Downtown Bureau Unraveling the Question of Who Subsidizes Whom The opportunity for councillors like Whitehead, who persist in driving a wedge between the downtown and the suburbs, is to recognize that a thriving downtown serves the best interests of his constituents. By Ryan McGreal

Published January 30, 2015

this article has been updated

For years, Ward 8 Councillor Terry Whitehead has defended his bizarre anti-urban positions on controversial policy issues on the argument that his ward subsidizes downtown Hamilton so he has a right to oppose measures that might inconvenience his residents.

Yesterday, Whitehead posted a table on his website, listing the total property tax revenue per ward:

2014 Property Tax by Ward Ward 2014 Municipal Tax Total by Ward Ward 1 $47,945,639 Ward 2 $51,889,771 Ward 3 $41,601,088 Ward 4 $51,305,948 Ward 5 $55,026,847 Ward 6 $51,274,683 Ward 7 $80,834,418 Ward 8 $63,169,211 Ward 9 $35,964,421 Ward 10 $38,933,509 Ward 11 $64,571,188 Ward 12 $71,175,916 Ward 13 $37,810,161 Ward 14 $22,612,906 Ward 15 $47,629,687 Total $761,745,393

According to Whitehead, this "proves" his contention that his ward subsidizes downtown.

It didn't take long for people with a more rigorous approach to evidence to point out some problems with Whitehead's data.

McMaster researcher Chris Higgins quickly noted that the numbers should be normalized by population. He posted a table adding the ward population and dwelling totals from the 2011 census and calculating the property tax per person and per dwelling:

2014 Municipal Tax Total, Per Person and Per Dwelling by Ward Ward 2014 Municipal Tax Population Dwellings Tax/Person Tax/Dwelling Ward 1 $47,945,639 29,868 16,080 $1,605 $2,982 Ward 2 $51,889,771 37,569 22,007 $1,381 $2,358 Ward 3 $41,601,088 39,090 18,614 $1,064 $2,235 Ward 4 $51,305,948 36,333 15,715 $1,412 $3,265 Ward 5 $55,026,847 37,386 16,107 $1,472 $3,416 Ward 6 $51,274,683 39,249 16,353 $1,306 $3,135 Ward 7 $80,834,418 62,179 22,529 $1,300 $3,588 Ward 8 $63,169,211 48,807 18,058 $1,294 $3,498 Ward 9 $35,964,421 26,979 10,067 $1,333 $3,573 Ward 10 $38,933,509 23,524 8,910 $1,655 $4,370 Ward 11 $64,571,188 37,055 13,206 $1,743 $4,890 Ward 12 $71,175,916 35,120 11,772 $2,027 $6,046 Ward 13 $37,810,161 24,907 10,191 $1,518 $3,710 Ward 14 $22,612,906 17,634 6,197 $1,282 $3,649 Ward 15 $47,629,687 24,249 8,736 $1,964 $5,452 Total $761,745,393 519,949 214,542 $1,465 $3,551

On a per capita basis, the average person in Ward 2 paid $1,368 in 2014 and the average person in Ward 8 paid $1,272.

There are other ways to consider the data. Look at the property tax revenue per square kilometre of area:

2014 Municipal Tax Total and Per km2 by Ward Ward 2014 Municipal Tax Area (km2) Tax/Area (km2) Ward 1 $47,945,639 15.33 $3,127,569.41 Ward 2 $51,889,771 6.14 $8,451,102.77 Ward 3 $41,601,088 14.43 $2,882,958.28 Ward 4 $51,305,948 16.59 $3,092,582.76 Ward 5 $55,026,847 19.23 $2,861,510.50 Ward 6 $51,274,683 15.81 $3,243,180.46 Ward 7 $80,834,418 18.12 $4,461,060.60 Ward 8 $63,169,211 17 $3,715,835.94 Ward 9 $35,964,421 14.74 $2,439,920.01 Ward 10 $38,933,509 10.58 $3,679,915.78 Ward 11 $64,571,188 278.38 $231,953.40 Ward 12 $71,175,916 113.39 $627,708.93 Ward 13 $37,810,161 23.31 $1,622,057.53 Ward 14 $22,612,906 439.12 $51,495.96 Ward 15 $47,629,687 115.03 $414,063.17 Total $761,745,393 1117.2 $681,834.40

Now the picture changes dramatically: Ward 8 generates $3,715,835 in property tax per square kilometre, whereas Ward 2 generates a whopping $8,451,102 per square kilometre - 2.27 times as much.

Cost as well as Revenue

This last table starts to illuminate the other side of the revenue/cost equation: the cost side. When considering the cost of municipal infrastructure, a useful heuristic is population density: the number of people per square kilometre.

Suburban land use is inherently far more expensive than urban land use. Municipal services have to travel farther to get to individual properties, and that means more pipe, asphalt, concrete and so on to build it. Water systems need to pump fresh water a lot farther to reach suburban destinations, so that means more and more powerful pumping stations.

In addition, roads are generally wider in suburban developments - and newer streets are wider still - and all that extra asphalt and roadbed needs to built and maintained. Further, services like garbage collection, police and fire have to travel a lot farther so operating costs go up.

The inefficiencies of suburban land use are cumulative and self-reinforcing. Because the density of land use is low and destinations are separated by use, it is difficult to get anywhere without driving. That means every destination needs to have lots of parking, and all that extra parking pushes destinations still farther apart. On top of that, the necessity of driving means increased wear-and-tear on roads when most trips are taken in cars.

In contrast, as density goes up, the same amount of municipal infrastructure serves more people and the cost per person goes down. Bringing destinations closer together makes it easier for people to walk or cycle for some trips, so car use per capita goes down. That reduces the need for parking, which brings destinations even closer together and makes still more productive use of land.

