John Tory’s proposal to finance his SmartTrack transit plan is a “risky scheme” that will come with major provincial taxes and would only raise 35 per cent of the funds he needs, according to an economic analysis released by Olivia Chow’s mayoral campaign Thursday.

The analysis rips apart development and revenue projections as outlined by Tory’s policy advisor in an Oct. 14 Toronto Star column. In the article, Arthur Lofsky, a volunteer with the Tory campaign and former policy director to finance ministers in the McGuinty government, writes that funding calculations are based on 42 million square feet of new office space being built in 30 years.

But this development will not generate the revenue needed for SmartTrack, says Chow’s campaign.

“His campaign points to absurd claims,” Chow’s campaign said in a news release. “One is that the property tax generated by one site (the old Unilever site in the East Don Lands) will be almost twice as much as the property taxes generated by towers owned by the Big Five banks—combined.”

Lofsky states that the new developments would be centred in three districts – 15 million square feet in Liberty Village, 12 million square feet in the central core and 15 million square feet on the former Unilever site near the Don Valley Parkway and Lake Shore Boulevard.

He goes on to say that the Unilever site’s developer said he expects $150 million in new property tax revenue once a planned business hub in this location is completed – but “it needs transit.”

Chow’s analysis questions the veracity of this claim when the combined value of the downtown towers for the Big Five banks generates only about $80 million based on an assessment from the Municipal Property Assessment Corporation, Chow says.

Mitchell Rothman, the former chief economist for Ontario Hydro, performed the economic analysis for Chow’s campaign. The analysis also pokes holes at the scale of development required to pay back loans for SmartTrack, and says that it would create a $1.7 billion “hole to fill” in provincial taxes.

At least 15 buildings the size of First Canadian Place – Toronto’s tallest building with 72 storeys – will be needed, Chow says, adding that five-and-a-half of them would have to be in the Liberty Village and the East Don Lands, and four-and-a-half of them downtown.

“This is a stunning amount of development, and the percentage of it Mr. Tory attributes to SmartTrack is highly ambitious, which in turn affects how the province may treat what can be deemed an increment,” Chow’s campaign said in their news release.

In the Star article, Lofsky said that property taxes were taken into account, and that further commercial and residential development growth along other parts of Tory’s transit scheme could “add to the projections for the downtown area.”

Chow’s campaign also downplays how much development would be directly attributable to building SmartTrack saying that the construction of office towers are is already booming downtown and that the East Don Lands is a floodplain that requires protection.

But Lofsky said that legislation required Tory’s advisors to account “for development that would have occurred even if the infrastructure was not built.”

Tory said SmartTrack could raise as much as $2.5 billion to offset borrowing costs, but Rothman’s analysis says he would only be able to raise $929 million.

Lofsky’s column was in response to a Toronto Star analysis that called out Tory’s funding plan as vague and massive with a likelihood of failing. The Star analysis said SmartTrack would be bigger than the total of all the tax-increment financing bonds issued in the U.S. in 2000, 2001, 2008, 2009 or 2010.

The Tory campaign has defended their tax-increment financing plan – a way to borrow initial funds and then pay it off with income generated by development – by saying that it has been successfully implemented in 48 American states to fund large-scale infrastructure projects.