City Hall's choices may determine city's future -- and ours as well
By Tom Monto
Calgary’s water main break should set off warning bells in Edmonton city hall and in Millwoods as well. The fact that that water pipe is 50 years old may be relevant to the break happening. Does Edmonton have the money to replace its water pipes when they reach 50 years or the end of its expected useful life, or even to maintain them meanwhile?
No. The City is running a deficit even without such special efforts.
If the City does not have money to maintain what it has, should the city expand and build more pipes?
Some might say growth is everything, a city not growing dies. We have only to look at Detroit to see the fallacy of that.
Detroit’s population grew and grew in the first half of the 20th Century. Then in 1950 it began to lose population, and since then it has dropped by half, finally declaring bankruptcy in 2013. Some say that that city’s disastrous decline will not be a one-off but instead is the destiny that many other North America cities will suffer in the next 30 years.
That is how Chuck Marohn, an urban-affairs specialist from Michigan, described it when he spoke in Edmonton last February on the subject of “Building Strong Towns.”
He said the best thing a city can do is to stop building. “If you can’t afford to maintain the streets and pipes you have, don’t build more.”
A second water main break has occurred in Calgary recently. Although smaller than the major one, that new development and the way Calgary is using an underwater camera to look for other potential failings of Calgary’s main water pipe hint that the major pipe failure may be just the beginning of major troubles for Calgary’s water system.
Parts of Edmonton’s system are likely of about the same age, and trouble here too may be not far behind. Can Edmonton afford to replace its existing water system? Can it afford such if it has to also cover costs associated with massive suburban growth?
While Marohn advises to stop building before over-extending the available tax base, Edmonton has a choice to make over the next few years. In 2018 Edmonton grew larger, taking in an additional 82 sq. kilometres of farmland, out as far as the International Airport. The intent at the time of annexation was to convert the farmland into suburban communities. For that to happen, the City would have to spend hundreds of millions of dollars. This money will have to come from tax money paid by landowners in established communities, increased city debt, savings made by reduced maintenance of infrastructure in established communities or other reduction of city expenditures.
And that may be a recipe for mass demographic change in Edmonton. If services deteriorate in established communities, this could easily affect Millwoods and The Meadows, and other older neighbourhoods. Millwoods, now 50 years old, can be considered an established subdivision. The Larkspur in The Meadows is about 40 years old, also. The City may ignore such older established communities to free up money to lay the base for development of the new areas.
The nicely-supported and shiny-new communities in the annexed districts will attract families from older parts of town. And as they fill up, the City will be on the hook for building and maintaining massive freeways for people there to commute to and from the city every day. These new freeways and roads will slice and dice the southern part of Edmonton.
It will be decades before the taxes raised in the annexed land begin to cover the costs of developing the annexed land. It will be taxpayers in established areas that will cover the outlay one way or another.
Marohn made a strong distinction between older neighbourhoods, and the planned communities that have been built since WWII and will be built in the future. His research into the finances of cities shows him that planned communities are not efficient. He mapped where prosperity lies in a city, and where a city takes in more tax revenue than it spends. Both show the same areas - the communities that were built prior to the Depression and WWII. That is where businesses are profitable, streets and sidewalks are active 12-plus hours of the day, and where a city collects more taxes than it pays out.
Those old-time communities grew up organically and have businesses, residences, industry, entertainment all mixed together. And they work, while he sees that planned suburban bedroom communities built after WWII do not.
Millwoods and The Meadows were built as planned communities. They are “bedroom” communities - predominantly residential, with some retail but little industry and very little employment opportunities. Most working people living there work outside the area.
And such bedroom communities draw on the city budget more than they pay in. Even if a house is taxed $3000 or $4000 annually, that does not go far if you calculate the city’s expenditures on roadways and public transit, water and sewage, street, police, fire department, streetlights and parks for the neighbourhood.
Marohn says the communities built pre-WWII are walkable and have the usual things you expect of streetscapes of that vintage - corner stores and on-street parking (so less land is used for low-taxed parking lots). Higher taxes paid by neighbourhood businesses help cover the costs that residences do not cover themselves. Land is used intensively - with apartments using space above first-story shops.
“Modern” communities have big box stores, parking lots, and streets and streets with nothing but houses.
Small businesses in older areas use local attorneys and other professionals, while box stores have their head office function done at the head office - in Toronto or New York.
Edmonton appears to be taking Marohn’s advice to heart and has embarked on a vision of 15-minute districts. The City has come a long way since the 1970s when it planned to build a freeway through the Old Strathcona area, which would have killed what has since become one of the city’s best known attractions.
The “15-minute district” plan will see the city divided into 15 districts. Travel is allowed between the districts obviously, but the city would like to see each district become somewhat self-sufficient. Businesses in each district should offer most of the goods and services a local resident wants and needs to buy.
