Regions “Hunt in a Pack”; Municipalities hunt alone

Regions can “Hunt in a Pack”; Municipalities not as much

On July 30, the Provincial Government announced a new financial assistance program for Municipalities called the Municipal Stimulus Program. The introduction and naming of this Program was a missed opportunity. It should have been named the “Regional” (instead of Municipal) Stimulus Program to have the intended benefits.

Then, in December, Municipal Affairs Minister Allard sent notification to all Chief Elected Officials, which stated, in part: “Municipalities are required to take actions that advance at least one of the following objectives: make it easier to start up a new business in your community; streamline processes and shorten timelines for development and subdivision permit approvals; make your community a more attractive destination for new investment and/or tourism”.

For perhaps the largest 50 (of 352) municipalities in Alberta, this requirement by the Minister may be a legitimate undertaking, but for the tiny municipalities (50% are tiny), having to do this task to justify much-needed financial relief to survive, this is fraught with red tape to do this work. For the approximately 140 villages and summer villages, what red tape actually exists? They only have 1-3 employees each. What difficult permit approvals are contemplated? These 140 municipalities are on life support.

In 2020 the Villages of Ferintosh, Cereal, Granum, Wabamun, Manning and Dewberry all voted to “dissolve” and become hamlets. The Village of Hythe is under review. For all the 140 smallest municipalities, there is minimal new investment potential, there is minimal tourism potential. There is already no red tape. But what about their immediate regions? That is another story. The opportunity to incentivize regions was missed. Regions (or hubs of trade) could benefit by this newly announced Program.

The smallest municipalities will now be granted funds after each one sends to the Province some shallow report – 140 of them. These reports will not be read or evaluated by anyone. They are token documents and red tape in and of themselves. These 140 smallest municipalities will receive their token funding to continue to survive. In the meantime, pooling money within their region could have had an impact. Afterall when Municipalities hunt in a pack, they have to behave and deliver results as a region.

The regional movement has been stirring since the 1950s in Alberta, beginning with the McNally Commission. This was followed by the Hyndman report, then the Radke report. Then, the Province updated the Municipal Government Act requiring the formation of the Edmonton and Capital Region Boards over the past 15 years in an attempt to continue with the regionalism movement that is occurring globally. Recently there have been additional requirements of Intermunicipal Development Plans and Intermunicipal Collaboration Frameworks, all of which have been regionalism advancements. The new “Municipal” Stimulus Program was an opportunity to further advance this regional work and the opportunity was missed.

Municipalities today face challenges in workforce, transportation, housing, open space and social inclusion that cannot be adequately addressed by traditional political jurisdictions and boundaries. All these issues must now be examined more thoroughly on a regional level where economic, environmental and social issues become more harmonized. Economic development extends to beyond a county, beyond a village and beyond a town or city into regional economic clusters. In short, regions are where the action is and should be recognized as such to advance the Provincial Economic Development mandate. The opportunity to do so was missed, clearly creating new red tape.

Regions “Hunt in a Pack”; Municipalities hut alone

Regions can “Hunt in a Pack”; Municipalities not as much

On July 30, the Provincial Government announced a new financial assistance program for Municipalities called the Municipal Stimulus Program. The introduction and naming of this Program was a missed opportunity. It should have been named the “Regional” (instead of Municipal) Stimulus Program to have the intended benefits.

Then, in December, Municipal Affairs Minister Allard sent notification to all Chief Elected Officials, which stated, in part: “Municipalities are required to take actions that advance at least one of the following objectives: make it easier to start up a new business in your community; streamline processes and shorten timelines for development and subdivision permit approvals; make your community a more attractive destination for new investment and/or tourism”.

For perhaps the largest 50 (of 352) municipalities in Alberta, this requirement by the Minister may be a legitimate undertaking, but for the tiny municipalities (50% are tiny), having to do this task to justify much-needed financial relief to survive, this is fraught with red tape to do this work. For the approximately 140 villages and summer villages, what red tape actually exists? They only have 1-3 employees each. What difficult permit approvals are contemplated? These 140 municipalities are on life support.

