Comment 14578

By arienc (registered) | Posted November 26, 2007 at 20:19:06

While I normally disagree completely with Mr. Flaherty, I do believe that he has a point when it comes to funding of infrastructure.

Federal income tax was never intended to pay for infrastructure which widely varies by community and by province. Why should someone in the NWT who doesn't even have sewage, pay part of the tab for a Hamilton arts centre?

The problem is municipalities have historically appealed to immediate wants, and built new arenas, freeways and opera houses, instead of taking care of proper maintenance and repairing existing infrastructure simply because they could get elected by doing so. Therefore, they shifted around the money by starving their operating budgets to meet them.

What should have happened is when these facilities were built, existing residents who stood to gain from the new services, as well as prospective new residents should have paid the full cost, including maintenance up to perpetuity. If you can't afford to maintain it and repair it when it needs repairing, then you can't afford to build's that simple.

Real estate is only useful as real estate because of the infrastructure that allows it to function. Why then is the cost of that infrastructure, plus the costs of keeping it maintained and in good working order (to perpetuity), not included in the cost of land. This could be accomplished quite easily at the time the land is developed through development charges. Over time as the land gains value (access to quality infrastructure contributes to this), the buyer is paid back the extra cost. Right now, developers are getting a free ride on the backs of municipal taxpayers. Municipal taxes should be used to operate the city, not to build it.

Of course most municipal politicians and those in the development industry would balk at the idea of charging developers more to develop a piece of land into housing or retail stores. However, it is unfair that the full value of 'location, location, location' accrues to them, and not the municipality that paid for the assets that make the location valuable. Developers have a right to make money, but should make money on their own merit, not on the public who subsidizes their profits through infrastructure.

The additional benefit of making development pay for the infrastructure, is that developers will then be more likely to build structures which use the infrastructure most efficiently. We'd get a whole lot less big-box retail and maybe more sensible mixed use as a result.

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