1. 1
Municipal and Federal
Financial / Regulatory Mechanisms
and the Canadian Housing State
Adriano Leonardi
M.Sc Planning Candidate
University of Toronto
Primary Supervisor
Dr. Alan Walks
Second Reader
Dr. Deborah Leslie
External Advisor
David Amborski
Course Coordinator
Philippa Campsie
March 2014

2. 2
Table of Contents
Executive Summary 3
Research Questions 4
Rationale of the Research Questions 4
Approach / Method 7
The Framework of the Questions 8
Part I - Current Economic Framework 11
1.1 The “New” Staples Economy 11
1.2 Crises of Capitalism or, the Dialectic Market/State:
The Exhaustion of the Intensive Stage 15
Part II - The State of the Canadian Housing 19
2.1 Housing Wealth Effect 19
2.2 Housing Prices: Planning, the Supply Side 21
2.3 Housing Prices: The Demand Side, and the Housing Crisis 23
Part III - Municipal Funding/Regulatory Mechanisms 28
3.1 Sources of Municipal Revenues 32
3.2 Case Studies 32
3.2.1 Municipal Revenues 34
3.2.2 Population and Income 37
3.2.3 Total Dwellings and Average Prices by Structural Type 38
3.2.4 Development Charges per Residential Use 40
3.2.5 Building Permits by Residential Use 41
3.2.6 Land Value Assessment 42
Part IV - Discussion 46
Part V - Conclusion and Recommendations 51
References 52
Appendix A - Context 61
Appendix B - The “New” Staples Economy 63
Appendix C - Crises of Capitalism or, the Dialectic Market/State 64
Appendix D - Case Study: the State of Canadian Housing 64
Appendix E - Sources of Municipal Revenues 65
Appendix F - Limitations of the Case Studies comparison 69
Appendix G - Case Studies: Original Charts with Additional Variables
and Complete Numbers 70
Appendix H - List of Interviewees and Interview Guide 82
* * *
This study was completed as a requirement for the University of Toronto Programme in Planning Master of
Sciences Degree. I thank my supervisor, Dr. Alan Walks, my second reader, Dr. Deborah Leslie, my outside
advisor, David Amborski, and the course coordinator, Ms. Philippa Campsie
Word Count: 14,133
Submitted on March, 2014

3. 3
Executive Summary
Growth and development require infrastructure that must be funded. In an ideal economic liberal model,
growth and resources would supposedly expand mutually and indefinitely. In this model, economic, social
and environmental depreciation are considered side effects of progress, capable of being counterbalanced
with more substantial growth/development that generates more resources – where all would gain once
more and the side effects would be compensated. This hypothetical endless accumulation principle has
been tested: first, by an economic crisis in developed countries (overlooked and adjourned by the constant
financing of public/private debt since 1980s) due to the saturation of the post-World War II boom; second,
by the beginning of the exhaustion of important non-renewable natural energy resources worldwide. In this
context, sustainable growth became a form of public policy in developed countries, and were followed by
recurrent economic downturns since the 1980s.
Inthisresearch,inPartsIandII,Iinterprettheexhaustionofthe post-World War II boom modelofaccumulation,
together with the results of this model in the urban fabric, where municipalities are heavily reliant on land-
use activities, basically housing construction, to fund their revenues. To illustrate this trend, Part III uses the
municipalities of Brampton, Hamilton, Markham and Vaughan as case studies, by involving first, an analysis
of municipal funding mechanisms and other economic indices; and second, this information will be analyzed
together to attempt to understand the extent to which these municipalities rely on the housing industry to fund
growth and provide revenues. The latter will involve an analysis of the budgets of these municipalities over time,
as well as interviews with planners and other key stakeholders.
I argue that an important change in the traditional Canadian Economic Staple Model (Innis, 1956) has occurred,
which I refer to as the “New” Staple Model: the extractivist industry, historically the major contributor to the
Canadian gross domestic product (GDP) became the third contributor (5%); retail/trade became the second
(13%); and construction, the main contributor (20%). Currently, with the erosion of the extractivism base of the
Staple Model, together with the slow economic decline of the most important commercial partner (the U.S.),
Canadian economic policies seem to see the housing industry (with the majority of jobs in the construction
industry) as a key sector. However, the housing industry is not a self-sustainable independent force: especially
aftertheU.S.subprimecrisis,theindustryhasbeensustainedthroughmassivefinancialassistancebytheBankof
Canada and the Canada Mortgage Housing Corporation (CMHC). The case studies prove that under low interest
rates, this is represented by a continuous reproduction of the housing-based economic model at urban fringes,
despite overall downturns or fragile growth, inflated housing prices, and growing public/private debt. I argue
that while there has been no drastic negative consequences in the economic bases of this status quo, this urban
economic issue is continuously postponed or not seriously considered by government agencies.
Municipal and federal funding/regulatory mechanisms are major agents in driving the housing industry and
urban markets through home ownership as economic engines, and, therefore, shaping the urban fabric.
However, in a constant discussion of budget fiscal constraints, realistic unfavourable future demographic/
economic trends, long time exposed low interest rates, and already high levels of private/public debt, it
seems to cast doubt as to whether this growth sector, where municipalities strongly base their revenues, is
sustainable in the long run.

4. 4
Research Questions
1. What is the effect of municipal funding mechanisms on the urban sprawl pattern of urban development
within the context of inflated housing prices?
1a. Housing Policies: How have housing policies possibly stimulated the contemporary urban sprawl
pattern of urban development?
1b. Housing Industry: To what extent do municipalities rely on the housing industry to provide
revenues and fund growth?
1c.ShrinkingRevenues:Whatisthecontextoftherecurrentdiscussionofshrinkingmunicipalrevenues?
2. How does the contradiction between federal housing policies in stimulating the ongoing urban sprawl
pattern of urban development operate within inflated housing prices?
2a. Mortgage Securitization: What kind of local planning practices do federal mortgage securitization
policy encourage?
Rationale of the Research Questions
Before being treated as a commodity, housing should be seen as a social need. Data from the 2011 National
Household Survey1
reveals that 58.6% of the country’s nine million homeowners have a mortgage to pay,
and 25.2% (of 58.6%) spent 30% or more of their total income on shelter—which is the threshold defined
by the CMHC to measure housing affordability. Also, due to the fact that interest rates have been so low
for an extended period, many households have been consolidating their debts in their mortgages. As low
interest rates are unsustainable in the context of continuously increasing debt (Flaherty, 2010; Magdoff,
2006; Hurst, 2011), slight rises in interest rates in a persistent unemployment environment could make
home ownership difficult and cool household consumption.
The 2007 subprime crisis in the US illustrated that the traditional strategy of igniting the housing industry
as a way of boosting the economy is showing signs of exhaustion, and, due to global economic shifts
together with recurrent recessions, similar signs can be also seen in the traditional Canadian approach
to balance deficits within natural resources extraction and trade surpluses. I suggests that, to avoid an
episode in the housing industry and markets similar to that which occurred in the U.S. from happening
in Canada, the federal government (CMHC and Bank of Canada) decided to directly intervene in the
mortgage securitization system via two means: (1) low interest rates and (2) by assuming as public risk
mortgage-backed securities generated from private banks2
(Dobbin, 2009; Rosemberg, 2010; Walks, 2012;
Macdonald, 2012). While there is already a discussion on the need for “smart decline” in some Canadian,
1. http://www12.statcan.gc.ca/nhs-enm/2011/as-sa/99-014-x/99-014-x2011002-eng.pdf
2. The CMHC is playing a similar role to the many ”’off-balance-sheet’ special-purposed vehicles (SPVs)
created in the US and elsewhere: take the originated mortgages off the hands of the banks, in turn lowering
the amount of capital the banks needed to hold according to the Basel requirements and allowing them to
originate even more mortgages (which again would be sold on to CMHC, etc.)”. Cited in Walks, 2012, p8.

5. 5
European and U.S. cities (Beauregard, 2008; Hall & Hall, 2008; Hall, 2009; Reckien & Fernandez, 2011;
Rybczynski & Linneman, 1999; Bowman & Pagano, 2000; Dewar, 2006; Mallach, 2011; Schilling & Logan,
2008; Dewar & Morrison, 2012), financing general economic growth by stimulating the housing industry
must be examined critically, due to: (1) housing-based growth is occurring through financial/monetary
artifices in a unstable economic basis, which can negatively affect public and private revenues if expected
economic growth does not happen as has occurred historically; (2) the overall economy, the structure
of municipal revenues and the urban fabric are so merged, that it is difficult to change the ways cities,
as “growth machines” (Molotch, 1976) are expected to operate. The rationale of my interpretation was
organized in six points, moving from an economic context, to the urban planning context:
First, in the current global economic shift, where developed countries are losing ground to developing
countries, the traditional Canadian staples economic model, as defined by Harold Innis (1956) is being
challenged: the construction industry (basically the housing industry) has taken the first position (from
the extraction of natural resources and retail trade) with the highest growth as a contributor to the GDP.
Comparing the housing construction activity with the traditional staples model, it is even more susceptible
to seasonal boom and bust cycles, it is based in a much smaller local market, it relies more on federal
stimulus, and it has become a mix of investment with welfare assets for households.
Second, the relationship between the determinants of property prices and regulatory/fiscal municipal/
federal mechanisms is frequently ignored due to the monolithic belief that higher property prices are
always beneficial, as they are considered a sign of individual and community economic strength (CGAAC,
2009; Carney, 2011; Gotham, 2009; Harris, 1998; Londerville, 2010; Poschmann, 2011). In Canada, the
ratio of total private debt to GDP is 164%, while household debt represents at least 78% of the GDP (Walks,
2012). This calls into question whether municipal and federal regulatory and financial policies are prudent
and responsible, and to the need to examine the general effects or efficacy of such regulatory mechanisms
on future housing market demands and affordability.
Third, residential property values are related to the effects of planning, including land-use planning, and
the financial mechanisms that the CMHC sets for stimulating homeownership. Planning can have side-
effects, contributing to the problems of higher housing prices and housing affordability (Knaap, 1998).
However, if housing prices and property values rise, revenues for landowners, developers and property
taxes rise proportionally, increasing municipal revenues. Governmental stimulus to homeownership is
heavily dependent on the assumption and expectation that housing prices will always increase, bringing
with them an implicit economic multiplier effect.
Fourth, during 1980-2001, transfers from provincial and federal levels to municipalities shrank from 50%
to 16% (Leisk et al., 2004, p.33). Municipalities were forced to look for legislatively possible revenue
alternatives, basically through the private sector, such as public-private-partnerships, in-kind contributions
via subdivision agreements, and even off-site contributions for growth-related capital costs.
Fifth, the idea behind housing taxation on new or related products, basically through development charges
and property taxes, is that “growth” must pay for itself and not be a burden on existing taxpayers (Slack

6. 6
2002) - which does not always happen. User fees charge existing taxpayers for extra uses or licenses in
a specific land or house property. Municipalities tend to view increases in development charges as more
politically acceptable than increases in property taxes because they are mainly paid by new residents.
Certainly, any taxation is embedded in the total housing price purchase.
Sixth, there are gaps in the literature in terms of addressing the efficacy of fiscal instruments and planning
mechanismsinchangingtheprofitabilityofconventionaltypesofdevelopment.Suchinstrumentsinfluence
how urban developments are generated and how housing prices are determined, and often induce urban
sprawl (Neptis, 2010; Skaburskis, 2003; Skaburskis & Qadeer, 1992; Slack, 2000, 2002, 2003, 2005; Slack &
Bird, 1991; Soule, 2006; Tomalty, 2000; Skaburskis & Tomalty, 2000, 2003, Blais, 2010).