In 2020 the Villages of Ferintosh, Cereal, Granum, Wabamun, Manning and Dewberry all voted to “dissolve” and become hamlets. The Village of Hythe is under review. For all the 140 smallest municipalities, there is minimal new investment potential, there is minimal tourism potential. There is already no red tape. But what about their immediate regions? That is another story. The opportunity to incentivize regions was missed. Regions (or hubs of trade) could benefit by this newly announced Program.

The smallest municipalities will now be granted funds after each one sends to the Province some shallow report – 140 of them. These reports will not be read or evaluated by anyone. They are token documents and red tape in and of themselves. These 140 smallest municipalities will receive their token funding to continue to survive. In the meantime, pooling money within their region could have had an impact. Afterall when Municipalities hunt in a pack, they have to behave and deliver results as a region.

The regional movement has been stirring since the 1950s in Alberta, beginning with the McNally Commission. This was followed by the Hyndman report, then the Radke report. Then, the Province updated the Municipal Government Act requiring the formation of the Edmonton and Capital Region Boards over the past 15 years in an attempt to continue with the regionalism movement that is occurring globally. Recently there have been additional requirements of Intermunicipal Development Plans and Intermunicipal Collaboration Frameworks, all of which have been regionalism advancements. The new “Municipal” Stimulus Program was an opportunity to further advance this regional work and the opportunity was missed.

Municipalities today face challenges in workforce, transportation, housing, open space and social inclusion that cannot be adequately addressed by traditional political jurisdictions and boundaries. All these issues must now be examined more thoroughly on a regional level where economic, environmental and social issues become more harmonized. Economic development extends to beyond a county, beyond a village and beyond a town or city into regional economic clusters. In short, regions are where the action is and should be recognized as such to advance the Provincial Economic Development mandate. The opportunity to do so was missed, clearly creating new red tape.

Why Regions Matter More Now, Due to the Pandemic

Why Regions Matter More Now, Due to the Pandemic

In the book “The Decameron”, by Italian author Giovanni Boccaccio, the tale is told that in Italy during the time of the Black Death, seven women and three men moved out of Florence to escape the plague to a deserted villa in the countryside. While there is much more to this story than simply about people escaping the plague-ridden metropolis, the story is about those who could afford to flee that pandemic, did so.

The reasons to get out of a city are perhaps straightforward. Physical distancing in Montreal, New York, or Paris may mean committing to months inside an apartment of a few hundred square feet, with the knowledge that a global pandemic is just outside the front door. Heading for the hills meanwhile, could mean peace and quiet, outside spaces, and the opportunity to avoid the city’s risks, by being in the country. This was the case with the wealthy Europeans during the Renaissance and has repeated itself in other pandemics. People do not move far though; they stay within their close-by region, not to far from their main home.

Will Canadians (and municipalities) now view their regions differently after the pandemic than before the pandemic? We are a mobile society. Where we shop, dine, educate, and recreate is now closer to home since the pandemic began than it was before the lockdown. For the first 100 years after confederation, Canadians were loyal to their close-by communities, but once highways became safer and quicker to drive upon, Canadians ventured further and soon became more regional in their movement patterns. In recent years Canadians travel outside their local towns and to far beyond their close-by region for many reasons; something that Canadians did very little of decades ago. Some of that “stay-close-to-home” behaviour has now returned. We are currently staying closer to our home communities, closer to our bubbles and there are now some new factors that could become a growing trend into the years ahead.

For example, while the Decameron scenario will likely not repeat itself to a large extent in 2020/21, it provides a glimpse into how it can affect the movement of some people and likely there will be impacts regionally. And while municipal councils across Canada grapple with a new financial reality caused by COVID-19, “regional” officials from all orders of government have new opportunities to re-build their relationships as partners with each other, thereby assisting in the rebuild of Canada. The provinces could become stronger partners with municipalities if they choose to do so.

