Funding Cities
March 3rd, 2010
There was an interesting article in the Star recently (with a misleading headline) about how Chicago’s chief financial officer arranged leases on profitable city-owned infrastructure with private companies, and so raised billions of dollars of capital for the city. These assets included some parking garages, all the city’s parking meters, and the Chicago Skyway, a 7.8 mile toll bridge and road connecting two expressways.
Leasing is certainly a better option than selling valuable city assets outright. The city raises needed money, and then, eventually, the assets return to the city and it can either start managing them again and get the revenue directly, or re-lease them.
It’s not ideal, though. Leases tend to be very long term (e.g. 99 years), so it’s not much different from privatization in the short term. And it might not make a lot of economic sense to sell or lease an asset that makes good money (such as Toronto Hydro), as economist Jim Stanford explains in the article:
“Think of Toronto Hydro,” said Stanford. “The city typically earns an annual profit of about 10 per cent on its equity investment. Some of that (but not all) is paid to the city as a cash dividend; but even the profits that are retained inside Toronto Hydro are still new wealth for the City.
“If you sell off an asset that earns 10 per cent, in order to pay down debt (or avoid new debt, which is equivalent) on which you pay 5 or 6 per cent interest, have you made a good decision? Obviously not.
“Your balance sheet is no stronger: debt is lower, but so are your assets.”
On the other hand, reading the article (especially the mention of the Skyway), I wondered whether it might make a sense to set up a lease on city assets that don’t earn any revenue but have revenue-generating potential, with a private company that is able to earn revenue with them. In return, the city could get a big dose of capital funding. I am thinking of the Don Valley Parkway and the Gardiner Expressway, which were handed over to the city to manage (and pay for) as part of the Harris government’s downloading.
September 28th, 2009
“Every time you do something in the city, don’t just do it, do it beautifully.”
A seemingly simple statement made by Joe Berridge at IPAC’s recent Cities and Public Policy Conference, speaks volumes about how we see planning and urban design policy making in Toronto. It summarized much of the talk during the two days and over 40 speakers, who included politicians, academics and management. A common thread of the speakers was the need for us to change the way we think about cities and urban design.
The conference opened with Mayor David Miller and Toronto’s role in Canada and among other global cities. He spoke about Toronto being a city that people choose to live in because of its diversity, culture and economic opportunities. While admitting he did not have the answer, he urged the delegates to think about how cities can sustain themselves in a changing political context, a relevant issue for Toronto, now that Mayor Miller’s time in Office is ending.
Eva Ligeti, Executive Director of Clean Air Partnership stated, “one of the key things that is holding us back is our culture of entitlement,” and an overall thinking that “whatever we have now, cannot be changed.” She references Malcolm Gladwell’s ideas in The Tipping Point and “the magic moment when ideas transcend and social behaviours cross thresholds, tip and spread like wild fire, whereupon institutions undergo fundamental change.” Ligeti gives the successful example of the five-cent a bag bylaw, which the City of Toronto recently implemented. A very simple change that has shown people things can be done on a small scale and now stores all over Ontario are doing the same. As Ligeti says, “a small item, but it worked.”
June 29th, 2009
Well, so much for the National Transit Strategy.
When city council approved the additional $417 million for the streetcar purchase on …
May 8th, 2009
“We’re breaking new ground for Transit City thanks to the recent investment from Premier Dalton McGuinty and the Ontario Government’s Move2020 initaitive.”
As my hastily snapped and poorly framed camera phone picture of the advertisement above shows, …
April 19th, 2009
WHAT: Spacing’s spring-summer 2009 issue release party
WHEN: Tonight! From 7:30pm-1am
WHERE: Canadian Corps hall, 201 Niagara St. (King & Bathurst area)
HOW MUCH: $10 includes copy of mag, $5 for subscribers
RSVP: let us know if you’re coming …
March 7th, 2009
After the first ballot at the NDP leadership convention, Michael Prue was dropped from the ballot after getting only 11.5% of the vote.
While his 4th-place finish wasn’t necessarily a surprise, the number of votes he received …
March 7th, 2009
We’re (myself and Matt Blackett) at the Ontario NDP leadership convention in Hamilton, looking to see what the NDP candidates have to say about the issues affecting cities in Ontario, and Toronto in particular.
Six of the ten NDP MPPs at Queen’s …
January 28th, 2009
When word started leaking out last night through Mayor David Miller via Twitter that Transit City wasn’t funded in the budget brought down by the federal government, I was disappointed. …
January 7th, 2009
[youtube]http://www.youtube.com/watch?v=–vlT1iGF0g[/youtube]
There has been much chatter around the continent — especially as the recession-depression continues — about a new deal for cities. Two intersecting items crossed my laptop yesterday, the first being this video of an Obama speech given back in …
October 30th, 2008
At a noon hour budget committee meeting, the City of Toronto publicly launched its capital budget approval process. While the biggest dollar figures were reserved for TTC and roads, bike lanes play a prominent role in the $1.6 billion spending plan.
Mayor David Miller, budget chief Shelley Carroll and city manager Joe Pennachetti all highlighted the investment of $70.3 million to be spent installing bike lanes between 2009 and 2012. Starting with $8 million in 2009, Miller said that with those funds and the streamlined approvals process, the bike plan will be completed by 2012. The outcome of the Annette bike lane debate at today’s meeting of City Council should be an indicator of whether the City will be able to spend the entire cycling budget.
The budget, for a change, comes in $99 million below the City’s overall debt target (the maximum amount it can borrow) and the City will continue to pay down its existing debt by $225 million per year. Only 40% of the capital budget will be funded out of debt, with the rest coming mostly from federal and provincial governments.
The budget goes to City Council for approval on December 10. The budget committee will be receiving councillor and public comment at meetings in November.
