Worried about Infrastructure Costs? Then End the Apartment Ban

Takeaways: 

• Opponents of building more homes in British Columbia, and especially denser, lower-cost options like apartments, often wield the argument that their communities lack the infrastructure—from sewers to schools, power lines to hospitals—to service so many new residents.
• And while it’s true that decades of infrastructure underinvestment have left a backlog of needed upgrades and additions to support the region’s growing population, that shouldn’t be a reason to block new homes that can help address the housing shortage and resulting high home prices and rents.
• In fact, infrastructure for denser housing options like apartments costs far less per capita and per unit. But cities and towns that ban these options can pass the infrastructure buck to the places where new homes are permitted—often in exurban sprawl where municipal coffers are smaller and infrastructure costs higher.
• A collective approach across city limits, along with new local, regional and federal funding programs would help cities embrace the apartments they should legalize anyway while ensuring a strong infrastructure to support the entire urban fabric.

The costs of public infrastructure are becoming the go-to excuse for restrictive zoning policies in British Columbia. These policies effectively ban apartments on most residential land and reserve it exclusively for low-density housing like detached houses.

As one newspaper headline put it, “Density is coming to BC municipalities. Leaders don’t know how they’ll pay for it.” On the surface, the objection to density on infrastructure grounds may sound reasonable, but it gets things backwards. 

As researchers and good planners have long understood, it’s far cheaper to build and maintain public infrastructure to service denser forms of housing than it is to service low-density sprawl. It’s one of those intuitive truths that is borne out by decades of research.

Imagine the infrastructure needed to service 100 homes in an apartment building compared to 100 houses in a low-density suburban development. When homes are farther apart, they require longer pipes, wires and roads to connect them, raising costs. And spreading out homes farther from important services and amenities increases demands on transit and roads. 

British Columbia undoubtedly needs to invest more in public infrastructure both to replace aging assets and to support new construction that alleviates existing housing shortages. This includes investments in new and upgraded sewers, water pipes, power lines, rapid transit, roads, libraries, schools and hospitals, to which both cities and senior governments must contribute funding. 

But housing density is not the problem. Indeed, by imposing low-density zoning, cities have been making the challenge of paying for infrastructure harder, not easier. 

Infrastructure concerns: The new exclusionary zoning?

The well-known infrastructure cost savings of density still aren’t reflected in the land use planning policies enforced by cities in Metro Vancouver. In fact, since the provincial government enacted legislation prodding municipalities to reform zoning and allow more housing, some municipalities and housing opponents have claimed that more density would add to infrastructure woes.

In the lead-up to the October provincial election, the Union of BC Municipalities (UBCM) warned that in light of provincial housing legislation, “costly upgrades to water, sewer, and roads are required to expand capacity and enable the creation of new high-density housing.” 

What new housing opponents don’t say is that when cities use restrictive zoning to block apartments on most of their land, they steer new housing disproportionately into low-density suburban development with higher infrastructure costs.

Others have warned against new housing on the premise that we have a shortage of schools and teachers for the next generation. This could be an excellent argument to hire more teachers or to build more schools, but it is a dubious argument against much-needed housing. Some may simply be disguising an argument against population growth as an argument against density.

The infrastructure gap is real, but apartment bans make it worse

Cities are flagging a real issue when they raise infrastructure concerns. Canada has a widely recognized infrastructure deficit owing to decades of underinvestment. At the low end , it’s estimated that Canada has an accumulated infrastructure gap of $150 billion; at the higher end, up to $1 trillion. In British Columbia, the UBCM estimates that “over $24 billion in core infrastructure alone needs to be replaced within the next ten years.”

But to tackle that infrastructure deficit and address the housing shortage, ending apartment bans and allowing denser housing is a critical part of the solution, including cost-effectively building the necessary supporting infrastructure. 

Overwhelming evidence shows that denser housing reduces per-capita infrastructure costs. Metro Vancouver recognized this in a recent report on the topic, noting that “higher density development forms are associated with lower per capita municipal expenditures for streets and highways, sewer, water, and solid waste.” The report found that public infrastructure costs for apartments were five to nine times cheaper than for houses, measured on a per-capita or per-unit basis. 

Lest the policy lesson here be missed, the report explains that “it is critical to permit and facilitate higher-density and more cost-effective forms of development in urban/developed areas (i.e., infill, intensification, redevelopment), where public infrastructure investments can be best utilized.” Municipalities failing to do so are, according to the report, “encouraging inefficient growth patterns… [which] are costly not only from an environmental and social point of view, but also from a municipal finance perspective.” 

These findings are consistent with a wide range of analyses from municipal governments and think tanks in Canada, international institutions like the OECD, academic research literature and studies around the world. 

