Dear Winnipeg

Dear Winnipeg,

I might be a little late to the game here, but November is Financial Literacy Month in Canada, and today is still technically November. So what better time to talk about the financial literacy of our City?

In the past month, most of the local news cycle has focused on two items: the proposed changes to the zoning by-law in order to access up to $192 million in federal housing money, and the sudden closure of the Arlington Bridge.

Unfortunately, the news coverage, and the discussions surrounding it, have treated those two items as though they are completely separate and unrelated. And that’s unfortunate, because it couldn’t be further from the truth.

Because everything in a city is connected, from housing to infrastructure to public services to livability. And what connects all those is our ability to pay for them. So we can’t, and shouldn’t, discuss any of these things in isolation without also talking about the connective tissue between all of them: money.

So let’s connect those dots. To paraphrase Tony Montana in the movie Scarface, say hello to my little friend: financial literacy!

Those of you who have been reading here for a while will already recognize that the sudden permanent closure of the Arlington Bridge isn’t the result of some exceptional set of circumstances, or some sort of mismanagement at the City, but rather, the inevitable result of the type of development pattern we’ve adopted since the 1940s. Strong Towns calls it the Growth Ponzi scheme, and it was adopted by basically every city in North America, including Winnipeg.

Some talk about, imprecisely I should add, suburban sprawl, but as I’ve written about before, the problem isn’t necessarily that our city expanded outwards, it’s how we expanded outwards.

For over 80 years, we’ve been accommodating population growth the same way: by building entire new neighbourhoods of mostly single-family homes in the suburbs. Unfortunately, and here’s where the financial literacy part comes in, those neighbourhoods were built with more infrastructure than that type of development could support in the long-term. Everything was fine while things were new, but when time came to repair and replace the infrastructure, that’s when the trouble started.

But if it was just that, then we probably wouldn’t be in this mess. The cherry on top of this type of development pattern was that after a neighbourhood like this was initially constructed, it was considered “built out”, or finished, with zoning regulations locking its configuration in amber and preventing it from ever evolving into a neighbourhood that could support its own infrastructure. And because it was all built at once, it got old and run down all at once, making the problem even worse.

The solution at the time, and still today, was simply to build more of these neighbourhoods. After all, the new tax revenue was immediate, but the maintenance obligations were far in the future. We could pay for the old with the new.

And this Ponzi-esque approach continued, with things getting worse with every generation that passed, until, inevitably, something breaks, we don’t have the money to fix it, and so it stays unfixed.

Like the Arlington Bridge.

It has happened before: the Kelvin Community Centre, the Norwood Pool, the tree canopy, the John Blumberg Softball Complex, and more. They’re all pieces of City-owned infrastructure that have come to the end of their life, there was no money to replace them, so we didn’t.

And it will happen again.

I predicted the Arlington Bridge closure back in June. But it’s not because I’m clairvoyant. I just know how to read a financial statement. It’s inevitable that we abandon even more infrastructure. We have way more than we can pay for.

It’s easy to oversimplify this into a call for “more density!”, but that would be a mistake. Even the newest part of the city, Waverley West, has higher than average density, with many multi-family developments in it. And yet, as we’ve seen before, it too is contributing to the decline of our city.

The real issue is the mismatch between the intensity of development and the amount of infrastructure we have, between private investment and public investment, and the zoning regulations we have in place that prevent any of it from changing even if we wanted it to.

I made a presentation to City Council in March 2019 highlighting the fact that the owner of a $250,000 house in Winnipeg was responsible for the maintenance and replacement of about $100,000 in infrastructure, an insanely unaffordable amount.

Last week, the Federation of Canadian Municipalities (FCM) released research that supported that assessment. It showed that, on average, each housing unit in Canada requires $107,000 in municipal infrastructure. So in order to meet the demand for the 5.8 million housing units the Canada Mortgage and Housing Corporation (CMHC) estimates we’ll need by 2030, municipalities across Canada will have to build an estimated $600 billion of new infrastructure. There’s no money for that.

