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Posted Oct 4, 2010, 2:23 PM
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Fake News
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Join Date: Jul 2008
Location: Calgary
Posts: 26,035
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An interesting article from FFWD this week.
Quote:
A $1.5-billion reason to talk about subsidizing sprawl
Developers want taxpayers to foot the bill
Published September 30, 2010 by Trevor Scott Howell in News
Calgary taxpayers are doling out $24.5 million for the controversial Peace Bridge. The proposed airport tunnel could cost upwards of $500 million. Mayoralty election candidates must divulge campaign donors.
Those issues are largely dominating municipal election campaigns, but are they the most pressing matters facing this city?
Consider this: For the past decade Calgarians, under an agreement with residential developers, have been subsidizing water and sewer infrastructure for new suburbs. That bill to taxpayers now totals $1.5 billion — half of the city’s $3-billion debt.
That’s enough to buy three top-of-the-line airport tunnels, blanket the Bow River with 60 Spanish-designed bridges or finance a $1-million mayoral campaign 1,500 times over. Without a new arrangement between the city and developers, that bill will grow to $2.5 billion by 2018.
Currently, the city and the development industry are haggling over a new five-year deal — a thorny issue the newly elected city council will have to deal with — and a new report called Moving Beyond Now suggests scrapping subsidies for developers. Yet, mayoral hopefuls barely touched the issue at a September 28 forum organized by the development industry.
Playing it safe, the eight candidates at the forum appealed to the crowd with repeated promises of streamlining the development process, levelling the playing field and moving forward with developers.
But the issue of who should pay for new communities’ infrastructure has largely been flying under the radar. And that troubles retiring Ald. Joe Ceci, who teamed up with former provincial water and transportation planner Bob Morrison to examine the cost of subsidizing sprawl in their five-part report, Moving Beyond Now.
“It has enormous financial impacts on the city,” says Ceci. “I’m surprised more debate and discussion on this is not occurring.”
This will be one of its most pressing issues Calgary’s new council faces — arguably more important than the looming $60-million revenue shortfall. The outcome will ultimately determine if the city can afford to improve existing communities, says Morrison.
“If you spend the money in the established communities you’ll deal with fixing up existing roads so they can handle the local traffic and whatever traffic they’re getting from the outside rather than building more expressways that simply dump more traffic into established communities,” he says.
The only solution, as Morrison sees it, is to end developer subsidies and institute a true free market, in which the invisible hand would naturally correct the problem.
“Right now the market is distorted in favour of sprawl,” he says. “If you get rid of the sprawl subsidy it is actually a market-based solution to growth management.”
Using city data, including projected growth, land requirements and costs, Morrison calculates subsidizing sprawl will cost taxpayers an annual $47 million for several years. And if Calgary Plan-It, the city’s long-term guide for development, is clawed back that figure could almost double to $88 million a year.
BUSINESS AS USUAL?
It’s a tough sell for the industry to swallow. The executive director of the Urban Development Institute says water and sewer are a public utility, therefore the “entire population base” should pay for it.
“For a utility such as that I think that is the most equitable way to deal with it,” says Michael Flynn. “The city has said it can’t afford it. We’re trying to get a handle on why they could afford it before, but now they can’t.”
The current agreement, in which the city pays for the entire cost of sewer and water infrastructure for new developments, is working well for the industry, says Flynn.
“We felt that it was a fair and equitable agreement last time around, so we’re hoping we can come to a similar agreement this time around,” he says. “It’s not realistic to expect it to be identical, but similar.”
Earlier this year, retiring Mayor Dave Bronconnier talked about the city’s finances in almost apocalyptic terms. He said re-signing the existing deal with developers would “bankrupt” the city’s utility; taxpayers would see “double-digit increases from now over the next decade — every year double-digits” to their water bills.
In July, city council moved one step closer to axing subsidies for urban sprawl when it approved the Financing Municipal Infrastructure report, laying out the ground rules for negotiations with developers.
Throwing a wrench into the negotiations was a last-minute amendment to call the report “interim,” introduced by Ald. Diane Colley-Urquhart at the behest of developer and homebuilder lobby groups.
“It’s one of those weasel words that means different things to different people,” says Ceci. “From the development side I think they’d say it’s not an approved council direction so there’s still work that can be done to ameliorate the potential impact of the decision on the development industry.”
In fact, that’s exactly what it means, says Ald. Ric McIver, the polls’ frontrunner in the mayoral race. Despite months of work and meetings, the process felt rushed and all parties agreed more talk need to be done, he says. “Sometimes people try to finish up business before an election,” says McIver. “But as we all know, sometimes rushed jobs aren’t the best jobs.”
Axing subsidies for developers and using a free-market model is a possibility, says McIver. “The industry has always agreed with the city, that the party that benefits from new development should pay for the cost of the new development and that’s a principle that I believe in,” he says.
That principle could cost each homebuyer about $10,000, says the development industry, warning any additional cost to the industry will trickle down to consumers.
ENORMOUS DEBT
Currently, each Calgarian owes $768 of the city’s debt. That figure will pass the $1,000-mark later this year — exceeding the province’s debt-limit regulation and severely handicapping the city’s ability to borrow and catch up on much-needed infrastructure.
And according to recent polls the economy, transportation and infrastructure top the list of Calgarians’ concerns — all of which tie into the sprawl issue and who is going to pay for it, says Ceci.
“The solutions are more compact cities, density in the proper places,” he says. “It’s a focus on alternative modes of transportation like public transit, good cycling and walking infrastructure. All of those would drive less of a reliance on continuing to grow out.”
On average, each existing community is shelling out $120,000 to $240,000 annually to subsidize subdivisions, he says. And that money could be used to fund affordable housing, recreational facilities and improving transit, he adds.
While the industry touts the mantra of: “If you’re not growing you’re dying” it is, in fact, “fiscally swamping” the city, says Ceci. “I think that it would benefit Calgarians if there were broader discussions.”
The lack of broader discussion may, in part, be that controversial bridges and tunnels are simply a much easier sell during an election. “This is already a very complicated election,” says Lori Williams, a political scientist at Mount Royal University.
The image of the development industry as the backroom boogeyman is also losing its hold, says Williams. “The developers are seen publicly more and more as innovators and contributors to a vibrant, almost visionary, city,” she says.
Others aren’t entirely sold on this new image developers are cultivating or their foray into the election with their industry-focused website votecalgary.ca.
“I find it incredibly offensive,” says Grant Neufeld, activist and operator of the non-partisan website calgarydemocracy.ca. “All voices need to be at the table, but they are presenting themselves as the go-to place for election information — and that is simply not the case.”
Mayoral and aldermanic candidates have to fill out a survey in order to have their platforms presented on the developer website, says Neufeld. Without developer support, candidates know their odds of winning are slim, he adds.
“It’s not in their political interest to in any way speak out against the developers,” says Neufeld. “It would take a pretty intensive campaign with some serious alternative financial support to stand a chance of winning and still be able to speak out against the developers.”
Mayoral candidate Naheed Nenshi says everything he’s read indicates suburban development hasn’t been paying for itself, but yelling and screaming at each other isn’t the solution. “Let’s use our smartest people from the city and the industry and come up with the right number,” he says. “It ain’t that complicated.”
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http://www.ffwdweekly.com/article/news-v...s-to-talk-about-subsidizing-sprawl-6361/
P.S. seems like some of our forumers might have already read this based on the comments section.
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