Challenging Some Urban and Suburban Myths

Let's continue to call out leaders out on their divisiveness politicking, but in such as a fashion that we're not making disparaging comments towards each other in the process.

By Viv Saunders
Published May 17, 2016

This article has been updated.

Over the course of the last few weeks, there have been some heated discussions on Area Rating, light rail transit (LRT) and the Waterdown By-pass. I wasn't paying attention during the great stadium debate so I don't know if this is par for the course in Hamilton, but I'm finding quite a bit of the information that is being circulate isn't accurate, is divisive and is creating quite a bit of angst amongst the City of Hamilton residents.

We. Are. One. City. Let's dispense with some urban/surburan myths and move forward in the best interests of all our citizens.

We're all unique and we all contribute to the overall economic and social well-being of this great city. Together we could be much more productive focusing on growing our city for the betterment of all by becoming better informed to hopefully realize the divisive politicking going on between our leaders should not filter down to us citizens. We deserve better.

In no particular order:

Myth: The Waterdown By-pass is 100% paid for by Waterdown residents and/or the whole cost is 100% paid for by the Hamilton taxpayers.

My preference would be that we refer to this as the East-West Corridor in Ward 15 of the City of Hamilton. Regardless, though, the truth is somewhere in between.

The funding of this by-pass primarily comes from the Development Charges (DC) paid for by developers. DC reserves can only be used to fund "growth" projects, hence it is easier and sometimes quicker for our Councillors to make decisions on spending DC funds knowing those funds have restrictions and that a large percent of the initial capital cost isn't downloaded via our municipal taxes.

In this case, of the $42 million in capital cost, $1.3 million is paid via the taxpayer with the balance paid by developers. Having said that, however, to date an additional $807,000 has been charged to the taxpayer for operating costs and an additional $170,000 annually will be charged in future operating costs.

It is disingenuous ignore the concerns of the city-wide taxpayers when we are paying toward all capital projects and bear the responsibility for all future costs and/or to over-inflate the initial costs to the city-wide taxpayers.

Myth: The pre-amalgamated outer areas pay only 30% of the full rate for Transit and/or Hamilton-urban subsidizes the outer city.

This is simply not accurate. The various area-rated areas each pay individual rates. In the past, RTH has published tables to support the need to remove Area Rating, but this information has been spun by some into misleading the facts during discussions.

2015 Residential Tax Rates for Transit by Area
Area Transit Rate % of Full Rate
Hamilton - Urban 0.089% 100.00%
Ancaster - Urban 0.027% 30.34%
Ancaster - Urban with Rural Fire 0.027% 30.34%
Dundas - Urban 0.024% 26.97%
Flamborough - Urban 0.013% 14.61%
Glanbrook - Urban 0.486% 0.045% 50.56%
Glanbrook - Urban with Rural Fire 0.045% 50.56%
Stoney Creek - Urban 0.027% 30.34%
Stoney Creek - Urban with Rural Fire 0.027% 30.34%
Ancaster - Rural 0.000% 0.00%
Ancaster - Rural with Urban Fire 0.000% 0.00%
Dundas - Rural 0.000% 0.00%
Dundas - Rural with Urban Fire 0.000% 0.00%
Flamborough - Rural 0.000% 0.00%
Glanbrook - Rural 0.000% 0.00%
Glanbrook - Rural with Urban Fire 0.000% 0.00%
Stoney Creek - Rural 0.000% 0.00%
Source: City of Hamilton - Residential General and Area Specific Rates By Community

I challenge the use of the Hamilton - Urban rate being the "Full Rate". Simply put, if 0.089 is the full rate, then when we add up the other areas, they total 1.5x more than the "full" rate. The fact is, the pre-amalgamated areas pay 100% of the actual full costs of transit services in those areas.

To move forward and make informed decisions, discussions on spreading the total costs evenly throughout the whole urban area (so every resident can choose to take public transit in order to work, live or play) would also need to take into consideration enhancing those services in the outer city and how those millions of dollars in increased costs would affect the overall transit rates.

Myth: The central city taxpayers subsidize the outer city and/or the outer city doesn't pay their fair share.

Our revenue streams are complex and include more than just property taxes. However, property taxes are the largest component. Sometimes as well, our leaders spin this to their advantage when ward vs. ward is pitted against each other.

