I have a comprehensive financial strategy to ensure that the citizens of the City of Winnipeg are served by an effective and efficient public service, that our public infrastructure is well maintained and that all civic taxpayers are receiving excellent value from their government at City Hall. This plan includes a rigorous examination of all components of civic spending, to find potential cost savings, not simply by cutting “red-tape” or “bloated bureaucracy” but by being creative and innovative in seeking new ways to provide civic services and by discovering new ways to raise revenues for our civic coffers. This policy represents where I will spend my political capital for without a sound fiscal foundation Winnipeg will not be able to grow and be the city we want and desire.
On a personal note, my family – my wife, Catherine, and our five children – understand the concept of “value for money” that all citizens expect from their civic government; I know how hard people work for their money and that you demand that your elected leaders to be careful – dare I say frugal – with your tax dollars. I appreciate your anger at this current city government for flagrant disrespect for taxpayers; best illustrated by the $70 million cost overrun on the new public safety building. As Mayor, I will be a careful steward of the public purse and this is a brief overview of my fiscal plan:
1. Land Value Tax
Downtown surface parking lots within the city are an eyesore and create a feeling of danger because they are dead-zones. They create a feeling of vulnerability for pedestrians and represent the greatest impediment to the long-term success of Winnipeg.1 Too often many owners of downtown surface parking lots have had older buildings torn down yet never replaced those buildings with anything substantive apart from an empty parking lot.2 They have done this to help reduce their property taxes and avoid the need to repair and replace older buildings which can be expensive to repair, maintain, and restore. The desire for a better bottom line while understandable has created undesirable environmental effects. We are now at risk for a donut effect within Winnipeg; a successful suburbia, but a struggling inner core. It is time to become creative and help owners of these lands realize their full potential for the benefit of all Winnipeggers. The City of Winnipeg has already set aside $40M to offer a tax grant subsidy to land developers who undertake the building of new commercial and residential development in the downtown neighbourhood.3 This is not enough and more needs to be done with a more long-term thoughtful approach to land development. As an example, the city’s CentreVenture Development Corporation has torn down the Carleton Inn in the hopes that a new development will take its place. They do this in spite of the knowledge that surface parking lots next door also need to be developed. We need to ensure that open space in the downtown is filled in. Equally important is diversity in downtown growth. The urban landscape needs multiple types of building for different types of people. Not all business and residents can afford grade A rental property4.
It is time for the city to take its destiny in its hands and use the control of the market forces to produce the desired outcomes in partnership with businesses creating a successful downtown. Land Value Taxation has already been implemented in Denmark, Estonia, Russia, Hong Kong, Singapore, Taiwan, Australia, Mexico, and the United States. The surface parking lots are not marginal and are in a prime location which could serve as the principal means to revitalize our inner core; the heart of Winnipeg. There are 208 surface parking lots in Winnipeg representing 35 hectares of land. This is 3 767 368.64 square feet of potential land. In these valuable locations there should be mixed development with higher density residential and commercial space. While the city’s OurWinnipeg5 strategy has different zoning requirements, I would as mayor look to having this land assessed as if it had a four story building (for taxation purposes). This would represent 15 069 474.56 square feet of commercial and residential space. At current construction costs of commercial units at $200 sf and a mill rate of 13.3726 times 65% this would represent $26 196 170.83 in new revenue for the city. Over time as surface parking lot owners stopped the long-term speculation, delaying building on their lots, and instead felt an incentive to find development money, we would see a drastic change in the ambience of our city.
