Comments on Financing of Municipal and Regional Government Entities in Metro Vancouver BC
Thoughts on moving towards a property taxation system based on municipality services usage and special purpose targeted levies from market value property taxation scheme.
If we want a certain type of metropolitan area, green, sustainable, healthy with excellent transit service and active transportation options including cycling, then we must be willing to pay for it. The “WE” refers to residents and the retailers and businesses of Metro Vancouver. We al benefit from it, businesses with more customers and workers.
On November 28, 2012, Metro Vancouver held a Metro Vancouver Regional Finance Symposium focusing on discussion of direction of taxation for the future. Property tax, user tax, grants, sharing of existing taxes as GST, carbon taxes, fuel taxes were discussed.
It seems to me that the basis of property taxation should be refocused to instill behaviours, which lead to a truly green Metro Vancouver and stop urban sprawl of single-family neighborhoods and low-density retail and commercial sprawl.
It is also apparent that if we want to have high level of transit services and for cycling as a transportation option to help deliver a green, sustainable, and personal healthy Metro Vancouver, we need to fund the investments and the operating costs through dedicated levies that can only be spent on the purpose of any levy. The public and business would directly benefit from such levies through reduced cost of transportation as gasoline and other fuel prices for cars will continue to increase dramatically with each year, through improvement of personal health reducing sick days and cost of health services and drugs, and a more liveable metropolitan area where people will want to live, work, and shop.
We cannot expect that taxes will continue to go down now and in the future. The economy of scale and efficiency of scale has reached the limit in a metro area where urban sprawl continuous to happen. Billions of dollars are wasted by all levels of government, especially the province in supporting single family and low commercial density urban sprawl creating the inventory. Billion of dollars are inappropriately directed within a green Metro setting building highways supporting dingle family urban sprawl and roads instead of rapid transit and rapid transportation, and active transportation (transit, cycling, and walking).
We as Metro Vancouverites are committed to a green Metro. Achieving that means more changes to how we live, where we live, how we build space for the future, and the services we need to sustain that lifestyle. We are still bent on urban sprawl tact with single-family homes, low rise commercial and office buildings, surface parking lots, on-street parking lots continuing to be built. Our single-family home inventory within Metro Vancouver is sufficient for the next 100 years.
It is time that we focus on densification of family space and of commercial and business space.
It is time that competition between municipalities within a metro area for residents and for business is stopped with consistent tax rate and elimination of financial and tax incentives to businesses, developers, and individuals. A consistent tax rate across all municipalities is the way forward.
Urban sprawl costs
It is time that rural communities to a metro area stop becoming bedroom municipalities to a metro area. It is time that these municipalities are not served by highways from a metro area but by rapid transit. It is time to stop urban sprawl into rural lands and their small villages, towns, and cities.
Studies in some cities have shown that urban sprawl fuelled by single-family homes and low rise and density commercial developments. These areas are subsidized by downtowners and high-density urban areas. So, some inhabitants are asked to subsidize the lifestyles of those who do not want to support living a green lifestyle.
Single housing stock is sufficient for the next 100 years. Single-family home building should be immediately stopped; stopped today. No more new single-family houses allowed to be building starting today.
Housing and commercial stock for population growth
Additional housing stock for population growth needs to be in semi and high-density living environment, many being part of mixed residential and commercial developments. Some for commercial and retail developments from small retail outlets focusing on low retail rates for family-style retailing to big boxes.
Land use – Both Private and Public
Too much of land, both private and public, is dedicated to the parking of personal vehicles, the cars. Too much tax revenue goes to maintaining car-parking lanes on public streets for the benefit of a few. Those who own cars are being subsidized by those who contribute to a green metro, especially those who live in medium and high-density housing.
Too much of municipal taxes are spent on maintaining and building car parking lots on streets. Time to redirect this tax money to active transportation. After all, the purpose of streets is to move people, not park people.
On-street parking is not an essential service for municipalities but a discretionary service. That should be left to landowners, homeowners, car parking condos, and private industry to provide. Otherwise, there is unfair subsidizing being provided to car owners. There is subsidizing being provided to single-family owners and to retailers and businesses by condo owners who pay for off-street parking – both long term and short term for visitors and service vehicles.
Too much tax revenue is lost with surface parking lots on public and private lands. Zoning should be changed to require parking being provided as non-surface part of developments. Too much subsidies is given to developers, landowners, and businesses with surface parking lots. Zoning should allow and encourage car parking condos, which also provide short-term parking, in residential neighbourhoods thus freeing up on-road parking for active transportation use and for green space with surplus street lands.
