Financing Urban Infrastructure in Canada

Decisions related to pricing depend on a number of considerations – local tradition, the type of service, the tastes and preferences of residents, and the willingness (or lack thereof) of local politicians and bureaucrats to substitute prices for local taxes (Althaus and Tedds 2016; Kitchen and Tassonyi 2012). [...] For example, the City of Kitchener, Ontario, applies a tiered flat-fee stormwater rate to properties based on their impervious area.16 The City of Edmonton levies a monthly stormwater utility charge calculated on the basis of the area of the property, development intensity (proportion of the lot that is used for intended development), and a runoff coefficient that is related to the permeability of [...] The second method is the sinking fund method, whereby the municipality estimates the future value of the asset at the time of replacement, using an appropriate rate of inflation, and calculates the appropriate annual contribution, including an allowance for growth with interest. [...] Moreover, the resulting lower costs for cities freed up property taxes for other services.18 In cases where municipalities operate a landfill site, the cost per cubic metre of waste needs to reflect the operating cost plus all amortized capital costs including closure and post-closure costs, the opportunity cost of the space, and the value of the environmental harm caused by the waste and its disp [...] Although it is generally believed that some of the costs of running the transit system should be covered by fares and the rest should be subsidized, the exact amount of the subsidy is difficult to determine.