Incentivizing sustainable urban form

Fresh Outlooks Foundation Building SustainABLE Communities Conference

November 27, 2013

David ThompsonPolicy Director, Sustainable

Communities Sustainable Prosperity

www.sustainableprosperity.ca

Comprehensive overview (not)Just touch on three points: Costs of sprawl Causes Reforms

More: www.thecostofsprawl.com

Making markets work for the environment

Sprawl Costs To the environment

Known for decades To human health

Known for years To municipal budgets

Just starting to get a handle on it A potential game changer

Making markets work for the environment

Costs to municipal budgets Edmonton

Net loss from 17 developments in 60 years ~ $4 billion

Halifax Region 50% of growth in urban areas - save $715 million in

20 yrs Calgary

25% denser development would save City $11 billion in capital costs alone

Making markets work for the environment

Making markets work for the environment

Municipalities are aware of the costs, and are acting… Cdn municipalities adopting density

goals E.g. St John’s, Saint John, Ottawa, Hamilton,

Saskatoon, Calgary, Edmonton, Kelowna, Metro Vancouver Kelowna OCP: “OCP objectives are focussed on

compact urban form (mixed use neighbourhoods and higher density in core areas)”

CMHC 2005, 2011 Census: little success

Making markets work for the environment

Making markets work for the environment

Why little success?

Need to look at causes.

Sprawl Causes “Pure” market demand for sprawl?

Much of it boils down to price (big decision driver) Can get 3BR, 2 bath house in centre of town: $

Sprawl subsidies Road subsidies: $13.5 billion per year, net Mischarging on development costs, utilities,

property taxes Failure to internalize externalities

This is an opportunity Reform prices, make sustainable housing affordable

Making markets work for the environment

Price reforms Transportation pricing

Fuel tax (sharing, or power to levy), road pricing, PAYD, parking pricing, etc.

Development charges Average rate structure – subsidizes sprawl Marginal, or area-based rates – fairer Special rates

Zero rate/ credits for downtown, brownfields Reduce rates near transit corridors

Making markets work for the environment

Price reforms Property tax adjustments

Lower tax rates for denser classes of property (e.g. multi-family)

Lower rates in central areas and near transit corridors to encourage density

Utility pricing adjustments Frontage-based levy to encourage density

Making markets work for the environment

Reforms: Equity and Fairness Pricing policies, if badly designed, can

unfairly affect low income Cdns 1990s “user fees” on public goods: head taxes

Good design: Link prices to sprawl goals, and to income / wealth

Making markets work for the environment

Multiple incentives No magic bullet; need a range of tools None is large enough to curb sprawl on its own

(E.g. DCs a full order of magnitude too small) Multiple incentives sends clear policy signal Less economic distortion Offset negative impacts

Making markets work for the environment

Economic benefits of density Spread infrastructure & service costs across more

payers Better access to workers – higher productivity Better access to jobs – reduced unemployment Industrial specialization and local outsourcing Knowledge spillovers, within and between sectors Access to suppliers and markets “Economies of agglomeration”

Making markets work for the environment

Making markets work for the environment

Conclusions Sprawl costs high Not inevitable

Result of market failures and policy failures These failures can be corrected

We can make sustainable housing affordable

Affordability will (continue to) drive decisions But… toward sustainable urban form

David ThompsonPolicy Director, Sustainable CommunitiesSustainable Prosperitydthompson@plrc.cawww.sustainableprosperity.ca info@sustainableprosperity.ca

Making markets work for the environment

Making markets work for the environment

Event of interest to some? "What is the Role of Pricing in Managing

Metro Vancouver's growth?" Symposium chaired by Larry Beasley January 20, 2014 Vancouver Sustainable Prosperity and Canadian

Urban Institute