The Urban Infrastructure Challenge in Canada: Focusing on Housing Affordability and Choice Presentation by CHBA – [Name] to The Municipal Council of [Name] June, 2008

The Urban Infrastructure Challenge2 Background to this presentation:  Major report on infrastructure financing prepared for CHBA by economic consulting firm Altus Clayton…The 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.

The Urban Infrastructure Challenge3 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?

1. What is “basic urban infrastructure”?

The Urban Infrastructure Challenge5 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.

The Urban Infrastructure Challenge6 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. )

The Urban Infrastructure Challenge7 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.

The Urban Infrastructure Challenge8 Risks of a lack of focus on basic urban infrastructure… Montreal overpass collapse Walkerton deaths due to faulty water supply system

2. What have patterns of urban infrastructure investment been over recent decades?

The Urban Infrastructure Challenge10 Investment in basic urban infrastructure on per household basis declined after 1973:

The Urban Infrastructure Challenge11 Average age of basic infrastructure has increased:

The Urban Infrastructure Challenge12 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.

The Urban Infrastructure Challenge13 Users not charged full cost of infrastructure they are using:

The Urban Infrastructure Challenge14 Small proportion of municipal revenues comes from user charges:

The Urban Infrastructure Challenge15 Tax bases of income, consumption and property taxes have all increased at about the same rate…

The Urban Infrastructure Challenge16 But effective property tax rates have been declining for years now…

The Urban Infrastructure Challenge17 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 Public Health Ambulance Social Assistance1,330.91,500.6 Senior Services Child Care Social Housing879.71,209.4 Total3,225.63,919.6

3. Who is paying for what?

The Urban Infrastructure Challenge19 Here are actual amounts provided by each investor:

The Urban Infrastructure Challenge20 Largest single proportion of investment provided by private sector through direct works, taxes, fees, levies and charges.

The Urban Infrastructure Challenge21 Here is how the different portions break down by source:

The Urban Infrastructure Challenge22 Development charges have been rising dramatically…

The Urban Infrastructure Challenge23 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.

The Urban Infrastructure Challenge24 “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.

Overall conclusion: Development Charges unfairly burden new home buyers, restrict affordability and choice.

4. What financing arrangements would most enhance housing affordability and choice in future?

The Urban Infrastructure Challenge27 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.

The Urban Infrastructure Challenge28 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.

The Urban Infrastructure Challenge29 Questions?  For further information, contact: [Local Executive Officer coordinates]