Making Major Decisions at Thunder Bay City Council-Part II

 

As noted in the previous post, the last few weeks at Thunder Bay City Council have been busy with three major decisions of particular note: not approving changes to council composition, approving the Kam River Heritage Park site as the location for a temporary village of tiny homes to address homelessness and finally, not shutting down the County Park location and adding Intercity Mall as the location for a new more centralized library.  These were particularly thorny issues to deal with on several fronts and my take is that the correct decision was made in two out of the three cases.  In the last post, I provided my thoughts on the two decisions I think City council got right: sticking with the status quo on council composition and not putting a large new central library in the Intercity Mall.  However, on the third decision – going ahead with the Kam River site for the tiny homes project- I beg to differ.  However, there may yet be a silver lining to the decision made if it is truly a transitional decision and time it buys used to bring about long term social and geared to income housing.

After several other tries at establishing a tiny homes village first on Miles Street (which is separate from another project by Alpha Court), then in Intercity, and then on Cumberland Street, the nod has now been given to the Kam River Heritage site – for now.  This has been somewhat of a merry go round in terms of location selection. There is still another meeting for final ratification, however, and this location decision has been made and reversed before. However, my feeling is given the cycling across locations, City Council will stick with this final choice if only to avoid further eroding their credibility. 

This has been a charged and emotional issue given the need to address the homeless problem and the presence of tent encampments under third world conditions.   There are also the many concerns as what the impacts of such a village will be on adjacent residences and businesses.  And to be fair, this is not just Thunder Bay’s problem, but the provincial and federal government’s problem given there are homeless encampments across the province and the country.

In the end, several reasons were advanced as to why the Kam River site should be selected including proximity to essential services, the fact the area already houses an encampment, and that it is in keeping with the City’s strategic plan.  After numerous delays, there is also a sense of urgency to put the project in place to not jeopardize provincial funding though making decisions to just get the money is never sound public policy.

However, a key concern raised has been safety of the residents given the proximity to water and rail tracks with the prospect of drownings up front and center.   The City Manager commented that “You can drown in six inches of water like you can drown in 12 feet of water. The depth is not really the consequential issue. It's clearly delineating it, making people understand the risks, and putting in some prevention measures."  This somewhat less than sensitive response in the wake of recent history along our waterways also omits the reality that a drowning is a drowning whether in six inches or 12 feet of water and if it is a municipally run village on city land there will inevitably be additional liability issues.  Safety is a big issue with this site.

As well, even with these tiny homes, encampments will still not be eliminated as the tiny home village is part of a city homelessness plan that includes three approved encampment sites. Also not addressed as a concern is the reality that this plan  - unlike the other sites considered - puts the tiny village essentially out of sight and out of mind by locating it where it will not be easily seen.  This will be a problem given that the project is supposed to run for only five years as “permanent” solutions are brought into play.  However, if the problem disappears from public view, it will be difficult down the road to generate the attention and the resources for permanent solutions.  The risk of hiding the problem is that long term solutions will go onto the back burner.

Then there is the cost.  According to the media reports, Thunder Bay will spend $5.5 million to construct an 80-unit "tiny home" village, with the province contributing $2.8 million of that, and has targeted operating costs for the first year at $1.5 million. So, over the five-year span of the project, the total cost for 80 units based on these numbers will be close to 13 million dollars.  Given the history of public sector capital projects at the public sector level in Thunder Bay, one can certainly expect cost overruns in the building and operation of these tiny homes.  Hamilton (always my favourite example) has also erected a “temporary” village to house its growing homeless population with the cost for 40 units (80 beds) originally forecast at $2.8 million but that has ballooned to $7.9 million or about $100,000 per bed.  Operating costs annually are apparently going to be $40,000 per bed. 

