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York Region Debt Part Deux

Due to York Region’s confusing governing structure, many people I talk to are only vaguely aware of York’s Regional Council — an overarching body that actually collects and spends the majority of all taxes and fees collected within the Region. York Region already runs one of the highest per-capita debt loads in North America and for a number of years, the Region has been backing this debt with the promise of “future development charges”. As a region we are betting that our future will pay for both the present and the future. As stated in the York Region 2011 Capital Budget:

Due to significant population and employment growth experienced in the last several years, York Region’s long term capital program, in particular, the road, water and sewer infrastructure plans, have been accelerated to accommodate the higher demands. As a result, there has been a significant increase in the amount of new debt required. However, the majority of this debt will be recovered from future development charge revenues. To support its capital plan, the Region will need to issue approximately $847 million of new debt in 2011 and a further $640 million in 2012. Over the 10 year forecast period of the capital plan, it is estimated the Region will need to issue, in total, about $4.87 billion of new debt. This amount does not include an estimated $360 million of debt which will be refinanced in 2019 and 2020 and which has already been approved by Council.

Based on the promise of future growth, the Region is borrowing $847 million in new debt in 2011 and expects to grow that to $4.87-billion by 2021.  We are also told that Development Charges will pay for the “majority of this debt”. Is that possible? Based on the numbers published by York Region, I don’t see how.

In 2009, York Region issued permits for 7105 housing starts. At that time, the Region charged a $23,743 development fee for each single-family dwelling.  Since then, the Region has increased development charges to 32,000 per single-family dwelling.

Less is charged for semi-detached and apartment units, but for simplicity, let’s use $32,000 per unit. How many units must we build to pay for the 4.87-billion capital infrastructure:

$4.87 billion / $32,000 = 152,187 housing units

The number of actual housing starts in York Region was dropping in 2008 and 2009. (I have not found stats for 2010 or 2011. Anyone?) However, in order to pay for this $4.87-billion debt, the Region will need to collect developer charges for more than 15,000 housing units each and every year for the next 10 years — almost a twofold increase since 2009.  Is this even possible? And, in a precarious world with dwindling fossil fuels, is it desirable?

In fact, the Region’s own 10-year capital budget shows that Development Charges will actually only finance 18% of the total infrastructure costs.

York Region Capital Budget

In other words, most of the cost of growth will be borne by taxpayers through:

  • Grants & Subsidies (paid by taxpayers to the Province)
  • User Rates (paid by taxpayers)
  • Tax Levy (paid by taxpayers)
  • Reserves (paid by taxpayers)
  • Debentures (risk assumed by taxpayers. Who pays interest?)

It’s true that some of these costs will be paid by people who choose to live in these new developments, but much of this money — and interest on the debt — will likely be shared by all of us. As the saying goes: privatize the profit, socialize the debt.

It’s time for York Region and its municipalities to come clean about how we are subsidizing rapid development with unsustainable debt.

N.B. Good to see the Toronto Star has taken notice of York Region’s debt mess.

Re: On the Privatization of Transit in York Region

Simon South is maintaining an interesting blog about the current YRT/VIVA transit strike.  Just wanted to add my 4-cents:

You are right, Simon — its all about density. Many of us want the Toronto subway to extend up Yonge St to Richmond Hill Centre — and possibly beyond, but until Yonge St is completely lined with condos, the low densities will not justify it. But there are many pressures at play. Veolia and other companies have brought some valuable expertise that has helped York Region get serious about transit, but should that be a forever cost? Shouldn’t our elected officials and staff be able to learn how to run an efficient public system?

1 It was only a few years ago that York Region moved to amalgamate all of the separate transit systems (Vaughan, Richmond Hill, Markahm, Newmarket, etc). So, I suppose you could make a case that the Region is still learning how to run a larger single transit operation — within the context of a rapidly (too rapid, I think) growing region.  There are probably still many efficiencies to be had.

2) As long as population densities remain low, transit will always be more expensive in York Region. Don’t forget, the TTC used to have a zoned fare system so riders in outlying suburbs paid more to travel downtown.  The TTC only began running deficits when they were forced to bring in a one-fare system.  We currently run two zones on VIVA — perhaps we need 3 and/or a zone system for YRT.  At least with a public system, any higher worker wages would be plowed back into the local economy.

3) Veolia profits are currently sucked out of the community and I don’t know if we can even discover what those profits are. Contracting out still requires considerable resources on the part of the Region. Do we know the real cost of VIVA transit enforcement system? It involves 60+ enforcers, additional police time as well as court time for some offenders. How much does this cost us?

