Introduction

This is a compilation of questions I have received regarding city finances and taxation. This post is periodically updated as I receive questions. I’ve also written about related financial topics here:

• Budget Consultation Ideas: What’s possible, what’s not and why

• Cities with Casinos Pay Less: Why this is a problem for everyone else

List of questions asked:

• Q1: Do we get revenue from Skytrain, Metro pump stations, etc.?

• Q2: Does density increase tax revenue?

If you have questions that aren’t answered here, please contact me.

Q1: Do we get revenue from Skytrain, Metro pump stations, etc.?

Do cities like Port Moody receive tax revenue from land uses like Translink SkyTrain right of way, Park and Ride, GVRD Pump Stations, etc. as many of those land uses are for the benefit of numerous cities nearby?

There are a couple of parts to this question, so I will do my best to break it down.

Do cities get tax revenue from things like Skytrain (right of way for the tracks), the Park & Ride or Metro Vancouver pump stations?

No, cities are not able to levy taxes on lands with these uses, nor do we get a grant in lieu. These uses are deemed to be the property of high levels of government. 

Do cities get tax revenue from utilities like Fortis distribution pipelines, telecommunications (e.g. fibre optic wires), or BC Hydro distribution lines?

No, we don’t get tax revenue, but we do get something. In BC, linear utility companies (electricity, natural gas and telecoms) pay municipalities a 1% tax based on their gross sales earned within municipal boundaries, based on the sales of the past two years. This 1% tax is in lieu of property tax because this linear infrastructure (wires and pipes) doesn’t fit well into the normal property tax system. Instead, the Province uses this revenue-based tax to provide revenue to municipalities.

Q2: Does density increase tax revenue?

As cities add more density, are they actually making more tax revenue (since they aren’t servicing a bunch of individual properties), or are condos not as positive for tax bases?

Analysis from other cities shows that more intensively used properties - like mixed-use combining commercial and residential uses are net positive revenue sources, compared to suburbs with low density residential uses. Urban3’s analysis of Eugene, Oregon found the following:

“Urban3 found that Eugene’s development pattern is dominated by single family housing (80%) which generally runs at a slight deficit with regards to its ability to pay for infrastructure. Overall, this means that the city is not able to afford its infrastructure liability. We also found that denser, compact development and infill development not only pay for themselves, but also produce a surplus, which can offset the losses created by low-density development.”

While this is an American example, Jens von Bergmann at MountainMath also conducted a similar analysis, examining tax density in Vancouver. This doesn’t include the expenses to service these properties, but gives a good idea of the revenue-generating potential of different development types.

I haven’t seen this completed for Port Moody, but it is on my (very long) “to do” list to learn how to do this. 

Based on these other analyses, I would expect Port Moody to follow a similar pattern. Higher revenue-generating potential for the city in mixed-use land uses compared to single-family. From a high-level perspective, we can assume that pipes and roads need to be longer on a per-person basis for single-family properties (assuming four people per dwelling) than an apartment building, as we have in Newport or Suter Brook. Expenses would not only include infrastructure such as water and sewer pipes, and roads, but also the provision of other services like recreation services and parks.