Don Cayo
Vancouver Sun
May 9, 2008

Citizen watchdog groups keep tabs on City Hall

Oversight: In the absence of any formal process, community activists are leading the way

Municipal politicians often boast that theirs is the most accountable kind of government.
And no doubt there are special opportunities for give-and-take with voters in small towns where you're apt to run into the mayor or a councillor having coffee, at the bank, or picking up a video.

But formal oversight to keep governments honest and the politicians and bureaucrats on their toes? The case can be made that municipal governments are the least accountable of the lot.

When did you last see a sweeping assessment of spending in your municipality along the lines of the report that federal Auditor-General Sheila Fraser released earlier this week in Ottawa? Or the tightly focused special report from John Doyle and his staff on aboriginal child care in B.C.? Probably never.

That is, unless you live someplace like Vancouver, West Vancouver or a handful of other cities where sophisticated citizens' groups have sprung up to fill the void.

The Vancouver Fair Tax Coalition is drawn from the business community, and it takes a highly disciplined, research-based approach. They don't speak out all that often, but when they do, it's with the authority born of knowing at least as much, quite possibly more, about their subject than the people in City Hall.

Similarly, in West Vancouver, the credentials of the volunteers who serve on the Interested Taxpayers Action Committee -- most of whom are retired, with time on their hands (see list on this page) -- is enough to chill the blood of a spend-thrift politician.

But this group differs from its Vancouver counterparts in two ways: First, they are homeowners, not business people. And their style tends to be populist.

They, too, do real research, but they usually dispense it in bite-sized pieces. Lawyer David Marley, especially, speaks out often through a stream of e-mails and a new blog. And, although his subject is serious, his tone is more apt to be saucy than sombre.

But such activist groups share similar roots -- deep frustration at their community's governance process. No auditor-general-like watchdog has a mandate to ferret out and expose municipal spending foibles and follies. Those in charge have little reason to fear being publicly fingered by anyone more credible than the coffee-shop grumps for bad planning, bad management, or stupid spending priorities. It's too easy to hide behind the excuse, "It's the way we did it last year."

The people who run our cities, towns and districts are never, ever required to spell out and defend the connection between money spent and the value provided.

So here's a look at these two groups, plus some thoughts on a possible way forward for other communities where frustrations aren't bad enough -- yet -- to spawn their own watchdogs:

WEST VANCOUVER
There's something about muffins and volunteers.

But if you're envisioning guys in shirtsleeves munching away as they strategize at the kitchen table, you haven't got a handle on West Van's Interested Taxpayers Action Committee. These guys don't eat muffins, they count 'em.

And they choke on them when the tab for muffins and other snack-time items reaches $33,705 worth from a single supplier in 2007 alone. That's up from $32,287 worth the year before, all bought at public expense for District of West Vancouver staff.

David Marley, a lawyer and frequent ITAC spokesman, has made these muffins an iconic issue for the group's crusade to rein in municipal spending.

Like Alberta in its ultra fat-cat heyday, West Van has lots of spending to rein in. Its per-capita expenditures are the region's highest by far -- $1,901 in 2006, compared with $1,433 in Vancouver and just $703 in Surrey.

With its puny business sector and no industrial base to do the heavy lifting on the tax load, the owners of West Van's pricey homes are left with huge tax bills.

And just because the homes are worth an average of $1.4 million, Marley points out, it doesn't mean all the occupants are rich. A lot of genteel poverty is disguised by nice facades, nice lots, and some extremely high-income earners who drive up the average income figures. But he has parsed the most recent Census figures and found, for example, that half the community's seniors -- nearly 800 households -- live on less than the stipend paid to councillors.

His poverty comments don't extend, however, to district employees -- a favourite target. Their wages and benefits account for 80 per cent of district spending, says group member Garrett Polman, and the cost of a growing cadre of bureaucratic heavy hitters is soaring.

The number of employees who earn $75,000-plus a year has gone from 40 in 2000 to 134 in 2007 -- even though police used to be on that list and now they aren't counted. And individual managers have in the last five years enjoyed raises ranging from 25.54 per cent to 67.07 per cent, with the average being 38.89 per cent.

"Like the debt in the '80s," Polman said, "the cost of these salaries takes away the flexibility of the politicians. It's why we're seeing a 3.5-per-cent tax increase, plus huge increases in fees."

In comparison with North Vancouver -- a community sprawled over similar geography -- police costs are 37-per-cent higher despite only a slightly higher crime rate, and fire protection costs are 36 per cent higher, he said.

Marley said this is the third budget cycle his group has scrutinized, and it has no plans to let up. It has two other goals, as well:

"We're hoping to encourage copycat groups in other places.

"And we want to make this issue [curbing of spending] the key issue in this year's election."

VANCOUVER
When I was researching some Vancouver property tax issues 15 months ago, I was astonished to learn that when a new condo tower is built, the net loss to the civic treasury often adds up to $1,000-$1,500 per year per unit.

Judging from my e-mail, a lot of readers were just as astonished.

