Opinion: City of Vancouver needs to focus on its basic municipal responsibilities

Feb 24 2022, 12:23 am

This is a three-part Daily Hive Urbanized series on the State of Vancouver’s municipal political landscape ahead of the October 2022 civic election.

Part 1 provides an overview of the potential outcome of the upcoming civic election, based on the current makeup of major parties and candidates. Part 2 compares the scope, mandate, and workforce size of the City of Vancouver and its bureaucracy with other major Canadian cities, while Part 3 (this article) highlights the need for the City of Vancouver to achieve a better balance with its core basic responsibilities of a municipal government.

In late 2021, upon the request of city council, city staff reported that the City of Vancouver currently spends at least $219 million annually in direct “downloaded” costs from the federal and provincial governments. That is almost equivalent to 15% of the aforementioned total operating budget of the city in 2021.

Downloaded costs, in short, are responsibilities that are the purview of the federal and provincial governments, but over the past few decades, for various reasons, municipal governments have gradually absorbed these costs.

City staff stated $168 million of the downloaded costs went to affordable housing, with $158 million for construction costs and about $10 million for annual operating costs. This includes temporary modular housing, SROs, supportive housing, and non-market rental housing. Another $23 million went to childcare, including $21 million for construction and $2 million for annual operations.

This sum also includes $27 million annually on the operating costs of addressing social issues inflicting the city, including $4 million on measures to deal with the mental health and opioid crisis and $23 million on homelessness.

“Collectively, the impacts of downloading, combined with the municipal role in actively taking on responsibility for certain service delivery areas, has resulted in significant ongoing pressures on the City budget and property taxes,” reads a city staff memo outlining the downloaded costs.

“This creates challenges for Councils who must make difficult choices between delivery of important services and increases to property tax to deliver those services, which as a regressive form of taxation can adversely impact residents and businesses. It also points to an opportunity for improved collaboration with senior levels of governments, to ensure that the delivery of services, as well as the policy and funding tools, are aligned across all levels of government to optimize how taxpayer dollars are used to address the increasingly complex challenges facing society.”

The property tax, the primary and by far the largest source of revenue for municipal governments in Canada, was not designed to take on building and operating affordable housing and childcare, and dealing with homelessness and the mental health and opioid crisis.

According to the city, 75% to 85% of the municipal operating budgets are funded by the property tax and utility fees, with other revenue such as permits, community and recreational programs, and parking funds making up the remaining 15% to 25%.

In Vancouver’s scenario, unlike its counterpart core cities in the country’s other major urban regions, it is at a significantly added disadvantage of being the regional core city that hosts a great majority of the region’s social issues but with only a small fraction of the pool of regional taxpayers to fund regional, provincial, and national-level issues that gravitate towards its jurisdictional borders.

Efforts by the cities to take initiative to tackle these issues may be well-intentioned, but they are highly ineffective and inefficient when it comes to implementation from the municipal level.

“The federal and provincial government of Vancouver”

There is a notion that Vancouver could significantly increase its property tax to help address its financial issues, as the tax rate is currently the lowest among major cities. But this ignores the reason why it is low in the first place: Vancouver’s property values are stratospherically high, and property taxes are based on a rate of assessed property values. A disproportionately and exceedingly high level of disposable income is already channelled into high housing costs and other escalating living costs in a city where average and median incomes are generally low; Vancouver is very much a cash-poor society.

Businesses across the city are also struggling to keep their doors open because of steep increases in rents and property tax increases passed on to them by landlords.

Yet the city continues to show an interest in piling on even more projects that are far beyond its capacity.

But various city-led homelessness, mental heath, and affordable housing construction and operation strategies have only created a vicious cycle of the federal and provincial governments downloading even more of the responsibilities to the City of Vancouver. This is not sustainable for the municipal government over the long term.

