Ward papastew City Councillor Michael Janz (Photo: David J. Climenhaga).

In recent months, a lot of ink has been spilled and hot air vented on the housing crisis being experienced everywhere in Canada. Meanwhile, as leaders at every level of government blame others for the crisis, our municipalities continue to engage in practices that increase costs, require higher taxes, and do little to solve the housing crisis – all in the service of big profits for well-connected developers. Edmonton City Councillor Michael Janz, the representative for Ward papastew, believes we can build happier and healthier urban communities for citizens “of all ages, wages and stages,” as he puts it in his official City Council biography. Mr. Janz is a former three-term Edmonton public school trustee, University of Alberta Board member, and Edmonton Public Library Board member. In this Guest Post, he takes a look at how suburban sprawl is a poor investment for municipalities, although it’s a big profit centre for the development industry. DJC

Who profits and who pays when it comes to urban development? Sales data tell the story

By Michael Janz

Sales figures in Edmonton, like other municipalities across Canada, show us that the suburban development industry is enormously lucrative.

But how much of that profitability depends on subsidies from other municipal taxpayers? 

Yes, we are in a national housing crisis, but we need to get “where we build” right, lest we harm housing affordability for everyone else.

Research into suburban sprawl shows time and again it’s a low-yield investment for municipalities. 

Former Calgary Mayor Naheed Nenshi (Photo: David J. Climenhaga).

Former Calgary Mayor Naheed Nenshi used to refer to this loss as the “sprawl subsidy.” 

In Ottawa, for example, the city found that suburban expansion costs $465 per person per year. By contrast, Ottawa found that high-density infill development earned that city $606 per person per year. 

In Edmonton, consultant research showed that six new neighbourhoods, even with a higher density than traditional sprawl, in the Decouteau area of the city’s southeast would create a $400-million liability (in 2014 dollars) by 2050. 

It is taxpayers – not developers, of course – who pick up this liability.

Obviously, it would be helpful if this subsidy reaped by developers from taxpayers could be viewed in the context of the profits they generate from their investment. 

A chart showing where development is taking place in Edmonton (Image: Prepared for Ward Metis City Councillor Ashley Salvador).

But as private companies that are not publicly traded, the public do not have access to their books. However, sales prices tracked by the City of Edmonton’s assessment and taxation branch can stand as the closest proxy for gross profit.

In developing neighborhoods over the past decade, 23,684 residential sales were made, producing revenue of $10,968,719,690 – almost $11 billion! 

To determine net profit, we know that banks want to see a return on investment of around 15 per cent. Even estimated conservatively at 10 per cent over the past decade, though, suburban land developers would have made almost $1.1 billion in profit on 23,684 homes, more than $110 million per year, or around $50,000 per home. 

Quite simply, these profits would not be possible without the public’s generous subsidy.

In the 1970s, speaking of Alberta’s petroleum resources, Progressive Conservative premier Peter Peter Lougheed urged us to “think like owners.” But when it comes to land development across Canada, we’ve failed to do that, and it’s time for a dramatic course-correction when it comes to where and how we build housing.

As citizens, we need to pull back the curtain, do the math, and demand more. 

Quite apart from the long-term maintenance and renewal of roads and sewers, in the short term they aren’t paying adequately for infrastructure required by every community – from playgrounds, to parks, to the welcome sign. 

Developers also myopically fight for their right to build lower-quality, energy inefficient homes today in the name of “housing affordability” – thereby creating a future energy retrofit liability for the municipality and decades of high energy bills for homeowners. 

Homeowners are denied a better deal by municipalities and the provincial government, who have capitulated to developer lobbyists. 

Who fights for the consumer? Who fights for the rest of the taxpayers? 

For the past century, municipalities have encouraged suburban sprawl – the most profitable kind of development for developers to build and the most expensive for municipalities to service.

Attempts to increase the costs recovered by municipalities have been repeatedly thwarted by politically savvy developers. Generous donations to City Council election campaigns and provincial political parties, the use of well-connected lobbyists, and public relations directed at media have all been employed in this successful effort. 

Ontario Premier Doug Ford (Photo: Andrew Scheer/Wikimedia Commons).

Canadians watched the Toronto greenbelt scandal almost topple a premier, but how many of us remember that one political action committee that helped elect Conservative Doug Ford, Ontario Proud, was majority funded by suburban development interests? 

One of the development industry’s favorite straw house defences is “housing affordability” – the claim they can’t pay any more, that any nickels or dimes charged by the city will increase the purchasing price for new homeowners.

But the industry’s enormous profits show this is untrue, and there are millions of dollars up for negotiation. 

Regardless, services and amenities are required in all neighbourhoods, and if our municipalities and provincial governments don’t require developers to pay, the costs of those playgrounds must be paid from grants from general municipal provincial revenue – diverting more resources from public services for the “us” to offset the profits for a very small “them.”

Another favorite developer defence is the threat they’ll build elsewhere, often in a neighboring municipality. 

But once taxpayers realize sprawl is a liability, not an asset, that threat is quickly defused.

Until the math says yes, municipalities need to say no!

Under our current regime, most new developments are liabilities to taxpayers, not assets. 

Yes, we badly need new housing, but like orphan oil and gas wells abandoned when they’re no longer profitable, municipalities must not be blind to their losses because of our obvious housing needs.

What can we do? 

