Friday, May 9, 2014

Greater Sudbury Election Notes, Part 2: Melanson Derides Long-Term Fiscal Sustainability In Favour of More Pain for Taxpayers

Greater Sudbury Mayoral candidate and former Greater Sudbury Taxpayer Association head Dan Melanson just doesn’t seem to understand what municipal fiscal sustainability is all about. Wading into the recent, on-going discussion around the subject of development charges, Melanson came out firmly against this progressive revenue tool, in a letter printed in the Sudbury Star.

Development Charges and Sustainable Development

The City of Greater Sudbury is considering upping its development charges through changes to a by-law. Some in our City, including a few current members of Council and a number of registered municipal candidates, appear to be not only dead-set against raises charges, but in favour of eliminating them all together. Often the argument trotted out by those in opposition to development charges is the old and tired notion that development pays for itself already through taxes, and therefore development charges amount to nothing more than penalizing new development.

This argument, of course, has proven false time and again – at least when it comes to certain types of development – and specifically to the most prevalent development forms in the City of Greater Sudbury: low-density urban sprawl. The mantra that “all growth is good” is a fiscally irresponsible one to cling to by anybody – but it’s absurd for someone like Melanson to subscribe to, given that he claims to want to champion lowering of municipal costs to taxpayers.

Without any recognition that development brings both benefits and costs, Melanson writes, “The major source of revenue for the city is our property taxes. New growth in that tax base is the lieblood for the future financial well being of our city.” Melanson, of course, is completely wrong on all accounts. Let’s dissect this statement, which seems to underpin his mistaken belief system.

The Real Costs of Sprawl

First of all, it’s well known that not all growth is good. In fact, residential growth tends to bring with it much higher long-term costs than is ever recouped through municipal taxes. The costs of providing services to residential uses are much higher than the tax revenue they generate. Yes, municipalities could choose to raise taxes on residential property owners in order to bring residential taxes and the provision of services into better alignment, but for the most part, raising taxes is seen as a toxic measure. And frankly, high residential tax rates are unsustainable for many reasons.

The Coalition for a Livable Sudbury provided a well-researched submission to the City on the matter of changes being proposed to the development charges by-law. The Coalition pointed out, based on municipal, regional and national-level research, that the cost of servicing residential uses tends to be about $1.40 for every $1.00 in municipal tax revenue generated. While this amount will vary from municipality to municipality, depending on numerous factors, the reality of the circumstance is clear and well-known: development isn’t paying for itself.

Finding the Right Balance for Development

This imbalance between costs and benefits can be minimized – residential development in existing urban areas and at higher densities have smaller costs for municipalities. Despite this, the development pattern in our own community has largely been to see new development in greenfield areas, contingent on the extension of services – the very type of development which costs taxpayers more in the long run. While that trend is starting to change, the fact of the matter is we still have an abundance of land designated for residential development in unserviced parts of our City.

Of course, the costs of building on greenfield lands tend to be lower, and developers can therefore derive a higher profit. And that’s with or without development charges, because right now in Greater Sudbury, development charges are applied no matter where development is being proposed, so those charges aren’t having any impact on where a developer chooses to build.

Using Development Charges to Achieve Broader Municipal Goals

The Coalition for a Livable Sudbury suggested that the by-law be changed to area rate development charges – by charging higher fees for more expensive-to-service low density development, and lowering fees on high density and mixed use development. This approach would provide the City with another tool to achieve the outcomes it claims to want to achieve in our Official Plan – more transit supportive, walkable, bikeable – and livable – communities.

Of course, the approach of area rating development charges would also achieve greater fiscal sustainability over time – exactly the sort of sustainability which candidate Melanson apparently doesn’t want for our community. Melanson needs to understand that not all growth is good. Really, he need look no further to the current economic mess our City is in right now, with crumbling infrastructure we can’t afford to fix. Had communities in this City been developed at higher densities, instead of through embracing sprawl, there’s no question that we would have been able to better afford to tend to the things which we’ve been putting off for so long. The infrastructure deficit is real, and only through sustainable fiscal practices can we finally start to get our house in order.

Look, development charges alone aren’t going to clean up the mess we’re in, but they are a progressive revenue tool which passes along the costs of new services to the people who are going to benefit directly from them, rather than burdening existing taxpayers. They can also be used to achieve other long-term outcomes beyond revenue generation, as pointed out by the Coalition for a Livable Sudbury. They can be used as incentives to develop in certain areas, and disincentives for expensive low density fringe development.

Melanson's Approach Ultimately Leads to Higher Property Taxes

Candidates like Melanson who believe that growth pays for itself need to do a little bit of research on the matter, because it’s very clear that fiscal sustainability won’t be achieved through municipal property taxes – at least not at their current level. And I doubt very much that Melanson is going to campaign on raising our property taxes. So where does that leave his fiscal plan? Clearly, he doesn’t have a serious, reality-based plan. Maybe his plan is just to try to pull the wool over the eyes of taxpayers while coddling up to the development industry.

By only thinking for today, candidates Melanson have decided to throw away the long-term need for fiscal sustainability. Embracing growth at all costs will do nothing more than hurry us down the road to financial ruin that we’ve been on because we’ve refused to get our house in order. Arguing for lower taxes while cutting off revenue-generating tools that can also better balance the costs/benefits of new development may be fine and dandy if you want to pull the wool over the eyes of voters, but it ultimately leads to higher property taxes for everybody.

Greater Sudburians can’t afford candidates like Melanson, which offer non-reality based solutions to our very real fiscal problems, like our infrastructure deficit. Growth has not been paying for itself – and we taxpaying citizens of Greater Sudbury are really starting to feel the pinch.

(opinions expressed in this blog are my own and should not be interpreted as being consistent with the views and/or policies of the Green Party of Canada)

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