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Originally Posted by GGG
Living in the suburbs isn't necessarily more expensive to the city. People living far away from their place of work is very expensive to the city.
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Density is a factor as well. As well as "start-up" costs for new communities. Low density is more costly than high density, adding communities costs more than densifying existing communities.
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Originally Posted by GGG
As for real capital costs the city and the developers were arguing over 160k a hectare which has I believe between 8 and 16 houses depending on lot size. So the initial subsidy on a house is only 10 to 20k. Not really enough for people to move over. Beyond that any significant change in taxation would essentially be a wealth transfer from the suburbs to the inner city as current pricing reflects current demand based on the current tax structure.
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The total cost of the subsidies that's being talked about is $1 billion. That would make a major difference to the city if it were invested in, say, LRT up Centre Street. (I'm picking on the SE LRT because the user base is further out.)
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Originally Posted by GGG
The more interesting question is what would happen if you got rid of all transportation subsidies and charged density based tolls on roads and trains. I think the biggest thing that would happen is that the core would decentralize. If charged the true cost of transportation businesses would likely move to the suburbs to reduce costs to their employees. You already see this happening with large EPC being located south of downtown due to costs and employee preference.
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Either commercial density would shift away from the CBD or residential density would shift towards it, or most likely, a mix of the two.
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Originally Posted by GGG
Lastly subsidies never produce positive externalities. They just correct for things that aren't priced into the current market or just transfer wealth from one sector to another. So getting rid of ALL subsidies is far better than creating new subsidies to balance out the market.
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Subsidies don't "produce externalities", but you optimize net public benefit where net subsidies / sin taxes match net positive / negative externalities. I think we're just into semantics... correct me if I'm wrong.