Premier Doug Ford’s government has the legal authority to unilaterally take over the TTC subway system without offering the city as much as a cent in compensation, according to a confidential council report.

The four-page document written by the city’s legal department and obtained by the Star is a confidential attachment to a public report released Monday on the province’s plan to take ownership of the subway network. The confidential legal opinion provides advice to councillors ahead of a key council vote on the proposal expected Thursday.

The legal opinion lays out in stark terms how few options the municipal government likely has to prevent the province from taking control of the subway on terms dictated almost entirely by Queen’s Park.

“The province can by legislation take over ownership of subway assets, including real property and other assets, and can do so without compensation to the City of Toronto or the TTC if the legislation expressly provides that no compensation shall be payable,” the report reads.

While generally no entity in Ontario can take property from another without providing some kind of compensation, according to city staff the provincial government has the jurisdiction to legislate property rights in the province and “it could enact legislation that explicitly removes the city and/or the TTC’s right to compensation for subway lands, fixed assets, and chattels.”

The province could also pass a law that would compensate the city for its subway assets at a level below market value or “otherwise in an amount considered to be inadequate by the city,” the report states.

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Legal staff speculate that by assuming responsibility for subway maintenance or other costs currently paid by the city as part of the upload, the Progressive Conservative government could argue it had provided fair compensation for Toronto’s rail assets.

The report warns that the province could even leave Toronto saddled with the debt the city has accrued in the course of funding the subway network it has owned for decades. That’s because debt issued by the city to finance subway capital costs are general obligation debentures, and are “not secured by the subway asset.”

“Accordingly, the transfer of the asset does not affect the debt,” the report says.

City legal staff say that by law the province could even completely dissolve the TTC.

Only the federal government could put a check on provincial authority over the subway system, according to the opinion.

Under the Constitution Act, the federal government could theoretically claim jurisdiction over the subway system by declaring it to be a public work for “the general advantage of Canada.”

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Historically, the federal government has most frequently used this power to assume control over railways.

“The Toronto subway system could be seen to be analogous to a railway due to its importance in keeping the country’s largest economic region running,” the report states.

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However, the city would have no ability to compel Ottawa to step in, and the Canadian government assuming jurisdiction of the subway would likely subject it to federal regulations, a change that would have uncertain implications for the transit system.

At its meeting Thursday, council is expected to vote on whether to authorize city manager Chris Murray to begin talks with the Ford government about the upload, including entering into an information-sharing agreement to provide details about the subway that could help facilitate a provincial takeover.

Ontario Transportation Minister Jeff Yurek wants written commitment from Mayor John Tory by Thursday that the city will participate in the information-sharing arrangement.

In the public report released Monday, Murray recommended the city engage with the province in order to better understand its goals and “ensure the province understands the city’s key interests and objectives.”

Tory has said he will support engaging with the province, arguing that with Queen’s Park wielding so much legislative power, the only chance the city has to preserve its interests is to have a voice at the table.

He has said he wants more information about what the province is planning but that any upload scheme must be beneficial for the city, transit riders and TTC workers.

Councillor Josh Matlow (Ward 12, Toronto—St. Paul’s), who opposes the upload, wouldn’t comment on the confidential report. But he said the city likely has little choice but to engage with the province.

He argued that doesn’t mean the city should “capitulate” to any provincial plan that would disadvantage Toronto residents and transit users.

“I support in principle being at the table to discuss transit with the province given that they have an enormous amount of power over us, and we can’t deny that reality,” he said.

“I don’t believe the city should go to the table and just say, ‘hey, how can we help you screw us?’”

The Ontario PCs have argued that the upload would be beneficial for the region’s transit system because the province is best equipped to efficiently finance new lines and create a seamless network across municipal boundaries. The party says that while Queen’s Park would take ownership of the subway, the TTC would be responsible for operations and the city would still collect fare revenue.

Transit advocates, the TTC’s largest union and some councillors vigorously oppose the proposal, warning the PCs would privatize work on the subway, sell off its assets, and extend lines to the party’s political base in the GTA suburbs at the expense of building the badly needed Relief Line.

With files from David Rider.

Ben Spurr is a Toronto-based reporter covering transportation. Reach him by email at bspurr@thestar.ca or follow him on Twitter: @BenSpurr

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