Time to Change Formula for Municipal and Metro Property Taxes Away from Market Value to Municipal and Metro Services Delivery Costs
Property taxes set based on market values of properties is an inefficient method of promoting green communities, cities, and metros. Such systems promote urban sprawl, especially in Metro Vancouver where land values fluctuate and rises dramatically. Such a taxation system promotes urban sprawl and single-family homes. Single-family neighbourhoods are financial unsustainable and require subsidization from medium and high-density neighbourhoods. Same holds for urban sprawl retail and commercial neighbourhoods.
A large part of the market value of a property, residential and commercial, is land cost. Building costs tend to stay at a more consistent level fluctuating more with inflation than demand. Land cost, however, is quite different considering how profits on land sales are taxed in this country, both private homelands and development lands.
It is time to move away from market value based property taxation to a system of government service level taxation. Properties would be based on the cost of municipalities and metro governments providing services to individual properties. Some government costs are universal to all residents and businesses, such as fire department services, municipal administration, and maybe policing (although servicing businesses may cost more than servicing residential areas). These costs should be equally charged out in property taxation based on population to both the residential sector and to the business sector. Population of business sector would be defined as the number of employees hired or contracted by business. There may be additional business taxes recognizing that it is a privilege to operate and make profits within a municipality and there should be a levy to be allowed to operate in a municipality within the vision of a municipality.
Basing taxation on cost of services would help shape location of homes and of businesses. Such a taxation method would make it more desirable to be in medium and high-density neighbourhoods. Better land use would result. Urban sprawl would be contained. Efficient lands use with fewer surfaces and more within building structure parking lots would result.
Taxation for transit service costs could be based on proximity of commuter, rapid, and semi-rapid transit and frequent-service bus lines. Taxation rates would go up as the distance from these lines and stations increases, within a block of the services, within catchment area, within local transit lines catchment areas, outside of transit services, and car-based travel suburbs. With such a formula, there would be more incentives for developers, landowners, and residential and commercial purchasers or renters to be located on well-served transit lines. Urban sprawl would be penalized by the property taxation. Contribution to medium and high-density living and business areas would be rewarded. Cost of delivery of services by municipalities would go down. It would cost less to maintain roads. There would be less demand for road space for cars. The cost of delivering drinking water to 100 residents in an apartment through one pipe would be much less that delivering it to 50 or 100 homes for 100 residents. The cost of garbage collection would be less. The demand of all types of infrastructure would go down as people our live and work in neighbourhoods requiring less land.
Taxes by services received from local and metro governments
Distance from service – transit, arterial highways, on, within catchment areas, sprawl
Size of service – water, sewage
Special-Purpose Taxation through Dedicated Levies
People are sceptical to paying more property taxes as their priorities for additional taxes are not guaranteed and usually not seen in reality. Usage of taxation dollars tend to shift by politicians and senior city managers by year and by election terms for their purpose to keep advocates at bay, both from public and from private for profit sectors.
Moving to a green Metro, special purpose, dedicated levies need to be implemented for achieving true green status. We want a much better transit system with less trip time and higher level of service of rapid and bus services, so that we truly can leave our cars at home. We need to be willing to pay for the service. A transit levy, which can only be used for purpose of transit, would be something that would be more pleasing to the public provided they see improved service levels and more rapid transit, semi-rapid transit, and faster bus trip service. A transit levy would be more palatable if there was fixed amounts dedicated to system expansion and to system operations.
Now, the benefit of higher quality transit system will be felt both by the public, by retailers, and by businesses. Retailers receive benefits from finding workers and from higher sales revenue by able to attracting more customers. Employers receive benefits through having a wider catchment area of coworkers.
Metro wants to be a green metro. Cycling is one of the strategies to move towards green communities. A cycling infrastructure levy would dedicate monies to achieve the full benefit of cycling as a contributor to achieving the true Green status. The efficiency and value of arbitrarily dedicating funding stream to cycling has proven very successful in the USA. The States has had road investment programs that require provision of cycling facilities. Now cycling facilities are blooming forth in hamlets, villages, towns, small cities, and metro areas.
Such a levy should be applied to providing quality cycling facilities that will attract motorists to leave their cars at home and cycle to their destinations. Such a levy should be applied both to cycling trips all the way to destinations and also to combined mobility of cycling trips which include travelling part of the way with transit, ferries, public transportation, and cars.
While only two levies are touched on in is discourse, we should also look at others, as we move forward. One that comes to mind that this been a political football since the 1960’s is secondary and tertiary treatment of sewages so that we do not continue to contaminate our land, lakes, rivers, and the sea. Still we continue to pollute and dump raw sewage and street runoffs into the ocean.
Metro Municipalities Competition for Businesses
Municipal competition for business location within Metro should not provide any form of taxation concessions to induce new business to locate locally or to induce businesses from one Metro municipality to another. This form of competition is inefficient and a subsidy to increase profits for relocating businesses. It also increases urban sprawl.
Within Metro, there should be a standard formula for determining property taxes that does not drive internal competition for inducing businesses to relocate.