Financial Considerations with the Growth of Cities

Financial Considerations with the Growth of Cities

Something interesting that the City of Winnipeg should look into (if they already haven’t) is the minimum livable density required in a given space and at a fixed taxable rate to support local infrastructure and services. This number could possibly help guide growth in established and new neighbourhoods in the city.

Neighbourhood plans might not take into consideration density requirements for maintaining financially stable communities. These plans as well as zoning by-laws usually set maximum heights on buildings and the maximum allowable number of units on a given lot but don’t set minimum values.

In order to maintain a self-supporting community the total taxable area times a prescribed rate must bring in enough revenue to cover all infrastructure and service expenses. Then it can be considered, at a minimum, a sustainable community. It can be argued that in such communities, roads and sidewalks will always be in good shape and local community centres, schools and libraries will be adequately supplied.

The following is a simple example to the above formula:

Imagine that the city of Winnipeg is 100 sq km in size and that it costs $100 million to fund all the city services. If, for example, the city is divided into 10 different districts then each district will be approximately 10 sq km and will need to generate approximately $10 million in tax revenue to break even.

The other variable is a $ rate per sq metre of livable space (home, garage, lawn, etc) that will be charged (assuming that ICI all gets charged the same rate). Using an easy number of $10 per sq m per year, the formula that we are now looking at is the following:

Total Required Livable Space per District = $10 million / $10 per sq metre

                        = 1 million sq metres

In this simplified example, we can see than a 10 sq km district will require 1 million sq metres of livable space in order to pay for all infrastructure and services in that area. So depending on what’s already there, building up or building out are the possible growth options.

Planners and the city should take this formula into consideration when considering new real estate developments, infill and suburban. Every area plan should maintain a component that aims to at least break even financially. Utilizing this method, we obtain a clearer picture of where we are and where we want to be when it comes to planning sustainable communities and vibrant cities.