The Provinces could all use this opportunity to change the financial arrangements that they have with municipal governments. Instead, the Provinces so far have taken the opportunity to distance themselves from municipalities. In Alberta, with recent assessment policy changes, some counties are reporting possible 55% to 75% tax increases next year.

There are various regional financial models utilized throughout North America, far better than the beg and give model used in Alberta. Revenue sharing models, instruments, tools, and formulae could be put in place that assists and rewards regions who collaborate, while keeping local municipal autonomy intact. Without a new arrangement, politicians across Canada will simply continue with the same old financial models, made worse by the pandemic.

What we do not need are families ‘heading for the hills’ unwilling to be part of the solution. While some families escaped during the plague, we now need all hands on deck, region by region, to be part of this recovery.

The “Mill” Rate – The Great “Unequalizer”

The “Mill” Rate – The Great “Unequalizer”

In April 2021, when Alberta municipalities set our property mill rates, it may not be pretty; COVID-caused. Additionally, there may be increasing disparity between municipality types; COVID-caused.

Based on the Municipal Affairs website, Alberta’s 87 villages’ mill rates are 20-40% higher than those of Alberta’s towns and cities. Also, at times, village mill rates are double or triple that of the rates of the county that surrounds them.

Bottom line is that mill rate disparity is a challenge in Alberta and may be exacerbated by COVID-19.

A tax rate, (expressed in mills), is established based on many factors. Arithmetic-wise it is the number that a property’s assessed value is multiplied by (decimal-adjusted) to determine its property taxes. On a $400,000 home and a tax rate of 8.4437 mills, the municipal property taxes would be $3,377/year.

The Municipal Affairs website reports that the Alberta mill rate average of non-residential for counties is 13.4411. The average non-residential rate for all towns is 13.4643 and the 2018 Alberta average for all villages for non-residential is 16.2665. While there are many classes of machinery, commercial, industrial, and linear affecting these numbers. The data shows that disparity exists between small urbans and counties.

Disparity is greater on residential taxes where the 2018 average for all counties of residential/farms is 4.1261 compared to the average for all town residential rates at 8.1847. The average of all village for residential rate is 10.7570. While there are nuances in each class (e.g., farm properties), for simplicity sake, disparity exists.

Bottom line, small urban tax rates are substantially higher than counties. What might this mean when setting the tax rates in 12 months?

Municipal districts and counties are likely facing a disproportionate non-res tax challenge (compared to urbans) because of possible unpaid industrial taxes, not the least of which, the challenged oil and gas sector. Collection of unpaid residential taxes is much easier than collecting unpaid industrial taxes. Houses can be repossessed and sold to collect unpaid taxes. That is easier than repossessing and selling abandoned oil and gas assets to collect taxes.

In contrast, urban municipalities have higher commercial assessment than counties. Simply put, shopping areas are much more common in urbans than in rurals. If the commercial vacancy rate is significant and commercial property owners are unable to pay taxes, low municipal tax revenue from those properties could be a factor for the urbans. That will likely be the case in 2021.

Since urbans receive a substantial portion of their revenue from residential taxes, house price stability will also be an important factor for the calculation of residential tax rates.

Finally, disparity will emerge for Edmonton and Calgary compared to all other municipalities. Edmonton and Calgary will have a particularly challenging time with taxation. These two cities have the largest facilities that are low revenue generators. Swimming pools, recreation centers, sports stadiums, museums, libraries, art galleries and public transit are not able to “break even” through user fees the best of times, and COVID will impact that further. Edmonton and Calgary also rely on parking revenues, which will also be substantially reduced. And, while each Alberta municipality has its own unique social challenges, homelessness disproportionately costs Edmonton and Calgary more, compared to all other municipalities. Other orders of government have not adequately addressed this matter, (nor other large city social costs).

In summary:

Towns and villages have little room to raise mill rates.

Counties will be challenged collecting all their taxes from industry.

Big cities will be challenged due to reduced revenues and collecting commercial taxes.

The least affected group in Alberta may be the most diverse counties along with the 20 mid-sized cities.

