The City’s Sustainable Development Department released a working draft of the Growth Coordination Strategy today.
I have not had time to digest the whole thing but the most interesting parts relate to the estimated costs of infrastructure that the City would be expected to provide in new Areas being proposed for growth (specifically in the Green areas on the map to the right).
The thing that caught my attention (and the Edmonton Journal’s) was the $1.2 Billion (with a B) projected bill (in today’s dollars) for City infrastructure that would accompany the growth in these areas. [CLARIFICATION, May 10: $1.2 Billion appears twice in the report, once is the cost for these new areas, the other and additional $1.2 Billion is the unfunded obligations for approvals for 44 neighbourhoods that are under development today in Areas previously approved, e.g Windermere Area Structure Plan in 2004, Heritage Valley in 2001, Ellerslie in 1999, Lewis Farms 1988 and so on.]
An important bit of context: a lot of people think that the City pays for the roads, sewers, water lines, etc when a new area is developed; not so. Developers front end many of those costs and pass them through to the homebuyer. That’s a big part of the cost of any lot – the value of ‘servicing’ it with utilities, local roads, sidewalks, etc. Developers/homebuyers also pay for part of the main roads (we call them ‘arterial’ roads) adjacent to a neighbourhood. Lanes 1&2 are charged to the developer on one side, lanes 3&4 are charged to the other. Lanes 5&6, if needed, fall to the City to fund. Everything thing else downstream (road widening, interchanges, etc) fall to the City.
Developers also provide land for parks, but the City has to fund their development. The City also has to buy land for recreation centres, fire & police stations, libraries and then build them. These are the type of costs that add up to the $1.2 Billion.
The City does get infrastructure grants from the province and sometimes from Ottawa that can cover some of this growth cost, but those grants are also needed to cover the cost of renewing or replacing existing infrastructure (and we are not yet adequately funding renewal in my view).
The analysis is confined to the up-front infrastructure, which is a start, but we also need to get to a full model including the operating costs and lifecycle (repair/replacement) costs of this model of growth. That’s coming, according to the report (p. 33):
Although not included in the analysis at this time, operating and maintenance costs in suburban areas represents a significant operational expenditure to the City. Also a large component of capital spending, rehabilitation and replacement of infrastructure is not included in the analysis presented either. Administration is working towards the inclusion of these expenses into future versions of the Growth Coordination Strategy, but at this time the methodology for the gathering and synthesis of the data required for this is not developed sufficiently.
I’m concerned we may not have this full picture before the next Area Structure Plans (for the North East and South West green patches) come up for debate this fall.
[UPDATED: Forgot to mention, we did get some idea of this in a high-level report last year called "Costs and Revenues for New Areas" which showed that predominantly residential low-density areas do not pay for themselves over a 30-year timeline.]
We need this full costing before Council can responsibly approve planning for these new areas of growth. I think it will help raise the pertinent policy questions, which include, but are not limited to:
- Should city-wide taxes increase to build this infrastructure because we all benefit from it directly or indirectly, or do we figure out how to match benefits to charges so growth pays for growth, or do we put off building a lot of the needed infrastructure as Edmonton has sometimes done?
- Should we continue to subsidize low-density residential neighbourhoods (as we do today, both existing and new) with higher taxes on commercial and industrial property and grants?
- Can we design moderately denser neighbourhoods that make more efficient use of infrastructure and generate more revenue per acre and can financially sustain themselves?
- And, regionally, what competitive advantages or subsidies are allowing our neighbours to accommodate growth at lower costs and does some price-signal equity need to be introduced with regional cost sharing for regional projects?