Municipalities will be ringing in the New Year by ringing the cash registers, once again collecting their revenue from one slice of citizens, and using it to subsidize another. Their New Year’s resolution should be to stop this fraudulent practice, and bring tax fairness to forms of urban development that are economically and environmentally sustainable.
This practice was highlighted at a recent conference held in Toronto, called “Retrofitting and Planning Sustainable Suburbs”. Although the conference was short on answers, a presentation by Peter Katz (Director of Smart Growth for Sarasota Florida) on long-term fiscal stability for communities was most revealing. In it, Katz compared tax revenue to urban density, with surprising results.
Both our regional and local governments generate their revenue, and incur their expenses, across a specific geography. A local comparison of three different properties in this landscape shows the subsidy from higher density to lower.
The three properties?
1) A 14 storey Downtown Kitchener condo (66 units, .7 acre including its associated street area, located on a street corner used by many of us)
2) a 7 storey historic and well-kept rental property (36 units, .5 acre including its street area, 90 feet of frontage along a street used by many of us)
3) a typical suburban home (1 unit, .12 acre, 45 feet of frontage, along a street used by only its inhabitants)
The typical suburban property is valued at about $200,000, and generates $2,250 of revenue for City and Region (ie., provincial education taxes excluded).The condo property carries $9.9 million of assessment on the municipal rolls, and generates $110,000.The rental building is valued at $2.55 million, but by virtue of its more than double tax rate relative to condo and single family home assessment, that $2.5 million generates $55,000 of revenue for the City and Region.
By comparing the revenue to the area of property and street necessitated by each, we can begin to see the enormous disparity, and the size of the suburban subsidy. The suburban home sends about $14,000 per acre to City Hall. Astonishingly, the condo sends $160,000 per acre even when the corner streets are used in the calculation. That’s more than 10 times the revenue of suburban development. The rental units cough up $115,000 per acre, taken in large part from citizens with little or no savings or net worth.
Multiply these numbers over and over, and you get the picture. Katz, in his presentation of numbers for his community, shows a similar effect on the commercial side. Strip malls and local suburban malls, with their massive parking and wasteful use of adjoining streets, generate about the same tax revenue per acre for Sarasota as suburban residences. No more.
What do our local condo owner or renters get for their tax bill? Garbage and recycling pickup, like the suburban homeowner? No. They pay extra for that, on top of their tax bill. Given that about 50% of municipal expenses are dependent on response times and density (25% of Kitchener’s costs are related to fire coverage alone over its network of streets), the tax bill could be seen as a fraud perpetrated upon sustainable development by suburban voters. Worse, the 36 unit rental property requires snow plowing, police drive-by, asphalt repairs and replacement, for only 90 feet of street. Its equivalent in the suburbs, on a dollar for dollar revenue basis, requires 1200 feet. Worse, that thirteen times length of infrastructure, paid for with utility rates common to all electricity, water and gas users, is maintained by all users equally. In addition to that subsidy, the renters must maintain their private pipes common to the units within the building, through their rent.
We’ve known for a long time that municipal property taxes transfer money from those without the means to pay to suburban voters with net worth, and the Ontario Government has directed municipalities years ago to end this practice. This directive has for the most part been ignored. Now, to grind salt into the wound, let’s add the subsidy: from sustainable, walkable, transit-friendly existing or new development to unsustainable existing and the suburbs-to-come, paid year after year. Properties generating $100,000 or more per acre are paying for municipal services for other areas of the city that incur the costs, yet generate only about $14,000 per acre. In business terms, it makes no sense whatsoever.
And what is the attitude of suburban voters to this largesse? On transit investment to support densification, or quality downtown urban infrastructure? Don’t do it. On taxes? We need relief. On municipal services? We don’t get our fair share. On change to allow density and a greater variety of uses? Don’t touch us!
Given that “Smart Growth” apparently means 40% residential development within built-up areas, and 60% outside it, and given that commercial and employment development can go where it wishes to chew more farmland, our municipal leadership will continue to massively subsidize low density development with capital and operating dollars, while talking a good game.
For this New Year, let’s resolve to end this fraud. It’s not enough to promote sustainable development. We’ve got to stop penalizing it.
A few years back, our neighbours across the street in our downtown Kitchener neighbourhood (Victoria Park) proudly announced the impending arrival of their firstborn. “Fantastic!”, we said. “A playmate for our own children. More laughter up and down our street!!!” Alas, it was not to pass. The parents-to-be had another plan: a quick getaway to the outskirts of town. “We can’t raise children here. It really would be better for them in the suburbs.” Ouch! We waved goodbye through the exhaust of their moving van, and slunk back to our front porch to ponder our failure as parents. We knew as well as anyone the litany of evil that permeates our culture’s notions of “the City”, in stark contrast to its healthier and morally superior country setting. What were we thinking in exposing our offspring, their minds tender and not yet made up, to straight streets named after citizens, mature trees, and schools with two floors? While we weren’t swaddling them directly in unspoilt nature, couldn’t we at least procure the safety of pastoral scenes but a few subdivisions yonder?
As early as the 1950’s, that prescient urbanist Jane Jacobs lamented the geographic cleaving of North American cities along the lines of age and gender. Communities designed as a daily pattern of break-up, with breadwinners commuting each day to the concrete jungle, leaving the women and children safely ensconced in a more predictable, healthier, and “natural” setting. The gains we have made since those times (for women, for instance) have largely been about participation in this model, not as a fundamental change to it. If anything we have further reinforced the geographic isolation through public school closures and the relocation of high schools out of our downtowns, so that a teenager’s exposure to “life on the streets” is first minimised, and then redefined as a fearful dead end. Our children visit Downtown Toronto more than their own community cores, and they are now a second and third generation removed from any experience of the healthy hustle and bustle of a 1950’s main street.
We have planned our cities to reinforce a perception of urban streets as inherently dangerous. Our media dutifully report and dramatise this state of affairs. Statistics and facts are skewed in support of a powerful piece of urban mythology: Downtown is where the crime is! If we cannot eliminate it, then we should at least contain it geographically. Our hopes for the young and vulnerable are that they be protected from this den of iniquity, only bearing witness to the carnage through the flat screen of NYPD Blue, Cops, and sundry reality shows: the prime-time line-up from which our potential assailants are stereotyped.
Urban districts that do not include for children must surely be condemned as inadequate. The active presence of children is a fundamental measure for the health of our streets. Where they are absent, our design has failed. It is unfortunate that we have so few examples in North America for the integrated design of schools, shops, work, entertainment, recreation space, cultural experience, and accommodation within one geographic district. The City of Vancouver and other municipalities that lack a farm belt into which they might endlessly expand are leading the search for this new city form, and a return to a sustainable urban model for living. In the words of Larry Beasley, former Director of Planning for the City of Vancouver: “without its comprehensive ‘living first’ strategy, Vancouver would be lightyears behind where it needs to be. Most of all, the city would not have realized its dream for an urban lifestyle that will draw people back from their 50-year romance with the suburbs, bringing with them their resources, energy, and creativity to build the kind of remarkable city that an extraordinary natural setting and the city’s people so richly deserve.” Sound appealing? This weekend, why not explore a new frontier. Bring your kids downtown.