain[6].

Essentially, some works are subject to payment of transportation dues, which will be collected by local municipalities in those zones lending themselves to the coordination of urbanisation and the implementation of public transportation services.

The new regulations cover:

• The requirement to obtain a permit for work subject to transportation dues (section 2)[7];
• The rate and calculation of the dues (section 3): the amount required, and indexed annually, is $107.64 per square metre built[8];
• Work subject to payment of dues (section 4): the construction, reconstruction, increase in surface area of a building, its redevelopment; the work must cover an area exceeding 186 square metres and buildings forming part of agricultural operations are excluded;
• The relevant buildings in cases of redevelopment with even just a partial change of use are those that involve a change to one or other of the following categories:
  - Housing;
  - Retail, restaurant, etc.;
  - Business offices and professional services;
  - Institutional;
  - Industries, wholesale trade, para-industrial services and automobile services;
  - The research and development industry and data centres.
• The value of the relevant works (section 5): work over $769,080, indexed annually;
• The determination of the floor area (section 6); 
• The dues are payable by the owner, the emphyteuta, the beneficial owner or the person with the right of superficies, as well as the occupant of a building mentioned in section 97.12 of the ARTM Act, and a syndicate of co-owners (section 7);
• The conditions of payment (sections 8 to 10);
• The rules for establishing suitable zones (section 11): some within 1 kilometre of a station, others within 500 metres;[9] 
• Exemptions (section 12): agricultural operations and other cases provided for in Section 97.12 of the ARTM Act;
• Collection by local municipalities and remittance to the Authority (section 8 and 13 to 18);
• Criminal provisions (section 19).

Transportation dues which will finance the REM are payable from 1 May 2018. However, the rates will be applied gradually as the CDPQ train network is currently under construction. This rate was set at 50% of the total amount of the dues until 31 December 2018, and will be 65% for 2019 and 80% for 2020.

[1]From the book La fiscalité locale: municipale, scolaire et régionale, second edition, WoltersKluwer, Montreal 2019, by Pierre Delisle.  [2]"Réseau express métropolitain: the complete figures", Gérald Fillion, Radio-Canada, 8 February 2018; "Financing the completed Réseau express métropolitain", Radio-Canada, 22 August 2018.  [3]S.Q. 2016, c. 8  [4]S.Q. 2017, c. 17  [5]Act regarding the Réseau électrique métropolitain, S.Q. 2017, c. 17; CQLR, chapter R-25.02, sections 38 and 77.  [6]By-law respecting transportation dues regarding the Réseau express métropolitain, CQLR, chapter A-33.3, r. 2. See the implementation guide prepared by the ARTM, which is available on its website, ed01_20180507, dated 7 May 2018. Also see the summary prepared by the APCHQ and mentioned in Note 1 of this chapter.  [7]See Appendix E of the by-law for the work permit system.  [8]The rate of the dues is calculated in accordance with section 97.2 of the ARTM Act and is published in Schedule C of the by-law.  [9]See Schedules A and B of the by-law.