ELISE STOLTE,
Edmonton cannot keep building new homes to subsidize low density neighbourhoods
It’s easy for people living in mature neighbourhoods to feel holier-than-thou in this city budget debate.
Mayor Don Iveson wants the new suburbs to pay their own way. Of course. Yes. Cheer if you live in an established area and wonder why cracked streets and sidewalks aren’t fixed quicker.
But that’s not going to solve Edmonton’s budget woes.
Many planning experts talk about city budgets being like a Ponzi scheme.
To borrow an analogy from University of Alberta planner Robert Summers, cities are like a condo board in a new building that doesn’t charge enough in condo fees to cover long-term maintenance. Instead, when the boiler goes and the roof needs to be fixed, the board builds a new building and uses its fees to cover repairs in the first.
This works as long as the board can keep building and selling new units. But if it stops, homeowners in those buildings have two choices: jack up the fees or see their condo community crumble.
Already, Edmonton officials say the city can’t afford to build all of the $19 billion in infrastructure they believe it will need in the next 10 years.
They estimate only $15 billion is available.
And as the city ages, the bill grows because it generally costs more to demolish and rebuild than it costs to build in the first place.
So we can feel smug if we live in mature neighbourhoods. But we shouldn’t. Every low-density neighbourhood was built with a subsidy. No one is paying their way.
On Thursday, city officials released their proposed fouryear capital budget. Key growth projects such as the Lewis Farms Recreation Centre and Terwillegar Drive expressway will only be funded if council agrees to take on more debt, which raises taxes.
Those projects alone would mean a 1.35 per cent tax increase to service the debt.
Money is tight. As chief financial officer Todd Burge said Thursday, after the Yellowhead Trail upgrades, LRT expansion and $2 billion to maintain existing infrastructure, “there’s very little left for new things.”
But Edmonton’s problem is not just the new areas. It’s that every car-oriented, low-density suburb is really expensive and the City of Edmonton now covers 700 square kilometres with just 980,000 people. That’s one quarter the density of Vancouver.
City officials calculate the new growth areas will cost $1.4 billion more to service and repair than they will generate in revenue for the city over the next 50 years. Developers build the roads and parks the first time — then the city is on the hook.
So we build more neighbourhoods. In the first years, they add to the city budget. Then they also need subsidy. So who is subsidizing who?
Business. Edmonton’s business community has always subsidized residential development, and over the past several years, its property taxes have increased faster than taxes on residential property. This year, a business paid 2.8 times as much for $100,000-worth of commercial property compared to residential property.
That’s a big reason Edmonton is hearing such a determined lobby effort from the Edmonton Chamber of Commerce and Property Edmonton this year.
A recent city report found Edmonton taxes are in line with similar-sized Canadian cities. But that’s cold comfort if a business is in trouble.
There is a solution.
To go back to the condo analogy, those condo buildings are overbuilt.
They have too many amenities for the number of people paying condo fees — too many fancy pools and on-site concierge staff and too few people footing the bill.
In the real world, Edmonton can pay for the infrastructure and services it needs, but established neighbourhoods will need to welcome more residents.
That means infill, redeveloping commercial areas to include condos and apartments, and having a special focus on density around transit.
Several council members have said they’re keeping that issue front and centre this fall.
“Planning impacts the budget,” says Coun. Michael Walters, saying they need to draw that line more clearly and fund projects that support this shift.
It’s a serious issue.
In the recent decade, Edmonton’s population boomed. It ramped up infrastructure spending and, since 2010, has been spending more than a $1 billion a year on capital projects with tax increases and provincial grants.
That’s the blessing of an oildriven economy. But it doesn’t take a crystal ball to predict the heyday is over.
Infill can be done well. It can create neighbourhoods that are both sustainable and a joy to live in.
Let’s focus on that and put those smug feelings aside.