Why we should celebrate residential buildout, and focus on attracting jobs
You’ve probably heard Burlington is running out of land for residential growth – something called “buildout.” What you may not have heard is that’s a good thing for our bottom line. Residential development costs about $1.40 to service for every $1 in tax revenue we get. Development charges only cover about 80% of the costs of this growth, and can’t fund items like hospitals for new residents.
Thus, the more we grow on the residential side, the more your taxes will go up. That’s exactly what we’ve seen in Burlington – years of residential development have delivered some of the highest tax increases on record.
Residential growth alone drives up taxes
Tax increases were 29% in the last term of council, at a time when assessment growth (new taxpayers) reached a high of 1.86% in 2009. Assessment growth has shrunk to .58% in 2014, and tax increases the last term of council have been 13%, less than half the rate of the period that saw the highest assessment growth.
Alternatively, for every $1 in tax revenue from industrial, commercial or institutional development, the city makes about 60 cents. That helps fund the services you need.
Residential taxpayers like you are paying more than your share of the city’s budget: our tax base is roughly 75% residential, versus 25% commercial. We need more balance between the two, or your taxes will continue to rise. But we’ve seen a huge drop in commercial/industrial tax growth since 2011. Commercial/industrial tax growth was about 2% and has dropped to less than a quarter percent annually.
We have hundreds of acres of vacant or underdeveloped employment land. There’s no commercial buildout in Burlington. We need to focus on filling this space, and take the pedal off residential intensification.
We need to get serious about attracting jobs to Burlington.
Council and staff recognized two years ago that attracting new businesses and creating jobs for Burlington residents is the city’s “burning platform.”
The Burlington Economic Development Corporation (BEDC) is tasked with business attraction and retention. Though an independent organization governed by a volunteer board, BEDC receives significant city funding: $1.26 million in 2014, representing more than 60% of BEDC’s total annual budget of $1.9 million.
BEDC as land development corporation
Council recently approved a proposal by the BEDC board for BEDC to become an incorporated for-profit organization that would have the ability to buy and sell land for commercial development. The city would be the sole shareholder, thus any profits would come back to city coffers (similar to our relationship with Burlington Hydro, a separate entity that pays annual dividends to the city).
BEDC’s land portfolio could include city-owned land (eg. downtown parking lots) or purchasing land to increase economic activity.
Adding land management could facilitate economic growth by speeding approvals, controlling development activities, offering preferential financing and other advantages.
BEDC’s goal is to increase the city’s non-residential tax levy ratio from 25% commercial/75% residential, to 30% commercial/70% residential; and bring an additional 1,526 jobs per year, half of which would be held by Burlington residents.
A new board and interim president will be recruited and a transition team put into place to switch BEDC’s board and activities over into BEDC Inc.
Staff will report back to the Development & Infrastructure Committee May 26 with an implementation and public engagement plan; the proposal also needs approval at the BEDC annual general meeting May 29. When ready, the staff report will be posted on the D&I agenda here.
My Take: I’ve long advocated that the BEDC needs to shift from being a self-described “social club” to actively wooing businesses to Burlington. That’s because residential taxes don’t cover all the services the new population requires, but commercial taxes pay more than they cost to service. Plus, local jobs means residents have shorter commutes and can work where they live.
The days are long gone when Burlington sold itself, based on cheap land and easy transportation. BEDC needs to get out of the networking lunch/event business altogether, and develop a dedicated sales force wooing business to Burlington – our competitors are.
I’m supportive of the incorporated land development model, as it gives the city and the BEDC greater control and presence in economic development. Repositioning BEDC for land development and ensuring a singular focus on business attraction and retention will help meet our jobs and tax revenue targets. BEDC must shift from “order taker” – its role in the past – to “order maker,” or jobs will go to cities around us in this increasingly competitive environment in the GTA where everyone is chasing the same corporate investment.
Your Take: Got comments or questions about the proposed BEDC Inc. organization and mandate, or the city’s overall economic strategy? Leave a comment below.