UBC Theses and Dissertations

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UBC Theses and Dissertations

Analytic approach to the provision and financing of urban public services in suburban development areas… Petersen, Gordon John 1974

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AN ANALYTIC APPROACH TO THE PROVISION FINANCING  AND  OF URBAN PUBLIC SERVICES  IN SUBURBAN DEVELOPMENT AREAS* A CASE STUDYi  KAMLOOPS, BRITISH COLUMBIA by  GORDON JOHN PETERSEN B.A., U n i v e r s i t y of A l b e r t a , 19?2  A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS i n the School of Community and Regional P l a n n i n g  We accept t h i s t h e s i s as conforming t o the required  standard  THE UNIVERSITY OF BRITISH COLUMBIA A p r i l , 197^  In p r e s e n t i n g  t h i s t h e s i s i n p a r t i a l f u l f i l m e n t of the requirements  an advanced degree at the the  U n i v e r s i t y of B r i t i s h Columbia, I agree  L i b r a r y s h a l l make i t f r e e l y a v a i l a b l e f o r r e f e r e n c e  and  I'm-  that  study.  I f u r t h e r agree t h a t p e r m i s s i o n f o r e x t e n s i v e copying of t h i s t h e s i s f o r s c h o l a r l y purposes may by h i s r e p r e s e n t a t i v e s .  be granted by  ^onreunlty an:i  The U n i v e r s i t y of B r i t i s h Vancouver 8, Canada  Date  s h a l l not be  April  29,  19?4  r.e • l o n a l rlannln,-  Columbia  publication  allowed without  permission.  Department of  Department or  I t i s understood that copying or  of t h i s t h e s i s f o r f i n a n c i a l g a i n written  the Head of my  my  ii ABSTRACT The  purpose o f t h i s study i s t o d e v i s e  em a n a l y t i c  framework f o r the d e c i s i o n making p r o c e s s as i t r e l a t e s t o the p r o v i s i o n and f i n a n c i n g o f urban p u b l i c s e r v i c e s i n suburban development a r e a s .  The u n d e r l y i n g  b a s i s f o r the  n e c e s s i t y o f p u b l i c s e r v i c e s i s the e x i s t e n c e  of e x t e r n a l  diseconomies o r s o c i a l c o s t s a s s o c i a t e d with a l l forms o f development, although the nature o f the e x t e r n a l i t i e s v a r i e s according  t o the p h y s i c a l form o f the s e c t o r i n which they  are generated.  I n the m i n i m a l l y o r p a r t i a l l y  serviced  suburbs, s o c i a l c o s t s are o f t e n o f such a nature t h a t they concern the p e r s o n a l  h e a l t h and s a f e t y of the r e s i d e n t s , as  w e l l as the p r o t e c t i o n o f t h e i r  property.  Assuming an o b j e c t i v e of the community i s t o " i n t e r n a l ize"  o r prevent e x t e r n a l i t i e s from a r i s i n g i  the r e l e v a n t  p o l i c y program should be formulated s y s t e m a t i c a l l y . outset the  i s the d i f f i c u l t and imprecise  o b j e c t i v e s o f the v a r i o u s  by the e x i s t e n c e t h e i r prevention.  At the  t a s k of i d e n t i f y i n g  i n d i v i d u a l s and groups a f f e c t e d  o f e x t e r n a l i t i e s o r by p o l i c i e s aimed a t Assuming i d e n t i f i c a t i o n o f group objec-  t i v e s , some o f which may be c o n f l i c t i n g , a search f o r a l t e r n a t i v e approaches t o a t t a i n i n g the o b j e c t i v e s i s r e q u i r e d . In the case study, three  a l t e r n a t i v e s are suggested!  f i r s t c o n s i s t s of p r o v i d i n g a f u l l the  range of p u b l i c  second c o n s i s t s o f a combination o f i n v o k i n g  the  services;  ordinances  iii t o r e s t r i c t continued  development i n concert  w i t h support  programs t o i n t e r n a l i z e e x i s t i n g diseconomies o f a s e r i o u s natures and the t h i r d i s a "toned-down" v e r s i o n o f the f i r s t i n t h a t p r o v i s i o n s are made only f o r c e r t a i n s e r v i c e s aimed at p r e v e n t i n g  e x t e r n a l i t i e s of a serious nature.  n a t i v e s are then evaluated  "by comparing the c o s t s and bene-  f i t s o f each and enumerating them a c c o r d i n g dence.  The a l t e r -  to their  inci-  Although the a n a l y s i s of the three a l t e r n a t i v e s does  not p o i n t c l e a r l y as t o which i s p r e f e r r e d , i t does s p e c i f y the t r a d e - o f f s r e q u i r e d i n choosing among the a l t e r n a t i v e s . A subsequent e v a l u a t i o n o f the t r a d e - o f f s suggests t h a t the group o b j e c t i v e s c a n be achieved  most e f f e c t i v e l y and e f f i -  c i e n t l y by p r o v i d i n g a p a r t i a l range o f s p e c i f i e d s e r v i c e s . An important c o n s i d e r a t i o n i n implementation i s t h a t of a c q u i r i n g adequate funds t o f i n a n c e the s e l e c t e d s e r v i c i n g program.  Because o f the nature of the s e r v i c e s i n v o l v e d , the  a s s o c i a t e d c o s t s a r e most a p p r o p r i a t e l y a l l o c a t e d t o the b e n e f i t s - r e c e i v e d p r i n c i p l e .  according  To ensure an e q u i t a b l e  d i s t r i b u t i o n o f c o s t s among a l l b e n e f i c i a r i e s , i n c l u d i n g e x i s t i n g r e s i d e n t s as w e l l as owners o f vacant p r o p e r t i e s designated  f o r f u t u r e development, r e c o g n i t i o n should be  g i v e n t o the p o s s i b i l i t y o f d i v i d i n g system c o s t s i n t o three components«  c a p i t a l c o s t s o f major f a c i l i t i e s  which are o f  g e n e r a l b e n e f i t ; c a p i t a l c o s t s of l o c a l f a c i l i t i e s ; ating costs.  The proposed s t r a t e g y r e c o g n i z e s  and oper-  t h a t the bene-  f i t s a s s o c i a t e d w i t h each category o f c o s t s accrue t o  iv d i f f e r e n t b e n e f i c i a r y groups, and as such a d i f f e r e n t type of b e n e f i c i a r y charge i s a p p r o p r i a t e f o r a l l o c a t i n g the costs associated  w i t h each c a t e g o r y .  V  TABLE OP CONTENTS Chapter I. II.  INTRODUCTION URBAN FORMi  1 CAUSES AND CONSEQUENCES  6  The Impact o f Government Regulations and C o n t r o l s on Urban Form . . . . . . . . The D i v i s i o n of Powers Among L e v e l s o f Government . . . . . L o c a l Government O r g a n i z a t i o n and Urban Development i n Kamloops Externalities. . . . . . . . . . . Summary. . . . . . . . . . III.  INTERNALIZING EXTERNAL DISECONOMIESi PROVISION OF URBAN PUBLIC SERVICES  6 12 19 23  THE 25  Introduction F u n c t i o n s and R e s p o n s i b i l i t i e s of M u n i c i p a l Governments . F i n a n c i a l Implications . Toward a R a t i o n a l Approach t o M u n i c i p a l Expenditure P o l i c y D e c i s i o n s . . . . . . . Economic E v a l u a t i o n of M u n i c i p a l Expenditures—PPB Cost-Benefit Analysis . Summary IV.  6  THE APPLICATION OF A SYSTEMATIC APPROACH TO INTERNALIZING EXTERNAL DISECONOMIES: A CASE STUDY Introduction . . . . . The P h y s i c a l Form of Westsyde E x t e r n a l i t i e s A r i s i n g From the Process and Form o f Development i n Westsyde. Community O b j e c t i v e s A l t e r n a t i v e Methods o f A c h i e v i n g the Community's O b j e c t i v e s . . . . . Evaluation of A l t e r n a t i v e s . . . . Participants . . . . . . . . Costs and B e n e f i t s Measurements of C o s t s and B e n e f i t s . The A n a l y s i s  25 26 27 30 31 36 k6  kQ . . .  kQ kQ  . . .  49 52  . . .  56 61 62 63 6k 65  . . .  vi Analysis of Producers . Consumers Analysis of Producers . Consumers Conclusion Summary V.  A l t e r n a t i v e s A and C. . . . . . . . . . A l t e r n a t i v e s B and C . . . . . .  . . . . •  FINANCING URBAN PUBLIC SERVICES: SOURCES OF REVENUE Introduction. . . . . . . . Philosophy o f T a x a t i o n . . E q u i t y — T h e P r i n c i p l e of B e n e f i t s Received . . . . . E q u i t y — T h e P r i n c i p l e of A b i l i t y t o Pay. Adequacy Flexibility . . . . . . . Elasticity Balance Neutrality. . . . . . . . . . . . . . . . Certainty Simplicity. • Philosophy o f Intergovernmental F i s c a l Relations P r o v i n c i a l Grants Philosophy o f P u b l i c Borrowing M u n i c i p a l Sources o f Revenue Property Tax . S i t e Value T a x a t i o n . . . . . . . . . . . Sources o f Revenue Based on the P r i n c i p l e o f B e n e f i t s Received. . . . . S p e c i a l Assessments . User Fees o r S e r v i c e Charges. . . . . . . C a p i t a l F i n a n c i n g by Developers Summary  VI.  THE APPLICATION OF A SYSTEMATIC APPROACH TO FINANCING URBAN PUBLIC SERVICES* A CASE STUDY Introduction Equity i n A l l o c a t i n g Costs. . . . . . . . . F i n a n c i n g by Borrowing . F i n a n c i a l A s s i s t a n c e From S e n i o r Governments S t r a t e g i e s and A l t e r n a t i v e s f o r Financing Public Services Methods o f F i n a n c i n g C u r r e n t l y P r a c t i c e d i n Kamloops .  65 65 66 70 71 72 ?6 77 80 80 81 81 81 82 82 83 83 83 8485 85 88 91 92 95 99 100 102 105 109 112  115 115 115 119 119 121 121  Current Methods A p p l i e d t o the Case Study 123 C a p i t a l F i n a n c i n g by Developers 128 An A l t e r n a t i v e S t r a t e g y f o r F i n a n c i n g the Case Study S e r v i c i n g Program . . . . 128 P u b l i c Acceptance o f the Proposed F i n a n c i n g S t r a t e g y . . . . . . . 1J6 A d m i n i s t r a t i v e F e a s i b i l i t y o f the Proposed F i n a n c i n g S t r a t e g y IkO Impact on Urban Development 141 E x t e r n a l C o n s i d e r a t i o n s i n the D e c i s i o n Making Process . 1^1 Summary 1^3 VII.  CONCLUSION Summary Suggestions f o r F u r t h e r Study. . . . . . . . Implications f o r Planning  Ik6 1^6 153 15^  BIBLIOGRAPHY  157  APPENDICES .  163  APPENDIX A ALTERNATIVE SOURCES OF LOCAL REVENUE  .163  APPENDIX B BORROWING RESTRICTIONS ON BRITISH COLUMBIA MUNICIPALITIES  165  vii  LIST OP TABLES TABLE 1 TABLE 2  Comparison o f F u n c t i o n s o f L o c a l Government Bodies . .  8  L o c a l Government O r g a n i z a t i o n and Urban Form C h a r a c t e r i s t i c s i n Kamloops D i s t r i c t  14-  TABLE 3  The P l a n n i n g Balance Sheet  42  TABLE 4-  Comparison of Costs and B e n e f i t s i n A l t e r n a t i v e s A and C  69  TABLE 5  Comparison o f Costs and B e n e f i t s i n A l t e r n a t i v e s B and C  TABLE 6  Expenditure Items by Type o f B e n e f i t . . . .  TABLE 7  Expenditure F u n c t i o n as Percent o f T o t a l M u n i c i p a l E x p e n d i t u r e s ! Kamloops 1973* • Sources o f Revenue as P e r c e n t of T o t a l M u n i c i p a l Revenues Kamloops 1973 . . . .  TABLE 8 TABLE 9  Sources of Revenue as Percent o f T o t a l Revenues Designated f o r General Expenditures  TABLE 10  Classification  of Revenues. . . . . . . . .  TABLE 11  Sources o f Revenue as Percent of Domestic Water U t i l i t y Fund and S a n i t a r y Sewer Fund: Kamloops 1973  75 87 89 93  9*4101  124^  ix  LIST OF FIGURES FIGURE 1  C i t y o f Kamloops  197^  FIGURE 2  Governmental S t a t u s o f  15  Developed Areas i n 1969. . . . . . . . . FIGURE 3  E x i s t i n g Level  of S e r v i c i n g .  FIGURE k  Westsyde - S u b d i v i s i o n  FIGURE 5  Public Servicesi Production Cost C h a r a c t e r i s t i c s  . . . . . . .  Patterns  16 17 50 108  ACKNOWLEDGMENTS I would l i k e  t o t h a n k my f a c u l t y  advisors, Professor  Brahm Wiesman a n d D r . H. P e t e r O b e r l a n d e r , helpful  for their  s u g g e s t i o n s and c o n s t r u c t i v e c r i t i c i s m s  throughout t h e course  Thanks a l s o  of this  offered  study.  t o my w i f e , M a x i n e , f o r h e r p a t i e n c e ,  encouragement, and f i n a n c i a l  support.  CHAPTER I INTRODUCTION M u n i c i p a l d e c i s i o n makers i n suburban communities are o f t e n c o n f r o n t e d w i t h demands t o p r o v i d e an i n f r a s t r u c t u r e of urban p u b l i c s e r v i c e s i n those development s e c t o r s not s e r v i c e d t o a l e v e l comparable t o t h a t of the adjacent central c i t y .  S e v e r a l d i v e r s e o p i n i o n s have been advanced  as t o the a p p r o p r i a t e p o l i c i e s t h a t should be adopted i n meeting these demands.  At the one extreme, some have  argued t h a t s e r v i c e s should not be extended because such a p o l i c y serves t o encourage a c o n t i n u a t i o n o f " s p r a w l i n g " development.  Others have adopted the a t t i t u d e t h a t i t may  be d e s i r a b l e t o improve the l e v e l o f s e r v i c i n g only i f the b e n e f i c i a r i e s a r e r e q u i r e d t o f i n a n c e the program  1966).  At the opposite extreme, s t i l l  (Eaton,  others have argued  t h a t urban p u b l i c s e r v i c e s should be extended, and because of the magnitude of the c o s t s i n v o l v e d i n p r o v i d i n g these s e r v i c e s , they should be f i n a n c e d , a t l e a s t t o a p a r t i a l extent, by the p r o v i n c i a l government  (Hardwick, 1973).  I t i s i m p o s s i b l e t o r e c o n c i l e these  conflicting  o p i n i o n s which appear t o be based not on a systematic and a n a l y t i c examination  o f the s i t u a t i o n , but on p e r s o n a l  b i a s e s , i n t u i t i o n , o r good w i l l .  The purpose of t h i s  2 t h e s i s , then, i s t o c l a r i f y the i s s u e s a s s o c i a t e d w i t h formul a t i n g p o l i c i e s r e l a t e d t o the p r o c e s s of development which has t a k e n p l a c e i n the suburbs, as w e l l as the consequences a r i s i n g from t h i s form o f development. As a b a s i s f o r i n v e s t i g a t i n g these i s s u e s , the f o l l o w i n g hypothesis i s postulated: 1.  Urban r e s i d e n t i a l development imposes c e r t a i n  external  diseconomies* on each household of the community i n which development t a k e s p l a c e t 2.  The nature o f e x t e r n a l e f f e c t s i s a f u n c t i o n o f p r e v a i l i n g community standards and development r e g u l a t i o n s and c o n t r o l s imposed by government d u r i n g development;  3.  Assuming an o b j e c t i v e of the community i s t o i n t e r n a l ize  these e x t e r n a l i t i e s , or t o prevent c e r t a i n e x t e r n -  a l i t i e s from a r i s i n g , one means by which t h i s  objective  may be achieved i s t o p r o v i d e a comprehensive  infra-  s t r u c t u r e o f urban p u b l i c s e r v i c e s i n those development s e c t o r s i n which the e x t e r n a l i t i e s are b e i n g generated; 4-.  Assuming the p r o v i s i o n of a comprehensive range o f urban p u b l i c s e r v i c e s , f i n a n c i n g can be d e r i v e d from those sources of revenue based on the b e n e f i t s - r e c e i v e d principle.  ^ E x t e r n a l i t i e s , a l s o r e f e r r e d t o as s o c i a l c o s t s and benef i t s , are the e f f e c t s of p r o d u c t i o n o r consumption a c t i v i t i e s t h a t are not accounted f o r by p r i v a t e market e v a l u a t i o n s because the r e l e v a n t b e n e f i t s o r c o s t s are not a p p r o p r i a b l e , i . e . , they cannot be a t t a c h e d t o i n d i v i d u a l p a r t i e s (Mushkin and B i r d , 1972).  3 In  o r d e r t o prove or d i s p r o v e the above h y p o t h e s i s ,  c e r t a i n r e l e v a n t evidence i s r e q u i r e d . to  The evidence r e q u i r e d  prove or d i s p r o v e statements one and two i s f i r s t ,  c r i p t i o n o f the p h y s i c a l form of the development  a des-  areas under  examination? second, an enumeration of the development  regu-  l a t i o n s and c o n t r o l s by government d u r i n g the p e r i o d i n which development  took p l a c e ; and t h i r d , evidence of e x t e r n a l i t i e s  a t t r i b u t a b l e t o the p h y s i c a l form of development. dence r e l e v a n t t o statement three i s f i r s t , of  The  evi-  a determination  the community's o b j e c t i v e s w i t h r e s p e c t t o i n t e r n a l i z i n g  e x t e r n a l diseconomies; second, a s e a r c h f o r a l t e r n a t i v e means o f a c h i e v i n g these o b j e c t i v e s ; and t h i r d , an e v a l u a t i o n of each o b j e c t i v e .  And f i n a l l y , t o determine the  v a l i d i t y o f statement f o u r , i t i s n e c e s s a r y f i r s t ate  t o enumer-  a l t e r n a t e sources o f revenue, and second t o e v a l u a t e  each s o u r c e . In  t h i s study, the r e q u i r e d evidence i s d e r i v e d from a  case study of Kamloops, B r i t i s h Columbia.  Several charac-  t e r i s t i c s of Kamloops make i t an a p p r o p r i a t e i n f o r m a t i o n source. the  F i r s t , urban development  i n the v a r i o u s s e c t o r s o f  d i s t r i c t has taken p l a c e i n an environment of w i d e l y  v a r y i n g community standards as w e l l as development t i o n s and c o n t r o l s . development  regula-  Second, the e x i s t i n g p h y s i c a l form of  v a r i e s w i d e l y from s e c t o r t o s e c t o r ( i . e .  vari-  a t i o n s i n s e r v i c i n g l e v e l s , s u b d i v i s i o n p a t t e r n s , and d e n s i t i e s of development).  T h i r d , t h e r e i s c o n s i d e r a b l e evidence  of  the e x i s t e n c e of e x t e r n a l diseconomies.  And f o u r t h ,  t h e r e i s a l s o some evidence o f demands t o i n t e r n a l i z e these e x t e r n a l i t i e s , o r t o take a c t i o n t o prevent c e r t a i n e x t e r n a l i t i e s from  arising.  Chapter O u t l i n e Chapter I I d e s c r i b e s the p h y s i c a l form o f Kamloops and examines the p r o v i n c i a l l e g i s l a t i v e enactments and administ r a t i v e p o l i c i e s i n f o r c e d u r i n g the p e r i o d s i n which the v a r i o u s s e c t o r s of Kamloops were developed.  Evidence o f  e x t e r n a l diseconomies b e i n g generated i n the community i s also introduced. Chapters I I I and IV r e l a t e t o the s u b j e c t matter o f statement t h r e e .  Chapter I I I c o n s i s t s of a review o f the  l i t e r a t u r e concerned with d e c i s i o n making as i t r e l a t e s t o urban p u b l i c s e r v i c e s . the  Chapter IV then attempts t o a p p l y  s y s t e m a t i c approaches  t o d e c i s i o n making o u t l i n e d i n  Chapter I I I t o a case study o f a p a r t i c u l a r suburban d i s trict  i n Kamloops. The s u b j e c t matter embodied i n statement f o u r i s d e a l t  w i t h i n Chapters V and V I .  Chapter V i s a review o f the  l i t e r a t u r e concerned w i t h the p h i l o s o p h y o f government  fin-  ance as i t a p p l i e s t o t a x a t i o n , i n t e r g o v e r n m e n t a l f i s c a l r e l a t i o n s , and p u b l i c borrowing. of  In l i g h t of a consideration  these p r i n c i p l e s , those means of f i n a n c i n g c u r r e n t l y i n  5 use, as w e l l as p o t e n t i a l a l t e r n a t i v e s are d e s c r i b e d and evaluated.  In Chapter VI a l t e r n a t i v e means of f i n a n c i n g  the s p e c i f i c s e r v i c i n g program  o f the case study o u t l i n e d  i n Chapter IV are i d e n t i f i e d and e v a l u a t e d i n terms of the p r i n c i p l e s and c r i t e r i a enumerated  i n Chapter V.  The f i n a l chapter attempts t o prove o r d i s p r o v e the h y p o t h e s i s p o s t u l a t e d i n Chapter I by measuring the evidence p r e s e n t e d i n the main body of the t h e s i s a g a i n s t the premises o u t l i n e d i n the f o u r statements of the h y p o t h e s i s .  6  CHAPTER I I URBAN FORM*  CAUSES AND CONSEQUENCES  The Impact o f Government  Regulations  and C o n t r o l s on Urban Form The D i v i s i o n o f Powers Among L e v e l s o f Government The e x i s t i n g d i v i s i o n o f powers i n Canada i s o u t l i n e d i n t h e B r i t i s h North America A c t — S S . 91 and 92 (1867). S e c t i o n 92 i n d i c a t e s t h a t the p r o v i n c e s have  jurisdiction  over p r o p e r t y , m u n i c i p a l i n s t i t u t i o n s , l o c a l works and undertakings,  and g e n e r a l l y a l l matters  of a merely l o c a l  or p r i v a t e n a t u r e : they a l s o have the power t o l e v y d i r e c t t a x a t i o n i n t h e p r o v i n c e t o r a i s e money f o r p r o v i n c i a l purposes.  Since the p r o v i n c e s are supreme w i t h i n t h e i r  own j u r i s d i c t i o n , i t f o l l o w s t h a t the d i v i s i o n o f powers between a p r o v i n c i a l government and the l o c a l governments i t has c r e a t e d i s e n t i r e l y a t the d i s c r e t i o n o f the p r o v i n cial  legislature.  In B r i t i s h Columbia, the p r o v i n c i a l government has found i t convenient  t o make p r o v i s i o n s f o r t h e establishment  o f s e v e r a l types o f l o c a l government, i n c l u d i n g m u n i c i p a l i t i e s , improvement d i s t r i c t s ,  school d i s t r i c t s ,  hospital  7 d i s t r i c t s , and more r e c e n t l y r e g i o n a l d i s t r i c t s .  The  basic  f e a t u r e d i s t i n g u i s h i n g each type i s the range of f u n c t i o n s e x p r e s s l y delegated  by the p r o v i n c i a l government and  degree of l o c a l autonomy i n c a r r y i n g them out.  An  the  illus-  t r a t i v e comparison of the f u n c t i o n s and powers of these v a r i o u s l o c a l bodies i s presented  i n Table  1.  An important c o n s i d e r a t i o n with r e s p e c t t o d i s t i n g u i s h i n g the v a r i o u s types of l o c a l government i s the s e p a r a t i o n  of  governmental f u n c t i o n s i n t o three d i s t i n c t categories« l e g i s l a t i v e , a d m i n i s t r a t i v e , and  judicial.  Under the  v i s i o n of the M u n i c i p a l Act, m u n i c i p a l i t i e s are  pro-  delegated  the r e s p o n s i b i l i t y f o r c a r r y i n g out each of the three governmental f u n c t i o n s .  The  power t o c a r r y them out, however,  i s not boundless i n t h a t a l l powers possessed by l o c a l t h o r i t i e s whether of a l e g i s l a t i v e , a d m i n i s t r a t i v e or c i a l c h a r a c t e r , are d e r i v e d e i t h e r d i r e c t l y or  aujudi-  indirectly  by express grant  or necessary i m p l i c a t i o n from the p r o v i n -  cial legislature  (Rogers, 1959).  F i r s t , with regards  t o i t s l e g i s l a t i v e c a p a c i t y , a muni-  c i p a l c o u n c i l i s a u t h o r i z e d to pass by-laws d e a l i n g i s s u e s of a p u r e l y l o c a l n a t u r e .  It i s i n this  with  capacity  t h a t the v e r y important element of r e g u l a t i n g persons or t h e i r property  comes i n t o e f f e c t .  i s a u t h o r i z e d t o r e g u l a t e the use zoning and b u i l d i n g by-laws.  For i n s t a n c e , a c o u n c i l of l a n d by  I t may  implementing  a l s o pass by-laws  8 TABLE I COMPARISON OF FUNCTIONS OF LOCAL GOVERNMENT BODIES CO  +» CO  a> •H +> •H rH  nJ p, ° c  Function  3  Regulatory F u n c t i o n s 1. Land-use r e g u l a t i o n and zoning . . x 2. S u b d i v i s i o n r e g u l a t i o n x 3. B u i l d i n g r e g u l a t i o n x 1+. P l a n n i n g x Administrative Functions 5. E d u c a t i o n 6. H o s p i t a l s 7. P u b l i c H e a l t h x 8. S o c i a l Welfare x 9. Water, sewers, and garbage . . . . x 10. F i r e P r o t e c t i o n . x 11. P o l i c e P r o t e c t i o n . . . . . . . . x 12. S t r e e t s x 13. S t r e e t L i g h t i n g x 14. L o c a l Parks x Sources o f Revenue 15. General p r o p e r t y t a x x 16. User f e e s . . . . . x 17. S p e c i a l Assessments . . . . . . . x 18. Borrowing x  00  o  a) i - H <D © i-t u«+»  +»  C < 03 -=fr >, O «H CO 6 +> +> bjO+> Q rH -P a) o >H C crj a ° 3 o n) o k to 6 S M o OD CO <D 03  S .H  O H CVH  -  x x x x  Q) . H  x x x x  1  1  SOURCE:  x X  X  x X  X X  -  -  x  X X X  -  2  X X  3 x J  X X X  M u n i c i p a l Act, Water Act, L o c a l S e r v i c e s A c t .  "'"Education and h o s p i t a l s a d m i n i s t e r e d by l o c a l boards, o E x p e n d i t u r e s i n Community P l a n n i n g Areas a r e f i n a n c e d by P r o v i n c i a l p r o p e r t y taxes i n t h a t l o c a l a r e a . ^Regional D i s t r i c t s a c q u i r e g e n e r a l p r o p e r t y t a x funds from two sources« (1) member m u n i c i p a l i t i e s ! and (2) p r o v i n c i a l p r o p e r t y taxes i n unorganized a r e a s . The f u n c t i o n s of the Regional D i s t r i c t as t a b u l a t e d a r e those e x p r e s s l y c o n f e r r e d i n t h e M u n i c i p a l A c t . The p r o v i n c e has, i n some cases, delegated a d d i t i o n a l r e s p o n s i b i l i t i e s (e.g. r e s p o n s i b i l i t y f o r h o s p i t a l s t r a n s f e r r e d from l o c a l H o s p i t a l Board t o R e g i o n a l D i s t r i c t ) .  r e g u l a t i n g the  s u b d i v i s i o n of l a n d , as w e l l as p r e s c r i b i n g  minimum standards of s e r v i c e s to be p r o v i d e d . a c o u n c i l may  adopt an o f f i c i a l  In a d d i t i o n ,  community p l a n to which a l l  f u t u r e developments must conform.  Although the a d o p t i o n of  such a p l a n does not commit the c o u n c i l t o the of any  undertaking  of the suggested or o u t l i n e d p r o j e c t s , the  planning  f u n c t i o n enables a c o u n c i l t o determine t o some extent, f u t u r e form of the The  municipality.  second f u n c t i o n delegated  of a d m i n i s t e r i n g  to m u n i c i p a l i t i e s i s that  those a f f a i r s on which l o c a l  has been enacted.  For i n s t a n c e ,  legislation  the m u n i c i p a l i t y may  v i d e a v a r i e t y of s e r v i c e s and u t i l i t i e s needs, the h e a l t h , the s a f e t y , and bitants.  the  pro-  i n response to  the comfort of the  In order to f i n a n c e these s e r v i c e s as w e l l  other a d m i n i s t r a t i v e f u n c t i o n s of the c o r p o r a t i o n  the  inhaas  (e.g.  management of c i t y h a l l ) , the m u n i c i p a l i t y i s a u t h o r i z e d r a i s e funds by t a x i n g r e a l p r o p e r t y , l i c e n c e s , charging rowing money and  municipal  i s s u i n g business  fees f o r u t i l i t i e s ,  incurring l i a b i l i t i e s .  of governmental powers i s the  as w e l l as by borThe  third  j u d i c i a l function.  c o u n c i l i s a n o n - j u d i c i a l body, i t may  category Although a  sometimes  be c l o t h e d with j u d i c i a l or q u a s i - j u d i c i a l f u n c t i o n s  1959).  to  (Rogers,  F o r i n s t a n c e , the c o u n c i l i s r e q u i r e d t o hold p u b l i c  hearings p r i o r t o the implementation of zoning ( M u n i c i p a l Act, Sec.  ?03).  by-laws  While such an i n t e g r a t i o n of  l e g i s l a t i v e , a d m i n i s t r a t i v e , and  j u d i c i a l functions i s  c o n t r a r y t o the Montesquieuan p h i l o s o p h y  of the  separation  of powers ( C h a r l e s de Montesquieu; Trans, by Nugent, 1952), the f a c t t h a t they are i n t e g r a t e d bestows a m u n i c i p a l c i l with e x t e n s i v e  powers over matters of a l o c a l  coun-  concern.  Of the v a r i o u s l o c a l government bodies i n B r i t i s h Columb i a , m u n i c i p a l i t i e s are d i s t i n g u i s h a b l e because they alone are a u t h o r i z e d  t o c a r r y out, a t l e a s t t o some extent, a l l  three governmental f u n c t i o n s .  The  remaining  p a l " bodies such as improvement d i s t r i c t s , h o s p i t a l boards, and  "quasi-munici-  s c h o o l boards,  other v a r i o u s boards and  commissions  have been e s t a b l i s h e d only t o c a r r y on s p e c i a l i z e d f u n c t i o n s of l o c a l government.  Because of i t s i n f l u e n c e on the  deve-  lopment p r o c e s s i n the case study, the p a r t i c u l a r body of i n t e r e s t i s the improvement d i s t r i c t , the Water A c t .  The  incorporated  sphere of i n f l u e n c e of an  d i s t r i c t i s considerably  under  improvement  l e s s than t h a t of a m u n i c i p a l i t y i n  t h a t of the t h r e e governmental f u n c t i o n s , i t has been d e l e gated the a d m i n i s t r a t i v e  function only.  An  improvement  d i s t r i c t i s r e s t r i c t e d t o the p r o v i s i o n of s p e c i f i c  local  s e r v i c e s , i n c l u d i n g domestic water, f i r e p r o t e c t i o n , s t r e e t l i g h t i n g , i r r i g a t i o n , drainage, dyking, garbage and d i s p o s a l , p a r k s , r e c r e a t i o n a l areas,  sewage  community h a l l s , .sale  of power, ambulance s e r v i c e , cemeteries, l a n d p r o t e c t i o n improvement, and mosquito c o n t r o l .  I n a manner s i m i l a r t o  t h a t of a m u n i c i p a l i t y , an improvement d i s t r i c t i z e d t o pass by-laws e n a b l i n g  and  i s author-  i t t o r a i s e funds by s p e c i a l  assessments, f i x i n g t o l l s ,  o r borrowing.  U n l i k e a munici-  p a l i t y , however, an improvement d i s t r i c t i s n o t a u t h o r i z e d t o pass l e g i s l a t i o n designed t o r e g u l a t e or c o n t r o l the use o r s u b d i v i s i o n o f l a n d , n o r i s i t a u t h o r i z e d t o undertake any p l a n n i n g  functions.  A more r e c e n t a d d i t i o n t o the v a r i o u s c a t e g o r i e s o f government o r g a n i z a t i o n a t the l o c a l l e v e l i n B r i t i s h Columbia i s the r e g i o n a l d i s t r i c t .  The purpose o f t h i s system of r e -  g i o n a l organization i s t o provide  a means o f d i s t r i b u t i n g  the c o s t s o f c e r t a i n area-wide s e r v i c e s over the p a r t i c i p a t i n g members without c r e a t i n g a f u l l - f l e d g e d  second-tier  a d m i n i s t r a t i v e body as found i n the new r e g i o n a l governments of Quebec and O n t a r i o , M e t r o p o l i t a n Toronto and M e t r o p o l i t a n Winnipeg (Canadian Tax Foundation, 1973). s e r v i c e s , as p r o v i d e d extensive,  The f u n c t i o n s and  f o r i n the M u n i c i p a l Act, a r e r a t h e r  i n c l u d i n g r e g i o n a l and community  planning,  b u i l d i n g r e g u l a t i o n s , l o c a l works and s e r v i c e s t o e l e c t o r a l areas, c o n t r a c t works and s e r v i c e s t o m u n i c i p a l i t i e s and improvement d i s t r i c t s , and g r a n t s - i n - a i d . districts,  I n some r e g i o n a l  s e v e r a l a d d i t i o n a l f u n c t i o n s have been  F o r i n s t a n c e , the Thompson-Nicola Regional  assigned.  District, i n  which Kamloops i s l o c a t e d , i s a l s o r e s p o n s i b l e f o r r e g i o n a l parks,  mosquito c o n t r o l , r e f u s e d i s p o s a l , as w e l l as u n t i d y  and u n s i g h t l y premises.  12 P r i o r to the i n c e p t i o n of r e g i o n a l d i s t r i c t s , t e r r i t o r i e s not ganized  included i n incorporated  t e r r i t o r i e s ) were administered  a l l those  m u n i c i p a l i t i e s (unor-  e n t i r e l y by p r o v i n c i a l  a u t h o r i t i e s , t h a t i s , except f o r the p r o v i s i o n of s p e c i f i e d s e r v i c e s by improvement d i s t r i c t s as w e l l as h o s p i t a l school d i s t r i c t s .  Of the a d m i n i s t r a t i v e  and  functions c a r r i e d  out by p r o v i n c i a l a u t h o r i t i e s w i t h r e s p e c t t o development i n unorganized areas,  one  t h a t has been of p a r t i c u l a r s i g n i f i -  cance i s the p r o c e s s of approving s u b d i v i s i o n s .  Under the  p r o v i s i o n s of the Land R e g i s t r y Act  approving  (S. 91)»  the  o f f i c e r i n unorganized t e r r i t o r i e s i s a designated  agent of  the Department of Highways. There were a l s o p r o v i s i o n s under the L o c a l S e r v i c e s (S. 2) whereby the Department of M u n i c i p a l i z e d t o e s t a b l i s h Community P l a n n i n g  A f f a i r s was  Act  author-  Areas i n unorganized  t e r r i t o r i e s f o r the purposes of r e g u l a t i n g land.use,. b u i l d i n g , zoning,  s u b d i v i s i o n c o n t r o l , as w e l l as the p r e p a r a t i o n  community p l a n s .  of  U n l i k e the s i t u a t i o n i n m u n i c i p a l i t i e s  where such powers are e x e r c i s a b l e at the l o c a l l e v e l , however, these r e g u l a t o r y powers when a p p l i e d to Community Areas were r e t a i n e d by the M i n i s t e r of M u n i c i p a l L o c a l Government O r g a n i z a t i o n  Planning Affairs.  and  Urban Development i n Kamloops The  governmental s t a t u s as w e l l as the urban form  c h a r a c t e r i s t i c s of each development s e c t o r i n Kamloops i s  enumerated i n Table  2.  T h i s i n f o r m a t i o n , as w e l l as a com-  p a r i s o n of F i g u r e s 2 and 3 i suggests a r e l a t i o n s h i p between l o c a l government o r g a n i z a t i o n d u r i n g the process  o f develop-  ment, and the r e s u l t a n t form o f urban development.  I t also  s u b s t a n t i a t e s the f a c t t h a t l o c a l a u t h o r i t y t o r e g u l a t e and c o n t r o l the use, s u b d i v i s i o n , and s e r v i c i n g o f l a n d v a r i e d widely  among the v a r i o u s government b o d i e s .  For instance,  the f a c t t h a t South Kamloops i s f u l l y s e r v i c e d and compactly developed with few vacant p a r c e l s i s evidence t h a t the d e l e gated a u t h o r i t y t o r e g u l a t e and c o n t r o l the development o f l a n d has been e x e r c i s e d . and  On the other hand, the haphazard  s c a t t e r e d development i n the surrounding  suburbs would  suggest t h a t the r e s p o n s i b l e government bodies i n these areas e i t h e r were not a u t h o r i z e d and  t o impose development r e g u l a t i o n s  c o n t r o l s , o r , because of the p r e v a i l i n g community  ards, they were r e l u c t a n t t o e x e r c i s e t h e i r a u t h o r i t y .  standTo  determine which o f these arguments i s i n f a c t a c c u r a t e , i t i s necessary t o note the presence o f three d i s t i n c t  govern-  ment bodies,  o f urban  each r e s p o n s i b l e f o r a separate  development i n non-municipal t e r r i t o r i e s .  aspect  F i r s t , the im-  provement d i s t r i c t was r e s p o n s i b l e only f o r p r o v i d i n g c e r t a i n s e r v i c e s : i t was not a u t h o r i z e d t o implement development r e g u l a t i o n s o r c o n t r o l s .  Second, the p o t e n t i a l r e g u l a r  t o r y powers o f Community P l a n n i n g  areas as p r o v i d e d  for in  the L o c a l S e r v i c e s Act, were i n f a c t f a r g r e a t e r than the a c t u a l powers delegated  t o the Community P l a n n i n g  Area i n  TABLE 2 LOCAL GOVERNMENT ORGANIZATION AND Governmental S t a t u s i n 1963 South (inc.  Kamloops 1893) ...... C i t y  North (inc.  194-6)  URBAN FORM CHARACTERISTICS IN KAMLOOPS DISTRICT Governmental , S t a t u s i n 1973  E x i s t i n g U r b a n Form Characteristics  City  f u l l y s e r v i c e d , ' compact s u b d i v i s i o n g r i d p a t t e r n , v e r y few vacant parcels 4  Kamloops  „ ,, , Valleyview  Town  . ....... Improvement D i s t r i c t (I.D.) Brocklehurst I.D.  C i t y (merged w i t h S. Kamloops i n 1967)  v  T  D u f f e r i n ......... U n o r g a n i z e d Westsyde Unorganized Dallas Unorganized Bamhartvale ..... U n o r g a n i z e d Raleigh ....I.D. H e f f l e y C r e e k .... I.D.  p a r t i a l l y serviced, subdivision p a t t e r n somewhat h a p h a z a r d , some s c a t t e r e d v a c a n t p a r c e l s  Town District Municipality D.M. Unorganized Unorganized Unorganized I.D. I.D.  (D.M.) minimally s e r v i c e d , haphazard subdivision pattern, r e l a t i v e l y high proportion of vacant pareels scattered sporadically throughout area  ^Immediately p r i o r t o amalgamation. i T A l l u n o r g a n i z e d t e r r i t o r y i n c l u d e d i n Community P l a n n i n g A r e a No, 8 ( e s t . I960). ^ E n t i r e a r e a i n c l u d e d i n T h o m p s o n - N i c o l a R e g i o n a l D i s t r i c t ( i n c . 