A new memo from the assessment and taxation department at the City of Edmonton highlights just how enormous impact building in-and-up plays in building a financially resilient and sustainable city. What has been missing from debates around renewal thus far has been quantifying the impact of the financial health of the city as a whole, and I hope these numbers help highlight another dimension for consideration.
Since 2015, for residential properties (not including commercial), the amount of tax uplift from renewal added to Edmonton is roughly $263 million in taxes just from the mature neighbourhoods alone. Each year since 2015 the city has added approximately $3-7 million to the tax base, and remember, this amount compounds each year.
Once a property is added to the assessment base, it is paying the higher assessed value each year, every year, in perpetuity (A, A+B, A+B+C… and so forth each year).
Once you factor in the compounding since 2015, the total additional revenue is over $263 million. Next year, even if one more new unit was added, will increase at a minimum an additional $51.7 million to the balance sheet. That is an enormous amount of revenue in merely 9 years in the mature areas, and there are many other areas undergoing renewal inside the Henday but outside of the area covered in this assessment. For example we expect to see even more renewal along the Valley Line, Valley Line West, and Capital Line stations over the next decade.
Last year in 2024, $6.7 million was added to the balance sheet from residential which included renovations, garage suites, infill homes, new apartment buildings. Roughly, that's the equivalent of adding around 12 new six story apartment buildings. For example, the new University Heights (six story) apartment building on University Ave and 114 street will generate $528,798 in taxes in 2024 (and increasing each subsequent year) as well as provide housing for hundreds of people close to two LRT stations and major employment centres.
Infill helps lower property taxes and provide quality public services for Edmonton.
That means millions and millions of additional funding each year to fund the public services we rely on. Taxes keeps our buses moving, allows us to hire new librarians, and pays for the hard working staff clearing our snow and cutting our grass. It pays for the replacement of our bridges and the expansion of our LRT network. With provincial funding dramatically reduced since the UCP took office, property taxes and user fees are the only way municipalities can fund and deliver services.
Study after study demonstrates that Infill (broadly defined as “refilling” existing neighbourhoods which could include new construction or renovations) helps generate new revenue, as opposed to financially ruinous urban sprawl which is costing our communities more money and never pays for itself.
Infill is also a force multiplier. If the residents of these infills were living in suburban sprawl neighbourhoods, we would be paying much more to build and service those new neighbourhoods, expanding the inventory of roads we need to replace and diluting our service levels across the city with longer drives for fire tucks, garbage trucks, police cars, and snow plows. There would be a temporary bump in new assessment from going from dirt to domiciles, but the liabilities and demands on new services would greatly outpace that revenue. Analysis from the city of Edmonton shows that by 2050 there will be a $400 million (in 2014 dollars) gap between our revenues and the cost of servicing and maintaining the Decoteau area alone.
Anytime you are raising assessment values without creating new service demands or infrastructure liabilities, is a fiscal win for your tax rate and the City’s budget. When I see new construction happening downtown or around the core of our city, I try to remind myself that the construction isn't merely creating new jobs for the construction workers, but the new building might be funding the salary of librarians, police officers, firefighters, snow removal workers or bus drivers.
To be perfectly clear: of course, this doesn’t mean that every project, every time, every place should be approved. Local context, impact, and infrastructure considerations must be considered. That is why we have plans such as the City Plan and District Plans to help guide Development.
But given the positive or negative financial impact, this is yet another reason why it is incredibly frustrating to see politicians who are self-proclaimed “fiscal conservatives”, who claim to care about city taxes, regularly voting against reasonable development proposals.
I hear concerns from people that this is just about developers making money. The reality is that whether new infill or suburban development, the vast majority of projects are built by the private sector and motivated by profit. However, as the city we still have a choice whether new homes should be built in a way that improves or damages our financial position as a community.
As a city councillor, denying the construction of new enormously revenue positive development, is effectively voting for a tax increase, layoffs, or both. Building “in not out” is probably the most fiscally responsible thing we can do. Adding new development in mature neighbourhoods may be challenging, but with time it is inevitable as structures age and populations grow (especially considering as Edmonton grew over 73,000 people last year alone).
There is a cross-party consensus on the need for densification. I hear from self-proclaimed fiscal conservatives that they support infill because it helps generate revenue more efficiently, can use resources more efficiently, and help lower taxes. I hear from labour leaders that they support infill because it helps contribute to fair wages and more good union jobs in the city. I hear from environmentalists that they support infill because it helps encourage walkability and reduce the largest source of our pollution: car trips.
These can be very challenging conversations, but the more we can lay all the variables on the table, including the financial tradeoffs to be considered, the better informed our public debate and dialogue will be.
Notes:
- The city budget is determined by an amount required (like a million dollars) and then it is distributed among existing against a number of properties.
- For example this could mean $1 million dollars could be collected over ten properties at $100k each, or 2 properties at $500k each.
- The greater the assessment base, the more area to apply the taxes to.
- Infill requires dramatically less services because it is located close to existing roads, parks, and amenities. Snow removal demands are reduced when you are not adding liniar roadway.
- For new construction, utilities (such as new fire hydrants, pipes, sewage, or extra power) required must be paid for by the developer as part of their construction costs.
- For specific questions about neighbourhood infill, I'm building a "Frequently asked questions" page at michaeljanz.ca/infill
