The PenOpticon

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.

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.