7. 7
3. Bascaramurty, D. (2013, June 19). www.theglobeandmail.com/news/national/a-new-model-of-
urbanity-in-a-sprawling-suburban-city/article12660667/
4. Cole, T. (2013, August 23). www.theglobeandmail.com/report-on-business/rob-magazine/hamiltons-
dead-or-is-it/article4284080/?page=all
Approach / Method
To understand how economics relates to urban policies, financial/regulatory mechanisms and the urban
fabric in the current exhaustion crisis, this research will examine three related parts:
● First, historically and conceptually, I will examine the evolution of high-level planning related
to Canadian economic development policy, including how economic development relates to the
principles of the “new” Canadian staple economy immersed in a broad model of accumulation in
crisis, and how it has evolved given the exhaustion of the intensive manufacturing stage in developed
countries. The context for this periodization is in Appendix A; an extended explanation of what I call
the “new” Canadian staple model is in Appendix B; and detailed discussion about the intensive
stage of accumulation in crisis is in Appendix C
● Second, I will examine how this current economic framework influences and is influenced by the
way financial innovations and securitization federal housing policies work together with municipal
funding/regulatory mechanisms to stimulate the housing industry and housing markets - with the
pattern of urban development as result. I will review national level trends in Canadian housing
development, volumes, prices, and mortgage debt levels. Appendix D discusses this topic in greater
detail
● Third, the CIP involves an analysis of typical Municipal Funding Mechanisms in four Ontario
municipalities (Brampton, Hamilton, Markham and Vaughan). There are two parts to this. First,
municipal funding mechanisms, and their diversity, will be examined. Second, this information will
be analyzed to understand the extent to which these municipalities rely on the housing industry
to fund growth and provide revenues. The latter will involve an analysis of the budgets of these
municipalities over time, and interviews with planners and other key stakeholders
● Finally, the CIP will pull together these three strands of understanding of the relationship between
I, II and III, to answer the overall research questions
Part I and Part II mainly comprise a literature review and the use of secondary data sources, including
those from CMHC, Statistics Canada, and news media sources. I have experience in both academic and
professional environments, and I always try to bridge what each can contribute best: market analysis with
a quick snapshot and academic materials with a deeper, more balanced analysis.
Part III relies on primary sources, specifically municipal documents, questionnaires sent to respective
planning and budget departments, and semi-structured interviews. Markham was chosen due to its
attempts to change the traditional pattern of urban development in the direction of new urbanism
approaches, and because of the existing intensification of high-rise developments in Markham Centre;
Vaughan, for being generally acknowledged as one of the most sprawling municipalities in Canada;
Brampton, for its use of non-conventional planning approaches in dealing with rapid growth and influx of
low income newcomers, although it has been criticized for letting developers determine how Brampton
has grown3
; and Hamilton, because has slow growth nowadays, after almost twenty years of economic
decline and large numbers of vacant buildings and lands.4

8. 8
The Framework for the Questions
The outcomes of social accumulation, surpluses or shortfall periods are easily perceived in the urban fabric
of cities. Even though it is still dominant, the conventional image of suburban wealth and abundance is
being revised - a 2010 analysis5
of the location of poverty in the U.S. in the 95 largest metro areas reveals
that suburbs had the largest and fastest-growing poor population, rising at a rate five times faster than
urban poverty growth: 60.7% of the poor lived in suburbs in 2000 in Seattle, 66.4% in 2008; 75.9% in
Atlanta in 2000, 84.5% in 2008; 60.9% in Washington in 2000, 67.5% in 2008; 62.7% in Cincinnati in 2000,
and 70.2% in 2008. Within the city of Toronto, the suburbanization of poverty increased from 19% in 1970
to 53% in 2005 (Hulchanski, 2010). This seems to be becoming the contemporary pattern of suburbia, and
in the U.S., suburban homeowners with subprime mortgages had the highest rates of foreclosures (Schildt,
2013).
This CIP considers urban sprawl “a result of land-use policies and financing decisions which have provided
incentives for low-density developments outside the urban core” (Slack 2002, p.2); a pattern of urban
development that used the housing industry as a trigger to boost the accumulation process in North
America during the post-World War II period, but may have reached a point of exhaustion by the 1990s, and
is now in crisis. This exhaustion is illustrated by the 2007 subprime crisis in the U.S., a result of an intricate
speculation system between the State, the private mortgage securitization system, and a considered
second (subprime) class of homebuyers to enlarge the housing market beyond economic sustainability.
As a consequence, inflation in housing prices took place, and became the non-official financial tool to
use to continue sustaining an artificial new housing market. When mortgage defaults started to increase,
not only in the subprime market, the U.S. federal government and the central bank had to intervene by
absorbing mortgages emitted by the private securitization system. In 2012, still in the recovery process,
the housing industry represented 15.4% of the U.S. GDP.6
The subprime crisis in the U.S. is part of a larger crisis. In Canada, due to the specificities of the staple
economy that has little diversity, the consequences of a similar housing crisis could generate even worse
results; this is why, according to my interpretation, following the U.S. crisis, the Canadian government
decided to directly intervene in the mortgage securitization system to sanitize the private banking system.
This pseudo-solution continues to preserve the status quo in indefinitely inflating housing/land prices,
and in the reproduction of suburbanism on the fringes of metropolitan regions, where cheaper land prices
facilitate housing construction. Even “the anti-sprawl discourse thus conflicts with public-policy objectives,
basically by pursuing the expansion of the economy in traditional [suburban] ways” (Cox 2004, p.2).
This study focuses on how the current economic framework influences and is influenced by the way
municipal funding/regulatory mechanisms, together with federal financial and securitization policies
5. http://www.brookings.edu/research/papers/2010/01/20-poverty-kneebone and http://www.
businessinsider.com/american-slums-2011-4?op=1
6. National Association of Home Builders, in www.nahb.org/generic.aspx?genericContentID=66226; table
1: www.nahb.org/fileUpload_details.aspx?contentTypeID=3&contentID=66226&subContentID=206100

9. 9
stimulate the housing industry, housing markets, and the pattern of urban development. This relationship
is illustrated in relation to the current state of Canadian housing by showing that enlarging the market
through credit/debt has market limits, that I call exhaustion, and that market regulation typically extends
this limit ad infinitum. The literature review together with the analysis of four case studies, the Ontario
municipalities of Brampton, Hamilton, Markham and Vaughan, reveal the following.
Housing is a key part of the North American economy, usually the most valuable individual and familiar
asset that is utilized also for businesses and household loans, and an important contributor to job growth.
On the demand side, there is the effect of planning; on the supply side, there is the action from the market.
Basically, capital gains in the housing industry come from two sources: the real economy, by minimizing
construction and land costs, with limited elasticity; and from circulating capital, by maximizing future
demand. Considering housing as a commodity, land/housing prices are influenced by the present value of
future gains expectations.
Government programs and subsidies stimulate home ownership, such as the Canada-Ontario Affordable
Housing Program and the Home Ownership Assistance Program, as well as historically decreasing levels of
mortgage rates from the private banking system. Mortgage securitization rules defined by the CMHC help
consumers to purchase homes with a minimum down payment of 5%. And, in spite of high public/private
debt, mortgage credit has re-accelerated since the 2009 crisis, increasing the already high debt exposure
of Canadian financial institutions to housing mortgages, already the single largest asset class exposure,
around 42%.
By checking numbers in our 2006-2012 framework for composing municipal revenues, 47.79% of total
municipal revenues in Hamilton, 48.39% in Vaughan, 48.57% in Markham, and 67.93% in Brampton
are related to land activity, basically property taxation and development charges. Residential uses pay
higher development charges and less property taxes than non-residential uses; but, by far, the municipal
inventories for property assessment by the Municipal Property Assessment Corporation (MPAC) comprise
a majority of the assets related to residential uses - lower property taxes for individual residences are
compensated by much larger proportion of current and future collected property taxes for residential land
uses than from other uses. Obviously, municipalities with more housing construction activity rely more on
DCs revenue, such as Brampton (17.12%), while others with low growth, such as Hamilton (2.73%), show
lower DCs revenues. Municipal revenues are predominantly funded by property taxes; in this sense, home
ownership and increasing housing/land prices are attractive due to benefits to the municipal tax base - if
land/housing prices increase, property taxes increase: the average dwelling price by structural type shows
a prices increase for all housing types in all cities, from 39.31% (Brampton) to 75.11% (Markham) for a
single-detached unit.
Data from MPAC shows that there is an overall constant and similar residential land use distribution in
all municipalities, a slight increase in commercial lands, and a slight decrease for industrial uses. The
percentage of current value assessment (CVA) for farmlands shrank slightly in Brampton (from 0.29% in
2006 to 0.26% in 2013), and Vaughan (from 0.30% in 2006 to 0.26% in 2013). The evolution of prices
devoted to land uses shows that in a time frame of only seven years, all municipalities had land prices that

10. 10
increased in all land uses, from a minimum of 17.19% in Hamilton to a maximum of 73.11% in Brampton.
These numbers confirm the importance of land uses, new housing, and increasing housing prices to the
municipal tax base. Aside from punctual decreases (that we can justify with the 2009 recession), municipal
revenues grew in all municipalities in the 2006-2012 period, suspending at least from this point, the
argument of constricted municipal revenues.
In many Canadian municipalities,
• Low density areas have profitability, and the best “land use efficiency” for private developers, even
when building new infrastructure
• Vertical, high-density condominiums pay higher charges in taxes and additional fees than low-
density subdivision plans
• Some cities forgo municipal revenues in the present period by leveraging future land development
• Development Charges with a flat rate through the municipalities and defined by population-per-
unit (PPU) instead of square area create market distortions and are a limited tool for directing
planning policies
• The way DCs are applied today can create competition (for lower taxes) between municipalities,
thus stimulating the status quo in the matter of reproducing subdivision plans. Similarly, Tomalty &
Skaburskis (2003) found such an absence of coordination between DCs and planning
• Whether the amount of single-detached production is a representation of urban sprawl levels, we
could interpret a high total number of single-detached houses as a form of high sprawled urban
development; Beyond the matter of “consumer choice” or Smart Growth principles, the case
studies reveal that this urban pattern has not substantially changed overtime

