City Hall’s Sweetheart Deals: SARAVANAMUTOO
There’s a simple reason why your municipal taxes keep going up while crumbling sidewalks, aging arenas, and neglected community projects get left behind.
It’s because Ottawa City Hall is using your tax dollars to hand out developer sweetheart deals.
Two proposals currently before council would consume the next three per cent of property tax increases:
- Lansdowne would cost the equivalent of a one-per-cent property-tax increase — at least for the next decade, and probably longer.
- Tewin would cost the equivalent of a two-per-cent property-tax increase – forever.
Mayor Mark Sutcliffe has focused on keeping your annual tax increases to four per cent or less. Inflation alone eats up most of that increase. If the remainder is used to subsidize wealthy developers, there’s precious little to reinvest in communities.
The Inconvenient Math
Two-Per-Cent Tewin tax
It will cost $600 million upfront to run water pipes across the greenbelt to the proposed Tewin community. Some of this money, the city would get back through development charges. But on top of that, Tewin will amount to a long-term two-per-cent tax increase for everyone in the city.
That increase comes from the costs that all taxpayers subsidize for a new sub-division far from the city centre, as computed by the city’s advisors, Hemson Consulting.
The city asked Hemson to compute the cost of growth, i.e., how much a new home generates in tax revenue versus how much it consumes in city services and upkeep for new infrastructure.
Hemson found that in sub-divisions built at the edge of town, each new home costs more than it collects in revenue, requiring a subsidy of $465 per person per year. With an average household size of 2.2 people, this means that taxpayers across the city have to provide a subsidy of $1,023 per home per year in these greenfield developments. (Hemson also found that infill building netted the city a surplus of $606 per person per year.)
Tewin is supposed to grow to a community of 40,000 homes. This means that, when completed, taxpayers across the city will be subsidizing new Tewin homes to the tune of about $43 million per year.
$20 million is the amount we get from a one-per-cent property-tax increase, and accordingly, the subsidy that we all pay for Tewin would be equivalent to a two-per-cent property-tax increase.
One-Per-Cent Lansdowne tax
Some city councillors take exception to me characterizing Lansdowne as a one-per-cent tax increase. Even the Ottawa Citizen’s Randall Denley gets prickly about that claim.
But here are the simple facts. Taxpayers will borrow about $22 million a year to pay for Lansdowne and its associated underground parking. (The City claims it will spend $16 million on debt servicing, but I argue this is not the correct estimate.) Against that $22 million, Lansdowne has some $1.6 million in annual revenues that it can count on. It has other aspirational revenue streams, although those have not materialized in the past. Taxpayers could easily be on the hook for $20 million a year with Lansdowne. And remember, $20 million is the amount we get from a one-per-cent property-tax increase.
Recently, I did a 10-minute explainer video to walk through the Lansdowne numbers line by line. Watch that video to see in detail the inconvenient math that the City does not want you to know.
I’ve also argued that I believe the city is pushing Lansdowne, not to fix a broken sports facility, but to fix a broken business model. The Ottawa Sports and Entertainment Group is bleeding money on Lansdowne, and the opportunity for one lucky developer to build luxury towers onsite, through demolishing and rebuilding the site, could be a way to reduce the sting of loses.
If that’s right, then Lansdowne is worse than just a developer sweetheart deal; it’s using your tax dollars for corporate welfare to some of the richest men in the city.
Make ‘developer sweetheart deals’ the municipal ballot question
The city will be holding a by-election on June 16 for the Osgoode ward councillor position left vacant by George Darouze.
The ballot question for Osgoode in 2025, and for the entire city in 2026, should be whether we use our limited fiscal space to fund priority investments in the community or to fund developer sweetheart deals.
Sutcliffe wants to spend the next three per cent of property tax increases on Lansdowne and Tewin. And he’s counting on the fact that you are not paying attention.
We’re paying attention. And we’re getting the word out across the city.
If Sutcliffe and other council members want to support the two-per-cent Tewin tax and the one-per-cent Lansdowne tax, I hope they will be ready to explain to constituents why they voted to subsidize wealthy developers over the priorities of local communities.
Neil Saravanamuttoo is a former G20 infrastructure chief economist, director of CitySHAPES and the author of The 613 on Substack.
For You:
Bill The City For Pothole Damage: THE VOTER
What Caused City Council’s Rushed Special Meeting?
You Caused The Sprung Structure Fiasco: GRAY
City Of Ottawa Is A Bad Partner: PATTON
I Will Debate Lansdowne: SARAVANAMUTOO
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So … what’s the draw for Tewin and Lansdowne 2.0?
Even the city’s auditor general isn’t jumping up and down about these projects
Mayor Sutcliffe? Councillor Hubley? Anyone?
I’m more than just ‘curious’ to know who ordered that Hemson Study; it is an unusually revealing set of facts and whomever ordered it would have known that the evidence would obviously go against / provides the facts for showing what we all sort of knew intuitively, … that sprawl is unnecessarily costly. Thus it flies in the face of what this Council and their senior staff would normally do,… ie. support developers, and suppress any facts that make them, or their developer ‘associates’ types look bad. So.. who was the ‘progressive weasel ‘ on the inside ??
A seven year construction for Lansdowne will result in loss of income, and claims of small business and Sports losses as well. (Resulting in 40% smaller venues..smaller ticket sales). Have these losses been included in the calculations?
We need Council to commit now to putting a freeze on both Lansdowne and Tewin until after the next municipal election so the electorate can weigh in on the plans and their cost. Of course, no matter how much that may be the right and democratic thing to do, we know it won’t happen, That’s because neither of these projects can stand the light of day.
All our city councillors know that if they had to put forward realistic figures and defend them, it would show that Lansdowne will continue to be a money pit for the next forty-plus years and the only possible benefits that there might be will accrue to OSEG, not the City.
When there are other land blocks across the city that can be developed without the obscene financial demands of Tewin, there is no excuse for saddling the City and its residents with the millions and millions of taxpayer dollars to extend services to such a remote location and maintain them in perpetuity.
It’s not just the costs during construction that should be non-starters. Once this community is built, the residents of those 40,000 homes will be expecting bus service to get to work, school and other expeditions. They will want existing roads to be upgraded and new ones to be built and maintained for their use. They will also expect that the City will provide removal of the water sent out there in those $600M pipes once they convert it to sewage. Instead of accessing existing recreation facilities from their isolated location, they will expect new facilities to be built for them. They will be a drain on City finances forever and the rest of us will have trouble getting our local infrastructure maintained.