Where will this all shake out for our taxes? Will the province bail out the villages differently than the counties, differently than the Edmonton and Calgary? What are the Federal Government plans?

There will be a day of reckoning in 2021 and perhaps again in 2022.

Municipal Funding – Creativity Needed – How do you spell regional?

Municipal Funding – Creativity Needed – How do you spell regional?

There is an African Tribe who legally catch and sell monkeys around the world. We see them all over. To catch the monkeys the tribe members drill a hole in coconuts, tight enough for monkey fist to fit in. Inside the coconuts the tribe members put in a sweet, hard, and cooked dough treat. When the monkeys put their hands in they clutch the treat and will not let go, yet also cannot remove their fist from the small coconut hole and are trapped and taken alive by the members. The monkeys of course clutch, not letting go, holding on in spite of the consequences.

Similarly, the Federal Government and Provincial Governments are not being creative when it comes to funding for municipalities. There are so many models in North America where money is available, if more than one, and sometimes multiple municipalities collaborate for a project that clearly has regional benefit. Instead the money is granted for projects that are benefiting only one municipality. There simply are better approaches. Like the monkeys, the senior orders of government hold on, at the expense of the greater good.

For example, a regional broadband project that might assist an entire region could be accomplished with the same grant money, but creativity is yearning to be called upon. Any Albertan who has traveled Highway 43 between Whitecourt and Grande Prairie knows full well that one must find high ground for any degree of communications availability. Imagine the benefits to several municipalities including Whitecourt, Fox Creek, MD of Greenview, Valleyview, Woodlands County, Big Lakes County and Yellowhead County.

There are dozens of such examples across Alberta, where funds could nurture collaborative projects helping multiple Alberta municipalities.

Instead, just like the monkeys we continue to be trapped without being creative looking for other solutions.

Regions matter.

Collaboration matters

Regions can be a solution.

Nolan Crouse

Regions and COVID – What will Evolve?

Regions and COVID – What will Evolve?

While municipal councils across Canada grapple with a new financial reality caused by COVID, “regional” (yes regional) officials at all orders of government now have new opportunities to help build Canada as legitimate partners with each other. While most “regions” do not have taxation powers, regions do have political powers because of their size and strength. Municipality after municipality have less political clout in Canada and that is evidenced recently by the terribly weak FCM (Federation of Canadian Municipalities) position that they announced last week on the financial plight of municipalities across Canada. Regions however could be the savior.

Many municipalities in Alberta, for example, chose to not increase taxes without adequate support from the senior orders of government on their future financial security. Cut, save, and cut more seems to be the trendy mantra that many are stating. “We will find savings”, “we can cut this”, “we will consolidate this”. Really? The risk of significant increases in property taxes looms. This is because the majority of revenue collected by municipalities is property taxation and that will be inadequate post-COVID. Take that to the bank.

What should change? First, the Provincial Governments should use this opportunity to change the financial arrangements they have with municipal governments. Instead of the “handout” strategy that has been used by municipalities for decades, other models employed around the world allow solutions to be linked to regional economies. Coors Field in Colorado was funded using a particularly unique regional model. There are many other examples of instruments, tools, and formulae. Without a new arrangement, local politicians across Canada will simply continue to beg for the next handout (just like FCM weakly did last week); like always.

Because of their limited financial diversity, reliance on their neighbors and their reliance on other orders of government, villages and small towns will now rely even more and more on their region, plus rely more on their immediate neighbors to share their burden of tax pressures and recovery. Regions however, can fill the void and share in the growth that individual municipalities cannot. Few seem to understand that, and few talk about it. And while transformation will likely not take place in the Federal-Provincial-Municipal financial arrangements, a transformation of regional entities could take place across Canada if all orders of Government stepped up and simply did it. Regions have power, strength, and diversification. Regions meet rural needs, urban needs, have recreational amenities and more. Most individual municipalities do not have required diversity and the smaller the municipality, the more difficult the struggle will be to be a part of recovery.

Here is an example.