11. 11
Part I - Current Economic Framework
The last global recession triggered in 2007 basically at the core of the dominant capitalistic model is just
the last example of the exhaustion of the accumulation process that was initiated in the late 1970s, and
represented a rupture or shift, by the early 1990s, in the traditional north-south division (developed versus
undeveloped economies) of economic and commercial powers. Since then, the amelioration measures
implemented by national governments of the global north have tried to soften the negative consequences
of the excesses of financial liberalization within a shrinking internal market, but the core principles of
financing the private and public debt trying to enlarge this market are ongoing, postponing the solution of
a crisis of which we still cannot see its upshot (Mandel, 1999; Aglietta, 1976; Deak, 1985; Leonardi, 2007).
This CIP considers two scales to contextualize the economic framework of the research questions: one, the
“new” staple economy, based in the construction industry, is a reinterpretation of the traditional Canadian
stapleeconomicmodel(HaroldInnis,1894-1952),influencedandreinforcedbyincreasedglobalcompetition,
free trade agreements, and by the shifting of the main global economic powers, as from the 1990s. The
second, the exhaustion of the intensive stage of accumulation (Aglietta, 1976; Mandel, 1999), since the end
of the 1970s, provides the historical economic framework that involves the “new” staple model. To show how
this economic contextualization relates to urban planning and municipal finance, Part II analyses Canada’s
housing state; followed by the way municipal revenues are generated in the case studies, in Part III.
1.1 The “New” Staple Economy
In this chapter, we will outline a discussion about how the staple economy can interfere in municipal revenues
and city planning. The arguments of this chapter are from Harold Innis (1956), Melville H. Watkins (1963) and
John N.H. Britton (1996). For additional argumentation, see Appendix B.
As the main global economic engine shifts from developed countries to emerging countries (figures 1, 2, 3), there
are ongoing outcomes and expected effects for the Canadian economy. Since the start of the crisis in 2007, the
BRICs’(Brazil,Russia,India,andChina)contributiontotheglobalGDPhasrisenevenmore:45%ofglobalgrowthhas
comefromtheBRICs,upfrom24%inthefirstsixyearsofthedecade.7
TheG7hascontributedonly20%inthepast
two years8
, and 2013 was the first time in which emerging markets accounted for more than half of world global
GDP on the basis of purchasing power, according to the International Monetary Fund (IMF, fig.4). Some media
economists say this BRICs boom is over, that this current crisis is temporary, and the traditional division developed/
underdevelopedcountrieswillberestored;butinstead,theyshouldconsiderthattheBRICsarereachingthemature
age.9
By 2030, the BRICs+other emerging markets will represent around 80% of the world’s GDP (Goldman Sachs,
fig.4). By 2050, BRICs’ markets will represent double of the GDP of the G7 countries.10
7. O’Neil, J. & Stupnytska, A. (2009, December 4). The Long-Term Outlook for the BRICs and N-11 Post
Crisis. In www.goldmansachs.com/our-thinking/archive/brics-at-8/brics-the-long-term-outlook.pdf [page 6]
8. (ibid.). www.goldmansachs.com/our-thinking/archive/brics-at-8/brics-the-long-term-outlook.pdf [page 8]
9. www.economist.com/news/briefing/21582257-most-dramatic-and-disruptive-period-emerging-
market-growth-world-has-ever-seen?zid=295&ah=0bca374e65f2354d553956ea65f756e0
10. Goldman Sachs Global Investment Research (2012, March). The Rise of Growth Markets. In www.
goldmansachs.com/our-thinking/focus-on/growth-markets/dataviz/index.html [March, 2012]

12. 12
2006 2010 2015 2020 2025 2030 2035 2040 2045 2050
BRICs Brazil, Russia,
India, China
5,637 8,640 13,653 20,226 28,925 40,278 55,090 74,483 98,757 128,324
G7 Canada, France,
Germany, Italy,
Japan, UK, USA
28,005 30,437 33,414 36,781 39,858 43,745 48,281 53,617 59,475 66,039
Fig.1: Gross Domestic Product 2006-2050 in US$ billions
Source: Brics and Beyond, Goldman Sachs Global Economics Group, 2007
Fig.2: Global Gross Domestic Product 2011-
2013: advanced economies & developing
economies
Source: International Monetary Fund, 2013, in
Growing Outlook Update: Growing Pains.
In the staples economic model, economic downturns are common. Traditionally susceptible to commercial
trades, the Canadian staples economy has been affected during the last 15 years, when its main commercial
trades and partners have been struggling with lower economic growth. This CIP interprets that the “new”
staple economy in Canada means fostering five objectives: (1) to diversify trading partners; (2) to continue
with the extractivism industry; (3) to enlarge free trade agreements; (4) to strengthen domestic technology
and industry; (5) to promote and sustain the housing industry (this last point is my addition to Britton’s
points, and this CIP will discuss this point).
This inherited colonial economic system, with a large dependence on exports of unprocessed products, has
led to good, bad and neutral consequences for Canada’s economy and society. The Canadian economy has
Fig.3 Emerging-Market Share of World GDP.
Source: International Monetary Fund, 2013, in The
Economist; When Giants Slow Down, July 27, 2013.

13. 13
Fig.4 World GDP Forecast up to 2030
Source: Goldman Sachs, 2013, in The Economist; When
Giants Slow Down, July 27, 2013.
small domestic markets within both individual and collective chains of consumers for those unprocessed
goods the economy produces the most. Thus, the Canadian economy has to rely heavily on trade. The
“new” staple economy means that the known staple economy is now immersed in a period of increased
global competition and currency wars, economic shocks, and the permanent instability of recurrent boom-
and-bust cycles, currently enhanced by free trade agreements (FTA/NAFTA, OCDE, WTO and others).11
11. NAFTA: North America Free Trade Agreement; OECD: Organization for Economic Cooperation and
Development; WTO: World Trade Organization.
12. “Given the prolonged reality of Canada’s continued high export of staples products and its relatively
low proportion of world export markets in manufactured end products, the pessimistic view appears
most borne out by the evidence. The result, to use Innis’s terminology, is that Canada is something of a
hinterland economy, one whose fate is strongly tied to events in foreign metropoles” (Britton, 1996, p.49).
On one hand, this Canadian strength in resource exports can be seen as an advantage, which has “enabled a
relatively small economy to achieve a standard of living that its small domestic market could not have otherwise
supported”(Britton1996,p.15).Ontheotherhand,revenuesfromthisindustrybasicallycomefromthedemand
of seasonal buyers and it does not create the multiplier effect (typical of manufactories of the second sector)
on the productive chain of suppliers (jobs, products with aggregated value, research and education; in addition
to that, there is no interdependence with other industries, particularly if the second sector is not strong. The
currently predominant tertiary sector, also does not generate the multiplier effect of the secondary sector, nor
is it able to adjust its configuration to the staple economy pattern: “Canadian tertiary industries as a group are
not successful exporters, except for some consulting and engineering firms, and as a whole the sector is a source
of trade deficits” (ibid., p.9). Canada historically has a “surplus on the trade of crude materials that is roughly
balanced by a deficit in end products, in services, and on investment income” (ibid., p32). As a result, there are
few economic development alternatives (Watkins, 1963) in pursuing endogenous growth.12
Towns and cities that are directly associated with the staples model suffer the most: when the market for the
stapledeclinesortheresourceisdepleted,theeconomicbasedisintegrates,andworkopportunitiesandmigrants
shrink. Some cities are trying to diversify their economies, such as Hamilton (ON), Fort McMurray (AL), Sudbury
(ON), and others (Hall, 2008, 2009), but few have been successful. Hamilton, a non-extractivist city and maybe

14. 14
Fig.6b: Canada’s Foreign Trade Balance
(goods exports minus imports)
Billionofcurrent$CAN
Year and month
Source: Statistics Canada, in Canadian
Construction Overview; Reed Construction
Data & CanaData, Fall 2011.
Fig.6a: Canada’s Current Account to GDP,
1995-2013*
Source: Statistics Canada, 2013, in www.
tradingeconomics.com/canada/current-account-
to-gdp
* Strong imports, weak exports, low saving rates,
high personal consumption rates as a percentage
of disposable incomes
Fig.5: Canada: GDP by Industry
Source: Statistics Canada, Recent Developments in the
Canadian Economy: Fall 2013; CANSIM table 379-0031
75
80
85
90
95
100
105
110
115
120
125
2007 2008 2009 2010 2011 2012 2013
indexQ12007=100
Mining, oil and gas
Construction
Manufacturing
Retail trade
themostimportantpost-industrialcityinCanada,hasbeenstrugglingwithchangingitsrevenuebasewithinslow
growth, and vacant land/building properties are a socioeconomic concern. Overall, if the economic base shrinks,
budget cuts tend to keep some municipal departments and eliminate others, and city planning departments
are usually rejected. Paul Bedford, ex-chief planner of the city of Toronto, sees governmental budget cuts in the
currentstateofthecityplanningprofession:withtheexceptionofToronto,“municipalplanningdepartmentsare
trying to figure out how to best cope with stagnation or decline”; (..) “many [municipal planning departments]
havebecomeburieddeepwithclustersofotherfunctionsorareevenmergedwithotherdepartments”,removing
“planning from the forefront of the change agenda” (Bedford, 2007, p.28-29).
In the “new” staple economy, a new “staple” has been found to maintain growth. Figure 5 (Statistics Canada,
2013),showsthatconstruction(basicallyhousingconstruction)becamethemaincontributortotheCanadian
GDP(20%)withthehighestgrowth,andthishasbeensustainedbytheBankofCanadaandtheCMHC(PartII).
Even historically with a good retail trade balance, the second contributor, has a very slow recovery since 2009
(fig.6a, 6b). About the “new” staple housing model, Enid Slack (Director, Institute on Municipal Finance and
Governance, Munk School of Global Affairs), mentioned: “the problem with relying on the housing industry
is that, the housing industry is even more unstable than the traditional staple economy” (February 3, 2014).

