Residential development in urban areas is most cost efficient for the city
When new housing is built, developers bear the majority of the initial costs of providing the needed additional service infrastructure -- roads, water and sewage handling systems, parks, fire stations, etc.. But the municipal government is responsible for maintaining and replacing this infrastructure.
A comparative picture of development costs versus revenues for the City requires some modelling assumptions, so the specific surplus or deficit numbers may not be exact. But the overall picture that emerges is valid. Intensification via development in higher-density urban areas is, on average, the most cost-efficient for the City, while urban greenfield development and low density rural development are likely costing the City more than is returned in taxes and service rate fees. A key reason is that urban development is more dense so requires less infrastructure per household. Moreover, urban properties typically have higher real-estate value, so taxes are higher.
Representative developments chosen by City Planning staff in collaboration with Hemson
Higher Density Urban: CLC Lester, Piccadilly (Condominium), Claridge Plaza 1 (Condominium)
Lower-Density Urban Greenfield: Kanata Klondike Road North, South Nepean Half Moon Bay, Orleans Springridge
Low-Density Rural Village: Richmond King's Grant (Sewer Service), North Gower (Unserviced), Greely West Beach (Unserviced), Carp (Fully Serviced)
Scattered Estate and Low-Density Rural: Osgoode Rideau (Unserviced), West Carleton (Unserviced), Kanata Ark-Charlebois (Unserviced)
- Hemson Consulting Ltd. 2009. Comparative Municipal Fiscal Impact Analysis. Accessed April 11, 2016.
- Hemson Consulting Ltd. 2013. Update to Comparative Municipal Fiscal Impact Analysis City of Ottawa. Accessed April 11, 2016.
The municipal government is a huge economic force in its own right
With about 17,000 employees, the City is Ottawa's second largest employer after the federal government.
Much of Ottawa's budget goes towards the basic infrastructure and services that keep things running (e.g., transit, drinking water treatment and distribution, sewage collection and processing, and police), and to programs that are provincially mandated. Many of these budget items are covered not by property taxes, but by users charges (fees and fares) and transfers from other levels of government.
Notwithstanding the many considerations and constraints that apply to municipal spending, its sheer size makes the City's procurement of goods and services a potentially highly important tool for stimulating the local economy and fostering innovation.
- City of Ottawa 2087. Budget at a Glance. Accessed August 1, 2018.
- City of Ottawa 2015. Transit Services 2015 Budget Briefing Note. Accessed April 11, 2016.
- City of Ottawa 2015. Community & Social Services 2015 Budget Briefing Note. Accessed April 11, 2016.
- City of Ottawa 2012. 2012 State of the Asset Report. Accessed April 11, 2016
Ottawa residents pay relatively high property taxes
The property tax rate is set by City Council each year as part of the budget. This rate, multiplied by the value of the property, constitutes the main part of the tax on property. An additional element is the education tax, whose rate is set by the province. Certain services — including water, sewer and garbage — are funded by rate-based charges, and are not tied to the value of the property.
The City of Ottawa has kept annual property tax rate increases below 2.5% for each of the past eight years. Nonetheless, Ottawa has the highest residential property tax rate among Canada’s six largest cities. Actual average property taxes are higher in Toronto than Ottawa due to the higher property values in Toronto. Ottawa’s commercial property taxes are also relatively high.
Property tax for each city is calculated by multiplying the average house price per city by the estimated residential property taxes per $1000 of assessment.
- Canadian Real Estate Association. National Average Price Map. Accessed April 11, 2016.
- City of Ottawa 2016. City budget and property taxes. Accessed April 11, 2016.
- RealPAC. 2015 Property Tax Rate Analysis. 2015
- Canadian Property Tax Rate Benchmark Report. Altus Group, 2018