News profile1. What are your thoughts on city ownership of Saamis Solar, and what direction would you want to see council take with ownership of renewables?
I have an open mind. If there is a financial case, I’d support it.
Medicine Hat’s current energy strategy, which I support, is based on proven methods and scaling. That means we carefully explore and vet projects such as Saamis Solar with technology which is economical right now and developed incrementally. In other words, with less risk.
Of course the risk is not zero, but running a fleet entirely comprised of natural gas powered generators comes with its own set of risks. (During my term on council we spent $75 million on our newest natural gas generator.)
Renewables are not intended to replace our natural gas generation, but to complement them. Peak periods of solar power overlap nicely with peaks in energy demand due to things like air conditioners.
Saamis Solar is sometimes compared to Medicine Hat’s joint project (with the Feds and the Province), the Solar Thermal Concentrator in 2015. That technology is completely different to Saamis Solar, but there are some lessons to be learned from the Solar Thermal Concentrator (STC).
The STC technology is economical in warmer parts of the world. Medicine Hat’s STC was meant to be an experiment to see if it could work up north. It couldn’t. The lesson is that if you want to be innovative and cutting edge, that comes with risk. Not every novel approach will work. People talk about municipalities and innovation, but there are good reasons why municipalities should be risk averse with expensive experiments. The lesson I take is the city shouldn’t make big risky bets.
To recap, Saamis Solar uses technology that is economical right now and is proposed to develop incrementally, thereby minimizing risk.
2. What are your thoughts on the future of the energy division, specifically the concept of turning it into a municipally controlled corporation?
I spoke in favour of the proposed MCC at the public hearing in June. I also stayed and listened to the concerns of those opposed. There are creative ways to bridge the divide.
Our attention is on our electric utility, but we shouldn’t forget it has a twin, our natural gas company. For a 100 years this natural gas company funded our city. That inevitably and unsurprisingly came to an end with a crash in 2015.
Hatters wanted below market natural gas rates just like we want below market electricity rates now. The city sold natural gas to residents 75-200% lower than market value between 1996-2006. People objected to the city sitting on big reserves back then too.
When I came onto council in 2017, the company had burned through $100 million in reserves in five years, had a significant reliance on a struggling company to cover operating municipal services, and hadn’t saved for our $225 million gas well abandonment costs. Does this sound like effective governance? This was all done under council control.
Electric generation is different, but the continued viability of this company is not guaranteed. We thought natural gas prices wouldn’t crash. They did and suddenly our production was uneconomical. The peak of our natural gas company was in 2008, by 2012 the bottom had fallen out. The same thing can happen to our electric utility.
A skills based board and an arms length company can focus on electric generation to an extent that a municipal political council cannot.
If residents don’t want a board of experts from outside Medicine Hat, we can make a rule that board members must live in town. If residents want the MCC to be sensitive to political opinion there are ways to adjust board terms to make the board less or more sensitive to council. If we don’t want it to be a corporation, we can look at other models. All while creating a skills based board to shoulder the burden. Council can’t do it all in this city, let others better suited help them.
Council and the community will continue to own the company.
3. How would you look to balance taxation with the operation costs of running a city, as well as the services provided to residents?
It was only ten years ago in 2015 that our natural gas company collapsed. 2017 was the first election which dealt with the fallout of losing this money we had come to rely on. Then the pandemic hit. We’re still recovering from both those shocks.
Balancing needs and wants for our community is difficult. According to the Medicine Hat’s 2021 Housing Strategy report, 30% are struggling with housing costs, ie affordability. 30% are doing okay, and 30% are comfortable. Each group will define needs and wants differently.
We also need to look at fairer ways of sharing the tax burden.
The Medicine Hat Advantage has always been defined as the lowest taxes for single family residential properties. Businesses and rental apartment buildings have paid more than their fair share for decades.
Small businesses are the lifeblood of our economy. They’ve been paying too high taxes. Lowering their tax rate will help.
Medicine Hat has traditionally taxed rental apartment buildings at a higher rate than single family residential properties and condos, with really flimsy justification. They don’t cost the city any more to service than other residential properties. When I left council in 2021 the rental tax rate was +22% in 2021, now it’s at +8%. We can lower it further. Of course there’s no guarantee landlords will pass this onto renters, but that’s beside the point.
4. How would you approach economic development and any need to incentivize business to come to Medicine Hat?
I would cut business taxes. Lower business taxes reduce operating costs for all businesses equally, without picking winners and losers.
People talk about economic development every election and the MH Advantage. The MH Advantage has always been narrowly defined as low taxes for single family residential properties. We’ve been doubling down on this strategy for decades. There are good reasons why this strategy isn’t working.
The Medicine Hat advantage has always been based on two really unsustainable pillars. It hasn’t been based on fiscal discipline. We had the highest levels of service in the 2000s. The most pools, arenas, outdoor soccer fields, trails, playgrounds and ball fields and we had the lowest taxes.
First, we historically used the profits from external natural gas sales to fund our lifestyle. That inevitably and unsurprisingly came to an end in 2015.
