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Description:
Local Government Bulletin No. 65, April 2006

The purpose of this bulletin is to focus debate on the need to increase local self-government in Canada and to help local communities achieve more autonomy. The local self-government website is: http://www.localgovernment.ca .
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In this issue:
1. Cities and energy
2. Edmonton’s infrastructure innovations
3. Getting property assessment right?
4. The passing of Jane Jacobs
5. Four year terms for municipalities
6. Subscribe to the Bulletin
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1. Cities and energy

If there is one big issue that will determine the future of Canadian cities and local empowerment, it is surely the question of energy use and supply. Cities are the biggest users of energy and thus the question of supply is central to their health. At the same time, it is in cities that the best opportunities exist for reducing energy consumption.

Many cities are slowly embarking upon policies for reduced energy use, but few have tough requirements mandating it in sensible ways. The private sector is stepping into the void with development projects relying on LEED (Leadership in Energy and Environmental Design) standards, often because LEED turns out to be an excellent marketing device for new buildings – consumers are ahead of policy makers.

Toronto consultant Richard Gilbert notes in a recent speech in Hamilton that most North American cities are not being nearly as serious about energy conservation as European cities, quite possibly because Europeans pay two to three times as much for fuel as we do. Gilbert believes that within about a decade gasoline prices will be four times their current levels. The impacts of this change will be extraordinary – for example Gilbert notes that with substantial increases in energy prices the chance of air travel continuing at the levels experienced today is very small. To meet the challenges, he suggests a smorgasbord of appropriate policies including energy conservation in buildings, geothermal heating and cooling, local energy generation through wind and sun, and so forth.

None of this is entirely new, except that few cities have come to grips with these initiatives. The speech was based on a report Gilbert did for the City of Hamilton. While the report’s details relate to one particular city, the template could be applied to many cities of comparable size.

Gilbert’s speech can be found in the library section of this website under his name, http://www.localgovernment.ca . His report on the opportunities in Hamilton, and the covering report by Hamilton staff, may be found at http://www.myhamilton.ca/NR/rdonlyres/144F4643-22C1-4D97-9BBA-639D2D2FA70C/0/Apr28CM06012PeakOil.pdf .

2. Edmonton’s infrastructure innovations

Edmonton is considered to be a leader in the area of managing infrastructure. It has created a long term management process to assess priorities, to determine possible cost savings, and to review funding opportunities.

This proactive approach is not one that all cities take even though infrastructure concerns are at the heart of municipal decision-making. Edmonton has done what it can to milk provincial and federal programs, and it has also taken a careful look at its own revenue sources. In a report prepared in December 2004, “Thinking Outside the Gap: Opportunities to Address Edmonton’s Infrastructure Needs”, the city summed up the gap that existed between needs and available funding, and realized that more had to be done. The opportunities available for closing the gap included reconfiguring city debt, finding new revenue sources, seeking developer support for new roads, and various user-pay mechanisms.

In partnership with Canada West Foundation, the city is embarking on a study on feasible actions to close the gap. City staff say that while the announcement of the partnership was made almost two months ago, work on the project has yet to begin, so the precise options to be studied have yet to be defined. However, the foundation outlined its interests in its 2002 report, “Big City Revenue Sources: Canada-US Comparison of Municipal Tax Tools and Revenue Levers”, which notes the plethora of tax revenue sources available south of the border. One assumes the study will review these sources as well as user-pay mechanisms.

With a federal government apparently less interested in urban policy than in the past (although we’ll see its interests in the federal budget to be released next week) it’s fair to assume federal support for urban infrastructure will decline. The outcome of the study Edmonton and the Canada West Foundation are doing together will be important for all Canadian municipalities.

Material on the Edmonton Infrastructure Program can be found at http://www.edmonton.ca . Click on Infrastructure and Planning, and then go to Infrastructure Strategy where the important reports are listed. Canada West Foundation can be found at http://www.cwf.ca and the report noted can be found under Publications, and go to Year 2002.

3. Getting property assessment right?

The Ontario Ombudsman has recently released its investigation into the property assessment process in Ontario and decision-making at the Municipal Property Assessment Corporation (MPAC.) The report is entitled `Getting It Right.’

MPAC was established almost a decade ago by the provincial government of Premier Mike Harris. It removed assessment functions from the Ontario Government and put them into the hands of a corporation controlled by municipalities, even though municipalities didn’t want that responsibility. MPAC’s job has been to reassess all properties in Ontario at current market value, a contentious task since assessments in many municipalities had been frozen at levels established 30 or more years ago.

The report is a sad recounting of how badly the assessment of properties has been done and how the system is generally set up against the interests of the owners, particularly those wondering how MPAC determined their assessment. The Ombudsman notes: “Never in the thirty year history of the office have so many complaints been received in so short a period about a single public agency.”

Recommendations include the following:
* MPAC should follow actual market sale prices rather than disregarding them when establishing assessments;
* MPAC should stop the practice of reducing assessments for one year on the basis of good evidence and then reverting to the previous faulty assessment in future years;
* MPAC should disclose in advance the evidence it is relying on at appeal hearings;
* The burden of proof should be put on MPAC to prove its case.