1967). F o r the p u r p o s e s o f t h i s s t u d y , the v a r i o u s l e v e l s of s e r v i c i n g are d e f i n e d as f o l l o w s : F u l l S e r v i c i n g - i n c l u d e s h o t - m i x a s p h a l t r o a d s w i t h c u r b s and g u t t e r s , c o n c r e t e s i d e w a l k s and o r n a m e n t a l s t r e e t l i g h t i n g , a s w e l l as s t o r m sewer, s a n i t a r y s e w e r , and w a t e r d i s t r i b u t i o n s y s t e m s . P a r t i a l S e r v i c i n g - i n c l u d e s hot-mix or cold-mix a s p h a l t roads, roadside d i t c h e s f o r s t o r m d r a i n a g e , some s t r e e t l i g h t i n g , as w e l l as s a n i t a r y sewer and w a t e r d i s t r i b u t i o n systems. M i n i m a l S e r v i c i n g - i n c l u d e s g r a v e l o r c o l d - m i x a s p h a l t r o a d s , some r o a d s i d e d i t c h e s , o c c a s i o n a l s t r e e t l i g h t i n g , and a w a t e r d i s t r i b u t i o n s y s t e m .  18 the Kamloops d i s t r i c t t h a t the p r o v i n c e  And  8).*  As such, i t c o u l d be  argued  has been r e l u c t a n t t o e x e r c i s e i t s author-  i t y t o r e g u l a t e and territory.  (No.  c o n t r o l urban development i n unorganized  t h i r d , the Department of Highways, a c t i n g i n  the c a p a c i t y as approving o f f i c e r i n unorganized areas, not a u t h o r i z e d  t o l e g i s l a t e development r e g u l a t i o n s !  b a s i s f o r approval  was  the P r o v i n c i a l S u b d i v i s i o n  o u t l i n e d i n the L o c a l S e r v i c e s A c t .  was  the  Regulations  Compared t o the  subdi-  v i s i o n r e g u l a t i o n s l e g i s l a t e d i n some m u n i c i p a l i t i e s , the r e g u l a t i o n s t o be complied w i t h by s u b d i v i d e r s  i n unorganized  t e r r i t o r i e s have not been onerous, namely, t h a t l o t shape be reasonable, t h a t p u b l i c access be p r o v i d e d and  t o each p a r c e l ,  t h a t l o t s i z e be adequate t o accommodate sewage d i s p o s a l  by s e p t i c tank.**  * A c c o r d i n g t o Order i n C o u n c i l No. 11?1, June 1, 1959» Community P l a n n i n g Areas were t o be e s t a b l i s h e d f o r the f o l l o w i n g purposes« (1) The p r e p a r a t i o n of community p l a n s by the a p p l i c a t i o n of D i v i s i o n s (1) and (6) of P a r t XXI of the M u n i c i p a l Act. (2) The r e g u l a t i o n of l a n d use, zoning, s u b d i v i s i o n - c o n t r o l and c o n s t r u c t i o n of b u i l d i n g s or s t r u c t u r e s of any k i n d by the a p p l i c a t i o n of D i v i s i o n (3), (4) and (5) of P a r t XXI of the M u n i c i p a l A c t . I t f o l l o w s , then, t h a t the p o t e n t i a l powers a v a i l a b l e t o Community P l a n n i n g Areas were e q u i v a l e n t t o the powers of a m u n i c i p a l i t y . The r e g u l a t i o n s made by the Department of M u n i c i p a l A f f a i r s w i t h r e s p e c t t o Community P l a n n i n g Number 8, however, r e s t r i c t e d the powers of the l o c a l area t o imposing b u i l d i n g regulations, subdivision regulations (quite l i m i t e d compared t o p r o v i s i o n s of M u n i c i p a l A c t ) , and some v e r y rudimentary zoning r e g u l a t i o n s (B.C. Reg. 105/60), **The minimum l o t s i z e requirement has been an i n f l u e n c i n g f a c t o r on average p a r c e l size--most r e s i d e n t i a l l o t s i n the suburban areas are r e l a t i v e l y l a r g e , t h a t i s , i n the order of one-quarter t o one-half a c r e .  19 Externalities In t h i s s e c t i o n , evidence i s i n t r o d u c e d first,  the e x i s t e n c e  that indicates  of e x t e r n a l e f f e c t s a s s o c i a t e d  urban development, and  second, t h a t the nature of  e f f e c t s v a r i e s according  with  external  t o the p h y s i c a l form of the  lopment s e c t o r i n which they a r i s e .  deve-  I t should be r e i t e r a t e d  a t t h i s p o i n t t h a t e x t e r n a l i t i e s are the c o s t s or b e n e f i t s of e i t h e r p r o d u c t i o n  or consumption a c t i v i t i e s not  f o r by p r i v a t e market e v a l u a t i o n s .  The  accounted  c l a s s i c example of  an e x t e r n a l diseconomy i s the housewife's laundry outdoors being  hanging  d i r t i e d by the smoke from a nearby f a c t o r y .  Examples of e x t e r n a l i t i e s abound i n urban development the most obvious being t r a f f i c c o n g e s t i o n every d e s c r i p t i o n . obvious.  areas,  and p o l l u t i o n of  Other forms are more s u b t l e and  For i n s t a n c e , a study conducted i n the  less  Munici-  p a l i t y of Richmond concluded t h a t on the average, each d w e l l i n g u n i t i s s u b s i d i z e d by the m u n i c i p a l i t y i n an amount of approximately $250 a n n u a l l y  1972).  (Richmond P l a n n i n g  In other words, the mere f a c t t h a t a d w e l l i n g u n i t  e x i s t s r e s u l t s i n the i m p o s i t i o n  of a diseconomy on  e n t i r e community by v i r t u e of the f a c t t h a t the i s obliged to provide its  Department,  the  community  s e r v i c e s both t o the p r o p e r t y  and  to  inhabitants. In the context  of t h i s study, the e x t e r n a l i t i e s of p a r -  t i c u l a r i n t e r e s t are those a r i s i n g i n suburban development  sectors.  The nature o f t h e e x t e r n a l diseconomies  i n the suburbs i s g e n e r a l l y of a markedly  generated  d i f f e r e n t nature  from those generated i n the c e n t r a l c i t y .  To i l l u s t r a t e  t h i s d i f f e r i n g nature, consider the e x t e r n a l i t i e s  arising  from the a l t e r n a t i v e methods o f sewage d i s p o s a l — a s a n i t a r y sewer system;on one hand, and i n d i v i d u a l tank d i s p o s a l systems on the o t h e r .  In a f u l l y  community septic  serviced  a r e a , a p r o p e r t y owner imposes e x t e r n a l diseconomies  on the  e n t i r e community o n l y i f t h e funds expended by t h e c i t y t o p r o v i d e s a n i t a r y sewer s e r v i c e t o h i s p r o p e r t y are n o t f u l l y r e c o v e r a b l e by taxes and f e e s charged a g a i n s t t h a t p r o p e r t y . I n such a s i t u a t i o n , t h e e x t e r n a l diseconomy a t t r i b u t a b l e t o the p r o p e r t y owner would be e q u i v a l e n t t o the subsidy p a i d by the m u n i c i p a l i t y t o make up the d i f f e r e n c e . On the o t h e r hand, the e x t e r n a l i t i e s o r p o t e n t i a l ext e r n a l i t i e s a r i s i n g i n a m i n i m a l l y s e r v i c e d suburban  develop-  ment area i n which sewage d i s p o s a l i s accommodated e n t i r e l y by i n d i v i d u a l s e p t i c tanks a r e o f a v a s t l y d i f f e r i n g n a t u r e from those a r i s i n g i n f u l l y s e r v i c e d a r e a s .  According t o  the U.S. Department o f H e a l t h , D i v i s i o n of Environmental E n g i n e e r i n g (1962), t h e s e p t i c tank method i s u s u a l l y a s a t i s f a c t o r y means o f sewage d i s p o s a l i n those areas where the s o i l s a r e r e l a t i v e l y permeable,  and where r e s i d e n t i a l  p a r c e l s are l a r g e and widely d i s p e r s e d , as i n a g r i c u l t u r a l or country r e s i d e n t i a l d i s t r i c t s . fail,  I f a d i s p o s a l system does  i t i s p o s s i b l e t o move t h e a b s o r p t i o n f i e l d t o another  21 part are  of the  o w n e r s property? hence, no  i n evidence.  With p r o g r e s s i v e  development, however, the d e n s i t y increases  and  external  diseconomies  suburban s u b d i v i s i o n  and  of development i n e v i t a b l y  the average p a r c e l .size decreases.  I f no a l -  t e r n a t i v e means of sewage d i s p o s a l are made a v a i l a b l e  such  t h a t suburbanites must a l s o r e l y on s e p t i c tanks, the  poten-  t i a l for external  diseconomies of two  F i r s t , with increased area i s i n c r e a s e d  fore.  the  proportionately,  a b s o r b i n g s o i l i n the ated and  density,  types becomes apparent.  e f f l u e n t l o a d per  unit  w i t h the r e s u l t t h a t  e n t i r e area i s l i k e l y  clogged with sewage r e s i d u e s  to become  the  satur-  more r a p i d l y than  be-  T h e r e f o r e , the r a t e of s u r v i v a l of a l l s e p t i c tank  d i s p o s a l systems may  be reduced; i n a sense, a n e g a t i v e  e x t e r n a l i t y i n the form of a shortened s e p t i c tank l i f e imposed on each r e s i d e n t by h i s n e i g h b o r s . event t h a t a suburban r e s i d e n t ' s t i o n s , he  Second, i n the  d i s p o s a l system malfunc-  does not have the a l t e r n a t i v e a v a i l a b l e t o  farmer or l a r g e l o t h o l d e r of moving the another p a r t  of h i s p r o p e r t y .  the  disposal f i e l d  Hence, when the  diseconomies on the e n t i r e  to  absorption  system f a i l s , sewage seeps onto the ground s u r f a c e , imposing e x t e r n a l  is  thus  community—  sewage seepage i s a nuisance as v/ell as a p u b l i c  health  hazard. S i m i l a r evidence i s a v a i l a b l e w i t h r e s p e c t s e r v i c e s as w e l l .  For i n s t a n c e ,  the t r a f f i c  to  other  l o a d on an  t e r i a l highway designed to accommodate a r u r a l or  ar-  semi-rural  population  o f t e n exceeds i t s c a p a c i t y .  lopment, each a d d i t i o n a l m o t o r i s t other m o t o r i s t s  imposes e x t e r n a l i t i e s on  n o t o n l y by c o n t r i b u t i n g t o an i n c r e a s e i n  t r a f f i c congestion, to a l l motorists  With suburban deve-  but by p o s i n g  an i n c r e a s e d s a f e t y t h r e a t  and highway p e d e s t r i a n s  as w e l l .  As the d e f i n i t i o n suggests, e x t e r n a l i t i e s a r e not necess a r i l y a s s o c i a t e d only with consumption a c t i v i t i e s ? o f t e n a s s o c i a t e d with p r o d u c t i o n  they are  a c t i v i t i e s as w e l l .  For  i n s t a n c e , c o n s i d e r a s i t u a t i o n i n which development has taken p l a c e i n a n a t u r a l drainage c o u r s e .  I f this  property  i s subsequently inundated by unusual f l o o d s because o f i n adequate dyking, d i v e r s i o n , o r drainage f a c i l i t i e s , the r e s u l t a n t damage i s i n e f f e c t an e x t e r n a l diseconomy imposed on the p r o p e r t y did  owners by the p r o d u c e r s , i n t h a t the l a t t e r  n o t make p r o v i s i o n s f o r adequate p r o t e c t i v e  safeguards.  In the event t h a t a c t i o n i s taken t o i n t e r n a l i z e the above mentioned e x t e r n a l i t i e s by p r o v i d i n g a d d i t i o n a l s e r v i c e s , evidence e x i s t s t h a t a d d i t i o n a l e x t e r n a l  diseconomies  a s s o c i a t e d w i t h the form o f development may a l s o a r i s e . Pearson (1967) has shown t h a t the p e r u n i t c o s t o f s e r v i c i n g an area i s a f u n c t i o n o f p a r c e l s i z e and shape,  distance  from developed s e c t o r s t h a t are p r e s e n t l y s e r v i c e d , the p r o p o r t i o n o f vacant p a r c e l s , the s p a t i a l d i s t r i b u t i o n o f vacant and occupied v i c i n g provided  p a r c e l s , as w e l l as the l e v e l o f s e r -  ( i . e . f u l l , p a r t i a l , or m i n i m a l ) .  I f ser-  v i c i n g c o s t s are indeed based on these v a r i a b l e s , i t can.be  expected t h a t i n the context e x i s t i n g i n the  of the p a t t e r n of development  suburbs of Kamloops, the per u n i t c o s t s  p r o v i d i n g even a p a r t i a l l e v e l of s e r v i c i n g w i l l be t i v e l y high.  of  rela-  I t c o u l d be argued t h a t these high s e r v i c i n g  c o s t s are, i n e f f e c t , e x t e r n a l diseconomies a r i s i n g from the development p r a c t i c e s of p r i v a t e i n t e r e s t s , which d i d not take i n t o account the p o t e n t i a l e f f i c i e n c i e s to be by p l a n n i n g  achieved  f o r f u t u r e s e r v i c i n g requirements, or by  o r d i n a t i n g development so as to a v o i d the of vacant and unoccupied p a r c e l s of  sporadic  co-  scattering  land.  Summary The  e v o l u t i o n a r y p r o c e s s of l o c a l government  organiza-  t i o n i n the Kamloops d i s t r i c t has  s i g n i f i c a n t l y a f f e c t e d the  present  The  urban form of t h a t c i t y .  f a c t t h a t the  l o c a l governmental bodies were delegated  various  d i f f e r e n t responsi-  b i l i t i e s and powers r e s u l t e d i n a s i t u a t i o n i n which development r e g u l a t i o n s and  c o n t r o l s v a r i e d w i d e l y from  t o s e c t o r ; development r e g u l a t i o n s were r e l a t i v e l y i n the C i t y of Kamloops and the  surrounding suburbs.  considerably  sector stringent  less stringent i n  As a consequence, the  present  p h y s i c a l form of each development s e c t o r r e f l e c t s the nature of the development r e g u l a t i o n s and the p e r i o d i n which t h a t s e c t o r was  controls i n force subdivided  and  during  developed.  Urban development, whatever i t s n a t u r e , g i v e s r i s e e x t e r n a l diseconomies being  to  imposed by each i n d i v i d u a l on  every other i n d i v i d u a l i n the community.  The  nature of  e x t e r n a l e f f e c t s , however, v a r i e s w i d e l y depending on nature of the p h y s i c a l form of the arise.  the  the  s e c t o r i n which they  For i n s t a n c e , e x t e r n a l i t i e s a s s o c i a t e d w i t h the  pro-  v i s i o n o f urban p u b l i c s e r v i c e s i n f u l l y s e r v i c e d areas are g e n e r a l l y of a monetary n a t u r e , whereas the e x t e r n a l economies generated i n p a r t i a l l y or m i n i m a l l y  serviced  t o r s are o f t e n of such a nature t h a t they concern the and  dissechealth  s a f e t y of the r e s i d e n t s , as w e l l as the p r o t e c t i o n of  their  property. The  evidence i n t r o d u c e d  i n t h i s chapter,  therefore,  would suggest t h a t e x t e r n a l e f f e c t s are a s s o c i a t e d with urban development, and  t h a t the nature of the e x t e r n a l i t i e s i s a  f u n c t i o n of governmental r e g u l a t i o n s and d u r i n g the p e r i o d of development.  controls i n force  25  CHAPTER I I I INTERNALIZING EXTERNAL DISECONOMIES*  THE PROVISION  OF URBAN PUBLIC SERVICES Introduction Assuming an o b j e c t i v e o f the community i s t o i n t e r n a l i z e the e x t e r n a l diseconomies o u t l i n e d i n the p r e c e d i n g chapter,  one means of a c h i e v i n g t h i s o b j e c t i v e i s t o p r o -  v i d e a comprehensive range o f urban p u b l i c s e r v i c e s i n those areas i n which the e x t e r n a l i t i e s a r e being The  generated.  method adopted t o t e s t the v a l i d i t y o f t h i s premise i s  e s s e n t i a l l y t h a t of a p p l y i n g a systematic  and a n a l y t i c  approach t o d e c i s i o n making a t the l o c a l l e v e l w i t h  respect  t o the e x t e r n a l i t i e s a r i s i n g i n a p a r t i c u l a r Kamloops suburb. Chapter I I I reviews the l i t e r a t u r e r e l e v a n t t o p r o v i d i n g urban p u b l i c s e r v i c e s ; p a r t i c u l a r emphasis i s p l a c e d s e v e r a l systematic d e c i s i o n making.  on the  approaches developed t o a i d i n l o c a l Chapter IV a p p l i e s these approaches t o  r e s o l v i n g the problems a s s o c i a t e d w i t h the e x t e r n a l economies a r i s i n g out o f the Kamloops case study.  dis-  26 Functions  and R e s p o n s i b i l i t i e s  of M u n i c i p a l Governments M u n i c i p a l government as i t e x i s t s i n Canada i s o f a dual or composite c h a r a c t e r .  F i r s t , when i t i s e x e c u t i n g  g e n e r a l p r o v i n c i a l laws w i t h i n i t s boundaries, the c o r p o r a t i o n can be s a i d t o be a c t i n g as an agent o f the p r o v i n c e . The  f u n c t i o n s c a r r i e d out i n t h i s c a p a c i t y are g e n e r a l l y o f  a mandatory n a t u r e .  For instance, m u n i c i p a l i t i e s i n B r i t i s h  Columbia a r e r e q u i r e d t o t  (1) p r o v i d e  s o c i a l assistance to  i t s poor and d e s t i t u t e ( M u n i c i p a l Act, S. 639); (2) pay c o s t s necessary t o m a i n t a i n  and enforce  laws ( M u n i c i p a l A c t ,  S. 644); and (3) a c t as agents f o r l o c a l boards by c o l l e c t i n g t h e i r share o f l o c a l p r o p e r t y S. 199).  taxes ( P u b l i c Schools A c t ,  Second, when i t i s p e r f o r m i n g the d u t i e s o f regu-  l a t i n g the conduct and s u p p l y i n g the wants of the p o p u l a t i o n i n a geographical municipal  aspect  a r e a by l o c a l laws, i t i s a c t i n g i n i t s (Rogers, 1959).  The f u n c t i o n s c a r r i e d out  i n t h i s c a p a c i t y a r e the o r d i n a r y housekeeping requirements of p l a c e s where people congregate t o l i v e and c a r r y on b u s i n e s s — f i r e p r o t e c t i o n , water, sewers, garbage d i s p o s a l , s t r e e t l i g h t i n g , s t r e e t s , sidewalks,  and so on.  U n l i k e the  f u n c t i o n s undertaken as the agent o f the p r o v i n c e , the delegated  powers o f m u n i c i p a l i t i e s t o c a r r y out house-  keeping f u n c t i o n s are o f a d i s c r e t i o n a r y nature; f r e e i n g them o f any l e g a l o b l i g a t i o n t o p r o v i d e vices.  however,  thereby such s e r -  Housekeeping s e r v i c e s , t h e r e f o r e , are g e n e r a l l y  2? p r o v i d e d i n response  t o demands by the c o n s t i t u e n t s .  Financial Implications A widespread concern a t the m u n i c i p a l l e v e l i s the r a p i d l y i n c r e a s i n g demand on l o c a l f i n a n c i a l r e s o u r c e s not only t o p r o v i d e more funds f o r the o b l i g a t o r y f u n c t i o n s over which l o c a l government a u t h o r i t i e s have no c o n t r o l , but t o s a t i s f y the growing demands o f l o c a l r e s i d e n t s f o r more and b e t t e r s e r v i c e s o f a housekeeping n a t u r e .  Consider  the mandatory f u n c t i o n s of m u n i c i p a l governments.  first Of prim-  a r y i n t e r e s t i s e d u c a t i o n because i t absorbs  a l a r g e propor-  t i o n of revenues obtained from taxes on r e a l  property—the  p r i n c i p a l source  of revenue a v a i l a b l e t o m u n i c i p a l i t i e s .  Indeed, t h e p r o p o r t i o n o f p r o p e r t y taxes r e q u i r e d f o r educat i o n i s ever i n c r e a s i n g ? i n B r i t i s h Columbia, the p r o p o r t i o n r e q u i r e d f o r e d u c a t i o n i n c r e a s e d from 40,6 p e r c e n t i n 1957 t o 5^.3 p e r c e n t i n 1968 ( P l u n k e t t , 1 9 7 1 ) .  I n Kamloops, the  p r o p o r t i o n of p r o p e r t y taxes r e q u i r e d f o r e d u c a t i o n was 5 5 . 1 p e r c e n t i n 1 9 7 3 (Kamloops Budget, 1 9 7 3 ) . The  costs to municipalities of providing s o c i a l  welfare  s e r v i c e s are i n c r e a s i n g as w e l l , although they are not o f the same magnitude as e d u c a t i o n a l c o s t s ( P l u n k e t t , 1 9 7 1 ) . And,  as with e d u c a t i o n , m u n i c i p a l a u t h o r i t i e s have  r e a l c o n t r o l over s o c i a l welfare expenditures standards province.  of a s s i s t a n c e are determined  little  s i n c e the  e n t i r e l y by the  T h i s t r e n d o f i n c r e a s i n g c o s t s i s expected t o c o n t i n u e . Baumol (1967) has argued t h a t there i s a tendency f o r sust a i n e d and cumulative i n c r e a s e s i n the c o s t s o f a c t i v i t i e s i n what he c a l l s the non-progressive  s e c t o r o f the economy.  T h i s s e c t o r comprises a c t i v i t i e s t h a t a r e l a b o u r - i n t e n s i v e , the b e s t examples being t e a c h i n g and medical s e r v i c e s . a c t i v i t i e s can b e n e f i t very l i t t l e  from i n c r e a s e i n produc-  t i v i t y brought about by i n n o v a t i o n s ,  c a p i t a l accumulation,  and economies o f l a r g e - s c a l e p r o d u c t i o n , istic  o f the p r o g r e s s i v e The  which are c h a r a c t e r -  s e c t o r o f the economy (Baumol, 1967).  p r i n c i p a l concern o f m u n i c i p a l governments w i t h  r e s p e c t t o i n c r e a s e d expenditures is  Such  on education  and w e l f a r e  t h a t t h e i r share of the mainstay o f the m u n i c i p a l  s y s t e m — t h e y i e l d from r e a l p r o p e r t y  taxes—is  revenue  diminishing.  As such, t h e c a p a c i t y o f m u n i c i p a l i t i e s t o respond t o urban needs i s reduced ( P l u n k e t t , 1972). The  f i n a n c i a l problems c o n f r o n t i n g l o c a l governments  are compounded by l o c a l demands f o r a h i g h e r standard o f e x i s t i n g s e r v i c e s and f o r the p r o v i s i o n o f a d d i t i o n a l s e r vices.  Hickey (1972) a t t r i b u t e s t h i s i n p a r t t o the advent  of the automobile and a p r o s p e r i t y t h a t has made i t p o s s i b l e for  the m a j o r i t y o f workers t o move from the o l d e r r e s i d e n -  t i a l areas i n t o suburbia  and the c o u n t r y s i d e ,  and y e t con-  t i n u e t o work i n the c e n t e r of an urban area? hence the r e s u l t a n t demand f o r the e x t e n s i o n  of p u b l i c works t o these  districts.  I n a d d i t i o n , demands f o r c e r t a i n l o c a l p u b l i c  s e r v i c e s which have not  t r a d i t i o n a l l y been a s i g n i f i c a n t  item i n the budgets of l o c a l governments, are r a p i d l y i n creasing.  Of these the most s i g n i f i c a n t are r e c r e a t i o n  community s e r v i c e s .  Between 1961  annual r a t e o f i n c r e a s e  19&7,  the  19.1  s i b i l i t y t o meet a d d i t i o n a l and  doubts w i t h r e g a r d t o the n e c e s s i t y  water system.  These and  of l o c a l respon-  i n c r e a s i n g l y complex demands  There i s no  the maintenance of roads and  1972),  percent (Plunkett,  argues t h a t t h i s upward t r e n d  i s l i k e l y to continue.  average  i n m u n i c i p a l expenditures on t h i s  s e r v i c e i n B r i t i s h Columbia was Plunkett  and  and  l o n g e r any  real public  of c i t i e s p r o v i d i n g  s t r e e t s , or o p e r a t i n g  for  a pure  o t h e r housekeeping s e r v i c e s are  taken f o r g r a n t e d by v i r t u a l l y a l l c i t i z e n s .  Instead,  now  the  c r u c i a l i s s u e s t h a t concern the urban r e s i d e n t have a much more s u b j e c t i v e  q u a l i t y i n t h a t they tend t o r e v o l v e  a concern f o r "the  q u a l i t y of urban l i f e " .  these i s s u e s concern development p a t t e r n s , transportation  with respect  around  More s p e c i f i c a l l y , the emphasis  t o v e h i c l e s or people, the  on re-  h a b i l i t a t i o n of neighborhoods, the p r o v i s i o n of s o c i a l and r e c r e a t i o n a l a m e n i t i e s , and  the p r o v i s i o n of p u b l i c  t o housing schemes f o r those who  support  cannot be p r o v i d e d w i t h  adequate accommodation e n t i r e l y through the  market mechanism.  In a d d i t i o n , t h e r e are the i s s u e s a s s o c i a t e d  with development  p l a n n i n g and  the  l o c a t i o n of p u b l i c improvements i n a manner  which minimizes t h e i r u n d e s i r a b l e  s o c i a l and  economic e f f e c t s  30 on both people and neighborhoods ( P l u n k e t t , 1 9 7 2 ) . I t i s i n the c o n t e x t of these p r e d i c t e d s u b s t a n t i a l i n c r e a s e s i n urban e x p e n d i t u r e s t h a t Robinson emphasizes the need f o r m u n i c i p a l a u t h o r i t i e s t o respond t o the f o l l o w i n g issuesi  (1)  what are the l e g i t i m a t e items t h a t concern muni-  c i p a l governments; (2) p a l i t y , how  g i v e n the l i m i t e d budget of a m u n i c i -  much should be spent on each item; (3)  m u n i c i p a l i t y t o determine  how  i s the  whether i t s e x p e n d i t u r e s are  a c h i e v i n g t h e i r o b j e c t i v e s ; and  (4)  how  are m u n i c i p a l i t i e s  t o o b t a i n the funds t o f i n a n c e t h e i r a c t i v i t i e s  (Robinson,  1971). Toward a R a t i o n a l Approach t o M u n i c i p a l Expenditure P o l i c y D e c i s i o n s To enable m u n i c i p a l a u t h o r i t i e s t o come t o g r i p s with the f o r e g o i n g q u e s t i o n s i n a l o g i c a l and r a t i o n a l manner, s e v e r a l a n a l y t i c a l l y - b a s e d d e v i c e s have been d e v i s e d . t h a t may  One  be w e l l - s u i t e d t o m u n i c i p a l government, i s the  planning-programming-budgeting (PPB)  system.  This  approach  " i s intended t o h i g h l i g h t management c o n s i d e r a t i o n s i n budg e t i n g and i n so doing t o b r i n g out the most s i g n i f i c a n t nomic, f i n a n c i a l , and p h y s i c a l a s p e c t s of the budgetary vity".  T h i s i s i n c o n t r a s t t o the t r a d i t i o n a l system  ecoacti-  of  budgeting, which "does not p r o v i d e i n f o r m a t i o n on what a government i s a c t u a l l y doing and what i t g e t s f o r the money spent"  ( U n i t e d N a t i o n s Department o f Economic and  Affairs,  1965).  Social  31 Economic E v a l u a t i o n of M u n i c i p a l Expenditures—PPB The  u n d e r l y i n g concepts of PPB  forward:  are r e l a t i v e l y  straight-  t o i d e n t i f y the g o a l s of m u n i c i p a l government, t o  c o n s i d e r a l t e r n a t e ways of a c h i e v i n g those g o a l s and the of each a l t e r n a t i v e , and t o s e l e c t the method t h a t  costs  achieves  each g o a l a t l e a s t c o s t . Objectives.  According  t o Mushkin and W i l l c o x (1968),  i d e n t i f i c a t i o n of the fundamental governmental o b j e c t i v e s of the j u r i s d i c t i o n i s a key phase i n the implementation of a PPB  system.  these  Sometimes c a l l e d m i s s i o n s ,  g o a l s , or needs,  d e f i n e as s h a r p l y as p o s s i b l e the c h i e f purposes f o r  which the government u n i t e x i s t s (Mushkin and W i l l c o x , 1968). As Robinson p o i n t s out, however, such a c a l l f o r the  identi-  f i c a t i o n and f o r m u l a t i o n of government o b j e c t i v e s assumes t h a t governments a t the m u n i c i p a l l e v e l can have permanent o b j e c t i v e s t h a t can be i d e n t i f i e d and formulated  in; p r e c i s e  terms, t h a t a p o l i t i c a l mechanism e x i s t s which can  select  such o b j e c t i v e s and weight them a c c o r d i n g to v o t e r s * p r e f e r ences, and t h a t the v o t e r s w i l l i n f a c t choose a s e t of s p e c i f i c o b j e c t i v e s r a t h e r than r e t a i n the o p t i o n of " p l a y i n g i t by e a r " — t h a t i s , of b a s i n g a c t i o n on what the generation  of m u n i c i p a l  present  o f f i c i a l s deems to be the most  p o r t a n t and p r e s s i n g problems r a t h e r than on what was i n the p a s t  (Robinson, 1971).  imdecided  In of  f a c t , s e v e r a l w r i t e r s have q u e s t i o n e d the v a l i d i t y  t h i s assumption  and i n so doing, have i m p l i c i t l y  questioned  whether the a n a l y t i c a l approach of PPB i s r e a l l y s u i t e d t o the a c t u a l d e c i s i o n making process i n government. stance, Lindblom  For i n -  (1961) i n h i s r e p r e s e n t a t i o n o f the i n c r e -  mental approach t o d e c i s i o n making, c l a i m s t h a t i t i s wrong to  impute o b j e c t i v e s t o governments because d e c i s i o n makers,  to  say n o t h i n g o f the e l e c t o r a t e , do n o t i n f a c t  agree  on o b j e c t i v e s or v a l u e s .  s h i f t i n g c o a l i t i o n s o f groups:  wholly  P o l i c i e s are agreed upon by democratic  government takes  advantage of agreement between two i n d i v i d u a l s where i t finds i t .  Though some groups may g e t t o g e t h e r t o muster  enough support f o r a p a r t i c u l a r p o l i c y t o ensure  i t s im-  plementation, t h i s does not imply any agreement about l o n g run o b j e c t i v e s but i s simply a momentary coalescence of s h o r t - r u n i n t e r e s t (Lindblom,  If  1961).  i t i s assumed, c o n t r a r y t o Lindblom's arguments,  t h a t m u n i c i p a l i t i e s do indeed have o b j e c t i v e s , the problem of  determining them remains.  As H i l l  (1968) has p o i n t e d out,  e l e c t e d o f f i c i a l s are g e n e r a l l y more than h e s i t a n t t o e x p l i c i t l y express the o b j e c t i v e s they may wish t o pursue.  Con-  sequently, i n d i r e c t methods o f determining a community's o b j e c t i v e s must be adopted. An a d d i t i o n a l p r a c t i c a l problem a s s o c i a t e d with d e t e r mining a community's o b j e c t i v e s i s the l i k e l i h o o d of c o n f l i c t s  33  of o b j e c t i v e s among v a r i o u s groups i n the community. instance,  such c o n f l i c t s may  between apartment d w e l l e r s i n d u s t r i a l developers and  a r i s e between r i c h and  and  For poor,  home-owners, or between  conservationists.  I f at some p o i n t i n time a p a r t i c u l a r m u n i c i p a l  govern-  ment i s able t o formulate i t s o b j e c t i v e s , the q u e s t i o n a r i s e s as t o how priorities i s .  permanent t h i s statement of o b j e c t i v e s Robinson (1971) p o i n t s out t h a t s i n c e  systems envisage m u l t i - y e a r the l o g i c of PPB  then and  PPB  r a t h e r than s i n g l e - y e a r budgets,  r e q u i r e s a r e l a t i v e l y permanent set of  governmental o b j e c t i v e s .  Because of the nature of m u n i c i -  pal  d e c i s i o n making, however, the achievement of a permanent  set  of o b j e c t i v e s i s d i f f i c u l t .  Rather than being  concerned  with broad p o l i c y i s s u e s , the implementation of l o c a l  policies  are d i r e c t l y r e l a t e d t o the i n t e r e s t s of i n d i v i d u a l s and s m a l l groups (Robinson and C u t t , 1968).  An a s s o c i a t e d  fea-  t u r e of r e q u i r i n g a r e l a t i v e l y permanent set of  objectives  i s the l o s s of some f l e x i b i l i t y ,  considered  by some as u n d e s i r a b l e .  which c o u l d be  By reason of having adopted a p r o -  gram, an o r g a n i z a t i o n reduces i t s freedom t o do d i f f e r e n t i n future years, i s required  (Smithies,  something  s i n c e a c o n s c i o u s a c t of r e v i s i o n  1965).  I f i t can be assumed t h a t r e l a t i v e l y permanent  objec-  t i v e s can be determined, the problem then a r i s e s of formul a t i n g them i n a meaningful and u s e f u l manner.  Meaningful  and u s e f u l o b j e c t i v e s should s a t i s f y the f o l l o w i n g c r i t e r i a : (1) they should be s t a t e d i n such terms t h a t o f f i c i a l s  will  be a b l e t o say u n e q u i v o c a l l y whether a p a r t i c u l a r measure i s a movement towards o r away from i t s achievement  (Robinson,  1 9 7 D ? and (2) they should r e f l e c t p o t e n t i a l impacts on c i t i z e n s and the communityj  t h a t i s , they should be "people-  o r i e n t e d " (Hatry, e t a l . , 1973).  Thus the o b j e c t i v e " t o  improve the p h y s i c a l and economic c o n d i t i o n o f the c i t y " , though an unexceptionable  statement  o f p o l i c y , i s not v e r y  u s e f u l as i t does n o t s a t i s f y the f i r s t c r i t e r i o n .  And,  o b j e c t i v e s which c o n c e n t r a t e on workload measures such as tons o f garbage c o l l e c t e d } o r immediate p h y s i c a l measures such as number o f a c r e s o f playground, second  f a i l t o s a t i s f y the  criterion.  The  f o r e g o i n g d i s c u s s i o n s would tend t o i n d i c a t e t h a t  while PPB may be an e f f i c i e n t means o f implementing community o b j e c t i v e s once they have been formulated,  i t does not p r o -  v i d e a d i r e c t means f o r the community t o s e t out i t s object i v e s i n an a p p r o p r i a t e p u b l i c document.  Nevertheless,  Robinson sees the p o t e n t i a l f o r a c o n s i d e r a b l e i n d i r e c t v a l u e , because i f a m u n i c i p a l i t y decides t o implement PPB, i t must d e v i s e some means o f determining what i t s o b j e c t i v e s a r e , and the degree o f p r i o r i t y a t t a c h e d t o each. blishment  The e s t a -  o f such machinery may i n i t s e l f be a major improve-  ment i n a d m i n i s t r a t i v e e f f i c i e n c y , s i n c e i t would p r o v i d e c r i t e r i a a g a i n s t which a d m i n i s t r a t o r s c o u l d e v a l u a t e p o l i c y  d e c i s i o n s , and would r e q u i r e them t o c o n s i d e r the consequences o f governmental programs i n a way t h a t i s a v o i d a b l e under the present  ad-hoc procedures (Robinson, 1971).  Selection of Alternatives.  I t i s c l e a r t h a t i f a gov-  ernment c o u l d g e t agreement on the i d e n t i f i c a t i o n and formul a t i o n o f p o l i c y o b j e c t i v e s , the p r o c e s s o f o p e r a t i o n a l ! z i n g a PPB system would be g r e a t l y s i m p l i f i e d .  Difficulties  c o u l d s t i l l remain, however, as there c o u l d be a l t e r n a t i v e programs t h a t would serve the same o b j e c t i v e s . s t r e s s the need t o search w i d e l y f o r i d e a s . Hatry and Cotton (1967),  According t o  a major d e f i c i e n c y o f p a s t  of government programs has been the inadequate of a l t e r n a t i v e s .  Many a n a l y s t s  analyses  consideration  Mushkin and Herman (1968) a t t r i b u t e t h i s  d e f i c i e n c y i n l a r g e p a r t t o the tendency f o r government departments and agencies t o r e s t r i c t the c o n s i d e r a t i o n o f p o l i c y a l t e r n a t i v e s t o those f a l l i n g w i t h i n the purview o f the p a r t i c u l a r agency's f u n c t i o n .  Since  one of the reasons  f o r i n t r o d u c i n g a PPB system i s t o get away from such l i m i t a t i o n s , i t i s t h e r e f o r e important t h a t a wide-ranging search be conducted f o r new a l t e r n a t i v e s t h a t extend beyond o r g a n i z a t i o n a l l i n e s (Mushkin and Herman, 1968). Evaluation  of A l t e r n a t i v e s .  Following  the search f o r  a l t e r n a t i v e s , a p r e l i m i n a r y e v a l u a t i o n of the v a r i o u s natives i d e n t i f i e d i s desirable. relevant are discarded.  Those options  alter-  t h a t are n o t  Those that n e c e s s i t a t e a d d i t i o n a l  new technology may be reviewed i n terms o f how much r e s e a r c h or e n g i n e e r i n g  o f what kinds would be needed t o p r o v i d e i t .  Those t h a t c a l l f o r new i n s t i t u t i o n a l o r g a n i z a t i o n s would be assessed The  i n terms o f f e a s i b i l i t y  (Mushkin and Herman, 1968).  f o l l o w i n g stage, the a n a l y s i s proper, i n v o l v e s the t e n t a -  t i v e s e l e c t i o n , from among the remaining range of o p t i o n s , of those t h a t would be s u b j e c t e d t o in-depth a n a l y s i s . Cost-Benefit The  Analysis  systematic  e v a l u a t i o n o f a l t e r n a t i v e means o f  a c h i e v i n g an o b j e c t i v e c o n s i s t s b a s i c a l l y o f a s s e s s i n g the b e n e f i t s o r gains p e r t a i n i n g t o each a l t e r n a t i v e r e l a t i v e t o cost.  Additional relevant c r i t e r i a ,  such as the i n c i d e n c e o f  c o s t s and b e n e f i t s , may a l s o be i n t e g r a t e d i n t o the a n a l y s i s . The  t r a d i t i o n a l c o s t - b e n e f i t model, a p p l i e d t o p u b l i c  investment p r o j e c t s , i s c o n c e p t u a l l y d e r i v e d from the economic  theory  o f the f i r m i n which each f i r m endeavors t o maxi-  mize i t s p r o f i t s  (Mishan, 1971),  Microeconomic theory  c a t e s t h a t when a p r o f i t - m a x i m i z i n g  indi-  entrepreneur i s f a c e d  with the need t o choose between a number o f p r o j e c t s , he compares the p r o f i t a b i l i t y o f a l t e r n a t i v e p r o j e c t s by d e t e r mining the p r o f i t s o f each p r o j e c t , c a l c u l a t e d on the b a s i s of the monetary revenues and c o s t s p r e d i c t e d t o accrue, and r e l a t e s these t o the c a p i t a l i n v e s t e d . most p r o f i t a b l e p r o j e c t s .  