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Problems and Purpose

Rapid growth is putting significant pressure on the City’s municipal infrastructure, as is occurring in many large cities in Canada. The Chamber, the City of Calgary, and partners wanted to take a fresh look at the City’s revenue sources and consider new revenues and financing models that can meet the city’s needs. To ensure Calgarians were placed at the heart of this discussion, a Citizens' Commission on Municipal Infrastructure was formed. 36 randomly-selected representative Calgary residents met during six Saturdays over a three month period to deliberate on and produce a series of 14 funding recommendations to ensure sustainable infrastructure investment by the City

Background History and Context

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Organizing, Supporting, and Funding Entities

The Calgary Chamber contracted MASS LBP, an independent specialist in the design and delivery of deliberative programs, to lead the Citizens Commission. MASS LBP is responsible for the success and impartiality of the Citizens Commission. The project team worked with an Advisory Committee to ensure that a balanced and informative learning program is developed for the Commission, and that its proceedings are free of bias.

Advisory Committee: The Advisory Committee provided oversight and guidance to the Chair and project team to ensure that the Commissions’ program was balanced, impartial and informative. The members of the Advisory Committee were selected by the Chair and included representatives with well-regarded expertise in municipal infrastructure, finance, and urban affairs. The Advisory Committee could not comment on the recommendations made by the Citizens Commission.

The Chair: The Chair was an impartial guide for the Citizens Commission and a member of the project team. It was the Chair’s responsibility to:

1. Oversee a fair and representative member selection process.
2. Develop a balanced learning program that involves residents, community organizations, and experts to provide a range of perspectives.
3. Support respectful dialogue and deliberation amongst members.
4. Ensure that regular updates concerning the Commissions’ proceedings are made publicly available.
5. Produce and deliver a final report concerning the Commissions’ activities and recommendations.
6. Exercise discretion in ensuring the integrity and sound conduct of the Commission.

The Chair was expected to remain neutral with regards to the recommendations and direction of the Citizens Commission.

Participant Recruitment and Selection

In June 2015, letters containing a special invitation to volunteer for the Citizens Commission went out to 10,000 households across Calgary. Six weeks later, 250 people had volunteered to devote six Saturdays, over three months to serve on the Commission. In August, the 36 members of the Citizens Commission were randomly selected from this pool of volunteers. Members of the Commission were selected using a civic lottery to ensure an equal balance between men and women, representation from business owners, as well as a proportional number of members representing different neighbourhoods, age ranges, and renters and homeowners.

Methods and Tools Used

Participants were selected using a Civic Lottery which is similar to sortition. MASS LBP was hired to carry out the Citizens' Commission following its signature Citizens' Reference Panel methodology. Over three weekends, the Commission was tasked with learning about Calgary's future infrastructure needs and its sources of revenue, before reviewing fiscal models from other jurisdictions and evaluating more than 25 different revenue tools. Members were charged with representing all Calgarians, and, in that spirit, they were asked to recommend the best use and mix of revenue tools to support the city’s infrastructure. Members also hosted a public roundtable meeting which all Calgary residents was encouraged to attend to learn and ask questions about the Commission's work thus far. The report was intended to describe the Commission's values and a provide a series of funding recommendations to ensure sustainable infrastructure investment by the City.

What Went On: Process, Interaction, and Participation

The engagement process was divided into a Learning Phase and a Recommendations Phase. The agenda was set out by the facilitators before the process began, with room for program adjustment based on participant feedback and reflection.

Learning Phase

The first three Saturdays of the Citizens Commission were dedicated to learning about Calgary’s infrastructure challenge. Through presentations and question and answer sessions, members had the opportunity to learn directly from some of Canada’s leading experts in municipal finance, City staff responsible for infrastructure management, and a range of local experts and stakeholders.

At the Commission’s first meeting, proceedings kicked-off with a warm welcome from Adam Legge, President and CEO of the Calgary Chamber and the Mayor of Calgary, Naheed Nenshi. Adam Legge explained why the Chamber had convened the Citizens Commission—to support a conversation among Calgarians and receive clear direction from them about how The City should fund its infrastructure. Mayor Nenshi echoed the Chamber’s hope for the Commission, and emphasized that he looked forward to some fresh and creative ideas from its members. The Mayor also reflected on the specific challenge of keeping pace with Calgary’s rapid growth.

Several presentations at the first meeting explored Calgary’s rapid growth over the past decades. Justin Smith, Director of Policy and Government Relations for the Calgary Chamber provided a historical look at the city’s population growth, and described how growth is essential to the city’s the economy. Professor Jyoti Gondek from the University of Calgary explained how family preferences and plentiful land have created distinctive, suburbanized settlement patterns. Joel Armitage from The City of Calgary’s Build Calgary initiative explained how this approach to growth has led to a significant and costly build-out of urban infrastructure. These presentations prompted important questions that the members of the Commission discussed: As an economic hub for the region, what kinds of infrastructure are important for Calgary? Who should contribute to the cost of this infrastructure? Does new development in Calgary pay enough of The City’s infrastructure costs? How does Calgary’s growth pattern affect its infrastructure challenge?

