Paying for the Costs of Growth

Three years ago, following the growth of Barrie’s boundaries, the Council of the day established a principle that “growth should pay for growth”.  With existing Ontario legislation – that’s easier said than done.

In fact, paying for the costs of growth is one of the biggest challenges Barrie has had for decades.  Right now Council is facing this challenge again.  It’s my view that today’s taxpayers should not have to shoulder the costs of growth.

Last week at Development Services Committee there was an update on the plans for growth in Barrie.  First off, growth over the coming years will be fundamentally different than in the past.  Nearly half of new population, and more than half of new jobs, will be housed within the existing urban area through better use of vacant lands and intensification.

This typically has it’s own fiscal benefits, for obvious reasons.  Where existing roads and pipes can handle more development, no new infrastructure need be built (although if existing pipes and roads have to be expanded – that can be very expensive.  Where you intensify is therefore hugely important).

With regards to the new lands, costs for all the infrastructure needed for growth were presented to Committee.  This includes (among others) highway interchanges, expanded arterial roads, community centres, the network of water and sewer pipes, and some some proposed service level improvements for things like additional bike lanes and transit service.

Of course, in addition to growth-related costs, Barrie City Council is committed to doing to more to fix what we’ve already got.  So in addition to growth, add to these costs the substantially larger amounts needed for rehabilitation of existing infrastructure (asset management), such as resurfacing roads and repairing pipes, buildings, and equipment that is at or past the end of it’s useful life.  Add it up and the total costs are substantial.  Highway interchange costs alone were very high, as one example.

Over the past few months, the growth planning team has been working to reduce these costs through a variety of measures – addressing essential needs first, and spreading out costs where possible, while still building the infrastructure we need when we need it.

The short version is a revised scenario would see an annual capital plan of $127M – although the plan is heavier in the first ten years as that is when more of the growth-related infrastructure needs to be built ($140M annually is the forecast for 2012-2021).   This includes water and wastewater capital plans.  Although this may seem like a massive number – it’s worth keeping in mind that Barrie had an annual capital budget of about $100M for many years, until the current Council reduced spending substantially as part of fiscal austerity.

I’ve been working on the numbers as I would like to see this Council adopt a fiscal plan for growth that does not put any of the costs of growth on our current taxpayers, or incurs any long term debt.  This is a stretch goal, but I believe it is achievable.  Here’s what it could look like:

As reported to Development Services, the reduced cost scenario at the moment is:

  • Growth related costs at about $72M per year.
  • Asset management (fixing what we’ve got) costs at about $55M per year.

There could be some shifting between these two categories but this is a reasonable ballpark).  Very roughly, about two-thirds of growth-related costs are eligible for development charges.  In my opinion this should be higher, but there are a series of limits in the Development Charges Act that limit the calculation of DC eligible costs, and some growth related costs are deemed to also have benefits to existing residents.  As a rough number, however, we might expect $48M a year from DCs, ultimately.  This leaves a balance of $24M annually to fund growth-related costs that has to come from elsewhere.

In addition, ALL asset management work must be funded from the tax base or from other sources.  At an additional spend of $55M per year, that’s a total of $79M – call it $80M for argument’s sake – that has to come from sources other than DC’s.

One approach to funding this could be as follows:

  • Transfer from reserves – average $35M annually
  • Powerstream dividends – $6M annually
  • Federal gas tax funding – $11M annually
  • Federal/Provincial grants – $10M annually
  • Water/Wastewater funds – $18M annually

Total – $80M

A few notes on this:

–       Transfer from reserves will need to continue to increase at $1.5M annually for 20 years, from roughly $20M today to $50M by 2031.  This will need to be accommodated in the operating budget, however, the Provincial upload is producing more than this annually in savings – assuming the uploads continue.  It’s my opinion that we need to do more work on a “pay as you go” basis and ultimately we need to the City to be able to fund more asset management work – roads, pipes, building repairs, etc.  This will take 20 years to get to a level of $50M/year.

–       Fed gas tax – the Federal government has recently indexed the gas tax and provided a calculation of future revenues.  We receive about $8.5M today but this will rise to $12.5M by 2031.

–       Fed/Prov Grants – this is admittedly a “finger in the air” amount.  But $10M a year would be less than what we have received annually in recent years, even after the stimulus period.  The Federal government has recently announced a new $53 billion infrastructure program over the next ten years – which on a per capita basis would translate into more than $200M for Barrie (or $20M per year!).  So $10M is probably a safe estimate, given that there is also Provincial funding that will be certainly be available for growth-related costs such as highway interchanges.

–       Water/Wastewater – this would be $6M annually from water and $12M annually from WW, which is an increase, but achievable without substantial pressures on rates, given substantial additional DC funding is also expected within the water and wastewater budgets.

 

The capital numbers and development charge numbers are still in flux.  Much may change as the numbers are finalized over the coming weeks.  However, I wanted to provide you my views on how we will be able to address the substantial costs of growth without impacting current residents and taxpayers.  As always, comments welcome.

