CBC Winnipeg Radio One
Information Radio
July 9, 2004
7:15 - 7:24 AM
And it could become home for as many as 50,000 Winnipegers. But developing Waverley West, the area just south of Bishop Grandin and west of Waverley, means more than just 10,000 new homes.
The neighbourhood will also need roads, and sewers, and schools, and recreation centres. When I asked Winnipeg’s new mayor Sam Katz yesterday what he thought he says that it is the developers who should be footing the bill.
July 8, 2004 (1:34 seconds)
Sam Katz: In the past, when there have been these urban developments, you know, they have paid for the development, but all the other costs such as providing, you know, transit, et cetera, to the area, it’s always seem to have been borne by the City and I’ve said right from the beginning that if a development such as this is going to take place, that all the costs have to be borne by the developer, including situations where you can see for example that down the road there will be situations that will arrive which will have an expense attached to them, and only are there because of this development, those are costs that also have to be borne, i.e., there’s onsite costs and there’s offsite costs. If all those things are addressed I can certainly accept the fact that we do need more housing for the City of Winnipeg.
CBC: So building a community that’s roughly the size of Brandon in that southwest corner, are you saying then that the private sector should bear some of the cost of the rapid transit that would be required to move those people?
Sam Katz: Well, you have to, listen, there’s schools, there’s recreation areas, there’s transit, it goes on and on and on. You know, there’s impacts on the roads, getting people, you know, access and egress. These costs have to be borne by the developer. And you know what, when people throw these things around, the size of Brandon, okay, (laughter) let’s just, you know, it’s words like that that I think scare people. It’s not like you are going to go to bed tonight and wake up tomorrow and all of a sudden there is going to be a new city there. This is over, like, a twenty-year period of time. It’s not happening overnight.
CBC: That’s Winnipeg’s new mayor Sam Katz speaking on Information Radio yesterday. Now, the Ladco Company is the developer hoping to make Waverley West a reality and Alan Borger is the company’s president. He’s with us now. Hello, Mr. Borger.
Alan Borger: Hello, Terry.
CBC: What’s your reaction to the comments you just heard from Mayor Katz?
AB: Well, frankly, I’m relieved that the issue is back on the table. I think that the looming shortage of building lots is one of the most, if not the most, serious issues facing Winnipeg today, and I look forward to working with the Mayor, Council, administration, the people in Richmond West, Waverley Heights and Whyte Ridge, and all the other landowners in Waverley West to address this problem and hopefully make this area an important part of our city.
CBC: What about the issue raised by the new mayor about who should cover the costs. He said there, you know, that I believe that all costs should be borne by the developer. Now, typically, when a developer is working on a project such as this, who bears the costs?
AB: Well, the whole area is quite complicated. The development is filled with a number of different costs, costs recovery schemes, cost sharing plans, but, as I say, I’m delighted that the mayor has already made some time to deal with this. I look forward to working with him. I congratulate him on his most recent election victory. I am confident that he will have no problem whatsoever getting his head around some of the complicated issues that face builders, developers and landowners, and no doubt he will bring a fresh and exciting new perspective. Before we get, though, into the cost, there is one thing that I would like to make clear.
WE AT LADCO ARE NOT THE DEVELOPER. THAT WOULD BE PRESUMPTUOUS. CONTRARY TO A NUMBER OF MEDIA REPORTS WE ARE NOT REPRESENTING THE PROVINCE. WE’RE SIMPLY WORKING WITH THE PROVINCE AND SEVERAL OTHER OF THE LANDOWNERS IN THE AREA WHO WOULD HOPE TO SECURE A PLAN WINNIPEG AMENDMENT AND ULTIMATELY JUST SETTLE A SECONDARY PLAN. THAT IS ABOUT IT.
The other thing is, Mayor Katz is completely right when he says that we should be careful about throwing out this notion that somehow we are going to be constructing Brandon overnight in this area. The fact is that this land will hopefully replace about four or five major subdivisions in southwest Winnipeg. Namely, Linden Woods, Whyte Ridge, Linden Ridge, Richmond West and South Tuxedo. Sure, there will be eventually be about 10 or 12 thousand families living in that area, maybe 25, 000 people depending on demographics, but the scale is really more similar to South St. Vital, and the development will take place over the next 18, or say, 25 years.
CBC: But who does pay for the kind of infrastructure that the mayor was talking about? Roads, sewers, schools, recreation centres in new developments.