Is this a problem?  Well, in the case of Thunder Bay, think about it this way. Spending $13 million for 80 tiny units over five years works out to $162,500 per unit – or $32,500 annually. Thunder Bay is currently undergoing an apartment building spree financed by federal and provincial housing money which is increasing the supply of rental units but not necessarily increasing the stock of affordable housing because two-bedroom units in these new build apartments are going for as much as $2500 per month. At $2,500 per month, the annual rent is $30,000 per year.  Essentially, for the same amount of money, the City of Thunder Bay could simply house up to 160 homeless people in new existing two bedroom apartments for the next five years in very nice lodgings.  If older buildings at somewhat lower rents were put into the mix, then you could house even more homeless people.

Of course, this modest proposal of a solution is not going to happen. One suspects that current rental accommodation landlords in Thunder Bay are not terribly interested in helping solve the city’s homeless population problem in a manner that might affect the value of their investments or the building environment of their current mix of tenants.  This does however lead to what I think the longer-term solution could be. 

Given the private sector does not appear to be either capable or willing to provide new build affordable housing and given the amount of money that is being spent simply for tiny homes, there can be a public sector role in longer term housing solutions.  There needs to be more social housing – administered by the district of Thunder Bay Social Services Administration Board (DSSAB) and funded by the City of Thunder Bay, the Provincial and the Federal governments with local groups (such as Alpha Court as well as Indigenous organizations) in partnership.  The partnership approach is key and has been noted by others.  Small apartment style buildings providing social housing and geared to income units need to be built in multiple locations throughout the city with city owned and other public land in the downtown cores and city being possible locations.

Again, as outlined in a much earlier blog post, a good model here is Finland which has through the building of social housing complexes that provide places to live and a fixed address for those requiring access to government services dramatically rescued its homeless population. As I have noted, “People who are homeless need to be housed and housed without questions being asked.  Creating a complex or dispersed network of complexes of transitional emergency housing with very small personal units combined with social support such as a community kitchen, social workers and even a nurse practitioner and mental health workers and basic security on site would be one way of dealing with the homelessness crisis.”   And once lives are stabilized in these homes, the next step is placing them in geared to income units.  As far as I am concerned, tiny homes on a riverbank are at best an expensive band-aid solution.  If you are going to be spending tens of millions of dollars, you need to be leveraging that money into permanent solutions, not stop gaps.  True, the social housing approach is seen as more expensive, but it is more likely to solve the problem rather than dilute or obscure it.  Moreover, the tiny homes approach is not exactly cheap either.

Still, these are all complicated questions, and one certainly does not envy the people who must wrestle with them. I suppose getting two out of three decisions right is not a bad score but as my old high school motto would say - Agimus Meliora – let us strive for better things. And doing better in the case of homeless encampments given that the Kam River site is likely a done deal, is to gain redemption by using the next five years to fully implement long term solutions and not hide problems along a riverbank.

 

Making Major Decisions at Thunder Bay City Council-Part I

 

It has been a busy few weeks at Thunder Bay City Council with three major decisions of particular note: not approving changes to council composition, approving the Kam River Heritage Park site as the location for a temporary village of tiny homes to address homelessness and finally, not approving Intercity Mall as the location for a new more centralized library and shutting down the County Park location.  These were particularly thorny issues to deal with on several fronts and my take is that the correct decision was made in two out of the three cases.

First, let us start with council composition.  I have already opined on the shape of councils to come and the long and short is that City Council made the right decision in sticking with the status quo. My reasoning is not that City council might not benefit from a different model but replacing a seven ward and five at large plus mayor model with the proposed four wards with two ward councillors each plus two at large and one mayor did not represent a major improvement to either representation or decision making on municipal issues.  Cost savings from moving to fewer councillors was always a red herring because the few thousand dollars in savings from going to 11 members from 13 was minor and cosmetic given a  combined total capital and operating budget well over half a billion dollars.

The representation issue is more serious in that the proposed model would have essentially subsumed rural interests in Neebing and McIntyre wards and local neighborhood issues would have been lost in the new wards each with a mish mash of rural, urban, industrial and commercial interests.  Having two ward councillors in each of these wards seemed to be an attempt to have council composition resemble a more at-large system without having a fully at large system.  A “Larson” compromise it was not because the rejected model created more problems than it solved.

