1. Incentivizing sustainable urban form Fresh Outlooks Foundation Building SustainABLE Communities Conference November 27, 2013 David Thompson Policy Director, Sustainable Communities Sustainable Prosperity www.sustainableprosperity.ca

2. Comprehensive overview (not) Just touch on three points:  Costs of sprawl  Causes  Reforms More: www.thecostofsprawl.com Making markets work for the environment

3. 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

4. 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

6. 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

7. Why little success? Need to look at causes. Making markets work for the environment

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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 Making markets work for the environment

15. David Thompson Policy Director, Sustainable Communities Sustainable Prosperity dthompson@plrc.ca www.sustainableprosperity.ca info@sustainableprosperity.ca Making markets work for the environment

17. 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 Making markets work for the environment