We are rapidly growing as a city, but how we grow can either lead to financial benefit or loss. For example, urban sprawl loses municipalities money but infill (building in and up in existing areas close to existing services and amenities) generates revenue-- but just how much?
Let's look at the taxation data...
I requested a memo from the City's assessment and taxation department to look at the tax impact of various infill projects around Edmonton. The data is clear from around cities the world. Infill development is profitable and helps contribute to municipal prosperity, while suburban residential is a financial liability, requiring more services and never paying enough taxes to cover services or replacement (what Strong towns refers to as the Growth Ponzi Scheme).
It is also worth noting the benefits to residents who can experience a dramatically improved location efficiency-- having more available homes closer to amenities, services, work, play and leisure -- reducing travel times, carbon footprints, and costs. I'm sure we all would love more money in our pocket and a little more time in our day.
It should also go without saying that just because these choices are provided for others, doesn't mean that you are required to leave your current home and move into these locations. This post is purely about understanding the finances underpinning urban development.
In this case, a small number of residential lots were replaced with a 6 story multi-family apartment building, with a jump in assessed value of the property from $21,431 per year in 2019 to $528,798 in 2024 which is a dramatic jump in tax revenue.
This one was interesting to me, because it really highlights how unproductive parking lots are economically, especially in prime locations such as beside the University of Alberta. The new development contributes an additional $760,000. I expect that is only going to increase as commercial tenants and the second residential tower fill existing vacancies.
This old parking lot is now providing hundreds of new homes, close to amenities, transit, heath care, shopping and other uses. The Rundle Development is also owned by our very own muncipal public housing corporation, HOME ED, of which the City of Edmonton is the sole shareholder. Any profit generated by these developments are re-invested into the public housing operation, allowing us to provide a sliding scale of affordability.
One question I've wondered is if there is a negative tax impact when a new development comes into your neighbourhood. Does a new multi-family development or apartment building reduce the assessed value of the adjacent properties or the community as a whole? Does the tax uplift from a new multi-family development or apartment building get washed out by a reduction to the assessed value of adjacent properties?
I also asked the taxation department to look into this, and the answer was broadly, no. It is possible there could be a reduction to the assessed value of a home that is directly next to a very large high-rise, but this isn't always the case and the tax uplift from the building still greatly outweighs any reductions from adjacent properties.
Putting aside the climate crisis (too many emissions) and our housing crisis (too few new beds) cities need to commit to smart growth, building in and up, not out.
If we want to maintain and improve service levels of police, fire, transit, recreation, and public amenities, we will all benefit from increasing the assessed values within our existing neighbourhoods.
We are thrilled to share Chuck Marohn's lecture from his visit to Edmonton! Hosting Chuck and Strong Towns has helped our city be better positioned for future development as we grow to 2 million plus residents.
Policing is the largest item in the city budget and on your property tax bill. No one spends more on policing than Edmonton. But where is the new funding going?
Did you know that an inmate released from the Federal Bowden Institution would be resettled 184 km away in Edmonton, not much closer in Calgary, or Red Deer?
Maclean's Magazine reports that as a group, the ten richest Canadians combined net worth has ballooned over the last two decades to $261 Billion compared to a paltry $60 billion in 2004. Collectively enabling this opulence and stark inequality for the top ten while thousands die is one hell of a policy choice, Canada. According to the Canadian Alliance to End Homelessness, we could end homelessnes across canada for $4.4 billion a year for the next decade-- a bargain when we consider homelessness costs the Canadian economy $7 billion each year. Ending homelessness would yield a 2;1 return on investment, let alone the moral imperative.