15. 15
1.2 Crises of Capitalism or, the Market/State Dialectic:
The Exhaustion of the Intensive Stage
The Canadian economy is obviously inserted in the global economy. In this chapter I will discuss the status
of the current crisis in developed countries, based on the arguments of Mandel (1999), Aglietta (1976),
Deak (1985), and Leonardi (2007). Additional discussion and detailed explanation is in Appendix C.
Capitalism was generated with the enlargement of the use-values production while commodities, and its
historical movement lies in the tendency of the generalization of the commodity form – the maximum
commodification possible as a proportion of the whole social production. There are limits to the
commoditization of production, which imposes the State intervention.13
Crises of capitalism may be seen
as periods in which the development of the antagonism within the dialectic of the commodity form reaches
stages in which the primacy of the commodity form is threatened. In these crises, the countertendency
(State intervention/regulation) itself raises its opposite, leading efforts to re-impose the primacy of the
commodity form (market intervention/regulation).
The market and the State command a dialectic defined by their antagonistic relationship regarding the
generalization of the commodity form. State intervention intends to ensure the maximum enlargement
possible of the market (providing the needed infrastructure). Although producing use-values directly, the
State interferes at the market regulation level. In other words, the tendency of the generalization of the
commodity form (from the market) induces its countertendency which materializes in State intervention
(Aglietta, 1976; Deak, 1985).
Not everything can be produced as exchange-value, though. The market can organize a portion of
social production, but it cannot organize “production” as a whole. Precisely what can and what cannot
be produced as a commodity varies according to historically specific stages of capitalism, but the
commoditization necessarily includes spatial (or urban) infrastructure (the “built environment”) and the
institutional conditions for the continued re-imposition of the capital relation. The part of the product
which cannot be commodified is produced directly as use-value under the direct intervention of the State
(Deak, 1985).
Michel Aglietta (1976) defines three stages of capitalism: extensive, intensive and contemporary. In
the extensive stage of accumulation, the rapid growth of commodity production in a combination (in
extension) of proper accumulation through non-capitalist production systems (independent producers,
slave labor, production for subsistence, etc.) helped to avoid serious interference into the primacy of the
commodity form. The extensive stage is when the relation productivity+profit is reached by extending
the capitalistic relations of production into new markets not previously absorbed through capitalism.
The period for this was during European expansion overseas, up to the end of the European industrial
13. The main areas of State intervention are: institutions (property), violence (monopoly), ideology,
infrastructure and spatial production, and new and obsolete industries.

16. 16
revolutions. In contrast, the intensive stage is when the relation productivity+profit is reached by intensive
productivity of labour, with technology playing an important role – from around 1880 to the 1970s. In the
intensive stage, the growth of commodity production is limited to levels of productivity and consumption,
and the generalization of the commodity form has an effective challenge, with consumption markets not
increasing at the same extend of overall production.14
Crises in the intensive stage15
bring more attention
to the widening role of the State, growing until the critical point to stunt free market principles.
The development of productive techniques and intensifying automation rapidly saturate the intensive stage,
represented by an overproduction crisis, its collapse postponed due to the continuous enlargement of credit
from a relaxed State fiscal policy through indebtedness and insolvency, especially after 1960, the exhaustion
of the post-war boom. In 1991, the government spending was already high (fig.7), and in 2008, public/private
debt reached around 275% as a percentage of GDP in developed economies (fig.8) – representing this crisis,
14. The neoliberal policies from the end of the 1970s and beginning of the 1980s (known as “Reaganism”
and “Thatcherism”) by governments from some central countries represented an attempt of “re-
commodification” of its economies and dominated the political scene, economic debate and policy for over
a decade. The capitalistic State has to try it due to its obligation to ensure commodity production, even
if it will have to produce directly use-values ahead. The problem is that privatization is not the same as
commodification. The current crisis signals the demise of the US hegemony and its impending transmission
to another nation-State. The last transmission of capitalist hegemony (from Britain to the US) took half a
century and two (or both) World Wars. It’s not at random that we are hearing (around the last 9 years)
about the “emergence” of the BRICs (Brazil, Russia, India and China): their importance is less related to
their economic power, but specifically by the potential of a still non saturated consumption market, in
comparison to those from developed countries. According to this view, it’s not at random too, that the last
Olympic Games were in China, the 2010 Soccer World Cup in South Africa, the 2014 Winter Olympics will
be in Russia, the 2014 Soccer World Cup in Brazil, and in 2016, the Olympic Games will be also in Brazil – the
first time in History that countries outside of North America and Europe are chosen.
15. Late capitalism is another name to call the actual crisis deriving from the second and more developed
stage of capitalism (intensive). The formulation was coined after the 1929 crisis and Mandel gave it visibility
in 1972.
Fig.7: Governments are spending even more
for financing the indebtedness for public and
private sectors.
Source: World Bank, World Development Report
1991, Washington, in www.fau.usp.br/docentes/
depprojeto/c_deak/CD/5bd/3world/t1-gov/index.html.

17. 17
the last episode was the U.S. subprime crisis in 2007
(fig.9). Canada is not immune, as figure 10 shows.
The crisis generated a reaction in the form of
neoliberal policies, which try to avoid the narrowness
of the commodity production and markets through
privatization and re-commoditization. Its ideology
focuses on two ways: presenting itself as an inevitable
tendency of a new stage of capitalism (instead of its
regular crises); and, trying to disqualify the State as
the representative of public interest. However, these
policies cannot reconstitute the market ambit. They
were resumed in movements of dismantlement of
the welfare State, in concentration of capital and
incomes, and at the unsustainability of the continuous
prolongation of consumption through enlarging the
credit/debt. More explanation in appendix C.
Source: MMCDonald-Laurier Institute, 2012.
Fig.10: Canada: Provincial Insolvency in 30 years
Fig.9: In spite of neoliberal discourse
which Government should not
intervene in the market, Central Banks
continuously help financial markets,
especially during economic crises:
1990s-2000s, in US dollars*.
Source: International Monetary Fund,
2007, in Revista Exame 900.
Fig.8: Gross Total (public/private)
External Debt as a Percentage of GDP:
22 Developed and 25 Emerging
Economies, 1970-2011.
Sources: Lane & Milesi-Ferretti, 2007; Reinhart &
Rogoff, 2009; and 2012; based in World Bank Quarterly
External Debt Statistics, various years; Word Bank
Global Development Finance, various years.
*Data from Keen, F.S (2011) shows that the
FED, under Bernanke, expanded the base
money from $850 billion to $2.15 trillion into
private banks after 2007.

18. 18
The modern urban planning was born with the intensive stage in the second half of the nineteenth century,
and the interest in the built environment increased with the beginning of the crisis in the 1970s. This is the
contemporary context of widening State intervention, one of the key areas being intervention in space,
that is to say, the production/transformation of spatial structures.
As the world economy shifts from developed to developing economies, the same happens with the
importance of cities in emerging economies. From 2007 to 2025, 423 cities in developing countries—more
than 70% of the City 600 (Urban World: Mapping the Economic Power of Cities, McKinsey Global Institute;
fig.11) — will generate more than 45% of global GDP growth (these cities accounted for about 15 % of
global GDP in 2007). The China region’s 225 cities alone will contribute an estimated 30% to the world’s
projected increase in GDP.
Source: McKinsey Global
Institute: Mapping the economic
power of cities. McKinsey &
Company, 2011.
Fig.11 “New” Global Cities In developing regions, around 420 cities will generate
45 percent of global growth; Chinese cities will contribute
almost 30 percent of the total
Number of cities
in the City 600
GDP growth1 by geography
100% = $54.9 trillion
SOURCE: McKinsey Global Institute Cityscope 1.0
1 Predicted real exchange rate.
2 Includes cities in China (including Hong Kong and Macau) and Taiwan.
3 Includes cities in Afghanistan, Bangladesh, India, Pakistan, and Sri Lanka.
4 Includes cities in Cambodia, Indonesia, Laos, Malaysia, Myanmar, Papua New Guinea, Philippines, Singapore, Thailand,
and Vietnam.
5 S&R = small cities and rural areas.
NOTE: Numbers may not sum due to rounding.
10010
124
10
7428
1325
2329
225 21 29 14 98
Mega- and middleweight developing world cities:
45 percent of global growth
Mega- and middleweight developed cities:
16 percent of global growth
48 2366 3038 8
Asia
China
region2
South
Asia3
South-
east
Asia4
Latin
Amer-
ica
Eastern
Europe
and
Central
Asia
Middle
East
and
North
Africa
Sub-
Saha-
ran
Africa
Devel-
oping
regions
S&R5
Total
devel-
oping
regions
United
States
and
Canada
West-
ern
Europe
North-
east
Asia
Aus-
tral-
asia
Devel-
oped
regions
S&R5
Global
growth

19. 19
Part II - The State of the Canadian Housing
The interaction of housing, housing finance, and economic activity has for years been of central
importance for understanding the behavior of the economy, and it will continue to be central to our
thinking as we try to anticipate economic and financial developments (Ben Bernanke, Jackson Hole
Symposium, 31 August 2007, cit. in Muellbauer, J., & Murphy, A., 2008, p2).
The objective of this chapter is to bridge between chapters 1.1 and 1.2 by illustrating, with the current state
of the housing industry, how the theoretical economic framework can be reflected in the urban development
pattern in Canada. Summarizing up to this point, (1) specific characteristics from a staple economic model
makes the primary resource Canadian economy susceptible to economic booms from other countries,
especially the U.S., and with limited endogenous growth; we have a (2) global economy in a structural crisis,
especially for developed countries, where Canada is situated, with no clear picture about how it will continue
to affect local growth and employment prospects. In this scenario, the “construction” industry, basically
housing, assumed the primary/most important contribution to the GDP, stimulated by Federal financial
policies that have resulted in rising household debt. A detailed introduction of this Part II is in Appendix D.
Three economic fundaments shape the urban fabric and housing production/consumption scenario for
the Canadian Housing state. One, is the (real) economy itself, such as general economic activity and major
changes in employment conditions interfering in house/land supply and prices, and altering the spatial
pattern of the demand, which the State tries somewhat to control. The second, is circulating capital, the
real economy being molded by institutionalized and financial mechanisms, variations of linkages between
central and private banks for determining the rules for mortgage securitization, enlargement or restriction
of the market, where the State can intervene with its statutory and regulatory powers. Third, is the move
by productive sectors to allocate production units pursuing cheaper land prices, together with public
incentives for developing the suburban North America life-style, boosted both the demand and supply
sides for low-density subdivision plans.
I consider that chapters 1.1 and 1.2 have provided the terms for understanding the current status of the
real economy. Now, we will focus on the institutional, monetary and financial policies and mechanisms
that the governments of the U.S. and Canada are promoting to ameliorate the crisis, by enlarging the
housing market to stimulate the economy, as has commonly worked in the past, and now, also in crisis.
2.1 Housing Wealth Effect
Housing is a key part of the North American economy, usually the most valuable individual and familiar asset
that is utilized also for businesses and household loans, and an important contributor to job growth, with an
effect on related industries and general employment, such as banking, the mortgage sector, raw materials,
construction, services (architecture, engineering) manufacturing and real estate, and even small businesses
(in the U.S., 50% of all private jobs come from small businesses).16
On the demand side, income, interest
rates, credit availability, demography, and expected price appreciation are major drivers. On the supply side,
credit availability, land-use planning controls, the tax system, municipal attractiveness, and the availability of
cheap land (usually greenfields) have effects on housing supply. In the U.S., the National Association of Home