Heathen chooses the  By a p p l y i n g t h i s c o n c e p t u a l  frame-  work t o p u b l i c investment p r o j e c t s , an a n a l y s t u s i n g the  c o s t - b e n e f i t approach, i n s t e a d o f c o n s i d e r i n g revenues as they accrue d i r e c t l y t o the agency would have t o take i n t o c o n s i d e r a t i o n  involved,  the e f f e c t s o f the  p r o j e c t as they apply t o the e n t i r e community. (1971) p o i n t s  only c o s t s and  As Mishan  out, an economist c a r r y i n g out an a n a l y s i s o f  a p u b l i c investment p r o j e c t asks whether s o c i e t y as a whole w i l l be made b e t t e r o f f by u n d e r t a k i n g i t , o r by undertaking instead,  any of a number o f a l t e r n a t i v e p r o j e c t s .  I n com-  p a r i n g the c o s t - b e n e f i t a n a l y s i s o f a p u b l i c investment t o the p r o f i t and l o s s a c c o u n t i n g of the p r i v a t e f i r m , Mishan i n d i c a t e s the basic, a d a p t a t i o n s o f the p r i v a t e  enterprise  approach t o make i t a p p l i c a b l e t o a p u b l i c investment p r o j e c t . Namely, the more p r e c i s e concept o f the revenue of the p r i v a t e firm i s replaced fit.  by the l e s s p r e c i s e concept o f s o c i a l bene-  F o r the c o s t s o f the p r i v a t e concern, the a n a l y s t  s t i t u t e s the concept of o p p o r t u n i t y c o s t — o r  s o c i a l value  foregone elsewhere i n moving f a c t o r s i n t o a p r o j e c t e d nomic a c t i v i t y .  In place  sub-  o f the p r o f i t o f the p r i v a t e  ecocon-  c e r n i s the concept o f excess s o c i a l b e n e f i t over c o s t , o r some r e l a t e d investment c r i t e r i o n .  I m p l i c i t i n the c o s t -  b e n e f i t approach i s t h a t the b a s i c c r i t e r i o n f o r acceptance of a p r o j e c t i s economic e f f i c i e n c y .  I n a manner s i m i l a r t o  a p r i v a t e f i r m which chooses t h a t p r o j e c t which maximizes p r o f i t s , the p u b l i c agency chooses t h a t p r o j e c t which as Hill  (1968) puts i t , maximizes the n e t p r o j e c t  contribution  t o the e n t i r e community; o r i n other words, maximizes s o c i a l b e n e f i t over c o s t .  The  t r a d i t i o n a l emphasis on economic e f f i c i e n c y as  s o l e c r i t e r i o n f o r e v a l u a t i n g a l t e r n a t i v e programs has q u e s t i o n e d on the grounds t h a t other c r i t e r i a are as w e l l .  be i n c l u d e d i n an a n a l y s i s  g i v e n r i s e to a c o n s i d e r a b l e  been  relevant  Whether or not the d i s t r i b u t i v e e f f e c t s of  investment program should  the  an has  amount of c o n t r o v e r s y .  The  proponents of the t r a d i t i o n a l approach have been very  expli-  c i t i n s t a t i n g t h a t the s o l e c r i t e r i o n f o r e v a l u a t i o n  of  a l t e r n a t i v e p r o j e c t s i s t h a t of economic e f f i c i e n c y .  Equity  considerations  have been r e c o g n i z e d  as important i n the  d e c i s i o n making p r o c e s s but have been l a r g e l y ignored cost-benefit evaluations. "there  i s no l o g i c a l way  For i n s t a n c e , E c k s t e i n of i n c o r p o r a t i n g  says,  distributive  e f f e c t s i n t o the b e n e f i t - c o s t a n a l y s i s , which must i t s e l f t o the one  confine  dimension of b e n e f i t f o r the country as  whole" ( E c k s t e i n , 1958« p. 36). and  in  Turvey i n d i c a t e t h a t ". . .we  a  In a s i m i l a r v e i n , P r e s t have to e l i m i n a t e  the  p u r e l y t r a n s f e r or d i s t r i b u t i o n a l items from a c o s t - b e n e f i t evaluation  ( P r e s t and Turvey, 1965* P»  688).  The  rationale  f o r t h i s approach i s based l a r g e l y on the argument t h a t i t i s most e f f i c i e n t t o r e d i s t r i b u t e income d i r e c t l y from  one  group of i n d i v i d u a l s to another through government programs of t a x a t i o n and  s u b s i d i e s , than to do so i n d i r e c t l y through  government investment programs t h a t are designed a l s o to i n c r e a s e n a t i o n a l product (Maass, 1966).  In addition,  there  i s the p r a c t i c a l d i f f i c u l t y of e v a l u a t i n g the r e d i s t r i b u t i o n a l consequences of p u b l i c expenditure programs.  As Good  (1971) p o i n t s out, there e x i s t s the i n e v i t a b l e problem t h a t even i f one  accepts i n d i v i d u a l p r e f e r e n c e s  i n d i v i d u a l welfare welfare  there  as a measure of  i s no g e n e r a l l y accepted method i n  economics f o r a g g r e g a t i n g the d i v e r s e  of d i f f e r e n t i n d i v i d u a l s .  In other words, there i s no  g e n e r a l l y accepted s o c i a l welfare Nevertheless,  preferences  function.  the f a c t remains t h a t the o b j e c t i v e s  of  a community are u n l i k e l y to be l i m i t e d t o concerns f o r economic e f f i c i e n c y .  As such, t o be r e l e v a n t , an a n a l y s i s must  take account of these v a r i o u s  o b j e c t i v e s ; one  of the most  important b e i n g a concern f o r the d i s t r i b u t i o n a l or e f f e c t s of an investment p r o j e c t .  equity  Weisbrod (1968) has made  the c l a i m t h a t the d i s a p p o i n t i n g response of p o l i t i c i a n s many c o s t - b e n e f i t analyses  to  of f e d e r a l investment p r o j e c t s  can be a t t r i b u t e d l a r g e l y to the tendency of a n a l y s t s  to  ignore the r e d i s t r i b u t i o n a l e f f e c t s of the p r o j e c t s i n question.  And  i n response t o the above mentioned arguments t h a t  d i s t r i b u t i o n a l e f f e c t s are best handled by t a x a t i o n and sum  t r a n s f e r s , L i c h f i e l d and M a r g o l i s  l i c m o r a l i t y r e j e c t s t h i s avenue and  stated that " . . .  lumppub-  i n s t e a d accepts the i n -  d i r e c t t i n k e r i n g of the market p l a c e t o a f f e c t these t r a n s f e r s . The  impersonal market p l a c e  i s not  only a p l a c e where con-  f l i c t s can be r e s o l v e d without p e r s o n a l l e n c e , but  b i t t e r n e s s and  i t i s a l s o a p l a c e where a i d can be r e c e i v e d  out shame or humbleness" ( L i c h f i e l d and M a r g o l i s ,  136).  viowith-  1962» p.  ko S e v e r a l w r i t e r s have g i v e n l i p s e r v i c e t o the  necessity  of c o n s i d e r i n g the d i s t r i b u t i v e e f f e c t s of a p u b l i c i n v e s t ment.  For i n s t a n c e , P r e s t and  Turvey (1965) suggest t h a t  these e f f e c t s should be considered evaluating alternative plans.  as a c o n s t r a i n t when  Even i f a p a r t i c u l a r a l t e r -  n a t i v e i s c l e a r l y s u p e r i o r i n terms of economic i t may  efficiency,  be r e j e c t e d because of a d i s t r i b u t i o n a l c o n s t r a i n t .  I t i s r a r e l y a p p l i c a b l e i n p r a c t i c e t h a t the  unfavorable  e f f e c t s on income d i s t r i b u t i o n of a p r o j e c t can be by making some of the g a i n e r s  overcome  compensate some of the l o s e r s .  More r e c e n t l y , however, s e v e r a l w r i t e r s have been  em-  p h a s i z i n g the n e c e s s i t y of i n c l u d i n g the r e d i s t r i b u t i o n a l e f f e c t s i n the analyses  of p u b l i c p r o j e c t s .  Weisbrod (1968)  i n p a r t i c u l a r s t r e s s e s the p r a c t i c a l i t i e s of such an approach i n t h a t the r e s u l t a n t analyses d e c i s i o n makers who  would be much more u s e f u l t o  base t h e i r d e c i s i o n s not  c r i t e r i o n of economic e f f i c i e n c y but e q u i t y as w e l l .  only on  the  on the c r i t e r i o n  of  At the l o c a l l e v e l , the i n c l u s i o n of r e d i s -  t r i b u t i o n a l e f f e c t s i s even more r e l e v a n t than a t l e v e l s of government. l o c a l l e v e l , there  higher  In examining p u b l i c programs a t  the  i s evidence t h a t c o n s i d e r a b l e r e d i s t r i b u -  t i o n does take p l a c e .  For i n s t a n c e , Netzer has  estimated  u s i n g e m p i r i c a l data t h a t b e n e f i t s from expenditures anced by the p r o p e r t y  fin-  tax more than o f f s e t the tax burden  f o r some income c l a s s e s below $7,000.  For the lowest c l a s s  (under $2,000), expenditure b e n e f i t s were estimated t o  be  41 one  and  a h a l f t o two  and  over c l a s s , the t a x burden i s e s t i m a t e d t o be anywhere  from two  times the t a x burden.  For the $15,000  t o seven times expenditure b e n e f i t s a c c r u i n g  people i n t h i s income group (Netzer,  to  1966).  In the event t h a t an urban program does r e s u l t i n d i s t r i b u t i o n a l i n e q u i t i e s , l o c a l a u t h o r i t i e s are very l i m i t e d i n balancing  or a m e l i o r a t i n g  t h a t they.possess few, t o achieve t h i s end. income t a x a t i o n and  the i n e q u i t a b l e d i s t r i b u t i o n i n  i f any,  s u i t a b l e mechanisms w i t h which  They cannot r e s o r t t o the mechanisms of t r a n s f e r payments which are a v a i l a b l e t o  s e n i o r l e v e l s of government.  As a r e s u l t , l o c a l d e c i s i o n  makers tend t o base t h e i r d e c i s i o n s l a r g e l y on the t i o n a l e f f e c t s of the p r o j e c t i n q u e s t i o n . important t h a t the  incidence  j e c t should be i n c o r p o r a t e d a u t h o r i t i e s may extent  of b e n e f i t s and i n t o any  base t h e i r d e c i s i o n .  t h a t l o c a l a u t h o r i t i e s may  distribu-  I t i s therefore c o s t s of a p r o -  a n a l y s i s on which l o c a l In a d d i t i o n , t o  the  d e s i r e to tax i n d i v i d u a l s  i n accordance with the b e n e f i t s they r e c e i v e , a t a b u l a t i o n of the i n c i d e n c e  of b e n e f i t s would f a c i l i t a t e the  t i o n of the a p p r o p r i a t e  l e v y t o be  charged.  In r e c o g n i t i o n of the premise t h a t m u n i c i p a l makers are d e s i r o u s  determina-  of determining the i n c i d e n c e  policy of  the  c o s t s and b e n e f i t s a c c r u i n g from a l o c a l investment p r o j e c t , L i c h f i e l d has  devised  a system whereby the b e n e f i t s and  costs  a c c r u i n g to a l l p a r t i e s are p r e s e n t e d i n a t a b u l a r form as i l l u s t r a t e d conceptually  i n Table  3.  3 o K  CN  to  X  H-  P. CD  o CD  Capital •£0-  Benefits  Annual B e n e f i t s  fa 3  •eft-  H*  CD  I  3  i  >  i  i  &.  C a p i t a l Costs  Annual Costs t-3  o o  o o. o  0) CD  2 M  CD  01  bo-  01  it' t1  Capital  to  Benefits  o  w •€8to  Annual B e n e f i t s  i—'  M  I  H3  C a p i t a l Costs  to  o •£0-  cf  M  -ee-  H 1  ro  >>  1  ro  i •€r>  W  R°  8=  3  •€» &.  M  1  3 to  1  -ea-  o  Annual Costs O  H* H> M> CD  •1  CD  3 o  CD  L i c h f i e l d argues t h a t a t a b u l a r p r e s e n t a t i o n o f the b e n e f i t s and c o s t s a c c r u i n g t o a l l p a r t i e s a f f e c t e d by a d e c i s i o n , i s n o t only an o r d e r l y way o f assembling a l l o f the r e l e v a n t data, but i t a l s o c o n f r o n t s the d e c i s i o n makers with the hard c h o i c e s o f i m p l i c i t o r e x p l i c i t assignment o f weights t o i n t a n g i b l e s o r f a v o r e d groups ( L i c h f i e l d and Margolis,  1962).  For each o f the a l t e r n a t i v e p r o j e c t s , the p a r t i e s p r i v a t e and p u b l i c ) who w i l l be producing  (both  and o p e r a t i n g  them, as w e l l as the p a r t i e s who w i l l consume the s e r v i c e s provided,  are enumerated.  When aggregating  individuals into  subgroups, each subgroup i s d i s t i n g u i s h e d by the o b j e c t i v e s i t wishes t o a c h i e v e .  I n e f f e c t , the p l a n n i n g balance  sheet  t r a n s l a t e s the o p e r a t i o n a l demands o f the subgroups i n t o "instrumental  objectives"»  the u t i l i t i e s t h a t are sought by  each group and the d i s u t i l i t i e s they t r y t o a v o i d  (Lichfield  and Chapman, 1970). F o r each p a r t y i s then f o r e c a s t the c o s t s and b e n e f i t s that w i l l accrue. kept separate, all  C a p i t a l and annual b e n e f i t s and c o s t s are  t h e former b e i n g those which accrue once f o r  (denoted by c a p i t a l l e t t e r s i n Table  those which w i l l continue  3), and the l a t t e r  (small l e t t e r s ) .  When measuring  these c o s t s and b e n e f i t s , L i c h f i e l d recommends d i v i d i n g them i n t o three broad c a t e g o r i e s !  (1) those c o s t s and b e n e f i t s  which can be measured i n monetary terms u s i n g present niques w i t h a reasonable  degree o f accuracy  tech-  ( i n Table 3t  those e n t r i e s preceded by $ ) j (2)  those c o s t s and b e n e f i t s  which can be measured on another s c a l e .  An example i s t r a v e l  time, which can then be transformed i n t o monetary measurements.  These measurements w i l l have a l e s s e r degree o f  accuracy than those i n the p r e v i o u s c l a s s ( i n Table 3, M denotes money, T — t i m e ,  and P — p h y s i c a l c a p i t a l ) } and (3)  those c o s t s and b e n e f i t s which a t p r e s e n t cannot be s a t i s f a c t o r i l y measured i n monetary terms and which are u s u a l l y of an i n t a n g i b l e n a t u r e .  I t may be p o s s i b l e t o p l a c e these  items i n an order of magnitude o r a l t e r n a t i v e l y t o leave them unmeasured but t o draw a t t e n t i o n t o them when p r e s e n t i n g the r e s u l t s o f a study ( i n Table 3, tangibles).  I t should be noted t h a t the degree o f accuracy  i n measuring;each vary.  I denotes i n -  o f the c l a s s e s of c o s t s o r b e n e f i t s  Consequently, the assumptions  will  made i n the measurement  must be c l e a r l y i n d i c a t e d when the r e s u l t s o f a study a r e p r e s e n t e d t o a v o i d the dangers  of a g r e a t e r degree o f a c c u r -  acy b e i n g a t t r i b u t e d t o them than i s warranted t u t e of M u n i c i p a l T r e a s u r e r s and Accountants,  (The I n s t i -  1969).  I f a l t e r n a t i v e p l a n s are b e i n g compared, the a n a l y s i s aims a t the d i f f e r e n c e i n c o s t s and b e n e f i t s t h a t w i l l under each a l t e r n a t i v e .  arise  The r e s u l t a n t output o f t h i s ap-  proach i s a s y s t e m a t i c p r e s e n t a t i o n , i n d e s c r i p t i v e and t a b u l a r form, o f a complete  s e t of s o c i a l accounts which  show a l l the s i g n i f i c a n t c o s t s and b e n e f i t s which would r e s u l t from the implementation o f the p l a n , o r from  alternative  plans,  and  t h e i r incidence.  Aside from grouping r e l a t e d  p a r t i e s , no attempt i s made to aggregate the c o s t s  and  "benefits a c c r u i n g  "total  t o the v a r i o u s  s e c t o r s such t h a t  net b e n e f i t s " of a " b e n e f i t - c o s t r a t i o " can be These accounts can then be  derived.  "reduced" by e l i m i n a t i n g double  c o u n t i n g , t r a n s f e r payments, common items, e t c . , so t h a t  a  f a i r l y simple summary statement r e s u l t s ( L i c h f i e l d , 1964a). This planning conclusion  balance sheet may  or may  leave  point quite c l e a r l y to a  room f o r value judgment.  In  the  l a t t e r case, i t would c l e a r l y i n d i c a t e the t r a d e - o f f s d e c i s i o n makers would have t o make between t a n g i b l e s and g i b l e s , e f f i c i e n c y b e n e f i t s and  intan-  redistributional benefits,  or the d i v e r s e and p o s s i b l y c o n f l i c t i n g o b j e c t i v e s o f various  subgroups of the community.  the  In a d d i t i o n , the b a l -  ance sheet would enable the d e c i s i o n makers t o p i c k  out  elements of the d e s i g n t h a t were h i g h i n c o s t or low  in  benefit.  Consequently, the d e s i g n would be a l t e r e d t o  minate these u n d e s i r a b l e adhere t o the design, f o r considering  elements.  I f they p r e f e r r e d  the a n a l y s i s c o u l d p r o v i d e the  some subsidy t o those who  elito  basis  were b e a r i n g  a  p a r t i c u l a r l y l a r g e share of the burden ( L i c h f i e l d , 1964b). The  purpose of the a n a l y t i c and  o u t l i n e d i n the PPB  approach  and b e n e f i t - c o s t techniques i s t o enable  p o l i c y makers t o make informed and decisions.  systematic  As S c h u l t z e  depend on i n t u i t i o n and  therefore  logically-based  argues, i t i s not good enough t o good w i l l alone when making d e c i s i o n s .  Even i f t h e s o l u t i o n s of PPB t u r n e d  out t o be no d i f f e r e n t  from the t r a d i t i o n a l methods, i t would have enabled the avoidance o f ", . . the endless cussions  hours spent on p o l i c y d i s -  i n which the i r r e l e v a n t i s s u e s have not been sepa-  r a t e d from the r e l e v a n t , i n which a s c e r t a i n a b l e f a c t s and r e l a t i o n s h i p s have n o t been i n v e s t i g a t e d but a r e t h e s u b j e c t o f heated debate, i n which c o n s i d e r a t i o n o f a l t e r n a t i v e s i s impossible  because only one p r o p o s a l  has been developed, and,  above a l l ,  d i s c u s s i o n s i n which n o b i l i t y o f aim i s presumed  t o determine e f f e c t i v e n e s s o f program" ( S c h u l t z e , 1968i p . 7 5 ) . Summary Decisions  w i t h r e s p e c t t o p r o v i d i n g urban p u b l i c  ser-  v i c e s are b e i n g made i n an environment o f demands and respons i b i l i t i e s t o improve the standards o f e x i s t i n g s e r v i c e s , t o extend e x i s t i n g s e r v i c e s t o new development areas, make p r o v i s i o n f o r a wide range of new s e r v i c e s .  and t o It is  e s s e n t i a l , t h e r e f o r e , t h a t d e c i s i o n makers adopt sound management p o l i c i e s such t h a t c i t i z e n demands can be adequately  s a t i s f i e d without imposing e x c e s s i v e  burdens on the  sources o f revenue r e q u i r e d t o f i n a n c e these s e r v i c e s . systematic  A  and a n a l y t i c approach t o p o l i c y making e n t a i l s  the c l e a r i d e n t i f i c a t i o n o f the f a c t o r s g i v i n g r i s e t o c i t i z e n demands, a f o r m u l a t i o n  o f the o b j e c t i v e s of the  community i n meeting these demands, a search  f o r alternative  means o f a c h i e v i n g the o b j e c t i v e s , and an e v a l u a t i o n of each  4? a l t e r n a t i v e t o determine which achieves the community's o b j e c t i v e s i n the most s a t i s f a c t o r y  manner.  48  CHAPTER IV THE APPLICATION OF A SYSTEMATIC APPROACH TO INTERNALIZING EXTERNAL DISECONOMIES t  A CASE STUDY  Introduction The p a r t i c u l a r development  a r e a t o which the systematic  approach o u t l i n e d i n Chapter I I I i s t o be a p p l i e d i s the Westsyde d i s t r i c t , a suburb of Kamloops. as a case study f o r s e v e r a l r e a s o n s .  Westsyde i s chosen  F i r s t , the p r o c e s s of  t r a n s f o r m i n g t h i s d i s t r i c t from a s e m i - r u r a l community t o a suburban r e s i d e n t i a l community i s n o t y e t complete.  Second,  t h e r e i s c o n s i d e r a b l e evidence t h a t a s s o c i a t e d w i t h t h i s p e c u l i a r form o f mixed development  i s the p o t e n t i a l f o r the  g e n e r a t i o n of a v a r i e t y of e x t e r n a l diseconomies.  And  t h i r d , a c u r r e n t i s s u e i n the community i s t h a t o f t a k i n g a c t i o n to i n t e r n a l i z e e x i s t i n g e x t e r n a l i t i e s or to prevent p o t e n t i a l e x t e r n a l i t i e s from a r i s i n g . The P h y s i c a l Form of Westsyde A d e s c r i p t i o n o f the p h y s i c a l form of Westsyde i s essent i a l l y a d e s c r i p t i o n o f what i s g e n e r a l l y r e f e r r e d t o i n the l i t e r a t u r e as "urban s p r a w l " (Clawson, 1971). syde i s an i s o l a t e d node o f development  F i r s t , West-  i n that i t i s physi-  c a l l y s e p a r a t e d from the remaining development  areas i n  Kamloops.  Second, the l e v e l of s e r v i c i n g i n Westsyde i s  minimal (except f o r two p a r t i a l l y s e r v i c e d s u b d i v i s i o n s ) . T h i r d , as F i g u r e 4 shows, the p a t t e r n of s u b d i v i s i o n , which has  o b v i o u s l y been i n f l u e n c e d i n l a r g e p a r t by a  s u b d i v i s i o n designed haphazard.  previous  f o r a g r i c u l t u r a l purposes, i s somewhat  In a d d i t i o n , the l o t s are r e l a t i v e l y l a r g e , a  s i g n i f i c a n t p r o p o r t i o n of the a r e a i s s t i l l vacant, vacant  t r a c t s and  occupied  throughout the a r e a . areas s t i l l vacant,  and  the  l o t s are s c a t t e r e d s p o r a d i c a l l y  I t should a l s o be noted t h a t of  those  a c o n s i d e r a b l e p r o p o r t i o n of the prime  a g r i c u l t u r a l land i s i d l e . E x t e r n a l i t i e s A r i s i n g From the Process  and Form  of Development i n Westsyde At t h i s stage, i t i s necessary  to c o n s i d e r the  t i c a l concept of e x t e r n a l diseconomies i n terms of problems c o n f r o n t i n g the r e s i d e n t s of Westsyde. t r a f f i c l o a d on the major a r t e r i a l — W e s t s y d e designed  theorespecific  First,  Road—which  and b u i l t to accommodate a r u r a l p o p u l a t i o n ,  exceeds i t s c a r r y i n g c a p a c i t y .  Not  only i s the road  v e n i e n t l y congested, but the poor alignment t o g e t h e r the absence of s t r e e t l i g h t i n g and  sidewalks  the was  often inconwith  poses a s a f e t y  t h r e a t to m o t o r i s t s , c y c l i s t s , and p e d e s t r i a n s a l i k e .  Second,  because sewage i s d i s p o s e d i n d i v i d u a l l y by s e p t i c tank s y s tems, and because the d e n s i t y o f development i s r a p i d l y i n c r e a s i n g , the p o t e n t i a l f o r widespread f a i l u r e of i n d i v i d u a l  51 d i s p o s a l systems i s enhanced.  T h i r d , the water  supply,  although adequate f o r domestic purposes, i s d e f i c i e n t i n terms o f f i r e p r o t e c t i o n standards (Strong, 1973)*  Fourth,  Lamb and Nelson,  storm drainage f a c i l i t i e s are v i r t u a l l y non-  e x i s t e n t ; hence the p o t e n t i a l f o r damage t o p r o p e r t y i n vulnerable The  areas.  f o r e g o i n g problems a r e r e l a t i v e l y easy t o i d e n t i f y  i n t h a t they e n t a i l the s a f e t y and h e a l t h o f the r e s i d e n t s , as w e l l as the p r o t e c t i o n of t h e i r p r o p e r t y .  There a r e ,  however, a number o f e x t e r n a l e f f e c t s a s s o c i a t e d w i t h the p r o c e s s and form o f development which, even though not o f a s e r i o u s nature, c o u l d p o s s i b l y be construed problems.  as community  F o r i n s t a n c e , the absence of such s e r v i c e s as  s t r e e t l i g h t i n g , curbs and g u t t e r s , as w e l l as sidewalks along a l l r e s i d e n t i a l s t r e e t s may prove t o be u n s i g h t l y o r inconvenient  t o some r e s i d e n t s , w h i l e t o o t h e r s ,  a matter of l i t t l e  concern.  Even more d i f f i c u l t t i n u a l increases  i t may be  t o i d e n t i f y i s the impact o f con-  i n the d e n s i t y of development on the so-  called "life-style"  of the r e s i d e n t s .  The c l a i m has been  made by s e v e r a l Westsyde r e s i d e n t s of l o n g standing  that  the continuous i n f l u x of new r e s i d e n t s i s , i n e f f e c t , r u p t i n g the area's s e m i - r u r a l  dis-  o r country r e s i d e n t i a l atmos-  phere, the l a t t e r b e i n g an i n f l u e n t i a l f a c t o r i n t h e i r dec i s i o n t o r e s i d e i n the a r e a .  52 Community As s t a t e d i n t h e p r e c e d i n g and  Objectives chapter,  t o be meaningful  u s e f u l , o b j e c t i v e s must be p e o p l e - o r i e n t e d  i n such terms t h a t e v a l u a t i o n c r i t e r i a  t o measure the degree  of o b j e c t i v e achievement can be a p p l i e d .  The f a c t remains,  however, t h a t t h e PPB system does n o t p r o v i d e for  and s t a t e d  a d i r e c t means  the community t o s e t out i t s o b j e c t i v e s i n an a p p r o p r i -  ate p u b l i c document.  Hence, the p r o c e s s o f i d e n t i f y i n g  o b j e c t i v e s i s a d i f f i c u l t and very imprecise  task.  In t h i s  study, no attempt i s made t o determine u n e q u i v o c a l l y the o b j e c t i v e s o f t h e C i t y o f Kamloops w i t h r e s p e c t t o i n t e r n a l i z i n g the e x t e r n a l e f f e c t s being generated i n Westsyde. Instead,  an i n d i r e c t approach i s adopted, i n d e t e r m i n i n g t h e  s p e c i f i c o b j e c t i v e s of the v a r i o u s groups concerned e i t h e r d i r e c t l y or i n d i r e c t l y with the existence  of external  dis-  economies i n Westsyde, C o n s i d e r f i r s t the o b j e c t i v e s o f the r e s i d e n t s o f Westsyde w i t h r e s p e c t previous  t o the e x t e r n a l i t i e s i d e n t i f i e d i n the  s e c t i o n as a f f e c t i n g p e r s o n a l  w e l l as p e r s o n a l p r o p e r t y  protection.  h e a l t h and s a f e t y , as One means o f o b t a i n i n g  some i n d i c a t i o n o f t h e r e s i d e n t s ' o b j e c t i v e s r e g a r d i n g  these  matters i s t o c o n s u l t the media f o r evidence o f s p e c i f i c demands made by c i t i z e n s i n the a r e a .  As might be expected,  these demands a r e most v o c i f e r o u s i n those areas where the e x t e r n a l diseconomies are of a s e r i o u s nature and very  apparent.  For i n s t a n c e , r e c e n t f l o o d damage t o p r o p e r t i e s  i n n a t u r a l drainage courses has  given r i s e to vigorous  mands f o r adequate p r o t e c t i o n t o a l l v u l n e r a b l e  properties.  I n t h i s i n s t a n c e , the o b j e c t i v e of the community may worded as f o l l o w s J t h e i r property  de-  be  To ensure the p r o t e c t i o n of persons  from damage a t t r i b u t a b l e t o  and  uncontrolled  storm waters. Extensive the c o n g e s t i o n  demands are a l s o i n evidence w i t h r e s p e c t and  s a f e t y hazards on Westsyde Road,  to  It  should be noted t h a t Westsyde Road i s a component of a broader t r a n s p o r t a t i o n systemj hence, the community's  ob-  j e c t i v e s cannot be r e s t r i c t e d to a c o n s i d e r a t i o n of Westsyde Road a l o n e ,  A transportation objective applicable to  e n t i r e t r a n s p o r t a t i o n system i s as f o l l o w s : access t o community s e r v i c e s , f a c i l i t i e s , a safe, quick,  comfortable, and  segments of the  To  and  the  provide  employment i n  convenient manner f o r a l l  community.  Even though the a s s o c i a t e d e x t e r n a l diseconomies are a very  s e r i o u s n a t u r e , there i s l i t t l e  of c i t i z e n demands w i t h r e s p e c t supply  services.  evidence i n the media  to sewage d i s p o s a l and  T h i s can be a t t r i b u t e d p r i m a r i l y t o  water the  f a c t t h a t the a s s o c i a t e d diseconomies are p o t e n t i a l r a t h e r than e x i s t i n g .  Of a l l urban p u b l i c s e r v i c e s , one  l e a s t v i s i b l e to the average c i t i z e n i s sewage t h a t i s , so long as e x i s t i n g f a c i l i t i e s  of  are  of  the  disposal}  operating  54 satisfactorily.  I t i s e s s e n t i a l l y t h i s s i t u a t i o n that e x i s t s  i n Westsyde; there have been few ures.  As d i s c u s s e d  reported  i n the p r e v i o u s  s e p t i c tank f a i l -  s e c t i o n , however, the  p o s s i b i l i t y e x i s t s t h a t i n d i v i d u a l d i s p o s a l systems may on a widespread b a s i s sometime i n the f u t u r e .  fail  I f t h i s were  t o happen, the r e s u l t a n t e x t e r n a l i t i e s would be h i g h l y v i s i b l e i n t h a t they would c o n s t i t u t e a t h r e a t t o the p u b l i c h e a l t h of the community. instance  followsJ  An a p p r o p r i a t e  TO dispose  sewage i n a safe and  objective i n t h i s  of d o m e s t i c a l l y  produced  a e s t h e t i c a l l y p l e a s i n g manner so as  t o t h r e a t e n the p u b l i c h e a l t h of the community. t i v e as. worded above i s more meaningful than an  The  not  objec-  objective  concerned w i t h p r o v i d i n g a c c e s s t o a community s a n i t a r y sewer system f o r a l l r e s i d e n t i a l d w e l l i n g s  i n the  community,  i n t h a t the l a t t e r presupposes t h a t t h i s i s the most d e s i r a b l e method of sewage d i s p o s a l without c o n s i d e r a t i o n of p o s s i b l e alternatives. The  e x t e r n a l i t i e s a s s o c i a t e d w i t h an inadequate  of water f o r f i r e p r o t e c t i o n purposes, though o f a nature, are seldom manifested; as such, there  supply  serious  is little  evi-  dence of demand f o r an improvement i n t h i s p a r t i c u l a r s e r v i c e . The  p o s s i b i l i t y e x i s t s , however, of f i r e f i g h t i n g e f f o r t s  being  s e r i o u s l y hampered by an inadequate water supply.  o b j e c t i v e r e l a t e d t o the domestic water supply To p r o v i d e  a supply  of p o t a b l e  An  system i s :  water i n flows adequate both  f o r peak hour domestic demand and  f o r f i r e prevention  purposes.  The  foregoing  o b j e c t i v e s are of a r a t h e r  nature i n t h a t the promotion o f p e r s o n a l  uncontroversial  s a f e t y and h e a l t h ,  as w e l l as the p r o t e c t i o n o f p e r s o n a l p r o p e r t y ,  i s generally  taken f o r granted by r e s i d e n t s o f Canada, both urban and rural.  The s i t u a t i o n i s n o t n e a r l y so s t r a i g h t f o r w a r d , how-  ever, w i t h r e s p e c t t o those e x t e r n a l i t i e s which may be r e a d i l y apparent, but a r e not g e n e r a l l y considered ous n a t u r e .  Included  of a s e r i -  a r e those e x t e r n a l i t i e s r e l a t e d t o con-  venience, comfort, a e s t h e t i c s , o r the l i f e - s t y l e o f the r e s i dents.  A c o n s i d e r a t i o n o f the community's o b j e c t i v e s with  r e s p e c t t o these f a c t o r s should  take account o f the o l d adage  t h a t what i s one man's bane may be another man's meat.  The  absence o f s t r e e t l i g h t i n g , curbs and g u t t e r s ,  sidewalks,  etc.  t o some r e s i -  may prove t o b e - u n s i g h t l y  dents, while t o o t h e r s , desirable. t o be very  and i n c o n v e n i e n t  i t may be o f l i t t l e concern, o r even  The l a c k o f good p u b l i c t r a n s i t s e r v i c e may prove inconvenient  t o some suburban r e s i d e n t s , w h i l e t o  o t h e r s , a c c e s s t o downtown i s of no g r e a t advantage.  The  l i f e - s t y l e a s p i r a t i o n s of some r e s i d e n t s may e n t a i l the enjoyment o f a f u l l range of urban p u b l i c s e r v i c e s }  a t the same  time t h e i r neighbors may be o f the o p i n i o n t h a t the p r o v i s i o n of such s e r v i c e s i s l i k e l y t o c o n t r i b u t e t o the d i s r u p t i o n of the s e m i - r u r a l l i f e  s t y l e which they p r e f e r .  Herein  lies  the crux o f the problem o f determining the o b j e c t i v e s of a community—the i n e v i t a b l e c o n f l i c t s o f o b j e c t i v e s among v a r i o u s groups i n the community.  56 To add  a note of complexity t o the problem of  deter-  mining the community's o b j e c t i v e s , i t must be kept i n mind t h a t the growth of the C i t y of Kamloops i s p r o j e c t e d tinue at a r a p i d r a t e .  As i s c l e a r l y e v i d e n t  in a  t o con-  recent  planning  study, an o b j e c t i v e of the c i t y c o u n c i l and  planning  a u t h o r i t i e s i s t h a t of accommodating t h i s  the new  growth i n some r a t i o n a l manner (Kamplan Committee, 1973). T h i s o b j e c t i v e i s r e l e v a n t t o the matter a t hand because of the p o t e n t i a l i n the Westsyde a r e a f o r the accommodation of a d d i t i o n a l urban development. A l t e r n a t i v e Methods of the Community's  Achieving  Objectives  As Mushkin and B i r d (1972) p o i n t  out,  the a l t e r n a t i v e s  a v a i l a b l e t o m u n i c i p a l i t i e s i n d e a l i n g w i t h the problem of e x t e r n a l i t i e s are of s e v e r a l broad c a t e g o r i e s * m u n i c i p a l i t y may  (1)  the  p r o v i d e s e r v i c e s t h a t " i n t e r n a l i z e " the  e x t e r n a l i t i e s ; or (2) the m u n i c i p a l i t y may  invoke ordinances  or l e v y taxes t h a t attempt to modify the s o c i a l behavior o f f i r m s and  households i n order t o remove the e x t e r n a l i t i e s  or t o prevent them from a r i s i n g . With these broad c a t e g o r i e s  i n mind, c o n s i d e r  terms those a l t e r n a t i v e s a v a i l a b l e to d e a l w i t h the e x t e r n a l i t i e s b e i n g generated i n Westsyde. j e c t i v e of p r e v e n t i n g one  in  general  specific  F i r s t , the  ob-  storm water damage can be achieved i n  of s e v e r a l ways; (1) the p r o v i s i o n of adequate storm  57 drainage f a c i l i t i e s t o d i v e r t storm waters  from  developed  a r e a s ; (2) the displacement o f a l l e x i s t i n g development from areas v u l n e r a b l e t o p e r i o d i c f l o o d i n g ; o r (3) i n areas n o t y e t developed, the i n v o k i n g o f ordinances p r e v e n t i n g development i n v u l n e r a b l e areas, p r o v i d e d t h a t development may take p l a c e i f p r o v i s i o n f o r adequate p r o t e c t i o n i s ensured. Second, s e v e r a l a l t e r n a t i v e s o r combination o f a l t e r n a t i v e s c o u l d be implemented t o achieve the community's transportation objectives.  Among those i n c l u d e d a r e :  (1)  the upgrading, realignment, and widening o f Westsyde Road along w i t h the p r o v i s i o n o f sidewalks and s t r e e t  lighting;  (2) the improvement o f p u b l i c t r a n s p o r t so as t o encourage r e s i d e n t s t o u t i l i z e p u b l i c r a t h e r than p r i v a t e modes o f t r a n s p o r t ; (3) t h e i n v o k i n g of s t r i n g e n t zoning and p l a n n i n g ordinances t o discourage continued development, thereby l i m i t i n g the i n c r e a s i n g t r a f f i c l o a d growth r a t e ; and (4) the i m p o s i t i o n o f t o l l s o r other charges t o discourage m o t o r i s t s from u t i l i z i n g  highways.  T h i r d , with r e s p e c t t o the sewage d i s p o s a l several a l t e r n a t i v e s are a v a i l a b l e , i n c l u d i n g : v i s i o n o f a community s a n i t a r y sewer system;  objectives, (1) the p r o -  (2) c o n t i n u a -  t i o n o f i n d i v i d u a l d i s p o s a l systems p r o v i d e d t h a t systems are maintained and i n s p e c t e d as a safeguard t o system tioning;  (3) the i n s t a l l a t i o n o f i n d i v i d u a l  malfunc-  household  treatment and r e c y c l i n g f a c i l i t i e s ; and (4) the i n v o k i n g o f stringent  zoning and p l a n n i n g ordinances t o prevent c o n t i n u e d  increases  i n the d e n s i t y  o f development.  