Good use of our urban land to generate municipal tax revenue is critical to our economic well-being. The areas where we're getting the highest rate per square kilometre is as follows.

Cautionary note here, though: this is just one side of the equation (the revenue stream) and as taxpayers we haven't been provided with the true costs of city-wide services and/or projects and who gets charged for what. There's a whole other world going on behind the scenes on sharing costs.

2015 Municipal Tax Total Net of Special Infrastructure Levy
Ward 2015 Municipal Tax 2015 Municipal Tax Less SI Levy Urban Area (km2) Net Tax/km2
Note: Wards in italics do not receive the Area Rating Capital Levy "slush fund"
Ward 2 $54,803,593 53,124,984 6.14 $8,652,278
Ward 7 $84,257,592 82,578,983 17.47 $4,726,902
Ward 11 $70,082,507 N/A 16.69* $4,199,072
Ward 15 $50,739,886 N/A 11.59 $4,110,398
Ward 8 $65,719,044 64,040,435 17.39 $3,682,601
Ward 10 $40,261,896 N/A 12.36 $3,257,435
Ward 6 $53,327,090 51,648,481 15.99 $3,230,049
Ward 1 $50,264,126 48,585,517 15.33 $3,169,310
Ward 13 $39,272,875 N/A 12.16 $3,108,385
Ward 4 $52,674,879 50,996,270 16.59 $3,073,916
Ward 3 $42,743,872 41,065,263 14.43 $2,845,826
Ward 12 $74,942,281 N/A 26.36 $2,843,030
Ward 5 $56,765,791 55,087,182 20.78 $2,650,971
Ward 9 $38,138,123 N/A 15.07 $2,386,526
Ward 14 $23,624,735 N/A 0 N/A
Total $797,618,290 784,189,421 230.74 $3,398,585

A personal observation after completing this exercise is that significant gains and contributions are made by the residents of Wards 11 and 15. Sometimes I think this gets overlooked in discussions.

Moving forward, productive discussions could be focused more on how we grow the tax base for those areas that need help, either directly or indirectly, in order to increase our city-wide average. For example, extending LRT to Eastgate to boost residential and commercial development in Wards 5 and 9.

Another myth is the statement made in recent LRT discussions that the A-line should be looked at before the B-line and a better business case might be made once the tax-supported employers are removed from the core.

In light of that statement, it is worth pointing out the 2015 Municipal Taxes shown above are inclusive of residential, commercial and industrial and the Urban Area is inclusive of those employers who are tax-supported.

My hope is that we continue to call out leaders out on their divisiveness politicking, but that we do it in such as a fashion that we're not making disparaging comments towards each other in the process.

Update: Based on some of the comments, I guess I should have also included a column showing the density within each of our city boundaries.

2015 Municipal Tax Total Net of Special Infrastructure Levy
Ward 2015 Municipal Tax 2015 Municipal Tax Less SI Levy Urban Area (km2) 2011 Density (ppl/km2) Net Tax/km2
Note: Wards in italics do not receive the Area Rating Capital Levy "slush fund"
Ward 2 $54,803,593 53,124,984 6.14 6199 $8,652,278
Ward 7 $84,257,592 82,578,983 17.47 3560 $4,726,902
Ward 11 $70,082,507 N/A 16.69* 1272 $4,199,072
Ward 15 $50,739,886 N/A 11.59 2093 $4,110,398
Ward 8 $65,719,044 64,040,435 17.39 2807 $3,682,601
Ward 10 $40,261,896 N/A 12.36 2223 $3,257,435
Ward 6 $53,327,090 51,648,481 15.99 2455 $3,230,049
Ward 1 $50,264,126 48,585,517 15.33 1948 $3,169,310
Ward 13 $39,272,875 N/A 12.16 2048 $3,108,385
Ward 4 $52,674,879 50,996,270 16.59 2190 $3,073,916
Ward 3 $42,743,872 41,065,263 14.43 2709 $2,845,826
Ward 12 $74,942,281 N/A 26.36 1332 $2,843,030
Ward 5 $56,765,791 55,087,182 20.78 1799 $2,650,971
Ward 9 $38,138,123 N/A 15.07 1790 $2,386,526
Ward 14 $23,624,735 N/A 0 n/a N/A
Total $797,618,290 784,189,421 230.74 2128 $3,398,585

There is no disputing the fact that sprawl is costly and unsustainable. However, the use of suburban vs. urban (and each of own interpretations of where the suburban lines are drawn) is divisive.

