Look at house prices as a way to manage sprawlFebruary 5, 2013
By: David Thompson Sustainable Communities Policy Director at Sustainable Prosperity.
Has the Ontario Municipal Board just opened a can of worms?
On Jan. 21, the board overruled Waterloo Region’s official plan, and may have sent shock waves across the Greater Toronto Area and Ontario. At stake is the goal of Ontario’s green belt and the Places to Grow Act: the curbing of suburban sprawl.
As economists, planners, doctors and others have shown, the costs of sprawl are enormous: lost farmland, automobile dependency, obesity, diabetes, smog, climate change emissions and more.
Waterloo Region aims to reduce future sprawl and encourage improvement and development in existing neighbourhoods. The regional plan would have opened about 80 hectares (150 football fields) of green space to new suburbs.
The municipal board decided to allow more than 10 times as much — more than 1,000 hectares.
With this precedent, other regional plans across the province might be attacked. City planners are asking developers to develop within the cities, but economic signals are telling them to expand the suburbs.
What’s the solution? Well, let’s look at the cause.
What drives the demand for sprawl is the price. You can build cheaply on farmland, and everyone wants affordable housing. For every family that buys a home in the centre of town, scores or hundreds buy in the ’burbs, because that’s what they can afford.
But it doesn’t have to be that way. Prices don’t exist in a vacuum. They are a product of government policies and budgets. These can be changed.
To curtail the advance of sprawl, governments will need to take a long look at prices. Price is a powerful influence on decisions — for both developers and individuals. If prices are pulling in the direction of sprawl, you can bet sprawl will continue. But governments can change some key prices, lowering some and raising others.
First, governments can have road users pay the real costs for their use of roads.
“Free” roads are a boon to sprawl. Fuel taxes don’t cover the costs of roads — not even close. Even when you add in registration, licence fees and all other taxes and fees, motorists still don’t pay their own way. This invisible Canadian road subsidy is in the billions of dollars per year. Recent reports from the Toronto Board of Trade and the Residential and Civic Construction Alliance of Ontario have proposed user fees ranging from highway tolls and congestion charges to parking pricing and vehicle levies.
Second, governments can change development cost charges, which developers pay to offset city costs of servicing new developments. Many cities now charge developers the same rates for urban and suburban development, even though the real costs of servicing suburban areas is higher. Some, like Kitchener, have reduced development cost charges in central areas compared to greenfield locations — thus boosting the incentive to build downtown.
Third, governments can improve rail service, local transit and bike lanes, reduce property taxes, and create more affordable housing near transit and in central areas. They can fund these changes with a new fuel tax-sharing system, as the Federation of Canadian Municipalities has proposed. Ontario and the federal government currently send some gas tax revenues to municipalities, but it doesn’t cover road costs, let alone policing, emergency medical services, or the impacts of smog and climate change. Governments can boost fuel taxes and send more to municipalities.
There are many options for reducing sprawl subsidies, as well as benefits from doing so. Compact and livable communities are not only cleaner and cheaper, urban density also has economic payoffs: the more people and firms in a given area, the higher the productivity, and the more knowledge “spillovers” will boost local businesses.
If more land gets opened up to suburban development, governments are going to have to get creative about sprawl solutions. A good place to look is the source of the problem: prices.
Prices can be changed, and there are many benefits to be had. Instead of a can of worms, it just may be that the Ontario Municipal Board has opened up a world of opportunities.