About jefflehman
Jeff Lehman is the 46th Mayor of the City of Barrie. The Ward 2 Councillor for the City of Barrie from 2006 to 2010, he was the Chairman of the Finance Committee of Council, chaired the City’s Growth Management Working Group, and created the Historic Neighbourhoods project, a new initiative to protect and revitalize Barrie’s oldest neighbourhoods. Jeff has lived in Barrie for most of his life, having grown up in Allandale and attended Barrie Central Collegiate. Jeff holds a B.A. from Queen’s University, and a Master’s Degree with first class honours from the UK’s prestigious London School of Economics. He was hired to teach at the LSE following his graduation, and lived and worked in London for two years as an academic. Since that time, as an economist, he has worked with cities across Canada to manage redevelopment and invest in their urban infrastructure. In 2005, he established the Growing By Degrees Task Force to assist in expanding university education opportunities in Barrie, and has volunteered his time with many organizations in the City. Jeff lives near Downtown Barrie with his wife, Jennifer, a part-time professor of political science, and their young daughter Cassie, who is already smarter than her father.

Comments

7 Responses to “Paying for the Costs of Growth”
  1. Thanks for posting this; I hugely appreciate being kept informed of council’s deliberations and the rationale for its decisions. Balancing a budget is not easy, I respect the hard work you guys are doing to manage the city’s needs.

  2. daniel oschefski says:

    I do not agree with your letter to the public. I am a home owner of Barrie and you have decide to build on the lot next me. you have destroyed my property value and the butternut trees that were protected around our little lake. We as the public bring you concerns and you look past them. balancing this budget may not be easy but when you quote things like ” It’s my view that today’s taxpayers should not have to shoulder the costs of growth” why is that my property has not been protected. I may not have to pay in tax but we have paid in the vaule of the property, our privacy, noise , and you have destroyed natural heritage land. Not to mention the trees I lost due to what you have done. None of this seems to matter because you are saving so much building on these vacant lands. Me as a resident I would leave in a minute. I love it here grew up here but the city dose not look out for its people. And I myself am very disappointed in the citys plans and its development growth. Daniel Mark Oschefski

  3. Concerned resident says:

    No one is looking “down” on minimum wage jobs. To think that the general populs is looking down on minimum wage jobs is false. Everyone I know, knows the value and hard work that put into in the minimum wage sector. It is those that trumphet such growth while setting up red tape to prevent proper growth here is where the issue comes from. If those here think such job growth is good then why don’t they get off their back side and try to work in such sector instead of whining here about posters who are at least recognizing a fundamental problem. The problem with Jeff Lehman is that claimed to be an economist. No economist I know would raise taxes while stifling growth through political red tape. They would welcome industry and not give in to the minority of NIMbys here that always go on and on about wind turbines and plants. These are the people who affect us most and ironically claim they value the worker. They do not if they can bad mouth an entire industry on myths and false beliefs.
    Anyone I know, knows what the mayor is wrong in what he is doing. By raising taxes it is stifling growth. By welcoming the call center and denying the wind turbine industry is also stifling growth. You cannot pay the bills on minimum wage and if people here think that is acceptible then they need to quit complaining about people on ODSP and the like as they are the ones perpetuating the cycle. Show you care. Prove to us you have a good work ethic. If you think such minimum wage jobs are great then please send in your resume and tell us how it goes and go see how well they treat you.
    I have yet to see the naysayers who promote this mayors way of handling things to put their foot first. They ironically whine about others who are at least have a valid point

    • Mike says:

      It is against the law to place wind turbines in urban areas. How many LOCAL jobs does a wind turbine create? The call centre created 100s of LOCAL jobs.

  4. Concerned resident says:

    Thinking about the amount of tax raises we have faced in this city. From Rob Hamilton till now, there should be plenty of money for infrastructure repairs. With a declining population that means even more money should be available. So where has all that money gone?

    If we are struggling with just the basics then why are we demanding wants that we cannot afford and is unsssery such as moving lakeshore road back, building a new police station that is not needed and funding an arts center?

    We should be cancelling said projects. If anything we need to remove the red tape. With the new annexed land it is a perfect location for wind turbines and plants. Building those would add to our tax base and provide proper growth.

    Not building more and more houses to make it look like we are growing when in fact we are not.

    • James says:

      This city is buried in debt and can only lay claim to the fuelling of terrible and disastrous economic ideas that have put this city on its knees. Closing in on a half billion in debt we are one of the highest debt-to-disposable-income cities in Ontario. As a city, Barrie is right up there as well when comparing the debt it carries and applying it on a per citizen basis. Don’t be fooled by the smoke and mirrors folks. This city is in deep deep financial distress and you can thank the mayor and council for getting us there in a very short time.

  5. Concerned resident says:

    The city dose not stand up for its residents. I myself have invested money into property in the city of barrie, only to have them damage my land with there great ideas with development projects. This mayor and council are not experienced enough and are hiring developer’s from the south that have no idea the climate we face. little lake has had silt dumped into it from surrounding developing lands for the last year. The city is aware but choses to do nothing about it blaming bad weather and heavy snow and rain. last time I checked barrie Ontario was known for heavy snow and heavy rain in the spring. lack of experience, knowledge, pride and concern are all barrie city council staff are offering.

Speak Your Mind

Tell us what you're thinking about this article...

*


Got a question or comment for City of Barrie staff?

If you have a question or would like to provide feedback to a City of Barrie department please use the online contact form located on the City of Barrie's website: http://www.barrie.ca/info/Pages/ContactUs.aspx