Thunder Bay Development Charge Proposal

The City of Thunder Bay is currently in a position where it is struggling to generate enough revenue and provide the services that the residents desire from it. As with many other Canadian cities; Thunder Bay is currently struggling with a significant infrastructure deficit; which compounds the backlog of projects annually. The heavy industrial industrial tax base has been reassessed to much lower levels and significant strain is being placed on the residences to make up the difference. These challenges are made worse by poor urban planning in the past which promoted urban sprawl; the de-urbanization of the core and the belief that the car/cheap gas would power society through the next 100 years. Merriam-Webster calls urban sprawl: “the spreading of urban developments (such as houses and shopping centers) on undeveloped land near a city.” The financial mistake we now call urban sprawl was covered by growing industrial and commercial taxes which allowed for residential taxes to be artificially kept low. As these have tax pillars slowly have been eroded we have seen this burden placed on residential housing to cover the cost. In conjunction with an aging and declining population the City of Thunder Bay faces a significant revenue issue; it simply does not pull in enough money in order to fully fund its costs. Projects, programs and debt are deferred to further years which increases the costs and adds to the backlog of items needing work. One area in which traditionally the residential tax base has seen growth is to allow for single detached homes to be built in the undeveloped areas as a means of bringing in additional money. Areas such as Neebing, McIntrye and Northwood (all 3 in certain instances) are a semi-rural where large numbers of city services are provided with little substance to add to the tax base. Every resident in Thunder Bay can attest to how certain areas have been built for new housing on what was once swamp, forest and bush; all natural remedies for storm protection and animal habitat. This development has been promoted because often the repair costs for the roads, sewage, etc come up at a 20-25 year period. Long after the presiding council is gone and passed onto a younger generation of resident. Unfortunately we see that this though process is actually a drain on city coffers as the farther the development is allowed to go the more costly services like fire, EMS, garbage become.

As seen in this photo there is significant cost associated with building and providing homes on the edge of our communities. The only people who get rich off of homes in the suburbs are the developers who push these developments and promote their ‘positives’. As the City of Thunder Bay looks to find ways to bring in new income I propose a development tax on the construction of new homes and buildings within the community. This development tax would not apply to additions to buildings or repairs/renovations of existing units. The City of Toronto is one example of a community that uses a blanket development tax and uses that income for programs including the Toronto Transit Commission (TTC), Public Libraries, food programs, etc. In 2013, Toronto considered raising their development charges which they expected would bring in an addition $3 billion dollars in 10 years. This would be in addition to the existing income that the city receives from the development tax. These taxes have been used by communities such as Mississauga to artificially keep taxes low or in Toronto’s case help to shift the load off tax payers for these projects. The issue I have with this program is that it provides the same blanket to the downtown cores as it does the suburban areas which does not help to continue the process of infill and density growth. Had Toronto not had areas like the Financial district to draw people to live in downtown Toronto they may have had issues of making a program like this work. In my mind for Thunder Bay I would like to see a development charge based on distance which would help to actually cover the costs of building on the fringe for the city but also make it more challenging for companies to continue the urban sprawl.

Please forgive the poor paint job but this would be a representative idea of what the plan would look like. Based on the two cores the city would be broken into rings where the farther from the core the more it costs you to build. This fee would be a percentage of the cost of the construction and would also result in lower scores for staff members time meaning it would take you longer to get an inspection done and approvals. In order to further promote development in the established areas the city would provide a subsidy in the red areas which would reduce the cost of building in these areas which would lead to urban renewal and density. This plan would be directed to low level residential and commercial spaces but with medium to higher density the rings would be further out. More dense construction or mixed-unit construction would receive top priority from the city and be in line for higher percentages off which would allow for this type of development to be promoted.

The red ring in this instance would lead to a 5% off the cost of building a unit; priority sequence for staff attention and approvals. For a developer working on a unit that costs $100,000 this works out to a rebate of $5,000. These costs would be covered by the fees paid by developers in other areas; as to avoid further challenges to the city’s coffers. If a program like this only bring in a small amount of money or is cost neutral how is it beneficial to the city? In discussions with a developer looking to build a 8 unit home by the Safeway on Dawson road; Councilor Shelby Ch’ng asked the taxation income of this unit compared to a single unit residential on the property. Administration representatives told her that the new home would bring in approx. $16,000 annually compared to the current $2,500 being brought in. If this program can lead to density growth for the city that means large income for the cities coffers. Increased levels of density also helps to benefit other systems and programs as well. Transit ridership increases; use of services like libraries, schools etc increases and these areas become hotbed for development of private industry.

The orange ring would have no development fee associated with the area and would have a regular priority for the city’s departments. Green would have a 5% fee associated with the charge meaning a $100,000 development now brings in the city $5,000 for the unit; it would also have a regular priority for city department needs. The further away would lead to increased cost for any developer with blue being 10%, purple 15% both of these would have a lower priority for city staff and could be jumped by developments closer to the core even if they were submitted later. The areas not surrounded by a ring which would affect mainly the McIntrye Ward and Needing would face a 25% fee and the lowest level of support from the city. These wards continue to cost the city thousands of dollars which are not recouped even with lower levels of services and higher tax rates. The promotion of a semi-rural lifestyle with the amenities of the city but away from the city itself is unsustainable. Even if services like sewers or water aren’t provided we see increased costs in these areas especially from services like emergency services which are required to provide 24/7 coverage. In certain instances it also requires additional infrastructure to protect these areas; once such area is Fire. The Fire department has a fire hall specifically for Neebing because it typically lies outside of its 6 minute target radius. A fire unit alone can cost up to one million dollars and the cost of staffing outweigh almost all income form this area.

Another example: The city is spending $250,000 a year to chip seal dirt roads in McIntyre due to complaints about dust from residents. Council approved in 2015 an addition to a residential development in Neebing. The addition if taxed at $7,000 a year was only expected to bring in $125,000 annually which means that urban areas are now forced to subsidize the rural areas because they are not self-supportive. Another example: The City of Thunder Bay is expected to spend $5 million dollars on phase 3 of the Golf Links expansion much of which is to support growth in suburban areas and flow in and out of the city. This cost is born by the city to help support suburban desires which rotting out the core of the community.

Thunder Bay has this negative idea that density and high rises are means of poverty and lower income. That only the white picket fence can show the true income of the homeowner and those who live there. This connotation is coming from the American dream and the community wanting to relive the glory days. Without significant change in the way the city does business it will build itself so far out that it cannot afford even the basic services. It will take political will but I hope that the people who are running in 2018 see the danger that a city the same size of Montreal with a declining and aging population is facing.

References:

https://www.merriam-webster.com/dictionary/urban%20sprawl

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