A fully at large system would in many respects be the least favourable outcome given the reduction in accountability to ratepayers who would no longer have a dedicated ward councillor.  That is a major problem with any fully at large system given that residential ratepayers foot 70 percent of the operating budget tax bill.  The partial at-large system being proposed created a more complicated set of representation problems for ward councillors while at the same time confusing who was responsible for the ward by providing two councillors who each could behave as an at-large ward councillor if they wished to avoid more pedestrian local issues.  And in terms of the desire for change and “cost savings”, informal surveys suggested an eight member council plus Mayor  was desired by the public rather than what was advanced even though again the cost savings here would be relatively minor.

As noted in my previous post, the public desire rightly or wrongly favored a smaller council of eight plus a mayor and “Going down to eight councillors plus a mayor would likely save several hundred thousand dollars – again a small sum compared to a budget in the hundreds of millions – but enough to increase resources available to perhaps attract better candidates. This does not necessarily mean raising salaries for councillors but could even involve providing funds so that they can hire some independent research support so they can better inform themselves on issues.”  This option but as an eight-ward and not all at large model plus a mayor would have been my preferred option.  However, this model was never on the table and after the time spent of this process, council composition is off the table for many years to come.

Second, the nixing of the Intercity library location.  The current CEO of the Thunder Bay Public Library is rather energetic and persistent as  this was the second attempt to foster change and bring about a central library at Intercity Mall.  However, as can be the case with leaders who believe they see things that others do not, you cannot take people where they do not want to go.  Moreover, closing a neighborhood library (County Park which is indeed in a neighborhood shopping mall) to provide a more centralized location in the Intercity shopping area where no one really lives – is not necessarily a service enhancement.  While it may on the surface appear to be a more accessible and convenient location, for families with kids, heading to the library becomes more of a destination event rather than part of a routine.  Moreover, the focus on having a large, centralized facility is at odds with the dispersed nature of Thunder Bay.  It might work but it is an expensive experiment and the cost of the project – even with contributions from the mall owners – were substantial and not likely to be fully recouped on the operating side from closing the County Park branch.

But there is more.  The informal sentiment in Thunder Bay – and not mine - is that books are very 20^th century and that indeed you might want to look at having fewer libraries rather than more.  I see that sentiment as a more North American affectation given that if you go to Europe, bookstores and libraries with hard copy books still proliferate (try visiting Dublin).  It is possible that in years to come, books will indeed enjoy a renaissance as the inevitable reaction against e-books and technology and a desire for retro sets in.  If future libraries with books and electronic media that function as information and communication centers (rather than community hubs) eventually have a renaissance, the case can oddly enough be made that Thunder Bay is “under libraried”.  That is, Thunder Bay could probably use a system with more small and dispersed libraries but not necessarily a system that concentrates resources at a few locations.

For example, the Hamilton, Ontario CMA with a population of about 785,000 people in 2021, has a City of Hamilton library system consisting of one central library in its downtown, 22 branch libraries of varying sizes, and a book mobile.  However, the CMA also includes Grimsby (one library) and Burlington (seven libraries) Put another way, 32 library locations for a population of nearly 800,000 people.  The Thunder Bay CMA with a population in 2021 of 123,000 has four libraries.  Based on the population and total number of municipal public libraries in the Hamilton CMA of 785,000 to 32, Thunder Bay’s 123,000 CMA population should have 5 municipal public libraries rather than 4.

At first glance this seems to support the case for a library at the Intercity area given that there are already four branches in existence.  However, I would argue that there is a better case for six smaller libraries - none of which would be in Intercity.  Thunder Bay’s current library system is rooted in a population distribution that comes from its history as two cities.  So, there are two large central libraries and two smaller neighborhood libraries.  The downtown Brodie and Waverly locations in a sense are too large given that over 75 years population has moved away from the core areas.

