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"Ever wonder if City Council is as contentious and chaotic as it is sometimes portrayed? Here you can get a progressive perspective on some of the issues from someone who spent four years in the trenches. Totally unbiased, though! Feel free to comment but keep it respectful, just like they do at council."

Sunday, June 24, 2012

Sandy Levin on growth forecasting

Sandy Levin served on city council for a portion of the northwest part of the city from 1997 to 2003. He was, and continues to be, highly respected for his grasp of financial matters, especially the setting of development charges, his understanding of land use issues, and his unwavering defense of the environment, as well as his respect for constituents and their concerns. He is a winner of a Green Umbrella award, named to the mayor's honour list, and was recently appointed to the Environmental and Ecological Planning  Advisory Committee. Here, Sandy discusses the importance of having accurate estimates when undertaking financial planning for the city. The report on growth will be presented to council on Tuesday.

"Why Facts are just noise" by Sandy  Levin

I was fascinated to listen to the recent “debate” at Planning and Environment Committee regarding the latest growth forecast.  One member of Council claimed companies making location decisions actually look at a city’s growth forecast.  The Mayor and some other members of Council want to use a growth rate double the one developed by consultants (who do this for a living, by the way).   

I got to wondering why the Mayor and some members of Council seem to resist information that does not conform to their beliefs. 

More on this later.  First I would like to explain why a growth forecast matters. 

The main reason a city does a forecast is not to impress potential investors but to develop its capital spending plan for the next 20 years.  And that plan is used to calculate the development charge.  The development charge is a levy that ensures that growth pays for growth.  The levy is reflected in the price of new homes and new commercial development (in London, all taxpayers pay for the cost of new industrial growth and new residences downtown and in Old East). 

So let’s assume the capital plan is based on a higher than forecasted rate and, lo and behold, London does grow that fast.  Great! That being the case, all those new roads, sewers, libraries, buses, police cars etc. that have been budgeted for in the capital plan will be needed.   

But if the capital plan is based on a faster growth rate, the development charge will be higher.   

Hold on a minute!  Those in the development and home building industry don't want a higher development charge.  So the usual reaction is to lower the development charge, the city’s capital plan shrinks, and some projects won't get built in the 20 year time frame.  That means fewer new buses and fewer road widenings, resulting in more congestion on the road and more crowded buses.   

Alternatively, there will be pressure to widen roads that aren’t included in the capital plan, forcing the current taxpayer to foot the bill.  That means higher taxes.  Oh no!  Many on council don't want this, so they will look for cuts in services to reduce the city’s spending.    

Get the picture?  We are left with some unpleasant choices. Higher taxes or cuts in services to keep taxes down to pay for growth, or a higher development charge. Take your pick.  That’s why the forecast matters.

But back to my earlier question - why are facts just noise to some councillors?  

Psychologists have a term for this: “motivated reasoning.” 

Dan Kahan, a professor of law and psychology at Yale, defines this as “when a person is conforming their assessments of information to some interest or goal that is independent of accuracy.” 

Jonathan Haidt, a professor of psychology at New York University’s business school, argues in a new book, “The Righteous Mind,” that to understand human beings, and their politics, you need to understand that we are descended from ancestors who would not have survived if they hadn’t been very good at belonging to groups. He writes that “our minds contain a variety of mental mechanisms that make us adept at promoting our group’s interests, in competition with other groups.”

For this reason, Haidt explained to Ezra Klein in the June 25, 2012 issue of the New Yorker magazine, “Once group loyalties are engaged, you can’t change people’s minds by utterly refuting their arguments. Thinking is mostly just rationalization, mostly just a search for supporting evidence.”  

I like to say it is easier to change the people at the Council table than it is to change the minds of the people at Council.  Now I know why.


Anonymous said...

Sandy has hit the nail on the head for SO many London issues!

tannie said...

Why doesn't Sandy run for Mayor?

Vicki Van Linden said...

“Once group loyalties are engaged, you can’t change people’s minds by utterly refuting their arguments. Thinking is mostly just rationalization, mostly just a search for supporting evidence.”

This is a great explanation, Gina, for what we can see in ourselves and the people around us so often. We often seem to look for information that confirms our already set ideas.

Yet, change does happen and people do at times embrace new ideas. What is the mechanism that allows for that, I wonder.

Any ideas on how to break through that group-protective mechanism? If we won't examine ideas and concepts that we 'think' define us as groups and nations, then we just keep repeating the same mistakes over and over.

Anonymous said...

So what happens if 20,40,60, 80 or centuries of years ago the projected growth rate that developers paid their fees based on was inaccurate?

Are fees passed on in the form of in higher real estate values and therefor higher property taxes (or lower, that'd be nice.) :-)

Sandy said...

It is not really significant if the growth rate is inaccurate, it is a problem when the estimates of the costs of works are inaccurate. This has happened frequently in past development charge studies and has been one of the contributors to the debt cap placed on capital spending in previous years.

Anonymous said...

Amazing how previous councillers seem to have all the answers ....