F o u r t h , the a l t e r n a t i v e means o f a c h i e v i n g supply o b j e c t i v e s  are rather  the water  l i m i t e d ; i n f a c t , the only  a l t e r n a t i v e i s t h a t o f improving the l e v e l o f s e r v i c i n g t o a point  where adequate supply f o r f i r e p r e v e n t i o n purposes  can be ensured. S i m i l a r l y , the a l t e r n a t i v e means o f a c h i e v i n g  the ob-  j e c t i v e s r e l a t e d t o convenience, comfort, o r a e s t h e t i c s are also l i m i t e d — t h a t  i s , e i t h e r p r o v i d e the "convenience"  s e r v i c e s t o s a t i s f y the demands of those who d e s i r e range o f urban p u b l i c  services,  o r m a i n t a i n the s t a t u s quo  t o s a t i s f y those who p r e f e r the e x i s t i n g s i t u a t i o n . with r e s p e c t  t o the l i f e - s t y l e  prefer a semi-rural one  a full  aspirations  And  o f those who  o r country r e s i d e n t i a l atmosphere, the  f e a s i b l e a l t e r n a t i v e i s t h a t o f i n v o k i n g ordinances t o  p r e v e n t c o n t i n u e d development i n the d i s t r i c t . The  s p e c i f i c a l t e r n a t i v e s as o u t l i n e d above can be  grouped i n t o two packages* range o f s e r v i c e s ;  (1) the p r o v i s i o n  of a f u l l  and (2) a combination o f i n v o k i n g  ordin-  ances aimed a t l i m i t i n g c o n t i n u e d urban development and implementing modest support programs aimed a t p r e v e n t i n g e x t e r n a l i t i e s i n e x i s t i n g development areas from a r i s i n g (e.g.  a s e p t i c tank maintenance and i n s p e c t i o n  program).  Although these two b a s i c packages of a l t e r n a t i v e s are n o t i n theory mutually e x c l u s i v e — a program o f l i m i t i n g urban development and p r o v i d i n g a f u l l range o f s e r v i c e s be implemented s i m u l t a n e o u s l y — t h e y t o t a l l y incompatible  should  a r e i n p r a c t i c e almost  because of a s s o c i a t e d economic i m p l i -  c a t i o n s which w i l l be d i s c u s s e d It  could  i n a subsequent  chapter.  a l s o be noted t h a t there e x i s t s a r e l a t i o n -  s h i p between the a l t e r n a t i v e s o f a c h i e v i n g the o b j e c t i v e s s p e c i f i c t o Westsyde and the a l t e r n a t i v e means o f a c h i e v i n g the c i t y - w i d e  o b j e c t i v e o f accommodating  (i.e., either i n f i l l i n g  a d d i t i o n a l growth  e x i s t i n g development areas, o r  c h a n n e l l i n g growth t o new development a r e a s ) . infilling  A p o l i c y of  e x i s t i n g development areas would d e f i n i t e l y have  r a m i f i c a t i o n s i n suburban communities such as Westsyde; i t would make impossible t a i l the continued  the implementation of p o l i c i e s t o c u r -  urban development i n t h a t community.  It  would a l s o n e c e s s i t a t e the a d o p t i o n of a l t e r n a t e methods of i n t e r n a l i z i n g the a d d i t i o n a l e x t e r n a l i t i e s a s s o c i a t e d a d d i t i o n a l development.  The c i t y ' s a d o p t i o n o f a p o l i c y o f  c h a n n e l l i n g growth t o new development areas, make p o s s i b l e a wider choice i n Westsyde.  with  however, would  of p o l i c i e s t o be implemented  I t i s obvious, t h e r e f o r e , t h a t p o l i c i e s s p e c i -  f i c t o the circumstances i n Westsyde cannot be formulated i n i s o l a t i o n of a c o n s i d e r a t i o n o f the broader p o l i c i e s o f the c i t y w i t h regards t o accommodating  a d d i t i o n a l development.  60 The for  foregoing  the formulation  l a y s the groundwork and p r o v i d e s a b a s i s of t h r e e a l t e r n a t i v e p o l i c y packages  which c o u l d he implemented t o i n t e r n a l i z e e x i s t i n g  external-  i t i e s and t o prevent c e r t a i n p o t e n t i a l e x t e r n a l i t i e s from a r i s i n g , i n the Westsyde a r e a . 1.  A l t e r n a t i v e A c o n s i s t s of the p r o v i s i o n o f a f u l l  range  of urban p u b l i c s e r v i c e s i n an amount adequate t o s e r v i c e e x i s t i n g as w e l l as f u t u r e r e s i d e n t s .  Among the  s e r v i c e s t o be p r o v i d e d are a community water system adequate f o r f i r e p r e v e n t i o n purposes, a community s a n i t a r y sewer system, a storm drainage system, a program o f upgrading the s t r e e t system, p a r t i c u l a r l y Westsyde Road, as w e l l as the p r o v i s i o n of sidewalks, s t r e e t l i g h t i n g , and curbs and g u t t e r s . 2.  A l t e r n a t i v e B consists of invoking  zoning ordinances  aimed a t p r e v e n t i n g c o n t i n u e d urban development i n Westsyde.  I n c o n c e r t w i t h such a p o l i c y would be  s e v e r a l support programs aimed a t i n t e r n a l i z i n g o r p r e v e n t i n g e x t e r n a l i t i e s o f a s e r i o u s n a t u r e from arising.  I n c l u d e d would be a program o f i n d i v i d u a l  sewage d i s p o s a l system maintenance and i n s p e c t i o n (an a l t e r n a t i v e may be t h a t o f i n s t a l l i n g i n d i v i d u a l treatment and r e c y c l i n g f a c i l i t i e s  i n each household*):  *Although t h i s i n n o v a t i v e a l t e r n a t i v e i s t e c h n o l o g i c a l l y f e a s i b l e , the c a p i t a l c o s t s a r e h i g h r e l a t i v e t o a l t e r n a t i v e d i s p o s a l methods. No attempt was made i n t h i s study t o determine whether the e x t e r n a l c o s t s a s s o c i a t e d w i t h convent i o n a l methods (e.g. r i v e r p o l l u t i o n ) are o f a magnitude g r e a t enough t o o f f s e t the d i f f e r e n c e i n c a p i t a l c o s t s . The p o s s i b i l i t y remains, however, t h a t f u t u r e t e c h n o l o g i c a l advances may make t h i s a l t e r n a t i v e e c o n o m i c a l l y f e a s i b l e .  61 a program of d i s c o u r a g i n g  private t r a f f i c ,  o b v i a t i n g , a t l e a s t t o some extent,  thereby-  the n e c e s s i t y o f  upgrading Westsyde Road; the improvement o f the water supply  system t o ensure adequate f i r e p r o t e c t i o n f o r  e x i s t i n g r e s i d e n t s ; and the p r o v i s i o n o f modest storm drainage f a c i l i t i e s t o p r o t e c t e x i s t i n g developed properties vulnerable 3.  t o damage.  A l t e r n a t i v e G i s , i n a sense, a "toned-down" v e r s i o n of A l t e r n a t i v e A i n t h a t only those s e r v i c e s aimed a t i n t e r n a l i z i n g or preventing nature are p r o v i d e d . such as sidewalks, and  e x t e r n a l i t i e s of a serious  As such, convenience s e r v i c e s  s t r e e t l i g h t i n g , curbs and g u t t e r s ,  s t r e e t improvements are not p r o v i d e d .  As w i t h  A l t e r n a t i v e A, no attempt i s made t o curb f u r t h e r development i n the area; as such sewer and water t r u n k mains, as w e l l as a r t e r i a l road improvements a r e designed  t o adequately s e r v i c e both e x i s t i n g and f u t u r e  development.  Evaluation of Alternatives To s i m p l i f y the p r o c e s s o f c a r r y i n g out the e v a l u a t i o n , it  i s necessary t o make an assumption; t h a t i s , the sources  of revenue used t o f i n a n c e the p r o j e c t s w i l l n o t a f f e c t the outcome o f the e v a l u a t i o n — a n y  v a r i a t i o n s from t h i s assump-  t i o n would a f f e c t n o t the t o t a l f i n a n c i a l c o s t s and b e n e f i t s , but t h e i r  incidence.  Participants As  s t a t e d i n the p r e v i o u s chapter, L i c h f i e l d ' s method  of a n a l y s i s and  evaluation  s t r e s s e s the  importance of enu-  merating the p r o j e c t c o s t s and b e n e f i t s a c c o r d i n g incidence  among the v a r i o u s  by the p r o j e c t .  The  i n d i v i d u a l s or groups a f f e c t e d  groups are c l a s s i f i e d  first  t o whether they are producers or consumers, and according  to t h e i r p a r t i c u l a r objective.  i n d i v i d u a l s or groups who  to t h e i r  according second  Producers are  p l a y a p a r t i n c r e a t i n g and  the s e r v i c e s t o be r e a l i z e d from the p r o j e c t .  running  In the above  a l t e r n a t i v e s , the producer i s the C i t y of Kamloops, except i n A l t e r n a t i v e B where i n d i v i d u a l homeowners "produce" t h e i r own  sewage d i s p o s a l s e r v i c e . The  consumers, on the  or groups who  consume the  a t i o n of the three  o t h e r hand, are the services provided.  individuals In the  evalu-  a l t e r n a t i v e s at hand, the consumers  be f u r t h e r c l a s s i f i e d  according  to t h e i r various  can  objectives.  F i r s t are the e x i s t i n g r e s i d e n t s of Westsyde whose o b j e c t i v e s are those p r e v i o u s l y h e a l t h and  s t a t e d as r e l a t i n g t o t h e i r p e r s o n a l  s a f e t y and  the p r o t e c t i o n of t h e i r  property.  Second are those r e s i d e n t s whose o b j e c t i v e i t i s t o enjoy the a m e n i t i e s of a f u l l range of convenience s e r v i c e s . are those r e s i d e n t s who  p r e f e r to m a i n t a i n the  t h a t i s , the  or country r e s i d e n t i a l atmosphere of  the d i s t r i c t .  semi-rural  F o u r t h are the  owners of vacant  status  Third quo,  properties  63 whose o b j e c t i v e s are not n e c e s s a r i l y r e l a t e d to the  external  diseconomies o u t l i n e d e a r l i e r but t o the impact of each a l t e r n a t i v e program on the development p o t e n t i a l of t h e i r property.  F i f t h , the C i t y of Kamloops can be c o n s i d e r e d  an i n d i r e c t consumer i n t h a t each a l t e r n a t i v e program  as  may  have an impact on the c i t y ' s o b j e c t i v e s of accommodating a d d i t i o n a l urban development. r e s i d e n t s as p r o v i d e d  f i n a l l y are the  f o r i n A l t e r n a t i v e s A and C.  be noted, o f course, t h a t there overlapping  And  i s l i k e l y t o be  future It  should  considerable  among the members of the v a r i o u s groups of con-  sumers . C o s t s and  Benefits  In implementing any producers and  of the three a l t e r n a t i v e s , a l l  consumers i n c u r both c o s t s and b e n e f i t s .  c o s t s are the value and  one  of the goods and  s e r v i c e s used t o produce  operate a p r o j e c t (the i n p u t s ) , and b e n e f i t s are  value  of the s e r v i c e s p r o v i d e d  b e n e f i t might be one  The  (the o u t p u t s ) .  of three k i n d s .  the  Each c o s t  F i r s t , private  and  or  s o c i a l — p r i v a t e r e l a t e s to c o s t s which the producer or consumer must bear and  t o b e n e f i t s t h a t can be a p p r o p r i a t e d  to  them? s o c i a l , or e x t e r n a l , r e l a t e s t o the d i f f u s e d c o s t s s u f f e r e d by others which need not be compensated and enjoyed by others f o r which payment cannot be  exacted.  Second, r e a l or t r a n s f e r — r e a l r e l a t e s t o the use (economic) r e s o u r c e s ,  t h a t i s l a n d , men  and  benefits  of r e a l  materials!  6k whereas t r a n s f e r r e l a t e s t o f i n a n c i a l r e s o u r c e s which are simply t r a n s f e r r e d from one  s e c t i o n of the community t o  another as a r e s u l t of a t r a n s a c t i o n , without u s i n g up  or  adding t o r e a l r e s o u r c e s (e.g. the purchase of l a n d ) .  And  t h i r d , r e a l ( t e c h n o l o g i c a l ) or p e c u n i a r y — t h e s e r e l a t e t o changes i n the value of e s t a b l i s h e d as opposed t o new and  s e r v i c e s , brought about by e x t e r n a l changes.  c o s t s and quality  b e n e f i t s a r i s e where there  (e.g. the i n c r e a s e  p e r t i e s a c c e s s i b l e t o new  goods  Real  are changes i n a c t u a l  i n development p o t e n t i a l of p r o public services)}  whereas p e c u n i a r y  changes i n value a r i s e simply because of r e l a t i v e changes i n the  supply or demand of goods or s e r v i c e s  (e.g. the  impact  on community-wide l a n d p r i c e s of p l a c i n g newly s e r v i c e d l o t s on the market) ( L i c h f i e l d , Measurements of Costs and  1966).  Benefits  As o u t l i n e d i n the p r e v i o u s chapter, a l l c o s t s b e n e f i t s must be  included  i n the a n a l y s i s , but  and  i t rarely  occurs t h a t a l l c o s t s and b e n e f i t s are commensurable. other words, some c o s t s and  b e n e f i t s may  In  be measured i n  monetary terms, others are o f t e n measured i n d i f f e r e n t s c a l e s of measurement (e.g. time, p h y s i c a l u n i t s ) , whereas others s t i l l are immeasurable, and i n t a n g i b l e s i n the a n a l y s i s . and b e n e f i t s of the v a r i o u s terms e i t h e r of a b s o l u t e s  The  as such are noted comparison of the  a l t e r n a t i v e s may  or d i f f e r e n c e s .  As  as costs  be made i n Lichfield  (1966) p o i n t s out, the a b s o l u t e s  are o f t e n o v e r - l a b o r i o u s  measure whereas d i f f e r e n c e s can r e a d i l y be grasped.  It is  t h i s approach of measuring the d i f f e r e n c e s , or n o t i n g r e l a t i v e magnitude o f the v a r i o u s c o s t s and  to  the  benefits, that  i s adopted i n the comparison of the three a l t e r n a t i v e s . The To  Analysis  s i m p l i f y the p r o c e s s of e v a l u a t i o n , the a l t e r n a t i v e s  are compared i n p a i r s ; A l t e r n a t i v e s A and C are f i r s t compared, f o l l o w e d by a comparison of A l t e r n a t i v e B w i t h e i t h e r A or C, depending on which i s found t o be the s u p e r i o r method of s a t i s f y i n g the community's o b j e c t i v e s . A n a l y s i s of A l t e r n a t i v e s A and  C  Table 4 summarizes the d i f f e r e n c e s i n c o s t s and which w i l l accrue t o the v a r i o u s  s e c t o r s from the  t a t i o n of A l t e r n a t i v e s A and C.  Although not  i n the  benefits  implemen-  comprehensive  sense of i n c l u d i n g every s i n g l e p a r t y which would  a f f e c t e d , they do cover the major i n t e r e s t s , as  be  follows:  Producers  Consumers  C i t y of Kamloops  Westsyde r e s i d e n t s Owners of vacant p r o p e r t y i n Westsyde Future r e s i d e n t s C i t y of Kamloops  Producers C i t y of K a m l o o p s — C a p i t a l C o s t s .  Because A l t e r n a t i v e  C i s i n f a c t a subset of A l t e r n a t i v e A, i t f o l l o w s t h a t  the  66 d i f f e r e n c e s i n c a p i t a l c o s t s can be a t t r i b u t e d t o t a l l y the i n c l u s i o n of the a d d i t i o n a l s e r v i c e s p r o v i d e d  to  i n A,  t h a t i s , s t r e e t improvements w i t h s t r e e t l i g h t i n g , s i d e walks, and estimates  curbs and g u t t e r s .  Although no a c t u a l c o s t  from Kamloops are a v a i l a b l e as t o the magnitude  of the d i f f e r e n c e i n c a p i t a l c o s t s , i t i s assumed t h a t c a p i t a l c o s t s of p r o v i d i n g a f u l l  the  range of s e r v i c e s as i n  A l t e r n a t i v e A r e l a t i v e t o the c a p i t a l c o s t s of p r o v i d i n g a p a r t i a l range of s e r v i c e s as i n C are roughly  equivalent  to  the r e l a t i v e s e r v i c i n g c o s t s as determined by Pearson (196?). Pearson's study i n d i c a t e d t h a t the c a p i t a l c o s t s r e q u i r e d to provide  a f u l l range of s e r v i c e s are approximately  percent  h i g h e r than those r e q u i r e d t o p r o v i d e  fifty  a partial  l e v e l of s e r v i c i n g . C i t y of Kamloops—Annual C o s t s .  The  d i f f e r e n c e i n the  o p e r a t i n g and maintenance c o s t s a s s o c i a t e d with the t i o n a l s e r v i c e s ( i . e . s t r e e t upgrading, curbs and and  gutters,  s t r e e t l i g h t i n g ) i n A l t e r n a t i v e A as compared t o  road maintenance c o s t s i n A l t e r n a t i v e C i s l i k e l y t o minimal.  I n f a c t , i t c o u l d be argued t h a t the  and maintenance c o s t s may  addi-  the be  operating  be l e s s i n a f u l l y s e r v i c e d than  i n a p a r t i a l l y serviced area.  As such, i t i s u n c l e a r as  which a l t e r n a t i v e i s p r e f e r a b l e i n t h i s  to  respect.  Consumers Westsyde R e s i d e n t s .  The  v a r i o u s s e c t o r s of r e s i d e n t s  6?  i n Westsyde can be i d e n t i f i e d a c c o r d i n g  to their  respective  objectives. 1.  Objectives  r e l a t i n g t o the p e r s o n a l  h e a l t h and s a f e t y  of r e s i d e n t s , as w e l l as p r o t e c t i o n of t h e i r  property—  both a l t e r n a t i v e s achieve these o b j e c t i v e s t o an e q u i v a l e n t extent and as such are n e u t r a l . 2.  Objectives  r e l a t i n g t o p r o v i s i o n o f convenience  Alternative A i s preferable  services—  i n t h a t i t makes p r o v i s i o n  f o r a l l the convenience s e r v i c e s ? whereas A l t e r n a t i v e C makes no such p r o v i s i o n s .  The b e n e f i t s a s s o c i a t e d  with  the p r o v i s i o n o f these s e r v i c e s are o f an i n t a n g i b l e nature. 3.  Objectives  r e l a t i n g t o the p r e s e r v a t i o n  o f the semi-  r u r a l l i f e - s t y l e - - s i n c e both a l t e r n a t i v e s envisage the continuation  o f urban development ( i . e . t o ensure an  e f f i c i e n t u t i l i z a t i o n o f the s e r v i c e s ) , both a l t e r n a t i v e s are n e u t r a l i n t h i s r e s p e c t . f i t s associated  The n e g a t i v e bene-  with t h i s o b j e c t i v e are a l s o o f an  intangible nature. Owners o f Vacant P r o p e r t y i n Westsyde.  As  above, both a l t e r n a t i v e s are n e u t r a l w i t h r e s p e c t  discussed t o con-  t i n u e d urban development? as such they are a l s o n e u t r a l i n r e l a t i o n t o the a s p i r a t i o n s o f owners o f vacant p r o p e r t y t o r e a l i z e the development p o t e n t i a l o f t h e i r p r o p e r t y .  The  b e n e f i t s i n t h i s case are r e a l t e c h n o l o g i c a l b e n e f i t s as opposed t o p e c u n i a r y b e n e f i t s i n t h a t they e n t a i l the  68 increase to new  i n development p o t e n t i a l of p r o p e r t i e s  public  services.  Future R e s i d e n t s . respect  Both a l t e r n a t i v e s are n e u t r a l with  to continued urban development which would enable  new  residents  new  r e s i d e n t s would be  to l i v e i n Westsyde.  The  neutral regarding  the  benefits accruing  Both a l t e r n a t i v e s  c i t y ' s objectives  r e s i d e n t i a l development.  The  c i t y are measured i n p h y s i c a l  are n e u t r a l i n a l l r e s p e c t s  benefits accruing  alternatives  i n s a t i s f y i n g the  objec-  d e s i r e a f u l l range of p u b l i c  As such, the e v a l u a t i o n but  the  except i n the case of c a p i t a l  t i v e s of those r e s i d e n t s who  to a conclusion,  to  units.  annual c o s t s t o the c i t y , and  services.  are  of accommodating  Reference t o Table 4 suggests t h a t the two  and  does not p o i n t c l e a r l y  i t does p r o v i d e a b a s i s f o r d e t e r m i n i n g  the t r a d e - o f f s which must be made i n choosing between the alternatives.  I f A l t e r n a t i v e A i s chosen, the  decision  makers are i m p l i c i t l y s t a t i n g t h a t the a d d i t i o n a l  benefits  a r i s i n g from the p r o v i s i o n of the a d d i t i o n a l convenience s e r v i c e s are more v a l u a b l e t o the tives.  or a t l e a s t e q u i v a l e n t  d i f f e r e n c e i n the c a p i t a l c o s t s There are two  to  of an i n t a n g i b l e n a t u r e .  C i t y of Kamloops as Consumer.  new  accessible  of the two  i n value alterna-  f a c t o r s which would tend to suggest  that Alternative C i s preferable  i n the  circumstances  TABLE 4 COMPARISON OF COSTS AND BENEFITS IN ALTERNATIVES A AND C  Item Number  Sector  Alternative A  Alternative C  Benefit  Benefit  Cost  Cost Remarks  Net Advantage  $A>$C ?  C not c l e a r  personal health, s a f e t y and p r o t e c t i o n of prop.  2  Equivalent  convenience services  i ^ i  life-style  =  Equivalent  =  Equivalent  s  Equivalent  =  Equivalent  Instrumental Objectives  A  A  C  C  Producers  1.0  C i t y o f Kamloops  $A  $a  $C  $c  Consumers  2.0  Residents o f Westsyde  2.1  2.2 2.3 3.0  Owners o f vacant p r o p e r t y  4.0  Future r e s i d e n t s  5.0  C i t y o f Kamloops  development potential  $V  $V  *5 accommodation o f growth  3  A  ON  p r e v a i l i n g i n Westsyde.  F i r s t , there has  been l i t t l e  evi-  dence of a widespread demand by the r e s i d e n t s of Westsyde for  access  t i v e A.  t o the a d d i t i o n a l s e r v i c e s p r o v i d e d  i n Alterna-  Second, the c a p i t a l c o s t s r e q u i r e d t o p r o v i d e  a d d i t i o n a l s e r v i c e s are of a c o n s i d e r a b l e magnitude. l a t i o n s based on a r e c e n t e n g i n e e r i n g  Calcu-  r e p o r t i n d i c a t e the  c a p i t a l c o s t s of c o n s t r u c t i n g a s a n i t a r y sewer system improving the water supply road improvements and  these  system ( e x c l u s i v e of  and  arterial  storm drainage f a c i l i t i e s ) w o u l d amount  t o approximately $ 3 2 0 0 per e x i s t i n g d w e l l i n g u n i t , or i f average c o s t s are based on the u l t i m a t e p o p u l a t i o n infilling, $ 1 6 0 0  It  following  the c a p i t a l c o s t s would amount t o approximately  p e r d w e l l i n g u n i t (Strong,  Lamb, and  Nelson, 1 9 7 3 ) .  i s obvious, t h e r e f o r e , t h a t an increment i n c a p i t a l  c o s t s of f i f t y percent  to provide  the a d d i t i o n a l s e r v i c e s  as i n A l t e r n a t i v e A would c o n s t i t u t e a l a r g e a d d i t i o n a l p e r unit  :  :  expenditure.  The  stances  e v a l u a t i o n suggests,  t h e r e f o r e , t h a t i n the  as they e x i s t i n Westsyde, the adoption  circum-  of a p o l i c y  as o u t l i n e d i n A l t e r n a t i v e C would be p r e f e r a b l e t o A l t e r n a t i v e A as a means of a c h i e v i n g the o b j e c t i v e s of the A n a l y s i s of A l t e r n a t i v e s B and  C  Table 5 summarizes the d i f f e r e n c e i n c o s t s and which w i l l accrue t o the v a r i o u s s e c t o r s from the t i o n of A l t e r n a t i v e s B and C.  community.  The  benefits  implementa-  major i n t e r e s t s which would  71 be a f f e c t e d here are as  follows:  Producers  Consumers  C i t y of Kamloops Westsyde r e s i d e n t s  Westsyde r e s i d e n t s Owners of vacant p r o p e r t y i n Westsyde Future r e s i d e n t s C i t y of Kamloops  Producers C i t y of K a m l o o p s — C a p i t a l C o s t s . i s aimed a t m a i n t a i n i n g  the s t a t u s quo,  c o s t s are not e x t e n s i v e . A l t e r n a t i v e C,  Because A l t e r n a t i v e B  The  the a s s o c i a t e d  capital  c a p i t a l costs associated with  on the other hand, are s u b s t a n t i a l .  Pearson  (1967) has estimated t h a t the c a p i t a l c o s t s r e q u i r e d t o p r o v i d e a p a r t i a l l e v e l of s e r v i c i n g (as i n C) are percent  h i g h e r than those r e q u i r e d to p r o v i d e  seventy-five  a minimal l e v e l  of s e r v i c i n g (as i n B ) . C i t y of Kamloops—Annual C o s t s .  Because A l t e r n a t i v e C  e n t a i l s the p r o v i s i o n of a more extensive  range of s e r v i c e s  than B (e.g. s a n i t a r y sewer), the annual maintenance  and  o p e r a t i n g expenditures a s s o c i a t e d with C w i l l be g r e a t e r  than  i n B, a l t h o u g h no c o s t estimates are a v a i l a b l e as t o the magnitude  o f the d i f f e r e n c e .  As such, B i s the p r e f e r r e d  alter-  native. Residents of W e s t s y d e — C a p i t a l and as w e l l as annual maintenance and  Annual C o s t s .  Capital  o p e r a t i n g c o s t s are  incurred  by e x i s t i n g r e s i d e n t s i n the form of expenditures on  indivi-  dual sewage d i s p o s a l systems as r e q u i r e d i n A l t e r n a t i v e B.  In A l t e r n a t i v e C, the c a p i t a l and. o p e r a t i n g  c o s t s of  the  community s a n i t a r y sewer system are i n c u r r e d by the (note p r e v i o u s  assumption concerning  t i o n of c o s t s by the c i t y ) . alternative i n this  the  city  subsequent a l l o c a -  As such, C i s the  preferred  respect.  Consumers Westsyde R e s i d e n t s . are i d e n t i f i e d a c c o r d i n g 1.  Objectives  The  v a r i o u s groups or i n d i v i d u a l s  to t h e i r objectives.  r e l a t i n g t o the p e r s o n a l  h e a l t h and  safety  of r e s i d e n t s , as w e l l as the p r o t e c t i o n of t h e i r p r o perty—both  a l t e r n a t i v e s are e q u i v a l e n t w i t h  t o water supply objectives? pect  o b j e c t i v e s and  they are not  f l o o d damage p r o t e c t i o n  equivalent,  however, w i t h r e s -  t o sewage d i s p o s a l o b j e c t i v e s and  objectives.  respect  transportation  A l t e r n a t i v e C ensures t h a t the sewage  d i s p o s a l o b j e c t i v e of not p o s i n g h e a l t h w i l l be a c h i e v e d . t r a t e s on r e d u c i n g  a threat to public  A l t e r n a t i v e B which concen-  the l i k e l i h o o d of e x t e r n a l i t i e s ,  cannot ensure t h a t e x t e r n a l i t i e s a s s o c i a t e d w i t h v i d u a l d i s p o s a l systems w i l l not a r i s e .  indi-  Regarding the  community's t r a n s p o r t a t i o n o b j e c t i v e s , i t i s u n c l e a r as t o which a l t e r n a t i v e i s p r e f e r a b l e .  Alternative C  attempts t o a c h i e v e the o b j e c t i v e by i n c r e a s i n g c a r r y i n g c a p a c i t y of Westsyde Road.  the  Alternative B  the other hand adopts an approach o f r e s t r i c t i n g  on  the  73 t r a f f i c l o a d t o a l e v e l which can be adequately accommodated by t h a t road's e x i s t i n g c a r r y i n g c a p a c i t y . 2.  Objectives  r e l a t i n g t o the p r o v i s i o n o f convenience  s e r v i c e s — n e i t h e r A l t e r n a t i v e B o r C makes p r o v i s i o n f o r convenience s e r v i c e s and as such, both are n e u t r a l in this 3.  respect,  Objectives  r e l a t i n g t o the p r e s e r v a t i o n  semi-rural  o r country r e s i d e n t i a l  o f the area's  atmosphere—Alterna-  t i v e C envisages the c o n t i n u a t i o n of urban development by i n f i l l i n g ,  whereas continued  i n A l t e r n a t i v e B.  development i s r e s t r i c t e d  I f the p r e s e r v a t i o n o f the area's  s e m i - r u r a l atmosphere i s enhanced by r e t a i n i n g a r e l a t i v e l y low d e n s i t y o f development, i t f o l l o w s t h a t B i s the p r e f e r r e d a l t e r n a t i v e i n t h i s Owners o f Vacant P r o p e r t y  respect.  i n Westsyde.  I f the o b j e c t i v e  of t h i s group i s t o r e a l i z e the development p o t e n t i a l o f t h e i r property, continued  i t f o l l o w s t h a t C which makes p r o v i s i o n f o r  urban development i s the p r e f e r r e d a l t e r n a t i v e .  Future R e s i d e n t s .  Since B makes no p r o v i s i o n f o r con-  t i n u e d development, b e n e f i t s a c c r u i n g t o f u t u r e r e s i d e n t s i n new development areas are n o n e x i s t e n t ;  as such, C i s the  preferred alternative. C i t y o f Kamloops. respect  F o r the same reasons o u t l i n e d with  t o f u t u r e r e s i d e n t s , C would be more e f f e c t i v e than  B i n a c h i e v i n g the C i t y ' s o b j e c t i v e s o f accommodating new r e s i d e n t i a l development.  The  e v a l u a t i o n of A l t e r n a t i v e s B and C as o u t l i n e d i n  T a b l e 5 does not p o i n t c l e a r l y to a c o n c l u s i o n as t o which i s the p r e f e r r e d a l t e r n a t i v e .  I t does, however, s p e c i f y the  t r a d e o f f s which are necessary i n choosing between the natives.  I f the d e c i s i o n makers choose A l t e r n a t i v e C,  are i m p l i c i t l y s t a t i n g t h a t the h i g h e r costs, together  c a p i t a l and  w i t h the c o s t s of s a c r i f i c i n g the  s e m i - r u r a l atmosphere, are more than o f f s e t by b e n e f i t s of e n s u r i n g  area's  (1)  t h a t sewage w i l l be disposed  c a p i t a l b e n e f i t s a c c r u i n g t o the  owners of vacant  the of i n a  w i l l r e a l i z e the development p o t e n t i a l of t h e i r  (3)  the b e n e f i t s a c c r u i n g to new  ment areas,  and  the  property  who  r e s i d e n t s i n new  they  annual  manner t h a t w i l l not pose a p u b l i c h e a l t h t h r e a t , (2)  property,  develop-  (4) the b e n e f i t s r e a l i z e d by the C i t y of  Kamloops i n accommodating a p a r t of the demand f o r urban development i n the  The  alter-  continued  city.  s i n g l e most important f a c t o r which would suggest  the p r e f e r e n c e  of adopting the p r o v i s i o n s of A l t e r n a t i v e C  r a t h e r than those of B i s the d e f i c i e n c y of B with r e s p e c t preventing  to  the e x t e r n a l i t i e s a s s o c i a t e d with i n d i v i d u a l  sewage d i s p o s a l systems.  Because of the s e r i o u s nature of  the e x t e r n a l diseconomies which a r i s e from  malfunctioning  s e p t i c tanks, i t i s e s s e n t i a l t h a t these e x t e r n a l i t i e s be prevented on an absolute  basis.  I n the circumstances as they  e x i s t i n the Westsyde d i s t r i c t , i t i s d o u b t f u l i f t h i s r e quirement can be ensured by implementing the p r o v i s i o n s  of  TABLE 5 COMPARISON OF COSTS AND BENEFITS IN ALTERNATIVES B AND C  Item No.  Instrumental Objectives  Sector  Alternative B  Alternative C  Benefit  Benefit  Cost A  Cost  Net Remarks A d v a n t a g e To«  C  Producers  1.0  City  2.0  Residents syde  o f Kamloops  $B $b  $C $ c $C>$B $c>$b  Alt.  B  $R $ r  $T $ t  Alt.  C  o f West-  Consumers  3.0 3.1  Residents  o f Westsyde  3.14  personal health, safety & protec, of property Water s u p p l y Storm d r a i n a g e T r a n s p o r t a t i on Sewage d i s p o s a l  3.2  Convenience  3.3  Semi-rural style  3.H  3.12  3.13  4.0  Owners o f V a c . P r o p .  5.0  Future r e s i d e n t s  6.0  City  o f Kamloops  i  |R>|T Sr>J5t  Equiv. Equiv, Not c l e a r Alt. C  2  i  6 5 > i  serv.  Equiv.  life  $X  $V L  Accommodation o f growth  P,  io  Alt. B Alt. C  $V>$X •ii  Hf^lO P >P i  1  A  l  t  '  C  Alt. C  ^  A l t e r n a t i v e B, l a r g e l y b e c a u s e t h e d e n s i t y has a l r e a d y  s u r p a s s e d b y a' c o n s i d e r a b l e m a r g i n t h e d e n s i t y  at which i n d i v i d u a l t o be t o t a l l y addition,  septic  adequate  tank d i s p o s a l  (Strong,  and enforcement  i s likely  s y s t e m s a r e deemed  Lamb a n d N e l s o n , 1973)•  the implementation of a s e p t i c  and i n s p e c t i o n p r o g r a m trative  o f development  In  tank maintenance  to give r i s e  t o adminis-  difficulties.  Conclusion  The  foregoing evaluation  suggests that  the s p e c i f i c  of Alternatives  objectives  A, B, a n d C  o f t h e community c a n  b e s t be a c h i e v e d b y i m p l e m e n t i n g t h e p r o v i s i o n s n a t i v e C, w h i c h e s s e n t i a l l y level  of servicing  of A l t e r -  amounts t o p r o v i d i n g a p a r t i a l  i n the area.  This  conclusion  validates  to a p a r t i a l  extent the premise of statement three  i n the  hypothesis.  I n o t h e r words, t h e e v a l u a t i o n s u g g e s t s t h a t i t  i s n o t n e c e s s a r y t o p r o v i d e a comprehensive, o r f u l l of s e r v i c e s :  t h e o b j e c t i v e s o f t h e community  more e f f i c i e n t l y  by p r o v i d i n g a p a r t i a l  specified public  services.  It ference  s h o u l d be n o t e d , however, t h a t  c a n be a c h i e v e d  range o f c e r t a i n ,  the margin o f pre-  of A l t e r n a t i v e C over B i s n o t great.  development  I n a suburban  s e c t o r i n which d e n s i t y has n o t surpassed  a t which s e p t i c  that  t a n k d i s p o s a l i s deemed a d e q u a t e , a l l o t h e r  things being equal, development  range  a policy  would l i k e l y  of restricting  additional  be t h e most e f f e c t i v e  urban  and e f f i c i e n t  77 means o f i n t e r n a l i z i n g nomies a s s o c i a t e d  and p r e v e n t i n g  with urban  the external  diseco-  development.  Summary The  a p p l i c a t i o n of a systematic  external steps.  approach t o i n t e r n a l i z i n g  diseconomies i n the case study c o n s i s t e d The f i r s t  i s that  potential  external  difficult  and i m p r e c i s e  of several  o f i d e n t i f y i n g b o t h e x i s t i n g and  diseconomies i n Westsyde. task  Second i s t h e  o f i d e n t i f y i n g the o b j e c t i v e s of  e a c h i n d i v i d u a l o r g r o u p t h a t may be a f f e c t e d b y t h e e x i s t e n c e of p a r t i c u l a r e x t e r n a l diseconomies o r by t h e implementation of p o l i c i e s  aimed a t t h e i r p r e v e n t i o n .  identifying  i n d i v i d u a l and group o b j e c t i v e s  attempting to i d e n t i f y  community-wide  former approach recognizes objectives  among v a r i o u s  study, the o b j e c t i v e s  The a d v a n t a g e o f  objectives  the p o s s i b i l i t y  groups.  Upon i d e n t i f i c a t i o n to conduct a search that  could  i n the case  who p r e f e r t h e p r e s e r -  with  accessibility  services.  of the o b j e c t i v e s ,  i t i s desirable  f o r a l t e r n a t i v e s t r a t e g i e s and t e c h n i q u e s  be e m p l o y e d t o a c h i e v e t h e s e o b j e c t i v e s .  case study, three  a l t e r n a t i v e programs a r e s u b m i t t e d .  native  of the provision of a f u l l  A consists  atmos-  with the objectives of  t h o s e who p r e f e r t h e a m e n i t i e s a s s o c i a t e d range o f urban p u b l i c  i s that the  o r country r e s i d e n t i a l  p h e r e , was f o u n d t o be i n c o m p a t i b l e  to a f u l l  than  of c o n f l i c t i n g  For instance,  of the residents  v a t i o n of the area's semi-rural  rather  In the Alter-  range o f p u b l i c  78 s e r v i c e s i n the  study a r e a .  combination of i n v o k i n g  A l t e r n a t i v e B c o n s i s t s of a  ordinances aimed a t r e s t r i c t i n g con-  t i n u e d development i n the area,  i n concert  with several  modest support programs aimed a t i n t e r n a l i z i n g or e x t e r n a l i t i e s of a s e r i o u s nature from a r i s i n g .  preventing Alternative  C i s , i n a sense, a "toned-down" v e r s i o n of A l t e r n a t i v e A i n t h a t only c e r t a i n s e r v i c e s aimed a t i n t e r n a l i z i n g or p r e venting  e x t e r n a l i t i e s of a s e r i o u s nature are  The  provided.  next step c o n s i s t e d of e v a l u a t i n g each a l t e r n a t i v e  t o determine which i s the most e f f e c t i v e i n a t t a i n i n g the previously i d e n t i f i e d objectives.  The  evaluation  consists  of a comparison of each a l t e r n a t i v e by enumerating a l l the c o s t s and  b e n e f i t s ( t a n g i b l e s as w e l l as i n t a n g i b l e s ) of  each a c c o r d i n g i n d i v i d u a l s and  to t h e i r incidence groups.  among the v a r i o u s  affected  Even though the e v a l u a t i o n may  p o i n t c l e a r l y to a c o n c l u s i o n as to which i s the  not  preferred  a l t e r n a t i v e , i t does s p e c i f y the t r a d e - o f f s n e c e s s a r y i n choosing between a l t e r n a t i v e s .  The  e v a l u a t i o n of A l t e r n a -  t i v e s A, B, and C i n the case study does not p o i n t  clearly  as to which i s the p r e f e r r e d a l t e r n a t i v e s a subsequent cons i d e r a t i o n of the r e q u i r e d t r a d e - o f f s s p e c i f i e d i n the  evalu-  a t i o n , however, suggests t h a t A l t e r n a t i v e C would l i k e l y the p r e f e r r e d a l t e r n a t i v e c i r c u m s t a n c e s . v a l i d a t e s t o a p a r t i a l extent three  i n the h y p o t h e s i s .  This  be  conclusion  the premise of statement  In other words, the  suggests t h a t i t i s not necessary to p r o v i d e  evaluation a comprehensive,  or f u l l range of s e r v i c e s ; the o b j e c t i v e s  of the community  can be achieved more e f f e c t i v e l y and e f f i c i e n t l y by p r o v i d i n g a p a r t i a l range of c e r t a i n , s p e c i f i e d  services.  80  CHAPTER V  FINANCING URBAN PUBLIC SERVICES t SOURCES OF REVENUE Introduction To approach  ensure  a degree  of c o n t i n u i t y with the a n a l y t i c  t o c h o o s i n g among a l t e r n a t i v e  a community's o b j e c t i v e s , systematic  approach  level.  