Urban finance expert Professor Enid Slack from the University of Toronto also provided members with an overview of the fiscal health of Canadian cities. She outlined their shared infrastructure challenge—limited funds to tackle increased responsibilities. The main aim of her presentation, however, was to review the principles that are often used to evaluate revenue tools. For example, she noted the advantage of revenue tools that were tied to economic growth, and explained how a revenue tool’s ‘fairness’ could be assessed in relation to both ‘user pay’ and ‘socially redistributive’ aims. Picking up on similar themes at the Commission’s second meeting, Casey Vander Ploeg explored the advantages and disadvantages of each class of revenue tool. Like Professor Slack, he emphasized the benefit of a mix of revenue tools—no one tool could meet every goal, but a good mix of tools could.

To better understand Calgary’s own fiscal powers, Professor Bev Dahlby from the University of Calgary explained how cities in Canada are “children of the Province”. Like other cities in Alberta, Calgary’s fiscal powers are outlined in the Municipal Government Act and The City mostly relies on revenue from property taxes to fund its infrastructure and operations. In contrast to the other municipal finance experts, however, Prof Dahlby argued that the property tax was an adequate revenue tool for cities and that other tools weren’t necessarily required.

Importantly, members also heard presentations from City engineers—Joel Armitage and Steve Wyton—responsible for infrastructure management. Members learned that The City has adopted a more efficient ‘risk-based’ approach to infrastructure management, and that it is making comprehensive plans for the infrastructure that it deems is most critical to build or replace in the coming years. These presentations also highlighted infrastructure challenges facing The City, such as the need to plan for extreme weather like the flood of 2013, and the need to carefully manage the lifespan and replacement of The City’s infrastructure.

During its second and third meeting, the Commission heard presentations from several stakeholders, each providing unique perspectives on specific revenue tools. Randy Pecarski, a Senior Planner with The City of Vancouver, provided an overview of how Vancouver uses its growth to fund infrastructure, in particular social amenities like affordable housing and daycare. Grace Lui and Mark Wynker, development experts, gave members an insiders perspective on how the development industry in Calgary works with The City to build projects and infrastructure. Casey Vander Ploeg explained to members why, after his review of revenue tools for the Canada West Foundation, he thought a penny tax was well-suited to Calgary. McGill Professor Chris Ragan, Chair of Canada’s Ecofiscal Commission, explained how revenue tools could not only generate revenue, but also encourage more environmentally sustainable behaviour.

To give members further context on Calgary, there were also presentations on Calgary’s current economic forecast, its social and community needs, and its arts and cultural life.

Throughout these sessions, members were keen to question and learn as much as possible from the presenters. In their own discussions, however, members primarily focused their attention on the values they thought should shape The City’s fiscal model. What was important to them as Calgarians? What makes a good revenue tool? What aims should The City try to achieve with its infrastructure management?

Together the members identified six values—efficiency, transparency, innovation, sustainability, social responsibility, and fiscal responsibility—to guide decision-making about paying for infrastructure.

In mid-October, the Commission hosted a meeting open to the wider public to discuss their proposed values, as well as The City’s infrastructure challenge. The lively conversations that evening gave Commission members an opportunity to test their ideas, as well as learn more about the concerns of other Calgarians.

Deliberation & Recommendations Phase

At this point, the Commission began its second phase of work: weighing the options and developing shared recommendations.

Each member began by developing their own funding scenarios for The City’s 10 year, $7 billion infrastructure deficit. They analyzed The City of Calgary’s infrastructure priorities by department and selected the revenue tools they thought were best suited to fund Calgary’s infrastructure gap.

Once their individual funding scenarios were complete, members formed groups with others who had similar scenarios to begin their deliberations. Already between these groups it was evident that there were some common themes. Most groups approved of The City’s infrastructure priorities, but felt that efficiencies should be found across all departments. Among the revenue tools that were selected, every group had suggested levies that could be applied to tourists and visitors, as well as increased transfers from the federal and provincial government. Many groups had also suggested charges on drivers, some kind of broad-base tax, and landbased levies.

At their fifth meeting, members formed new groups to wrestle with the benefits and limitations of each revenue tool or efficiency strategy that had been identified.

Members examined the cost of implementing and administering each tool. Although there was significant interest in some form of road toll, for instance, members worried that the cost of implementation made road tolls an inefficient revenue generator. They also considered the policy consequences of different revenue tools: Would a bicycle registration fee discourage cycling? Would development levies based on densities encourage sprawl? Would a tiered utility rate discourage overconsumption?