20. 20
Builders estimates that about three jobs are created directly from every single-family home built, and about
one job from every multi-family rental unit built, with the economic benefit extending indirectly, not only
related to the construction itself.17
In Ontario, 2.32 direct/indirect full-time jobs were created per housing
start in 2007 (Will Dunning Inc., based on Statistics Canada data, 2011). The State maintains a close eye on
the housing industry because a slight increase in interest rates affect mortgage rates, which can cool down
the activity, especially for new houses, affecting the whole distributive productive chain. Figure 12 clearly
shows that countries which have their economy set in the North American style for the housing industry and
markets perform better economically.
-80% -70% -60% -50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60%
-5%
0%
5%
10%
15%
20%
Switzerland
Netherlands
Canada
Sweden
United Kingdom
Norway
Australia
Belgium
New Zealand
Japan
Austria
France
Germany
Finland
Italy
United States
Denmark
OECD Average GDP Growth %
x
y
OECDAverageEmploymentGrowth%
2=0.2185AdjustedR
p-value=0.034;t=2.348
Figure 1: Average per capita increase in employment and GDP 1991–2005, selected countries.
Source: Schwartz, H.(2008); Housing, global finance, and american hegemony: Building conservative politics
one brick a time; Comparative European Politics, 6, 262-284
Countries to the Right on the X-axis have above average gains in Employment after adjusting for population
growth. Countries North on the Y-axis have above average gains in GDP per capita expressed in constant
2000 USD. Thus, France combined average employment growth with slightly below average GDP per capita
growt, and Germany, Japan or Switzerland, very below average GDP per capita growth.
Countries to the Right on the X-axis have above average gains in Employment after adjusting for population growth.
Countries North on the Y-axis have above average gains in GDP per capita expressed in constant 2000 USD. Thus, France
combined average employment growth with slightly below average GDP per capita growht, and Germany, Japan or
Switzerland, very below average GDP per capita growth. Source: Schwartz, H.(2008).
Fig.12 Average Per Capita Increase in Employment and GDP 1991–2005, selected countries.
16. U.S. Small Business Administration, cited in The Importance of Housing to the U.S. Economy, in https://
www.ivyfunds.com/perspectives/importance-housing-us-economy
17. National Association of Home Builders, “The Direct Impact of Home Building and Remodeling on the
U.S. Economy,” October 2008; http://www.nahb.org/generic.aspx?sectionID=734&genericContentID=103
543&channelID=311
The basic idea, in a strong economy with employment growth, is that people are confident to purchase
homes and feed the chain of related supplies and appliances; conversely, in a weak economy, people are
less likely to buy new homes or renovate existent ones. The thermometer of the housing industry assess
other consumer-based indicators for spending in the whole economy. This is why in North America, the
housing starts index is so important; measured by the New Residential Construction Report in the US and by
the Canada Mortgage and Housing Corporation in Canada, it is considered to be a critical monthly indicator
of economic strength. It is forward-looking, measured through surveys of home builders nationwide
according to building permits, housing starts and housing completions data of new residential construction
projects. Housing starts and building permits are considered leading indicators that anticipate changes in
the economy’s pattern, and are carefully watched by investors and analysts. For evaluating the real estate
market, housing starts have to be looked at in conjunction with home sales, the rental component of the
Consumer Price Index (Statistics Canada18
) and the Housing Price Index (Statistics Canada19
).

21. 21
18. www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/cpis01a-eng.htm
19. www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/manuf12-eng.htm
The current channel of cheap credit in deep mortgage markets is crucial for housing wealth, what drives
what probably everybody wants: higher house prices with lower down payments. In an opposite direction,
countries with restrained credit or limited loans have the opposite effect - consumption falls when house
prices rise: home buyers save more for a large down payment, a rationale also applicable for renters,
expecting higher rent if the house prices increase (Muellbauer & Murphy, 2008).
2.2 Housing Prices: Planning, the Supply Side
Socially speaking, the objective of planning is to promote distributive efficiency in the provision of public
goods and services in scale, timing, and spatial configuration. In term of urban economy, planning means
organizing the conditions of competitiveness on the supply side, according to statutory and legislative
mechanisms to control and tax the land use, which sets the determinants for property values and prices
of land and buildings.
Efficiency in the spatial distribution of public services has long been debated between those in favor of
and against of conventional suburban sprawled developments. Studies suggesting lower costs of public
services in compact urban development include Real Estate Research Corporation (1974), Burchell and
Listokin (1995), Frank (1989), and Blais (2010); conversely, studies arguing that public services are not
less costly in compact developments include Windsor (1979), Peiser (1984). Regarding scale and spatial
configuration, Hirsch (1984) has the following opinion:
There is little evidence that horizontally integrated municipal services [police, education, refuse
collection, hospitals, and fire] incur scale economies beyond a population size of 100,000 to 250,000
(....) For vertically integrated services, matters are different. (...) Cost studies of vertically integrated
electricity, gas, water, and sewage treatment services are available, and they all indicate declining unit
cost [for large populations] (p272-73, cit. in Knaap, 1998, p272).
Land use planning and building regulations affect the spatial configuration and land/housing prices in a
varietyofways.Whetherplanningimposesdevelopmentrestrictions(atypicalviewofscholarsineconomics
and the real estate industry), the supply of developable land can be limited, increasing land/housing
prices. Whether land use planning enhances neighborhood amenities and public services (a typical view of
planning scholars), housing/land prices will probably also increase, even with a surplus of developable land,
because amenities/public services increase the overall level of housing quality. Building and maintaining
a good public school or library, or other desired public service, could raise surrounding property prices;
higher property values seem to appear close to public parks (Schroeder 1982; Weicher & Zerbst 1973),

22. 22
20. Pressed by fiscal constraints since 1980s, local governments have created impact and user fees, and
development exactions - a broad range of regulatory justifications to force developers to contribute to
the cost of communities’ public facilities (such as access roads, off-site drainage easements or new parks).
LRT stations (McDonald & Osuji 1995; Gatzlaff & Smith 1993), sewer interceptors and centralized sewage
systems (Nelson & Knaap 1988), better public schools (Jud 1985), and other public investments. Bramley
(1993) found that British governments respond to high housing prices by releasing more land through the
statutory planning system for housing development; but despite housing construction being stimulated, he
found a minor effect on diminishing housing prices. Potepan (1996) found that increases in land supplies,
which can be understood in part as less land/building regulations, can just slightly lower house prices/
rents; and that demand and economic factors (robust/weak economy), differences in construction wages
and construction costs, seem to have more long-term effects on property prices than land prices.
Similarly, good access to public services can be related to higher taxation and can be capitalized into higher
property values (Altshuler & Gomez-Ibanez, 1993; Gyourko, 1991; Skaburskis, 1990). At the same time, it is
possible to say that property taxes and other taxes lower land prices, especially if it is not counterbalanced
by planning advantages/amenities, such as public services (Oates & Schwab 1995; Skaburskis 1995; Wassmer
1993). This means a delicate balance for sprawled municipalities, where revenues heavily rely on property
taxes from new subdivision plans, without land improvements.
The extent to which land use planning and location factors influence land and housing prices depends
largely on the availability of land and housing markets. Where there are plenty of greenfields, the North
American case, competition with nearby markets and municipalities for revenues imposes constraints on
the effects of planning. Whether they are not, and infill developments are preponderant, land use planning
may play a significant role, including contributing to higher price effects. Other assumptions include that
property prices generally decline with distance from the central business district (CBD); but even if the
location is far but has good connectivity to the CDB or other urban centres, it can increase prices (Waddell
et al., 1993; McDonald & McMillen, 1990).
By determining density restrictions, zoning influences property prices and the spatial configuration, but
it may vary according to how strictly zoning is enforced or who controls the zoning process, exactly what
local governments control through zoning, and the metropolitan context in which that local zoning control
takes place. In North-America, most local governments seek to curtail high-density development (Knaap,
1998), and this negative approach to higher density affects property prices more than permissive use
(Pogodzinski & Sass 1991).
Typically, property prices are higher in higher density zones (Knaap 1985; Jud 1980), and prices in suburban
communities are more uniformly affected by zoning than in central cities (Fischel 1989b, 1988). It seems
that residents, particularly in suburban areas, are disposed to pay extra for land use constraints, and that
zoning policies and the housing industry tend to follow this market differential (McMillen & McDonald,
1993, 1991a; Thorson, 1994). In sum, regulatory controls within municipalities can influence land and
housing prices, shifting the demand for land from one part of the metropolitan area to another; which

23. 23
can be understood that, facilitating developments can lower property prices only by a small fraction.
Conversely, limiting urban sprawl can increase urban density, probably increasing land and housing prices.
Fischel (1988, p.54) concludes:
Land use management, especially traditional zoning, does provide some benefits that would seem
to be difficult to obtain under less coercive conditions. Abolition of zoning and related management
would seem to create net costs; land use management, especially overall growth control programs, are
important constraints on the land market. This in turn affects housing values.
2.3 Housing Prices: The Demand Side, and the Housing Crisis
As typical recommendation from a housing market advisor, “past performance is not a guarantee
of future results”16
Basically, capital gains in the housing industry come from two sources: the real economy, by minimizing
construction and land costs, with limited elasticity; and from the circulating capital, by maximizing future
demand. Considering housing as a commodity, land/housing prices are influenced by the present value of
future gains expectations (Capozza & Helsley 1989; Amott 1980; Chinloy, 1996); or, growth expectations
increase current housing prices. Roughly speaking: if the expected profitability through speculation is not
considered, if there is no planning regulation or, if the regulation is fragile, housing prices cannot be much
higher from construction costs. Construction costs constitute about 50%, and land about 25% of a typical
house in the U.S. and Canada. As a sample, the components of housing costs are in table 1 (data from US;
due to similarities between both markets, see percentage rate).
Data from US; due to similarities between both markets, I consider the percentage rate applicable to Canada.
Source: National Association of Home Builders of United States (1996)
Tab.1: U.S.: Cost Components of an Average New Single-Family Home, by Census Regions 1995
Since 2000, in the U.S., low interest rates, financial innovations in securitization and changes in procedures by
credit rating agencies resulted in the creation of a second category of housing consumers, extending loans for
those whose credit histories would not have been previously accepted by the mortgage regulation (named
sub-prime market). In 2004, a combination of interest rates signalizing a return to normal levels, and an already
expanded housing stock with overvalued prices started to show a increase in default in mortgage loans payments,

