Wednesday’s headlines

11 comments

1. What’s missing from the stories is comparative context. It’s nice that they compared various cities on overall prosperity, but I would like to see comparisons on suburb vs core for all of those places as well. We all have a sense that Toronto is slowly turning into Atlanta, but then again so are a lot of places. We didn’t invent the car, the lawn, or the passage of time, factors that have been driving people to whatever constituted the “suburbs” since the 1800s.

   Due to its younger age, Toronto was indeed one of the more compact cities in the last century, but has a tipping point been reached? Are more jobs, more population, and more real estate value now found outside the 416 or in it? And how does that compare to NY vs its massive suburbs in three states or Chicago and Chicagoland, or Boston and the ring of burbs around its ring roads, or SF vs the Bay Area and silicon valley?

   My point is that it’s ok if we are still doing better than our peers at holding onto the “city”, even as we spread out over time, but if we are indeed slipping vs our peers then it indicates something within our control that should be addressed.

2. uSkscraper,

   A comparison would be helpful. It would also be helpful to see if these other areas also faced decline as the surrounding regions flourished. It would be expected that there would be differences in growth rates. It is uncommon that the trajectories are opposed.

   Now on to the official response. Let’s cut through some of the bull from Miller and Pantalone.

   It took Toronto nearly a decade to move on the tax issue. Two years ago all the city did was recognize a problem that was more than ten years old. Prior to ‘not waiting’, it had successfully lobbied the province to allow it raise non-residential rates faster than mandated by provincial law. It is only after the city had lost thousands of jobs and had a shrinking commercial assessment base did it act. Even then, its first course of action fell far short of public suggestions.

   Toronto also should stop milking its two office towers under construction as a sign of its new found prosperity. Unless drastic action is taken these will be the last of the type we see in a generation. Councillor Pantalone might want to consider that between 2000 and 2006, slightly over 14 million s.f. of office space has been developed across the GTA with the overwhelming majority (90%) taking place in suburbs. Mississauga itself, while being less than half the size of Toronto, had five times the amount as Toronto. To make matters worse, a large portion of Toronto’s amount is being built by the city (the Courus building). This is because the private sector would not do it.

3. Glen, are you sure it’s so uncommon that the trajectories are opposed? For example, there are plans to convert the famous IBM Plaza in Chicago from office to residential. uSkyscraper is exactly right: the trend in Toronto has to be seen in context of what’s happening across North America. The Board of Trade’s apples-to-oranges (city of Toronto to entire regions) comparison is speculative at best.

4. We could also throw Detroit and Buffalo into the comparisons.

   And why is it surprising that a less-developed suburb like Mississauga should have more development than a mature city where there isn’t much space left? Anyway, a lot of those new office towers will be going empty no matter where they are located given the current state of affairs.

5. As a resident of Clarkson, I’m not too happy about the gas-fired plant proposed. What happened to more environmentally friendly choices?

6. Matt, it is the persistence that worries me. For cities that ascribe to being world class growth is important. In 1989 Toronto had its peak employment of 1.5 million jobs. Compare that to today’s 1.3 million. If trajectories persist in different directions Toronto will become more like the Detroit or LA CSA’s. Twenty years is a long time to still be behind in jobs.

   The city has to be able to grow in order to build. How can we afford good public transit and public spaces when the population growth is anemic and the assessment base is shrinking? There are real risk’s here.

7. Not sure I buy the study’s findings or put much weight in all the indicators selected. But study aside, there’s no use keeping one’s head in the sand regarding the employment situation in the GTA. On this issue, Glen is right (and I’ve long agreed with him). The stats show Toronto has been bleeding jobs while other jurisdictions in the GTA have been gaining. A key factor in this is the cheaper property taxes for the commercial sector outside Toronto — and we’ve seen both large and small employers pull up stakes, often moving just a few blocks to avoid TO’s tax rates. Council seems to have finally woken up to the severity of the situation (though some would argue they are a long ways off from improving the situation, if that’s even possible.)