AB: It’s a good question, and it is complicated, and unfortunately some of the critics of development seem to believe that new developments are somehow subsidized by the rest of the City. I don’t think that anything could be further from the truth. We’ve prepared a, our consultants have prepared a, comprehensive cost benefits study, that proves beyond a shadow of a doubt, that far from being a net drain, Waverley West will be a net contributor to Winnipeg, both in the long and short term, and that over, say, a 80 year investment horizon, which allows us to consider important issues like life cycle costing, that, this area will generate about one billion dollars more than it will cost.
Now, some of the things that you read, and some of the things that you see on TV you might wonder, well, how might that possibly be the cost, or how could that possibly be the case?
The truth is that when someone buys a home in one of our communities that family has already paid for a full complement of modern municipal services. What’s more, through the property tax system, they will end up paying quite a bit more than their fair share of the cost of running and maintaining the city.
CBC: Are you saying that some of the costs are built into the purchase price of the house, you mean?
AB: Absolutely. For example, the developer, and ultimately the homeowner, pays for almost all of the local infrastructure, including sewer and water service, local and collector roads, sidewalks, intersections, street signs, traffic signals, lighting, water retention ponds, berms, railway crossings, boulevards, neighbourhood parks…
CBC: What about schools and community centres?
AB: The list goes on. The developer also contributes to the regional drainage system, pays half the cost of building arterial roads. Pays a number of fees that help offset the costs of running the City’s land development department. Finally, the developer also front ends hydro and telephone service, subsidizes the purchase of school sites, and front ends the cost of the regional sewer and water systems. All that is set out in the parameters, and it substantially reduces the cost of the city.
CBC: All right.
AB: So your question is, what does the City pay for? The City will have to pay for capital and operating costs. Half the cost of arterial roads, the cost of expressways such as Kenaston, the cost of future system upgrades, and the capital costs of setting up libraries, rec centres, and police and fire stations.
But there are several things that you should keep in mind.
Only part of that infrastructure can reasonably be attributed to Waverley West or any other new subdivision. Some of those costs would have been incurred no matter where growth would occur. For example, let’s say that the City proceeds with its plan to centralize the rec centers in Fort Garry in Waverley West. Would it be fair to say that that cost should be borne specifically by the new residents of Waverley West, or would it be appropriate to say that some of that cost should also be borne by all of the residents of Winnipeg, all of the other residents of Fort Garry?
The same applies to things like major highways such as Lagimodiere, Bishop Grandin, and Kenaston. These serve many more people than the residents that happen to be located nearby. Those roads form an integral part of our city’s transportation grid. But in addition, we’ve allowed for all those costs, and they are more than offset by the net revenue that Waverley West would generate. An average new home in the southeast or southwest would cost about $210,000, would be assessed at $180,000, and would pay about $4,800 worth of property taxes, say about $2,400 going to the City. That could be compared to one of two things.
First, the average family home in the City, which is assessed at about $94,000 and pays City taxes of about $1,200, a difference of almost $1,200. Or it could be compared to the cost of providing civic services, which our consultants have worked about to about $961 per household.
Basically, the City will end up doing very well on its investment. As I’ve said, in this case, we estimate that Waverley West will produce a net direct benefit of over one billion dollars over the next eighty years.
CBC: All right, Mr. Borger, I, when you said it was complicated, I take your point now, and I appreciate your time laying it out for us.
AB: Well, thank you for having me on your show.
CBC: You bet. Thanks a lot.
AB: All right. Thank you. Good bye.
CBC: That’s Alan Borger, he’s the president of Ladco Company, that is one of the umbrella developers that would like help to make Waverley West a reality. In the next half hour on Information Radio I will speak to Jino Distasio, he’s the acting director of the Institute of Urban Studies at the University of Winnipeg, and we’ll talk about Waverley West from a planner’s point of view. That’s coming up after the news.
----Continued after the news----
CBC: And we’ve heard from the mayor, we’ve heard from the developer, and now we’ll hear what an urban planner thinks about who should be paying for what when it comes to developing new suburbs in Winnipeg. Jino Distasio is the acting director of the Institute of Urban Studies at the University of Winnipeg and he’s here now and been listening to Mr. Borger from Ladco and to the mayor, so Mr. Distasio, who is actually responsible for paying the infrastructure costs of suburban development?
Jino Distasio: Well I think as we’ve heard there, it’s a very complicated issue, and you know, uncovering all the costs associated with a type of development like this is so complex because who pays for what? And again, like, who pays for increased usage on Bishop Grandin, or different types of roads, and who pays for different types of infrastructure, sewer, water and all the rest? It just becomes a really tough, tough question to put a percentage or an accurate dollar figure on. So it’s really a hard question to really get to.