24. 24
Source: tradingeconomics.com/
united-states/interest-rate
Fig. 13:
Unites States Interest Rates/
Benchmark Interest Rate
and housing prices started to decline, which led to a general contraction in the credit supply, and not only for the
sub-prime market or to the housing industry - losses to the order of $500 billion by early 2008 (Mishkin 2011;
Greenlaw,Hatzius,Kashyap,&Shin,2008;Ashton2009;Fligstein&Goldstein2010;McNall72009).Fewneoclassic
economists, such as Paul Krugman did, stood up to speak on how fragile or forged the affordability bases of the
inflated housing market were and the dangers of future corrections. Trying to curb the expansion of the lending
process, interest rates rose until the middle of 2008, when the overall economic activity finally plummeted and
forced interest rates to sharply fall to the current 0.25% a year (fig.13).
After the U.S. housing crisis in 2008, the share of housing growth to GDP in the U.S. fell to about 2% and
now is 2.5% of the GDP growth21
; the number of jobs in housing-related industries collapsed, resulting
in a struggle for economic growth. As a typical response, the Federal Reserve (Fed) lowered interest
rates to near zero, but with prices, foreclosures and overbuilding high, the housing industry remained
stalled despite interest rates close to zero. As another resource, the Fed decided to purchase mortgage-
backed securities (MBS), a move followed by the Bank of Canada and the Canadian Mortgage and Housing
Corporation (CMHC) (fig.14). The current international financial crisis has highlighted deficiencies in the
self-regulation of the financial system; there is an emerging consensus that prudential regulation in recent
years was too lax, and banks know that public agencies would save them from their risk taking excesses.
It has become clear that the practice of lending long and funding short has become extended in recent
years and that liquidity covered by the banking system has been negligent. The U.S. sub-prime crisis has
extended the connections between housing and the macroeconomy by seizing large segments of credit
markets and a widening of credit spreads (Sassen, 2009; Mortgage Architects, 2007).
$0
$20
$40
$60
$80
$100
$120
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
OutstandingCredit,$CdnBillions
Regular NHA MBS
NHA MBS purchased via CMB
Source: KPMG 2008, cited in Walks, 2012.
Fig. 14:
Canada: Growth in NHA MBS (Mortgage-
Backed Securities) purchased via CMB
(Canada Mortgage Bond program: CMHC
and CHT take mortgages off of private
banks, allowing them to originate new
mortages).

25. 25
Canada is following similar steps the U.S. took in dealing with the combination of public/private debt and
the housing crisis. By purchasing MBAs, the CMHC and Bank of Canada are assuming as their responsibility
risks taken from the private securitization industry (fig.15); and thus, socializing the risk. Walks says, “by
2009, the Canadian mortgage market had come to resemble the U.S. mortgage market before its crash, with
over 30% of all outstanding mortgage credit now securitized and packaged in mortgage-backed securities”
(Walks, 2012, p.18) (fig.16). With so many State guarantees, housing prices continue to increase (fig.17, 18).
However, the Bloomberg Agency said that it is improbable that the credit crisis in Canada can be solved in
traditional ways: “There’s little evidence exports will help Canada offset any drag from its housing-sparked
debt addiction. In the third quarter [of 2012], outbound shipments, including oil, plunged 7.8% from the
second quarter and had dropped 8% since 2000” (Thorpe, Argitis & Dmitrieva; Bloomberg, 201322
).
0%
20%
40%
60%
80%
100%
120%
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
MBS,%,AllofCanada
Source: CMHC 2009a, cited in Walks,
2012 (p.15)
Fig. 15:
Canada: Growth of CMHC-
guaranteed mortgage backed
securities (NHA MBS) as a
proportion of the growth of
total mortgage debt
Source: CMHC 2009a, 2009b, cited in
Walks, 2012 (p.18)
Fig. 16:
Canada: CMHC-guaranteed
mortgage backed securities
(NHA MBS) as a proportion of
the growth of all outstanding
mortgage debt
0%
5%
10%
15%
20%
25%
30%
35%
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
NHA-MBSasPercent(%)ofAllOutstanding
ResidentialMortgageDebt,AllofCanada
21. U.S.Census Bureau and S&P/Case-Shiller Home Price Index, cited in https://www.
ivyfunds.com/perspectives/importance-housing-us-economy; and in www.nahb.org/generic.
aspx?genericContentID=66226; table 1: www.nahb.org/fileUpload_details.aspx?contentTypeID=3&conten
tID=66226&subContentID=206100
22. Thorpe, J., Argitis T., & Dmitrieva, K. (2013, February 27). Canada losing debt halo as property peaks
under Carney. Bloomberg. www.bloomberg.com/news/2013-02-27/canada-losing-debt-halo-as-bull-
market-housing-peaks-with-carney.html

26. 26
Source: Teranet-National Bank 6-City
Index, Canada; Shiller-Standard and
Poors 20-City Index, USA, cited in Walks,
2012 (p.11)
Fig. 17:
Canada and US: Index of
Urban Real Estate Prices
60.00
80.00
100.00
120.00
140.00
160.00
180.00
200.00
220.00
United States Case-Shiller 20-City Index
Canada Teranet 6 City Weighted Index
CanadaUnited States
HousePriceIndex(January2000=100)
Encouraged by low interest rates of 0.25% from the end of 2008 to August 2010 (fig.19), and with five-year
mortgage rates of less than 3%, the average price of homes sold increased 82% between 1992-2012, and
more than 30% from January 2009 to January 2012, according to the Canadian Real Estate Association.
The value of mortgages insured by the CMHC increased 98% to $575.8 billion at the end of September,
2012, from the end of 2006; and in 2011, Canadians became more indebted than Americans.22
The ratio
of private debt to disposable income has continued to rise, to a record 170% as a proportion of GDP
in 2010, with 78% household debt, according to Statistics Canada (Walks, 2012; fig.20). Although the
government has made a fetish of its prudence with the public finances, the current impasse is seen in
an official contradictory message of “borrow but save”, maybe because “it was the only tool the Bank of
Canada had. The reality, they really could not lift interest rates” (Douglas Porter, chief economist at Bank
of Montreal). Within a global race for low interest rates, any increase would cause the Canadian dollar
to appreciate, constraining the staple economic model even more, already in a global quenching, and
increasing household debt. In January 2013, Mark Carney, ex Bank of Canada Governor, said that rate
increases were improbable because of weaker-than-anticipated business investments and exports.22
Source: Teranet-National Bank House
Price Index, Canada; in The Globe and
Mail, Jan 12, 2014.
Fig. 18:
Canada: Housing Price Index of
Urban Real Estate in Toronto,
Vancouver, Calgary and Winnipeg,
1999-2013

27. 27
Source: tradingeconomics.
com/canada/interest-rate
Fig.19:
Canada Interest Rates/
Benchmark Interest Rate
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Total Private Credit/Debt
Household Debt Only
OutstandingPrivateCredit/Debtas%ofGDP
Fig.20: Outstanding Private Debt
as a proportion (%) of GDP.
Source: Walks (2012); from
Statistics Canada, Cansim II database,
Tables 3800002, 1760032 and 3780012
Bloomberg estimates that the share of GDP to housing in Canada, including construction and renovation, was
about 20% in February 2013; a similar U.S. measure was at 18% in 2005, back up by easy monetary policy and
regulation. Moody’s Investors Service, on January 28, 2013, downgraded six Canadian banks, saying debt and
inflated home prices have left Canadians vulnerable to the extended global crisis. Benjamin Tal, deputy chief
economistattheinvestment-bankingCanadianImperialBankofCommerce(CIBC)said,“Webasicallyborrowed
our way out of this recession”…“now, it’s payback time. We will be in for a period of long, slow growth”.22
Weale (200723
) says that there is a close analogy between the effects of rising house prices and the effects of
government debt: rising house prices and low interest rates reduce the apparent need for people to save or to
finance their retirement, in addition to stimulate borrowing for general consumption; on the government side,
this means in the end, a social burden that the State has to shoulder through increasing government debt. Both
havetheeffect of reducing theeconomy’s stock ofproductivecapital and increasing the dependence on revenues
orinvestmentsfromabroad,backinguptherationaleofthestapleeconomy.However,whiletheincreaseinpublic
debt may be used to fund collective goods such as health and education, the increase in average house prices
typically temporarily benefits the wealthy, and can create social and spatial exclusion (Gibbons & Machin, 2008).
According to Muellbauer & Murphy (1997), two forces will dampen the next upturn of macroeconomic
instability: unfavourable demographic trends, especially an aging population, and high levels of debt, especially
23. On the assumption that between 1987 and 2007 “excess” house price appreciation was 1.9% year,
Weale argues that this appreciation was equivalent to a government deficit of 4% year of US GDP over
these years. Cited in Murphy & Muellbauer (2008).

28. 28
after interest rates move to normal levels - low interest rates are not sustainable in the long run. One of the
dilemmas in targeting housing prices by managing interest rates or preserving the liquidity of private banks
in a small open economy, such as Canada, may be the unintended effect on the exchange rate: if short-term
interest rates are raised in response to an excessive appreciation in house prices, the exchange rate is likely to
appreciate,damagingthe“realeconomy”–exportsofnaturalresourcegoodsandmanufacturedgoods.Weare
going to see in Part III, how this discussion affects a strong portion of municipal revenues - taxation and charges
related to land uses and housing construction. Or, using words from a planner (anonymous) from Hemson
Consulting said that, “municipal revenues created this straitjacket about relying on the housing industry that it
is very difficult to detach; but, urban sprawl is being slowly reduced in the last 10 years”.
Part III - Municipal Funding / Regulatory Mechanisms
Until the 1970s, most of the first generation of hard infrastructure’s urban expansion was funded by the
government, either directly or through taxation. By the middle of the 1970s, successive economic crises began
to reveal the unsustainability of affording infrastructure only through this model. Thus, even after being used for
almost 40 years as lot levies (Slack, 1994), the application of development charges as a legislative piece to fund
growthwasfinallyofficialisedinthe1989DevelopmentChargesAct,and,later,therespective1997amendment.
Funding growth has become more difficult since 2001, when transfers from provincial and federal levels were
reduced from 50% in 1980, to 16% in 2001 (Leisk et al., 2004, p.33); “Notwithstanding the significant decrease
in support from other levels of government, municipalities have not been given significantly enlarged powers to
raise revenue for their own purposes” (p.34). Since then, municipalities have been facing difficulties in financing
growth-related infrastructure, using alternative revenue sources, such as user/license fees, public-private
partnerships, and increasing development charges. Municipal revenues are largely financed by property taxes;
in this sense, home ownership and increasing housing/land prices are attractive due to benefits to the municipal
tax base - if land/housing prices increase, property taxes increase.
About property taxation, development revenues and the pattern of urban development, Jamie Bosomworth
(Manager, Strategy and Innovation Development Services Commission, City of Markham) said that “municipalities
atnorthofSteelesAv.,basically,Vaughan,RichmondHill,MarkhamandBrampton,areinafiercecompetitionforthe
same market of developers and population for similar housing developments; everybody is closely watching what
each other is doing about municipal revenues related to that” (February 4, 2014). About regulatory mechanisms
and the position that the status quo can be convenient for municipalities and developers, Remo Agostino, (Vice
President,Development,TheDanielsCorporation)saidthat,“developersfollowthelegislationandrulesdetermined
by the province and municipalities; the type and pattern of housing developments are a combination between
municipal regulation, demand and profit margin for municipalities and developers” (February 3, 2014).
Housing policies using the home ownership model became the mandate of public/private sectors to deal with
housingsupply,byconsideringhomeownershipasasset-buildingthatallowspeopletobuildequityintheirhomes
and other positive impacts (Hajar 2009, Shlay 2006, Gree & White 1997; Haurin & Parcel 2002). Government
programs and subsidies stimulate home ownership, such as the Canada-Ontario Affordable Housing Program
(initiated in 2008) and the Home Ownership Assistance Program (City of Toronto, 2010ab, 2012ab, 2013), as
well as historically decreasing levels of mortgage rates from the private banking system (fig.21). Also, mortgage

