Canadian Cities Are in Decline

This article was originally published in Maclean’s magazine on June 3, 2002. Partner content is not updated.

The mayor of Winnipeg is calling on his cellphone from Toronto's drab airport en route to sun-drenched Rio. He's slated to be a keynote speaker on urban policy at a Forum of Federations meeting in Brazil - and he isn't going to chat about sewers.
This article was originally published in Maclean’s magazine on June 3, 2002. Partner content is not updated. The mayor of Winnipeg is calling on his cellphone from Toronto's drab airport en route to sun-drenched Rio. He's slated to be a keynote speaker on urban policy at a Forum of Federations meeting in Brazil - and he isn't going to chat about sewers.

Canadian Cities Are in Decline

The mayor of Winnipeg is calling on his cellphone from Toronto's drab airport en route to sun-drenched Rio. He's slated to be a keynote speaker on urban policy at a Forum of Federations meeting in Brazil - and he isn't going to chat about sewers. Rio's white beach may be glorious, its fabled Sugar Loaf Mountain may be breathtaking - but Glen Murray will be rhapsodizing about "globalization and local power." It may sound dreary - but it spells prosperity. And one of its foremost evangelists is practising his sermon from the airport lounge. "The planet is becoming an interconnected network of urban economies and local governments," he says. "Cities are becoming the most important economic and political unit. In this century, the country with the strongest cities wins." Amen.

CITIES are suddenly hot. After three decades of neglect and decline, Canadians are belatedly realizing that their wealth hinges on the health of their urban centres. Four out of every five Canadians live in cities. About 48 per cent reside in the eight largest metropolitan areas: in order, TORONTO, MONTREAL, VANCOUVER, OTTAWA-Hull, CALGARY, EDMONTON, QUEBEC CITY and WINNIPEG. But until the Federation of Canadian Municipalities began a canny campaign to focus attention on its members' plight last year, urban issues and municipal governments were at the bottom of the heap. Ottawa and the provinces have squabbled about everything from Senate reform to limitations on federal spending power - while urban infrastructure wore out. They have talked about globalization - while ignoring that new, potent buzzword "localization."

Not any more. This weekend, Finance Minister Paul Martin and eight other federal cabinet ministers will attend the federation's annual meeting in Hamilton, running from May 31 to June 3. In the pivotal address, Martin will propose a new partnership to assist cities involving all three levels of government - since "municipal institutions" are the constitutional responsibility of the provinces.

The minister will also offer to work with the other two levels of government to figure out better ways to deliver financial support. He will first run though the ideas on urban reform presented in such recent reports as Toronto MP Judy Sgro's urban taskforce and an intensive Toronto-Dominion Bank study - coupled with suggestions culled from his own discussions with mayors. Then, in effect, he will offer to become the cities' champion, working to turn ideas into firm commitments.

If provinces agree, both levels could consider ways to commit funds over the longer term to cities: that way, for example, transit authorities could start subway lines without fear that funding would evaporate midway through their 20-year plan. The finance minister will also suggest that money could be slotted into separate funds for such areas as housing, transit and water. Cities would not have to apply to finance each project: instead, they could receive general, longer-term funding which they could spend as they pleased in areas such as transit.

Martin will not explicitly promise more money - although he is flush with extra cash because the economy is performing better than expected. That will be left to the next budget. And Deputy Prime Minister John Manley already has a $2 billion Strategic Infrastructure Fund to dole out, created in last December's budget. Martin will indicate, however, that he recognizes urban needs are long-term and enormous. And despite his own skepticism, he will even offer to discuss the possibility that Ottawa and the provinces could lower their tax take - in any area including cigarette or gasoline levies - so that cities could tap those extra sources of revenue. "We recognize that the need is urgent," Martin told Maclean's. "Cities do need a new financial deal. We have got to sit down, the three levels of government, and figure out ways of providing longer-term sustainable funding."

Martin may be just in time. Three decades ago, by almost any indicator, Canadian cities worked: they were clean, safe, profitable centres where housing was affordable and mass transit easy. Since then, Ottawa and the provinces have tackled their deficits by cutting spending and downloading, to cities, responsibilities for everything from local ports to transit.