As one study commissioned by the city of Halifax emphasizes, municipal savings from denser housing are found not only through lowering the up-front capital cost of new infrastructure, but also in lower operations and maintenance across the life cycle of that infrastructure. As a result, the study concludes that the life-cycle costs of low-density development may be ten times higher than for denser development. Similarly, the City of London, Ontario, found that “over a 50-year period sprawling growth would entail capital costs $2.7 billion higher, and operating costs about $1.7 billion higher, than for a compact growth scenario.” 

Ending sprawl-producing apartment bans also has a host of other benefits, including easing housing shortages, reducing tenant displacement in existing apartment areas, opening up quiet side streets to renters, lowering cost and risks for both non-profit and private housing creation, bringing down household transportation costs and decreasing air pollution and greenhouse gas emissions. In other words, a win on many fronts for the region’s growing communities.

Infrastructure for denser housing is less expensive, so why not act like it?

Despite the enormous costs, apartment bans remain in place on most of the land in big, expensive cities like Vancouver, ensuring that sprawl continues into the Fraser Valley and up the north shore mountains. 

Why is this still happening? In part, infrastructure concerns have become just another horse on the carousel of excuses to block apartments, weaponized in service of old school NIMBYism. Not unlike how, to take just one other example, NIMBY actors in many cities have brandished the cause of historic districts to effect the same old exclusionary zoning.

Cities and towns are also failing to take a collective approach to the infrastructure question. If Vancouver (or Burnaby or New Westminster) maintains an apartment ban on most of its land, it pushes more housing—and the problem of building infrastructure to support that housing—to the edges of the region and out of its jurisdiction. While the infrastructure for that sprawl then comes at a greater expense both per home and per person, from Vancouver’s perspective it’s some other municipality’s problem. And to the extent that this reduces overall housing creation and drives up prices and rents, those costs are borne by renters and prospective buyers. 

In short, apartment bans not only embody a kind of pass-the-buck mentality when it comes to creating new housing; they also drive up overall infrastructure costs province-wide. 

Don’t block homebuilding to avoid infrastructure buildout—accelerate both

Building more homes while building needed infrastructure no doubt presents genuine challenges, but those challenges have ready solutions.

Denser cities than Vancouver already exist and many of them have world-class infrastructure. Vancouver itself already has dense neighborhoods like the West End to model a successful buildout. 

Of course, new infrastructure has to be paid for. Cities typically pay for their infrastructure investments through a mix of property tax revenue, debt financing, funding from senior governments and (increasingly) ever higher fees levied on new housing construction. 

The provincial and federal governments can play an important role by providing more funding to close the infrastructure gap and promote efficient urban housing creation. This funding should require an end to apartment bans, especially in expensive central cities like Vancouver (which so far has been treated with kid gloves by provincial zoning reforms).

The good news is that the incoming BC NDP government committed in its election platform to create “a new local infrastructure investment fund that’s tied to housing starts, while offering more flexibility to cities exceeding those targets.” And the provincial Ministry of Housing now includes the municipal affairs portfolio, which could help in this effort. But details are scant, both in terms of the level of funding to be provided and the structure of the conditions on that funding. 

The Union of BC Municipalities has asked for an additional $650 million per year for infrastructure, which may be a good place to start. Provincial revenue could be raised for increased infrastructure funding by taxing even a sliver of the huge increase in land wealth seen in BC in recent years.

The federal government also recently created a $6 billion Canada Housing Infrastructure Fund. The funds come with some good conditions relating to zoning reform and limiting fee increases on new housing, but they notably do not include a requirement to end apartment bans. This federal initiative is a positive step, but the level of funding is manifestly inadequate, given that it is spread over 10 years and an entire country. 

Still, municipalities—and in particular big, expensive cities—are far from helpless when it comes to funding infrastructure investment. Cities like Vancouver and Burnaby have among the lowest property tax rates in North America (which encourage speculation in the housing market and entrench wealth inequality). They could increase property taxes to help cover the costs of infrastructure upgrades with a simple policy change. Even better would be to tax land value specifically and add progressive tiers to the property tax system (which would require provincial permission).

Instead, Metro Vancouver municipalities recently decided to pile more fees on new housing rather than tax land wealth broadly. According to Metro Vancouver’s own report, this will hurt the economic viability of new rental housing projects at a time when they already face major pressures from high construction costs and interest rates. The fee structures also fail to reflect the lower per-capita infrastructure costs of servicing dense housing. (The damage done when cities tax land wealth lightly and new housing heavily is a topic for another article.)

Concern about infrastructure costs can’t be wielded as a weapon against new homes and apartments if we’re going to get a handle on the housing crisis. The reality is that allowing denser housing makes it easier to tackle infrastructure challenges, not harder. Metro Vancouver cities have been digging a budgetary hole with inefficient sprawl for decades. It’s time to stop digging, stop banning apartments on most of the land and start building the homes people need.

Topics: Housing & homelessness, Municipalities