Plus -- and this isn't astonishing, it's astounding -- the counter-intuitive math I presented in The Vancouver Sun seems to have been news to City Hall, as well. All those years of growth, all those condos, and nobody ever figured out that -- from a revenue perspective -- the costs of the city's showcase development have substantially outweighed the benefits.

Nobody, that is, until Paul Sullivan, Norm Stickelmann and Rob Fitzgerald came along. They're all heavily into real estate and property tax issues in their day jobs -- Stickelmann with Terasen Gas, Fitzgerald with the Vancouver Port, and Sullivan with his own company, Burgess Cawley Sullivan and Associates. And they form the three-man technical committee for the Vancouver Fair Tax Coalition, a broad-based group of neighbourhood Business Improvement Associations.

It was their math, not mine, at the root of that eye-popping expose I wrote last year. And it illustrates one of the two key themes that, the group believes, are slowly, slowly starting to sink in at City Hall.

The first is what they call "tax topography" -- the art and science of figuring out, before any dirt is moved or concrete poured, what the tax implications of any given development might be.

This isn't always obvious. If a $40-million condo tower replaces a ho-hum business block worth, say, $100,000, it seems a no-brainer that city coffers will gain. Except that the tax rate on the old business building, plus the valuable land it sits on, was at a rate six times higher than what the condo-owners pay. And consider that the little businesses in the old building consumed few city services, while the condo-owners will use a lot. Ergo, the city's revenue drops, its costs soar, and tax bills for the rest of us inch up to cover the shortfall. This happens over and over and over.

The coalition's other big issue is that the business tax rate is six times higher than the residential rate. This is way out of line with the rate differential -- usually two to three times -- in most other municipalities. And, judging from the rate of business failures and vacancies in high-priced neighbourhoods like Yaletown, it's way beyond the ability of most businesses to pay.

City budgeting generally follows a simple schedule. First, council figures out what it wants to do in the coming year and what it will cost. Then the provincial assessors tell them how the tax base has changed thanks to the addition of some new buildings and the re-evaluation of old ones. Then City Hall calculates what tax rate is needed in each category -- residential, business, industrial, etc. -- to raise that much money.

No one ever connects the dots in advance -- to say what effect any particular decision will have on revenues, costs and tax rates. So inevitably there's an additional step in the budget process where everybody slaps their forehead and says, "Ouch!"

No one feels the pain more acutely than the business community in Vancouver. That's because the residential/business tax rate is split according to a fixed, inflexible and badly out-of-date formula -- currently 53 per cent for business and 47 for residents. True, this formula has been adjusted a bit over time. But the total value of residences has soared far faster than the total value of business properties, and the burden on individual businesses has thus ratcheted up, up, up.

Today, the coalition calculates, residences make up more than 83 per cent of the value of property in Vancouver, yet residents pay just 47 per cent of the tax bill.

THE WAY FORWARD
Besides better planning -- knowing and weighing all costs and benefits in advance -- the coalition wants to see a far more fair split of business and residential taxes. And it is making real gains.

The city bureaucracy, Sullivan says, was initially indifferent and/or hostile to the technical committee's tax topography approach. But now it is actively working with them.

And council decided this spring not only to lower the business share of the tax bill from 55 to 53 per cent, but also to continue lowering it one percentage point a year until it reaches 48.

That is still, of course, an arbitrary number. Depending how quickly Vancouver continues to develop and how its balance of business and residential properties unfolds, it's almost certain to be out of date -- unfair to one group or the other -- by the time the transition is complete.

The coalition is pleased with the change as far as it goes, but continues to press for tax rates -- in Vancouver, and in other communities where the property mix may be very different -- to be based on consumption. It proposes that arms-length consumption studies be done every two years to set the ratio, recognizing that the business rate will still, without doubt, be substantially higher than residents pay.

And it's proposing that the province step in to require all municipalities to start taking the kind of measurement, planning and public reporting steps that Vancouver is, at long last, beginning to embrace.

This, in my view, would go a long way to lessen the need for volunteer watchdog groups. It would mean that political decisions would be made by council members with their eyes wide open in regard to the mix of costs and benefits their communities could expect.

As long as this information is public and the process transparent, it would go a long way to assist voters in giving the credit -- or laying the blame -- where it belongs.

dcayo@png.canwest.com
Visit Don Cayo's blog at www.vancouversun.com/blogs

TAXING LINE-UP
The West Vancouver Interested Taxpayers Committee brings a lot of high-level skills to the table. Its members include:

• Norman Alban, retired partner in a major accounting/consulting firm and former school board chair.
• Mark Angus, businessman and former mayor of Whistler.
• Alex Baker, vice-president of marketing and sales for a wholesale distribution company.
• Paul Browne, realtor.
• Scott Hean, corporate CFO and former bank executive.
• Steven Kaufmann, CEO of a wood products company.
• Michael Lewis, management consultant and former phone company executive.
• David Marley, public affairs counsel and former trial lawyer.
• Alec Orr-Ewing, forest industry consultant.
• Garrett Polman, retired comptroller for JP Morgan-Chase and former Treasury Board analyst.