29. 29
Fig. 21:
5-year Fixed Mortgage Rate and the 5-year
government bond Yield, 2001-20132
.
1
Chartered bank posted interest rates
2
Latest data point is April 2013
Source:Bank of Canada, in Canadian Housing Observer (CMHC, 2013)
%
0
2
1
3
4
5
6
7
8
9
2012
2013
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
5-year fixed mortgage rate1
5-year government bond rate2
securitization rules defined by the CMHC help consumers to purchase homes with a minimum down payment
of 5% (Canadian Housing Observer, CMHC, 2013). And, in spite of high public/private debt, mortgage credit
has re-accelerated after the 2009 crisis (fig.22), increasing the already high debt exposure of Canadian financial
institutions to housing mortgages, already the single largest asset class exposure, around 42% (fig.23).
Fig. 22: Mortgage Credit has
re-accelerated, 2005-2011.
Fig. 23: Housing is the Single
Largest Asset Class Exposure among
Canadian Financial Institutions,
2005-2011.
Source for figures 22, 23: Statistics
Canada, Bank of Canada; in Remarks
by Mark Carney, Governor of the
Bank of Canada, Vancouver Board of
Trade, 15 June 2011
Residential uses pay higher development charges and less property taxes than non-residential uses, but, by
far, the municipal inventories for property assessment by the Municipal Property Assessment Corporation
(MPAC), comprise a majority of assets related to residential uses. Land, as fixed capital for current or
expected development is proving itself resistant to crises. The evolution of prices devoted to land uses in

30. 30
24. CityofTorontoStaffReport,“DevelopmentCharges-BackgroundStudyandProposedBy-Law”,October27,2008
25. Councillor Mark Grimes website(2013, October 18). In http://markgrimes.ca/toronto-city-council-
highlights-meeting-october-8-9-10-11-2013/
Single family homes
4,500
5,500
6,500
7,500
8,500
9,500
40,000
60,000
80,000
100,000
2009 2010 2011 2012 2013
units
Vacant
Starts
Source: Statistics Canada, CANSIM tables 027-0010, 027-0051.
Fig. 24: Housing Starts for Single-
detached dwellings in Canada
the four municipalities of the case studies of my research show that in a time frame of only seven years,
all municipalities had land prices increased in all land uses.
Becausethenumberofbedroomsorpopulationperunit(PPU)insteadofareaisconsideredforDCcalculation,
higher density developments tend to pay a higher charge per hectare/acre than low density developments,
although some services have a lower per unit or per capita cost in higher density developments (RCCAO;
Amborski, 2011). In Toronto, 2008, the City commissioned a study that was used as the basis for proposing
an increase in development charges; the recommendation was the following increases: 126% for single and
semi-detached units, 123% for two-bedroom apartments, and 144% for one-bedroom and bachelor units24
- the increase was approved by Council in October 11, 2013 (Bylaw 1347-2013), to a universal increase over
two years of 75% for residential uses and 25% for non-residential uses.25
Thus,ononehand,efficientdevelopmentsubsidizesinefficientdevelopment:small,high-densitylotssubsidize
large lots, and smaller units tend to subsidize larger units. On the other hand, as most municipalities do not
apply area-specific development charges, relatively low-density developments pay the same per unit charge
as built-up areas where services are already extended. Consequently, as they all pay the charges based on
the same average costs, the low-cost areas tend to subsidize the high-cost areas (Blais, 2010). Lloyd Noronha,
(DirectorofDevelopmentFinance&InvestmentsattheCityofVaughan)saidthat,“thereisaneedofreviewing
how property taxes and development revenues are generated, because the way they are today, it seems
they are reproducing sprawl; the government realizes that, and this matter is currently being discussed in the
conference ‘Development Charges in Ontario - Consultation Document, fall 2013’” (November 19, 2013).
Both in peripheral or central areas, an over-reliance on development charges and property taxes as a
continuing revenue source seems to be an unstable strategy. As we see in figure 24, during economic
downturns, housing activity tends to decline and municipalities face shortfalls to meet expenditure
commitments that were predicated on future development revenues and continuously increasing housing
prices. If prices decline, property taxes tend to decline, diminishing this main source of municipal revenues.

31. 31
The result in the urban fabric, despite the Ontario government initiatives to curb urban sprawl, such as the Smart
Growth principles, the Provincial Policy statement (2005), the Growth Plan for the Greater Golden Horseshoe
(2006) and Places to Grow Act (2005), shows that the status quo of conventional pattern of sprawled urban
developments is still leading. A planner from the City of Vaughan (anonymous, did not want to identify his/
her self) said that, “of course we stimulate a specific type of development [single-detached units], but you
will not hear this publicly here”. City centres grew by 5.3% with a population of 13,682,144 (13.7% of total the
population), less than the national average; and peripheral areas grew by 8.7% with a population of 13,213,599
(13.2% of the total population) over the 2006-2011 period (fig.25, 2011 Census26
).In other words, even our case
studies showing in some cases a small decline in the production of single-detached and increase of apartment
units, municipal funding/regulatory mechanisms and the housing industry maintain the status quo in modeling
the urban fabric. In 2008, Statistics Canada showed the following densities by type of neighborhood (tab.2).
Fig. 25: Canada: Peripheral areas
grown more than central areas,
2006-2011
Numbers in blue bubbles show the
increase in population of suburban
communities. Source: 2006-2011
Census Canada
Tab.2: Canada, 2008: Distribution (%) of population by type of neighborhood
1. In low-density neighbourhoods, 66.6% or more of the housing stock is composed of single family dwellings, semi-
detached dwellings or mobile homes. In medium-density neighbourhoods, the percentage is between 33.3% and less
than 66.6%. In high-density neighbourhoods, these types of dwellings comprise less than 33.3% of the housing stock.
2. Census Metropolitan Areas. Source: www.statcan.gc.ca/pub/11-008-x/2008001/t/10459/4097957-eng.htm
Up to this point, the position of this CIP is that, regardless of the conventional rationale of policy makers and
the development industry (that suburbia and single detached houses are what people want), policy makers
and developers should develop a solid economic framework that is economically and environmentally
sustainable; and that the status quo modeling the urban fabric is mostly possible due to the federal fiscal
support encouraging home ownership and the way the municipal funding mechanisms are set.
26. The Canadian Press (2012, April 12). New census data shows Canadian suburbs rule: Planners stumped
by demographic surprises. In www.cbc.ca/news/canada/story/2012/04/11/census-suburbs-growth.html

32. 32
3.1 Sources of Municipal Revenues
Revenues are generated for bearing the costs of three types of municipal expenditures: infrastructure operating/
maintenance; services that residents receive; and for funding growth, usually in new areas or greenfields.
Municipal taxes:
• Property taxes
• Special area taxes
• User fees: licenses, permits and rents
• Fines and penalties
• Investment income
• Development charges
Federal / Provincial transfers:
• Payments in lieu of taxes
• Conditional and unconditional grants
Municipalrevenueshavethefollowingadvantages:autonomy,flexibility,accountability,somepredictability,
and are broadly distributed as follows: property and related taxes 53%, user fees 23%, provincial transfers
15%, federal transfers 1%, other revenues 8%. Broad municipal expenditures are: transportation 19%;
health, social services, and social housing 13%; water, sewers and garbage 17%; recreation and culture 12%;
debt charges 4%; planning and development 2%, other 16% (Slack, 2003a). Some tax bases and charges
are existing policies, but others are at the discretion of local councillors without a uniform methodology,
city-wide policy or longer term vision (Matthews, 2010). A detailed description of how these revenues is
contained in Appendix E.
3.2 Case Studies
The data collection for each city was organized into six categories. First is the compilation of the 2006-2012
numerically most significant sources for municipal revenues: property taxation, development charges/
reserve funds, user fees charges, investment income and conditional government grants. This information
was collected from respective municipal budgets, and consolidated statements of financial position.
Second, population size and income, from the 2001, 2006, and 2011 Censuses; and, the 2010 income
composition in private households (market income and government transfer payments) from Statistics
Canada; third, total private dwellings distributed according to structural type, including single-detached,
semi-detached, row/townhouses, duplex apartments, apartments of 5 storeys or more, and apartments
fewer than 5 storeys – information taken from the 2001, 2006, and 2011 Censuses; fourth, the average and
median dwellings price by structural type for every October from 2006-2012, data taken from the Toronto
Real Estate Board (TREB) and the Canadian Real Estate Association (CREA, for Hamilton, and prices are
averages of the respective years); fifth, 1994-2013 evolution of development charges for residential use,

33. 33
information taken from respective municipalities and other sources; sixth, 2006-2012 building permits by
residential use, information taken from the Ministry of Municipal Affairs and Housing; eight, the 2006-2013
evolution of the current value assessment (CVA) of lands by use type, according to the MPAC. Comments
about the limitations of this case study’s research are in Appendix F.
Despite the argument of shrinking revenues, all municipalities showed growing revenues. For municipal
revenues,
1. Property taxation remain the most important source of revenues, comprising between 36.71%
(Vaughan) and 50.81% (Brampton)
2. Development charges seem to be a highly volatile source, from an average of 2.90% (Hamilton) to
17.12% (Brampton)
3. User fees/service charges are more stable than property taxes and DCs while revenues and are from
12.21% (Brampton) to 28.33% (Markham)
4. The average investment income, surpluses from reserve funds generated by tax collections, grant
payments, and returns from investments in the financial market varies between a constant year
amount, or slight increase/decrease: 1.52% in Hamilton and 3.88% in Markham
5. Government conditional grants are a small more-or-less constant portion (lower-tier municipalities
of Vaughan (1.30%), Markham (1.42%), Brampton (2.46%), and 21.66% for the single-tier Hamilton),
but started to grow substantially after the 2009 recession for all municipalities. There was a clear
change between 2008/2009, when the recession somehow altered previous patterns of revenues:
DCs’ contributions and investment incomes fluctuated, and government grants fluctuated (Hamilton)
or slightly increased (tables 1 of respective municipalities, appendix G). Other findings are presented
by sections and in Appendix G
Regarding the urban sprawl and almost 10 years of Smart Growth principles being highlighted in provincial
studies and official documents, the case studies show that Markham and Vaughan had improvements in
diminishing the proportion of singles/semis detached units, and Hamilton and Brampton maintained the
status quo.

