A question for all the urban thinkers out there:
The economics of sprawl are known to be dubious as sprawl rarely pays its own way on capital, operating and, often ignored lifecycle cost of infrastructure. Complicating the picture is the "network effects" of growth (e.g. who pays for a new interchange that is triggered because we added another 10,000 car dependent households somewhere else in the network?). Similarly, cash-flows from new taxes brought in by suburban developments as they are built out are often too low to replace or upgrade the infrastructure once it needs replacing in coming decades, meaning that many neighbourhoods become net-loss areas where the cost to operate them are always higher than the taxes they provide. As a result we look for tax dollars elsewhere to close the gap (among other reasons), commercial properties being a key one.
With the reforms in the fee/service structure in the past years, the City has been improving on the capital side as developers now pay most of that cost. Density and design improvements (street-connectivity, mixed use) has theoretically improved the tax productivity, servicing deficiency of new developments. However, network costs, infrastructure lifecycle costs and operating costs still are not fully accounted for, necessitating ever-increasing taxes to pay for new sprawl.
My questions are three:
- Are my simplified assumptions of how this works correct?
- Are we as a city actually getting more sustainable sprawl developments?
- If sprawl isn't financially sustainable, why do we want these developments in the first place? Why bother trying to compete with Rockyview MD, Airdrie etc. for net-loss suburban growth? I get the planning rationale of the uni-city model (debateable whether this approach got us much, as we managed to develop a very sprawled, unsustainable city anyways) and free-rider issues of system users that aren't taxpayers, but if these developments aren't sustainable what does it matter? At least Calgary doesn't negatively impact it's finances chasing poor investments.
I am no expert in development financing, so my assumptions may be off-base, please let me know. Would be really interested to hear the thoughts of people on here.