But those new duties did not come with more money. Canadian cities must rely on property taxes for 54 per cent of their revenues: such taxes do not automatically rise when the economy grows - and they are not directly linked to ability to pay. In the last five years, municipal revenues have grown by 7.7 per cent - compared with 33 per cent for the federal government and 26 per cent for the provinces. Cities have been squeezed. U.S. municipal governments spend more than twice as much per resident as Canadian cities. And Washington puts US$54.55 per resident per year into municipal budgets - compared with Ottawa's US$10.22 for a similar bundle of services.

The neglect shows. The federation estimates that in five years, cities will need $4.3 billion per year in federal funding for transportation, affordable housing and infrastructure for water, energy and waste. Poor neighbourhoods with multiple social problems are appearing with dismal regularity. "Municipal politicians have all been singing in harmony," says federation president Jack Layton, a Toronto councillor. "Now the collection plate has to pass."

But more than money is needed. Four decades after Toronto-based urban visionary Jane JACOBS decried the dangers of sprawling suburbs and inhospitable downtowns in The Death and Life of Great American Cities, experts are united behind the message that it takes skilful planning to ensure healthy and wealthy cities in a globalizing world. International firms are seeking clean, safe locales with skilled workers, efficient transportation and cultural and recreational amenities. The best cities in the world are our cities' rivals. "And we have been," warns Winnipeg's Murray, "on a slow march to decline."

Remember when Philadelphia was just another word for trouble? Race riots. Violent crime. Heavy-handed police. University of Toronto architecture graduate Kaarin Piegaze, 29, walked about its cobblestoned core one evening this spring, checking out the renovated historic buildings, the single women strolling safely, the crowded nightlife. She was wowed. So she starts a job at a prominent firm there this summer. "It's beautiful," she says simply. "I don't know if I would have gone if there had not been this very interesting, livable city centre."

Over the past 15 years, urban experts have identified a trend toward so-called "edge cities": that is, sprawling outer suburbs that gradually become cities themselves with retail and business centres. Although the trend is less pronounced in Canada than in the U.S., it presents a challenge: how do we keep a city from spilling endlessly across the countryside, replicating itself? For starters, the downtown core should be nurtured as an inviting place to work and live. It should foster diversity. Carnegie Mellon University professor Richard Florida has found a high degree of correlation between the concentration of gay couples in a city and a region's success in attracting high-tech businesses and workers. It turns out that the presence of those couples reflects the region's openness - and those firms and workers value a city that offers cultural and lifestyle diversity.

Equally, downtowns should boast vibrant gathering spots, cultural attractions and sporting events that suburbs cannot match. Everyone should take a lesson from Quebec City's dynamic mayor, Jean-Paul L'Allier. When he took office in 1989, developers were proposing to build a shopping mall, to compete with suburban shopping malls, in the heart of the historic Lower Town. Instead, the mayor capitalized on the ramshackle but evocative buildings that were there. The city shared the cost of restoring the landmark Dominion Corset factory. It created an enchanting central garden. It poured funds into wider sidewalks and more greenery. It polished old facades. In an inspired move, L'Allier even shifted his urban planners and economic development officers into Lower Town, figuring they would find solutions when they worked amid the problem. Today, the area has thriving businesses and residents in all income categories. And it attracts other locals and tourists like a magnet. L'Allier calculates that the area's higher tax payments are providing an eight per cent return on the city's $75 million program. "By investing in beautiful things, you can achieve something," he says.

Other cities are deploying equally artful tactics. Vancouver has fostered the construction of high-density residential development around its waterfront. But it has ensured that those clumps of high-rises are people-friendly neighbourhoods. On the former Expo 86 lands, which set the standard for development in 1990s, Hong Kong developer Li Ka-Shing provided parks, a community centre, a contribution toward social housing, a child care centre, playgrounds and two elementary school sites as a condition of the building permit. The bottom 30 feet of each building's height is occupied by alluring storefronts or townhouses to lend warm human scale to the area. The roofs sport greenery. The developer still reaped a profit because of the high numbers of units.

