Why spend money on ....?

2013-03-05

I can't recall any residents asking why we have spent many millions of dollars on various infrastructure work projects. Everyone knows that when we got our town back, following the demerger, our infrastructure - roads, sidewalks, water mains, sewers, lights, etc. - were in terrible shape. But now that our infrastructure is possibly the best on the island, I am getting questions about spending on secondary priorities.

Why spend on so many events for kids? Why have so many sports programs? Why do we need to beautify the Queen Mary median? Why do we need to improve our pool and tennis facilities? Why subsidize library memberships? The list goes on and on.

I am sure that some residents think that at least some of our expenditures are unnecessary and that our taxes would be lower if we spent less. I disagree with that point of view. Here's why.

Spend more to keep taxes down!
Towns, like businesses, must keep growing or else they start to decline. Town tax base growth is measured by the total valuation of all the property in the town. Hampstead, with almost no undeveloped land, can only grow when old homes are replaced by newer ones or when they are renovated and/or expanded. The other way that valuations grow is when residents sell a home for more than it was worth in the past.

All these types of growth require that we attract new residents, especially young families, to Hampstead. They are the ones bidding up the prices of our real estate. They are the ones demolishing old small homes and building new larger ones. They are the ones expanding existing homes. Please don't misunderstand. I am not in favour of unrestricted modernisation. In my first mandate, the council tightened the rules for new homes in Old Hampstead. However, there can be substantial growth while respecting the treasured look of Old Hampstead.

All towns want to attract new residents. Our main competition (for upscale home buyers) is TMR and Westmount. We have done well. On the last valuation roll, our single family home values climbed past those of TMR for the first time and we have reduced the gap between us and Westmount.

So what is so good about higher valuations?
Obviously, higher valuations are good because we will get more when we sell our homes. However, some residents believe that higher valuations result in higher taxes. That is false since we adjust the mill rate down to compensate for valuation increases. That is how it works for the town as a whole. For individual property owners, you pay more or less than average depending on whether your valuation increased more or less than average. It is a fixed taxation pie and when some pay more, the rest pay less. In 2009, we had a 0% local tax increase overall but 96% of residents saw a decrease of 1%. The decrease was mostly due to large tax increases for just 11 properties.

Now you can see why we are moving to improve the beautification of the town. Most residents have beautifully landscaped lawns. They want the public spaces to be just as attractive. This will attract more home buyers who will pay higher taxes while your taxes will be relatively lower. Having many fun events and programs for the younger set is also important in attracting our primary home buyers. Smooth roads where the kids can bike safely and speed humps to reduce dangerous driving are other factors.

We have now had six years in a row of below inflation local tax increases. This, too, results in more home buyers because new residents can count on stable taxes. We are in a virtuous circle (the opposite of a vicious circle) where we spend money to attract new residents and in so doing most of us see lower taxes than if we had not spent the money on these "secondary" priorities.

If you have any comments suggestions, or questions on this topic or anything else related to Hampstead, please e-mail me at WSteinberg@Hampstead.QC.CA or call me 7 days a week until midnight at my home office (514) 483-6954.


Sincerely,


Dr. Bill Steinberg
Mayor, Town of Hampstead