Because the old city is effectively subsidizing new suburban development, we end up promoting a form of growth that has a higher cost to the city as compared to inner city development and a significant negative impact on the environment.
By Gregory Ciupka
Published December 01, 2015
Dr. Pamela Blais, urban planner and author of the book Perverse Cities, addressed a standing room only crowd at Mills Hardware last week, explaining "wonky" pricing at an event titled, Shift: Changing Direction in City Building and hosted by the Useful Knowledge Society.
Full video recording of the event by The Public Record
According to this highly respected individual, the city calculates development and on going property taxes based on a citywide average per unit. As a result, a home in the lower city is assessed a similar level of property tax to a home built deep in a southern suburb.
According to Dr. Blais, the actual cost of providing services to the suburban home is approximately three times that of a similar home in what we might call an established downtown or inner city. This is due in part to the relative distance of the suburban home from the heart of the city and related services.
In order to support a distant new survey, many kilometres of roads and other infrastructure are required. This amounts to huge costs which are not fairly assessed on the suburban homes.
I first noticed this pricing wonkiness when we moved into a 21-unit residential condominium in the city. The building sat on a lot similar in size to lots of nearby individual homes, but the taxes assessed were about 21 times as high, since there were 21 units.
Thinking about the length of pipe needed to service a single property compared to 21 properties or making one garbage pick up instead of 21, or the length of road to reach one property instead of 21, it would seem that the cost of delivery would be significantly lower for the more densely populated structure.
But this efficiency was not reflected in the tax assessment, which is calculated based on "market value".
The result of this mis-pricing, in addition to inequitable allocation of costs, is the promotion of suburban sprawl. Because the old city is effectively subsidizing new suburban development, we end up promoting a form of growth that has a higher cost to the city as compared to inner city development and a significant negative impact on the environment.
In essence, we provide a financial reward for development that is less sustainable. This is what Dr Blais referred to as "wonky" pricing.
According to Dr. Blais, if we want to encourage better development behaviour, we need to improve the cost allocation of development charges and on going property taxes.
This would require reducing property taxes in established neighbourhoods and significantly increasing assessments on properties further from the downtown city cores (including Ancaster, Dundas, Flamborough, Stoney Creek and Hamilton).
At the same time, we need to recognize the efficiency of density. It costs less to service a multi-story building, and property tax assessments need to reflect this reality.
Is it OK to overcharge downtown city dwellers? Is it OK to overcharge apartment and townhouse developments? Do suburban and single family homeowners realize they are enjoying deep discounts on city services on the backs of their more established neighbours?
And finally, will City Council have the fortitude to do the right thing?
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