Broadband capacity needs to be improved in Canada now and could be one driver in economic recovery. it is a good example of infrastructure that can only be put in place on a region-by-region basis. Imagine if broadband were to be increased in every corner of every province and territory in Canada! Imagine that! The economic potential is immense on broadband alone. Virtual meetings, communications, exploration, keeping communities thriving on a region-by-region basis. All so that we can live the transformed lifestyle that will take place because of COVID. Broadband will assist with work-life balance, “smart” electronics, online service provision, online education, online commerce and more.

Broadband serves regions, not individual municipalities.

Broadband is an economic engine.

Broadband is only one example of many regional initiatives that could assist with economic recovery and diversification. There are more.

Regions need to flex their muscles; acting like groups of municipalities hunting in packs. The recovery depends on it. Our taxes depend on it.

Regions matter.

June 5, 2020

Test 99

The Day of Reckoning is Soon

The Mill Rate – The Great “Unequalizer”

This is kinda heavy stuff but I will attempt to simplify this with my conclusion to begin with.

My conclusion is that Alberta’s villages’ tax rates are already 20-30-40% higher than their nearby towns/cities and at times double or triple the mill rates of the County that surrounds them.

Bottom line – mill rate disparity is a challenge in Alberta. Will it be exacerbated because of COVID?

We will know more in May 2021 when all municipalities will be setting their mill rates for 2021. Stay tuned, it may not be pretty.

Mill rate, or the tax rate, is the result of many factors. Arithmetic-wise it is the number that is multiplied by each property’s assessed value to determine its property taxes. A mill rate is achieved by multiplying the tax rate by 1,000. For example, a tax rate of 0.008437 would be presented as 8.4437 in mill rate terms. On a $400,000 home with a mill rate of 8.44 the municipal property taxes would be $3,377/year.

So, what are the average mill rates in Alberta?

According to the Municipal Affairs website 2018 mill rates are as follows

1. ***Let us look at Non-Residential first called “General Non-Res”:

Average of all Counties/MDs for Non-Residential 13.4411

Average of all Towns for Non-Residential 13.4643

Average of all Villages for Non-Residential 16.2665

***One needs to recognize that there are many subclasses of machinery, commercial, heavy industry, linear. This is not intended to be a tax lesson but an illustration of the great unequalizer.

2. *****Let us look at residential mill rates second:

Average of all Counties/MDs for Residential/Farm 4.1261

Average of all Towns for Residential 8.1847

Average of all Villages for Residential 10.7570

*****One also needs to recognize there is a far more detailed analysis required to review the farm properties. A simple listing does not explain some of the nuances. But for simplicity this is how Municipal Affairs lists it.

To explain the farm tax rate further, as per the Canadian Property Valuation Magazine, in Alberta most farm residences and improvements are exempted in whole or in part from taxation. Farm assessments are determined by local assessors (as are all other property classes). The valuation date is set at July 1 in the preceding year. Simplified, farmland is assessed at its ability to produce income from raising livestock or growing crops. For the most part, tax revenue from farm properties does not make counties wealthy, contrary to some opinions.

Now, MDs and Counties are likely facing a disproportionate non-res tax challenge because of bankruptcies that relate to the Oil and Gas market. Residential properties are easier to “repossess and re-sell” to collect on unpaid taxes in urbans than repossess and sell abandoned oil and gas assets in rural Alberta to collect taxes.

Where will this all shake out?

Will the province help bail out the villages?

Will the province help bail out the counties?

Will there be a day of reckoning in 2021 or 2022?

The New Regional Reality

The New Regional Reality

May 1, 2020

When Chief Medical Officer, Dr. Deena Hinshaw holds her daily Alberta news briefings updating Canadians on the province’s COVID-19 crisis, most Albertans have no doubt heard her speak in terms of “zones”. For Dr. Hinshaw, zones are a version of “a region” and are defined by Health Services. It is clear that this approach does not have her present statistics of municipality by municipality to Albertans. While some people would prefer to see data by municipality, she presents her data only with a regional viewpoint. Of course, if anyone wishes to drill down further, an on-line map (geospatial function) on the Alberta website shows additional data is broken down into more detailed sub-regions. Most coronavirus data, however, is not defined by municipal boundaries, and rightfully so.

