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Incentivizing sustainable urban form Fresh Outlooks Foundation Building SustainABLE Communities Conference November 27, 2013 David Thompson Policy Director, Sustainable Communities Sustainable Prosperity www.sustainableprosperity.ca
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Comprehensive overview (not) Just touch on three points: Costs of sprawl Causes Reforms More: www.thecostofsprawl.com Making markets work for the environment
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Sprawl Costs To the environment Known for decades To human health Known for years To municipal budgets Just starting to get a handle on it A potential game changer Making markets work for the environment
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Costs to municipal budgets Edmonton Net loss from 17 developments in 60 years ~ $4 billion Halifax Region 50% of growth in urban areas - save $715 million in 20 yrs Calgary 25% denser development would save City $11 billion in capital costs alone Making markets work for the environment
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Municipalities are aware of the costs, and are acting… Cdn municipalities adopting density goals E.g. St John’s, Saint John, Ottawa, Hamilton, Saskatoon, Calgary, Edmonton, Kelowna, Metro Vancouver Kelowna OCP : “OCP objectives are focussed on compact urban form (mixed use neighbourhoods and higher density in core areas)” CMHC 2005, 2011 Census: little success Making markets work for the environment
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Why little success? Need to look at causes. Making markets work for the environment
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Sprawl Causes “Pure” market demand for sprawl? Much of it boils down to price (big decision driver) Can get 3BR, 2 bath house in centre of town: $ Sprawl subsidies Road subsidies: $13.5 billion per year, net Mischarging on development costs, utilities, property taxes Failure to internalize externalities This is an opportunity Reform prices, make sustainable housing affordable Making markets work for the environment
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Price reforms Transportation pricing Fuel tax (sharing, or power to levy), road pricing, PAYD, parking pricing, etc. Development charges Average rate structure – subsidizes sprawl Marginal, or area-based rates – fairer Special rates Zero rate/ credits for downtown, brownfields Reduce rates near transit corridors Making markets work for the environment
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Price reforms Property tax adjustments Lower tax rates for denser classes of property (e.g. multi-family) Lower rates in central areas and near transit corridors to encourage density Utility pricing adjustments Frontage-based levy to encourage density Making markets work for the environment
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Reforms: Equity and Fairness Pricing policies, if badly designed, can unfairly affect low income Cdns 1990s “user fees” on public goods: head taxes Good design: Link prices to sprawl goals, and to income / wealth Making markets work for the environment
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Multiple incentives No magic bullet; need a range of tools None is large enough to curb sprawl on its own (E.g. DCs a full order of magnitude too small) Multiple incentives sends clear policy signal Less economic distortion Offset negative impacts Making markets work for the environment
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Economic benefits of density Spread infrastructure & service costs across more payers Better access to workers – higher productivity Better access to jobs – reduced unemployment Industrial specialization and local outsourcing Knowledge spillovers, within and between sectors Access to suppliers and markets “Economies of agglomeration” Making markets work for the environment
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Conclusions Sprawl costs high Not inevitable Result of market failures and policy failures These failures can be corrected We can make sustainable housing affordable Affordability will (continue to) drive decisions But… toward sustainable urban form Making markets work for the environment
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David Thompson Policy Director, Sustainable Communities Sustainable Prosperity dthompson@plrc.ca www.sustainableprosperity.ca info@sustainableprosperity.ca Making markets work for the environment
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Event of interest to some? "What is the Role of Pricing in Managing Metro Vancouver's growth?" Symposium chaired by Larry Beasley January 20, 2014 Vancouver Sustainable Prosperity and Canadian Urban Institute Making markets work for the environment
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