When all is said and done, it’s the City that determines where, when and how new development can take place. They monitor our land supply, approve the subdivision of land and determine the timing of the initial infrastructure investment. The City requires that “leading infrastructure” – water, storm, sanitary, fire and transportation services – is in place before Developers can begin their work.
The priority and sequencing of infrastructure is, understandably, highly complex. Cities try to provide the same services to everyone, no matter where they live, and to ensure the creation of sufficient housing choices for homebuyers. Cities and industry are moving further into a partnership model for determining the sequence of growth. The Cities have the information to take the big-picture view and the industry has strong market knowledge to bring to the table. Knowing where/when Home Buyers are most likely to purchase new homes helps ensure that the City receives revenue through additional property taxes as quickly as possible once a new community is built.
What’s Not Working?
The funding model for Regina’s infrastructure is “complete cost recovery” for connecting existing infrastructure to new communities, so any initial investment from the City is eventually paid back for use on future projects. The first step in finding revenue for connecting costs is the collection of levies from Developers. After that, property taxes and utility rates help pay back much of the investment.
New growth pays for itself, and then some… Service Agreement Fees (SAFs) and Development Levies (DLs) “Understanding Service Agreement Fees and Development Levies” paid by greenfield Developers also indirectly contributes to funding maintenance and upgrading of existing infrastructure. HOW? Each new home built adds revenue to the City through property tax and utility rate payments.
However, cost recovery should not be the only goal the City should consider. Sometimes, the benefits of growth throughout Regina are not necessarily directly tied to how quickly The City’s infrastructure investment can be recovered.
What’s Being Done?
Together, industry and cities are actively pursuing new solutions to ease the strain of infrastructure investment as Regina grows. In 2013, City of Regina introduced Design Regina, its new Official Community Plan (OCP) to manage the City’s growth to 300,000 people and set the stage for its longer-term development.
Design Regina contains a comprehensive policy framework that will guide the physical, environmental, economic, social and cultural development of the City.
Design Regina worked with the public and key stakeholders to review and refine the plan. The plan was reviewed with the community, Council and the City staff to obtain feedback.
Looking elsewhere for funding inspiration? In cities throughout the world, there are other models to consider that could help create long-term predictable funding for efficient and effective investment decisions.
It’s always a good idea to ask citizens to help make important decisions around infrastructure- but only if they are informed of all the facts. It’s an exciting time to be in an innovative Regina with new thinking and collaboration – we should take advantage of the current slowdown in development to think of better ways to fund infrastructure. We can respond to our fluctuating pace of population growth and build a great city to live, work, invest and play in.
Possible New Revenue Streams
- Public-Private Partnerships
In a public-private partnership, the infrastructure assets remain publicly owned, but the private sector takes on responsibility for the risks associated with designing, building and maintaining the assets. The results can be innovative solutions, delivered on time and on budget.
- Local Improvement Tax
A local improvement tax may appear on one community’s property tax bills to help pay for improvements to specific things like curbs and back lanes in that community. Tax increment financing (TIF) is a public financing method that is used as a subsidy for redevelopment, infrastructure, and other community-improvement in some other cities.
- Special Tax Option
A community can request an enhancement from the City, such as enhanced landscaping, and then pay for it as a community.
- Permanent Area Contributions
These contributions are inter-developer financing and cost sharing of common infrastructure systems within a specific area.
- Municipal-Issued Bond
The purchase of a municipal bond is akin to lending money to the City; you earn interest on your investment.
- Home Owner Associations
For communities that wish to have a higher level of infrastructure amenity, they can pay fees into an operations and maintenance fund, similar to a condo corporation. HOAs are quite common in other cities.