Parking spaces are deliberately scarce. People walk to many downtown destinations, if only to escape congestion. So there has been a reduction in car use. "Eventually sprawl hits the wall," says Vancouver councillor Gordon Price. "Then you have got a real competitive advantage because there is a far more stimulating environment downtown."

Calgary had a different problem: a downtown brimming with office space as dense as Manhattan that essentially shut down after business hours. That is changing fast. The city has restored its historic Stephen Avenue, encouraging pedestrian traffic and converting old buildings into hotel space, stores and cafés. It has fostered condos, galleries, festivals, the largest performing arts centre in western Canada and parks like Prince's Island on the edge of the downtown core. "Downtown needs to be a strong place to work first," says Richard White, executive director of the Calgary Downtown Association. "Then if you encourage vitality, people start to say, 'I not only want to work there: I want to play there.'"

Easier said than done. It is not enough to nourish the downtown; cities must also limit sprawl. And that requires a plan that cities stick to - no matter how alluring a developer's proposal. "We need to recycle downtown land that was once used for old railyards or industrial sites," argues former B.C. premier Mike Harcourt, executive member of Ottawa's National Round Table on the Environment and the Economy. "And we need to re-invent our suburbs so that they are more compact, less expensive to service and less unfriendly to live in."

That means cities have to decide where they want growth - and where they don't. Ironically, one problem may be that cities, or at least their governments, are not big enough - so they cannot control sprawl outside their boundaries. "Some cities have the worst of both worlds," says University of Toronto economic geography professor Meric Gertler. "They are too big to respond to local needs. And too small to match the scope of the regional economy."

If cities can curb sprawl, they can design time-saving road systems - and extend transit services to reduce traffic jams. The federation estimates that cities will need $1 billion in federal funds per year to meet needs in everything from commuter rail to public transit to roads. Vancouver councillor George Puil says B.C.'s inadequate road system cost $500 million last year in lost time and wasted fuel. And Vancouver is lucky: the province shares 11 cents of its 17-cents-a-litre gasoline tax with the Greater Vancouver Transportation Authority. "Every major metropolitan area is in trouble," says Puil, chairman of the federation's finance committee. "We are the only G8 nation that does not give sustainable national funding to urban transit."

Cities can also change the way they levy taxes. In a report for the C.D. Howe Institute, urban consultant Enid Slack says it is virtually certain that the cost of providing services to low-density, outlying developments is higher than within existing developed areas. But cities often charge for new infrastructure and services on the basis of average costs. Instead, development fees should reflect the real cost of extending infrastructure - and user fees should match the real cost of providing the service. Many cities also overtax apartments and commercial properties - compared with single-family homes. Politically, such radical tax changes would not be easy to introduce. But proponents argue that the beneficiaries of sprawl should pay for it.

Astute planning may lure people into the downtown core. But the city centre and its inner suburbs will never be truly healthy unless some disturbing, relatively recent trends are addressed. Between 1990 and 1995, the total metropolitan-area population of Canada grew by 6.9 per cent; the poor population in those centres grew by 33.8 per cent. (Breakdowns from the 2001 census are not yet available.)

Worse, those poor populations are increasingly congregating in a few neighbourhoods dotted across the central core and the suburbs. And they are often composed of social groups with multiple challenges: unemployed immigrants with poor English or French skills, aboriginals with little education, single parents on social assistance. "We had avoided the U.S. ghetto syndrome of deep deprivation concentrated in central neighbourhoods with generation after generation of poverty and social dysfunction," says Gertler. "That has begun to change in the last 10 years."

Income inequality has become a plague. In wealthy Calgary, in 1992, officials found 447 people when they counted the homeless. Two years ago, they found 1,296. And the federation estimates that for every homeless person, four families are at risk of losing their shelter because they cannot afford the rent. "There have been hardly any affordable rental units built in the last few years," says Calgary alderman Bob Hawkesworth, co-chair of the federation's housing policy options team. "If anything the situation is getting worse."

