Are We Ready for It?
100,000 people.
That’s how many people moved into Edmonton in the last two years with approximately 40,000 people coming in 2022 and 65,000 people in 2023. That’s the equivalent of Red Deer moving into Edmonton in just two years.
That means our population has increased by more than 10% since the 2021 Federal Census. Although our City Plan did not assume specific timelines for reaching 1.25 million people, it is safe to assume no one expected to grow as quickly as we have been. If the current growth rate holds, we could be at 1.25 million people in 3 years (that would be a 25% increase in population over 5 years). This immense growth is already creating significant pressure on the need for infrastructure and services in our City.
Rapid population growth is exciting but if we aren’t ready for it, it can create challenges. For example, do we have the necessary municipal and provincial infrastructure to support that rapid growth and has our provincial infrastructure funding for municipalities kept up with the growth? To help determine our current state of readiness, I made the following inquiry during the February 21st, 2024 City Council meeting:
Can Administration provide a report outlining:
Work currently underway on the Housing Needs Assessment for Edmonton and the Edmonton Region including any analysis on if enough housing is being built to support the population growth;
Any information City Administration has from the Administration of the various school boards about the ability to provide enough schools for the growing population;
If updated modeling has occurred for municipal infrastructure needed to support the growing population (example: libraries, recreation centres, bus garages, police stations, fire halls, utility lines, etc.);
If updated modeling has occurred for the City Plan to address the rapid population growth;
Language and translation services that the City provides to support the large increase of new Canadians who are moving to Edmonton; and
Funding changes in the MSI/LGFF funding provided to the City of Edmonton since its inception.
Due Date: Q2 2024
I know our City staff have already been doing a lot of work on the areas listed in the inquiry but I felt it was important to bring together all of this information in one report so we can fully understand what we are facing.
If we are being realistic, I don’t think we are ready for this growth. At least not yet.
It took a lot of time to get projects like the Lewis Farms Recreation Centre/Library and the Valley Line West LRT approved. With our current financial position, and the decrease in provincial infrastructure funding we have seen over the years, I don’t think we have the capacity to build and operate all of the infrastructure needed to support so many new Edmontonians.
Contrary to what some think, the property taxes we receive for new development outside the Henday do not cover the cost of the infrastructure needed to serve those areas. My colleague, Councillor Ashley Salvador, wrote an excellent blog post last year which covers this in far more detail. You can read that post here. So not only do we not get enough money to cover the construction of infrastructure, we then need to operate that infrastructure (ex: staff to clear roads, library staff, firefighters, rec centre workers, etc.) and that has an additional cost.
Since the new property taxes we bring in do not cover all of those costs, we have to increase property taxes to make up the difference. That is never a popular option. During the 2019-2022 budget cycle, City Council artificially kept property taxes lower than inflation because of the economic uncertainty created by the pandemic.
The property tax increases (and freeze in 2021) were the lowest increases in 25 years. At the time, the 2019 increase was the lowest increase in a decade (2.6%). In 2020, the increase (1.3%) was the lowest increase in 23 years. In 2021, the tax freeze (0%) was the first time that occurred in 24 years (0%). Finally for 2022, we had the third lowest increase in 25 years (1.9%).
During each of those years, Edmonton’s population kept increasing with 2022 being the start of of our very rapid population growth (40,000 people). Therefore, not only were we not keeping pace with inflation, we weren’t budgeting for the population growth.
Over the years, groups like the Edmonton Chamber of Commerce have spoken during our budget Public Hearings and would often suggest that property taxes should increase at the rate of inflation plus population growth. I generally believe that is a good target but I also appreciate the tension that can create because that would mean that our property tax increases would have to be far higher each year for most of the last 10 years.
The rapid population growth means we need to respond differently. This inquiry should provide us with a clear picture of what infrastructure is needed so that we can build an appropriate budget. On February 29th, 2024, we will also find out if the provincial infrastructure funding for municipalities will be increasing to meet the needs of our rapidly growing population. Almost every municipality in Alberta is seeing rapid growth and we haven’t seen the infrastructure funding keep pace. In fact, it’s been decreasing.