34. 34
3.2.1 Municipal Revenues
TheanalysisforeachcitywasorganizedbetweenTotalRevenues,PropertyTaxation,DevelopmentCharges/
Reserve Funds, User Fees/Service Charges, Investment Income and Government Conditional Grants for
the 2006-2012 period. Original charts with additional variables and related numbers are in Appendix G.
To investigate my hypothesis, a relationship between the status quo of producing sprawled pattern of
urban development and the distribution of sources of municipal revenues, I had the following findings:
47.79% of total municipal revenues in Hamilton, 48.39% in Vaughan, 48.57% in Markham, and 67.93% in
Brampton are related to land uses, basically property taxation and development charges (fig.26).
Fig. 26:
Distribution of Major Municipal Revenues,
2006-2012: Bramptom, Hamilton, Markham
and Vaughan
*average contribution increase for total municipal revenue in 7 years
Brampton Hamilton Markham Vaughan
Land Uses: Property Taxes & Development Charges
License/Permit fees & Services Charges
Government Transfers
0
10%
20%
30%
40%
50%
60%
70%
80%
67.93%
47.79%
48.57%
48.39%
Sources: Municipal Budgets, and Consolidated
Statements of Financial Position for respective
municipalities and years; in Ministry of Affairs
and Housing.
There is an overall constant and similar residential land use distribution in all municipalities, a slight increase
in commercial lands, and a slight decrease for industrial uses (fig.39a, 40a, 41a, 42a, and appendix G). The
percentage of CVA for farmlands has slightly shrunk in Brampton (from 0.29% in 2006 to 0.26% in 2013),
and Vaughan (from 0.30% in 2006 to 0.26% in 2013); Hamilton and Markham basically maintained the same
proportion (appendix G).
The evolution of prices devoted to land uses (fig.39b, 40b, 41b, 42b, and appendix G) shows a less uniform
pattern than just analyzing land use distribution. In a time frame of only seven years, all municipalities had
land prices increased in all land uses, from a minimum of 17.19% in Hamilton to a maximum of 73.11%
in Brampton. Residential land prices increased 33.58% in Hamilton, 53.17% in Brampton, 56.08% in

35. 35
Markham, and 63.86% in Vaughan (fig.27a). The growing percentage of commercial lands valorized even
more than residential lands, 43.94% in Hamilton, 62.36% in Markham, 67.07% in Vaughan, and 73.11%
in Brampton (fig.27b). Even the shrinking percentage of industrial lands had values increased: 17.19% in
Hamilton, 17.95% in Brampton, 30.36% in Markham, and 48% in Vaughan (fig.27c).
Fig. 27a: Residential Land Prices
Increase, 2006-2012
$0
$10,000,000,000
$20,000,000,000
$30,000,000,000
$40,000,000,000
$50,000,000,000
$60,000,000,000
33.58%H
53.17%B
63.86%V
56.08%M
2006 2007 2008 2009 2010 2011 2012 2013
Brampton
Hamilton
Markham
Vaughan
Fig. 27b: Commercial Land Prices
Increase, 2006-2012
$0
$2,000,000,000
$4,000,000,000
$6,000,000,000
$8,000,000,000
$10,000,000,000
$12,000,000,000
67.07%
73.11%
62.36%
43.94%
2006 2007 2008 2009 2010 2011 2012 2013
Sources for figures 27a, 27b, 27c: Ministry of
Municipal Affairs and Housing for respective
municipalities, based on the Municipal
Property Assessment Corporation values.
Fig. 27c: Industrial Land Prices
Increase, 2006-2012
$0
$500,000,000
$1,000,000,000
$1,500,000,000
$2,000,000,000
$2,500,000,000
$3,000,000,000
$3,500,000,000
$4,000,000,000
$4,500,000,000
48%
17.95%
30.36%
17.19%
2006 2007 2008 2009 2010 2011 2012 2013
Between the four municipalities in the 2006-2012 period, figure 28 shows the city of Markham with the
highest municipal revenue increase (146.89%), followed by Vaughan (135.49%), Brampton (132.79%)
and Hamilton (29.56%). The single-tier Hamilton had the highest revenue, which is related to higher
government transfers (fig.32). Figure 29 shows Brampton with the highest (50.81%) average property
taxation contribution, Vaughan with the smallest (36.71%), and all cities show an increase in this type
of revenue. Figure 30 shows Markham with the average highest (28.33%) user charges contribution and
Brampton with the smallest (12.21%), and again, all cities show an increase.

36. 36
Sources for figures 28 to 33: Municipal
Budgets, and Consolidated Statements
of Financial Position for respective
municipalities and years; in Ministry of
Municipal Affairs and Housing.
Fig. 28: Total Municipal Revenues
Growth 29.56%
132.79%
146.89%
$0
$200,000,000
$400,000,000
$600,000,000
$800,000,000
$1,000,000,000
$1,200,000,000
$1,400,000,000
$1,600,000,000
$1,800,000,000
Brampton Hamilton Markham Vaughan
2006 2007 2008 2009 2010 2011 2012
135.49%
Fig. 29: Property Taxation
44.88%*
50.81%*
*average contribution increase for total municipal revenue in 7 years
37.57%*
Brampton Hamilton Markham Vaughan
2006 2007 2008 2009 2010 2011 2012
$0
$100,000,000
$200,000,000
$300,000,000
$400,000,000
$500,000,000
$600,000,000
$700,000,000
$800,000,000
36.71%*
Fig. 30: User Fees / Service Charges
*average contribution increase for total municipal revenue in 7 years
27.74%*V
12.21%*
17.86%*
Brampton Hamilton Markham Vaughan
2006 2007 2008 2009 2010 2011 2012
$0
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
$300,000,000
$350,000,000
28.33%*M
Fig. 31: Investment Revenues
*average contribution increase for total municipal revenue in 7 years
1.83%*
3.25%*
1.52%*
Brampton Hamilton Markham Vaughan
2006 2007 2008 2009 2010 2011 2012
$0
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
3.88%*
Fig. 32: Conditional Grants/Transfers
*average contribution increase for total municipal revenue in 7 years
1.30%*V
2.46%*
21.66%*
Brampton Hamilton Markham Vaughan
2006 2007 2008 2009 2010 2011 2012
$0
$100,000,000
$200,000,000
$300,000,000
$400,000,000
$500,000,000
$600,000,000
1.42%*M
Investment revenues (fig.31) vary between a constant year amount, with an average slight increase to all,
except for Hamilton, with a sharp increase in 2008. There is a similar slight increase in government transfers
for Bramptom, Markham and Vaughan (fig.32) after 2009, and again, Hamilton had a high increase after
2008. Hamilton is a single-tier municipality (Hamilton receives more governmental transfers for providing
services that Regions provide for Brampton, Markham and Vaughan), and is facing slow growth after an
economic decline during the last 20 years due to the exhaustion of the steel industry. Impressively 21.66%
of total revenues are grants/transfers, the highest between municipalities; not surprisingly, only 2.90% of
total revenues come from DCs. All municipalities have shown fluctuation in DCs contribution (fig.33), and the
comparison of graphics 4 to 8 shows DCs as a high percentage of municipal contribution, usually just after
property taxes, and the most volatile.

37. 37
*average contribution for total municipal revenue in 7 years
Brampton Hamilton Markham Vaughan
2006 2007 2008 2009 2010 2011 2012
$0
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
2.90%*
10.82%*
11.87%*
17.12%*
Fig. 33: Development Charges /
Reserve Funds
3.2.2 Population and Income
Brampton (521,310; tab.3a) has a similar population of Hamilton (519,941; tab.3b), and the highest
population growth (60.19%), followed by Vaughan (57.29%) and Markham (44.62%). From 2001-2011
(tab.3a, 3b, 3c, 3d), market incomes decreased for men in Brampton (-15%) , Markham (-7.53%), Vaughan
(-5.4%), and increased 2.54% in Hamilton. Women’s market incomes decreased -1.7% in Brampton,
increased 2.32% in Vaughan, 2.19% in Markham, and 28.86% in Hamilton – not exactly a good sign:
women are statistically more present in lower income and more precarious jobs than men. Vaughan
had the highest ratio of total city revenue per total population of $1,874 in 2011, followed by Markham
($1,605) and Brampton ($1,406). Hamilton is included, but not being considered in this comparison due
to its single-tier condition.
Tab.3c: Markham: Population Market Income
Total
Population
2001 1
208,613 34,303 23,123
2006
1
261,572 30,911 20,742
2011 2
301,704 31,720 23,631
increase/
decrease 44.62% 7.53% 2.19%
1. Selected trend data for Markham, 1996, 2001 and 2006 censuses
2.NHS Profile, Markham, Ontario, 2011, Sta�s�cs Canada
Ratio city revenue/population: $ 1,605 per inhabitant in 2011
3. CAN$ before taxes: 92.9% of total male income and 86.9% of total
female income are market incomes in 2011
Median Market
3
Income Males
Median Market
3
Income Females
Tab.3d: Vaughan: Population Market Income
Total
Population
2001 1
182,021 41,402 25,794
2006
1
238,863 36,174 23,911
2011 2
286,303 39,183 26,394
increase /
decrease 57.29% 5.4% 2.32%
1. Selected trend data for Vaughan, 1996, 2001 and 2006 censuses
Ratio city revenue/population: $ 1,874 per inhabitant in 2011
2. NHS Profile, Vaughan, Ontario, 2011, Sta�s�cs Canada
Median Market
3
Income Males
Median Market
3
Income Females
3. CAN$ before taxes: 92.5% of total male income and 86.1% of total
female income are market incomes in 2011
Tab.3b: Hamilton: Population Market Income
Total
Population
2001 1
490,263 34,783 19,214
2006
1
504,550 34,461 20,567
2011 2
519,941 35,666 24,761
increase /
decrease / 6.05% 2.54% 28.86%
1. Selected trend data for Hamilton, 1996, 2001 and 2006 censuses
2. NHS Focus on Geography Series 2011 – Hamilton, Sta�s�cs Canada
Ratio city revenue/population: $ 3,052 per inhabitant in 2011
Median Market
3
Income Males
Median Market
3
Income Females
3. CAN$ before taxes: 88.4% of total male income and 80.7% of total
female income are market incomes in 2011
Tab.3a: Brampton: Population Market Income
Total
Population
2001 1
325,422 39,296 24,340
2006
1
433,801 33,573 21,958
2011 2
521,310 33,414 23,934
increase/
decrease 60.19%
Ratio city revenue/population: $ 1,406 per inhabitant in 2011
15% 1.7%
1. Selected trend data for Brampton, 1996, 2001 and 2006 censuses
2. NHS Profile, Brampton, Ontario, 2011, Sta�s�cs Canada
3. CAN$ before taxes: 90.8% of total male income and 82.7% of total
female income are market incomes in 2011
Median Market
3
Income Males
Median Market
3
Income Females