But it’s important to note that’s an average, because not all types of development require the same intensity of infrastructure.

As the FCM research points out, a 2023 study by the Metro Vancouver region determined that the costs for onsite infrastructure for a single-family house are 5 to 9 times higher per person than for multi-family developments. Further, according to a 2021 study by the City of Ottawa, the servicing of low-density greenfield development costs the City $465 per person every year, while high-density infill development provides the City with $606 per person/year.

Does that mean we can’t have single-family-only neighbourhoods? Of course not. We can still have them, but financially, we have to accept how much infrastructure that kind of development can support. We’re talking gravel roads, septic fields, well water and a volunteer fire department.

But what if we asked the Province and the Federal government to help out with infrastructure costs?

Oh, you mean the Province whose Throne Speech last week had “fiscal restraint” as a key theme? Or how about the Federal government whose Fall Economic Statement predicts economic growth will slow, unemployment will rise, and that Federal costs of servicing its debt will be double what we spend on defense before the end of the decade?

The Province and the Feds don’t have more money, they just have a greater ability to borrow it. They get their money from the same place as the City: our pockets. It’s not just that the City can’t afford the amount of infrastructure we have, it’s that we can’t afford it.

And just as importantly, the more we upload our financial responsibilities to the Province and the Feds, the more they’re going to want to have control over the City’s affairs.

Many members of Council expressed their concern that the Federal government was requiring zoning changes as a condition of funding, one Councillor even going as far as calling it “political extortion“.

“Do I like the way the federal government has said, ‘you shall do this?’ No, I don’t, quite frankly. But that’s where we’re at today.”

— Mayor Scott Gillingham on the zoning changes required for Federal housing money

And the City’s Public Works Chair explains in this Nov 29th news article, the reason the Waverley Underpass was funded in 2015 even though the Arlington Bridge replacement was a priority for the City, was because the Federal government at the time was trying to get an MP re-elected in the region.

“We can’t do any major project without provincial or federal support. Like, it’s virtually impossible.”

— Waverley West Councillor Janice Lukes, the City’s Public Works Chair

If there’s one thing that Tony Montana has taught us, is that money is power. It’s how the world works: if you control the purse strings, you also control the puppet’s strings. Or, as Tony puts it:

“In this country, you gotta make the money first. Then when you get the money, you get the power. Then when you get the power, then you get the Arlington Bridge replacement.”

— Tony Montana, Scarface (1983)… I’m pretty sure.

So it can’t be surprising that the more we rely on the Province or the Federal government to fund the City’s needs, that those funds will go towards the Province’s and the Federal government’s priorities, rather than the ones of the City.

But it’s not hopeless.

Given that 88% of our infrastructure is just roads and pipes, we could stop making the problem worse with the continual expansion of roads that enable more unproductive development. When you’re in a hole, you stop digging.

Then, we need to start accepting change in our neighbourhoods so we can increase our means to pay for what we’ve already built.

Last week, our City Council took a bold and important first step to help correct this infrastructure to development imbalance by passing a motion to change our zoning bylaw to enable neighbourhoods to be able to change by allowing up to a fourplex to be built anywhere.

It’s important to note, that motion didn’t actually change our zoning bylaw. It only signaled to the Federal government our intent to change it in order to access money from the Federal Housing Accelerator Fund. The next step, which will take place over the following 18 months or so, will be vast public consultations through open houses, surveys and more, culminating in an official public hearing in early 2025 where residents will be able to present directly to Council. Then, Council will hold a vote on actually changing the zoning bylaw.

Now, maybe the idea of a duplex, triplex or fourplex going up next door seems like too big a change to accept. But a bridge, pool or road that closes suddenly, never to re-open, is a big change too. It’s up to us to decide which of these kinds of changes we prefer to see more of going forward.

Love,

Elmwood Guy