Second, Medicine Hat has relied on commercial properties to pay more than their share of roads, police, fire and other services. There is no justification for a commercial tax rate 2x that of single family residential taxes.
Everyone wants to be open for business, but then ignores this glaring unfriendly business tax policy. We’re not the only ones. This is common across Alberta and it has terrible implications for business development. The University of Calgary’s School of Public Policy found that for every 10% in business taxes there is a corresponding 7% decrease in investment. This makes sense, if you want less of something, you tax it. Then we’re confused why businesses are struggling?! The answer is simple. Lower business taxes. It doesn’t pick winners and losers, unlike inefficient incentive programs.
Incentive programs have problems. New business plays municipalities against each other to see who will give them more money. During my council term we gave $6 million to the Aurora Sun Cannabis Greenhouse. That didn’t work as we hoped and every business in town paid for that incentive.
Incentives might get something built, but if the underlying business case isn’t there the incoming business won’t be sustainable.
5. With the proposed north-side location for a permanent homeless shelter off the table following public concerns, what do you think are the essential priorities that a shelter location must provide?
Every city is struggling with this issue, so it’s not like Medicine Hat is behind.
Emergency shelters are provincially funded, but that doesn’t mean the city should passively let them handle this issue. The proposed north-side location is one possible location, but the city and province cannot make these decisions in private. As difficult as the conversation about placement is, it needs to happen with those accessing the shelter and those directly adjacent to any proposed site. The community as a whole should be aware and consulted, but it is important to understand whose voices we are centering in this conversation.
Bussing people to the edge of town may reduce the visible effects of homelessness, but comes with its own challenges. The downtown area has traditionally been where most social services are located. Perhaps the shelter should be built right into City Hall. If it’s placed downtown we need to vastly increase funding to mitigate side effects. The downtown community has too often been left to deal with the negative effects on their own. We need to remember that. If no neighbourhood is willing to accept this shelter, perhaps we have a rotating shelter which moves every three years to a different neighbourhood, to equally share this challenge. We can also experiment with other concepts of shelter designs or break up shelters. Instead of one big shelter, have five smaller ones.
There is no shortage of ideas, what’s important is how we have this conversation.
Shelters are reactive, meant to deal with the symptoms of those most struggling with affordability. We can’t put all our attention and resources here. Twenty percent of Hatters make less than $40k/year. More and more people are being pushed into homelessness. We have to also prioritize stabilizing those residents. The city must lead in those efforts.
6. A lot of focus during this election campaign has been on property taxes in Medicine Hat, though a majority of residents do not own property. What can or should the city be doing to ease cost-of-living issues for those who do not own property, such as renters?
There are different things at play for this issue.
Chat News Today, recently ran a story which cited Medicine Hat as one of the cities with the most affordable rental rates. But people are struggling, how to explain these two seemingly opposite facts? Low rental rates (compared with other cities) might mean that we don’t have enough good jobs for people. Medicine Hat also has higher rates of residents with physical and cognitive disabilities and older adults than the provincial average, both affect affordability.
Some options to help:
Control overall city budget. Just because you don’t own property doesn’t mean you don’t contribute to property taxes. Landlords pass down the cost of taxes through rent. Renters are usually those with less money, so any increase in property taxes will affect them more.
Figure how to build more smaller rental units. The 2021 Medicine Hat Housing Strategy outlines who in Medicine Hat is struggling with housing costs and what we need to close the gap. The biggest need is smaller rental units. New apartment buildings are one option, but they require lots of upfront money. Few cities or companies have enough money to build enough rental apartment buildings quickly.
Another option is to allow single family residential properties to subdivide their backyards and sell the land. Lowering the price of land automatically makes houses smaller and more affordable.
We already allow backyard suites in many places, this change simply allows owners to sell those suites. We need to understand that backyard privacy is something we all value. There are design constraints we can impose to protect backyard privacy.
This will be controversial. One way to ease this difficult conversation, is to decide this neighbourhood by neighbourhood. It won’t make sense for every neighborhood and it will take time. The only way it’ll work is if council does not force the issue. Persuasion takes time, but creates more lasting change.
I think we can get to a $100,000 house. Not a tiny house. Just a smaller house.
7. What are your thoughts on proposed recreational facilities such as the Southside Outdoor Aquatics Centre and Brier Run Sports Field? How much focus would you want the city to put toward adding recreational facilities?
Mayors don’t make these decisions on their own, but if it were up to me. No to both. We’re in an affordability crisis. I’m utterly confused that council is considering these expensive recreation projects.
The city is facing so much financial uncertainty. We still have an $11 million dependence on an undependable dividend from our electric utility we have to wean ourselves off. The electric utility is facing $500 million in capital asset replacement over the next ten years, even without Saamis Solar.
Before we build and expand facilities we need to sustainably maintain what we have. MH Stampede needs some help. Other recreation facilities are underutilized.
If we want more recreational facilities I suggest the first step is to experiment with alternative ways to operate these facilities with less or no city involvement. Building these facilities isn’t the problem, it’s the lifetime operating costs I worry about.
