Wednesday, March 24, 2004
Moncton Times and Transcript

Urban growth for fun and profit: How Moncton can avoid Halifax’s mistakes

By Brian Lee Crowley

To prove to his subjects that he was not all-powerful, legend has it that King Canute stood on the beach and commanded the tide to recede. The tide obligingly took no notice.

The human tide coursing out of central cities into lower density suburbs has likewise thumbed its nose at the efforts of many city governments to dam the flow. Moncton may not quite be there yet, but at the other end of the “Growth Corridor” in Halifax the debate is raging; at the rate Moncton is growing, it is only a matter of time before it arrives here too. So no time like the present to start figuring out what it all means.

What makes the debate interesting is that most of the arguments against growth outside the city centres – namely that it damages the environment, raises traffic density and drives up costs disproportionately – don’t stand up. It is mysterious, for example, why many Halifax Regional Municipality (HRM) bureaucrats think that driving residential development out to surrounding Hants and Lunenburg will protect the environment and get cars off the road. The Mayor of Lunenburg has publicly said what is in the minds of many in Halifax’s satellite communities: HRM may not want you, but we do.

That doesn’t mean that there aren’t things that smart councils can do to shape their cities; but they need to strike at the root of the problem. If people want to live in suburban low density areas, you can either try to thwart them by heavy-handed attacks on property rights in suburban communities, or you can try and make the city centre and higher density development more attractive so that more people choose that for themselves. HRM, Canute-like, has chosen the first. But only the second has any hope of succeeding because it works with human nature, fairness and efficiency, not against them.

Because of technology, rising affluence and the convenience and practicality of the automobile, downtowns as we know them would not be invented today if they didn’t already exist. Many of the newest urban centres in North America, the so-called “edge cities”, don’t have downtowns at all. This kind of low-density living is what most people today choose for themselves, including in the major European cities that so inspire the anti-growth, anti-automobile crowd in North America.

It’s not just the “pull” of suburban life that explains its popularity. The “push” of ill-thought out policies in city centres also drives people out: bad and excessive taxes, zoning and regulatory controls, poor schools and crime. This “policy-induced” expansion is reversible.

Take taxes. Many lovely old buildings have disappeared in city after city, replaced by parking lots. Owners razed them, in part because it lowered their taxes to do so. We could change that calculus, however, by a revenue-neutral reform of property tax to emphasize the value of the land, not what is built on it.

Property taxes levied chiefly on land rather than buildings bring great benefits. Nobel Laureate Herbert Simon made the classic case for land-only taxation in 1980. It discourages speculation by raising the holding cost of vacant land and encourages prudent owners to build to generate revenue. It also induces owners to improve decrepit buildings, because they don’t get hit with higher taxes if they do.

In two Pennsylvania cities, Harrisburg and Allentown, property taxes now emphasize the value of land instead of buildings. It works. Over 15 years Harrisburg doubled the ratio of the tax on land to the tax on buildings. The number of building permits nearly doubled, and the value of new construction nearly tripled. Vacant buildings dwindled from 4,000 to 500.

Our tax mix is also wrong. At the moment, the income of cities like Moncton and Halifax depends largely on taxes on property and development values. When urban growth brings more consumers with higher incomes, the city should share in that increased prosperity through gas, sales and income taxes. It doesn’t, so municipalities too often see growth as a cost rather than the boon that it is. There is no room for increasing those taxes overall, so Ottawa and the province must share, and cities should reduce property taxes accordingly.

Finally, rather than trying to stifle suburban growth through freezes, bans and attacks on the property rights of rural folk, we need to find ways to make everybody pay their fair share of infrastructure costs.

Properly costed and justified user charges for each beneficiary of many municipal services is one necessary innovation, matched by cuts in the general property tax load. And most major road arteries are only stretched at certain times of the day, so smart tolling can make existing infrastructure work better at lower cost by smoothing out traffic flow while generating revenue for upgrading from all those who benefit directly.

By all means, let’s have more people in city cores, but let’s have them there because we’ve made it an attractive and cost-competitive place to be, not because they’ve been forced there to please bossy planners and Volvo-driving Chablis-drinking activists who don’t want to share their rural havens with anybody else.