So, what is my point? Why does this matter?

You see, we each view different regions through different regional lenses, depending on the topic. For property taxes (and municipal spending) for example, the lens is a single municipality and not a region. For grocery shopping, the radius extends beyond municipal boundaries and we see shopping regionally. For the new Transit Commission formed in 2020 in the Edmonton area, the lens is now through the eyes of the 12 communities who now belong to the regional commission. For the regional economic entity, Edmonton Global, created in 2017, the lens is 15 municipalities who are “hunting as a pack” for better regional and local economic prosperity. And, for the St. Albert Gazette their region is a St. Albert-north region of St. Albert, Sturgeon and its many nearby towns and villages. But, for Dr. Deena Hinshaw it is 5 zones. That is her lens. So will “re-opening” be more regional than by municipality.

The concept called “modern regionalization” has been a growing concept around the globe since the 1950s. As increased globalization began to take foothold after WWII, so did regional efforts to address needs. Municipalities could no longer serve their residents alone and now, more than ever, municipalities must work as collectives. For example, British Columbia has 162 municipalities but 27 formal regional districts. Manitoba has 137 municipalities and 23 census divisions and 8 regions. Italy has 20 regions, yet 7,914 municipalities. Regions matter, depending on the context. Alberta can learn so much from other jurisdictions in Canada and indeed throughout the world about regional benefits.

With the pandemic affecting so many aspects of our lives, some of the municipalities may have to reassess their financial viability. Addressing recent debt incurred in 2020 in Canada and Alberta will be everyone’s responsibility to deal with over the coming decade. And, while “bigger is not always better”, many of the villages in Alberta are already reassessing their viability to serve their residents. The regions that these villages are within may now even be better equipped to handle the financial burden than the villages can by themselves. Spreading the debt, tax burden and liabilities over a broader tax base is no doubt appealing to many. Unless Canadians begin de-urbanizing by moving into smaller communities as a result of COVID-19, the future of villages is even in more jeopardy. Many of the villages in Alberta may be faced with “handing their keys” over to their regional county partner.

We all know that little will be untouched by the virus.

Re-opening will occur more region by region.

Municipal policies will need to be re-written.

Regional policies will need to be re-written.

Municipalities will rely on their neighbors more than ever before.

Regions now matter more than ever before. Guaranteed.

Now, I wonder what Dr. Hinshaw would say?

Will COVID Reshape Urbanization?

Will COVID Reshape Urbanization?

Will Canadians Share Their Region Differently?

In the book “The Decameron” written by Italian author Giovanni Boccaccio, the tale is told that, in Italy during the time of the Black Death seven women and three men moved out of Florence to escape the plague to deserted villa in the countryside for two weeks. While there is much more to this story than simply escaping the plague-ridden metropolis, the story is told in part to demonstrate that those who could afford to flee the pandemic did so.

Recently during COVID-19 many New Yorkers moved out of their cities and headed to short term rentals, Air B&B’s and to remote villages. While there are no hospitals, grocery stores, or other infrastructure to support the new residents, other amenities are, such as no people! Many New Yorkers remain in the rural towns and villages today.

The reasons to get out of the city are perhaps straightforward. Social distancing in Montreal, New York, Milan or Paris may mean committing to weeks or months inside an apartment of a few hundred square feet, in the knowledge that a global pandemic is just beyond the front door. Heading for the hills meanwhile, could mean peace and quiet, outside spaces, and the opportunity to opt out of the city’s risks by being in the country. This was the case with the wealthy Europeans, like during the Renaissance and has repeated itself in other pandemics and it is the case in 2020.

Will COVID-19 revitalize towns and villages in Canada because of de-urbanization?

Will COVID-19 reshape urbanization?

Will Canadians share within their regions differently long term?

Time will tell; Realtors be aware!