What might work better is six libraries each about the size of a County Park or Mary JL Black.  So, what this might suggest is a downsizing and refurbishment of the two downtown branches – Brodie and Waverly – in terms of their collections with each having a collection about the size of a MJLB/County Park.  Furthermore, one would house the archives/reference section and the other library admin and storage (which is not far from current reality).  Two new smaller branches would be put in place – one somewhere in the Northwood area or perhaps Parkdale and the other in the Current River area.  Essentially a system with smaller branch libraries providing more neighborhood access.  Can this work? Maybe? Will it happen? Not likely.  Capital costs are capital costs whether for small, dispersed facilities or larger centralized ones.  One cannot discern any appetite for major new capital library projects in Thunder Bay given the focus is on recreation facilities. 

Next post - Conclusion.

 

 

 

Tariffs and Thunder Bay's Economy: Not as Bad as One Might Expect

 

As the Trump Tariff and Trade War continues, the impact on economies across Canada is front and centre in most minds.  Despite most of the national doom and gloom, my initial take on the impact of tariffs and the trade war in of the potential impact on the Thunder Bay economy was relatively optimistic.  As noted in my January 13^th, 2025, post:

“In the case of northern Ontario, the short-term effects will be mitigated by public sector activity.  For example, in major urban centres like Thunder Bay and Sudbury, a lot of employment is already either directly public sector or is based on economic activity from government contracts.  For example, Thunder Bay is in the midst of a construction boom driven by government housing money and a new provincial jail, and its transit car manufacturing just received another government funding boost.  The long-term is another matter if the country and province go into recession.”

It appears that this assessment is now being backed up by the Conference Board of Canada in their April 7^th release Major City Insights Thunder Bay which can be summarized by their overview title that the “Area may avoid worst of tariff fallout.”  It is not that tariff do not pose a risk to Thunder Bay’s economy - and that risk is largest in the city and region’s forest sector - but as the Conference Board report notes “Forestry seems the region’s industry most exposed to U.S. tariffs. This is perversely fortunate, since softwood lumber has long been subject to U.S. trade “remedies,” so local producers are well-versed in dealing with them.’

Nevertheless, growth of real GDP is expected to decline from their fall forecast for 2025 of 1.7 percent to 1.3 percent while 2026 is expected to see 0.6 percent real GDP growth.  Much as was noted several months ago: “The city will be somewhat insulated from tariff effects by its relatively large (broadly defined) public service, by ongoing construction of Thunder Bay’s $1.2-billion jail, and by manufacturing work on GO Transit rail cars.” If anything, I would expect more serious blows to the economy moving beyond 2026 given that construction on the jail is going to wind up, the prospects for regional lithium mining are more problematic in the wake of the decline in demand for electric cars and their batteries, and migration to the region from reduced federal immigration targets will hit both our post-secondary and housing sectors. Indeed, it has already hit Confederation College.

If one looks at employment changes from 2024 to 2026 based on the Conference Board estimates (See Figure 1), overall employment will be remarkably stable at about 65,000 jobs but there will be some sectoral impacts.  The direct impact of US tariffs will be primarily on our primary and manufacturing sectors and one can expect to see a total of 500 jobs lost here.  However, there is also an impact on wholesale and retail trade from the reduction in economic activity amounting to nearly 800 jobs lost followed by some job losses in education, public administration and other services.  However, there are expected to be employment gains in accommodation and food services, arts entertainment and recreation, healthcare and social assistance, transport and warehousing and construction. Overall, the losses pretty much balance out with the gains for total employment to remain in 2026 roughly where it was in 2024 and 2025.

 

 

However, the increase in accommodation and food services may be an underestimate and the decline for wholesale and retail trade an overestimate because of the shift in national and local travel patterns.  Thunder Bay might well expect to see an increase in domestic tourism visits this year as Canadians shift travel away from the United States and to domestic locations.  As well, fewer Thunder Bay residents are crossing the border at Pigeon River into the United States mirroring an ongoing national trend that has seen a significant decline especially in land border crossings into the United States.  