Chain stores scattered through the city may do some of this. Canadian Tire, Home Depot, large drugstores, dollar stores provide a wide selection of goods.
But also the city will allow small house-based businesses and redevelopment of land to secure higher density through infill. These are intended to diversify and deepen land use. Through such ways, more goods and services will be obtainable locally, within a 15-minute walk, bike ride or transit ride. Narrower roads with fewer lanes would be required, easing the burden on the city.
The City’s new small-scale informal approach to 15-minute districts is in line with the way cities grew up in the early years, one building or one business upgraded and expanded at a time, the change spawned and nurtured by the owner himself or herself. Small risk and small gain but it added up over the years.
And when it comes to the newly-annexed land, I hope the City will take it slow despite pressure by land developers for massive fast development and massive profits. The city, I think, should develop the land in small increments, developing neighbourhoods one by one, offering affordable starter homes and business streets filled with small business buildings that have room to grow. Making places where local residents could find employment and get what they need for a good life, right in their own district. Meantime hopefully meshing the new suburban communities in with the farms that now use the land.
Such rational growth means perhaps less tax revenue for the city in the short term but is a way to grow the city that does not land the city with the kind of debt-heavy “wealth” that could potentially over-stretch it and kill it. A heavy and growing tax burden and population decline can hurt a city as much as a huge fire. And if a City over-stretches and loses water or other basic service in a big way, that would mean having no city at all.
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sources:
Chuck Marohn Building a Strong Town (speaking in Edmonton, Feb. 7, 2024)
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Some of the same points were made in this email from Edmonton Councillor Michael Janz, June 26, 2024
Margy, ever looked at your tax bill going up, up up or looked at urban sprawl going out out out?
Do you ever wonder why despite higher taxes and population growth each year, cutting the grass, snow removal, or transit wait times and basic services feel like a struggle?
Have you wondered, “what on earth was the 1970/1990/2010 City Council thinking?”
Here's the bad news -- on July 3rd, City Council may give the green light for planning more sprawl– a financially ruinous decision for the city. This is the most significant decision City Council may make for decades.
I am deeply concerned as I support growth management and financially sustainable development.
Here's why...
Together, we can sure that the current and future Mayor and Council…
Protect our tax base, put taxpayers ahead of developer profits by ensuring that new growth pays for new growth
Build on the available spaces land in limits 80,000+ spaces (over 8 years of spaces at current construction rates)
Maximize use of existing services and infrastructure
In other words, we aren’t saying no forever, just NOT YET.
PROBLEM: The financial losses of new suburban growth are staggering.
Owning a house in a new development is a dream for many would-be homeowners, but a new city report suggests that taxpayers in other parts of Edmonton will have to pick up a $1.4-billion tab for the development of three new neighbourhoods. (Global News, 2016)
In Ottawa, for example, the city found that suburban expansion costs $465 per person per year. By contrast, they found that high-density infill development earned that city $606 per person per year. (CBC, 2021)
SOLUTION: We need fair deal for taxpayers
Substantial Completion: A growth management framework to ensure Edmonton is fulfilling its commitments to deliver basic services in new neighbourhoods, before opening up more land for new ones.
Substantial completion is NOT...
A moratorium on new housing, single family homes, a green belt, or a perfect tool.
Restrictive enough to ensure that new sprawl is cost-recovery
Going to undo the financial challenges of the last 70 years of postwar suburban development
Forcing people to live downtown
So who profits? As you expect, the suburban development industry is fighting any restrictions tooth and nail.
There is a reason that the development industry gets involved in municipal elections and supports the elections of Councillors willing to put the industry’s bottom line interests ahead of what is good for the city.
These private business interests occupy public hearings and public meetings and fear mongers for concessions and subsidies, yet on the other hand regularly advocate austerity and cutbacks to the core services we depend on the most.
But the interests of private industry should not overrule what is in the broader public interest.
We have known this for decades. Then first-term City Councillor Don iveson diagnosed this in 2009. His remarks are just as true now as they were 15 years ago:
A less efficient city will cost more to serve well, or will end up with declining services. We know these peripheral neighbourhoods will be very expensive to deliver services to and maintain infrastructure for; things like fire protection, waste collection, and transit will be more costly to deliver to further suburbia than if we densify the exiting footprint properly. This is intuitive, but the city is also studying this. Wish we had the results.Peripheral neighbourhoods, no matter how walkable or attractive, will lock in automobile dependancy for the vast majority of their residents.
There is well-documented public health evidence that automobile dependance leads to higher rates of obesity as well as impacts to emotional well-being. Our council-stated goal to see a shift from car use to other modes of transportation (principally transit, walking and cycling) stands in jeopardy. This means more traffic, more delay, more private and public expense on cars and infrastructure.
Plus there’s no way we achieve community-wide reductions in greenhouse gasses with rising distances travelled by car and worsening downstream gridlock.
