Halifax’s greenfield developments have made the city more expensive for everyone but, simultaneously, contribute less tax revenue to pay for those costs.
Since 1996, the length of road per person in Halifax’s suburban and urban areas has increased by 5%. For each taxpayer, that means 5% more costs for road maintenance, snow clearing, and garbage pickup. It means providing pipes, sewers, transit and emergency services also become more expensive. Provincial and federal costs, including school bussing and electricity, equally go up. Any service the government provides each house becomes more expensive the further the distance between them. To reduce taxes, we must reduce the burden of infrastructure each of us must carry.
To reduce our road length per person, we need to ensure new developments either use existing roads or, at the least, that they add more taxpayers than roads. Eleven separate areas of the city (census tracts) have, however, increased in population but still ended up with longer roads per person than before. These places, such as Kingswood and Glen Arbour, cost taxpayers money to build, and then increase costs for all taxpayers in perpetuity.
But, do these large new homes pay enough in taxes to make up the difference?
According to our research, it’s quite the opposite: the more a neighbourhood costs to service, the less it chips in.
How do we make sense of this? It’s not just that land with bigger buildings are valued more, or else density would show an equally high correlation with tax revenue. We found it doesn’t.
Here’s one way to think about it. The greater the distance between each person, the less likely it is that any amenity—like a park or a grocery store—will be close to a home. Without nearby amenities, properties sell for less, which pushes down their assessment value, and therefore the amount they pay in taxes.
The same mechanism that drives up costs also appears to drive down revenue. Tax-payers are getting hurt twice.
Since costlier places pay less, and efficient places pay more, some places in the city are unfairly paying for others.
We estimated the total residential tax revenue for each area and minused the total cost of road maintenance and snow clearing. We show that many neighbourhoods, including Kingswood and Glen Arbour, only barely break even. That means they cannot chip in for garbage pickup, emergency services or any of the other costs of the city.
Meanwhile, many areas, especially in the core, are paying more than their fair share, including North Dartmouth, North End Halifax, Fairview, Downtown Halifax, and the South End.
In effect, historic neighbourhoods, as well as some older suburbs, are subsidizing new, costlier developments. To put that subsidy in concrete terms, let’s compare specific census tracts.
Often, as these examples show, the subsidy is clearly unfair, since some of our least efficient, costliest neighbourhoods also have a higher average household income.
These examples of unfair cross-subsidization demonstrate why it is so important to reform Halifax’s growth patterns, and perhaps its residential tax formula. We should emphasize that the underlying mechanism for why some places cost more and contribute less is not household income, but the efficiency of the road network.
These findings show clearly some things need to change:
- To decrease costs for everyone, Halifax should set a goal of reducing road length per resident from 7 meters per person in its suburban and urban area to 6.
- To achieve that goal, a hard maximum of 6 meters per person should be set for new developments, with incentives to achieve less.
- Residential tax reform should be considered so that historic neighbourhoods are not subsidizing costly new neighbourhoods.
- We should use the city’s new Green Network Plan to direct growth to existing roads.
The greater the length of road per person, the more the city costs to service. Startlingly, there is also a direct connection between areas costing more and yet contributing less tax revenue. To create a lower-cost and fairer city for everyone, Halifax must grow more efficiently and make better use of the roads it already has.