can f i n d  without  t o o much l o g i c  (Eaton,  1966).  approach  have b e e n made t h a t  at present  o p i n i o n , government a u t h o r i t i e s  t a k e money where t h e y  atic  a  i s not generally followed at the l o c a l  In Eaton's  s h o u l d be t a k e n  that  o f revenue t o f i n a n c e the s e l e c t e d  Suggestions  such an approach  i t w o u l d seem l o g i c a l  s h o u l d a l s o be e m p l o y e d i n d e t e r m i n i n g  the a p p r o p r i a t e sources alternatives.  means o f a c h i e v i n g  it,  where t h e money i s ,  or principle  T h i s chapter reviews into  i n the process those  issues that  consideration i n adopting a  t o the a c q u i s i t i o n  simply  o f revenues.  system-  81 Philosophy of Taxation* E q u i t y — T h e P r i n c i p l e of Benefits  Received  T h i s p r i n c i p l e , i n which e q u i t y i s i n t e r p r e t e d as r e q u i r i n g t h a t the burden o f t a x a t i o n be a l l o c a t e d among taxpayers i n r e l a t i o n t o the b e n e f i t s each d e r i v e s  from the  enjoyment o f p u b l i c s e r v i c e s , conforms t o a b a s i c r u l e o f the p r i v a t e s e c t o r of the economy} t h a t goods and s e r v i c e s should be p a i d f o r by t h e i r u s e r s . Ontario  I n the o p i n i o n  of the  Committee on T a x a t i o n (1967), the a l l o c a t i o n o f  costs according  t o the b e n e f i t s p r i n c i p l e i s d e s i r a b l e  when s e v e r a l c o n d i t i o n s  are s a t i s f i e d .  only  F i r s t , when the  b e n e f i t s and b e n e f i c i a r i e s o f government expenditure p r o grams can be i d e n t i f i e d r e l a t i v e l y c l e a r l y } second, when a modified  d i s t r i b u t i o n of wealth and income i s n o t a  p o l i c y o b j e c t i v e ; and t h i r d , when the i m p o s i t i o n  of benefit-  r e l a t e d charges on the u s e r s o r b e n e f i c i a r i e s o f a s e r v i c e w i l l n o t r e s u l t i n an i n e f f i c i e n t use o f t h a t  service.  E q u i t y — T h e P r i n c i p l e of A b i l i t y t o Pay T h i s p r i n c i p l e , i n which e q u i t y treatment of persons p o s s e s s i n g  r e q u i r e s the equal  the same c a p a c i t y t o pay  * F o r the purposes o f t h i s study, a t a x i s c o n s i d e r e d t o be a p e c u n i a r y charge l e v i e d upon persons and/or p r o p e r t y t o meet the c o s t s o f government (Baker, 1971).  taxes,  i s appropriate  f o r f i n a n c i n g those government expen-  d i t u r e s where i t i s e i t h e r impossible  or i n a p p r o p r i a t e  to  a l l o c a t e c o s t s among taxpayers i n accordance with b e n e f i t s received.  There are s e v e r a l c r i t e r i a upon which a b i l i t y  pay  can be b a s e d — i n c l u d i n g  The  O n t a r i o Committee ( 1 9 6 7 ) argues t h a t income i s a b e t t e r  index of a b i l i t y to pay sons.  First,  wealth, consumption, and  to  than the other two  saving,  d u r i n g a g i v e n p e r i o d of time. u n i v e r s a l than wealth and of  f o r several rea-  income i s more comprehensive i n t h a t i t com-  p r i s e s both consumption and  standard  income.  or i n c r e a s e s  i n wealth,  Second, income i s more  a b e t t e r index of an i n d i v i d u a l ' s  living.  Adequacy I t almost goes without s a y i n g t h a t a tax system must be capable of p r o v i d i n g the flow of funds t h a t government deems a p p r o p r i a t e  i n any  given  period.  Flexibility A tax system should be s o : c o n s t i t u t e d t h a t government can r e a d i l y i n c r e a s e  or decrease the flow of tax funds i n  response t o changing c i r c u m s t a n c e s . teristic  An e s s e n t i a l charac-  of f l e x i b l e taxes (e.g. p r o p e r t y  t a x and  income  tax) i s t h a t r a t e a l t e r a t i o n s can be graded so as to accommodate s m a l l as w e l l as l a r g e changes i n revenue r e q u i r e ments.  Elasticity T h i s p r i n c i p l e r e q u i r e s t h a t a revenue system he composed i n p a r t of taxes whose y i e l d s respond c l o s e l y to changing economic circumstances without d e l i b e r a t e changes in rates. Balance A t a x system should cause no  c o n s i s t of more than one -tax  s i n g l e t a x can simultaneously  ments of e q u i t y , f l e x i b i l i t y and a property  f u l f i l l the  elasticity.  be-  require-  For  instance,  tax i s r e l a t i v e l y unresponsive to economic change  but h i g h l y f l e x i b l e , whereas consumption taxes are more e l a s t i c but r e l a t i v e l y i n f l e x i b l e .  rather  There are, how-  ever, disadvantages i n too great a m u l t i p l i c i t y of F i r s t , the t o t a l burden of many s m a l l weights may than a s i n g l e moderate weight.  taxes. be  greater  Second, a l a r g e number of  taxes u s u a l l y i n v o l v e s a l a r g e c o s t of c o l l e c t i o n . t h i r d , a m u l t i p l i c i t y of taxes may  dissipate  altogether  taxpayer consciousness of the c o s t of government, a ness which i s a necessary element of ensuring  And  conscious-  political  a c c o u n t a b i l i t y (White and Hamilton, 1972). Neutrality The  p r i n c i p l e of n e u t r a l i t y i s d i r e c t l y r e l a t e d to  o b j e c t i v e of e f f i c i e n c y i n the use resources  of s o c i e t y .  I f one  of the human and  the  material  assumes t h a t the p a t t e r n  of  84 r e l a t i v e p r i c e s determined by c o m p e t i t i v e market f o r c e s tends t o encourage the most e f f i c i e n t  a l l o c a t i o n of the  n a t i o n ' s r e s o u r c e s , then t o the extent t h a t a t a x minimizes  system  i t s d i s t o r t i o n of r e l a t i v e p r i c e s , i t minimizes  i t s i n t e r f e r e n c e with p r o d u c t i v e e f f i c i e n c y .  An  important  i m p l i c a t i o n f o l l o w s , namely t h a t the more g e n e r a l a tax, the l e s s i t w i l l n o r m a l l y i n t e r f e r e with i n d i v i d u a l c h o i c e s on the p a r t of producers, r e s o u r c e owners, and consumers. I t should be noted t h a t the p r i n c i p l e of n e u t r a l i t y i s a p p r o p r i a t e only when economic e f f i c i e n c y i s a prime t e r i o n of p o l i c y .  cri-  F r e q u e n t l y , governments are more con-  cerned w i t h other g o a l s and w i l l c o n s c i o u s l y depart from n e u t r a l i t y i n order t o f u r t h e r these o b j e c t i v e s ( O n t a r i o Report,  1967).  Certainty A taxpayer should be able t o e a s i l y a s c e r t a i n the time, manner and amount of payment of t a x .  A c e r t a i n t a x not  only removes the p o t e n t i a l f o r a r b i t r a r y d e c i s i o n s of a u t h o r i t i e s , but i t enables a taxpayer t o be w e l l  informed  of h i s t a x burden and t h e r e f o r e a b l e t o r e l a t e i t t o the b e n e f i t s he d e r i v e s from p u b l i c s e r v i c e s . only dimly aware of h i s t o t a l t a x burden,  I f a taxpayer i s he i s l i k e l y t o  underestimate  the c o s t of the p u b l i c s e r v i c e s with which he  i s provided.  T h i s i s p a r t i c u l a r l y l i k e l y where many of h i s  taxes are hidden i n the p r i c e s of goods and s e r v i c e s he purchases, r a t h e r than imposed upon him  directly.  85 Simplicity The p r i n c i p l e of s i m p l i c i t y must be c o n s i d e r e d as d i c t a t i n g the g r e a t e s t c l a r i t y w i t h i n the l i m i t s s e t by c e r t a i n t y and e q u i t y .  I t should be noted t h a t undue  simplicity  may make i t i m p o s s i b l e t o r e c o g n i z e the v a r y i n g circumstances of p a r t i c u l a r taxpayers ( O n t a r i o Report,  1967).  P h i l o s o p h y o f Intergovernmental F i s c a l Relations The statement was made i n Chapter I I t h a t the d i v i s i o n of f u n c t i o n s and revenue sources between a p r o v i n c i a l  govern-  ment and the m u n i c i p a l i t i e s i t has c r e a t e d i s e n t i r e l y a t the d i s c r e t i o n of the p r o v i n c i a l l e g i s l a t u r e .  A province  concerned with determining an a p p r o p r i a t e d i v i s i o n o f exp e n d i t u r e f u n c t i o n s and revenue sources between i t s e l f and i t s m u n i c i p a l i t i e s should take i n t o c o n s i d e r a t i o n two p r i n ciples!  (1)  l o c a l autonomy; and (2) the i n c i d e n c e of bene-  f i t s a s s o c i a t e d w i t h expenditure items (Johnson,  1969).  The j u s t i f i c a t i o n of l o c a l autonomy i s based l a r g e l y on the premises  t h a t s e r v i c e s t o people should be p r o v i d e d by the  government c l o s e s t t o people, and d e c i s i o n s should be made at the lowest p o s s i b l e l e v e l (Hickey, 1 9 7 2 ) .  If this  con-  cept o f d e c e n t r a l i z i n g l e g i s l a t i v e and a d m i n i s t r a t i v e f u n c t i o n s i s t o be encouraged,  the O n t a r i o Committee (1967)  suggests t h a t the p r i n c i p l e of l o c a l autonomy can be r e a l i z e d only i f m u n i c i p a l i t i e s are accorded a wide measure of  86 d i s c r e t i o n a r y a u t h o r i t y over the q u a n t i t y and q u a l i t y of the p u b l i c s e r v i c e s e n t r u s t e d t o them, and equipped w i t h sources of  revenue both adequate f o r the d i s c h a r g e of t h e i r  r e s p o n s i b i l i t i e s and s u f f i c i e n t t o ensure d i r e c t  spending  accounta-  b i l i t y t o the p u b l i c . The  j u s t i f i c a t i o n f o r c o n s i d e r i n g the i n c i d e n c e of bene-  f i t s a s s o c i a t e d with expenditure items l i e s i n the d i v e r s e nature of s e r v i c e s ; hence the wide range  of b e n e f i t s a s s o c i -  ated w i t h s e r v i c e s p r o v i d e d a t the m u n i c i p a l l e v e l . one hand t h e r e are the o r d i n a r y housekeeping l o c a l government—police  On the  requirements  and f i r e p r o t e c t i o n , water, sewers,  s t r e e t s , sidewalks, and so on.  For these kinds of items,  the b e n e f i t s accrue p r i m a r i l y t o those who  r e s i d e and work  w i t h i n the m u n i c i p a l i t y — i n t e r n a l b e n e f i t s are dominant (Eaton, 1966).  Other s e r v i c e s funded and p r o v i d e d a t the  l o c a l l e v e l do not f i t too n e a t l y i n t o the category of exp e n d i t u r e of a p u r e l y concern.  Because of the nature of  these s e r v i c e s — d e n o t e d by the A l b e r t a Task Force (1972) as human r e s o u r c e programs (e.g. h o s p i t a l s ,  libraries,  r e c r e a t i o n , e d u c a t i o n , p u b l i c h e a l t h and w e l f a r e ) - - t h e r e s u l t a n t , b e n e f i t s o f t e n " s p i l l over" and b e n e f i t in  j u r i s d i c t i o n s o t h e r than those p r o v i d i n g and  people  financing  the s e r v i c e s ; e x t e r n a l b e n e f i t s are s u b s t a n t i a l , or even dominant.  Table 6 p r e s e n t s i l l u s t r a t i v e expenditure  items  where the e x t e r n a l b e n e f i t s are dominant, where i n t e r n a l or  of  l o c a l b e n e f i t s are dominant, and where the e x t e r n a l and  TABLE 6 EXPENDITURE ITEMS BY TYPE OF BENEFIT  External  Benefits  Dominant  Education Public Health S o c i a l Welfare P u b l i c Housing A d m i n i s t r a t i o n of J u s t i c e Hospitals Intermediate A i r and water p o l l u t i o n c o n t r o l Expressways and a r t e r i a l highways R e c r e a t i o n a l s e r v i c e s and f a c i l i t i e s C u l t u r a l f a c i l i t i e s — l i b r a r i e s * museums, e t c . Internal Benefits  Dominant  General governmental s e r v i c e s Fire protection Police protection Public transport Domestic water Sewage c o l l e c t i o n and d i s p o s a l Storm drainage Garbage d i s p o s a l Residential streets Street l i g h t i n g Sidewalks, e t c .  SOURCEt J . A. Johnson, " P r o v i n c i a l - M u n i c i p a l I n t e r g o v e r n mental F i s c a l R e l a t i o n s , " Canadian P u b l i c A d m i n i s t r a t i o n . Summer 1969. ~—•  88  i n t e r n a l b e n e f i t s are both s u b s t a n t i a l . the r e l a t i v e p r o p o r t i o n  illustrates  of t o t a l expenditures a l l o c a t e d by  the C i t y of Kamloops to i t s v a r i o u s Based on c o n s i d e r a t i o n s the i n c i d e n c e  Table 7  functions.  of l o c a l autonomy as w e l l  of b e n e f i t s a c c r u i n g  from urban p u b l i c  as  services,  Johnson (1969) argues t h a t f o r s e r v i c e s where the r a t i o  of  e x t e r n a l b e n e f i t s t o l o c a l b e n e f i t s i s l a r g e , the case f o r l o c a l autonomy and r e s p o n s i b i l i t y i s weak.  I n these s i t u a -  t i o n s , the l e v e l o f s e r v i c e should be approximately uniform and  as such should be  municipality.  determined by a government above the  Consequently, the r e s p o n s i b i l i t y f o r p r o v i d i n g  the funds f o r the program should a l s o r e s t w i t h the l e v e l government.  For items where i n t e r n a l b e n e f i t s  dominant, the r e s p o n s i b i l i t y should be l o c a l and should be met  the  by taxes or charges borne by those who  and work w i t h i n the m u n i c i p a l i t y .  are costs reside  I t i s also i n providing  these s e r v i c e s t h a t the case f o r l o c a l autonomy and s i b i l i t y i s greatest  higher-  respon-  (Johnson, 1969).  P r o v i n c i a l Grants To cope with the gap  between l o c a l revenue sources  l o c a l r e s p o n s i b i l i t i e s , p r o v i n c i a l and m u n i c i p a l c o u l d implement one (1)  and  authorities  or a combination of the f o l l o w i n g options«  a complete t r a n s f e r o f a d m i n i s t r a t i v e  and  financial res-  p o n s i b i l i t i e s of human r e s o u r c e programs from m u n i c i p a l i t i e s t o the p r o v i n c e  as recommended by Johnson; (2)  increase  the  89 TABLE ? EXPENDITURE FUNCTIONS AS PERCENT OF TOTAL MUNICIPAL EXPENDITURES:  1  KAMLOOPS 1973  Expenditure F u n c t i o n  Percentage  E x t e r n a l B e n e f i t s Dominant 1. E d u c a t i o n 2. H o s p i t a l s 3. T r a n s f e r s t o R e g i o n a l D i s t r i c t and M u n i c i p a l Finance A u t h o r i t y . . . . 4. S o c i a l welfare3 5. P u b l i c h e a l t h . . 6. A d m i n i s t r a t i o n of J u s t i c e . . . . . . . . . 2  2  36.2 1.3  2  0.7 13.2 0.6 0.3  Intermediate 7. R e c r e a t i o n  and C u l t u r a l S e r v i c e s  11.6  I n t e r n a l B e n e f i t s Dominant 8. 9. 10. 11. 12. 13. 14.  General government s e r v i c e s Police protection . . . . . . . Fire protection T r a n s p o r t a t i o n s e r v i c e s and p a r k i n g . Garbage and waste d i s p o s a l Debt charges Other  SOURCE:  . . . . .  9.0 4.8 4.2 8.6 2.5 3.4 2.9  C a l c u l a t i o n s d e r i v e d from C i t y o f Kamloops Budget  1973.  ^ o t a l m u n i c i p a l expenditures $17*850,250. T h i s t o t a l i s e x c l u s i v e o f expenditures on s e l f - l i q u i d a t i n g s e r v i c e s . Domestic water $1,186,525  S a n i t a r y sewer  $  838,325  2 Transfers  t o other governments—38,2% o f t o t a l  expenditures.  ^ S o c i a l welfare expenditures are f i n a n c e d from two sources: C o n d i t i o n a l t r a n s f e r s from Prov. 73% L o c a l g e n e r a l revenue 27% 4 R e c r e a t i o n and c u l t u r a l s e r v i c e s are f i n a n c e d from two sources: C o n d i t i o n a l t r a n s f e r s from Prov. 20% L o c a l g e n e r a l revenue 80%  p r o v i n c i a l f i n a n c i a l a s s i s t a n c e t o m u n i c i p a l i t i e s ; and (3) broaden the m u n i c i p a l revenue base.  Implementation o f the  f i r s t a l t e r n a t i v e i s l i m i t e d t o some extent because o f t h e b e l i e f o f both p r o v i n c i a l and l o c a l a u t h o r i t i e s t h a t l o c a l autonomy w i l l be threatened by such a p o l i c y * . t i v e o f broadening of  The a l t e r n a -  m u n i c i p a l revenue i s a l s o l i m i t e d because  major d i f f i c u l t i e s t h a t adhere t o m u n i c i p a l r e l i a n c e upon  any major non-property  tax f i e l d  (e.g. l o c a l income t a x ,  g a s o l i n e tax, o r l o c a l s a l e s t a x — s e e  Appendix A ) .  the p r o v i n c e s have found i t n e c e s s a r y t o p r o v i d e  Hence,  financial  a s s i s t a n c e t o m u n i c i p a l i t i e s i n the form of p r o v i n c i a l g r a n t s , the two p r e v a l e n t forms are c o n d i t i o n a l and uncond i t i o n a l grants.  I n g e n e r a l , p r o v i n c e s have tended  to place  s t i p u l a t i o n s as t o the f u n c t i o n s t o be f i n a n c e d by p r o v i n c i a l grants. of  The funds, u s u a l l y earmarked f o r the f u n d i n g  humanrresource programs, c o u l d be construed as being a  compromise which r e c o g n i z e s both the r e s p o n s i b i l i t y o f p r o v i n c i a l governments with r e s p e c t t o these s e r v i c e s , as w e l l as b e n e f i t s t o be d e r i v e d by m a i n t a i n i n g l o c a l  auto-  nomy and a l o c a l day-to-day a d m i n i s t r a t i v e presence. U n c o n d i t i o n a l o r revenue d e f i c i e n c y g r a n t s , on the other hand, a r e designed t o make up a c r o s s - t h e - b o a r d  deficiencies  * F o r i n s t a n c e , the A l b e r t a Task Force ( 1 9 7 2 ) recommended t h a t p r o v i n c i a l r e s p o n s i b i l i t y i n these areas o f human r e s o u r c e programs should i n c r e a s e , but n o t t o the extent o f assuming f u l l f i n a n c i a l r e s p o n s i b i l i t y — t h e r a t i o n a l e b e i n g to p r e s e r v e some semblance of l o c a l autonomy and thereby p o l i t i c a l accountability.  i n m u n i c i p a l revenue t o the extent t h a t there i s a need t o supplement the p r o p e r t y tax and i n so f a r as t h i s need be met  through non-property  cannot  tax sources.  P h i l o s o p h y of P u b l i c  Borrowing  There are s e v e r a l c o n f l i c t i n g views among government o f f i c i a l s as t o the circumstances under which i t i s approp r i a t e t o borrow.  First,  the " f u t u r e g e n e r a t i o n s " view holds  t h a t s i n c e the b e n e f i t s from c a p i t a l expenditures w i l l  be  enjoyed by f u t u r e g e n e r a t i o n s i t i s always a p p r o p r i a t e t o borrow f o r c a p i t a l e x p e n d i t u r e s — s u b j e c t , of course, t o other f a c t o r s such as the c o s t of borrowing, t o assume h i g h e r debt charges, and so  the w i l l i n g n e s s  on.  Second, the "pay-as-you-go" view holds t h a t i n normal circumstances c a p i t a l as w e l l as o r d i n a r y expenditures should be f i n a n c e d from c u r r e n t revenues.  The exponents of  t h i s view argue t h a t f u t u r e g e n e r a t i o n s w i l l have c a p i t a l expenditures t o f i n a n c e as w e l l , and t h a t as l o n g as  capital  expenditures bear a reasonably constant r e l a t i o n s h i p t o exp e n d i t u r e s they should not be f i n a n c e d by  borrowing.  A t h i r d view, i n between the above extremes, holds t h a t when the b e n e f i t s of p u b l i c works w i l l be enjoyed  entirely  by a l i m i t e d number of taxpayers, i t i s a p p r o p r i a t e t o f i n a n c e the p u b l i c works by borrowing, taxpayers concerned  and t o r e q u i r e the  t o s e r v i c e the debt through  special  92 taxes.  In a sense borrowing f o r t h i s purpose becomes s e l f -  l i q u i d a t i n g ; by d e f i n i t i o n the debenture debt i s r e p a i d out of i n c r e m e n t a l revenues (Johnson and Andrews, 1964). Other f a c t o r s may  a l s o i n f l u e n c e the borrowing d e c i s i o n .  F o r i n s t a n c e , the d e c i s i o n t o borrow may p a r t by the r a t e of i n t e r e s t .  be i n f l u e n c e d i n  Evidence assembled by  Johnson  and Andrews (1964), however, suggests t h a t m u n i c i p a l governments are not m a t e r i a l l y a f f e c t e d i n t h e i r borrowing p l a n s by changes  i n the r a t e of i n t e r e s t ; spending needs are by f a r the  more c o m p e l l i n g f o r c e .  An a d d i t i o n a l f a c t o r which i s v e r y  i n f l u e n t i a l a t the m u n i c i p a l l e v e l i s the e x i s t e n c e of numerous s t a t u t o r y l i m i t a t i o n s on borrowing imposed by the p r o v i n c e (see Appendix B f o r B r i t i s h Columbia  regulations).  M u n i c i p a l Sources o f Revenue The M u n i c i p a l Act o f B r i t i s h Columbia a u t h o r i z e s to numerous r e s t r i c t i o n s ) m u n i c i p a l i t i e s t o a c q u i r e by l e v y i n g the f o l l o w i n g charges: (2) b u s i n e s s t a x (S. 427); (S. 220);  (subject  revenue  (1) p r o p e r t y t a x (S.  (3) l i c e n c e s (S. 438);  367);  (4) f i n e s  (5) s p e c i a l a s s e s s m e n t s — e . g . f r o n t a g e t a x (S.  (6) u s e r f e e s (S. 564);  and (7) c o n n e c t i o n charges (S.  415);  532).  T a b l e s 8 and 9 show the r e l a t i v e y i e l d of the v a r i o u s revenue sources u t i l i z e d i n Kamloops and i n d i c a t e t h a t by f a r the most important source o f revenue i s the l o c a l p r o p e r t y t a x . Of the remaining sources, p r o v i n c i a l g r a n t s c o n t r i b u t e the most s i g n i f i c a n t y i e l d .  In a sense p r o v i n c i a l g r a n t s are  93 TABLE 8 SOURCES OF REVENUE AS PERCENT OF TOTAL MUNICIPAL REVENUE!  1  KAMLOOPS 1973  Revenue Source  Percentage  Property Taxation 1. Real p r o p e r t y t a x 2. S p e c i a l assessments . . . . . . . . . . . . 3. Grants i n l i e u o f taxes 4. School t a x 5. H o s p i t a l tax2 . . . . . . . . . . . . . . .  27.0 0.7 0.8 36.2  2  S a l e s o f S e r v i c e s ( u s e r charges) 6. T r a n s p o r t a t i o n 7. Garbage f e e s 8. R e c r e a t i o n and c u l t u r a l f e e s 9. Other  1.3  .  Other Revenue From Own Sources 10. L i c e n c e s and p e r m i t s 11. F i n e s 12. Other T r a n s f e r s From Other Governments 13. C o n d i t i o n a l t r a n s f e r s from Fed. Gov't.. . 14. C o n d i t i o n a l t r a n s f e r s from Prov. Gov't. . a. S o c i a l w e l f a r e b. R e c r e a t i o n . c. Admin, o f J u s t i c e d. Other 15. U n c o n d i t i o n a l t r a n s f e r s from Prov. Gov't. a. L o c a l gov't, grant @ 32/person. . b. S p e c i a l grant.? Other T r a n s f e r s K 16. Recoverable debt charges 17. T r a n s f e r s from own r e s e r v e s SOURCE:  1.1 0.6 1.2 0.6 1*6 0.7 1.1  . .  . ,  0.4 9.5 2.2 1.3 0.9 9.8 0.9 0.8 1.3  C a l c u l a t i o n s d e r i v e d from C i t y o f Kamloops 1973.  ^ o t a l m u n i c i p a l revenues $17,850,250. T h i s t o t a l i s e x c l u s i v e o f revenue from s e l f - l i q u i d a t i n g s e r v i c e s . Domestic Water $1,186,525  2  S a n i t a r y Sewer  $  838,325  The m u n i c i p a l i t y a c t s as agent f o r l o c a l s c h o o l and h o s p i t a l boards by c o l l e c t i n g s c h o o l and h o s p i t a l t a x e s . -^Portion o f 1972 Prov. p r o p e r t y taxes c o l l e c t e d i n unorg a n i z e d areas p r i o r t o amalgamation. 4 Debt charges on p a r k i n g f a c i l i t i e s , operated on a s e l f s u s t a i n i n g b a s i s , are r e c o v e r a b l e .  TABLE 9 SOURCES OF REVENUE AS PERCENT OF TOTAL REVENUES DESIGNATED FOR GENERAL EXPENDITURES  Revenue Source Property Taxation 1. Real p r o p e r t y t a x 2. S p e c i a l assessments 3. Grants i n l i e u of taxes  1  Percentage  . . . »  56.1 1.4 1.5  Sales of S e r v i c e s (user charges) 4. T r a n s p o r t a t i o n 5. Garbage f e e s . . . . . . . . . . . . . . . . 6. R e c r e a t i o n and c u l t u r a l f e e s . . . . . . . . 7. Other  2.3 1.2 2.4 1.5  Other Revenue From Own Sources 8. L i c e n c e s and permits 9. F i n e s 10. Other  3.3 1.4 2.4  T r a n s f e r s From P r o v i n c i a l Government 11. L o c a l government grant @ 32/person 12. S p e c i a l grant Other T r a n s f e r s 13. Recoverable debt charges. 14. T r a n s f e r s from own sources  SOURCE:  20.5 1.8 1.6 2,6  C a l c u l a t i o n s d e r i v e d from C i t y of Kamloops Budget  1973.  T o t a l revenues designated f o r g e n e r a l expenditures $8,591,750. T h i s t o t a l i s e x c l u s i v e o f revenues c o l l e c t e d f o r a n s cf h or os lf and h o s p i t a l boards ($6,713,475) and c o n d i t i o n a l /I P ^ Tom F e d e r a l ($66,275) and P r o v i n c i a l t  h  e  ($2,478,750) governments.  the o n l y means by which m u n i c i p a l i t i e s have a c c e s s t o a l t e r n a t i v e sources o f revenue such as income tax, s a l e s t a x , and g a s o l i n e t a x . P r o p e r t y Tax The  property  t a x i s , i n essence, a l e v y a g a i n s t a p r o -  perty i n proportion t o the value it  i s seldom achieved  of that property.  Although  i n p r a c t i c e because o f imperfect  assessment procedures, the fundamental p r i n c i p l e of equal treatment of equals ( i n t h i s case equal r e f e r r i n g t o p r o perty values  r a t h e r than a b i l i t y t o pay o r b e n e f i t s  i s t h e o r e t i c a l l y possible to achieve.  received)  When measured a g a i n s t  the p r i n c i p l e s o f a b i l i t y t o pay o r b e n e f i t s r e c e i v e d , however, i t i s not c l e a r whether equals a r e indeed t r e a t e d equally.  First,  i t i s u n c l e a r who b e n e f i t s from a l a r g e  p a r t o f l o c a l expenditures,  and second, i t i s a l s o  who bears the u l t i m a t e burden o f the p r o p e r t y f i r s t problem r e g a r d i n g ready been d i s c u s s e d  the i n c i d e n c e  at length.  respect t o the incidence  tax.  unclear The  of b e n e f i t s has a l -  The second problem with  o f t h e burden of t a x a t i o n i s  c l a r i f i e d by c i t i n g two examples.  The f i r s t  i s that pro-  p e r t y taxes imposed on l a n d l o r d s do n o t n e c e s s a r i l y r e s t with t h e l a n d l o r d .  At l e a s t i n growing communities where  the demand f o r housing warrants i t , r e n t s can be r e v i s e d q u i t e r a p i d l y t o r e s t o r e the r e t u r n t o the l a n d l o r d s . Secondly, under most circumstances, h i g h e r p r o p e r t y  taxes  96 imposed on b u s i n e s s e s w i l l u l t i m a t e l y r e s u l t i n h i g h e r p r o duct p r i c e s borne t o some extent by r e s i d e n t consumers ( O n t a r i o Report,  196?).  I f i t c a n be assumed t h a t the u l t i m a t e burden o f p r o p e r t y t a x a t i o n on owner-occupied r e s i d e n c e s f a l l s on the owner, t h e r e i s some c o n t r o v e r s y as t o whether or n o t the t a x burdens a r e a l l o c a t e d a c c o r d i n g t o a b i l i t y t o pay.  On the one  hand, Netzer ( 1 9 6 6 ) has advanced the argument t h a t a p e r son's expenditures on s h e l t e r a r e r o u g h l y p r o p o r t i o n a t e t o his  a b i l i t y t o pay, and t h e r e f o r e , some accordance  p r i n c i p l e of a b i l i t y t o pay i s a c h i e v e d .  w i t h the  On the other hand,  the O n t a r i o Committee p o i n t s out t h a t those w i t h low incomes spend a l a r g e r f r a c t i o n o f t h e i r incomes on the p r o v i s i o n of s h e l t e r than do those w i t h h i g h incomes, whether the c o s t s are i n c u r r e d through owning o r r e n t i n g accommodation.  This  b e i n g so, those with low incomes c a r r y a p r o p e r t y t a x l o a d t h a t i s r e l a t i v e l y h e a v i e r than the l o a d c a r r i e d by those with l a r g e r incomes. regressive tax. passed  The p r o p e r t y tax, i s i n e f f e c t , a  Real p r o p e r t y taxes on b u s i n e s s t h a t a r e  on t o consumers through h i g h e r p r i c e s have the same  e f f e c t , f o r low-income i n d i v i d u a l s spend a l a r g e r  fraction  of t h e i r incomes than do upper-income i n d i v i d u a l s ( O n t a r i o Report,  1967).  An important advantage o f the p r o p e r t y t a x i s i t s f l e x i b i l i t y ; r a t e a l t e r a t i o n s c a n be e a s i l y implemented  t o accommodate s m a l l as w e l l as l a r g e changes i n revenue requirements.  In a d d i t i o n , the p r o p e r t y tax i s a l s o c e r t a i n  i n t h a t i t i s r e a d i l y a s c e r t a i n a b l e and c l e a r l y The  visible.  e f f e c t of the p r o p e r t y t a x on the a l l o c a t i o n of r e s o u r c e s ,  r e l a t i v e p r i c e s , and p r o d u c t i v e e f f i c i e n c y i s v e r y u n c l e a r , and as such the extent of c o n f o r m i t y with the p r i n c i p l e of neutrality i s largely  indeterminate.  A d e f i n i t e weakness of the p r o p e r t y t a x i s t h a t i t has been unable diture.  to keep pace with i n c r e a s e s i n m u n i c i p a l expen-  Research by the Economic C o u n c i l of Canada (1968)  has shown t h a t d u r i n g the p e r i o d of 1953  t o 1963  property  tax revenues rose more than one and one-half times as as p e r s o n a l incomes, thereby s u b s t a n t i a t i n g Netzer's f i n d i n g s t h a t the income e l a s t i c i t y of p r o p e r t y taxes been r e l a t i v e l y h i g h .  rapidly (1966) has  C o n t i n u i n g i n v e s t i g a t i o n by the Eco-  nomic C o u n c i l of Canada suggests, however, t h a t on  average,  the assessment base has r i s e n a t only about the same r a t e as p e r s o n a l income, o r perhaps v e r y s l i g h t l y f a s t e r . m u n i c i p a l expenditures have been r i s i n g f a s t e r  But s i n c e  than;personal  income, many m u n i c i p a l i t i e s have f o r some time f a c e d upward trends i n the r a t e s which they must apply t o the p r o p e r t y t a x base (Economic C o u n c i l of Canada, 1968). The  f o r e g o i n g d i s c u s s i o n of the t h e o r y u n d e r l y i n g the  p r o p e r t y tax would do l i t t l e  t o enable an o u t s i d e r t o a n t i -  c i p a t e the extent of adverse  c r i t i c i s m t o which the tax  has been s u b j e c t e d .  In essence, the c r i t i c i s m s l e v e l e d a t  the p r o p e r t y t a x are not a r e s u l t of the nature of the tax, but r a t h e r the manner i n which i t i s a d m i n i s t e r e d , as w e l l as the extent to which l o c a l governments depend on the p r o p e r t y tax t o f i n a n c e expenditure which c i t i z e n s f e e l r i g h t l y be f i n a n c e d by taxes which b e t t e r r e f l e c t to  should  ability  pay. The  fundamental c r i t i c i s m of the a d m i n i s t r a t i o n of the  tax i s t h a t the p r i n c i p l e of equal treatment often v i o l a t e d .  of equals i s so  F i r s t , assessment p r a c t i c e s are v e r y imper-  f e c t : assessed v a l u e s of s i m i l a r p r o p e r t i e s are a n y t h i n g but uniform i n many c a s e s .  Second, the p r i n c i p l e of equal t r e a t -  ment of equals i s v i o l a t e d because of e x t e n s i v e t a x conc e s s i o n s and exemptions.  As a r e s u l t a community's a s s e s s -  ment base i s narrowed; i n a sense, p r o p e r t i e s b e i n g taxed are f o r c e d t o s u b s i d i z e those p r o p e r t i e s t h a t are favoured, A second c r i t i c i s m of the p r o p e r t y tax i s t h a t i t i s b e i n g r e l i e d on too h e a v i l y t o f i n a n c e those s e r v i c e s which should r i g h t l y be f i n a n c e d by taxes which b e t t e r r e f l e c t a b i l i t y t o pay  (Baker, 1971).  F o r i n s t a n c e , Eaton (1966)  c o n s i d e r s i t t o be an anomaly t h a t the same k i n d of tax i s used t o f i n a n c e e d u c a t i o n expenditures as expenditures housekeeping  items.  on  99 S i t e Value  Taxation  An a l t e r n a t i v e which has a t t r a c t e d c o n s i d e r a b l e t i o n i s t h a t o f l i m i t i n g the p r o p e r t y  atten-  t a x t o the t a x a t i o n of  l a n d without b u i l d i n g s , thereby exempting improvements from assessment. taxation are: it  Among the advantages claimed  f o r site  value  ( 1 ) i t takes account o f l o c a t i o n r e n t s ; ( 2 )  i s e n t i r e l y n e u t r a l and t h e r e f o r e w i l l n o t tend t o d i s -  courage investment i n new c o n s t r u c t i o n and r e h a b i l i t a t i o n as w i t h the p r e s e n t  tax;  ( 3 ) i t would encourage more i n t e n s i v e  u t i l i z a t i o n o f l a n d because i t would i n c r e a s e s u b s t a n t i a l l y the h o l d i n g c o s t s of l a n d ; and ( 4 ) l e s s s p e c u l a t i v e  with-  h o l d i n g o f l a n d from development would r e s u l t i n reduced urban sprawl (Netzer, 1 9 6 6 ) .  There i s some d i s p u t e as t o  the v a l i d i t y o f these claims as i s e v i d e n t  i n the O n t a r i o  Committee's ( 1 9 6 7 ) comments on t h i s t a x i n which they argue t h a t the t a x would not e l i m i n a t e the l a n d s p e c u l a t o r and urban c o n s t r u c t i o n would be compressed on t o more crowded sites.  I n a d d i t i o n , the b a s i s o f assessment of s i t e  t a x a t i o n i s s u b j e c t t o d i s p u t e i n t h a t as F i s c h e r  value  (1954)  c l a i m s , the demand f o r urban l a n d i s d e r i v e d from the i n t e n s i t y and c h a r a c t e r o f the demand f o r s t r u c t u r e s i n g e n e r a l , and the c h a r a c t e r o f improvements o f p a r t i c u l a r s i t e s shapes the demand f o r the s i t e themselves.  Therefore,  t h e r e i s no meaningful way, i n theory as w e l l as i n p r a c t i c e , of s e p a r a t i n g t h e v a l u e  o f the s i t e from the v a l u e o f im-  provements i f the s i t e i s not a vacant one.  As a r e s u l t ,  10G f o r m i d a b l e p r a c t i c a l d i f f i c u l t i e s would a r i s e , making a s s e s s ment even more d i f f i c u l t than a t p r e s e n t .  Additional disad-  vantages c i t e d by the O n t a r i o Committee are»  (1) i t would  narrow the base of t a x a t i o n by removing p a r t of the weight of t a x a t i o n from i n d u s t r i a l and commercial taxpayers;  (2)  r e g r e s s i v e n e s s and i n e q u a l i t y would be g r e a t e r because the weight on any p a r t i c u l a r taxpayer would no l o n g e r be governed by h i s expenditure  on s h e l t e r — i . e . s m a l l homeowners would  be more h e a v i l y taxed; and developed  (3) s i n c e land-use p a t t e r n s have  under the e x i s t i n g system of r e a l p r o p e r t y t a x a -  t i o n , the t r a n s i t i o n a l e f f e c t of s i t e v a l u e t a x a t i o n would d i f f e r w i d e l y from one p r o p e r t y h o l d e r t o another Report,  (Ontario  1967).  Sources of Revenue Based on the P r i n c i p l e of B e n e f i t s Received The  statement  was  made e a r l i e r i n the chapter t h a t the  a l l o c a t i o n of c o s t s a c c o r d i n g t o the b e n e f i t s p r i n c i p l e i s d e s i r a b l e only whent  (1) the b e n e f i t s and b e n e f i c i a r i e s of  government expenditure programs can be i d e n t i f i e d clearly;  relatively  (2) a m o d i f i e d d i s t r i b u t i o n of wealth and income i s  not a p o l i c y o b j e c t i v e ; and r e l a t e d charges  (3) the i m p o s i t i o n of b e n e f i t  on the u s e r s or b e n e f i c i a r i e s of a s e r v i c e  w i l l not r e s u l t i n an i n e f f i c i e n t use of the S e v e r a l means of l e v y i n g charges  service.  can be u t i l i z e d t o a l l o c a t e  c o s t s a c c o r d i n g t o the b e n e f i t p r i n c i p l e .  Table 10,  which  TABLE 10 CLASSIFICATION OF REVENUES  Type o f Revenue  Extent o f Individual Benefit  Example  Extent of P u b l i c Purpose  Quasi-private price  e l e c t r i c i t y and telephone r a t e s  S p e c i a l b e n e f i t the exclusive consideration  P u b l i c purpose incidental  Public  bus f a r e  Less s p e c i a l b e n e f i t although s t i l l preponderant  P u b l i c purpose o f some importance  User f e e  metered water rates  S p e c i a l b e n e f i t measurable  P u b l i c purpose o f s t i l l greater importance  Special assessment  frontage tax  Special benefit assumed  P u b l i c purpose controlling  Tax  general property tax  S p e c i a l b e n e f i t only an incidental result  SOURCEi  price  Mushkin and B i r d , " P u b l i c P r i c e s t Goods, ed. Mushkin (1972), p. 24.  