   PS. Glen, acknowledging your point regarding commercial taxes, I still don’t buy your oft-stated corollory to this that residential property taxes in TO are low compared to surrounding municipalities. As a function of value, the mill rate is lower in TO. But if one were to calculate it on the basis of square footage of living space, residential property tax in TO is MUCH higher than surrounding municipalities. Regarding TO’s costs, I don’t see the situation turning in TO’s favour until things such as welfare and social housing costs (which are MUCH more substantial in TO) are removed from the property tax base. Some would argue that TO’s City Council has registered some very questionable expenditures compared to the surrounding municipalities (Filmport being a recent one), thus placing a more onerous burden on its ratepayers. While to some extent I would agree with this (though not nearly to the extent that the right wing members of Council seem to suggest), I don’t think this alone would not explain the expenditure differential between TO and the surrounding municipalities.

8. “I don’t see the situation turning in TO’s favour until things such as welfare and social housing costs (which are MUCH more substantial in TO) are removed from the property tax base.”

   Isn’t Toronto’s public housing self-supporting?

9. Toronto’s taxes are the result of Toronto’s spending. They have as much relationship to Mississauga’s as they do to Madrid’s. Only in the areas which you mentioned, do they bear any relationship.

   That being said, lets look at what those cost are. They can be found under the heading : Citizen Centred Services “A” : in the budget. They amount to ~1 billion per year. That is gross, it does not account for the portion over and above that of other municipalities. Even Pretending that this entire burden was to an extra expense that only Toronto had to carry, it amounts to 11.5% of the budget. Per household it amounts to $1,000. On the other hand the Province also gives Toronto money for such services, this amounts to more than $2,400 per household, over and above the average grants to the 905 cities.

   On the issue of taxes, the square footage argument falls flat. First off in any areas in the city, in Toronto’s suburbs, the taxes per sq.ft. are substantially lower than in the 905. Furthermore, expenses, like the ones talked about above, bear little to no relationship to area. Does someone living in a 600. sq ft condo use the library, police, health services, etc. 40% less than a person in 1,000 sq. ft. residence? Of course not. At most the benefits of density translate into a 5% cost advantage. That fact remains, that the average property tax per household is ~$2,400. Which is much lower than surrounding regions. You seem to be at odds at the ‘progressive’ nature of property tax. Which, as a capital tax, is its intention. So while some households are paying more per sq. ft than others in the city and regions, it is the result of the ‘progressive’ nature of property tax in general.

   The simple truth is that Toronto spends more and charges residents less compared to its neighbors. It makes up the shortfall by raiding reserves, Provincial grants and by having punitive taxes on businesses and renters.

10. While some spacing readers might dismiss my musings on the effects of Toronto’s high commercial taxes, I think that the words of the progressive, but pragmatic, Don Drummond are in agreement……….

    “Miller and McGuinty, Drummond says, need to tell their constituents that Toronto and Ontario are suffering from structural deficits that must urgently be fixed. By “structural deficit,” he means that, on a regular basis, neither government has enough revenues to pay for its programs. The city is not legally allowed to run an operating deficit, so it balances its budget by drawing on its reserves. Drummond thinks that city hall should cut spending as much as possible, then cover the remaining shortfall (and there will be a shortfall) by raising residential taxes, which are lower here than in comparable jurisdictions. He has great faith in the intelligence of ordinary people, and in their ability to handle the truth about the economy. They’ll back higher residential taxes, he believes, if someone shows them why higher taxes are necessary.

    Most importantly, he says, if Toronto wants a thriving economy, it has to stop driving away business with its high corporate taxes. The city’s commercial and industrial rate is double the residential rate, which, in Drummond’s view, makes no sense. The rates are also higher than those in the outer suburbs, which is why business headquarters and jobs are moving to places like Markham.”

    http://torontolife.ca/features/celebrity-economist/?pageno=3

    * NB Toronto’s non residential taxes are nearly 4 times as high as residential and twice as high as its neighbors. I believe that Don was misquoted.

11. Re: Boris’ comment “Isn’t Toronto’s public housing self-supporting?”

    You are being sarcastic, aren’t you?
    ***

    Re: Glen, we have a difference of opinion on whether TO’s res property rates are lower — and also with what the “intention” of said tax should be. Not enough space here to debate this (or time on my part, and probably yours as well), but the difference is noted. And I still agree with your comments regarding the impact of TO’s commercial tax rate.