The Toronto-based C.D. Howe Institute has released two studies this week, both of which are sure to generate controversy. First up, and we'll only discuss it briefly, is a study entitled Bread and Circuses: The Local Benefits of Sports and Cultural Businesses by John Palmer at the University of Western Ontario. Palmer's main contention is that the economic impact of professional sports teams and major cultural amenities is "usually small and might even be negative in some instances."

Palmer also notes in his study that "lobbyists" for these institutions "thwarted by the logic and evidence against the Keynesian multiplier argument, routinely shift from simple economics to the broader nonpecuniary case: the argument that to have more sports and culture in a community improves the ambience, morale, civic pride, and the desirability of living there."

Given this, he notes that these communities should experience and increase in housing starts and housing prices. But his evidence points out that this is not always the case. Given that our friends in Alberta are now taxing visiting players and redirecting the money back to NHL franchises, along with their own sports lottery, look for this study to be quoted often in the near future.

Now the other, and more relevant study put out by the C.D. Howe Institute was authored by urban finance guru Enid Slack. Entitled Municipal Finance and the Pattern of Urban Growth, Ms. Slack contends that if cities want to encourage ‘smart growth' and "strike a balance between urban growth and the protection of farmland, open spaces and environmentally sensitive areas," the current property tax mix will have to change.

She notes that cities will have to "remove distortions in the property tax system and eliminate the overtaxation of apartments and commercial and industrial properties relative to single-family homes. If you're an apartment owner or business proprietor, indeed this is good news. And in this regard, this study echoes the work published last year by the Canadian Federation of Independent Business (CFIB) noting the wide spread in Ontario between residential and non-residential units.

But to accomplish this one of two things will have to happen. First, cities will have to dramatically trim their budgets and curtail their expenses if they want to reduce the burden on these types of non-residential properties … and not hike residential property taxes in the process.

The second choice is to give non-residential properties and break and make up the difference on the backs of homeowners. While yours truly has full sympathy for the plight of urban centres and their fight for more revenues currently collected by the provinces and Ottawa, let's be serious, this problem isn't going to be fixed overnight.

Sadly, option two is most likely to occur over the long haul. Especially when one considers the current "raid the rainy day fund" path to managing the city's reserves that council seems about to travel upon.

One can quickly see this troubling finance and planning dilemma that will present itself to us shortly. Many councillors will push for the adoption of smart growth concepts in the official plan. In fairness, there are several long-term fiscal and environmental reasons to embrace these principles and yours truly has penned several columns in the past extolling the virtues of brownfields redevelopment, greenroofs promotion and other innovative urban planning ideas.

But the dilemma is in financing these infrastructure needs and restricting urban sprawl. Ms. Slack argues that cities will need to set new user fees (and you thought the current transit and hydro spikes were bad) and establish various classes of development charges (as opposed the current uniform approach) that reflect the full costs of development.

It is here where great policy ideas on paper that appeal to policy wonks (of which I am one) will meet the harsh realities of council table politics, big-time lobbying by the development community (an activity in which they have a right to engage) and I suspect community indifference or even rejection of smart growth ideas. The reason I say this is that it's going to be pretty tough to tell a homeowner that his property tax bill is going to go up $500 or more … but not to worry, because it will mean that commercial folks are getting a break and it is the right thing to do to promote smart growth in the long run.

Can you see the campaign brochures in 2003 or 2006? Do you think they'll read: "Hi there, vote for me because I want to hike your taxes so the business down the street can pay less and so we can fix-up Lebreton flats?" Of course they won't.

Voters as much as they love their local neighbourhood dry cleaner, restaurant or their big-time hi-tech employer, know full well that such a tax reduction, while beneficial for the economy, will probably be paid for out of their tax bill given, allow me to point it out again, the current raid the reserves party going on down at city hall. Keep these harsh realities, and your property tax bill, in mind when the talk turns to smart growth … Mayor Bob's 10% tax rate reduction may disappear faster than you can say ‘official plan.'