Members carefully weighed the trade-offs between different broad-based taxes that were favoured, specifically the penny tax, an employee payroll tax, or a local income tax. In light of their values, members considered how each tax would perform.

The impact of revenue tools on the individual taxpayer was also assessed. For example, members questioned whether a land transfer tax would create a greater deterrent to home- ownership in comparison to other land-based tools. Finally, the political climate for implementing different revenue tools was debated. Was a sales tax a dead-end in Alberta, or could a transparent, voter-directed penny tax gain support in Calgary? Or again, was it practical to recommend a carbon tax instead of a fuel tax, if the Province was likely to introduce its own carbon-pricing system?

Members also spent time exploring other strategies to address the infrastructure gap. In particular, they discussed the circumstances under which borrowing was an appropriate tool, whether The City might generate more revenue from its investment income, and how further efficiencies might be found within The City’s operations through contracting out services, public-private partnerships, or more inter-department communication.

Through all these discussions, a common set of priorities and preferred revenue tools emerged. At their final meeting, members indicated their support for each tool, and only those which enjoyed overwhelming support were included in the Commission’s report. Members then worked together to draft their recommendations for how Calgary should address its infrastructure challenge. After three months of learning, discussion, and careful work together, the members of the Commission had completed their task.

Final Recommendations

Based on The City's estimate of a $7 billion infrastructure deficit over the next decade, the Commission sought to identify approximately $700 million in additional annual revenues to fill this gap and fully fund The City's infrastructure priorities.

Strikingly, the Commission declined to endorse an increase in commercial or residential property taxes and instead looked to new revenues sources — including new, dedicated infrastructure transfers from the provincial and federal government.

The Commission also endorsed other strategies for tackling The City’s infrastructure deficit. An important value for the Commission, and a theme throughout its report, is efficiency. The Commission believes The City must also do its part. It requests that The City streamline its operations and work actively with the private sector to reduce costs and redirect any savings towards new infrastructure. It isn’t enough for The City to simply raise more revenue, it must also “get more bang for its infrastructure buck”.

The Commission also considered the impact of new revenue tools on low-income families. Given an uncertain economy, members were hesitant to impose new burdens on those facing hard times. If a revenue tool was likely to impact low-income families — like the introduction of a more aggressive multitiered utility rate — members also endorsed mechanisms that would offset this impact.

Members of the Commission also took care to consider the impact of their recommendations on Calgary businesses, and avoided recommendations which they believed would harm the city’s prospects for economic growth. Ultimately, the Commission sought to achieve several goals with their recommended mix of revenue tools.

One goal was to generate new revenues from tourists and business visitors—those who use and benefit from Calgary’s infrastructure, but do not contribute to its costs. With this in mind, the Commission recommended both a municipal car rental levy and hotel levy.

A second goal was to review the charges property developers currently pay and better align these fees with the true cost of growth. Specifically, members endorsed revenue tools that would help to fund infrastructure upgrades in established areas that are undergoing intensification and redevelopment.

Each of the land tools recommended by the Commission— Community amenity contributions, Land value capture, and new density-based Development levies—were recommended to fulfill this purpose. Members were careful to underscore, however, that they did not want these tools to slow The City’s smart growth objectives—such as transit oriented development. The Commission also recommended new variable rates for electricity, water and garbage collection, with the goal of reducing consumption habits and extending the lifespan of city landfills and utility systems.

The Commission also sought to shift more of the cost of road construction and maintenance to road users, recommending both a municipal Vehicle registration tax as well as a municipal Fuel tax. In the Commission’s words: “the path from pump to pavement must be clear”.

Finally, the Commission endorsed the introduction of new municipal sales tax — or penny tax — established and renewed periodically by local referendum, tied to the GST, and set at no more than 1%. The Commission believes that all Calgarians have a role to play in funding infrastructure, and a penny tax would provide The City with a reliable and significant source of infrastructure funding without placing an undue burden on consumers or business. Importantly, under the terms of their proposal and based on the precedent of several US cities, all funds from the tax would be directed towards specific infrastructure projects that would be identified and approved during periodic referenda.

Taken together, the Commission’s recommendations propose a mix of revenue tools for The City of Calgary, and puts forward a balanced vision for how Calgary could successfully address its infrastructure challenge.

Influence, Outcomes, and Effects

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Analysis and Lessons Learned

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See Also

Civic Lottery

Citizens' Reference Panel

References

External Links

Calgary Chamber Citizens Commission on Municipal Infrastructure Homepage [ARCHIVED] https://web.archive.org/web/20170611130411/http://calgary-commission.ca/