The high costs come from low density, and not all of our areas are low density. Surprisingly, only five of our areas are high density, if we use the 93 people/acre model provided from the link in one of the comments. Overall, though, we as a city combined have a medium-high built form within our urban boundary, based on 2011 density statistics. We are likely over once we factor in developments completed since 2011.

Again though, this is just one facet of the overall picture. It is nearly impossible to factor in actual costs of services, nor can we state that a "surburban ward 12" resident is being subsidized by a "urban ward 8" when both of them might live right next door to each. These are just lines. They are not representative of the costs of services.

Viv Saunders has loved living in six different wards of Hamilton. She is a Chartered Life Underwriter, Certified Financial Planner and Chartered Financial Consultant, wife, mother of two and has recently been utilizing her life experiences to become an informed and actively engaged citizen.


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By KevinLove (registered) | Posted May 17, 2016 at 07:56:13

An excellent article! Vic very correctly put up a table of the revenues of urban vs. suburban. To complete that picture, we need to look at the costs to the city of providing services to suburban vs. urban households.

In Halifax, Nova Scotia, it was found that the City spent [twice as much money on suburban households].(

I strongly doubt that it is much different in Hamilton. So suburban areas not only contribute less revenue, but have over twice as much spending costs.

Perhaps the taxes should be raised on suburban households to cover these costs.

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By Viv (anonymous) | Posted May 17, 2016 at 15:17:57 in reply to Comment 118652

I'm going to have to respectfully disagree Kevin. I believe our costs would differ substantially from that of Halifax. We have 'burbs that are just as, or in some cases more dense (LOL!) than areas we view as 'core-urban' Some costs are also directly related to the linear distance of an area to say, the water treatment plant for example. To actually work out the costs of each individual tax funded service would serve no purpose. Plus, a tax model based on deliver costs of service is the complete opposite of the argument to support changing our Transit Area Rating; which I'm in favour of.

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By kevlahan (registered) | Posted May 18, 2016 at 15:19:32 in reply to Comment 118672

Did you see Pamela Blais's presentation last year? She's done a lot of analysis in Ontario and the difference is really one of density, not downtown versus non-downtown. Many of Hamilton's newer sub-divisions are, however, much less dense that the older ones.

And the density is not just to do with housing density, but the density of office parks, shopping areas and recreation facilities.

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By mdrejhon (registered) - website | Posted May 17, 2016 at 09:14:07 in reply to Comment 118652

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By KevinLove (registered) | Posted May 17, 2016 at 10:08:11 in reply to Comment 118658

Thank you! It should have embedded, but I have timed out of being able to edit it.

Yes, suburban households get massive subsidies from both municipal and provincial taxpayers. Suppose those people had to pay their own way and pick up the real cost of their behaviour, instead of reaching into everyone else's wallet? Then I predict that there would be a lot less of this behaviour.

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By ergopepsi (registered) | Posted May 17, 2016 at 10:45:46 in reply to Comment 118659

Let the divisiveness begin!

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By Problem (anonymous) | Posted May 17, 2016 at 10:24:46

"The fact is, the pre-amalgamated areas pay 100% of the actual full costs of transit services in those areas."

And in order to increase the service in those areas they would have to fund 100% of the increase. Isn't that the problem with the current system of area rating?

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By kevlahan (registered) | Posted May 17, 2016 at 10:32:44 in reply to Comment 118661

But is the "transit service in those areas" the relevant measure of the cost of providing bus service to those residents?

It would be if residents never took bus trips that went outside their wards, but the vast majority of bus user trips cross ward boundaries: that's precisely the advantage of having a bus system. I can take the bus from Dundas to McMaster, then take a bus downtown and then transfer to a bus going to Limeridge. The level of bus service in Dundas itself is only a small part of the overall transit service I have access to.

To properly cost transit service on a ward by ward basis would mean starting with the service level within the ward and then accounting for the cost of the portion of trips that start in the ward but end outside it (and vice versa).