  • Legalize and build housing in already serviced locations, refilling our cities with infill that still provides a generous profit to the developer, but without land use liabilities.
  • Encourage a proper role for the public sector in the development business. Why should such enormous profitability be left to a small group of private interests amidst a national housing crisis?
  • Make an effort to improve our residents’ municipal financial literacy, ensuring our precious tax dollars stewarding the assets we already have before paying to build more. 

A good life in a prosperous place is possible for the people of our cities when we rebuild inward, especially around the the vacant shopping malls, overbuilt parking lots, and pre-serviced spaces of the last century as we look ahead to the next.

Join the Conversation


  1. Like crack addicts, we were hooked on the dream of expressways and single family homes complete with a dog and perhaps a picket fence. Read the “Unbuilt” series of books, especially the Calgary one, to see the horrible future we narrowly avoided.

    Unfortunately, politics runs on money and the UCP changes around campaign funding and political parties at the municipal level will only give developers an even stronger hand.

  2. Michael Janz is bang on. Sadly, this is Alberta, the land of corporate subsidies. We love to elect politicians that love to give taxpayer funded subsidies to developers, sports owners and oil companies. Case in point, the arena to be built for the Calgary Flames. However, the biggest subsidy is yet to arrive. Subsidies to developers will get lost in the rounding when it comes time for taxpayers to clean up the mess left behind by the oil companies for both conventional and the oil sands. Not an if, but a when.

  3. Unfortunately, this is Alberta, and for a very long time our so-called Conservative provincial government favored corporate greed, over the well being of Albertans.

  4. Wednesday’s edition of CBC’s ‘The Current’ hosted mayors from Halifax, Brampton and Surrey to talk about the housing crisis, and one of the things that was mentioned was that it has been estimated that, on average, each home built in a new neighbourhood costs the municipality $107,000 to provide the services the home will need.

    A few years ago a Calgary city planner estimated that when a new subdivision is built, the city has to collect taxes for 35 years before they will recover the cost of the services they had to provide for the subdivision.

    Interestingly, $107,000 divided by 35 years is a bit over $3000, which is in the ball park, but at the low end of most people’s municipal tax bill, which suggests both claims back each other up.

  5. It is just more of the same old same old “free market capitalist myth” warm and fuzzies that everyone knows and loves, even as it remains that “Private initiative independent of the Government does not exist.” Apparently.

    1. “Canadians watched the Toronto greenbelt scandal almost topple a premier, but how many of us remember that one political action committee that helped elect Conservative Doug Ford, Ontario Proud, was majority funded by suburban development interests?”

    2. “The private interests that lobbyists are paid to advance can be at odds with the public’s interest. Thus, lobbying has the potential to influence government to make decisions that do not represent the interests of the majority,” Lysyk said in her report. “The process was certainly corrupted by the government essentially rigging it in favour of a few developers and giving them preferential treatment,” said Conacher. “The laws need to be reviewed and strengthened to prohibit this.”


    3. “Roll out the pork barrel, we’ll make a barrel of money, roll out the pork barrel, we’ve got the politicians in our pocket(s).”

    4. Are we there yet? ——> “A common characteristic of plutocracy is the frequent enactment of government policies that benefit the wealthy, often at the expense of the lower classes.”

    “Big Money Big Influence” BY BILL KILGANNON & SAYEH YOUSEFI


  6. It’s a nationwide , even world wide problem.
    Developers have deep pockets to influence local Councils and their planning departments.
    As long as the many amongst us yearn for the 5000 square foot home with all the trimmings they will continue to succeed.
    Alberta has the extra pressure from a young workforce that revels in such a lifestyle.
    Sad thing is that when they eventually retire and move to, often, BC, they screw up our lifestyle.

    1. Some part of the housing crisis may be due to people expecting to get 5000 sq ft homes for the build price of a 1050 sq ft home when it was built in 1950.

  7. Where does the problem start? With city councillors who vote to expand the city limits so they can collect more taxes. Pin the blame on those city councillors. Councillors …To solve the problem of urban sprawl just stop expanding the size of the city!

    1. Keith: A wise old city planner (the real thing, a professional) once told me that “you can’t stop people from moving to a city, all you can do is plan for them.” History would seem to suggest this is true. Even totalitarian countries, Stalin’s Russia and Mao’s China, for example, literally closed off Moscow and Beijing to new residents, and still they came. DJC

  8. Good article, I agree, and I am enjoying seeing the new infill going in. I think we’ve been had by the ‘Beacon’ though. Whose idea of affordable was that? And what happened to the rest of it? Are they holding out for a more tower friendly Council in the next election? Maybe the coyotes will move in to the site meantime? I am being serious.

  9. One reason people are attracted to more suburban areas in Edmonton is due to the decline of downtown.

    A lot of this is due to the failure of the provincial government to provide adequate support and social programs. So, many homeless people are roaming around through any public or private space they can access during the day. Edmonton has fewer permanent shelter spaces than Calgary even though the social problems are more severe.

    However another problem is a city council that has failed to grasp the enormity of the problems and deal with them. A rookie city councilor from downtown who is unable or unwilling to take a strong leadership role on downtown issues is part of the problem too. Other councilors are too busy grandstanding on other issues.

    It would be hard to overstate how angry and disappointed many Edmontonians are with politicians at every level of government who continue to point fingers at each other. All will be given a strong and unpleasant message in their next elections if they don’t shape up soon. The first ones to get this message, due to the electoral calendar may be municipal politicians. I am not sure they realize yet what is coming.

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