4) No one likes to hear about Peak Oil, but it will almost certainly start to affect us more in the coming decades. Here is an excellent overview of Peak Oil from a physicist’s perspective.  As Tom Murpyhy says:

So how can I look at the total hydrocarbons figure and still have concerns? Most simply, peak oil is about rates, not amounts. It’s also about economics, the speed with which we could scale, energy returned on energy invested (EROEI), carbon caps, and other practical matters. The fact that oil prices recently rose by a factor of three while no relief arrived from other hydrocarbons can be taken as empirical evidence that the vast amount of hydrocarbons in the ground is not immediately useful in a pinch. The market did not cradle us and take care of business, as the perennial promise goes.

Perhaps even [much] higher-priced transit will likely be viewed as an absolute bargain in the coming years.

As we look for efficiencies in York Region we will soon have to address the fact that we currently support 9 local councils and dozens of duplicate departments, multiple fire fighting services, library systems, etc. We will have to do better.

Concord West

TransCanada: American Veterans Endorse Keystone XL Pipeline

TransCanada Pipelines has co-opted a few American veterans to shill for the Keystone XL project as part of a lobbying effort to get Hillary Clinton to approve it. As they say in a March 4, 2011 letter to Clinton:

“One only needs to consider the recent events unfolding in the Middle East to understand the vulnerabilities our nation faces and the need for a more domestic, secure supply of oil from a friendly and reliable trading partner such as Canada.”

It’s not quite American oil, but it is “more domestic”. It’s as if they really wanted to contrast “wild”, unsafe oil from sketchy parts of the planet with “domesticated” oil that can be sent down the pipe from compliant Canadians.

But how compliant are we? Very:

Sean McMaster, TransCanada’s executive VP noted that the pipeline will “provide thousands of high-quality jobs for Americans and invest billions of dollars from the private sector, at no cost to American taxpayers”. No cost to American taxpayers, because domesticated Canadians have been footing the bill for tar sands exploitation for a long time. In 2008 alone, Canadians gave 2.8 billion to big oil.

It looks like Canada’s just gotta trash the Boreal forest over the tar sands because the Americans don’t want to trash their own tar sands in Utah. As stated in this 2008 Congressional Research Report: “In light of the environmental and social problems associated with oil sands development, e.g., water requirements, toxic tailings, carbon dioxide emissions, and skilled labour shortages, and given the fact that Canada has 175 billion barrels of reserves… the smaller U.S. oils sands may not be a very attractive investment in the short term.”

Innisfil residents to become next victims of “Places to Grow” act

The McGuinty legacy of “managing” growth, by foisting it on unsuspecting towns and residents across southern Ontario continues. On Monday, January 10th, Innisfil residents are invited to a public open house at the Town Hall from 4 to 8 p.m.    Places to Grow is supposed to help curtail sprawl by mandating that 40% of new development occur within exisitng urban boundaries.  Although 40% is a cowardly target, it would not be so bad except that “plan” has become nothing but a fastracking process to jump start rapid development all across the Golden Horseshoe (which has rapidly turned into the SmartCentre Horseshoe).  So here we grow again with the same kind of tactics used in Markham, Richmond Hill, Vaughan, etc:

  • The town wants public input before it makes a case to the province about a new growth plan
  • The town is under a tight deadline — Jan. 31 — to make its submission to the Growth Plan for the Greater Golden Horseshoe (2006) affecting the Simcoe Sub-Area.
  • The town wants to commit to just 23% intensification rate instead of 40%. In other words, watch out for thousands of acres of farmland to be scraped down to the clay and turned into subdivisions and shopping centres.

Once the “plan” has been agreed upon through this oh-so- friendly consultation process, residents can look forward to rapid approval of new development projects. And, if York Region is anything to go by, watch for Simcoe to begin borrowing large amounts of money to build the infrastructure needed to support this artificially inseminated building boom.

The end result will be more generic sprawl, further replication of the usual super stores and franchises. And Ontario will have tied up billions more in energy sapping infrastructure that it can barely afford to maintain.

Here’s a silly thought: design policy that encourages slower physical growth, combined with wide and deep intellectual and creative growth (invest in education). Design policy that encourages each generation to continously produce healthy, highly educated replacement generations (invest in health).  Design policy that ensures that the current generation can’t arbitrarily deplete resources that belong to the future. Then, within this framework, let’s see how much physical growth is possible and desirable.

Never gonna happen, but I can dream, can’t I?