still  P u b l i c purpose the e x c l u s i v e consideration  An Overview," i n P u b l i c P r i c e s f o r P u b l i c  102 c l a s s i f i e s revenues a c c o r d i n g  t o the extent of i n d i v i d u a l  b e n e f i t as w e l l as the extent of p u b l i c purpose, i n d i c a t e s t h a t d i f f e r e n t sources may be a p p r o p r i a t e  depending on the  extent t o which a s e r v i c e b e n e f i t s i n d i v i d u a l s as opposed t o the community  as a whole.  S p e c i a l Assessments S p e c i a l assessments are e s s e n t i a l l y l e v i e s a g a i n s t property  to defray  real  a l l or p a r t of the c o s t s of s p e c i f i c  p u b l i c improvements.  A s p e c i a l assessment i s d i s t i n g u i s h e d  by s e v e r a l c h a r a c t e r i s t i c s *  (1) i t i s a l e v y r e s t r i c t e d t o  an a r e a demonstrably b e n e f i t e d by the improvementj (2) the proceeds from the l e v y are used t o d e f r a y  the c o s t of making  e s s e n t i a l l o c a l improvements, e.g. sewers and d r a i n s , water supply, and s t r e e t improvements; and (3) the assessments become l i e n s upon the b e n e f i t e d Generally,  property.  improvements t o be f i n a n c e d  by s p e c i a l  assessments may be i n i t i a t e d e i t h e r by the p e t i t i o n of p r o perty  owners or by the l o c a l government a u t h o r i t y .  The  m u n i c i p a l i t y may a l s o decide i f any o f the improvement are t o be met from g e n e r a l  revenues.  suggests t h a t i f a community  Weinstein  (1970)  as a whole w i l l d e r i v e some  b e n e f i t s from the p r o j e c t , the m u n i c i p a l i t y be r e q u i r e d  costs  t o pay p a r t of the c o s t .  should  generally  103 The  b a s i c f e a t u r e d i s t i n g u i s h i n g s p e c i a l assessments  from user f e e s or s e r v i c e charges i s the method of a l l o c a t i n g the c o s t s .  Depending upon the nature  of the p a r t i c u l a r s e r -  v i c e , three a l t e r n a t e methods of a l l o c a t i n g c o s t s are able—frontage,  zone, and a r e a .  avail-  F i r s t , as the name i m p l i e s ,  frontage assessment (most commonly used f o r s t r e e t improvements) i s an assessment on p r o p e r t y v a r y i n g a c c o r d i n g t o the l o t f r o n t a g e a b u t t i n g an improvement. does not s e t a uniform  I f the m u n i c i p a l i t y  amount p e r f o o t t o be assessed,  the  computation f o r each l o t i s simply a r a t i o of t h a t l o t frontage t o the t o t a l frontage a b u t t i n g the  improvement  m u l t i p l i e d by the a s s e s s i b l e c o s t of the p r o j e c t .  Second,  under a system of zone assessments, the l a n d on both s i d e s of the improvement (e.g. an a r t e r i a l r o a d ) , but s t i l l  i n the  b e n e f i t area, i s d i v i d e d i n t o zones or s t r i p s p a r a l l e l the improvement. assessed area.  The p r o p e r t y w i t h i n each zone i s then  a percentage of the c o s t s i n p r o p o r t i o n t o i t s  The  r a t e of assessment d i m i n i s h e s with the  from the improvement.  distance  T h i r d , area assessment, which i s most  o f t e n used f o r s a n i t a r y and  storm sewers, i s based on  premise t h a t each p a r c e l served by the f a c i l i t y assessed  to  should  the be  t h a t p r o p o r t i o n of the c o s t which i t s a r e a bears  t o the t o t a l area of the d i s t r i c t .  T h i s method of  ment i s g e n e r a l l y c o n s i d e r e d more e q u i t a b l e than  frontage  s i n c e area g i v e s c o n s i d e r a t i o n to the l o t depth and as w e l l as width.  assess-  shape  S e v e r a l a d d i t i o n a l methods of a l l o c a t i n g  10k c o s t s have "been advanced.  F i r s t , the p r o p e r t y  valuation  method attempts to i n t e g r a t e the p r i n c i p l e s of b e n e f i t s r e c e i v e d and  a b i l i t y t o pay.  The  amount assessed to each  l o t i s the r a t i o of t h a t l o t ' s p r o p e r t y  v a l u a t i o n to  the  t o t a l v a l u a t i o n of the assessment d i s t r i c t , m u l t i p l i e d by the a s s e s s i b l e p r o j e c t c o s t .  And  second, the d i r e c t b e n e f i t  method i s based on the premise t h a t s i n c e a government p r o v i d e d improvement may  r e s u l t i n an enhancement o f v a l u e of  c e r t a i n p r o p e r t i e s , the a l l o c a t i o n of c o s t s should vary according  t o the b e n e f i t s a p a r t i c u l a r p r o p e r t y  will  receive.  T h i s method i s a p p l i e d by determining the value of a l o t b e f o r e and the two  a f t e r the p u b l i c improvementt the d i f f e r e n c e i n  v a l u e s i s the  s t e i n , 1970).  The  s p e c i a l assessment f o r t h a t l o t (Wein-  obvious disadvantage of the  l i e s i n d e t e r m i n i n g the p r o p o r t i o n b u t a b l e t o the p r o v i s i o n of the  l a t t e r method  of i n c r e a s e d v a l u e  attri-  service.  I t should be noted t h a t s p e c i a l assessments can be t o defray  used  the c o s t s of a p a r t i c u l a r c a p i t a l improvement i n  s e v e r a l ways: f i r s t ,  i n cases where improvements are  fin-  anced on a pay-as-you-go b a s i s , s p e c i a l assessments are l i k e l y to be a lump-sum levy?  and  second, i n cases where  improvements are f i n a n c e d by borrowing, s p e c i a l assessments are l e v i e d a n n u a l l y As a tax, the tages:  u n t i l the debt i s r e t i r e d . s p e c i a l assessment has  (1) i t i s an e q u i t a b l e  a number of advan-  tax t o the extent t h a t i t  105 (2)  conforms w i t h the p r i n c i p l e of b e n e f i t s r e c e i v e d ; easy t o understand; (3) forward; (4) able;  (5)  administration  i s relatively straight-  i t i s c e r t a i n i n amount and  i t provides  i t is  readily ascertain-  an a l t e r n a t i v e t o the p r o p e r t y  tax,  thereby f a c i l i t a t i n g a b e t t e r balanced t a x system; (6)  pro-  p e r t y tax exempt p r o p e r t i e s can be a s s e s s e d f o r t h e i r share (7)  of the b e n e f i t ; and  p r o j e c t s do not add t o tax burdens  or f i n a n c i a l l i a b i l i t i e s of the g e n e r a l The  taxpayer.  s p e c i a l assessment i s , however, not without i t s (1)  disadvantages:  i t i s r e s t r i c t e d i n scope t o f i n a n c i n g  s e r v i c e s f o r which there are i d e n t i f i a b l e b e n e f i c i a r i e s ; (2)  i t i s i n e q u i t a b l e t o the extent  of a b i l i t y to pay;  and  (3)  t h a t i t takes no  account  i t i s i n f l e x i b l e i n that rate  a l t e r a t i o n s are l a r g e l y i n f e a s i b l e . User Fees or S e r v i c e Charges The  U.S.  Bureau of the Census d e f i n e s user f e e s  as  "amounts r e c e i v e d from the p u b l i c f o r the performance of s p e c i a l s e r v i c e s b e n e f i t i n g the person charges". are b a s i c a l l y of two garbage f e e s ) and of the q u a n t i t y  User f e e s  t y p e s — t h e f l a t r a t e (e.g. monthly  the r a t e which i s charged as a f u n c t i o n  of a p a r t i c u l a r s e r v i c e consumed  metered water c h a r g e s ) .  (e.g.  In essence, a f l a t r a t e i s a  tax  r a t h e r than a user fee i n t h a t i t takes no account  of  covering v a r i a b l e costs associated with a v a r i a b l e  use;  f l a t r a t e charges assume a m a r g i n a l p r i c e of zero  1969).  (Downing,  106 V a r i a b l e u s e r f e e s , on the other hand, are s i m i l a r t o taxes but d i f f e r i n two i s not  important r e s p e c t s .  compulsory but may  F i r s t , payment  be avoided, a t l e a s t i n  theory,  by not u s i n g a government f a c i l i t y  or not a c c e p t i n g  ernmentally s u p p l i e d s e r v i c e .  second, the government  And  a  gov-  i s o b l i g e d t o render a s p e c i f i c b e n e f i t t o the persons making payment (Weinstein,  1970).  A fundamental problem  a s s o c i a t e d with l e v y i n g v a r i a b l e user f e e s i s t h a t of mining the a p p r o p r i a t e  " p r i c e " t o be charged.  deter-  Traditionally,  the l e v e l of p u b l i c u t i l i t y  r a t e s has been determined  by  considerations  of h i s t o r i c a l or o r i g i n a l  costs.  f o r recovery  To achieve t h i s , r a t e s are u s u a l l y set so as t o equate average  revenue (AR)  with average c o s t s (AC);  average  costs  being the summation of average v a r i a b l e c o s t s (AVC) average f i x e d c o s t s AVC  (AFC).  In the case of p u b l i c  and utilities,  would be comprised of o p e r a t i n g and maintenance expendi-  tures?  whereas AFC  would be comprised of c a p i t a l c o s t s .  Rates determined i n t h i s manner not according  costs  t o the p r i n c i p l e of b e n e f i t s r e c e i v e d , but  ensure the r e c o v e r y well.  only a p p o r t i o n  they  of c a p i t a l and maintenance o u t l a y s  In some cases,  i f a government wishes t o encourage  the consumption of a p a r t i c u l a r s e r v i c e , i t may  set  the  r a t e s below average c o s t ; the d i f f e r e n c e between c o s t s e l l i n g p r i c e would then be recovered A government i s a l s o able t o use p r i c e s above c o s t and purposes.  as  by g e n e r a l  and  taxation.  i t s monopoly power t o set  thereby generate funds f o r  other  A c c o r d i n g t o M i l l i m a n (1972), however, i t i s q u e s t i o n a b l e whether r a t e s determined  by the average c o s t o f s e r v i c e s  as opposed t o the marginal c o s t o f supply w i l l l e a d t o e f f i c i e n c y i n the use o f e x i s t i n g s e r v i c e s . p r i c e s should be determined  Instead, p u b l i c  a c c o r d i n g t o the p r i n c i p l e s o f  m a r g i n a l - c o s t p r i c i n g which says t h a t the demand p r i c e  should  be made equal t o marginal c o s t , with marginal c o s t d e f i n e d as the i n c r e m e n t a l c o s t s of p r o d u c t i o n .  The t h e o r y o f  m a r g i n a l - c o s t p r i c i n g s t r e s s e s t h a t investment d e c i s i o n s on s o c i a l investments  should be made  and o p e r a t i n g independently  of reimbursement p o l i c i e s f o r i n d i v i d u a l lumps or u n i t s o f productive capacity.  Since r e s o u r c e s are drawn away from  a l t e r n a t i v e uses, marginal c o s t s should r e f l e c t a c c u r a t e l y the s o c i a l o p p o r t u n i t i e s foregone. and marginal c o s t ensures  The e q u a l i t y o f p r i c e  t h a t consumers equate  marginal  b e n e f i t s from t h i s use o f resources w i t h the r e a l t i v e s foregone  alterna-  elsewhere ( M i l l i m a n , 1972).  F o r some types of p u b l i c goods, p r o d u c t i o n i s charact e r i z e d by longrun d e c r e a s i n g c o s t s o r i n c r e a s i n g r e t u r n s to s c a l e .  M a r g i n a l c o s t w i l l l i e below average c o s t i n  i n c r e a s i n g r e t u r n s cases  (see F i g u r e 5 ) .  i s made equal t o average c o s t ( P ^ ) — i . e . ,  I f demand p r i c e full-recovery  c o s t as i n the t r a d i t i o n a l s y s t e m — t h e p r i c e w i l l exceed marginal c o s t .  T h i s r e s u l t i s i n e f f i c i e n t because the  value t h a t consumers p l a c e upon e x t r a output exceeds the c o s t o f a l t e r n a t i v e p r o d u c t i o n t h a t c o u l d be s a c r i f i c e d  108  FIGURE  PUBLIC  Production  Cost  5  SERVICES  Characteristics  elsewhere t o produce t h i s e x t r a output. d e s i r a b l e t o expand p r o d u c t i o n ( Q p r i c e (P^) equals m a r g i n a l c o s t .  2  I t i s therefore  t o Q^) t o the p o i n t where  As M i l l i m a n p o i n t s out,  however, t h i s s o l u t i o n w i l l generate a d e f i c i t , and the g o a l s o f c o s t r e c o v e r y come i n t o c o n f l i c t w i t h e f f i c i e n c y . The q u e s t i o n then a r i s e s as t o who s h o u l d bear the c o s t s o f t h i s d e f i c i t ; i s i t e q u i t a b l e a c c o r d i n g t o the p r i n c i p l e o f b e n e f i t s r e c e i v e d t h a t the g e n e r a l taxpayer should pay these c o s t s when the b e n e f i c i a r i e s a r e c l e a r l y the u s e r s o f the facility?  I f g e n e r a l taxes are t o be employed t o r e c o v e r  the c o s t s i n t h i s case, the e f f i c i e n c y q u e s t i o n s would be concerned w i t h the p o s s i b l e adverse e f f e c t s o f these taxes upon r e s o u r c e a l l o c a t i o n versus the adverse e f f e c t s of the l e v y of b e n e f i c i a r y charges t h a t might r e t u r n h i s t o r i c a l c o s t s but s t i l l be i n e f f i c i e n t .  I n the r e a l world, t h e r e -  f o r e , i t may be necessary f o r l e g a l and f i n a n c i a l t o implement f i x e d repayment c o n t r a c t s , f i x e d  reasons  beneficiary  charges, and f i x e d o p e r a t i n g r u l e s , even though they may not be a t a l l conducive t o e f f i c i e n t r e s o u r c e use ( M i l l i m a n ,  1972). C a p i t a l F i n a n c i n g by Developers The p r a c t i c e o f t r a n s f e r r i n g the r e s p o n s i b i l i t y f o r providing or paying f o r municipal service i n s t a l l a t i o n s i n new developments from the m u n i c i p a l i t y t o the developer i s becoming an i n c r e a s i n g l y p o p u l a r means o f f i n a n c i n g p u b l i c  s e r v i c e s i n urban growth areas.  C a p i t a l f i n a n c i n g by deve-  l o p e r s enables the f i n a n c i n g o f m u n i c i p a l place  through p r i v a t e borrowing.  works t o take  Accordingly,  p a l i t y ' s borrowing c a p a c i t y i s n o t a f f e c t e d . i n accepting  a municiThe developer,  the o b l i g a t i o n s of f i n a n c i n g the c a p i t a l works  does so i n the e x p e c t a t i o n  of r e c o v e r i n g  the c o s t s  upon him as p a r t o f the s a l e p r i c e o f h i s l o t s .  imposed  Whether he  i s i n f a c t s u c c e s s f u l i n s h i f t i n g the e n t i r e burden t o h i s purchasers depends on p r e v a i l i n g c o n d i t i o n s of supply and demand, and the l i k e l i h o o d o f h i s success i s d i r e c t l y r e l a t e d t o the buoyancy o f demand ( O n t a r i o Report, 1967). In B r i t i s h Columbia, the M u n i c i p a l  A c t enables m u n i c i -  p a l i t i e s t o t r a n s f e r the r e s p o n s i b i l i t y f o r p r o v i d i n g o r paying f o r municipal  s e r v i c e s i n s e v e r a l ways:  (1) pass by-  laws r e q u i r i n g -the p r o v i s i o n o f c e r t a i n s e r v i c e s as an adjunct t o land s u b d i v i s i o n r e g u l a t i o n s — t h o s e  services i n -  c l u d i n g storm drainage, road s u r f a c i n g , sidewalks, boulev a r d s , s t r e e t l i g h t i n g , underground w i r i n g , sewage c o l l e c t i o n systems, and community water systems, a l l t o p r e s c r i b e d minimum standards (Sec. 711):  (2) c o s t - s h a r i n g  agreements  between the developer and m u n i c i p a l i t y f o r the c o n s t r u c t i o n of trunk mains (Sec. 711);  (3) s u b d i v i s i o n or developers  agreements i n which developers agree t o p r o v i d e  or finance  the i n s t a l l a t i o n of s e r v i c e s as a necessary c o n d i t i o n t o municipal  cooperation  f o r r e g i s t e r i n g a subdivision plan*;  * P r i o r t o 1973» s u b d i v i s i o n agreements were s i g n i f i c a n t l y more important i n t h a t m u n i c i p a l i t i e s were not a u t h o r i z e d t o r e q u i r e as wide a range o f s e r v i c e s as a t p r e s e n t .  Ill and  (h)  land-use c o n t r a c t s i n which the developer and  p a l i t y are open t o n e g o t i a t e use  and  any  terms and  development of the l a n d — a  land-use c o n t r a c t being  munici-  c o n d i t i o n s f o r the  prevalent  c o n d i t i o n of a  the developer's r e s p o n s i b i l i t y f o r  p r o v i d i n g or f i n a n c i n g s e r v i c e i n s t a l l a t i o n s  (Sec.  A fundamental problem a s s o c i a t e d with the  702A).  conceptual  b a s i s of a land-use c o n t r a c t i s t h a t i t v i o l a t e s the p r i n c i p l e of c e r t a i n t y and hence the p r i n c i p l e of a s c e r t a i n a bility.  In a sense, i t runs counter t o the l e g a l maxim  which s t a t e s t h a t m u n i c i p a l  l e g i s l a t i o n must be i m p a r t i a l :  or i n other words, the m u n i c i p a l i t y must not consider  each case on i t s m e r i t s  legislate  to  (Rogers, 1959).  I t i s i n t e r e s t i n g to note the d i v e r s i t y i n the views of the O n t a r i o Committee and the use  the conceptual  of land-use c o n t r a c t s .  the p r o v i n c e  The  basis  underlying  Committee suggests t h a t  should p r e s c r i b e g u i d e l i n e s w i t h i n which the  m u n i c i p a l i t y would d e l i n e a t e the developer's r e s p o n s i b i l i t y t o i n s t a l l or pay guarantees, and  f o r designated  s e r v i c e s , set performance  e s t a b l i s h standards.  The  province  should  a l s o set out the l i m i t s w i t h i n which a developer c o u l d held responsible  f o r e x t e r n a l s e r v i c e s or f o r the  of s e r v i c e s w i t h i n the  subdivision.  g e s t s t h a t i n f i x i n g the  be d e v i s e d  oversizing  Committee a l s o sug-  s t a t u t o r y l i m i t s f o r developer con-  t r i b u t i o n s toward m u n i c i p a l method should  The  be  s e r v i c e i n s t a l l a t i o n s , some  t h a t w i l l ensure t h a t the  services  112 demanded are n e i t h e r more e l a b o r a t e  nor more extensive  i s warranted i n r e l a t i o n t o the value p o t e n t i a l value  of the l a n d and  than the  of the housing or other development upon the  l a n d ( O n t a r i o Report, 196?). Summary Chapter V c o n s i s t s of a review of the p h i l o s o p h y government f i n a n c e as i t r e l a t e s t o t a x a t i o n , mental r e l a t i o n s , and p u b l i c borrowing.  of  intergovern-  When adopting a  t a x a t i o n system f o r f i n a n c i n g urban p u b l i c s e r v i c e s , each revenue source should be evaluated criteria:  i n terms of the  following  e q u i t y as i t r e l a t e s t o the p r i n c i p l e of b e n e f i t s  r e c e i v e d , e q u i t y as i t r e l a t e s to a b i l i t y to pay,  adequacy,  flexibility,  e l a s t i c i t y , balance, n e u t r a l i t y , c e r t a i n t y , and  simplicity.  An a d d i t i o n a l concern i s t h a t of d e t e r m i n i n g an  appropriate a province  d i v i s i o n of f u n c t i o n s and and  revenue sources between  the m u n i c i p a l i t i e s i t has  created.  In  mining t h i s d i v i s i o n , c o n s i d e r a t i o n should be g i v e n s e v e r a l p r i n c i p l e s , i n c l u d i n g l o c a l autonomy and  deter-  to  thelinci-  dence of b e n e f i t s a s s o c i a t e d w i t h expenditure items.  For  those s e r v i c e s where i n t e r n a l b e n e f i t s are dominant, the r e s p o n s i b i l i t y should be l o c a l and  the c o s t s should be  by taxes or charges borne by those who the m u n i c i p a l i t y .  met  r e s i d e and work w i t h i n  With regards to f o r m u l a t i n g p o l i c i e s r e -  l a t i n g t o the borrowing d e c i s i o n s of m u n i c i p a l i t i e s , l o c a l d e c i s i o n makers should  take account of the  several  conflicting  views as t o the circumstances under which i t i s a p p r o p r i a t e to "borrow.  The  " f u t u r e g e n e r a t i o n s " view holds t h a t i t i s  always a p p r o p r i a t e t o borrow f o r c a p i t a l e x p e n d i t u r e s ; the "pay-as-you-go" view holds t h a t c a p i t a l expenditures be f i n a n c e d from c u r r e n t revenues;  should  and the t h i r d view holds  t h a t when the b e n e f i t s of p u b l i c works w i l l be enjoyed  en-  t i r e l y by a l i m i t e d number of taxpayers, i t i s a p p r o p r i a t e t o f i n a n c e the p u b l i c works by borrowing, taxpayers concerned  and t o r e q u i r e the  t o s e r v i c e the debt through s p e c i a l taxes  In a d d i t i o n , a l t e r n a t i v e sources of l o c a l revenue are d e s c r i b e d and e v a l u a t e d .  The p r o p e r t y t a x , the mainstay  l o c a l revenue sources, i s a h i g h l y f l e x i b l e , c e r t a i n , r e l a t i v e l y simple t a x .  of  and  I t i s u n c l e a r , however, whether the  tax adheres t o the p r i n c i p l e of b e n e f i t s r e c e i v e d or t o the p r i n c i p l e of a b i l i t y t o pay.  The fundamental c r i t i c i s m  the p r o p e r t y tax a r i s e s not because of i t s n a t u r e , but  of be-  cause of the manner i n which i t i s g e n e r a l l y a d m i n i s t e r e d , and the extent t o which i t i s r e l i e d on t o f i n a n c e those s e r v i c e s which should r i g h t l y be f i n a n c e d by taxes which b e t t e r r e f l e c t a b i l i t y t o pay. Sources  of revenue based  on the p r i n c i p l e of b e n e f i t s  r e c e i v e d , i n c l u d i n g s p e c i a l assessments and u s e r f e e s , are a p p r o p r i a t e only when the b e n e f i t s and b e n e f i c i a r i e s can be i d e n t i f i e d r e l a t i v e l y c l e a r l y , a m o d i f i e d d i s t r i b u t i o n of wealth and income i s not a p o l i c y o b j e c t i v e , and  the  i m p o s i t i o n o f b e n e f i c i a r y charges w i l l not i n e f f i c i e n t use  of the  service.  result in  115  CHAPTER VI THE  APPLICATION OF A SYSTEMATIC APPROACH TO FINANCING URBAN PUBLIC SERVICESi  A CASE STUDY  Introduction The  a p p l i c a t i o n of a systematic  approach t o the imple-  mentation o f the s e l e c t e d Westsyde s e r v i c i n g program r e q u i r e s the adoption  o f a f i n a n c i n g s t r a t e g y d e r i v e d by a p p l y i n g the  p r i n c i p l e s o f government f i n a n c e as o u t l i n e d i n the p r e v i o u s chapter t o the p r e v a i l i n g circumstances i n Westsyde. first  The  concern i s t h a t o f s e c u r i n g adequate funds t o f i n a n c e  the program and a l l o c a t i n g the a s s o c i a t e d c o s t s i n an e q u i t a b l e manner.  The second i s t h a t o f f o r m u l a t i n g a p o l i c y  r e l a t i n g t o the n e c e s s i t y o f borrowing f o r c a p i t a l expenditures.  The t h i r d concern i s t h a t of determining  o f p a r t i c i p a t i o n o f the p r o v i n c e  the l e v e l  and the f e d e r a l government  f i n a n c i n g the s e l e c t e d s e r v i c i n g program. E q u i t y i n A l l o c a t i n g Costs A fundamental i s s u e t o be r e s o l v e d a t the outset i s t h a t o f determining  the most e q u i t a b l e means o f a l l o c a t i n g  program c o s t s ; should they be a l l o c a t e d a c c o r d i n g t o t h e p r i n c i p l e o f b e n e f i t s r e c e i v e d , the p r i n c i p l e o f a b i l i t y t o pay,  o r a combination of t h e two?  The statement was made i n  116 the p r e v i o u s chapter t h a t the a l l o c a t i o n of c o s t s  according (1)  t o the b e n e f i t s p r i n c i p l e i s d e s i r a b l e only when:  the  b e n e f i t s and b e n e f i c i a r i e s of government expenditure programs can be  identified relatively clearly;  bution  of wealth and  (3)  the i m p o s i t i o n  (2)  a modified  distri-  income i s not a p o l i c y o b j e c t i v e ;  of b e n e f i t r e l a t e d charges on the  users  or b e n e f i c i a r i e s of a s e r v i c e w i l l not r e s u l t i n an c i e n t use  of the  With r e s p e c t of the  and  ineffi-  service. t o the f i r s t c r i t e r i o n , the b e n e f i c i a r i e s  s e r v i c i n g program as i d e n t i f i e d i n T a b l e s 4 and  5 in  Chapter IV are the e x i s t i n g r e s i d e n t s of Westsyde, the of vacant l a n d i n Westsyde, f u t u r e r e s i d e n t s and  the C i t y of Kamloops.  The  are a s s o c i a t e d and  to quantify  l a r g e l y with t h e i r personal  the p r o t e c t i o n o f t h e i r p r o p e r t y .  t h a t the b e n e f i t s may  i n Westsyde,  benefits accruing  r e s i d e n t s of Westsyde are d i f f i c u l t  to  v a l i d s u g g e s t i o n , the a s s o c i a t e d  the  i n t h a t they  h e a l t h and  safety,  I t has been suggested  be r e f l e c t e d i n the form of  value increments (Kenney, 1964).  owners  property  I f t h i s i s assumed to be b e n e f i t s are c l e a r l y  a  identi-  fiable. A second group;of b e n e f i c i a r i e s , the owners of vacant property,  r e a l i z e b e n e f i t s of a t a n g i b l e nature i n the  of p r o p e r t y  v a l u e increments.  form  A fundamental premise of  s e v e r a l p u b l i c a t i o n s r e l a t e d t o the p r o v i s i o n of water  and  sewer s e r v i c e s i s t h a t the development p o t e n t i a l of a vacant  11? parcel  i s enhanced w i t h  things  being  equal  service accessibility,  ( e . g . m a r k e t demand), t h e  property  will  (Kenney,  1964)  and  third  g r o u p o f b e n e f i c i a r i e s , new  The  realize  t a k e up  residence  realize  benefits  an  when t h e  a l l other  owners o f  increment i n property  such  values  1966).  (Wicker,  o f an  and  residents  vacant p a r c e l s  are  intangible nature.  As  who  developed, Lichfield  (1966) p o i n t s o u t , t h e b e n e f i t s must be o f a p o s i t i v e n a t u r e o r no  one  w o u l d t a k e up  I f the dating  infilling  realize  accommodating the  projected  influx  City Council  t h a n Westsyde i s u n c l e a r .  conflict  between the  population  with the  construed  growth i s b e n e f i c i a l t o the  more r e c e n t  opinion  t h a t new  sive consideration  of t h i s  existing  i n sectors  residents  b e n e f i t from the  proposed  A s e c o n d c o n d i t i o n t o be allocated  according  t o the  1973).  controversy, other  that  the  continued  e n t i r e community,  residents  (McCall,  sectors  i s evidenced i n  opinions  cost To  of  Whether  S t a f f i s t o be  This  the  objectives  of population.  and  conventional  more t h a n t h e y c o n t r i b u t e  way  accommo-  a p o s i t i v e b e n e f i t to e x i s t i n g taxpayers i n those  other  the  area.  e x i s t i n g development areas,  benefits associated  t h i s b e n e f i t t o the as  i n the  C i t y o f Kamloops o p t s f o r a p o l i c y o f  g r o w t h by  City will  residence  the  avoid  and  community an  i t i s assumed  extenthat  t h a n Westsyde w i l l  in  no  s e r v i c i n g program i n Westsyde.  satisfied  i f costs  are  benefits p r i n c i p l e i s that  to a  be  118 modified  d i s t r i b u t i o n o f wealth and income i s not a p o l i c y  objective.  Present f i n a n c i n g p r a c t i c e s i n the C i t y of Kam-  loops would c l e a r l y i n d i c a t e t h a t r e d i s t r i b u t i o n i s n o t a p o l i c y o b j e c t i v e i n p r o v i d i n g housekeeping s e r v i c e s such as water, sewers, roads, and storm d r a i n s . The  t h i r d c r i t e r i o n t h a t the i m p o s i t i o n o f b e n e f i t  charges w i l l not r e s u l t i n an i n e f f i c i e n t use of the s e r v i c e i s g e n e r a l l y r e l a t e d t o those s e r v i c e s encouraged by the community. education  The.: i m p o s i t i o n o f excess f e e s on p u b l i c h e a l t h o r s e r v i c e s may discourage t h e i r use,  thereby f r u s -  t r a t i n g the attainment o f the community's o b j e c t i v e s i n t h i s regard.  Because o f the nature of the s e r v i c i n g program under  c o n s i d e r a t i o n , however, i t i s concluded t h a t the i m p o s i t i o n of b e n e f i t charges w i l l n o t r e s u l t i n an i n e f f i c i e n t use of the  services.  Indeed, M i l l i m a n  (1963) suggests t h a t  such  charges can be employed t o discourage i n e f f i c i e n t o r e x c e s s i v e use  o f water. The  f o r e g o i n g a n a l y s i s suggests t h a t the c o s t s of the  s e r v i c i n g program c a n be a l l o c a t e d i n an e q u i t a b l e manner according  t o the benefits p r i n c i p l e .  This conclusion  concurs  with the view o f the I n t e r n a t i o n a l C i t y Manager's A s s o c i a t i o n (1961) t h a t b e n e f i c i a r y charges should  be developed t o cover  a l l c o s t s o f u t i l i t i e s such as water supply and sewage d i s p o s a l ; t h e g e n e r a l t a x p a y e r should n o t be r e q u i r e d t o support a utility  operation.  119 F i n a n c i n g by Borrowing; A second i s s u e t o be r e s o l v e d i s t h a t of determining whether the s e r v i c i n g program i s to be f i n a n c e d you-go b a s i s , by borrowing and e s t a b l i s h i n g a reserve  fund.  on a pay-as-  incurring l i a b i l i t i e s ,  or  by  A pay-as-you-go f i n a n c i n g pro-  gram implemented i n concert w i t h a b e n e f i t s approach would impose an e x c e s s i v e beneficiaries.  burden on the  sources of revenue,  E s t a b l i s h i n g a reserve  the  fund i n which adequate  funds to f i n a n c e c a p i t a l expenditures are c o l l e c t e d from f u t u r e b e n e f i c i a r i e s p r i o r to program implementation i s def i c i e n t because of the e x t e n s i v e r e q u i r e d funds.  delays  i n acquiring  the  As a consequence, the only f e a s i b l e a l t e r -  n a t i v e t o f i n a n c i n g c a p i t a l expenditures i s t h a t o f borrowing and  incurring  liabilities.  F i n a n c i a l Assistance I t was  From S e n i o r Governments  suggested e a r l i e r i n the c h a p t e r t h a t the major  f a c t o r j u s t i f y i n g the a l l o c a t i o n of p r o j e c t c o s t s  according  t o the b e n e f i t s p r i n c i p l e i s t h a t the b e n e f i t s and  benefi-  c i a r i e s o f the case study program can be tively clearly.  I t was  identified  rela-  a l s o suggested t h a t because of  the  n a t u r e of the s e r v i c e s i n v o l v e d i n the proposed program, the r e s u l t a n t b e n e f i t s are l a r g e l y i n t e r n a l or l o c a l .  In  other  words, i t i s u n l i k e l y t h a t s o c i e t y a t l a r g e b e n e f i t s from such a program, and there  as such, i t would appear l o g i c a l  that  should be no compulsion on e i t h e r the p r o v i n c i a l or  120 f e d e r a l government t o p r o v i d e proposed program.  assistance  Nevertheless,  i n f i n a n c i n g the  f i n a n c i a l assistance i s  f o r t h c o m i n g from both governments. The  p r o v i n c i a l assistance  i s unique t o t h e case study.  P r i o r t o amalgamation, a l l roads i n Westsyde (unorganized t e r r i t o r y ) were under the j u r i s d i c t i o n of the Department o f Highways which had made commitments t o upgrade the main arterial—Westsyde was  not rescinded  be r e s p o n s i b l e  Road.  Upon amalgamation, t h i s commitment  and consequently, the m u n i c i p a l i t y w i l l n o t  f o r f i n a n c i n g the work.  Federal  assistance,  on t h e other hand, i s a v a i l a b l e t o m u n i c i p a l i t i e s i n the form of grants  and l o a n s f o r f i n a n c i n g p u b l i c u t i l i t y  p a r t o f i t s neighbourhood improvement program.*  s e r v i c e s as Although i t  i s n o t d e f i n i t e i f Westsyde would q u a l i f y , i t would appear t h a t the community i s w e l l s u i t e d t o t h i s form o f a s s i s t a n c e i n t h a t i t i s p r e s e n t l y a v i a b l e r e s i d e n t i a l neighbourhood comprised of middle-income f a m i l i e s r e s i d i n g p r i m a r i l y i n owner occupied  single family units.  One o f the o b j e c t i v e s  of the F e d e r a l neighbourhood improvement program i s t o encourage the maintenance and improvement o f such environments.  *The F e d e r a l Government, under the terms o f the N a t i o n a l Housing Act, w i l l c o n t r i b u t e 25 percent o f the c o s t s o f improvements of m u n i c i p a l and p u b l i c u t i l i t y s e r v i c e s (trunk main f a c i l i t i e s o n l y ) i n the neighbourhood. I n a d d i t i o n , i t may make loans f o r up t o 75 percent o f a m u n i c i p a l i t y ' s share of t h e c o s t s a f t e r a l l F e d e r a l c o n t r i b u t i o n s have been deducted ( C e n t r a l Mortgage and Housing C o r p o r a t i o n , August  1973).  121 S t r a t e g i e s and A l t e r n a t i v e s f o r Financing Public As d i s c u s s e d  i n the p r e v i o u s  Services chapter,  a wide v a r i e t y of  a l t e r n a t i v e sources of revenue, each based on the p r i n c i p l e , may  be a p p l i e d a c c o r d i n g  s e r v i c i n g program and community.  benefits  to the nature of  the  the circumstances p r e v a i l i n g i n the  In p l o t t i n g a s t r a t e g y f o r f i n a n c i n g the program,  the a n a l y s t must give, c o n s i d e r a t i o n t o s e v e r a l f a c t o r s . F i r s t , f o r l e g a l and namely, p r i n c i p a l and  f i n a n c i a l reasons, a l l c a p i t a l i n t e r e s t , must be recovered.  t i o n , adequate funds to cover a l l o p e r a t i n g provided.  Second, r a t e s should  be  T h i r d , the system must  that a l l b e n e f i c i a r i e s , regardless contribute  t o the l e v e l of the b e n e f i t s they r e c e i v e .  f o u r t h , the f i n a n c i n g program must not be unduly and  expensive t o  addi-  c o s t s must be  of the nature of the b e n e f i t , are r e q u i r e d t o according  In  s e t so as to encourage an  e f f i c i e n t u t i l i z a t i o n of the s e r v i c e . be e q u i t a b l e t o the extent  costs,  And  complicated  administer.  Methods of F i n a n c i n g  Currently  P r a c t i c e d i n Kamloops I t should  be r e i t e r a t e d t h a t the present  C i t y of Kamloops  i s an agglomeration of s e v e r a l s e c t o r s of development which were only r e c e n t l y amalgamated t o form a s i n g l e entity.  P r i o r t o amalgamation i n 1973,  administered  municipal  each s e c t o r  e i t h e r l o c a l l y or by the province?  was  hence the  p r a c t i c e s o f p r o v i d i n g and f i n a n c i n g urban p u b l i c s e r v i c e s v a r i e d s u b s t a n t i a l l y from s e c t o r t o s e c t o r .  I t follows,  t h e r e f o r e , t h a t the p a s t p r a c t i c e s o f the v a r i o u s  local  b o d i e s a r e r e f l e c t e d i n the c u r r e n t p r a c t i c e s o f the c i t y . Domestic Water. w i t h the supply  A l l c a p i t a l and annual c o s t s  of domestic water a r e f i n a n c e d  associated  on a s e l f -  l i q u i d a t i n g o r s e l f - s u s t a i n i n g b a s i s ; t h a t i s , the c o s t s are i n c u r r e d by the b e n e f i c i a r i e s o f the s e r v i c e .  C a p i t a l expen-  d i t u r e s a r e i n i t i a l l y f i n a n c e d p r i m a r i l y by p u b l i c borrowing; the most notable  exception  a r i s i n g i n s u b d i v i s i o n s where the  developer i s r e q u i r e d t o i n s t a l l o r f i n a n c e  on-site services,  and  i n some i n s t a n c e s  cost-sharing of o f f - s i t e  The  c a p i t a l c o s t i n c u r r e d by the developer are passed on t o  the consumer i n the l o t purchase p r i c e .  services.  The c a p i t a l  costs  f i n a n c e d by p u b l i c borrowing, on the other hand, are u l t i mately i n c u r r e d by consumers i n the form o f one o r a combinat i o n o f the f o l l o w i n g charges: a s s e s s e d when a p r o p e r t y  (1) c o n n e c t i o n  charges  i s l i n k e d t o the community water  system; (2) metered u s e r f e e s ; o r (3) f l a t r a t e u s e r f e e s , * The  r a t e s o f t h e l a t t e r two sources a r e s e t a t a l e v e l which  i s adequate n o t only f o r c a p i t a l debt s e r v i c i n g , but f o r annual o p e r a t i n g and maintenance c o s t s , and c o n t r i b u t i o n s t o  *The Water U t i l i t y Fund makes separate r e f e r e n c e t o a f l a t r a t e l e v y and a water tax; i n r e a l i t y , an annual water t a x ( i d e n t i f i e d as a s p e c i a l assessment) i s i d e n t i c a l t o a f l a t rate levy.  123 a reserve  fund as w e l l .  