Lets add density to the last table:

2014 Municipal Tax Total and Per km2 and Density by Ward, Total Area Ward 2014 Municipal Tax Area (km2) Tax/km2 Density (ppl/km2) Ward 1 $47,945,639 15.33 $3,127,569.41 1,948 Ward 2 $51,889,771 6.14 $8,451,102.77 6,119 Ward 3 $41,601,088 14.43 $2,882,958.28 2,709 Ward 4 $51,305,948 16.59 $3,092,582.76 2,190 Ward 5 $55,026,847 20.78 $2,647,966.11 1,944 Ward 6 $51,274,683 15.99 $3,207,607.11 2,483 Ward 7 $80,834,418 17.47 $4,627,862.12 3,432 Ward 8 $63,169,211 17.39 $3,633,186.48 2,871 Ward 9 $35,964,421 19.31 $1,862,023.95 1,830 Ward 10 $38,933,509 12.36 $3,151,132.79 2,223 Ward 11 $64,571,188 274.05 $235,620.70 133 Ward 12 $71,175,916 110.03 $646,890.98 310 Ward 13 $37,810,161 25.47 $1,484,245.07 1,069 Ward 14 $22,612,906 414.45 $54,561.00 40 Ward 15 $47,629,687 148.92 $319,831.34 211 Total $761,745,393 1117.2 $681,834.40 465

Ward 8 is actually moderately dense at 2,871 people per square kilometre, but Ward 2 blows the rest of the city out of the water with 6,119 people per square kilometre.

So even though the average income of Ward 2 may be lower than Ward 8, the vastly more efficient use of municipal infrastructure means Ward 2 still ends up ahead.

And just to be thorough, here's the same table but using only the area of each ward that is within the urban boundary:

2014 Municipal Tax Total and Per km2 and Density by Ward, Urban Area Ward 2014 Municipal Tax Urban Area (km2) Tax/km2 Density (ppl/km2) Ward 1 $47,945,639 15.33 $3,127,569.41 1,948 Ward 2 $51,889,771 6.14 $8,451,102.77 6,119 Ward 3 $41,601,088 14.43 $2,882,958.28 2,709 Ward 4 $51,305,948 16.59 $3,092,582.76 2,190 Ward 5 $55,026,847 20.78 $2,647,966.11 1,799 Ward 6 $51,274,683 15.99 $3,207,607.11 2,455 Ward 7 $80,834,418 17.47 $4,627,862.12 3,560 Ward 8 $63,169,211 17.39 $3,633,186.48 2,807 Ward 9 $35,964,421 15.07 $2,386,526.42 1,790 Ward 10 $38,933,509 12.32 $3,160,692.93 1,910 Ward 11 $64,571,188 29.13 $2,216,408.59 1,272 Ward 12 $71,175,916 26.36 $2,700,095.85 1,332 Ward 13 $37,810,161 12.16 $3,108,384.95 2,048 Ward 14 $22,612,906 0.00 N/A N/A Ward 15 $47,629,687 11.59 $4,110,398.30 2,093 Total $761,745,393 230.74 $3,301,253.14 2,253

Huge Urban Growth Potential

Perhaps most amazing, this is true even though downtown Hamilton is significantly under-performing its potential. In a recent article on downtown parking, Higgins pointed out that downtown Hamilton still has an excess of low-value surface parking and other vacant lots:



Downtown Hamilton Parking (click image to view larger

The potential for downtown Hamilton to generate additional property tax revenue is huge - if our political leaders can bring it upon themselves to understand the dynamics and to make policy decisions that support urban growth.

Former Ward 9 Councillor Brad Clark pointed this out at a May, 2014 public event on taxation, in which he acknowledged that urban development is vastly more productive for the city than suburban development, and that our tax and fee rates should encourage the kind of development we want:

[W]e need to ensure that the incentives are across the entire city for all of the downtowns. But more importantly, we need to educate the suburban voters as to why those subsidies are so vitally important in the downtown. [...] So I hear frequently, as I have been knocking on doors and talking to people, that the suburbs are concerned about all the money going into the downtown. They don't really understand the economics, because quite candidly, we've not done a good job of explaining those economics.

The opportunity for councillors like Whitehead, who persist in driving a wedge between the downtown and the suburbs, is to recognize that a thriving downtown serves the best interests of his constituents.

Ironically, Whitehead insists that he wants downtown to be more successful, yet he continues to vote against the very policy measures that would ensure such success.

Update: Chris Higgins was nice enough to take my last table of property tax revenue per square kilometre and plot it on a map:



Municipal tax per square kilometre by ward

And lest someone point out that much of the territory of the outlying wards is rural and hence not developable, he also made a map using only the non-rural areas of each ward:



Municipal tax per square kilometre by ward, non-rural areas only

Update 2: Chris Higgins provided the ward-level urban area totals he used to generate hsi second map, and I used them to produce a table that calculates the property tax revenue per square kilometre by ward for only the urban areas of the wards. You can jump to the added table.

Ryan McGreal, the editor of Raise the Hammer, lives in Hamilton with his family and works as a programmer, writer and consultant. Ryan volunteers with Hamilton Light Rail, a citizen group dedicated to bringing light rail transit to Hamilton. Ryan wrote a city affairs column in Hamilton Magazine, and several of his articles have been published in the Hamilton Spectator. His articles have also been published in The Walrus, HuffPost and Behind the Numbers. He maintains a personal website, has been known to share passing thoughts on Twitter and Facebook, and posts the occasional cat photo on Instagram.

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