CBC: Now we heard from the mayor that when he thinks about this he was thinking that the developer ought to pay quite a lot of the costs. So if the City asks developers to pay for things like road connections and transit and schools and rec centres and such, what impact does that have on large-scale urban development?
JD: Well, I think that in a city like Winnipeg where growth has been very slow I think that developers have had the upper hand in terms of the City almost chasing developers for business. In fast-growing cities where population growth is rapid, a lot of immigration coming in, cities can exert a bit more power in terms of collecting fees, but here we’re in a precarious situation because we’ve got slow growth and we’re trying to attract or create the environment for growth and we’re struggling. So it’s really hard out there for the city to tell developers what they are going to pay.
And for true costs it’s really hard. How do you get money from a developer to say you’re going to pay for a school, you’re going to pay for roads, but how do they pay, how do you factor in the costs for those teachers, for those rec techs, for the police, for the fire, for the equipment, for the ongoing maintenance and costs that are associated after they are built.
CBC: Is it cheaper to build infrastructure in an open field, which is what Waverley West basically is now?
JD: Well definitely. Green field development is easier, it’s cheaper. You’ve got the whole field there, you’ve got no impediments to growth, you’ve not dealing with a bunch of landowners like you would in a brownfield or an existing area, so it’s an attractive location for developers and it’s very easy for them to lay out plans.
But in the case of Waverley West that large area does give the opportunity to have a very comprehensive plan that would be staged over it in a maybe twenty or twenty-five year period. So if the City is smart they can really force a developer to have a very concrete plan that’s really spelled out over what’s going to happen over those twenty-five years of development.
CBC: What do think of Mr. Borger’s belief that the City is a net gainer from developments such as this. I think he said, what was it, over an eighty-year horizon the City would benefit to the tune of about a billion dollars generated because of developments such as Waverley West.
JD: I think that’s an ambitious statement, and I think it becomes also complicated because new developments not only have to pay for themselves, they also have to help pay for other things within the City. So Waverley West, yeah, I mean we need that development, but it just can’t pay for Waverley West, it has to help offset other costs associated with running the City. So I mean, they have to pay their fair share of all the existing infrastructure and costs in the City.
CBC: Are there pockets of undeveloped land closer to the core of the City? This is right out on the edge by the Perimeter, you know, an appealing site, no doubt, but still, some might look at it and say, why not keep the development closer to the core where the infrastructure is already in place?
JD: Well sure, and there’s certainly the closest site is the Kapyong redevelopment that’s going to be coming online. And probably be in direct competition with the Waverley West. That’s a major site that could have, you know, a couple thousand, probably a couple thousand homes on there depending on the type and the, whether its multi-family, single –family, but that’s a major site. Canada Packers always remains a major site. And those sites help promote inner city and the downtown. Waverley West, if it comes onboard to such an extent, we’ve got such slow growth that I always use the analogy of a slice of bread and we’ve got a little bit of peanut butter left and we kept trying to spread it out over to cover the whole slice of bread , and all’s we’re doing is just tearing the centre and we’re tearing different pieces here. So, unless we get a growth spurt, you know, its tough to continue to expand in these areas.
CBC: But who has to make these big decisions whether Waverley West gets the nod, or Canada Packers gets the nod, or some other site in the city gets the nod?
JD: Well, in the case of Waverley West it’s classified as a Rural Area. And under Plan Winnipeg it’s really up to the City to make that first change in zoning. And allow residential development. And its really the City’s right, and they should, really exert a lot of pressure to ensure that whatever gets approved there is effective for the entire city and it doesn’t detract from other existing neighbourhoods like the River Heights. I mean, I don’t think anybody’s going to argue that Waverley West is going to draw people from impoverished inner city neighbourhoods. It is going draw people from middle-class neighbourhoods and existing neighbourhoods, and that’s the concern, what happens to the resale market when we dump 10,000 homes on the market over X number of years?
CBC: And now, just as a final question, from having listened to Mayor Katz talk a bit about his beliefs about the way that development ought to take place and who should pay for it, are we in for a change in Winnipeg about the way that these things are paid for?
JD: I don’t know, maybe Mayor Katz might benefit from a discussion with his planning department to see who does pay, and what way we can do it, and, you know, if he can leverage additional dollars out of developers for the City I think it’s great, but I think the status quo has been that the City has fronted a higher percentage of those costs over the last number of decades. Just because we’re chasing development here.
CBC: Okay, Jino Distasio, thanks for this.
JD: No problem.
CBC: Jino Distasio is the acting director of the Institute of Urban Studies at the University of Winnipeg.