CITY HALL TAKE NOTE: PUBLIC-PRIVATE PARTNERSHIPS WON’T FIX THIS PROBLEM

Everyone agrees that Winnipeg’s spending on infrastructure maintenance is seriously short of what is required to maintain the streets, sewers and water lines in good condition. Anyone can confirm this by taking a drive or a walk around some of the older neighbourhoods and observing the potholes and cracks in the streets. Winnipeggers who keep an eye on the news will observe more fundamental ills, including sinkholes that open up suddenly, sometimes swallowing automobiles or construction machinery, because of the deteriorated state of underground sewer lines.
The causes of this problem are obvious, if you think through what’s happening, and they can be fixed. This is a tad complex, so bear with me.


Within recent years the infrastructure deficit – the amount needed, but not being spent, on maintenance – has been estimated at $1 – $2 billion, and that was before recent, very substantial increases in construction costs. You can get a more concrete sense of how serious the under-spending is by looking at some sample figures from the most recent, detailed study of the matter.
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That study was published in 1998, but changes since then have not been for the better, even though both federal and provincial governments have put new money into Winnipeg’s infrastructure. The reasons for this are complex, but the most fundamental one is that Winnipeg can’t break the habit of spreading itself too thinly, spending so much money on new horizontal infrastructure – roads and the underground municipal services that go with them – as to undermine its own viability.
Not only infrastructure, but other city services – from transit, policing and fire-fighting to mosquito and weed control – cost more if equipment and people have to be moved over longer distances. The city sprawls out across bald prairie, but is settled so thinly that there are not enough property tax payers to cover the costs of its services. This happens because the city builds roads generously, and exercises no real control over the location of new development. By default, the choice of location falls to developers.
In choosing locations for new development, one of the most important considerations for developers is access to the rest of the city. As the city expands the road system, the areas available for development multiply. A developer’s primary obligation is to his or her shareholders so, quite properly, development proposals focus on the potentially most profitable locations. Those locations are not the same as the ones that the city would choose if it were ensuring the most cost-effective expansion of its network of infrastructure and services.
The developers are doing their job of focusing on profit, but the city is not serious about doing its job of regulating location. In practice, the city is highly reluctant to say no to any serious development proposal. The result is that perfectly developable parcels get by-passed because they don’t represent a priority for developers. Therefore, the city straggles across the countryside, all the while straining to cover the costs of infrastructure and services.

Transcona West (click on the picture) is only the most conspicuous parcel in a large inventory of land located well within the city that is suitable for conventional suburban development, meaning developments in the same style as the fringe neighbourhoods of Whyte Ridge and Island Lakes. In 2004, according to the city’s Residential Land Supply Study, land usable for conventional suburban development amounted to 20,300 lots, while the most optimistic population growth projections yielded an estimated maximum demand of 19,618 for lots by the year 2011.
At that point, the Manitoba Homebuilders’ Association stirred up a panic about a so-called “critical lot shortage”. At the same time, the Manitoba government was anxious to secure revenue from the development of a large tract it owned at the southern edge of the city, in the area known as Waverley West. (Other parts of Waverley West are owned by a developer, Ladco, and the University of Manitoba.) As a result the city was browbeaten into changing Plan Winnipeg in order to open up the 2,900 acres of Waverley West, making enough agricultural land available for more than 13,000 additional single-family suburban homes.
As the city scrambled to do the planning work necessary for this fringe development, Transcona West, and other substantial parcels of land available within the city, languished undeveloped. Meanwhile, the development of Waverley West will require the extension of Kenaston Boulevard to the Perimeter Highway. (See diagram below.) That extension, the other infrastructure required for this development, and the full panoply of city services to follow, will add further to the city’s costs, spreading it more thinly yet, making it still more difficult to cover its costs.
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What’s more, the extension of Kenaston provides improved access to land outside the city, in areas where property taxes are substantially lower than taxes in Winnipeg, for the very good reason that largely rural, gradually urbanizing municipalities can get by with a much lower level of services than those a city has to supply. In other words, by extending Kenaston to the Perimeter, the city is creating improved access to areas outside the city, thereby enabling the development of new suburban neighbourhoods in adjacent municipalities. The residents of those neighbourhoods will make frequent use of Winnipeg’s over-stretched services, but not have to pay Winnipeg property taxes.