There is no question but that MPAC will be changing its procedures as a result of this report, and the suggestions of the Ombudsman are clearly useful to all property assessment bodies across the country. However, there’s a large question that remains unanswered, one not examined by the Ombudsman: Is it appropriate to continue to assess properties on the basis of market value?

As has been frequently argued, levying taxes on market value ensures that any owner who improves his or her property increases market value and assessment and therefore incurs higher taxes. You get penalized for improving your property. Owners living in an area where values are sky rocketing even though they have done nothing to provoke this change, pay higher property taxes even though services might be declining.

It would seem to make more sense to move away from market value as the key basis for assessing property and instead levy the tax according to the size of the property and the size of any structure. This would encourage intensification (the market value system discourages it), and that would moderate municipal expenses on a per capita basis. It would also not penalize those who make improvements.

Did the Ombudsman really get it right? To get it right, the whole idea of market value assessment needs to be reviewed. Fifty years ago a family with a median income could find an average home for about twice the median annual income. That ratio has been thrown totally out of whack in recent years, and now the median income family can expect a home to cost six or seven times the median income. In the current world of wildly escalating house prices there is no way market value assessment can be done to satisfy most owners. With property values so volatile, it makes better sense to rethink the basis on which municipal councils tax property.

The Ombudsman’s report can be found at http://www.ombudsman.on.ca , and then click on `MPAC Report.’

4. The passing of Jane Jacobs

“Economic life develops by grace of innovating; it expands by grace of import-replacing. These two master economic processes are closely related, both being functions of city economies.” So Jane Jacobs writes in her 1984 book “Cities and the Wealth of Nations” (page 39) as she outlines why cities are at the heart of any successful economy. It is also in this book that she describes in great detail the kind of problem we have in Canada with an over-arching national government unable to make policies to encourage healthy cities.

“Nations are flawed . . . because they are not discrete economic units, although intellectually we pretend that they are and compile statistics about them based on that goofy premise.”(p.162) She continues “Cities within a nation get no feedback whatever from the national currency with respect to their trade with one another nor their other domestic trade either, for that matter.”(p.176) And she goes on, “Cities are the open-ended types of economies in which our open-ended capacities for economic creation are not only able to establish ‘new little things’ but also to inject them into everyday life. Unfortunately, given the deadly interplay between nations and their cities, we human beings are doomed to spurts of economic development only –sporadic and relatively brief episodes, now here, now there, followed by stagnation and deterioration.”(p.224-225).

This is the problem with which Canadian cities struggle. The national government refuses to recognize that it is the economies of our cities which creates the wealth. Provincial governments generally belittle cities.

In an earlier book, “The Death and Life of Great American Cities” (1961) Jane Jacobs defined the four characteristics of a successful city: short blocks, mixed uses, medium density and a mixture of old and new buildings. These are the characteristics really necessary for a strong economy and vibrant social life. Planners and city decision-makers seem to have missed the importance of these four characteristics and have done whatever they can to prevent them from being present, whether through the endless curvy suburban street system, zoning which prevents mixed uses, either very low suburban densities or super high-rise towers, or by paying little attention to the important economic function that older buildings provide by supplying inexpensive space for new enterprises. In fact most land-use planning activity happens as though “Death and Life in Great American Cities” had never been written.

Jane Jacobs died on April 25, 2006 at age 89. Her writings create a powerful agenda for those who wish to create successful cities. It would be good if her legacy was reflected in the decisions that we make about our cities.

5. Four year term for municipalities

In the last Bulletin it was noted that the Ontario government surprised a lot of people by suggesting that it was considering implementing a four-year term for municipal councils. That Bulletin incorrectly stated there were only a few provinces with four-year council terms, but in fact there are five: Quebec, Nova Scotia, New Brunswick, Newfoundland and Manitoba.

Legislation was introduced to implement the four year term in Ontario on March 23. It is found in Bill 81, an omnibus piece of legislation titled `The Budget Measures Act’ which includes schedules on: business corporations; Certified General Accountants; the Community Small Business Investment Fund; gasoline, income, retail sales, and tobacco taxes; the Ministry of Natural Resources; the Ontario Infrastructure Program; the Ontario Loan Act; the Ontario Municipal Employees’ Retirement System; the Public Service Act; the St. Clair Parks Commission; the Vital Statistics Act; and tucked away in Schedule H, six paragraphs which change the time of the municipal councils from three to four years.

It is a classic provincial strategy of burying an important municipal issue in a pile of its own paraphernalia in the hope that it is neither debated nor discussed. So much for respecting municipalities or local democracy in Ontario.

6. Subscribe to this bulletin

The bulletin is sent monthly, at no cost, to about 1500 individuals involved directly or indirectly in local government in Canada. Those who receive this Bulletin directly (not forwarded by a third party) are already part of the subscription list. Others who wish to subscribe should go to http://www.localgovernment.ca and follow the instructions. To unsubscribe, please send a message to info@localgovernment.ca indicating your wish to unsubscribe.

More information about the sponsors of the Bulletin, a library of relevant and useful documents, and an archive of past Bulletins, can be found on our web site. We appreciate your comments, your feedback (to j.sewell@on.aibn.com ), and items of interest that you wish to share with us and others who visit the web site.
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