As Figure 2 reveals, using data for March across consecutive years, Canadian plated vehicles entering Canada at Pigeon River had begun to recover from the pandemic drop.  Over 12,000 vehicles a month returned to Canada in the months of March prior to the pandemic.  By March of 2024, the March total had recovered to just under 10,000 vehicles and for 2025 might have been expected to approach pre pandemic totals even with the decline in our dollar.  However, for March 2025 relative to the March previous there was a 34 percent drop to 6,159.  If more people in the region are spending their dollars at home, this will serve to boost the local food and retail sector somewhat mitigating the effects of tariffs.

 

 

So, will tariffs influence Thunder Bay’s economy?  Yes, there will be some employment loss, but accompanied by gains in other sectors with  the net effects at this point looking like total employment will remain stable.  However, one can expect the cost of living to rise as tariffs make everything more expensive.  In the long run, it is really anyone’s guess what will happen.  But if there is an increasing east-west orientation to Canada’s economy that requires more east-west transport infrastructure such as new pipelines and more east-west shipping of goods, expect to see Thunder Bay well positioned to take advantage of that.

 

Thunder Bay’s Port: The Renaissance of The East-West Connection

 

The Port of Thunder Bay is hosting its annual opening of Navigation Luncheon tomorrow and there is indeed much to celebrate moving into the future even given the current turbulence of the international economic environment.  The port has long been a key piece of infrastructure for Thunder Bay’s economy and is really the main reason that Thunder Bay exists.  Thunder Bay or "The Lakehead" as it was more commonly known was the transshipment point on the east-west economic axis erected by Canadian Confederation and the subsequent national policies that put through a railway linking the agricultural production of the west with the manufacturing production of the east.   

Thunder Bay exists in its current incarnation because of Canada and Canada in turn requires  Thunder Bay as a transport hub.  The role of the port was key in the east-west flow that defined Canada after Confederation.  The chief export product flowing through the Lakehead twin-ports of Port Arthur and Fort William was of course prairie grain but over time there was a diversification into other products though grain was always by far the most important product shipped.  At the peak of the grain trade, dozens of grain elevators lined Thunder Bay’s waterfront and thousands of people worked in either the railways, the grain elevators or the port.

Of course, change has been constant when it comes to the Port of Thunder Bay. And nowhere is that change more evident than in the data compiled and available through the Port Authority itself.  Figure 1 plots total tonnes of cargo from 1952 to 2023 with a polynomial trend fitted. Total tonnes of cargo peaked in 1983, and the port then underwent a decline in total cargo shipped.  Much of this decline was due to a reorientation of the grain trade away from traditional European markets to the Asia-Pacific region which generated more activity for grain facilities in Vancouver and Prince Rupert.  However, as Figure 2 illustrates, it was not just a decline in grain that affected the port but also the end of iron ore mining at Steep Rock in Atikokan as well as the phasing out of coal.  Indeed, as Figure 3 illustrates, grain as a share of total cargo became even more important over time with the linear trend showing an increase from 60 percent of cargo in the mid twentieth century to over 80 percent by the present.

 

 

 

 

 

What is also notable in these charts is that since the start of the 21^st century, the Port of Thunder Bay has seen a recovery and activity is generally on an upward trend.  While activity is still well removed from the peaks of the early 1980s, the Port of Thunder Bay is poised to increase its role in Canada’s transportation network.  It is probably a coincidence but the decline of the port’s activity in the 1980s also paralleled the increasing north-south orientation of Canada’s economy in the wake of first the Canada-US Free Trade Agreement (1988) and later its NAFTA and CUSMA successors.  However, with the continental economic relationship with the United States under stress and a push to remove inter-provincial trade barriers and increase east-west economic activity within Canada, Thunder Bay and its port are well poised to again build on its historical role as the east-west transportation hub.  Thunder Bay and its port exist because of Canada’s east-west economic orientation and anything that strengthens that link will inevitably benefit the Port of Thunder Bay.  What is good for Canada, is good for Thunder Bay.