That would be ridiculously complex, which is why it makes sense to have a uniform rate for all urban areas. It would also make it easier to expand service to under-served areas because they wouldn't need to cover the whole cost locally.

That's why no other municipality charges different transit tax rates to different urban areas. Hamilton is strangely unique in this respect.

Comment edited by kevlahan on 2016-05-17 10:54:58

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By Viv (anonymous) | Posted May 17, 2016 at 15:04:45 in reply to Comment 118662

Agree! I think however Ottawa has 3 models - rural and 2 urban rates based on distance/service standards. Maybe that should be our first phase?

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By Haveacow (registered) | Posted May 18, 2016 at 13:04:00 in reply to Comment 118671

No Ottawa just has 2 transit service municipal tax levels for the transit levy on your tax bill, Urban/Suburban and Rural. If you live outside the Transit Envelope (transit service area) you pay rural rates. If you live inside the transit service area you pay the higher rate. What @Viv is probably thinking about is OC Transpo's route structure.

Buses that do serve rural areas are generally Express Routes (usually colored green on our older transit maps) that cost more to ride because of the distance involved. Then regular routes (black colored on the older maps) and peak hour only routes (colored red on our older maps). The rush hour only and regular routes for the most part service only inside the transit service area. The Express routes also only operate during peak periods.

Just to make things really complicated OC Transpo then went ahead and changed all the colors of the routes on the dam transit maps 2 years ago, after having the same system for 3 decades. This was done so you could not only differentiate the different types of routes but also to visually separate multiple routes travelled on the same street or corridor. They did this with different shades or other colors of a similar hue. It unfortunately made the maps more difficult to read.

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By Suburbanite (anonymous) | Posted May 18, 2016 at 16:25:12 in reply to Comment 118685

Ottawa seems to have 3 different levies: Commuter, Full Service and Paratranspo under the Transit levies. Commuter presumably is rural which has some form of public transit going to those areas hence the levy. Is the paratranspo the levy charged if one member of the household qualifies no matter whether the home is urban or rural? It's an interesting concept if that is the case since we're struggling locally with escalating costs in that area

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By Keith (anonymous) | Posted May 17, 2016 at 12:50:45

I think it's important to recognize the way that the "cost" of bus service within the former suburbs is calculated is flawed. Right now, the cost is based on a per kilometer basis. How is this cost calculated

It takes the total operating cost of the ENTIRE HSR system and subtracts the total revenue collected of the ENTIRE system. It then divides it by the total kilometers travelled (both revenue and non-revenue kilometers), or put in a formula

Cost per km = [Total operating costs (full system) - Total revenue collect (full system)] / Total kilometers traveled (full system, revenue and non-revenue)

The problem with this is that the most successful routes (the Main/King/Queenston corridor) that turn a profit or nearly break even, are subsidizing the suburban routes within the current cost structure. The actual cost of providing service in the suburban areas is much higher than what the homeowners are actually paying but the urban subsidy covers the difference. Prior to amalgamation, all the costs were kept separately but now it all pools into one account. It's part of the reason why the urban-suburban area rating structure is such a farce.

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By KevinLove (registered) | Posted May 17, 2016 at 15:04:11 in reply to Comment 118666

That is a bizarre way of doing things. A rational way would be to calculate:

  1. The per km cost of providing service. This is largely independent of passenger load. An empty bus costs about the same to run as a full one.

  2. The average passenger-km revenue. Total fare revenue divided by total passenger-kms transported.

That provides a good basis to predict the cost of service. Revenue depends upon how many people transported, but allows "what-if" analysis to be done. In other words, if a new service runs so many km with an average of X people on board, we can calculate the revenue.

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By Viv (anonymous) | Posted May 17, 2016 at 15:00:26

I didn't realize it was total costs and total revenue, but that makes partial sense considering for example, the Bline at one end starts in Stoney Creek and therefore Wards 9,10 and 11 contribute to that profitable route. What doesn't make sense is charging out by total kilometre for some Wards of Hamilton while others are not being charged for kilometres travelled within their wards. Adding to the unfairness is the fact that neighbours are charged differently which again creates diviseness. It is definitely an antiquated formula that is long overdue for a overhaul.

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