Charle Marohn, founder of "Strong Towns," speaks to a large crowd on Tuesday at the Esplanade.--News photo Collin Gallant
cgallant@medicinehatnews.com@CollinGallant
A set of meetings to introduce “Strong Towns” to Medicine Hat hasn’t produced a strong reaction, but some attendees told the News they are still wondering what the whole exercise is about.
The U.S.-based, non-profit group advocates that municipalities consider the effect of growth patterns on finances, and suggests experimenting on a small scale and to inspire cost-effective development to reverse a trend that Small Towns founder Charles Marohn says will eventually sink cities financially.
The basis of his 90-minute presentation Tuesday is that the added cost to provide city services and system maintenance to newly-built properties is higher than the cumulative property tax collected on them.
That’s why, he says, taxes keep rising and service levels deteriorate even as cities keep growing – the opposite of the promise that more residents and more development will shoulder more of the load.
“The fundamental problem is that we’ve built more stuff than we have the tax base to sustain,” Marohn told the News on Wednesday, echoing his address on Tuesday to several hundred Hatters in the Esplanade Theatre.
He described that wide-spread suburban development model as a major shift from pre-Second World War development, and more expensive in the long run than previous patterns from improving properties from city centres outward over time.
“I’m not hear to tell you what to do,” Marohn told the audience. “But the problem will not fix itself.”
Mayor Linnsie Clark said she is very encouraged with the initial level of engagement.
“It’s the beginning of a conversation, and there have been some really good questions asked,” she said. “There are people that have concerns, but ultimately we’re trying to get to the same place – a financially sustainable community that has a vibrant economy.”
Council approved spending $212,000 from its contingency fund last fall to invite the group to conduct a “Community Action Lab” in the city, answering questions and helping to guide discussions and receive input from staffers, policy makers, community groups and industry.
Working groups will reflect on the concepts introduced this week, then reconvene with Marohn’s group in June to set priorities, and then again in November.
Reaction was mixed among those in the development community who attended the talks.
Malcolm Sissons, a retired member of the Urban Developers Institute who has completed infill projects, left the meeting stating he is keen to participate.
“It’s a conversation worth having,” he said.
John Hashem, a spokesman for the Box Springs Business Group, attended both sessions and said he still has questions.
“We still haven’t heard much (local) information,” he said. “I have an open mind, but let’s have the numbers.”
Guy Bellis, of Midwest Design and Construction, said industry needs to have a seat at the table as the process works through.
“I’m a little disappointed to hear there’s no defining set of outcomes,” he said. “Without that it all becomes theoretical.”
He said the biggest concern from large builders now is a general lack of activity and new projects. To compete with other centres, the city may have to continue offering incentives or build infrastructure ahead of time to attract shovel-ready projects, he said.
Clark said the concepts are complex, but work will result in a better functioning and more responsive city administration.
“This isn’t about blame of anything that’s been done in the past,” she said. “We want to shift so we make sure the productivity of our neighbourhoods is sufficient.”
Marohn argues that cities across North America fall back on newly added tax revenue from rapidly expanding suburban communities to keep taxes low, but as maintenance and replacement in those areas come due over decades the costs mount.
Faced with a revenue shortfall “the first thing cities do is try to grow faster.”
“This creates an illusion of wealth, but leaves with it enormous liabilities,” said Marohn. “If you’re losing money on every transaction, you can’t make it up on volume.”
He says new housing starts and business openings are understandably attractive to residents and municipal leaders, but subsidies and overspending on large-scale municipal infrastructure to outskirts of cities creates a situation of having more infrastructure than the tax base can support.
But, it can be a complex argument for those outside policy or development circles.
Higher-end housing, for example, comes with a higher tax assessment value, meaning it would pay higher taxes, but estates-style communities are typically less dense than older neighbourhoods, meaning relatively fewer tax accounts to cover municipal costs in that area.
Those include portions of the police and fire budgets, snow clearing and, eventually, road and sidewalk replacement.
In Medicine Hat, property tax also covers storm sewer costs, but water, sanitary sewer, power and gas services as well as infrastructure costs are recovered through utility rates.
Property tax bills are determined by charging an assessment value of property against the tax rate to collect the specific amount in the city budget.
From an overarching perspective, city leaders can address that with more revenue, said Marohn, through raising taxes or by pushing off maintenance, but neither is sustainable in his opinion.
Marohn opened Tuesday’s presentation stating cities must operate at some level of profit to ensure they can continue providing services, but unlike a business, a city can’t go bankrupt, but instead just “lingers on.”
“If a city doesn’t have adequate resources to cover expenses, it can’t provide what it’s supposed to,” he said. “People pay taxes on the understanding that when the road needs fixing it will be fixed.”
