Monday, December 4, 2023

Higher Density Means Lower Property Tax for Infrastructure

Aerial of Downtown Langley City

When it comes to municipal infrastructure such as roads, water pipes, sewer pipes, and stormwater systems, it has been well-accepted that building and maintaining this infrastructure for compact urban areas is more cost-effective than suburban ones. While there is a lot of evidence that proves this out for regions throughout the world, this has just been done for Metro Vancouver. The Metro Vancouver Regional District recently released a report called "Costs of Providing Infrastructure and Services to Different Residential Densities."

The report's authors crunched the numbers and produced the following table, which shows representative housing forms within our region and their associated municipal infrastructure costs.

Scenario Unit Yield (Per Acre) Servicing Costs Cost Per Unit Persons per Household Cost Per Capita
House (Low) 16 $640,000 $40,000 3.10 $12,903
House (High) 24 $880,000 $36,667 3.10 $11,828
Townhouse (Low) 40 $680,000 $17,000 2.75 $6,182
Townhouse (High) 60 $700,000 $11,667 2.75 $4,242
Apartment (Low) 100 $800,000 $8,000 1.85 $4,324
Apartment (High) 200 $900,000 $4,500 1.85 $2,432

Langley City's single-detached housing density would be "high," townhouse density would be "high," and apartment density would be "high" in the table to give an idea of the densities this study's authors are comparing which isn't super high density.

You may think that the servicing costs don't matter as builders pay for it initially via developer fees and charges. One of the challenges is that the City, and therefore all property taxpayers, are on the hook for ongoing costs and replacement costs when the infrastructure needs to be renewed. Regarding infrastructure costs, lower density means high property tax in the long run, as it is spread among fewer people.

Please read the full report in the November 3, 2023, Metro Vancouver Regional Planning Committee agenda.

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