Item - 2026.EX33.13

The Chief Financial Officer and Treasurer recommend that:  

1. City Council authorize the levy and collection of taxes for the 2026 taxation year on railway roadways and rights-of-way and on land used as transmission or distribution corridors owned by power utilities, in accordance with subsection 280 (1) of the City of Toronto Act, 2006 and subsection 257.7 (1) of the Education Act.

This report seeks Council authority for the introduction of the by-law necessary to levy and collect taxes for the 2026 taxation year on railway roadways and rights-of-way and on land used as transmission or distribution corridors owned by power utilities, totalling approximately $6,993,742 in taxation revenue, of which the municipal share is $6,484,859 and the provincial education share is $508,883.

The 2026 levy has remained consistent with the 2025 levy total of $6,992,485 (with a $6,483,956 municipal share and a provincial education share of $508,529). For 2026, the prescribed property tax rates and taxation methodology for railway rights-of-way and hydro corridors remain unchanged from 2025 (as confirmed by attached correspondence from the Province through Ministry of Finance, dated December 10, 2025).

Taxation of railway lands varies across Canada, with some provinces utilizing a per-acre rate for railway lands, and most western provinces using tonnage per linear kilometre rates. In Ontario, per-acre rates are not increased annually and currently, the acreage rates for the City of Toronto are the highest in the province. From 2005 to 2016 railway rates remained static, followed by modest rate increases in 2017 and again in 2018, with no rate increases since. If railway and hydro rates had been indexed to inflation to reflect increases in the Consumer Price Index in each year since 2005, an additional $3,891,024 would be generated from the levy in 2026.  This additional levy would be inclusive of the educational portion of Hydro One's levy of approximately $3,601,155.

The 2026 levy of taxes on railway roadways and rights-of-way and on power utility transmission or distribution corridors will raise approximately $6,993,742, of which the municipal share is $6,484,859 and the provincial education share is $508,883.

The total municipal share of the 2026 levy of $6,484,859 is consistent with the 2026 Non-Program budget revenue estimate of $6,483,956. Comparatively, the total amount billed for 2025 was approximately $6,992,485, of which the municipal portion was $6,483,956 and the provincial education portion was $508,529.

Table 1 below summarizes the acreage rates prescribed by the Province, the total acreage for each group of properties, and the resulting 2026 and 2025 levy on railway roadways or rights-of-way and on power utility transmission or distribution corridors.

Table 1: Levy Amounts for 2026 and 2025 on Railway Rights-of-Way and on Power Utility Transmission or Distribution Corridors

Table 2 provides a comparison of the change in acreage and levy from 2025 to 2026. For 2026, the per-acre rate for railway roadways and rights-of-way and for power utility transmission or distribution corridors will remain at the 2018 levels of $624.33.

Table 2: Change in Levy from 2025 to 2026

Overall, the net revenue retained by the City for 2026 has increased by $1,020.00 from 2025. The net increase is the result of an increase in total acreage of railway roadways and hydro corridor rights-of-way from 4,283.08 acres in 2025 to 4,284.66 in 2026 (representing a net increase of 1.58 acres).

1. For Hydro One properties, the City retains the education portion of taxes. In the rows labelled "Adjusted Total", the education portion for Hydro One properties has been included in the Municipal Portion of taxes. Prior to April 1, 1999, under a revenue sharing arrangement for Ontario Hydro properties, the City retained both the education and municipal portions of taxes. Section 361.1 of the Municipal Act was amended effective April 1, 1999, to establish that the taxes payable were included in the definition of payment-in-lieu (PIL) properties. This allowed the City to continue to retain both the municipal and education portion of taxes, and this has been continued under the City of Toronto Act, 2006.