De-amalgamating the Halifax Regional Municipality is the worst thing we could possibly do for this city.
I don’t want to re-fight the 1996 forced merger of the cities of Halifax and Dartmouth, the town of Bedford and Halifax County, except to note that while it was heavy-handed and rushed, it was an attempt to address some real problems—in particular, suburban sprawl.
Let’s back up. In the 1960s, the former city of Dartmouth created the Burnside Industrial Park, and so Dartmouth got the bulk of new industrial operations in the area, and therefore the bulk of new property taxes. Reeling from the loss of industrial operations, and therefore tax revenue, the city of Halifax responded in kind, creating the Bayers Lake Industrial Park in the 1980s.
Then each city attempted to out-do the other by attracting giant retail chains—-suburban sprawl was subsidized at the expense of the old downtown retail district, so as to feed their need for tax revenue. If they didn’t chase retail property taxes paid by the Walmarts of the world, the cities would have to increase residential property taxes.
Sprawl wasn’t limited to the business parks. The development of Portland Hills, much of Cole Harbour and especially Kingswood in essence boils down to the county seeing an opportunity to underwrite its costs in a sort of Ponzi scheme: existing property taxes paid for the extension of roads, water mains and sewers, in order to increase the residential tax base, which could then be used to extend more infrastructure to create more suburbs, and on and on, forever.
We now have a better sense of things, and want to see all those things policy wonks have turned into buzzwords—compact urban form, densification, thriving downtown and so forth. Still, I part with people who want to start a war with the suburbs. We’ve heard it time and again: the suburbs aren’t paying their way, we should change the way we charge taxes and, in its purest form, we should de-amalgamate. Wrong on all counts.
It does no one any good to vilify suburbanites. First, the economic arguments don’t stand up. It’s true that bringing government services to urban areas is much cheaper, per capita, than is servicing the suburbs. But neither area pays its own way. In HRM, residential taxpayers are subsidized three to one by commercial taxes—on average, for every dollar it costs to bring government services to a residential property, 25 cents come from residential taxes, while 75 cents come from commercial taxes.
And where do commercial taxes come from? Ultimately, from the employees who work in the businesses, and the customers who shop in them. And the bulk of those people live, yep, in the suburbs.
Third, suburbanites are not monsters, or even mildly bad people. They’re full citizens who made life choices with the encouragement of governments and while touching on all the cultural signposts that have been erected over the decades. We need to bring about a cultural and political shift in the way we build cities, but that too will take decades; in the meanwhile, just like urbanites, suburbanites deserve good parks, decent transportation infrastructure and reliable city services.
And we need the cooperation, not the antagonism, of suburbanites.
Yes, we’re not getting the kind of cooperation we need. Halifax council continues to pursue stupid projects like the Washmill underpass, paid for with the further expansion of the BLIP, and the widening of Bayers Road. To a large degree, that’s a reflection of suburban councillors out-voting urban councillors and continuing to vote in policies that encourage sprawl. But de-amalgamating is nuts. Think what would happen if suddenly there were a handful of suburban cities in control of their own destiny.
We’d be back to 1980s-style tax-chasing policies of sprawl—the city of Cole Harbour could keep its residential property taxes down by subsiding a gigantic big-box district. The city of Sackville would respond in kind, building its own mall. A new county jurisdiction could open up the coastline to hyperdevelopment to start the Ponzi scheme anew.
It’s a recipe for disaster, and would lead to the destruction of downtown Halifax. Let’s keep it together.
This article appears in Apr 12-18, 2012.
So, let me get this straight. Suburban sprawl = bad. But also penninsular high rise condo development and thus denser population in the city = bad.
Which route would you ACTUALLY like HRM to take, Mr. Bousquet? Or do you just enjoy writing negative articles get to show cartoons of Peter Kelly looking like a goon?
I don’t think that the controversy is against suburbanites per se. It’s more an outrage over the disparity in the commercial tax rates charged in the core vs. the ‘burbs.
You noted that one of the issues that lead to amalgamation was the competing interests of the various municipalities, where they had been providing incentives to attract big box stores via low-tax business parks. This was clearly a race to the bottom as each municipality attempted to provide an even better tax deal to those stores.
Unfortunately, after amalgamation, the commercial tax formula wasn’t corrected. The business parks continue to host large commercial entities who pay a fraction of the tax rate that businesses in the core/urban/downtown area pay.
Given this rationale, it would make sense to say that commercial taxation was an important factor in pursuing amalgamation, and revising the formulas after amalgamation (i.e. tax reform) has to happen in order to get closer to what amalgamation was supposed to accomplish/address.
you want to see densification?!?!?!
hahahahahahahahahahaha!!!!
Since when? You have taken every possible opportunity to argue against density. Show me ONE article where you argued in favour of a high density development within the downtown core. Density in an urban context is in part defined by height, given that squat buildings in the downtown core are spectacularly bad land usage and do nothing to address either the environmental or property tax issues facing the downtown area.
