Exposing the Hidden Subsidies for Sprawl

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Exposing the Hidden Subsidies for Sprawl

In her book and upcoming lecture, Toronto-based urban planner Pamela Blais argues that hidden subsidies promote sprawl and penalize the inner city.

By Don McLean
Published October 25, 2011

Hamilton exempts downtown growth from development charges. This is presented as a progressive measure that supports smart growth over sprawl, but the facts suggest otherwise.

Not only is this a taxpayer-funded subsidy, it is also part of a pattern of subsidizing greenfield sprawl and penalizing the most helpful forms of development.

Dozens of examples of such perverse public policies are detailed by Dr Pamela Blais in her 2010 book Perverse Cities: Hidden Subsidies, Wonky Policy and Urban Sprawl.

That's also the title of the November 7 Spirit of Red Hill Valley lecture that Dr Blais will deliver at First Unitarian Church on Dundurn South starting at 7:30 pm.

Development Charges

The downtown example works like this: Hamilton imposes a one-size-fits-all development charge (DC) on new housing and businesses. Even though the vast majority of the city's actual growth costs are associated with greenfield development, a new house on a vacant 40 foot lot on Hughson Street is billed exactly the same development fee as a mcmansion on half an acre in Ancaster.

That means the downtown house subsidizes the mcmansion. To counter that, the city waives the fees for the downtown house - but under the current system, those lost fees can't be recovered, so the taxpayers eat them.

According to Blais, policies like this and other mis-pricing explains why sprawl development continues unabated despite the 'smart growth' objectives formally endorsed by cities like Hamilton.

The geographic aspect of this particular mis-pricing is simple, and permitted by provincial legislation on development charges. For the purposes of determining growth charges, policy should divide the city into geographic segments and assign the actual growth costs in each segment to the new development occurring there.

The City of Ottawa has started down this path, creating two segments - infill and greenfield - and resulting in development charges that are 80 percent higher for the greenfields.

But this is just one change Blais recommends.

Lot Size and Building Form

She notes that small lots subsidize large lots. In Hamilton (and most municipalities) every new single family house faces the same development fees, no matter how much space it occupies.

"But the cost of hard services - water, sewer, roads, transit - is more directly related to the size of the lot (i.e. the density)," she notes.

"When one considers the cumulative impact of larger lots, multiplied over hundreds of thousands of new units as cities grow, the implications are clear for regional capital costs - more kilometres of regional roads, water and sewer pipes that would otherwise be needed."

A similar argument applies to variations between detached houses, townhouses and apartments. There is some variation, but it still strongly favours sprawl. Development charges in Hamilton are just under $27,000 for a single, $19,300 for a townhouse, and $16,600 for an apartment of two or more bedrooms.

"A one-hundred-unit apartment building will account for much lower demand for linear infrastructure on a per unit basis than will one hundred single detached units," argues Blais.

The mis-pricing gets even worse for commercial and industrial development - even before the huge discounts offered by Hamilton, especially for the latter that meant the new wiener factory got a $3.5 million subsidy from lower DCs.

Development charges are calculated on the floor area of the building so "denser development is discouraged", says Blais, because the more you build, the more you are charged.

"Charging according to a per-square-metre-of-floor-area-built basis is a distinct disincentive to using land more intensively and efficiently."

Parking and Traffic

This is exacerbated by a zero DC for parking lots, which also has major impacts on commercial developments. The latter are also treated in a one-size-fits-all manner, paying no attention, for example, to the amount of traffic different uses generate.

Blais cites figures from the Institute of Transportation Engineers who estimate PM peak hour traffic generated by 1000 square feet of floorspace at 1-3 vehicle trips for an office, 3-14 for a shopping centre and 26 for a fast food restaurant.

"By ignoring these significant variations in trip generation, the DC creates a situation in which uses that generate relatively low numbers of trips subsidize those that generate high numbers of trips," writes Blais.

And of course, this is also true of the subsidies for sprawl development - despite earnest declarations from planners in support of 'transit-oriented' development.

Smart Growth

Blais made her mark in municipal planning in the mid-1990s with a detailed report [PDF] for the Golden Commission documenting sprawl development costs as far higher than denser growth - a still controversial idea at that time.

That helped create the 'smart growth' movement and multiple new policies that were supposed to make it happen. But it isn't happening, and it won't if the hidden subsidies aren't eliminated.

Blais has been okayed to speak to the city's public works committee on the morning of November 7, and councillor Brian McHattie is pulling together an informal afternoon gathering with senior staff.

Her free evening public talk - the Seventh Annual Spirit of Red Hill Valley Lecture - will take place at 7:30 pm in First Unitarian Church at 170 Dundurn Street South.

Don McLean is chair of Friends of Red Hill Valley and coordinator of Citizens at City Hall, a volunteer group that has monitored city affairs since 2004 and distributes free news articles via email. The group can be contacted at info@hamiltoncatch.org.

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By Undustrial (registered) - website | Posted October 25, 2011 at 14:33:06

This lecture series always brings in such great speakers. Kudos once again.

This reminds me in many ways from the old theories of Henry George, who proposed taxes based on land rather than building "values" as a means of encouraging the most efficient uses of land possible.

http://en.wikipedia.org/wiki/Henry_Georg...

http://www.econlib.org/library/YPDBooks/...

Comment edited by Undustrial on 2011-10-25 14:33:37

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