Table 11  i l l u s t r a t e s the pre-eminence  of f l a t r a t e l e v i e s over a l t e r n a t i v e sources.  I t should  be  noted t h a t these l e v i e s are a p p l i e d o n l y t o p r o p e r t i e s connected t o the system: no c o n t r i b u t i o n s are r e q u i r e d from vacant p a r c e l s i n the b e n e f i t i n g S a n i t a r y Sewer.  area.  L i k e the domestic water system, the  s a n i t a r y sewer system i s f i n a n c e d basis.  on a  self-liquidating  Except f o r those c a p i t a l c o s t s i n c u r r e d by  developers  as r e q u i r e d by the m u n i c i p a l i t y , a l l c a p i t a l debt s e r v i c i n g as w e l l as annual o p e r a t i n g and maintenance c o s t s , and t r i b u t i o n s t o the r e s e r v e  fund are f i n a n c e d p r i m a r i l y by  f l a t r a t e u s e r f e e s (see Table S t r e e t s and  con-  Storm Drainage.  11). Aside from a r t e r i a l s  desig-  nated as primary or secondary highways by the Department of Highways, a l l funds expended on s t r e e t s and are d e r i v e d from the g e n e r a l Current  storm drainage  revenue fund.  Methods A p p l i e d  t o the Case Study T h i s s e c t i o n c o n s i s t s of an e v a l u a t i o n t o determine whether the present an a p p r o p r i a t e  methods employed i n Kamloops c o n s t i t u t e  s t r a t e g y f o r f i n a n c i n g the case study s e r -  v i c i n g program. Streets.  As  s t a t e d e a r l i e r , the t r a n s p o r t a t i o n compo-  nent of the proposed s e r v i c i n g p r o g r a m — t h e upgrading of  124 TABLE  SOURCES  11  OF R E V E N U E A S P E R C E N T OF D O M E S T I C  UTILITY  FUND AND S A N I T A R Y KAMLOOPS  SEWER  WATER  FUNDJ  1973  Domestic Water  1  Source  Percent  Metered u s e r fees F l a t rate user fees Connection f e e s Other  S a n i t a r y Sewer  2  F l a t rate user fees Connection f e e s Reserve fund s u r p l u s Other  SOURCEi  L  13*5 80.0 2.8 3.7  •  83.6 2.0 12.6 1.8  C a l c u l a t i o n s d e r i v e d from C i t y of Kamloops Budget 1973.  T o t a l revenues f o r domestic water fund $1,186,525.  " T o t a l revenues f o r s a n i t a r y sewer fund $ 8 3 8 , 3 2 5 .  125 Westsyde R o a d — i s t o be funded by the p r o v i n c e .  If provincial  a s s i s t a n c e were not forthcoming, the a p p l i c a t i o n of  current  f i n a n c i n g methods would i n d i c a t e t h a t the n e c e s s a r y funds would be obtained  from the g e n e r a l  revenue fund, which i s  d e r i v e d l a r g e l y from g e n e r a l p r o p e r t y  tax y i e l d s .  Because  the b e n e f i t s and b e n e f i c i a r i e s a s s o c i a t e d w i t h t h i s component of the  s e r v i c i n g program are not as c l e a r l y  identifiable  as those a s s o c i a t e d with storm drainage, s a n i t a r y sewer, domestic water, a t a x of g e n e r a l a p p l i c a t i o n such as property  tax may  and  the  be an e q u i t a b l e means of a l l o c a t i n g c o s t s .  However, i n the event t h a t the program r e s u l t s i n s u p e r i o r access to Westsyde as.compared t o t h a t i n other s e c t o r s the c i t y , a t a x of g e n e r a l a p p l i c a t i o n would be t o the extent  of  inequitable  t h a t the a s s o c i a t e d b e n e f i t s are not  equitably  distributed. Storm Drainage.  The  present  method of a l l o c a t i n g c o s t s  a s s o c i a t e d with the p r o v i s i o n of storm drainage i s i n e q u i t a b l e t o the extent  t h a t the g e n e r a l  facilities  taxpayer i s  r e q u i r e d t o f i n a n c e the p r o j e c t r a t h e r than the  easily  i d e n t i f i a b l e b e n e f i c i a r i e s — t h e owners of p r o p e r t y vulnerable  to f l o o d damage.  S a n i t a r y Sewer.  The  cost estimates of a recent  e e r i n g study show t h a t i n order t o r e c o v e r operating  i n areas  engin-  a l l capital  plus  c o s t s , an annual f l a t r a t e u s e r fee would amount  t o $332 per e x i s t i n g household (Strong,  Lamb and  Nelson,  126 1973).  Of course, t h i s p e r u n i t fee would g r a d u a l l y  with the continued thereby e n a b l i n g  development p r o j e c t e d f o r the  the annual debt s e r v i c i n g and  decrease  area,  operating  c o s t s to be d i s t r i b u t e d among a g r e a t e r number of households. I n c i d e n t a l l y , the c a l c u l a t e d r a t e compares w i t h an f l a t r a t e fee i n B r o c k l e h u r s t  of $120,  and $48  annual  i n North  and  South Kamloops. T h i s s t r a t e g y f o r f i n a n c i n g the s a n i t a r y sewer component o f the s e r v i c i n g program i s d e f i c i e n t i n s e v e r a l  respects.  F i r s t , the burden on homeowners, so long as the area i s not f u l l y developed, i s e x c e s s i v e .  Second, t h i s s t r a t e g y does  not adhere s t r i c t l y to the b e n e f i t s p r i n c i p l e i n t h a t a l l b e n e f i c i a r i e s are not r e q u i r e d t o c o n t r i b u t e a c c o r d i n g the b e n e f i t s they r e c e i v e . owners of vacant land who  There i s no accounting b e n e f i t i n the form of an  i n the development p o t e n t i a l of t h e i r p r o p e r t y .  f o r the increase  Third,  method of f i n a n c i n g i s i n e q u i t a b l e i n t h a t i t takes  of each p a r c e l .  And  t o the s i z e and  this  no  account of the f a c t t h a t the c a p i t a l c o s t s o f s e r v i n g v i d u a l p r o p e r t i e s vary a c c o r d i n g  to  indi-  dimensions  f o u r t h , the f l a t r a t e fee system assumes  t h a t the m a r g i n a l c o s t a t t r i b u t a b l e t o each household i s zero.  I t takes no account t h e r e f o r e of v a r i a t i o n s i n  e f f l u e n t production  among the users of the  service.  Whether  or not t h i s c o n s t i t u t e s a v a l i d c r i t i c i s m i s dependent the extent  on  to which o p e r a t i n g and maintenance expenditures  vary according  t o the l e v e l of use  of the  service.  According  t o I s a r d and  C o u g h l i n (1957)» because of the nature of  technology of a c o n v e n t i o n a l  sewer c o l l e c t i o n and  trans-  m i s s i o n system, v a r i a t i o n s i n expenditures a c c o r d i n g l e v e l of use  are r a t h e r  Domestic Water.  to  domestic water component of  proposed s e r v i c i n g program c o n s i s t s of improving  the  an:existing  on a f l a t r a t e u s e r fee b a s i s .  i n c r e m e n t a l c a p i t a l c o s t s a s s o c i a t e d with the  the extent t h a t a l l a d d i t i o n a l c a p i t a l and  The  improvement  would t h e r e f o r e be f i n a n c e d by i n c r e a s i n g the f l a t r a t e  are r e c o v e r e d .  the  insignificant.  The  system which i s f i n a n c e d  the  operating  to  costs  T h i s method of f i n a n c i n g i s a l s o d e f i c i e n t  i n a number of r e s p e c t s ,  s e v e r a l of which are i d e n t i c a l  those r e l a t e d t o f i n a n c i n g the  to  s a n i t a r y sewer component.  F i r s t , c o n t r i b u t i o n s are not r e q u i r e d from a l l b e n e f i c i a r i e s , namely, the owners of vacant l a n d .  Second, no account i s  taken of v a r i a t i o n s i n c a p i t a l c o s t s a c c o r d i n g dimensions.  to p a r c e l  T h i r d , no account i s taken of v a r i a t i o n s i n  consumption among households; the m a r g i n a l c o s t i s assumed t o be  zero.  However, because the p r o v i s i o n of domestic  water e n t a i l s o p e r a t i n g  c o s t s which v a r y a c c o r d i n g  t o con-  sumption ( i . e . pumping c o s t s ) , the marginal c o s t s of p r o duction  i s not  zero.  As such, the f l a t r a t e system a l l o -  c a t e s c o s t s i n an i n e q u i t a b l e manner. r a t e s t r u c t u r e i n no way of the  fourth, a  encourages an e f f i c i e n t  s e r v i c e ; as M i l l i m a n  (1963) points  structure i s l i k e l y to contribute usage of water.  And  out,  to excessive  flat  utilization  such a r a t e and  wasteful  128 C a p i t a l Financing The  by Developers  statement was made e a r l i e r i n the c h a p t e r t h a t  developers a r e o f t e n r e q u i r e d t o p r o v i d e v i c e s i n new s u b d i v i s i o n s .  o f a p p l y i n g t h i s technique i s  T h i s can be a t t r i b u t e d p r i m a r i l y t o the  s m a l l s i z e of the vacant p a r c e l s and the extent they are s c a t t e r e d throughout the a r e a .  t o which  As such, i t i s  u n l i k e l y t h a t major developers w i l l be i n s t r u m e n t a l i n f i l l i n g process;  ser-  I n the s e r v i c i n g program under  c o n s i d e r a t i o n , the f e a s i b i l i t y somewhat m a r g i n a l .  and f i n a n c e  i n the  the>.present t r e n d i n d i c a t e s t h a t t h e  i n i t i a t i v e t o develop i n the a r e a w i l l be s u p p l i e d by many individual builders. An A l t e r n a t i v e S t r a t e g y The  For Financing  Case Study S e r v i c i n g Program A r e p o r t by the J o i n t Committee o f the American Bar  A s s o c i a t i o n and the American S o c i e t y o f C i v i l E n g i n e e r s  (1951) g i v e s r e c o g n i t i o n t o t h e i n c o n s i s t e n c y and i n e q u i t y i n e x i s t i n g f i n a n c i n g s t r u c t u r e s , many o f which a r e s i m i l a r i n nature t o those c u r r e n t l y employed i n Kamloops.  The  r e p o r t suggests t h a t the needed annual revenue o f a water or sewage works s h a l l be c o n t r i b u t e d by u s e r s and p r o p e r t i e s f o r whose use, need, and b e n e f i t the f a c i l i t i e s o f the works are p r o v i d e d ,  approximately i n p r o p o r t i o n  t o the c o s t o f  p r o v i d i n g the use and the b e n e f i t s o f t h e works ( J o i n t Committee, 1951).  A f i n a n c i n g s t r a t e g y should  therefore  take i n t o account the breakdown of c a p i t a l c o s t s i n t o s e v e r a l components.  First,  regarding  c a p i t a l c o s t s , i t i s important  t o note t h a t only a p o r t i o n of t o t a l c o s t s a t t r i b u t a b l e t o each b e n e f i c i a r y v a r y a c c o r d i n g  t o the dimensions and  of each p a r c e l , namely, the l a t e r a l c o l l e c t i o n and t i o n component.  The  distribu-  remaining p o r t i o n of c a p i t a l c o s t s ,  namely, expenditures on trunk mains, i n t a k e  and  treatment  f a c i l i t i e s , as w e l l as water storage r e s e r v o i r s , are stant regardless  c i a r i e s i n the Westsyde d i s t r i c t .  t o the  con-  of the area's s u b d i v i s i o n c h a r a c t e r i s t i c s ;  as such t h i s component i s of g e n e r a l  of o p e r a t i n g  area  b e n e f i t to a l l benefi-  And  second, the  incidence  and maintenance c o s t s bears l i t t l e r e l a t i o n s h i p  incidence  of c a p i t a l c o s t s .  In view of t h i s v a r i a -  t i o n i n types o f c o s t s , the J o i n t Committee suggested a combination f i n a n c i n g system as 1.  Use  general  follows:  tax funds f o r t h a t p a r t of the c a p i t a l  c o s t s of major f a c i l i t i e s which are of g e n e r a l 2.  Use  s p e c i a l assessments f o r c a p i t a l c o s t s of  whose b e n e f i t s are l o c a l , 3.  Use  structures  and  v a r i a b l e s e r v i c e charges f o r o p e r a t i o n  ance c o s t s  benefit,  and  mainten-  ( J o i n t Committee, 1951).  C a p i t a l Costs of Major F a c i l i t i e s .  In the context  of  the case study s e r v i c i n g program, i t should be n o t e d t h a t the g e n e r a l  b e n e f i t s a l l u d e d t o i n statement one  only t o r e s i d e n t s and p r o p e r t y  are  general  owners of Westsyde; the  maining s e c t o r s of the community i n no way  b e n e f i t from  rethe  130 program.  As such, i t would be i n e q u i t a b l e t o use  t a x funds a c q u i r e d  from the e n t i r e community.  general  An a l t e r n a -  t i v e i s to impose a s p e c i a l m i l l r a t e on p r o p e r t i e s i n the benefiting d i s t r i c t .  The  fundamental d e f i c i e n c y of t h i s  a l t e r n a t i v e , however, i s t h a t occupied  p r o p e r t i e s would be  taxed much more h e a v i l y than vacant p r o p e r t i e s ; t h i s i s i n e q u i t a b l e to the extent  t h a t major f a c i l i t i e s such as  t r u n k mains, which are c o n s t r u c t e d  t o accommodate  eventual  development of a l l vacant p r o p e r t i e s , are o f g e n e r a l t o both occupied  benefit  and vacant p r o p e r t i e s .  It i s therefore  submitted t h a t t h i s component of  c o s t s should be a l l o c a t e d a c c o r d i n g  capital  t o the t o t a l number of  e x i s t i n g as w e l l as f u t u r e households i n the b e n e f i t i n g on a f l a t r a t e l e v y b a s i s .  The  r a t e p e r household i s  c a l c u l a t e d by d i v i d i n g annual debt s e r v i c i n g c o s t s by t o t a l number of p r e s e n t  and f u t u r e households.  simply the  Allocating  the share a t t r i b u t a b l e t o e x i s t i n g households p r e s e n t s s p e c i a l problems.  area  no  A l l o c a t i n g the share a t t r i b u t a b l e t o  f u t u r e households, on the  other hand, can most simply  be  achieved  by a f l a t r a t e acreage assessment; the acreage r a t e  equaling  the household r a t e times the p r o j e c t e d number of  households p e r  acre.  Based on t h i s s t r a t e g y , i t was  found t h a t the  annual  r a t e s i n the case study f o r p r o v i d i n g s a n i t a r y t r u n k sewer facilities  (the only s e r v i c e f o r which comprehensive c o s t  131 estimates are a v a i l a b l e ) are as  follows:  1.  Annual f l a t r a t e l e v y per household  2.  Annual f l a t r a t e l e v y per vacant acre C a p i t a l Costs of L o c a l F a c i l i t i e s .  $30  $120*  The  (1951) suggests t h a t s p e c i a l assessments are  J o i n t Committee appropriate  l e v i e s f o r r e c o v e r i n g the c a p i t a l c o s t s of s t r u c t u r e s whose b e n e f i t s are l o c a l , namely the l a t e r a l s a n i t a r y sewer c o l l e c t i o n system and  the water d i s t r i b u t i o n system.  the s p e c i a l assessment may  The  basis  be e i t h e r p a r c e l frontage  or p a r -  c e l s i z e ; both methods have the advantage of r e f l e c t i n g d e n s i t y of the a r e a served. v i d u a l advantages. the shape and  The  of  the  Both methods a l s o have i n d i -  p a r c e l s i z e method takes account of  dimensions of the p a r c e l ; f o r i n s t a n c e ,  panhandle l o t would be assessed more e q u i t a b l y u s i n g p a r c e l s i z e method than the frontage method, on the other hand, has  method.  The  the advantage of  only those p a r c e l s t h a t have access t o the  a the  frontage charging  service.  This  i s an important advantage i n an area such as Westsyde where the c o l l e c t i o n system w i l l i n i t i a l l y be c o n s t r u c t e d  to  pro-'  v i d e s e r v i c i n g t o e x i s t i n g r e s i d e n t s ; i n t e r v e n i n g vacant p a r c e l s w i l l abut the s e r v i c e but  subsequent  subdividing  *The r a t e s are d e r i v e d as f o l l o w s : (a) t o t a l annual debt s e r v i c i n g c o s t s f o r trunk f a c i l i t i e s .....$164,000 (b) t o t a l number of households present = 1,200 future 4,200.... 5400 (c) annual r a t e per household = 164000/5400 = ..... $30 (d) annual r a t e per vacant acre = 4 x JO = ........ $120  may  necessitate  the frontage  additional collection f a c i l i t i e s .  As  method would l i k e l y "be the most e q u i t a b l e  t h a t c o n t r i b u t i o n s from vacant p r o p e r t i e s would be according  such, in  based  to a c t u a l a c c e s s i b i l i t y t o s e r v i c e s , r a t h e r  than  a n t i c i p a t e d a c c e s s i b i l i t y to f u t u r e s e r v i c e s as would be case with a s p e c i a l assessment based on p a r c e l s i z e . instance,  consider  P a r c e l A and  a s i t u a t i o n i n which two  p a r c e l s i z e method, the c o n t r i b u t i o n s r e q u i r e d  Using  method were  of P a r c e l A would be  s i g n i f i c a n t l y l e s s than f o r P a r c e l B.  The  difference i n  c o n t r i b u t i o n s would r e f l e c t the g r e a t e r  c a p i t a l costs  a t t r i b u t a b l e t o P a r c e l B than t o P a r c e l  A.  The  property  frontage  r a t e i s c a l c u l a t e d by  the number of f r o n t f e e t of each p r o p e r t y i n - p l a c e c o s t per f o o t of the another p r o p e r t y the sewer. for  across  the  sewer.  the  of both par-  i d e n t i c a l ; whereas i f the frontage  employed, the c o n t r i b u t i o n r e q u i r e d  For  p a r c e l s , vacant  occupied P a r c e l B are equal i n a r e a .  c e l s would be  the  by one  multiplying h a l f the  T h i s assumed t h a t  s t r e e t i s a l s o b e i n g served  by  Adjustments are r e q u i r e d of course t o account  flankage on c o r n e r l o t s .  panhandle and  In a d d i t i o n , t o ensure t h a t  c u l - d e - s a c l o t s are not g i v e n  an u n f a i r  advantage, p r o v i s i o n s are made f o r a minimum p a r c e l Based on t h i s method of a l l o c a t i n g c o s t s , i t was t h a t the annual frontage  frontage. found  r a t e i n the case study f o r p r o -  v i d i n g s a n i t a r y sewer i s $1.»'30 per f o o t .  A t y p i c a l 10,000  133 square f o o t l o t with a frontage he assessed  $110.50 per  Operating (195D  o f 85 f e e t would a c c o r d i n g l y  annum.*  and Maintenance C o s t s .  The  J o i n t Committee  suggests t h a t o p e r a t i o n and maintenance c o s t s  he f i n a n c e d by v a r i a b l e s e r v i c e charges.  F i r s t , with  to the water supply, the s e r v i c e charge would vary  should respect  according  to the volume of water consumed; as such water meters are r e q u i r e d to measure the volume.  And second, with  respect  t o s a n i t a r y sewers, the v a r i a t i o n i n charge should he based on the measured volume o f sewage presented Unfortunately,  by each customer.  a cheap and accurate means of measuring the  volume o f sewage presented yet a v a i l a b l e .  by s m a l l c o n t r i b u t o r s i s not as  The p r a c t i c e o f u s i n g metered water consump-  t i o n as a measure o f sewage c o n t r i b u t e d i s the next best alternative  (Downing, 1969).  A charge based on water use  would have t o take i n t o c o n s i d e r a t i o n the d i f f e r e n c e between water use and  sewage c o n t r i b u t i o n s .  Downing (1969) p o i n t s out t h a t t r a d i t i o n a l l y , when v a r i a b l e charges are used, the r a t e i s s e t not equal t o the marginal  c o s t s but t o the average v a r i a b l e c o s t s .  He argues  t h a t a charge equal t o average v a r i a b l e c o s t s r e s u l t s i n a  • C a l c u l a t i o n s d e r i v e d as f o l l o w s t (a) t o t a l c o l l e c t i o n footage (b) t o t a l frontage (c) t o t a l annual debt s e r v i c i n g c o s t s (d) f r o n t a g e r a t e = 203700/155200 =  ,. 77600 f t . .155200 f t . $203,700 $1.30  s m a l l e r q u a n t i t y demanded than i s e c o n o m i c a l l y  justified.  However, several- d i f f i c u l t problems a r i s e i n attempting t o equate  the charge t o marginal c o s t .  F i r s t , the theory of  m a r g i n a l c o s t p r i c i n g r e q u i r e s the d e r i v a t i o n of a demand curve which r e f l e c t s the p r i c e t h a t consumers are w i l l i n g t o pay f o r v a r y i n g volumes of sewage c o n t r i b u t e d .  As Downing  (1969) shows, i t i s r e l a t i v e l y easy t o p r e d i c t the g e n e r a l shape of the curve. I n p r a c t i c e , however, i t i s necessary t h a t the exact l o c a t i o n of the curve be determined, which i s d i f f i c u l t and i m p r e c i s e .  a task  Even i f i t i s assumed  t h a t the demand curve can be d e r i v e d , the p r i c e a t which demand equals m a r g i n a l c o s t i s not adequate t o r e c o v e r average  variable costs.*  Consequently,  be made up by a l t e r n a t i v e charges.  t h i s d e f i c i t must  I t i s t h e r e f o r e suggested  t h a t the m a r g i n a l c o s t p r i c i n g method i s an i n a p p r o p r i a t e means of a l l o c a t i n g v a r i a b l e  costs.  The c o n v e n t i o n a l method of equating charges t o v a r i a b l e c o s t s as recommended by the J o i n t Committee  average (195D  ensures t o t a l r e c o v e r y of o p e r a t i n g c o s t s and a l s o a v o i d s the n e c e s s i t y of d e r i v i n g a demand c u r v e .  The q u e s t i o n then  a r i s e s as t o whether t h i s method of a l l o c a t i n g o p e r a t i n g costs i s p r e f e r a b l e to a f l a t rate levy.  In o t h e r words,  * I n d e c r e a s i n g c o s t s i t u a t i o n s , as i s u s u a l l y the case w i t h p u b l i c u t i l i t i e s , the marginal c o s t curve l i e s below the average v a r i a b l e c o s t curve (see F i g u r e 5 i n Chapter V ) .  135 would the a d d i t i o n a l c a p i t a l c o s t s of i n s t a l l i n g meters (about $150 administrative  water  p e r d w e l l i n g u n i t ) p l u s the a d d i t i o n a l  c o s t s of meter r e a d i n g  than o f f s e t by savings  and b i l l i n g ,  i n system o p e r a t i n g  be more  costs?  Although  no c o s t estimates are a v a i l a b l e i n t h i s r e g a r d with t o the case study, an i n t e r v i e w w i t h a m u n i c i p a l suggested t h a t i n many cases,  respect  engineer  i t i s u n l i k e l y that  switching  from a f l a t r a t e l e v y to a v a r i a b l e r a t e i s worth the t i o n a l c a p i t a l and of t h i s o p i n i o n , operating  administrative  i t i s therefore  expenses.*  addi-  In: r e c o g n i t i o n  suggested t h a t annual  c o s t s be a l l o c a t e d among households connected t o  both the water and  s a n i t a r y system on a f l a t r a t e b a s i s .  Based on t h i s method of a l l o c a t i n g c o s t s , i t was  found  t h a t the annual f l a t r a t e l e v y i n the case study f o r p r o v i d i n g s a n i t a r y sewer i s $26  p e r connection.**  Because the  system w i l l  achieve e f f i c i e n c i e s of s c a l e with f u l l  t i o n of the  system's c a p a c i t y , i t can be expected t h a t  annual l e v y p e r connection lopment  will  utilizathis  g r a d u a l l y decrease as deve-  progresses.  *Interview w i t h D.N. Lockwood, A s s i s t a n t C i t y Engineer, C i t y of P o r t Coquitlam, A p r i l 19?4. ** B a s i s (a) (b) (c)  of c a l c u l a t i o n annual o p e r a t i n g c o s t s e x i s t i n g households per u n i t levy  $31,000 1200 $26  136 Summary of C o s t s .  The f o l l o w i n g i s a summary of  charges u t i l i z i n g the proposed a l t e r n a t i v e of a l l o c a t i n g c o s t s "by a combination of charges. Item  Occupied P r o p e r t y  Vacant P r o p e r t y  f l a t rate l e v y — $30 p e r household  f l a t rate l e v y — $120 p e r acre  (b) C a p i t a l c o s t s of local facilities  frontage t a x — $1.30 p e r f o o t  frontage t a x — $1.30 p e r f o o t  (c)  f l a t rate l e v y — $26 per c o n n e c t i o n  (a)  C a p i t a l c o s t s of major f a c i l i t i e s  Annual o p e r a t i n g and maintenance costs  Based on the. above schedule of charges» (a)  A t y p i c a l occupied 10,000 square f o o t l o t with 85 f o o t f r o n t a g e would be charged an annual l e v y of $166.50.  (b)  A s e r v i c e d vacant l o t of s i m i l a r dimensions would charged an annual l e v y of $140.50.  (c)  Vacant p r o p e r t y with no access t o c o l l e c t i o n l a t e r a l s would be assessed an annual l e v y of $120 p e r a c r e .  be  P u b l i c Acceptance of the Proposed F i n a n c i n g S t r a t e g y I t i s a n t i c i p a t e d t h a t the proposed departure from conv e n t i o n a l f i n a n c i n g techniques w i l l give r i s e t o e x t e n s i v e o p p o s i t i o n from c e r t a i n i n d i v i d u a l s and groups i n the benef i t i n g area. F i r s t are the long-time r e s i d e n t s of Westsyde, many of whom occupy r e l a t i v e l y l a r g e l o t s , who  w i l l be charged f o r  s e r v i c e s which, i n t h e i r i n d i v i d u a l circumstances, may i n f a c t be n e c e s s a r y .  not  In defence of t h i s p a r t i c u l a r group,  137 which comprises a s m a l l m i n o r i t y population,  o f the area's e x i s t i n g  i t c o u l d be argued t h a t t h e new s e r v i c i n g c o s t s  are i n e f f e c t e x t e r n a l diseconomies imposed on them by t h e more r e c e n t r e s i d e n t s who now comprise a m a j o r i t y area's p o p u l a t i o n .  As such, a subsidy  the former group may be j u s t i f i e d . as t o the form t h a t t h i s subsidy a l l p r o p e r t i e s occupied  of the  from the l a t t e r t o  The q u e s t i o n  should  take.  then a r i s e s  Assuming t h a t  by such r e s i d e n t s are t o be connected  t o the system, i t i s submitted t h a t the f l a t r a t e l e v y o f $30  p e r household f o r the c a p i t a l c o s t o f major f a c i l i t i e s  i s j u s t i f i e d on the grounds t h a t the c a p a c i t y o f the trunk mains must be adequate t o accommodate each household, r e gardless  o f the circumstances under which t h a t household i s  developed.  I n a d d i t i o n , the f l a t r a t e l e v y o f $26 p e r  household f o r o p e r a t i n g subsidy,  expenses i s a l s o j u s t i f i e d .  The  t h e r e f o r e , must be drawn from the component of  t o t a l c o s t s a t t r i b u t a b l e t o the c a p i t a l c o s t s o f l o c a l facilities.  One means by which t h i s subsidy  without c r e a t i n g undue a d m i n i s t r a t i v e  can be e f f e c t e d  d i f f i c u l t i e s i s to  make p r o v i s i o n s f o r a maximum p a r c e l frontage} the c o s t s o f the subsidy  would then be passed on t o other r e s i d e n t s i n  the form o f an increment i n the l e v y p e r frontage  foot.  Such a technique would enable the avoidance of e x c e s s i v e burdens b e i n g  imposed on r e s i d e n t s l i v i n g on r e l a t i v e l y  large properties. p a r c e l frontage  I t should be noted t h a t the maximum  p r o v i s i o n would apply  o n l y t o occupied  138 p a r c e l s : s e r v i c e d vacant p r o p e r t i e s would s t i l l be r e q u i r e d to contribute according  t o t o t a l frontage.  I n t h e event  t h a t t h e owner o f a s u b s i d i z e d p a r c e l subsequently h i s property, be waived.  the maximum frontage  subdivides  p r o v i s i o n would o f course  I n a d d i t i o n , t o ensure t h a t t h i s p r o v i s i o n does  not d i s c r i m i n a t e a g a i n s t owners o f vacant p r o p e r t y , the e n t i r e amount o f the subsidy  should  be recouped i n the form  of a lump-sum payment when the new l o t ( s ) i s connected t o the  system. I t i s conceivable  appropriate  t h a t i n some i n s t a n c e s , i t may be  t o r e l a x the assumption t h a t a l l p r o p e r t i e s  occu-  p i e d by long-time r e s i d e n t s a r e t o be connected t o t h e s a n i t a r y sewer system.  I n those circumstances where i t c a n be  demonstrated beyond doubt t h a t an i n d i v i d u a l d i s p o s a l system w i l l be t o t a l l y adequate and t h a t t h r e a t s t o t h e p u b l i c h e a l t h o f t h e community w i l l be p r e v e n t e d on an a b s o l u t e b a s i s , i t may be a p p r o p r i a t e s e r v i c e charges.  An a d d i t i o n a l c o n d i t i o n o f t o t a l  must be t h a t the p r o p e r t y i n the f u t u r e .  t o exempt the p r o p e r t y  from the exemption  w i l l not be s e r v i c e d a t any time  I f the owner wishes t o r e t a i n h i s o p t i o n t o  be connected t o the system a t a f u t u r e date,  considerations  of e q u i t y d i c t a t e t h a t he be charged the f l a t r a t e l e v y of $30  p e r household f o r the component o f t o t a l c o s t s  able t o the c a p i t a l c o s t s o f major f a c i l i t i e s .  attribut-  139 Other i n d i v i d u a l s from whom o p p o s i t i o n i s a n t i c i p a t e d are the owners of vacant l a n d i n the b e n e f i t i n g a r e a .  These  i n d i v i d u a l s can be c l a s s i f i e d a c c o r d i n g t o whether or not t h e i r p r o p e r t y abuts a c o l l e c t i o n l a t e r a l .  F i r s t the owners  of vacant p r o p e r t y a b u t t i n g a c o l l e c t i o n l a t e r a l may  con-  s i d e r i t t o be i n e q u i t a b l e t h a t they are r e q u i r e d t o c o n t r i bute an annual l e v y not s i g n i f i c a n t l y l e s s than the a c t u a l u s e r s of the system.  I t i s submitted t h a t these arguments  are not j u s t i f i e d f o r the f o l l o w i n g reasons.  One,  the  development p o t e n t i a l of vacant p a r c e l s i s immediately hanced upon p r o v i s i o n of the s e r v i c e ; and two,  en-  the c a p i t a l  c o s t s a t t r i b u t a b l e t o a p a r t i c u l a r p r o p e r t y must be r e c o v e r e d r e g a r d l e s s of whether t h a t p r o p e r t y i s vacant or o c c u p i e d . Second, the owners of vacant p r o p e r t y with no access t o c o l l e c t i o n l a t e r a l s may  c o n s i d e r i t t o be i n e q u i t a b l e or  unreasonable t h a t they are b e i n g charged an annual l e v y of $120  p e r acre f o r a s e r v i c e which may  them f o r some time i n the f u t u r e .  not be a v a i l a b l e t o  Some have argued t h a t a  p r e f e r a b l e method of a l l o c a t i n g the c o s t s a t t r i b u t a b l e t o these f u t u r e development areas i s t o impose a development surcharge i n the form of a lump-sum payment when the p r o p e r t y i s developed and connected to the system A major disadvantage of t h i s approach  (Kenney, 1964).  i s t h a t i t takes no  account of the f a c t t h a t these c a p i t a l c o s t s must be amort i z e d whether or n o t these p r o p e r t i e s are developed, and the body which must supply these a m o r t i z a t i o n funds d u r i n g t h a t  140 p e r i o d i n which the p r o p e r t y cipality.  The  i s not  developed i s the muni-  q u e s t i o n then a r i s e s as t o the sources o f  revenue t h a t should be tapped t o a c q u i r e  the r e q u i r e d  funds.  I t c o u l d be argued t h a t whatever the source, t h a t source i s i n e f f e c t being used t o s u b s i d i z e not vacant p r o p e r t y  only the owners of  i n f u t u r e development areas, but  r e s i d e n t s as w e l l .  I t i s therefore  future  submitted t h a t the  pro-  posed method of a l l o c a t i n g the c o s t s a t t r i b u t a b l e t o vacant property  is justified  j u s t as the establishment  fund i s j u s t i f i e d — t h e p r e s e n t those who f i t s may  of a  reserve  c o s t s are a l l o c a t e d among  cause the c o s t s , even though the a s s o c i a t e d benenot be  Administrative  immediately  realized.  F e a s i b i l i t y of  Proposed F i n a n c i n g  the  Strategy  Combination f i n a n c i n g s t r a t e g i e s s i m i l a r t o t h a t proposed f o r the case study are being  used q u i t e  i n a number of m u n i c i p a l i t i e s i n the U n i t e d been found t o be q u i t e acceptable t r a t i o n and  extensively  S t a t e s and  to both the l o c a l  have  adminis-  the consumers of the s e r v i c e (Kenney, 1964).  I t i s evident,  however, t h a t the more p r o v i s i o n s  to ensure t h a t c o s t s are a l l o c a t e d on an e q u i t a b l e  introduced basis,  the more complex w i l l be the a d m i n i s t r a t i o n of t h a t program. Even though the proposed f i n a n c i n g s t r a t e g y would d e f i n i t e l y i n v o l v e a more complex a d m i n i s t r a t i v e s t r u c t u r e than i s p r e s e n t l y employed, i t i s submitted t h a t the  required  141 p r o v i s i o n s to administer complex, and  the program would not be  t h a t the a d d i t i o n a l a d m i n i s t r a t i v e  unduly  c o s t s would  be more than o f f s e t by the b e n e f i t s a s s o c i a t e d with a more e q u i t a b l e d i s t r i b u t i o n of c o s t s . Impact on Urban Development I t was equal,  s t a t e d e a r l i e r t h a t , a l l other t h i n g s  being  the development p o t e n t i a l of vacant p r o p e r t i e s i s  enhanced by the a v a i l a b i l i t y of those s e r v i c e s p r o v i d e d the case study s e r v i c i n g program. t h a t urban development w i l l be made a v a i l a b l e , r e g a r d l e s s ployed.  As such, i t i s probable  i n c i t e d when s e r v i c i n g i s  of the f i n a n c i n g s t r a t e g y  However, because the c a r r y i n g c o s t s of  vacant p r o p e r t y  in  em-  holding  w i l l be h i g h e r with the proposed f i n a n c i n g  program than the c o n v e n t i o n a l  method, i t i s expected t h a t  the owners of vacant p r o p e r t y  w i l l be encouraged t o develop  t h e i r property conventional  more r a p i d l y than would be the case i f the  method of f i n a n c i n g were employed.  This i s  advantageous from a s e r v i c i n g e f f i c i e n c y p o i n t of view i n t h a t i t would encourage the e a r l y u t i l i z a t i o n of the  full  c a p a c i t y of the system (Pearson, 1967). External Consideration  i n the  D e c i s i o n Making Process An assumption i m p l i c i t i n t h e . p r o c e s s of d e v i s i n g proposed s e r v i c i n g program and  f i n a n c i n g s t r a t e g y has  the been  142 t h a t t h e r e w i l l he no c o n s t r a i n t s t o d e v e l o p i n g p a r c e l s i n the  study a r e a .  The  the vacant  enactment of the  British  Columbia Land Commission Act r e s t r i c t i n g the development of a g r i c u l t u r a l l a n d f o r urban purposes may  prove t o be a  sig-  n i f i c a n t i n f l u e n c i n g f a c t o r i n the d e c i s i o n making p r o c e s s w i t h r e s p e c t t o the p r o v i s i o n of s e r v i c e s i n the  area.  Although i t i s u n l i k e l y t h a t the s m a l l vacant p a r c e l s i n the e x i s t i n g development area of Westsyde proper w i l l a f f e c t e d by the l e g i s l a t i o n , the development areas, i s provided,  s t a t u s of the  be  future  f o r which c a p a c i t y i n the proposed system  has not y e t been determined.  It is  conceivable  t h a t a d e c i s i o n t o r e s t r i c t development i n the f u t u r e development areas may  render the proposed s e r v i c i n g program  i n f e a s i b l e i n t h a t the t o t a l c a p i t a l c o s t s f o r f a c i l i t i e s adequate t o accommodate the e x i s t i n g development area would not be p r o p o r t i o n a t e l y lower than the c o s t s i n v o l v e d i n p r o v i d i n g f o r e x i s t i n g as w e l l as f u t u r e development  areas.  As such, the b e n e f i c i a r y charges i n the e x i s t i n g development area may  prove t o be e x c e s s i v e l y burdensome, r e g a r d l e s s  of the method of f i n a n c i n g employed. I t i s evident,  t h e r e f o r e , t h a t p r i o r t o making a d e c i -  s i o n w i t h r e s p e c t t o s e r v i c i n g the Westsyde area, the of the f u t u r e development areas must be  determined.  status  Summary In implementing the proposed case study s e r v i c i n g p r o gram, an important c o n s i d e r a t i o n i s t h a t o f a c q u i r i n g adequate funds t o f i n a n c e the program.  Because o f t h e nature  of t h e s e r v i c e s i n v o l v e d , i t was found t h a t t h e c o s t s  should  be a l l o c a t e d a c c o r d i n g t o the p r i n c i p l e o f b e n e f i t s r e c e i v e d . Even though the p r e s e n t  f i n a n c i n g techniques  employed i n the  C i t y o f Kamloops a r e based on the b e n e f i t s p r i n c i p l e , the technique i s d e f i c i e n t i n t h a t i t does n o t a l l o c a t e the p r o gram c o s t s among the b e n e f i c i a r i e s i n an e q u i t a b l e manner. To ensure an e q u i t a b l e d i s t r i b u t i o n o f c o s t s among a l l benef i c i a r i e s , i n c l u d i n g the owners of both occupied  and vacant  p r o p e r t i e s , an a l t e r n a t i v e combination f i n a n c i n g s t r a t e g y i s proposed.  