Thanks for the laugh Tim.
issmat – box stores pay the same tax rate as downtown stores, except for the BID levy. Some Murphy guy keeps mumbling about Walmart paying less taxes than downtown biz but he decides to mislead people by not pointing out that downtown land is worth a lot more than biz park land. The biz parks are not low tax. The competition of earlier regimes was based on giving away the land for $1 (City of Halifax) or selling the land for a price lower than the costs of preparing and servicing the lots (City of Dartmouth).
I can’t even read tim’s articles anymore. He is against everything, hes like the green party, lets just whine about problems and not give solutions.
There was some sense in amalgamating urban areas (Halifax/Dartmouth/Bedford, and maybe the Sackvilles) back in ’96. But adding the county that stretches from Ecum Secum to Hubbards was (and IS) ridiculous! Google maps suggests that it is a three hour drive between the two towns!
This is comparable to the driving time between Brussels and Paris!
And the needs of those two small towns are very different than the needs of the residents on Bayers Road or Pleasant Street.
Business taxes come from the business owner who, yes, is able to pay thanks to the labour of employees and the patronage of customers. Ultimately though, it’s owner who is responsible and if taxes gobble up too much revenue, the business will close or relocate. It’s not a bottomless well. The way we handle commercial taxes has real problems. Taxes are highest in the core where the most valuable property is. The opportunity to earn more by locating Downtown, however, isn’t necessarily there. Being Downtown works for bars and restaurants and some upscale boutiques, but businesses with lower margins, like bookstores or hair salons, are left to struggle as costs increases, but revenues remain relatively the same. This makes it tough to build vibrant mixed-use neighbourhoods since key business services are pushed out. There is also no cap on commercial assessments, which leaves business owners at the mercy of wide swings in the paper value of their property or the property they’re renting, which hits Downtown business, again, particularly hard (Downtown Dartmouth and North End Halifax are the recent victims).
The flawed and counter-productive message our tax system sends the business community is that you’re better off locating in the burbs where taxes are lower, parking is free and services are subsidized. Why would anyone setup Downtown given those incentives? Our tax code encourages sprawl and makes it more difficult to maintain vibrant urban neighbourhoods that support a mix of services. Perhaps the worst part though is the greatest concentration of independent businesses are located in our urban areas while most of the big national and multi-national businesses are located out on the edge in the business parks. Effectively what we’ve done is we’ve decided to tax our own entrepreneurs who are attached to our community and keep a greater share of profits here at a greater rate than their competitors who send the cash off to head office. It’s not Wal-Mart and its like that are paying the high taxes that goes with Downtown’s high property values! It’s our own people! I hope our next council restarts the tax reform process. The first iteration may not have worked, but the status-quo is still broken.
Joeblow – Yes, the tax rate is the same. But the tax amount paid is vastly different for comparable property sizes.
The argument tax reformers are trying to make is that rates shouldn’t be the same, or the formula shouldn’t be based on property values. A 1000 square-foot retail store in downtown Halifax and a 1000 sqft store in Dartmouth Crossing shouldn’t be taxed at the same percentage per $100 of assessed value because that unfairly creates a much larger tax bill on the higher-assessed property regardless of how much it costs to service it, and regardless of how much revenue or profit either property generate.
One of the arguments the article is trying to make is that suburbanites make up the majority of customers, and therefore an equally major portion of commercial property taxes that businesses pay in HRM come from those same suburbanites.
The author then attempts to infer that it is ok to have a tax disparity in the ‘burbs since suburbanites contribute more to the tax stream via their purchases, and that tax stream goes to service other areas of HRM, including the core.
This conclusion is flawed. First, while rural and suburban dwellers do outnumber urban residents, they do not ‘shop’ in the urban core. In fact, the shopping patterns are the opposite. Because the business parks are located outside the urban core, it is urbanites who shop in suburban areas, not the other way around. That’s one of the main reasons urban business districts are struggling.
Second, we all accept as fact that suburban businesses pay less taxes into the stream due to their lower property assessment. Therefore, if a consumer spends $100, a smaller percentage of that money goes into the tax stream if the $100 was spent in Bayers Lake than if that same $100 was spent on Spring Garden.
So, whichever way we slice it, the urban core ends up the loser, not the suburbs. Urban district businesses pay more into the tax stream in terms of real dollars than equivalent businesses outside the core, and they receive less revenue because their customers are flocking to suburban shopping centers.
The urban core ends up subsidizing their competitor’s success because of a wonky commercial tax formula that does not charge those big box stores for the true cost of servicing their suburban business park, or doesn’t consider that property value has nothing to do with how much business/revenue an urban-based business is generating in order to be able to afford to pay the tax, whether its customers are urbanites or suburbanites.
It’s only fair that the disparity is corrected. Local hard working business owners in the urban core are closing shops and going bankrupt because they can’t keep the same amount of money in their pocket that an equivalent suburban business can.
What’s worse is that most of those suburban big box stores are not even locally owned! So whatever money the tenants of those suburban business parks are able to pocket from the tax advantage goes to investors in Ontario, Quebec and Alberta where the holding companies are set up and pay commercial income tax outside Nova Scotia. So we can’t even say that the disparity is worth it because the overall local economy benefits from hurting the few urban local businesses in exchange for benefiting the many suburban local businesses.