For senior governments, it has also been challenging to make big policy moves when the municipal government is insistent on making all of the chess board moves at every turn; Vancouver essentially likes to be in the driver’s seat of policy direction, even though it does not have the capacity and resources, instead of in the passenger seat.

In October 2020, city council approved a strategy detailed by city staff to spend $1 billion to acquire and secure up to 105 privately owned SRO buildings to protect their continued use as housing for individuals at risk of homelessness. There would also be renovations or redevelopments of thousands of rooms, and new assistance to private SRO owners to improve about 1,300 rooms and secure affordability. The city will attempt to engage the federal and provincial governments as partners in this city-initiated strategy.

Several weeks later, city staff’s Climate Emergency Action Plan of 32 projects was also approved by city council, carrying a combined total cost of $500 million through the end of this decade.

Seemingly running out of ideas, and ignoring prevailing high cost of living issues, the original 371-page CEAP report in 2020 contained 160 uses of the word “fee,” 86 uses of “charge” or “surcharge,” 44 uses of “revenue,” 159 uses of “pricing,” and 69 uses of “tax.” Revenue-generating terms totalled 518 mentions. Very little in the plan goes towards climate mitigation of better preparing city infrastructure, residents, and businesses for the high likelihood of climate impacts (raising the seawall, flood prevention measures, extensive overhauls and separation of storm sewers with more capacity, etc.) — which is something the powers of the municipal government can more effectively control and influence — but instead the plan gravitates much more towards climate prevention.

The largest CEAP project is transport pricing (mobility pricing), specifically road tolls for the downtown Vancouver peninsula.

Road tolls into the region’s urban centre account for about half of CEAP’s cost, while also providing a new annual revenue source of as much as $80 million going to the City of Vancouver for city-isolated projects, starting in 2026. Several years earlier, TransLink created concepts for regional mobility pricing to raise much-needed new revenue for its public transit expansion projects across the region, and to better prepare itself for dwindling fuel tax revenues from the gradual adoption of electric-battery cars. This City of Vancouver measure takes a potential revenue source from TransLink for much broader regional transportation needs determined by regional consensus through the Mayors’ Council, not Vancouver City Hall.

Road tolls will be a major civic election issue for the October election; city staff are not expected to return to city council on a transport pricing implementation plan for consideration until 2023. Moreover, road tolls are under the jurisdiction of the provincial government; the city does not have the legal authority to implement transport pricing on its own, but it is still willing to commit substantial funding to the planning exercise.

Ahead of one of the city’s most recent budget planning processes, a survey conducted by the city found that a majority of residents — nearly six-in-10 residents (57%) — wanted their municipal government to prioritize the delivery of core services that municipal governments are directly responsible for. This was followed by affordability and housing at 48%, economy at 42%, the city’s definition of equity and socials at 32%, and climate change at 21%.

Amongst businesses, 57% wanted delivery of core services prioritized, followed by 51% on the economy, 41% for affordability and housing, 31% for equity and social issues, and 20% for climate change.

Balance is needed: Vancouver needs to return to the basics

The City of Vancouver increasingly has a tendency of playing Victoria and Ottawa, but the inverse is true of the provincial and federal governments’ interests in venturing deep into the basic core responsibilities of municipal governments.

Core municipal responsibilities in BC entail fire/police/public safety and animal control services, land use regulation such as zoning, parks and recreation, local road maintenance, street cleanliness and sanitation, state of good repair of civic assets, and utilities such as water connections and storm sewers, as well as public libraries, local economic development, and arts and culture.

The issue centres on the clear tradeoffs — when the city takes its foot off the pedal, so to speak, on core municipal responsibilities to accommodate its scope creep. This reduces the city’s ability to respond to growing demand for the core responsibilities, or the timely replacement of ageing infrastructure.

Cleanliness and maintenance standards for streets, parks, and other public spaces have greatly fallen, particularly within areas in and around the downtown peninsula.

