As Metrolinx sweeps up properties across the Toronto map, expropriating them from private owners for its Ontario Line project, a fight over land values in Liberty Village has left the provincial transit agency on the hook for tens of millions of dollars more than it initially expected to pay out.
After Metrolinx moved to expropriate 1A Atlantic Ave., a 1.15-hectare property near Exhibition GO train station featuring surface parking and large electronic billboards, its owners argued the agency was stripping them not only of the value of the property in its current form, but of lucrative redevelopment potential.
And earlier this month, the Ontario Land Tribunal agreed. While Metrolinx had set aside nearly $14.9 million in trust for the property, the tribunal ruled the actual market value was more than $41 million. Even with some deductions, Metrolinx was told to increase its payout by more than $24 million.
It’s a case that offers a window into the public agency’s opaque process of expropriating land for the $27-billion Ontario Line, as Metrolinx won’t say how many properties it has acquired along the route nor their price-tags. It also lays bare the reality of Toronto’s real estate market, where the potential for denser future developments can hike up the price for unassuming properties.
The Liberty Village case began in 2021, when Metrolinx registered plans to expropriate two neighbouring parcels of land near the existing Exhibition GO train station — 1A Atlantic Ave. and 1 Jefferson Ave. Expropriation is a process where governments or their agencies take over private property for projects of public importance. Owners don’t have to consent to a sale, but officials do have to pay what’s determined to be market price.
At most stops along the 16-kilometre Ontario Line route, Metrolinx is planning not only station stops, but entire “transit-oriented” communities: developments to be built on publicly owned, often expropriated land, with Infrastructure Ontario designing the buildings before partnering with private builders. The idea is to provide amenities such as housing in areas well-served by the new routes, while using the public-private developments to offset the line’s costs.
Metrolinx’s plan for 1A Atlantic Ave. is two mixed-use towers, at 20 and 19 storeys, with 265 residential units — mostly one-bedrooms. The Jefferson site is expected to yield a single 19-storey tower with 303 residential units, also mostly one-bedrooms. No developer has been publicly identified for either site.
In taking the land from its original owner — a numbered company that has owned 1A Atlantic Ave. since 1998, according to sale records — Metrolinx said they would pay whatever the properties were worth as of May 28, 2021. For Atlantic, it set aside nearly $14.9 million, plus nearly $4.5 million for Jefferson.
But the property owners believed they were owed more — after appealing to the land tribunal, one appraiser appearing on their behalf argued Atlantic Avenue alone could be worth more than $126 million in one hypothetical development scenario. Throughout the case, multiple experts on both sides put forward differing calculations for the value of the properties.
The tribunal then had to decide which scenario was realistic.
To figure out the highest and best use of the land, it looked at four questions: what was legal, what was physically possible to build on each site, what would be financially feasible in that market, and what would likely offer the best rate of returns.
The denser of the two development scenarios for the Atlantic land tested by the tribunal would involve two towers, 30 and 35 storeys high, on an eight-storey podium, as well as two midrise sites. The second was two 22-storey towers on a four-storey podium — a proposal similar to Metrolinx’s own plan.
No matter the design, Metrolinx argued the value should be dampened by the fact the City of Toronto had also eyed the properties to build a new road. The risk and uncertainty of the city potentially needing the land in future, they argued, would bring down its market value.
The tribunal disagreed, saying a new road should be considered part of the overall Ontario Line project, given its purpose as a connection with the neighbourhood — meaning its impacts would not be considered as a factor.
More debate ensued over the details of the hypothetical future developments on the land, altogether pulling in 21 expert witnesses and 165 exhibits. Surely, Metrolinx argued, any development would need a rail safety crash wall, being so close to a station — which would affect any potential designs. Environmental remediation efforts, too, would dig into the bottom line.
But at the end of the day, while the tribunal decided Metrolinx didn’t owe more money for the Jefferson site, it ordered a much heftier payout for Atlantic Avenue, deciding the smaller of the two proposals was realistic and attainable.
It put the market value at roughly $41.4 million and, after accounting for environmental remediation costs, the tribunal ruled the transit agency owed the landowner around $24.2 million more — for a total cost around $39 million.
The ruling is not expected to add to the project’s budget, Metrolinx says, as contingency funds will cover the difference in costs.
A director of the company that owned the sites, Fred Dominelli, offered only a brief comment to the Star via email, saying he wasn’t happy with the decision.
The vast difference between the value Metrolinx initially saw and the owners’ desired price isn’t unusual, especially when dealing with multimillion-dollar land, says Arnold Weinrib, a retired professor of law at the University of Toronto. Each side’s appraisers are paid to evaluate the land in a way that benefits their side, Weinrib said. “It’s like lawyers, they have a side here.”
He doesn’t expect the case to have knock-on effects for Metrolinx’s other expropriated properties, as many have been single-family homes whose potential is limited by zoning and sheer property size.
Metrolinx’s Ontario Line expropriations have triggered heavy frustration in recent years — from small businesses having to close to tenants turfed without a promise of being allowed to return in future. In one case, Metrolinx assessed a site at $2.1 million, but offered its owner $1, citing costs to clean up contaminated land; the compensation was also challenged in that case.
To Matti Siemiatycki, an expert in infrastructure and planning with the University of Toronto, the Liberty Village case is a rare public glimpse into how future density potential factors into the costs of expropriated lands.
“You look at what’s there today, and you envision what could be done tomorrow,” he said.
He sees expropriation as an important tool, especially for projects like transit. But, Siemiatycki said, an onus then falls on governments to use the land to its highest potential. That could mean building affordable housing or community facilities, he said — features that show public benefit.
“Whether that happens in this case, with this agency, and this provincial government, remains to be seen,” he said.