Ottawa has earmarked $680 million for affordable rental housing over five years - if provinces match its $25,000-per-unit subsidies to developers. So far, only British Columbia, Quebec, Nunavut and the Northwest Territories have signed agreements. The federation calculates that 20,000 new units of affordable housing are needed each year - and $1.6 billion in annual federal funds. If provinces don't sign deals, the federation wants Ottawa to go ahead anyway, deal directly with cities - and provide higher subsidies for each unit. It has also proposed a series of tax changes, such as elimination of the GST on materials for rental housing construction, so that developers can charge lower rents.

If cities need money, they also generate it. Big time. Winnipeg accounts for 64 per cent of Manitoba's GDP; Halifax produces 48 per cent of Nova Scotia's. Their contribution is vital. Their requirements are complex. Adam Chowaniec founded Tundra Semiconductor Corp. in the Ottawa suburb of Kanata in 1995. Why there? In this miniature replica of California's fabled high-tech Silicon Valley, there is a cluster of supportive networks and similar firms. His company works closely with local universities. Suppliers, venture capital firms and research councils are nearby. Skilled employees accept jobs in the city because, if things don't work out, they can march across the street and find a new place to work. "A cluster," says Chowaniec, "is all about critical mass."

Clusters are formidable creatures that we are only starting to map. They require the presence of everything from research universities to visionary networking organizations. Toronto Board of Trade president Elyse Allan not only talks about taxes but about culture and affordable housing. "Such elements are important to business," she says. "And they are important to the creation of a competitive and vibrant city."

Clusters may be the ideal that many cities aspire to create, yet the most pressing need is simply for a plan. "Clusters are great if you can produce them but not every city is going to succeed," says University of Toronto political scientist David Wolfe, a clusters expert. "We still need to encourage every city to develop strategies to upgrade the innovativeness of its local economy."

At the very least, governments should not inhibit such activity. Between 1996 and 2001, three out of four Atlantic provinces lost population (Prince Edward Island was the exception). Brian Lee Crowley, president of the Atlantic Institute for Market Studies, blames Ottawa's regional development policies, which essentially paid people to stay in place in rural areas instead of moving to cities where the jobs were. Belatedly, that urban migration is now happening - although many people are simply moving out of the region. The population of St. John's, Nfld. dropped 0.7 per cent; Saint John, N.B., slipped 2.4 per cent. The region's brightest spot, Halifax, went up 4.7 per cent - above the national average of four per cent. "Those natural movements of people to cities are now starting to reassert themselves," says Crowley. "And that is the absolute foundation stone of prosperity."

The challenges for cities and their governments are enormous. On an average day last month, Toronto councillor David Miller dealt with traffic patterns, hospital redevelopment, regional growth strategy, daycare, welfare and social housing. He presented a donation which he scrounged from a developer to a school for playground equipment. "Even one day," he says, "is illustrative of the complexity of municipal government."

The days are long gone when city governments just handled sewers. It was to make that point, to illustrate the huge gap between their duties and their resources, that the federation's 1,000 members launched their campaign. Rural communities and big cities agreed to stick together. They marshalled facts, including data on what the Americans and Europeans were doing. They assembled kits. They found allies among environmental, housing, transit and business groups. They talked. And it is working.

Now what? In a recent report for the Canadian Policy Research Networks Inc., political scientist Neil Bradford surveyed the extensive literature on cities - and then talked about all that we still don't know. Provinces are struggling to figure out the best design for municipal governments; experts don't know enough about clusters or urban poverty; everyone must figure out how to foster diversity. "There are," he says, "key gaps in our knowledge."

But we also have to make governments make cities work. Loleen Berdahl, acting president of the Canada West Foundation, points out that Ottawa has a rural secretariat that takes account of rural perspectives when programs are crafted. The same approach must be applied to urban issues. "We need the political will to start thinking creatively," she says. And how can we do that? "Cities must rise up," says the federation's Layton. "We cannot afford to sit back any longer." The standard of living of all Canadians - wherever they live - is on the line.

Maclean's June 3, 2002