The Urban Infrastructure Challenge in Canada: Focusing on Housing Affordability and Choice

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The Urban Infrastructure Challenge in Canada
Focusing on Housing Affordability and Choice

• Presentation by CHBA Name to
• The Municipal Council of Name
• June, 2008

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Background to this presentation

• Major report on infrastructure financing prepared
  for CHBA by economic consulting firm Altus
  ClaytonThe Urban Infrastructure Challenge in
  Canada Perceptions and Realities.
• Our aim is to get key findings out.
• Report analyzes municipal funding and governance
  in Canada in a balanced way.
• Uses data from Statistics Canada and
  Infrastructure Canada regarding respective
  financial participation of different levels of
  government and of the private sector.

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Key questions addressed

1. What is basic urban infrastructure?
2. What have patterns of urban infrastructure
   investment been over recent decades?
3. Who is paying for what?
4. What financing arrangements would be most
   suitable to enhance housing affordability and
   choice in the future?

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1. What is basic urban infrastructure?
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Why we need to define this term according to
Altus Clayton

• Wide range of definitions of public
  infrastructure, many of which include items
  better described as amenities.
• This takes focus off basic urban infrastructure
  as a key component of public sector stewardship
  of urban growth and community well-being.
• Policy development will benefit from a focus on
  assets most closely affecting health and safety
  of population.
• Facilitates setting priorities and achieving
  measurable results.

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Priorities for inclusion in basic or core
urban infrastructure

• Roads and highways
• Bridges
• Public transportation system structures and
  equipment
• Water supply systems
• Sewerage collection and treatment systems
• (The term core infrastructure is used by the
  National Round
• Table on Sustainable Infrastructure as well as
  Infrastructure
• Canada and the National Research Council of
  Canada. )

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Why should these be priorities for infrastructure
investment?

• Focus on facilities essential to human beings
  functioning effectively in modern cities.
• Give highest priority to public health, safety,
  natural environment, and future prosperity.
• Stress infrastructure typically owned by
  municipalities/local utilities.
• Recognize that such infrastructure is vital to
  quality of life and must be built well, operated
  efficiently, and maintained to a high standard.

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Risks of a lack of focus on basic urban
infrastructure
Walkerton deaths due to faulty water supply
system
Montreal overpass collapse
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2. What have patterns of urban infrastructure
investment been over recent decades?
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Investment in basic urban infrastructure on per
household basis declined after 1973
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Average age of basic infrastructure has increased
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After a period of less investment in basic urban
infrastructure, it has been growing again in
recent years, in part due to federal return to
funding programs for local infrastructure.
13
Users not charged full cost of infrastructure
they are using
14
Small proportion of municipal revenues comes from
user charges
15
Tax bases of income, consumption and property
taxes have all increased at about the same rate
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But effective property tax rates have been
declining for years now
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Especially in Ontario, pressures on local budgets
arise from provincial government offloading of
social services onto property tax base.
Provincial Program in Ontario Costs to Municipalities (M) (Figures adapted from Association of Municipalities of Ontario Costs to Municipalities (M) (Figures adapted from Association of Municipalities of Ontario
2003 2005
Public Health 266.4 292.0
Ambulance 312.7 394.7
Social Assistance 1,330.9 1,500.6
Senior Services 242.5 302.7
Child Care 193.4 220.2
Social Housing 879.7 1,209.4
Total 3,225.6 3,919.6
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3. Who is paying for what?
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Here are actual amounts provided by each investor
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Largest single proportion of investment provided
by private sector through direct works, taxes,
fees, levies and charges.
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Here is how the different portions break down by
source
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Development charges have been rising dramatically
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Comments on Development Charges by Altus Clayton

• Development Charges place a major burden on new
  home buyers, reducing affordability and choice.
• User charges and debt financing for
  infrastructure are more equitable and efficient.
• The local property tax base has increased, but is
  not being used effectively.
• Development Charges have detrimental impacts on
  urban form and efficiency.
• Social services program expenditures not
  appropriately borne by property tax base, but
  basic urban infrastructure is.

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Growth paying for itself the facts

• All residents benefit from urban growth.
• Off-site infrastructure is used by all community
  residents, and by industrial concerns, not just
  by new residents.

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Overall conclusion Development Charges unfairly
burden new home buyers, restrict affordability
and choice.
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4. What financing arrangements would most
enhance housing affordability and choicein
future?
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A rational funding model for core infrastructure
would

1. Be based on long-term planning and close links
   between planning and budgeting.
2. Have industry fully engaged in infrastructure
   planning.
3. Recognize that off-site infrastructure serves the
   entire community, not just newly-arriving
   residents.
4. Ensure federal and provincial governments
   contribute to reflect their role in overall
   prosperity, health and safety.
5. Charge appropriate user fees to maintain and
   upgrade basic infrastructure.
6. Use debt-financing methods to spread payments
   over present and future generations of users of
   urban infrastructure.
7. Upload social services and social housing
   expenditures to provincial, federal governments.

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What the new home building industry is ready to
do

• Develop with municipalities alternative models
  for infrastructure financing.
• Support municipal presentations to federal and
  provincial governments seeking infrastructure
  funds.
• Support uploading social services and programs to
  provincial governments.
• Participate in community-wide planning processes.

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Questions?

• For further information, contact
• Local Executive Officer coordinates