T h i s s t r a t e g y takes i n t o c o n s i d e r a t i o n the p o s s i -  b i l i t y of d i v i d i n g t o t a l system c o s t s i n t o three  components:  (1) c a p i t a l c o s t s o f major f a c i l i t i e s which are of g e n e r a l benefit;  (2) c a p i t a l c o s t s o f l o c a l f a c i l i t i e s ; and (3)  operating costs.  The proposed s t r a t e g y r e c o g n i z e s  b e n e f i t s a s s o c i a t e d with each category  t h a t the  o f c o s t s accrue t o  d i f f e r e n t b e n e f i c i a r y groups and as such a d i f f e r e n t type o f b e n e f i c i a r y charge i s a p p r o p r i a t e a s s o c i a t e d with each category.  f o r a l l o c a t i n g the c o s t s  F i r s t , the c a p i t a l c o s t s o f  major f a c i l i t i e s are a l l o c a t e d among a l l the b e n e f i c i a r i e s for  whom c a p a c i t y i s p r o v i d e d ;  the charges take the form o f  a f l a t r a t e l e v y on e x i s t i n g households, and f l a t r a t e a c r e age  l e v y on vacant l a n d designated  f o r f u t u r e development.  Second, the c a p i t a l c o s t s of l o c a l f a c i l i t i e s are a l l o c a t e d among a l l those who have d i r e c t access t o the s e r v i c e by means o f a frontage  tax.  No d i s t i n c t i o n i s made between  vacant and occupied  properties.  And t h i r d , annual  expenditures are a l l o c a t e d among occupied  operating  p r o p e r t i e s connected  t o the system on a f l a t r a t e l e v y b a s i s . I t i s a n t i c i p a t e d t h a t o p p o s i t i o n t o t h i s method o f a l l o c a t i n g c o s t s w i l l be forthcoming from c e r t a i n groups and i n d i v i d u a l s , i n c l u d i n g the owners of vacant p r o p e r t y ,  as w e l l  as the long-time r e s i d e n t s l i v i n g on r e l a t i v e l y l a r g e p a r c e l s who may n o t d e s i r e t o p a r t i c i p a t e i n the s e r v i c i n g program.  I t i s submitted t h a t l e v y i n g charges a g a i n s t  vacant p r o p e r t i e s i s j u s t i f i e d on the same grounds t h a t the establishment  of a reserve  fund i s j u s t i f i e d — t h e p r e s e n t  c o s t s a r e a l l o c a t e d among those who cause the c o s t s , even though the a s s o c i a t e d b e n e f i t s may n o t be immediately realized.  The o p p o s i t i o n from long-time r e s i d e n t s , however,  may be j u s t i f i e d i n t h a t e x t e r n a l diseconomies i n the form of new s e r v i c i n g c o s t s have been imposed on them by the new r e s i d e n t s o f the a r e a .  To grant  some r e l i e f t o t h i s group,  p r o v i s i o n s are made f o r a maximum p a r c e l f r o n t a g e ,  and i n  some circumstances, t o t a l exemption from the s e r v i c e charges. The  proposed f i n a n c i n g s t r a t e g y i s more complex and  c o s t l y to administer  than e x i s t i n g methods because o f the  a d d i t i o n a l p r o v i s i o n s t o ensure an e q u i t a b l e d i s t r i b u t i o n o f  costs.  I t i s suggested, however, t h a t the a d d i t i o n a l ad-  m i n i s t r a t i v e c o s t s are more than o f f s e t hy the b e n e f i t s associated  with a l l o c a t i n g c o s t s i n an e q u i t a b l e  manner.  146  CHAPTER V I I CONCLUSION Summary A major concern of m u n i c i p a l d e c i s i o n makers i n suburban communities i s t h a t o f f o r m u l a t i n g  policies relating  to the p r o v i s i o n and f i n a n c i n g o f an i n f r a s t r u c t u r e of urban p u b l i c s e r v i c e s i n those development s e c t o r s n o t s e r v i c e d t o a l e v e l comparable t o t h a t o f the a d j a c e n t c e n t r a l c i t y . a b a s i s f o r i n v e s t i g a t i n g the i s s u e s a s s o c i a t e d  As  with t h i s  s u b j e c t matter, the f o l l o w i n g h y p o t h e s i s , c o n s i s t i n g o f f o u r statements, was p o s t u l a t e d 1.  i n the i n t r o d u c t i o n *  Urban r e s i d e n t i a l development imposes c e r t a i n e x t e r n a l diseconomies o r s o c i a l c o s t s on each household o f the community i n which development takes p l a c e ;  2.  The nature of e x t e r n a l e f f e c t s i s a f u n c t i o n o f p r e v a i l i n g community standards and development and c o n t r o l s imposed by government d u r i n g  3.  regulations  development;  Assuming an o b j e c t i v e o f the community i s t o i n t e r n a l i z e these e x t e r n a l i t i e s , o r t o prevent c e r t a i n e x t e r n a l i t i e s from a r i s i n g , one means by which t h i s o b j e c t i v e may be a c h i e v e d i s t o p r o v i d e a comprehensive i n f r a s t r u c t u r e of urban p u b l i c s e r v i c e s i n those development  sectors  i n which the e x t e r n a l i t i e s are b e i n g generated;  4.  Assuming the p r o v i s i o n o f a comprehensive  range of  urban p u b l i c s e r v i c e s , f i n a n c i n g can be d e r i v e d from those sources of revenue based on the b e n e f i t s received  principle.  The evidence r e q u i r e d t o t e s t t h i s h y p o t h e s i s was d e r i v e d l a r g e l y from a case study conducted i n Kamloops, B r i t i s h Columbia: w i t h p a r t i c u l a r emphasis of Westsyde,  on the community  a r e s i d e n t i a l suburb r e c e n t l y amalgamated w i t h  the remainder of the c i t y . Statement One. personal  observation  dance of examples  A review of the l i t e r a t u r e as w e l l as i n the case study suggested an abun-  supporting  d e n t i a l development  the premise t h a t urban r e s i -  imposes c e r t a i n e x t e r n a l diseconomies on  each household o f the community. the obvious examples  F o r i n s t a n c e , there were  of t r a f f i g c o n g e s t i o n and p o l l u t i o n o f  every d e s c r i p t i o n , as w e l l as a more s u b t l e form o f s o c i a l cost—municipal  s u b s i d i e s t o i n d i v i d u a l consumers o f p u b l i c  services. Statement Two. development  A review of the h i s t o r i c a l p r o c e s s o f  i n the Kamloops d i s t r i c t  i n d i c a t e d t h a t the  e x i s t i n g p h y s i c a l form of the v a r i o u s nodes of development i s a f u n c t i o n o f the p r e v a i l i n g community standards and development  r e g u l a t i o n s and c o n t r o l s imposed by government  d u r i n g development.  F o r i n s t a n c e , the f a c t t h a t the c e n t r a l  c i t y i s compactly developed, s u b d i v i d e d  i n an o r d e r l y manner,  and  f u l l y s e r v i c e d * i n d i c a t e s t h a t the l o c a l a u t h o r i t y  gated by the p r o v i n c e use,  and  t o r e g u l a t e and  s e r v i c i n g of l a n d has  c o n t r o l the  been e x e r c i s e d .  dele-  subdivision,  On the  other  hand, the p h y s i c a l form of Westsyde, which i s c h a r a c t e r i z e d by a haphazard s u b d i v i s i o n p a t t e r n , a minimal l e v e l of s e r v i c i n g , as w e l l as a l a r g e p r o p o r t i o n  of vacant t r a c t s  s p o r a d i c a l l y i n t e r s p e r s e d w i t h occupied  parcels,  reflects  the f a c t t h a t the a u t h o r i t y to r e g u l a t e the development of l a n d was  r e t a i n e d by the p r o v i n c e  and  as such, was  exercised  only t o a l i m i t e d e x t e n t . The t o r s was  v a r i a t i o n s i n the p h y s i c a l form of development found t o be  s i g n i f i c a n t to the extent  that  sec-  the  nature of the e x t e r n a l diseconomies a r i s i n g i n a p a r t i c u l a r sector v a r i e s according  t o the p h y s i c a l form c h a r a c t e r i s t i c s  of the development s e c t o r i n which they are generated. instance,  For  e x t e r n a l i t i e s a s s o c i a t e d w i t h the p r o v i s i o n of  urban p u b l i c s e r v i c e s i n f u l l y s e r v i c e d areas are t o the extent  generated  t h a t the s e r v i c i n g c o s t s a t t r i b u t a b l e t o  v i d u a l consumers are not f u l l y recovered  by taxes and  indicharges  l e v i e d a g a i n s t those i n d i v i d u a l s — t h e y are s u b s i d i z e d by municipality.  the  On the other hand, e x t e r n a l diseconomies  generated i n p a r t i a l l y o r m i n i m a l l y  serviced sectors  o f t e n of such a nature t h a t they concern the p e r s o n a l  are health  * F o r d e f i n i t i o n of the v a r i o u s l e v e l s of s e r v i c i n g ( f u l l , p a r t i a l , and minimal) as used i n t h i s study, see Table 2 i n Chapter I I .  149 and  s a f e t y of the r e s i d e n t s , as w e l l as the p r o t e c t i o n o f  their  property. T h i s evidence from the case study supports the v a l i d i t y  of the premise t h a t the nature o f e x t e r n a l e f f e c t s i s a f u n c t i o n o f p r e v a i l i n g community standards and development r e g u l a t i o n s and c o n t r o l s imposed by government  during  development. Statement Three.  To t e s t the v a l i d i t y o f the statement  t h a t e x t e r n a l i t i e s can be i n t e r n a l i z e d by p r o v i d i n g a comp r e h e n s i v e i n f r a s t r u c t u r e o f urban p u b l i c s e r v i c e s , the f o l l o w i n g approach was adopted. c u l t and imprecise  At the o u t s e t was the d i f f i -  t a s k o f i d e n t i f y i n g the o b j e c t i v e s o f  each i n d i v i d u a l o r group t h a t may be a f f e c t e d by the e x i s t ence o f p a r t i c u l a r e x t e r n a l i t i e s o r by the implementation of p o l i c i e s aimed a t t h e i r p r e v e n t i o n .  I t was found t h a t the  term " i n t e r n a l i z i n g " i s r e l a t i v e t o the extent be c o n c e p t u a l i z e d jectives.  t h a t i t may  d i f f e r e n t l y by groups w i t h d i f f e r e n t ob-  F o r i n s t a n c e , the meaning o f the term as i t i s  conceptualized  by those r e s i d e n t s with the o b j e c t i v e o f  p r e s e r v i n g Westsyde*s s e m i - r u r a l  or country  residential  atmosphere i s l i k e l y t o d i f f e r markedly' from t h a t o f those r e s i d e n t s w i t h the o b j e c t i v e o f enjoying  the amenities  a s s o c i a t e d with a c c e s s i b i l i t y t o a f u l l range o f urban public services.  Because o f t h i s p o t e n t i a l f o r c o n f l i c t i n g  o b j e c t i v e s among v a r i o u s groups, no attempt was made t o  150 lump i n d i v i d u a l and  group o b j e c t i v e s i n t o community  t i v e s or standards.  Instead,  i n those cases where c o n f l i c t s  were i n evidence, an attempt was tive proportion  objec-  made t o determine the  of t o t a l i n t e r e s t s represented  by each group.  Upon i d e n t i f i c a t i o n of the o b j e c t i v e s , a search conducted f o r a l t e r n a t i v e s t r a t e g i e s and  was  techniques t h a t  c o u l d be employed to achieve these o b j e c t i v e s . study, three  rela-  In the  a l t e r n a t i v e programs were submitted.  case  The  first  c o n s i s t e d of the p r o v i s i o n of a f u l l range of p u b l i c s e r v i c e s i n the study a r e a . invoking  The  second c o n s i s t e d of a combination of  ordinances aimed at r e s t r i c t i n g continued  ment i n the area,  i n c o n c e r t w i t h s e v e r a l modest support  programs aimed at i n t e r n a l i z i n g or p r e v e n t i n g of e x t e r n a l diseconomies of a s e r i o u s n a t u r e . a l t e r n a t i v e was, first  develop-  the The  generating third  i n a sense, a "toned-down" v e r s i o n of  the  a l t e r n a t i v e i n t h a t only c e r t a i n s e r v i c e s aimed a t  i n t e r n a l i z i n g e x t e r n a l i t i e s of a s e r i o u s nature were The  provided.  next step c o n s i s t e d of e v a l u a t i n g each a l t e r n a t i v e  t o determine which was  the most e f f e c t i v e i n a t t a i n i n g the  previously identified objectives.  The  evaluation  consisted  of a comparison of each a l t e r n a t i v e by enumerating a l l the c o s t s and  b e n e f i t s ( t a n g i b l e s as w e l l as i n t a n g i b l e s ) of  each a c c o r d i n g  to t h e i r incidence  i n d i v i d u a l s and groups.  among the v a r i o u s a f f e c t e d  Even though the e v a l u a t i o n d i d not  p o i n t c l e a r l y as to which was  the p r e f e r r e d a l t e r n a t i v e , i t  d i d s p e c i f y the t r a d e - o f f s necessary i n choosing "between alternatives.  For instance,  i f d e c i s i o n makers were t o  s e l e c t the a l t e r n a t i v e of p r o v i d i n g a p a r t i a l range of s e r v i c e s r a t h e r than the a l t e r n a t i v e of i n v o k i n g aimed a t r e s t r i c t i n g continued  ordinances  development, they would  i m p l i c i t l y be s t a t i n g t h a t the a d d i t i o n a l c a p i t a l c o s t s , w e l l as the c o s t s of s a c r i f i c i n g Westsyde*s country  as  resi-  d e n t i a l atmosphere, would be more than o f f s e t by the benef i t s a c c r u i n g to present  and  f u t u r e Westsyde r e s i d e n t s ,  w e l l as the b e n e f i t s t o the owners of vacant l a n d who r e a l i z e an i n c r e a s e property.  as  would  i n the development p o t e n t i a l o f t h e i r  A subsequent c o n s i d e r a t i o n of the r e q u i r e d  trade-  o f f s s p e c i f i e d i n the case study e v a l u a t i o n suggested t h a t the a l t e r n a t i v e of p r o v i d i n g a p a r t i a l range of c e r t a i n , s p e c i f i e d s e r v i c e s would l i k e l y be the p r e f e r r e d a l t e r n a t i v e i n the p r e v a i l i n g circumstances. This conclusion proved nor d i s p r o v e d  s p e c i f i c t o the case study n e i t h e r the premise of statement three  that  e x t e r n a l i t i e s can be i n t e r n a l i z e d by p r o v i d i n g a comprehensive i n f r a s t r u c t u r e of urban p u b l i c s e r v i c e s .  Instead,  the e v a l u a t i o n i n d i c a t e d t h a t a l t e r n a t i v e programs t o i n t e r n a l i z e diseconomies should the extent  be e v a l u a t e d  to which they achieve the  a f f e c t e d i n d i v i d u a l s and groups.  i n terms of  o b j e c t i v e s of  the  Because o b j e c t i v e s  and  standards are l i k e l y to vary from community to community, s i n g l e program w i l l be a p p r o p r i a t e  i n a l l communities.  no  Statement Four,  A review of the l i t e r a t u r e on govern-  ment f i n a n c e i n d i c a t e d t h a t a l t e r n a t i v e methods of a l l o c a t i n g the c o s t s of l o c a l government expenditure priate for different  services.  programs are appro-  Because of the nature of the  s e r v i c e s i n v o l v e d i n the proposed case study program, i t was found t h a t the c o s t s should be a l l o c a t e d a c c o r d i n g to the benefits-received principle.  T h i s c o n c l u s i o n , which concurs  with the premise of statement f o u r , was tors}  based on three f a c -  the b e n e f i t s and b e n e f i c i a r i e s can be  r e l a t i v e l y c l e a r l y ; a modified  identified  d i s t r i b u t i o n of income i s  not a p o l i c y o b j e c t i v e of the m u n i c i p a l i t y i n p r o v i d i n g these s e r v i c e s ; and  imposing the b e n e f i c i a r y charges w i l l not  t r i b u t e t o the i n e f f i c i e n t use  con-  of the s e r v i c e .  To ensure an e q u i t a b l e d i s t r i b u t i o n of c o s t s among a l l b e n e f i c i a r i e s , i t was  suggested t h a t the f i n a n c i n g program  take i n t o c o n s i d e r a t i o n the p o s s i b i l i t y of d i v i d i n g t o t a l system c o s t s i n t o three components:  c a p i t a l costs  of  major f a c i l i t i e s which are of g e n e r a l b e n e f i t ; c a p i t a l c o s t s of l o c a l f a c i l i t i e s ; posed s t r a t e g y r e c o g n i z e d each category  and  operating costs.  The  pro-  t h a t the b e n e f i t s a s s o c i a t e d  with  of c o s t s accrue t o d i f f e r e n t b e n e f i c i a r y  groups, and as such a d i f f e r e n t type of b e n e f i c i a r y charge would be a p p r o p r i a t e with each  category.  f o r a l l o c a t i n g the c o s t s a s s o c i a t e d  153 Suggestions f o r F u r t h e r Having completed the r e s e a r c h  Research  i n the case study,  s e v e r a l suggestions can he made as t o the d i r e c t i o n i n which f u r t h e r r e s e a r c h  should be c h a n n e l l e d .  F i r s t , a more  comprehensive search f o r a l t e r n a t i v e methods of the i d e n t i f i e d community o b j e c t i v e s would be  achieving  desirable.  More s p e c i f i c a l l y , c o n s i d e r a t i o n should be g i v e n t o  the  p o s s i b i l i t y t h a t t e c h n o l o g i c a l advances i n sewage d i s p o s a l and  domestic water supply may  c o n t r i b u t e t o the  economic  f e a s i b i l i t y of adopting a program of i n d i v i d u a l sewage d i s p o s a l and  r e c y c l i n g systems r a t h e r than the  community s a n i t a r y sewer and  conventional  domestic water systems.  A second i s s u e r e q u i r i n g a d d i t i o n a l r e s e a r c h  i s that  o f i d e n t i f y i n g the b e n e f i t s and the b e n e f i c i a r i e s of  local  government expenditure programs s i m i l a r t o the proposed case study program.  I t was  concluded i n the study t h a t  the  b e n e f i t s a s s o c i a t e d w i t h the p r o v i s i o n of housekeeping s e r v i c e s are l a r g e l y i n t e r n a l .  T h i s c o n c l u s i o n runs counter  t o the p o p u l a r argument t h a t s o c i e t y w i l l b e n e f i t t o  the  extent  supply  t h a t housing p r i c e s w i l l be s t a b i l i z e d i f the  of s e r v i c e d land i s i n c r e a s e d increase  t o accommodate the  continued  i n the demand f o r urban r e s i d e n t i a l l a n d .  If  f u r t h e r r e s e a r c h were t o i n d i c a t e t h a t t h i s argument i s indeed v a l i d , the proposed method of a l l o c a t i n g the of the case study program may  prove to be  costs  inappropriate.  154 Implications  for  Planning  E s s e n t i a l l y four implications f o r planning d e r i v e d from t h i s study.  The  first  can  be  i s d e r i v e d from the  c o n c l u s i o n t h a t the nature of the e x t e r n a l e f f e c t s genera t e d i n a p a r t i c u l a r development s e c t o r are a f u n c t i o n of community standards as w e l l as development r e g u l a t i o n s c o n t r o l s d u r i n g development.  The  relevant implication i n  t h i s case i s t h a t the environment of a development can be s i g n i f i c a n t l y i n f l u e n c e d by the i m p o s i t i o n planning and  r e g u l a t i o n s and  s e r v i c i n g of  planning  of use,  land.  t h a t the a p p r o p r i a t e n e s s i n terms o f the  v i d u a l s and  area  c o n t r o l s on the s u b d i v i s i o n ,  A second i m p l i c a t i o n i s d e r i v e d from the  evaluated  and  groups.  conclusion  of a l t e r n a t i v e programs should  be  o b j e c t i v e s of the a f f e c t e d i n d i -  As such, an important element i n the  f u n c t i o n as i t r e l a t e s t o the p r o v i s i o n of urban  p u b l i c s e r v i c e s i s t h a t of i d e n t i f y i n g the o b j e c t i v e s the i n d i v i d u a l s and  groups t h a t would be a f f e c t e d by  of the  implementation of a s e r v i c i n g program. A t h i r d i m p l i c a t i o n i s d e r i v e d from the c o n c l u s i o n new  development i s l i k e l y t o be  spurred  b i l i t y to c e r t a i n p u b l i c s e r v i c e s .  by improved a c c e s s i -  As such, the p r o v i s i o n  of s e r v i c e s can be used as a t o o l to achieve the o b j e c t i v e s of accommodating and nated development  areas.  that  community's  c h a n n e l l i n g growth t o d e s i g -  155 A f o u r t h i m p l i c a t i o n i s t h a t the method of a l l o c a t i n g s e r v i c i n g c o s t s may a f f e c t the r a t e of i n f i l l i n g t i a l l y developed a r e a . would l i k e l y  For instance  i n a par-  the r a t e of i n f i l l i n g  he more r a p i d w i t h the implementation o f the  proposed method of a l l o c a t i n g c o s t s among a l l b e n e f i c i a r i e s , i n c l u d i n g the owners of vacant p r o p e r t i e s designated f o r f u t u r e development, than would be the case w i t h the u t i l i z a t i o n o f the c o n v e n t i o n a l consumers on occupied  method of a l l o c a t i n g c o s t s among  properties.  156  BIBLIOGRAPHY  15?  BIBLIOGRAPHY A l b e r t a . Task Force on P r o v i n c i a l M u n i c i p a l F i s c a l Arrangements i n A l b e r t a . Edmontons Queen s P r i n t e r , December 1972. 1  Baker, Benjamin. "Economics o f T a x a t i o n , " i n Sources o f M u n i c i p a l Revenue. E d i t e d by E.T. Wright. New York* 1971. Baumol, W.J. "Macroeconomics o f Unbalanced Growth* The Anatomy of Urban C r i s i s . " American Economic Review. (June 196?). B r i t i s h Columbia. B r i t i s h Columbia R e g u l a t i o n s 105/60. Order i n C o u n c i l No. 1171, June 1959. B r i t i s h Columbia. Land R e g i s t r y A c t . C. 208 and Amendments,  R.S.B.C. i960,  B r i t i s h Columbia, L o c a l S e r v i c e s A c t . R.S.B.C. I960, C. 224 and Amendments. B r i t i s h Columbia. M u n i c i p a l A c t . and Amendments.  R.S.B.C. i960, C. 255  B r i t i s h Columbia. P u b l i c Schools A c t . C. 219 and Amendments. B r i t i s h Columbia. Water A c t . and Amendments.  R.S.B.C. i960,  R.S.B.C. i960, C. 405  B r i t i s h North America A c t 1867 t o 1965. A C o n s o l i d a t i o n . Prepared by Elmer A. D r i e d g e r , Q.C., B.A., LL.B., LL.D., Deputy M i n i s t e r o f J u s t i c e and Deputy A t t o r n e y General o f Canada, Department o f J u s t i c e , Ottawa, C o n s o l i d a t e d as o f January 1, 1967. Canadian Tax Foundation. P r o v i n c i a l and M u n i c i p a l F i n a n c e s . 1973. Ottawa* 1973. C h a r l e s de Montesquieu. "The S p i r i t of the Laws," Trans, by Thomas Nugent, V o l . 38 Great Books o f the Western World, Chicago* E n c y c l o p e d i a B r i t a n n i c a , I n c . 1952, Clawson, Marion. Suburban Land C o n v e r s i o n i n the U n i t e d S t a t e s . Baltimore* Resources F o r The F u t u r e , 1971.  158 Downing, P a u l B.  1969.  The  Economics of Urban Sewage D i s p o s a l .  Eaton, A. Kenneth, Essays i n T a x a t i o n , Ottawa* Tax Foundation, Canadian Tax Papers No, 40, E c k s t e i n , Otto,  Water Resource Development.  Canadian 1966,  1958.  Economic C o u n c i l of Canada. " F i n a n c i a l I m p l i c a t i o n s of Urban Growth," i n P u b l i c Finance i n Canada* Selected Readings. E d i t e d by A.J. Robinson and James C u t t . Toronto* 1968. F i s c h e r , E r n e s t M. and New York* Holt,  Robert M. 1954.  Fischer.  Urban Real E s t a t e .  Good, D a v i d A. C o s t - B e n e f i t and Cost E f f e c t i v e n e s s A n a l y s i s * T h e i r A p p l i c a t i o n t o Urban P u b l i c S e r v i c e s and F a c i l i t i e s . Regional Science Research I n s t i t u t e * 1971. Hardwick, Walter. Comment i n "Proceedings of Symposium on Land Banking," (Unpublished), Vancouver, October 1973. Hatry, H.P. and J.F. Cotton. County, C i t y . 1967.  Program P l a n n i n g  f o r State,  _, R.E. Winnie, and D.M. F i s k . P r a c t i c a l Program - /-I*-, -P«v» O + n + n- ~ " 3- T ~ 1 rt l-f--l L. /-N-O-O • _*• ~_•" 1f - • E v a l u a t i o n f o r S t a t e and L o c a l Government O f f i c i a l s . 1973. Hickey, P a u l . "The Changing S t r u c t u r e o f M u n i c i p a l Governments i n Canada," i n M u n i c i p a l Finance and A d m i n i s t r a t i o n i n Canada. Toronto* The Canadian I n s t i t u t e of C h a r t e r e d Accountants, 1972. H i l l , Morris. "A Goals-Achievement M a t r i x f o r E v a l u a t i n g A l t e r n a t i v e P l a n s , " J o u r n a l of American I n s t i t u t e of Planners. (January 1968)* 19-29. The  I n s t i t u t e of M u n i c i p a l T r e a s u r e r s and Accountants. C o s t - B e n e f i t A n a l y s i s i n L o c a l Government. Londont  I n t e r n a t i o n a l C i t y Manager's A s s o c i a t i o n , The M u n i c i p a l Yearbook, 1961. Chicago* The A s s o c i a t i o n , 1961. I s a r d , Walter, and C o u g h l i n , Robert E. M u n i c i p a l Costs and Revenues R e s u l t i n g From Community Growth. W e l l e s l e y , Mass.* 1957.  159 J o i n t Committee of the American Bar A s s o c i a t i o n and the American S o c i e t y o f C i v i l E n g i n e e r s . "Fundamental C o n s i d e r a t i o n s i n Rates and Rate S t r u c t u r e s F o r Water and Sewage Works," Ohio S t a t e Law J o u r n a l , ( S p r i n g  195Di  147-276.  Kamloops, C i t y .  Annual Budget, 1973*  Kamplan Committee. City Council.  Kamplan, a Status Report t o Kamloops Kamloops* J u l y 1973*  Kenney, Kenneth B. P u b l i c P o l i c y A l t e r n a t i v e s A f f e c t i n g Water and Sewer S e r v i c e i n Urban Growth Areas. Chapel H i l l s U n i v e r s i t y o f North C a r o l i n a , 1964. L i c h f i e l d , N a t h a n i e l and J u l i u s M a r g o l i s . "Benefit-Cost A n a l y s i s as a T o o l i n Urban Government D e c i s i o n Making," i n P u b l i c Expenditure D e c i s i o n s i n the Urban Community. E d i t e d by Howard G. S c h a l l e r . Baltimore* Resources f o r the Future, 1962. , . "Cost-Benefit Analysis i n Plan E v a l u a t i o n , " Town P l a n n i n g Review ( J u l y 1964a)*  159-169.  " S p a t i a l E x t e r n a l i t i e s i n Urban P u b l i c Expenditures* A Case Study," i n The P u b l i c Economy of Urban Communities. E d i t e d by J u l i u s M a r g o l i s . Baltimore* Resources f o r the Future, 1964b. Planning.1966,  C o s t - B e n e f i t A n a l y s i s i n Town  and Honor Chapman. "Cost-Benefit A n a l y s i s i n Urban Expansion* A Case Study* Ipswich," Urban S t u d i e s . (June 1 9 7 0 ) . Lindblom, C h a r l e s E . " D e c i s i o n Making i n T a x a t i o n and Expenditures," i n P u b l i c Finances* Needs Sources and U t i l i z a t i o n . E d i t e d by James M. Buchanan. Princeton* N a t i o n a l Bureau of Economic Research, I96I. f  Maass, A r t h u r . "Benefit-Cost Analysis* I t s Relevance t o P u b l i c Investment D e c i s i o n s , " Q u a r t e r l y J o u r n a l of Economics. (May 1966)* 209-22o\ M c C a l l , Tom. "Growth, Who Needs I t . " 4 February 1974, p. 5 .  Vancouver Sun,  M i l l i m a n , Jerome W. " B e n e f i c i a r y Charges—Toward a U n i f i e d Theory," i n P u b l i c P r i c e s f o r P u b l i c Goods. E d i t e d by Selma J . Mushkin. Washington* The Urban I n s t i t u t e , 1972,  16 0 Mishan, E . J . London*  Cost-Benefit 1971.  Analysis*  M u s h k i n , S e l m a and B. Herman. Washington* 1968.  The  An I n f o r m a l  Introduction.  Search For A l t e r n a t i v e s.  and M a r j o r i e W i l l c o x . An O p e r a t i v e PPB System* A C o l l a b o r a t i v e Undertaking i n the S t a t e s . Washington* 1968. ^ (ed.). Public Prices For Public Washington* The U r b a n I n s t i t u t e , 1972.  Goods.  ^ a n d R i c h a r d M. B i r d . "Public Prices* An O v e r v i e w , " i n P u b l i c P r i c e s f o r P u b l i c Goods. Edited by Selma J . Mushkin. Washington* The U r b a n I n s t i t u t e ,  1972.  Netzer, Dick. Economics o f the P r o p e r t y Tax. The B r o o k i n g s I n s t i t u t i o n , 1966. O n t a r i o Committee on T a x a t i o n . Printer, 1967.  Report.  P e a r s o n , Norman. What P r i c e S u b u r b i a ? Mainland Regional P l a n n i n g Board,  Washington*  Toronto*  Queen's  Vancouver* 1967.  Lower  P l u n k e t t , Thomas J . The M u n i c i p a l P i c t u r e i n B r i t i s h Columbia. Vancouver* Union of B r i t i s h Columbia cipalities, 1971.  Muni-  . The F i n a n c i a l S t r u c t u r e a n d t h e D e c i s i o n M a k i n g P r o c e s s o f C a n a d i a n M u n i c i p a l Government^ Ottawa * C e n t r a l M o r t g a g e and H o u s i n g C o r p o r a t i o n , 1972. 1  P r e s t , A.R. a n d R. T u r v e y . "Cost-Benefit Analysis* A Survey," Economic J o u r n a l . (December 1965): 683-735. Richmond  P l a n n i n g Department.  Unpublished Report,  1972.  Robinson, A . J . Economic E v a l u a t i o n o f M u n i c i p a l E x p e n d i t u r e s : PPB. Ottawa: C a n a d i a n Tax F o u n d a t i o n , C a n a d i a n Tax P a p e r s No. 52, 1971.  Canada:  . a n d James C u t t ( e d s . ) . Public Finance i n S e l e c t e d Readings. Toronto: 1968.  R o g e r s , I a n MacFee. The Law Toronto: 1959.  of Canadian Corporations.  S c h u l t z e , C h a r l e s L. The P o l i t i c s a n d E c o n o m i c s o f P u b l i c Spending. Washington: The B r o o k i n g s I n s t i t u t i o n , 1968.  161 Smithies, Arthur. " C o n c e p t u a l Framework f o r t h e P r o g r a m Budget," i n Program B u d g e t i n g . E d i t e d by D a v i d N o v i c k . Cambridge: 1965. S t r o n g , Lamb and N e l s o n ( K a m l o o p s ) L t d . Water S t u d y . Kamloops, 1973.  Westsyde Sewer  and  U n i t e d N a t i o n s D e p a r t m e n t o f E c o n o m i c and S o c i a l A f f a i r s . A M a n u a l F o r Programme and P e r f o r m a n c e B u d g e t i n g . New Y o r k : 1965. U.S.  Department o f H e a l t h , E d u c a t i o n , and W e l f a r e , P u b l i c H e a l t h S e r v i c e , and F o o d P r o t e c t i o n . Environmental H e a l t h P l a n n i n g Guide, P u b l i c H e a l t h S e r v i c e P u b l i c a t i o n No. 823. Washington: U.S. Government P r i n t i n g Office, 1962.  W e i n s t e i n , B e r n a r d L. S p e c i a l A s s e s s m e n t s and Charles i n Municipal Finance. New Y o r k : t i o n , Inc., 1970.  Service Tax Founda-  W e i s b r o d , B u r t o n A. "Income R e d i s t r i b u t i o n E f f e c t s and B e n e f i t - C o s t A n a l y s i s , " i n Problems i n P u b l i c E x p e n d i ture Analysis. E d i t e d by Samuel B. C h a s e . Washington: The B r o o k i n g s I n s t i t u t i o n , 1968. W h i t e , P h i l i p and S t a n l e y H a m i l t o n . The i n B r i t i s h C o l u m b i a - An A n a l y s i s .  R e a l P r o p e r t y Tax Vancouver: 1972.  Wicker, Warren J a c k . A r r a n g e m e n t s F o r W a t e r and Sewerage Services. Chapel H i l l : U n i v e r s i t y of North C a r o l i n a , I n s t i t u t i o n o f Government, A p r i l 1966.  162  APPENDICES  163  APPENDIX A ALTERNATIVE SOURCES OF LOCAL REVENUE L o c a l Income Tax A t a x on e a r n i n g s i s a t t r a c t i v e because i t i s more l i k e l y t o be i n accordance w i t h the p r i n c i p l e o f a b i l i t y t o pay than i s the r e a l p r o p e r t y tax? and l i k e the p r o p e r t y tax,  an income t a x i s a l s o r e l a t i v e l y f l e x i b l e .  mentation  The imple-  o f income taxes a t the l o c a l l e v e l , however, i s  complicated by s e v e r a l a d m i n i s t r a t i v e problems.  First, i f  the t a x i s t o be o f l o c a l d e s i g n , only simple and t h e r e f o r e crude d e f i n i t i o n s o f income c o u l d be p r o v i d e d , r e s u l t i n g i n considerable i n e q u i t i e s .  Second, income t a x r e q u i r e s  s o p h i s t i c a t e d a d m i n i s t r a t i o n but such an o r g a n i z a t i o n i s most d i f f i c u l t t o e s t a b l i s h a t the l o c a l l e v e l (White and Hamilton, 1972).  I f the t a x i s t o take the form o f a share  of p e r s o n a l income t a x c o l l e c t e d f o r the p r o v i n c e by the p r o v i n c i a l government, i t i s l i k e l y t h a t the p r o v i n c i a l government would have t o s e t a standard r a t e f o r a l l munic i p a l i t i e s , with the r e s u l t t h a t the t a x would more c l o s e l y approximate  a p r o v i n c i a l government g r a n t r a t h e r than a  l o c a l source of revenue.  16k Local Sales  Tax  A s a l e s tax, which i n e f f e c t i s a l e v y on consumption, i s a l s o somewhat l e s s than p r a c t i c a l a t the l o c a l l e v e l  be-  cause of problems of compliance as w e l l as problems of ministration.  As White and Hamilton p o i n t out, the  ad-  basic  d i f f i c u l t y of a l o c a l r e t a i l s a l e s tax i s t h a t the geographi c a l area of the a u t h o r i t y l e v y i n g the t a x i s not  nearly  l a r g e enough to prevent wide-scale avoidance by means of people making purchases i n j u r i s d i c t i o n s with lower r a t e s . I f neighboring  m u n i c i p a l i t i e s agree t o p o o l revenues i n  order  t o a v o i d t h i s d i f f i c u l t y , the r e s u l t i s a r e d u c t i o n i n l o c a l autonomy and  a weakening of the s e n s i t i v i t y of the l o c a l  payer t o the l e v e l and  d i r e c t i o n of l o c a l  tax-  expenditures  (White and Hamilton, 1972). Gasoline  Tax  A g a s o l i n e tax i s a t t r a c t i v e as a l o c a l revenue source since a considerable  proportion  from automobile t r a n s p o r t and  of l o c a l expenditure a r i s e s  the c o n t r o l of t r a f f i c .  How-  ever, such a t a x i s not without i t s disadvantages i n t h a t g a s o l i n e taxes are p r e s e n t l y l e v i e d by the p r o v i n c i a l government.  As such, a l o c a l g a s o l i n e tax would e i t h e r n e c e s s i t a t e  the p r o v i n c e ' s the l e v y but  v a c a t i n g the f i e l d e n t i r e l y or c o n t i n u i n g  with  d i s t r i b u t i n g to l o c a l a u t h o r i t i e s those r e c e i p t s  a t t r i b u t a b l e to sales i n t h e i r respective areas.  In a d d i t i o n ,  as with the l o c a l s a l e s tax, i t would be r e l a t i v e l y easy f o r consumers t o a v o i d those areas where the r a t e was  highest.  165  APPENDIX B BORROWING RESTRICTIONS ON BRITISH COLUMBIA MUNICIPALITIES B r i t i s h Columbia m u n i c i p a l i t i e s must comply w i t h the f o l l o w i n g r e s t r i c t i o n s as o u t l i n e d i n the M u n i c i p a l A c t : (1) Long-term m u n i c i p a l debt s h a l l not exceed the amount of m u n i c i p a l revenue f o r the c u r r e n t year and any revenue s u r p l u s a p p r o p r i a t e d f o r the budget (S. 24?): (2) F o r c i t i e s , towns, and d i s t r i c t s , long-term debt ( e x c l u d i n g debts f o r temporary c u r r e n t borrowings, debts f o r s c h o o l or h o s p i t a l s , and 50 p e r c e n t of t h a t f o r s e l f l i q u i d a t i n g e n t e r p r i s e s ) s h a l l not exceed 20 p e r c e n t of the average t a x a b l e assessment over t h r e e y e a r s p l u s the v a l u e of the s e l f - l i q u i d a t i n g m u n i c i p a l e n t e r p r i s e s (S. 248): (3) Borrowed funds must be used f o r c a p i t a l purposes (S. 248) except i n the case of borrowing i n a n t i c i p a t i o n of c u r r e n t revenues, up t o the amount of revenue not y e t r e c e i v e d (S. 264)} (4) The term may not exceed 30 years and the type of i s s u e i s l i m i t e d t o i n s t a l m e n t , s e r i a l or s i n k i n g fund debentures, a l l of which may be c a l l a b l e (S. 252)} (5) Long-term borrowing must conform t o the f i v e y e a r c a p i t a l budget prepared a n n u a l l y by the m u n i c i p a l i t y and approved by the I n s p e c t o r of M u n i c i p a l i t i e s (S. 199A)} (6) A l l long-term borrowing must be approved by the e l e c t o r s u n l e s s i t i s i n c u r r e d f o r l o c a l improvements, water and sewerage f a c i l i t i e s , p u b l i c u t i l i t i e s or p r o j e c t s ordered by the p r o v i n c i a l a u t h o r i t i e s r e s p o n s i b l e f o r p o l l u t i o n c o n t r o l (S. 253); (7) Short-term borrowing (up t o f i v e y e a r s ) may be i n c u r r e d without f i r s t o b t a i n i n g the consent of the e l e c t o r s , p r o v i d e d the aggregate does not exceed twenty d o l l a r s p e r c a p i t a or $500,000, whichever i s the l e s s e r (S. 260).  

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