(05-31-2025, 07:26 AM)creative Wrote: Could the city borrow to pay for new infrastructure and then use the new tax dollars derived from these new developments to pay down the loan? Does the math work?
The new infrastructure that DC's pay for are things like arterial road extensions (Strasburg Road), new amenities for an area (Southwest Kitchener Park) or upgrades (Sanitary Pumping Stations, Strasburg Trunk Sanitary Sewer). Sure the city could finance it through debt but the reality is you would need costs to be cut elsewhere within the budget if you were to take on those costs. Assuming we are living in an environment where we aren't increasing taxes to fund these. Now if we are getting rid of DCs for new subdivisions are we assuming the road infrastructure is now funded by the city as well and not the developer? In the current set up that is also funded by the developer to the tunes of millions.
Take for example Activa's 1198 Fischer Hallman Road site, so far site grading and servicing has occurred (Activa has paid for all of it), now lets assume the servicing cost is incurred by the city, the city would have to magically come up with the 3.4 million dollars to cover the costs to service the site for the 511 units that will eventually be on it.
Let's say the city has a 10 year loan at 1% interest, the total cost the city would incur over the ten years is 3.6 million dollars. The development itself, under the assumption that it has identical taxes to similar recent developments by Activa will be $941.17 a year to the city, over the 10 years the townhomes will only produce taxes worth 1.43 million assuming 1% inflation (not reality but for simplicities sake). Now sure 1198 also has apartments on it so including those into it with the same rate as the townhomes one gets 5.1 million assuming the same things.
However sure you will have an excess in this case of 1.5 million but keep in mind that you now have to fund everything else in the city that tax dollars are normally used for over that same ten years with 3.6 million less. Without increasing taxes you can't make the math work, are we okay with cutting fire services? Community Centres? KPL? Winter works? Road Maintenance (pothole repairs, reconstructions, line painting, preemptive maintenance)?
Sure my example is assuming the city takes on servicing of new roads (unlikely even if DCs are removed but you never know what the developer buddies of Ford want) but projects like the Strasburg Road extension or Middle Strasburg Trunk Sanitary Sewer are required for those new developments and were funded via DCs in the realm of millions of dollars. You'll get the same exact issue I mentioned before if we don't increase taxes.
The reality is you either pay DCs or increase taxes, the math doesn't allow for removal of DCs and no increase in taxes especially if we want the same level of service currently provided. Now we could change the way cities are designed to promote significantly more density and stop building endless suburbia but that wouldn't go over well with the vast majority of the populace.
DC's don't go to repairs of existing infrastructure, you use your tax dollars to pay for what DCs pay without increasing taxes and you will spiral into a maintenance disaster.