I’ll use schools as an example. The construction of schools is up to the provincial government. The school boards determine the need and then they submit capital plans to the province for funding. I was recently at a meeting organized by the Edmonton Public School Advocacy Network and it was very eye-opening. I know we needed more schools but the information they have put together shows just how big the need has grown. Here is the Edmonton Public School Board ten-year facilities plan from last year.
One interesting statistic I heard was that going into this school year, Edmonton Public School Board was expecting an additional 5,000 students but they saw 5,000 students plus an approximately 150 additional students per week each week since the start of the school year. By the end of this school year, they will be approaching double the number of students they were expecting.
Even if our population were to freeze for the next 10 years, which is won’t, we would need at least 8-10 new public schools each year for a number of years in a row and that would just be to keep up with the growth that has already been happening over the last decade. The chart below shows the need for more spaces for students.
And this is just for the Edmonton Public School Board, this doesn’t include schools for the Edmonton Catholic School District or the Francophone School Board. If you live in communities of Big Lake, Lewis Estates, Rosenthal, Secord, or Westview Village, you already know this because David Thomas King School and Bishop David Motiuk School are all well over capacity and have only been open for a few years. For those with children attending the two west end high schools, you know that there isn’t enough space right now and new west end high schools are needed.
Separate from new schools, there is a lot of deferred maintenance for our older schools. Here’s what has been identified by Edmonton Public School Board as the projected value of the deferred maintenance.
We need to build and operate the necessary municipal infrastructure and provincial infrastructure to support this rapid growth. Provincially, there are a few more financial levers that can be used to help with this. More people moving to Alberta results in more income taxes which have greater opportunity than property taxes to produce a net positive cash flow. We also know there is a significant provincial surplus and while Alberta should continue to pay down its debt, if that’s all that happens and we don’t at least try to stay ahead of population growth, that will only create a massive infrastructure deficit that we will all end up paying more for later while residents currently living in Edmonton will not have the amenities and infrastructure they need to have the best quality of life.
From a municipal perspective, our financial tools are far more limited. Property taxes and user fees are the main sources of revenue to pay the borrowing costs to build and service infrastructure. If we want to build a new recreation centre, we need to borrow for the construction cost and pay back the borrowed amount (plus interest) using property taxes. Then when the recreation centre opens, we have to pay to hire the staff to run the facility. Even when factoring in some revenue that we receive from admission fees, there is still a net cost that we have to make up through property taxes.
Put bluntly, every new rec centre, police station, park, library, etc. that we build requires an increase in property taxes. And the faster we grow, especially in newer areas, puts even more pressure on our financial position because instead of enhancing an existing civic facility, we have to build and staff a new one in a newer part of Edmonton.
If provincial infrastructure funding is increased to the level that municipalities across the province have been asking for, that will help reduce the pressure on municipalities for larger property tax increases. If you read my budget blog post from December, you will know that Edmonton was not alone in having a larger property tax increase. The 6.6% increase we saw was around the average of many other municipalities across the province.
Here are a few key stats for what municipalities are facing:
$30B: Alberta's municipalities are facing an estimated $30B infrastructure deficit that will worsen.
-64%: Compared to 2011, provincial infrastructure funding to municipal governments dropped by 64%.
$1.75B: Alberta Municipalities calls for $1.75 billion in funding to keep pace with population growth.
If you want to learn more about the overall provincial infrastructure funding for municipalities and how it has changed over the years, please read more on the Alberta Municipalities website.
One final consideration we need to better understand is how quickly can developers build new homes. If we keep seeing 65,000/year move into Edmonton, that’s going to require more homes than industry can likely build unless something changes. The Edmonton Metropolitan Region Board is working on a Housing Needs Assessment so having this come back as part of the report will help us determine what changes are needed for zoning, permitting, etc. to allow the necessary construction of all of the homes people will want to live in.
So what do we do now? First, we get all of that information into a single report that can be easily understood by everyone. If we don’t understand what the problem is, it’s going to be hard to solve it. When that report comes back in a few months, we can learn what infrastructure and services will be needed to serve all Edmontonians (both new and current). It will also allow us to better understand the financial realities we are facing due to rapid population growth.
Seeing so many people choose Edmonton as their new home is something we should all be proud of. That means we are continuing to build a city that others want to be a part of. They see it as a place to raise a family, start a business, and enjoy an excellent quality of life. Now we need to make sure we can deliver on that for everyone who calls Edmonton home.