In other words, for fiscal, social and environmental reasons, there is a strong case against conceding to so much peripheral development.
Background:
Edmonton is participating in a growth management exercise called substantial completion. Substantial completion is a good concept but right now as written it is way too permissive and should be sent back to make sure that when we absolutely are required to grow out, we are prepared to do so in a way that is financially responsible.
We should have a growth management framework.
We should not start planning or preparing new neighbourhoods until we have figured out how to pay for the other ones.
In other words, the 295 existing neighbourhoods should not be on the hook for paying significantly more taxes while the developers reap more profits from building even more new homes.
We aren’t saying no forever, just not yet.
While my primary concern is financial, we know that suburban growth is environmentally harmful, much because of auto-dependency, and it is worth noting that our City of Edmonton Carbon Budget comes back to City Council November 13th, so it is worth delaying at a minimum to better understand how far behind in achieving our climate goals we are.
Here’s a few key reflections about the growth management debate:
Municipalities are dependent upon property taxes to pay for services. They do not get a cut of the GST, and are limited in what charges they can place on new development.
Residential development loses money, and will never generate enough taxes to pay for their services (operating costs like snow removal) or replacement costs of the capital. Commercial and industrial development generate more taxes, however, as more suburban residential drives up the tax rate, more commercial or industrial (highly mobile) is likely to leave, further hollowing out the city. As crazy as it might sound, Edmonton is better off financially if the new suburban housing is built in the region. Edmonton needs to stop making the growth ponzi scheme worse.
The core mandate of a municipality is not to subsidize home purchases or business profit margins. And yes, significantly higher taxes in perpetuity may also inadvertently worsen the housing affordability crisis.
While population growth is expected overall, Edmonton still has huge parcels of land within city limits – almost a decade of development opportunities (80,000 single family homes), even given inflation/labour shortage etc. Clareview is booming! The U of A farm is going to house thousands. St. Albert is growing too (it is a myth that growth is only happening in the South West). Clr Salvador has created a really cool map that shows the red lines of neighbourhoods approved and where there is still room.
Some opponents are lying and trying to spin taxpayer protections as a moratorium on growth. This is not the case. Edmonton is still booming, leading Alberta with 69% housing permits, and rapidly accelerating in Infill. Since the new Zoning Bylaw was passed Jan 1 2024, there have been hundreds and hundreds of new units of infill applications. The new zoning easily doubles the amount of potential additional homes available inside the Henday.
Services Impacts: It is estimated that the area south of 41st ave will need new pools, fire halls, libraries, rec centers, and much more. There is a capital and operational cost to consider. Sprawl could also add thousands of kilometers of roads to our already pothole-potched aging infrastructure, mountains of grass to be mowed, and could mean dramatic service reductions to the core. All Edmonton residents deserve excellent services, but is it fair to expect parity of services immediately when you choose to live farther away?
Edmonton already has an Infrastructure deficit of $4.7 Billion over the next ten years- an annual cost of $470 million, annually. We can’t take care of what we have – remember how Scona pool closed? We need to pay and support what we have and we are not.
Where should our priority growth areas be? Every time a city subsidizes sprawl, it takes labour and capital away from building in and up like suburban shopping centres, malls, derelict and problem properties. Look at all those problem properties, pits in the quarters or downtown and ask yourself: should we be incentivizing development on these serviced sites or digging up brand new farmland?
Ask yourself: How much more per year, every year are you willing to pay so someone can afford a brand-new home toward the airport? $250? $500 Many consumers want the biggest and best they can afford at the best price – but they can’t pay the true cost without your taxes subsidizing their choice. Level the playing field and help us all buy what we can actually afford. They are artificially subsidized by everyone else. The Infrastructure Canada Bank has pegged costs at $100,000 per home. Someone has to pay: the developer? The home buyer? You? Your property taxes? Your provincial/federal income taxes?
On our municipal financial balance sheet, growht is not always good. Developers are threatening that people will move elsewhere. But the truth is that these homes are liabilities, not assets. More residential would also provide a financial loss to Devon, Beaumont, or Leduc. Because Edmonton is funded by property tax, not sales tax, the greater risk is that sprawl-driven tax increases here, driving away our tax base of commercial and industrial.
In the last ten years developers have sold almost ~$11 Billion in homes in new suburban neighbourhoods in Edmonton. Even at a conservative 10% profit margin, that is over a Billion in profits. However, they insist that they will not pay, and any attempt at cost-recovery, they will pass it onto the homeowner.
As former Mayor Don Iveson said in 2009, In Edmonton, the way we grow is the way we sprawl. As mayor Nenshi warned us, Calgary City Hall was captured by the big developer donors of the, “The Sprawl Cabal”. These patterns have been happening for decades and will not stop until cities finally go broke (Detroit) or enough citizens rise up and demand: STOP.
Michael Janzhttps://www.michaeljanz.ca/
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