To get a taste of where that can lead, take a look at McGillivray Boulevard (click on picture above), most of which crosses an area of farmland in the south-west corner of the city, an area served mainly by gravel roads. For reasons best understood by city planners and decision-makers, McGillivray became a paved highway to the perimeter. That stretch of pavement has drawn little development within the city. But just outside the city is Oak Bluff, a conventional suburban development surrounded by farmland.
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It’s a safe bet that most of the residents of Oak Bluff travel regularly up and down that nice stretch of highway, thoughtfully provided by Winnipeg taxpayers to make it easier for them to enjoy Winnipeg services while evading Winnipeg taxes. Similar situations prevail on all sides of the city, and in all directions access is being improved to municipalities with highly competitive cost structures, hungering to compete with Winnipeg for new development. Each time they succeed in attracting a development that might otherwise have been located in the city, Winnipeg becomes a little bit poorer.
In short, the city’s expenses are already out of control, and our decision-makers are bending every effort to drive them still farther out of control. How will we bring the cost of infrastructure development under control? Ask the decision-makers in City Hall, and they will tell you that the solution is public-private partnerships.
Instead of borrowing money to build bridges and other infrastructure, we are told, the city will sign contracts with a private companies, in which a company agrees to construct a facility and lease it to the city. Somehow, by paying a company to borrow money and build a bridge, the city, it is implied, will save enough money to resolve the infrastructure crisis.
Suppose, for the sake of argument, that a company is actually able to deliver infrastructure at a lower cost to the city than the city itself would achieve. (Studies suggest that it is a controversial proposition. See citations below.) It should be obvious that such savings cannot possibly make up for the ills of a city stretched too thinly to cover the costs of its own services. There is, in fact, no way this problem can be resolved in the short run.
In the short run, we will have to choose between higher taxes to cover the costs of services, or continuing deterioration of our services. In the long run, the city, and the provincial government, will have to screw their courage to the sticking-point and exercise their legal control over land use, at the risk of saying no to developers from time to time.
The alternative is further decline in our older infrastructure, and in municipal services. We have already gone a good way down this road. A rapid transit system – conceived on the lowest possible budget to begin with – has been cancelled. Recreation facilities in low-income neighbourhoods, widely acknowledged to be key in the battle against gangs, are being shut down and razed. Mayor Sam Katz’s so-called Economic Opportunities Commission, reduced to grasping at straws, has suggested the city consider privatizing golf courses and swimming pools, and turning the delivery of municipal services over to business organizations and homeowner associations.
Ultimately, the question is this: Will the city take control of land use, or will it go the way of Camden, New Jersey (below), and many other American cities that have been unable to find the courage to take their fate in their hands.
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Photos by Camilo José Vergara. To see more of Camden, and other cities, go to a beautifully constructed web site entitled Invincible Cities
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For more detailed discussions of the causes of urban decay, and means of addressing it in Winnipeg’s context, take a look at;
Christopher Leo and Lisa Shaw, with Ken Gibbons and Colin Goff, “What causes Inner-city decay and what can be done about it?” In Katherine Graham and Caroline Andrew, eds., Urban affairs: Is it back on the policy agenda? Montreal: McGill-Queens University Press, 2002, 119-47.
Richard Lennon and Christopher Leo, “Metropolitan growth and municipal boundaries: Problems and proposed solutions”. International Journal of Canadian Studies, 24 (Fall), 2001, 77-104.
For briefer discussions addressing various elements of the problems of a straggling city, see:
Fixing sprawl would be a lot easier if we’d focus on the problem.
Are you tired of the sprawl game?
On public-private partnerships, see Jean-Etienne de Bettignies and Thomas W. Ross, “The economics of public-private partnerships”. (Canadian Public Policy / Analyse de Politiques, 30 [2], pp. 135-154). Also, watch for a forthcoming book by John and Salim Loxley, entitled The economics and financing of P3s: Theory and Canadian policy and practice.
The detailed assessment of Winnipeg’s infrastructure deficit, referred to above, is in City of Winnipeg, Strategic infrastructure reinvestment policy: Report and recommendations. City of Winnipeg, 1998.

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