Growth projections: Fact and fantasy

One thing that the current Planning Committee, make that the Planning and Environment Committee,  can’t be accused of is excessive realism. This is particularly apparent when matters of growth come before it.

That was the case last Monday when the director of land use planning, John Fleming, presented a report on the growth projections for the city of London for the next 30 years.

The planning department had retained Altus Economic Consulting to do the research. It’s a well respected firm of “urban and real estate economists that provides strategic advice and information to the private and public sector clients in Canada.” Formerly known as Clayton Research Associates, the company has a long history of studying the London area and is therefore very conversant with the region. In fact, it provided the background information of projected growth to the previous council when it was preparing its revisions to the Official Plan. Additionally, it provided forecasts for the 2009 Development Charges Study and the Growth Management Implementation Strategy.

Basically, Altus looks at the current and unfolding international, national and local economic conditions, population trends, housing demand indicators, and requirements for non-residential space. It also provides its own version of best and worst case scenarios and takes into account the potential effects of local initiatives that could serve to stimulate or discourage growth.

On Monday, Fleming was charged with the responsibility of presenting the committee with its draft report and his department had prepared an overview. It’s clear that they were aware that the committee might not be too receptive to the contents. They felt it incumbent on themselves to point out that there is a difference between fact and fantasy in a section called Growth Forecasts vs Growth Targets.

It is important to recognize the difference between growth forecasts and growth targets. Growth targets are aspirational goals of desired rates of growth. They provide motivating outcomes for initiatives to stimulate the economy and to attract population. However, growth forecasts are based on an informed estimate of the future…. Forecasts provide a baseline for anticipated growth and can inform growth targets.

In short, there is hope and there is reality, and it is important to distinguish between them, particularly since the numbers being projected will be used to make serious decisions about spending on infrastructure and finding ways to pay for those decisions. Get it wrong, and there are significant consequences for residents and their children and grandchildren.

Staff might as well have saved breath and ink on the report. It was obvious that most of the committee members had not read it and when informed of its contents, didn’t believe it. It didn’t match their fantasies of 2.5% assessment growth per year and 10,000 net new jobs over the next few years.

Basically, the message from Altus was that assessment and population growth over the next thirty years, and particularly for the next five years, will be modest and lag behind that of the country and the province generally. With respect to population, a growth rate of less than 1 per cent is projected, in line with what has been experienced for the last decade, although a scenario with a higher growth rate of 1.5 per cent (as well as a lower than anticipated growth rate of .73 per cent) is also presented. Just in case.

It’s not what the committee wanted to hear. How could .93 per cent population growth turn into 2.5 per cent assessment growth? You get assessment growth from more people forming more households and buying more houses. Without the people, where will the assessment growth come from? And without more assessment growth, how do you pay for existing services while maintaining a tax freeze?

But Fleming was clear on the need for the committee to understand what the projections were. They weren’t his projections; they came from an independent, objective, professional firm. The information provided was critical. If you have limited assessment and population growth, you had better make the most of what you have, build where the services are already in the ground and where you don't have to spend a lot of extra money for police, fire, and other basic services. Focus on infill rather than greenfield development.

Judy Bryant is the only committee member who seemed to have read and understood the implications of the report. "It seems that assessment growth won’t be fantastic over the next few years, we don’t have a magic wand,” she noted. They would have to be mindful of this when doing “planning on the fly”, as this committee has been wont to do. “We have to build where it is most economical, keep the numbers in mind over the next two and a half years.”

Her remarks were not appreciated by Mayor Fontana. To his mind, the report was too pessimistic.

Apparently, he was speaking for others as well as he continued in the first person plural. “We don’t like what we see,” he complained. “That’s why some of us are here; we don’t want to accept what is happening.”

He certainly didn’t like the numbers. “These are the same numbers as the past five years; those ‘informed’ numbers say the city is going to crawl along, what I disagree with totally.”  They had new targets, he pointed out. They had adopted a growth rate of 2.5 per cent and wouldn’t accept growth of one per cent. “See what we need to change to change those numbers, those projections are not acceptable.

“That’s not to be argumentative,” he concluded, “but that’s facts.” It was an unusual definition of facts.

Paul Hubert is not on the committee, but he was interested in the issue and he had, in fact, read the report. Although he sympathized with the mayor’s objections, he pointed out that one can “Promise little and deliver much or promise a lot and deliver little.” The latter is disastrous, he warned. It was better to have big aspirations and prudence.

Also in attendance was Joni Baechler. She too is not on the committee but seems to be spending many hours keeping tabs on what is happening on other committees. She pointed out that the report is a “fact based document that feeds into our development charges. We can’t inflate the number” since to do so would potentially inflate capital projects, and destroy the critical balance. “If you charge too much or too little, it falls back on the taxpayer.”

Fleming agreed. Of course they wanted higher growth rate; the council had identified lots of projects and initiatives it wanted to implement. But the report is the basis for the Official Plan review; it has to be fact-based. It had been prepared by one of the most well respected economic forecasters in Canada. He stressed the distinction between growth forecasts and aspirations. There was plenty of room to respond if growth proved to be faster than projected. “This is the basis for land requirements, for [development charges]. These are fact based numbers with flexibility.”

Joe Swan didn’t like it either. He saw the projections as “a baseline for a status quo world” without intervention. “How aware is Althouse of target-based intervention?” he wanted to know. Clearly, he hadn’t read the report; he didn’t even know the name of the consultant although it had been repeated several times. He seemed to think that this foundational report should be more of a marketing exercise. “It sends a message to the investors that nothing is going to happen in London,” he complained. “We’re anticipating higher numbers.” He was annoyed that “Althouse thinks it’s right and everyone else is flaky.”

Dale Henderson too was not happy with what he saw. He didn’t see any measurement documentation. He wanted that every month, how many new jobs, how many new homes to show how they were doing. “I don’t know what this means against any policy,” he sputtered.

Fleming wasn’t sure what Henderson was referring to. The report was full of measurements—numbers, rates, charts, tables and graphs. As well, the committee received monthly updates on real estate sales and building permits. They had planning applications on which they made decisions every meeting. He heard loud and clear that the committee wanted to grow at a faster rate. But this was a forecast, not a policy document. It was to be circulated to the public and stakeholders for feedback.

Still, Fontana wanted changes before it went out for comment. He wanted more discussion of the committee’s aspirations at the front end. “Better ratchet it up; otherwise what we’re doing is not worth it.” As for the fact-based nature of the Altus draft report, “They never talked to me,” he pointed out, affronted.

“We’re trying to move the numbers. I thought we already made the decision as a council that we want 2.5%,” he reiterated. “We’ve told the world that’s where we want to go. Sorry to be so nauseating.” Somehow his “sorry” sounded less than sincere.

Bud Polhill chairs the committee and tends to reserve his remarks for the end. He didn’t like the message that the report might send to anyone who might want to come to London. He likened it to a weather report. If the weather sounded bad, no one would come. “It’s like the wind direction,” he said, and he wanted to change the direction of the wind.

Good luck with that, Bud. Just be careful of what you’re doing in the wind.

Swan had the last word. Despite probably not having read it, he had a special interest in the report since he saw it a challenge to his committee, the Investment and Economic Prosperity Committee. If they couldn’t “move the numbers” they might as well give up. He asked for the “intervention” to be added to the report, something along the line of:  Do nothing, this is what you get; attract investors, and see what happens, etc.

With that wishful thinking added, they moved to receive the report. All supported the motion save Henderson. He still wanted no part of it. 

Perhaps he’ll reconsider when he’s had a chance to actually read it, measurables and all.