When it comes to public safety and order, the city and its elected officials are increasingly under heavy public criticism for not only their inaction on violent crime, theft, and vandalism, but also their apparent sheer indifference. Very real experiences and concerns of residents and businesses are met with insincere responses and sometimes even gaslighting from some city council members and other leaders.

And while most of city council was willing to throw their weight in support of a legal discrimination battle against Quebec, there has been a highly disproportionate lack of attention on discrimination issues within their own jurisdiction. City council and city staff have done little in response to rising Asian hate-crime.

According to California State University San Bernadino, in 2020, Vancouver had the highest number of Asian hate crimes in North America. There was a 717% year-over-year increase.

Elevated levels of anti-Asian racism still remain. As just one case in point, Chinese-operated businesses and organizations in Chinatown assert that their businesses are far more likely to be vandalized than non-Chinese entities.

The not-for-profit Chinese Cultural Centre in the heart of Chinatown has been besieged by daily vandalism — not just broken windows, graffiti, theft, and dumps of garbage, but needles pushed through doors or partially protruding to injure an unsuspecting passerby, fire exit doors tied shut with rope from the outside, and attempts to set fire to their buildings. These malicious acts have escalated in frequency over the past five years.

Cognitive dissonance appears to be embraced as a key governance principle by some policymakers and elected officials in the City of Vancouver.

But policies against reality are like a tiny dam built by beavers against a tsunami. Sooner or later, there is always a reckoning.

On affordability and housing, the city can make a very real dent in the housing crisis by overhauling zoning to allow much more housing supply. They already have a powerful tool at their disposal, completely under their jurisdiction, but it is not used to the extent needed.

By providing more new homes — both rental and ownership — for the huge middle-class segment of the population, this reduces competition for the existing pool of homes available for both the middle- and lower-income segments. With a real surge in new supply, housing affordability will grow and improve over time, but it requires the seeds to be planted today.

The city needs to stay within its lane, and let the provincial and federal governments be the primary drivers of building and operating low-income affordable housing, and tackling the homelessness, mental health, and opioid crisis, while also being a supporting actor for their efforts.

The resulting density from the surge in new housing — especially in transit-oriented developments, and near concentrations of employment, opportunities, and activities — also serves as the single most powerful and effective way, completely under the city’s direct control, to take part in climate action efforts. Real density is comparatively the low hanging fruit of climate action, before requiring the expensive bells and whistles of green building design; the cities with the highest urban densities have the lowest average household carbon footprint.

Allowing density, whether it be residential or commercial, also provides the city with new revenue through approval processes and increased ongoing revenue through property taxes to support new and improved services and infrastructure. Vancouver’s refusal to properly densify has sent residents, businesses, and potential municipal revenues to the suburban municipalities. Rather than focusing only on tapping the existing pool of residents and businesses dry, there should be a real effort to create new revenue opportunities through additional residents and businesses.

When it comes to the economy, the city bureaucracy and consecutive city councils have not had a good grasp or understanding of the need to catalyze economic development and attract investment — major businesses — to create improved employment income opportunities for their residents. Focusing on catalyzing upward mobility serves to achieve the city’s socioeconomic goals of fostering affordability, supporting more small businesses, and shifting residents towards greener and healthier lifestyles, which often come at a greater financial cost. That is the positive impact when residents have more disposable income.

Real estate investment should not be the only major upward mobility income opportunity for residents of this city, nor should the municipal government pursue real estate as its primary revenue driver. But the reality is in the absence of other kinds of wealth generation, both sides of the equation are completely hooked on real estate.

The City of Vancouver lacks the necessary culture of valuing economic opportunity and growth — unlike Toronto, Montreal, and Calgary, and increasingly even Surrey and Burnaby.

While there seems to be a blank cheque for think tank-like urban, transportation, and social planning studies and departments, the city’s investment attraction agency, the Vancouver Economic Commission, receives only about $3 million annually from the municipality to support its highly strategic and productive efforts in bringing more businesses and jobs to the city and the wider region. In contrast, the City of Calgary provides its equivalent agency, Calgary Economic Development, with over $13 million each year.

