Keith Gerein: Amid housing crisis, can Edmonton resist pressure to expand its footprint?

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Edmonton Mayor Amarjeet Sohi suffered a couple of painful indignities in recent days, including an injured arm from a biking accident and having to wear a Florida Panthers jersey in a council meeting.

The first was a physical injury that will keep Sohi’s arm in a sling and Sohi himself from attending Edmonton’s hospitality events at the Calgary Stampede. The second was more of an injury to the soul, as well as to general good taste.

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However, the mayor and council also wrestled with something potentially even more bruising, politically speaking, just before heading out on their summer break — a piece of policy dynamite known as “substantial completion.”

In basic parlance, this is a concept that says suburban areas already under development should be finished before the city allows residential construction on lands designated for future expansion. Some might call it a temporary growth barrier — a stop sign for sprawl, if you will — that applies to thousands of hectares south of 41 Avenue SW annexed five years ago from Leduc County.

For many on council, they consider this a signature policy, essential for Edmonton to meet its goals of improved climate and cost sustainability. Much of the development community has a different view, warning of risks to Edmonton’s competitive advantage with housing prices.

Either way, the timing and sequencing of future development is no idle question. With the city growing at an unanticipated clip of 50,000 newcomers a year there is urgency to figure out where all these folks are going to live and how to provide them with municipal services.

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City of Edmonton development map
A City of Edmonton map distinguishes areas of the city that are still developing and areas that have been designated for future growth Photo by Supplied, City of Edmonton /edm

What you should know is that substantial completion is already approved as a general policy in Edmonton’s City Plan, but there are no details of how it will be applied.

City managers have since proposed a single number to fill the gap — 62 per cent — a standard that doesn’t feel particularly close to completeness, but there is some method to the math.

As the policy goes, once Edmonton’s developing suburban areas collectively reach a point where 62 per cent of expected dwellings for those areas have been constructed, that’s the threshold for when the city wants intensive planning to begin for the future growth areas.

The city conservatively estimates it will take about 10 years from the point when that planning begins to when the first houses actually start appearing — which should be enough time for the developing areas to move from about 62 per cent completion to something closer to a full build-out.

For context, as of last summer, the completion rate in developing areas was pegged at 49 per cent, which puts the city on track to meet the 62 per cent threshold in 2029.

The right sequencing of expansion

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Taking all this in, skeptics ask an important question: Why is council insisting on such discipline now, during a national crisis of housing supply and affordability?

To find the answer, look no further than your tax bill, which is up nearly nine per cent this year for the average homeowner.

Tax rates are a product of several factors, but there is no question that sprawl is a piece of the puzzle.

An urban planning degree isn’t required to know that more communities mean more roads, parks, snowplows, recreation centres, transit, libraries, police stations, and fire trucks — not to mention ongoing maintenance and staff. And when there’s a bunch of communities half-complete or less, the property taxes they generate are insufficient to pay for what’s needed.

(Reduced provincial infrastructure funding also hasn’t helped.)

I’ve even heard characterizations of this pattern as not unlike a Ponzi scheme, in which the city borrows money to fund the costs of serving unfinished subdivisions, but can only cover the repayments by building more subdivisions, which, in turn, soon need their own services.

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In the city’s estimation, more orderly growth is a vital measure to ensure there is adequate funding to support that growth.

“Our (system) has always been that taxpayers are going to pay for (new suburban infrastructure) and new homeowners will reap the benefit of it because they are not paying for it,” Coun. Andrew Knack said. “And yet, because we are not raising taxes to the level you would need to pay for all of that infrastructure, we are not building it quick enough. So nobody is happy in the existing scenario.”

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Listening to the market?

However, opponents suggest substantial completion is an attempt at social engineering, coercing particular living patterns that run counter to housing preferences and affordability.

Of note, in addition to all the incomplete suburbs under construction, the city is not exactly short of development opportunities closer to the core, including Blatchford, the Exhibition Lands and West 240. In addition, the city’s recent zoning overhaul is meant to incentivize higher-density infill housing in older neighbourhoods across the city. There are lots of places to build.

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Despite that, developers say the highest demand is still for a suburban single-family home with a yard. Demand is especially strong in the city’s southwest, where many newer communities are already nearing or even above the 62 per cent threshold. As such, they argue, the city should now be advancing planning to move into the growth areas in the southwest, rather than waiting for the rest of Edmonton to catch up or better interest in infill to materialize.

(It’s also fair to say suburban greenfield construction is the model that local developers know best, the one that offers the most certainty for delivering “affordable” homes and realizing a profit margin.)

Moreover, they say, restricting such housing will just drive consumers to Beaumont, Strathcona County and elsewhere, where those residents will still end up using Edmonton’s infrastructure but pay taxes to a different municipality.

The solution to city financial woes isn’t erecting barriers to growth, but in finding ways to deliver services and infrastructure more efficiently, they add.

Next steps and tough choices

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Weighing these various pressures, what should Edmonton do?

Apparently, all of us will have more time to ponder that, because councillors voted unanimously last week to punt any major decisions down the road to allow for more detailed research. And while that’s frustrating for everybody, it’s probably the right call.

For its long-term sustainability, we know the city is ultimately going to have to make good on what it’s talked about for years. It’s going to have to slow, or even stop, its outward expansion, but there are gaps in knowledge about how best to manage it.

That unanimous council vote, on a motion from the mayor, calls for two things to happen. First, city managers have been ordered to proceed with “pre-planning” work for the new growth areas, including an assessment of what the ideal balance is for dividing the land between housing and industrial and commercial uses.

Second, the city will work with industry to dive into the question of what the larger costs are of greenfield development, how that can be done more efficiently and whether developers are covering enough of the infrastructure.

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“I think the pricing (of new homes) is artificially low because we are not capturing the full cost of greenfield development right now,” Coun. Andrew Knack said.

“Maybe that is forever what we should do, but we’ve never really had that policy discussion to ask if we should essentially subsidize new development outside (Anthony Henday Drive) to protect affordability, while we make that up through our property taxes?”

(In theory, if new suburban homes had to cover more of the bill, that might put prices more on par with infill housing, and therefore increase buyer interest in the latter.)

The research is expected to take two years, which means it will fall into the hands of the next city council. As such, that new group should have “a true, eyes-wide open understanding” of its policy options, whether that’s status quo, substantial completion or faster expansion with increased developer contributions, Knack said.

That can only be good thing, because making major decisions with incomplete information is like trying to manage a major city with one arm tied in a sling.

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