This policy will work in conjunction with the current property land grant subsidy. It will also be phased in over a period of 5 years allowing developers and businesses the opportunity to adjust to the new policy. Present buildings in the core will be grandfathered and be taxed at their current rate. The City is now looking to redevelop the closed Civic Parkade and with the already existing tax grant subsidy more parkades will be developed to satisfy the needs for parking. Meanwhile, with improvements to our transit system ,greater numbers of people will use public transportation. Cyclists will also feel welcome in a revitalized downtown.There will be a number of benefits to this policy:
1)More commercial space; 2)More residential units downtown for newcomers, because the city will have almost a million people by 2030; 3)More people in the streets who actually live in the area; 4)Improved vacancy rate (Winnipeg has one of the lowest vacancy rates in Canada) 5)Better pricing on residential units due to higher surplus of units allowing young people the opportunity to become home owners; 6)Potential for mixed co-op social housing following the Calgary model with mixing between people of various social classes & families; 7) A better business climate with more customers for shops and opportunities for grocery stores and other new businesses; 8) A safer environment because more people who are in the street and watching the streets will mean that it is less likely that petty crime will be committed.7 9) Additional revenue to be used for improving the road infrastructure on our streets.
2. Outlying bedroom communities need to pay their fair share.
We will not be able to fund our city’s needs let alone be able to build new infrastructure without raising more money. And I know that the residents of Winnipeg understand that the city’s costs, just like all costs, continue to rise, and that the freeze on property taxes has starved our city of the resources needed to maintain our infrastructure and fund crucial public services. But, property taxes are only one way to raise money and as Mayor I will look to alternative means of raising money to pay for the services that we all use. Many residents who live outside of the City of Winnipeg don’t pay municipal taxes, but nonetheless, use the civic infrastructure and the services provided by and paid for by Winnipeg taxpayers. Oftentimes they pay substantially less in property taxes than a similar City of Winnipeg homeowner; this needs to change. Working with the provincial government to create a “Winnipeg Regional Masterplan” is one way of ensuring that all residents of this area pay their fair share to fund the public services that they all use. Such a mechanism would permit us to levy additional charges to out-of-town users of our civic infrastructure and services. The city made some moves in this direction in 1972, but we have not solved the issue and it is time we sat down with other municipalities and had a long and frank discussion.
3. Raise the Hotel Accommodation Tax:
We will examine the feasibility of raising the hotel accommodation tax from its current 5% to 7%. This would provide additional revenue for the city without adding to the tax burden of the average resident. This will need to be studied with the Tourism sector to ensure feasibility
4. Tax Increment Financing (TIF):
We will investigate the feasibility of using Tax Increment Financing (TIF) to pay for new infrastructure projects. This is an innovative method to raise money for civic projects and it captures the added value that new infrastructure creates. When a city builds a new light rail line, for instance, the value of the land surrounding the stations often increases significantly and, as a result of this added value, its owners are required to pay higher property taxes that reflect its higher worth. The city borrows money to pay for a particular project and then it uses the increased property tax revenue – the tax increment – to repay the debt that was incurred for this specific project. This targeted funding approach holds potential to help pay for new infrastructure projects.
5. As a last resort, property, school & business taxes:
It would be disingenuous to deny that at some point property taxes might have to rise. But, if they do have to rise, it will be after long and careful consideration, and after we have exhausted all other means of limiting spending and raising money through alternative means. And, most critically to note, they will not rise in any one year at a rate that exceeds the inflation rate. It is time though to reconsider the effect school taxes have on the overall perception that residents have of municipal budgets. As mayor I will work to ensure that school boards collect their own taxes and the city collects taxes separately. This will provide a better evaluation of Winnipeg’s ability to spend money responsibly. If there was more room on the school boards side of taxes then the city of Winnipeg could have greater ability to make the necessary investments in infrastructure. This will require a long-term discussion with the education sector.
1 A city street equipped to handle strangers, and to make a safety asset, in itself, our of the presence of strangers, as the streets of successful city neighborhoods always do, must have three main qualities:
First, there must be a clear demarcation between what is public space and what is private space. Public and private spaces cannot ooze into each other as they do typically in suburban settings or in projects.
Download the full PDF of this policy here: Rebuilding the Fiscal Balance – Part II land value tax winnipeg