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Cities are central to resolving the challenges of our time

Cities have long been seen as engines that drive prosperity but a new fiscal arrangement is needed that allows them to tackle the serious issues of our time.

Cities are a constant work in progress. Great cities attract great talent. They are where we find the most specialized health care. They provide for the broadest set of social, recreational and cultural experiences that enrich our lives.

But cities are also on the frontlines of the homelessness and affordable housing emergency, the raging poison drug crisis, growing food insecurity, persistent traffic congestion and the consequences of climate change.

While these urgent issues require action from all levels of government, it is cities and their local partners that are the first and last point of contact with affected communities, and the level of government best placed to understand and deliver the solutions required.

Consider the role of cities in achieving Canada’s climate targets. Seventy per cent of emissions come from cities, primarily through transportation and heating. Reducing these emissions will require that we transition to better ways of moving around our cities, in particular by making greater use of transit and active transportation.

Meeting the goals of Canada’s Green Building Strategy to reduce emissions by 37 per cent from 2005 to 2030 and create a net-zero building sector by 2050 can only be accomplished with leadership from cities.

Municipalities own and operate thousands of existing buildings, including public libraries, recreational and cultural facilities, and community centres. Improving the energy efficiency of these buildings is low-hanging fruit and critical to meeting Canada’s climate commitments.

We can also have a much greater impact when we design cities to be more walkable. Making streets safer to navigate and interesting to walk on results in more people opting to walk over driving for shorter distances. We can do this by designing streets that encourage traffic to move slower. And also by paying attention to what makes a walk through a neighbourhood or down a mainstreet interesting.

And, of course, investment in transit means that people can move around their cities efficiently and affordably without the need of vehicles. Smart cities today must reduce the cost to ride transit—eventually leading to free transit as a public service—and design transit routes that move people around their neighbourhoods to get to work, to shop, to school, to groceries and everywhere they choose as their destination.

This is not the time to divest in transit. This is when cities that are determined to lead and attract great talent and revitalize their downtowns invest in transit.

It’s a similar story with homelessness and housing. Cities and their local partners are the largest providers of community and supportive housing in Canada. Ending chronic homelessness will not happen without the strong leadership of municipal councils and their partners. And it is city zoning rules that dictate density, green building standards, the pace of housing development and the stock of affordable options.

When we talk about the housing crisis, we are often talking about the difficulties in buying a home. But we need to increasingly look at housing as a system that runs from ownership to rentals to community housing. When this system fails, individuals and families are left with no choice other than homeless shelters or the growing number of encampments. Changes in one area affect the entire system, through their impact on supply and demand.

Unaffordable home ownership pushes can keep more people in the rental market. Higher rents cause more people to fall into core housing need (i.e. spending more than 30 per cent of their income for housing that is adequate and suitable for their situation), driving up the demand for community housing. Higher rents incentivize more people to buy, which, in turn, pushes up home ownership prices.

The federal government aims to cut chronic homelessness by 50 per cent within a decade. Yet any steps are outweighed by the growing number of homeless encampments in our cities and a lack of data to gauge whether programs to reduce and prevent homelessness are working. To accelerate progress, the federal government must do better to support municipalities, which are best placed to greatly reduce and even end chronic homelessness in their communities—in a few short years.

The imbalance between supply and demand for housing flows back and forth between ownership, rentals, community housing and homelessness. We cannot solve one segment of the housing system without addressing the others.

We see three key takeaways from this analysis.

First, for local climate action, housing affordability and sustainable transportation, higher levels of government need to start thinking less in terms of funding programs and more in terms of funding local plans. Funding envelopes are important, but let’s make sure they are aligned with the unique circumstances of each city and town that is closest to the problem and best able to achieve concrete progress.

Second, higher levels of government can achieve stronger results with cities through the carrot of cash transfers than the stick of rules and legislation. The federal Housing Accelerator Fund is an example of how the carrot approach could help reform local zoning. We need to allow cities to be innovative in how they approach the crises that directly affect them, not burden them with onerous terms and conditions that impede timely progress.

Third, currently, we are asking cities to do their part in addressing these national priorities while failing to provide them with the financial resources to do so. As difficult budget deliberations in cities across Canada illustrate, it is impossible for municipalities to allocate the funding required to rapidly reduce carbon emissions and build adequate affordable housing stock when their limited resources barely cover the cost of providing basic services such as sidewalk maintenance, snow clearing, garbage removal and recycling, responding to emergencies, and providing clean water.

Most cities have few options for raising revenue other than property taxes. And, often, they cannot depend on predictable funding from higher levels of government. A serious discussion is long overdue on what we are asking of each level of government and the tools they have to finance the work they are best placed to do.

Municipalities collect 11 per cent of all tax revenue and deliver 15 per cent of all government services. That means that municipalities across Canada spent $65 billion more than they collected in taxes (out of a total of approximately $200 billion in combined municipal budgets)—and they rely on this additional spending from federal and provincial transfers that are often unpredictable. City finances are simply not sustainable.

While cities have long been seen as engines that drive prosperity, municipalities are also essential partners to achieve Canada’s climate commitments and solve the housing crisis but they cannot do it without adequate funding. Cities need a new fiscal arrangement that allows them to tackle the serious issues of our time.

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