Now that the Edmonton Election is underway, a critical conversation that should be discussed is how to make the city financially sustainable. Currently the city is approving large swathes of low density single family housing developments past the Anthony Henday. Is this a financially sustainable strategy for the city to be pursuing?
According to Strong Towns’ Charles Marohn, approving and building new green field developments is a ponzi scheme. Why? Often cities approve new greenfield developments to generate new revenue through property taxes and development levies. The revenue generated from these developments do not actually go towards funding the services needed for the developments being approved. These revenues often go towards funding necessary services in already developed or aging neighbourhoods elsewhere in the city. Eventually when the infrastructure serving these new neighbourhoods starts to deteriorate at the end of their lifecycle new greenfield neighbourhoods will have to be approved to fund the necessary maintenance and upkeep.
Is there a way to determine what is financially productive and sustainable for the city coffers? According to Joe Minicozzi cities need to change their city making math. Often cities look at the revenue potential for developments from a lump sum perspective. With this approach a Walmart big-box store style development often becomes more attractive for city councils. This approach completely neglects how efficiently these developments are using land, which is a city’s most valuable resource. When you look at the potential tax revenue generated from developments based on the land area being used the math changes.
Calculating the property tax generated per land area (tax density) demonstrates that those big box stores among single dwelling developments are producing some of the lower taxes densities for developments in Edmonton. When single dwelling households and the big box stores are producing some of the lowest tax returns on developments, should the City of Edmonton continue to approve them? Edmonton can ultimately change the tax burden on all Edmontonians by correcting the city building math and building the type of developments that produce the highest return on investment using the smallest foot print.
So what is producing the highest tax density? Zooming in on the tax density map reveals that the majority of properties generating the highest tax densities are in the city centre. To be more specific the highest tax density generating properties tend to follow the streets that follow Edmonton’s historic street car lines. These include streets like 124 Street, Whyte Avenue, Jasper Avenue, 107 Avenue, 97 Street and 118 Avenue.
What do these developments look like? Often they are 2-4 storey properties with a short frontage. These are also the buildings where you find most locally owned businesses operating from, due to the smaller square footage and therefore more affordable leases.
What about housing? What is producing the highest tax density for the city? On the lower end one unit dwellings like single dwelling housing are producing on average $4.3 per square meter. Meanwhile 4 story multi-unit walkups like in the photo above produce over double the property tax per square foot ($10.5/sqm). Almost any development type that has more than one unit per property would generate more taxes per square meter.
Why does this matter? When cities are looking balancing budgets to pay for necessary services, amenities and create vibrant neighbourhoods, any business owner would look to accomplish this in the most efficient way as possible. Building more units per development site translates into the city generating more property taxes per square meter. The more property taxes the city generates from the same area translates into reducing the amount of property taxes everyone collectively has to pay. In addition to this it means that the city can service more people with the same infrastructure which lowers the cost for everyone. If the city of Edmonton builds more strategic and denser developments, the tax burden is reduced for everyone.
Often there are protests about the appearance of the developments being built as people feel that they do not fit in with the existing neighbourhood characteristics. The westmount development in the photo above has 3 units however it maintains the appearance of the surrounding neighbourhood. It looks like a larger house, however it houses three separate units.