The city could also support affordability by making real, impactful changes to its permitting and licensing processes and requirements so that new housing can be achieved more quickly to better react to demand, and small businesses do not face costly, lengthy wait-times. The city emphasizes the need to be cost neutral in its permitting and licensing operations, yet it does not fully appreciate the expensive impact it can have on middle-class families who operate small businesses.

When it comes to arts and culture, the city’s scene is underwhelming and dying — partially because of housing affordability issues, but also because of a culture that is overdependent on natural surroundings. Civic attractions like the city-owned Museum of Vancouver are grossly neglected, and it was only last year that the Pacific National Exhibition (PNE) received its first substantial city-supported reinvestment in its entertainment facilities — almost two decades after the city first assumed ownership of the PNE.

Arts and culture would greatly benefit from new ongoing investments by the city to support major public events and festivals, which also serve to support businesses and tourism, and foster a sense of civic pride and community. These events and festivals that attract and inspire the masses should be highly valued as a public benefit, especially in the post-pandemic context.

Less dogma, more pragmatism

To circle back to the very start of this exhaustive three-part series breakdown of everything that is currently wrong with the City of Vancouver, prospective candidates in the October civic election should be tasked with pursuing an improved balance between the basic core responsibilities of the municipal government and interventions into non-traditional responsibilities, but in more efficient and practical ways.

Candidates, including incumbents, should be reminded that they are not running for a seat as a Member of the Legislative Assembly or a Member of Parliament.

The trajectory this municipal government has been following for almost 15 years has been completely unsustainable. There is the old fable of the boiling frog; a frog dropped into a pot of boiling water will rightly leap straight out immediately, but if the frog is put into cold water and the heat is gradually increased in barely noticeable increments, the frog will not notice the creeping calamity and will submit to being boiled to death. But as of now, we are still at least a handful of increments away from a comparative complete disaster (see San Francisco).

Elected officials should strive to establish a culture of less planning (office-based jobs) and more doing (frontline and service-based workers), challenge bureaucratic norms, tame partisan city staff, and ignore politics based on tantrums and nihilism. Perfection, often highly subjective, especially in the context of the City of Vancouver’s various current lenses, is the enemy of the collective good.

But with Vancouver’s civic electoral turnout historically hovering at only about 40%, more centrist-leaning candidates are challenged with activating the vast disengaged pool of moderates in the electorate. Efforts should be made to mobilize a larger proportion of voters from the Asian community, which makes up about 45% of the city’s total population, including 27% Chinese, 6% South Asian, and 6% Filipino. When there is a larger vote turnout, usually a sign of a surge in moderate voters, far-left and far-right political movements do not gain real traction, and for the same reason they historically do not perform well in provincial and federal elections, which typically see significantly larger turnouts than municipal elections.

The makeup of the current city council completely lacks diversity, and this is reflected by their poor understanding of their very diverse constituents. That said, this is certainly not to say city council should be comprised of more single-issue candidates (three existing city councillors would fit that classification). Absolutely not.

Some candidates and political parties would perhaps benefit from consolidating their efforts and finding common ground, but the split vote from their numbers is also indicative of their sense that a growing number of voices in this city are not being heard. Very frustrated. Disillusioned.

This is the conclusion of a three-part Daily Hive Urbanized series on the State of Vancouver ahead of the October 2022 civic election.

Part 1 provides an overview of the potential outcome of the upcoming civic election, based on the current makeup of major parties and candidates. Part 2 compares the scope, mandate, and workforce size of the City of Vancouver and its bureaucracy with other major Canadian cities, while Part 3 (this article) highlights the need for the City of Vancouver to achieve a better balance with its core basic responsibilities of a municipal government.

Kenneth ChanKenneth Chan

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