 

Sorting Out Thunder Bay's 2025 Municipal Budget

 

Well, Thunder Bay’s budget season is well underway but the public interest to date has been somewhat underwhelming but that is perhaps because the tax levy increase has been advertised as being 3.7 percent which is below the 6.1 percent in last year’s proposed 2024 budget.   However, this year’s budget process has also been a little different than the past and somewhat more confusing than usual.  Until this year, both the capital and operating budgets were done together and the final tax levy reported consisted of the taxes going to fund the operating budget and the taxes going to fund capital spending.  We can term this the total tax levy – which now has been broken apart into the operating tax levy (the subject of current deliberations) and the capital tax levy (which was done last fall).

Last year, the original proposed total municipal tax levy (which incidentally only funds about 40 percent of total capital and operating spending this year– the rest coming from provincial and federal grants, other user fees, the TBayTel dividend and reserves) came in at about 232 million dollars (of which 211.5 million was the operating tax levy and 20.2 million was the capital tax levy).  The 232 million dollar proposed total tax levy represented an increase of 6.1 percent from the previous year’s total tax levy.   Based on the revised numbers presented in this year’s budget, the total tax levy in 2024 seems to have come in at just under 230 million dollars of which 209.6 million dollars was the operating tax levy and just over 20 million was the capital tax levy.  In the end, based on these numbers, the actual total tax levy increase last year was closer to 5 percent than the initially proposed 6 percent.  

This year, the budgeting process is essentially the same in that there is a capital and operating budget, but they were discussed separately and the tax levies reported separately as a capital tax levy and an operating tax levy. So, the 2025 capital budget process that concluded in the fall reported: 

“The proposed 2025 Capital Budget includes $22,642,600 financed from the tax levy.

The “base” tax levy amount of $19,906,900 (2024: 19,178,100) is 3.8% more than the

previous year’s “base” tax levy which is in line with City Council direction.”

This was of course reported as a 3.8 percent capital tax levy increase because rather than 22.6 million dollars as the capital spending amount, only 19.9 million was used in the percent growth calculation because 2.7 million dollars in the total of 22.6 million was the retirement of a debenture.  If one compares the total capital tax levy amount this year of 22.6 million dollars to last year’s total of 20.2 million dollars (rather than last year's "base" of $19.2 million)  – then one gets a capital tax levy increase of 12 percent – substantially higher than 3.8 percent.  However, one should also factor in anything retiring debt etc.. for the previous year and if you do that last year's comparison amount would be $21.684 million. So, that woulds make the increase in the capital levy 4.2 percent. I suppose one can quibble on how to account for money in the capital budget being used to retire debt but, in the end, a tax dollar is a tax dollar, and the total capital tax levy numbers are what should be compared. 

So, putting everything together:  In 2024, based on the revised numbers to date this year, the total tax levy was $209.6 million dollars for the operating budget and 21.7 million dollars for the capital budget for a total of $231.3 million dollars.  This year, the operating budget tax levy is $217.4 million dollars, and the capital budget tax levy is $22.6 million dollars (which incidentally is only part of total proposed capital spending with the rest coming from grants and reserves and borrowing) for a total tax levy of approximately $240 million dollars - up just over 10 million dollars from last year.  However, there is also assessment growth of $1.693 which when added to the total levy brings it up to $241.7 million dollars. The percent increase in the operating tax levy increase is indeed 3.7 percent but based on how reporting used to be done in the past based on a total municipal tax levy, the increase from $231.3 million dollars to $241.7 million dollars is more like 4.5 percent - which by the way is still quite a bit lower than last year.  However, the total tax levy increase this year is also indeed about 3.7 percent if you believe that the millions of dollars being spent in the 2024 and 2025 capital budget to retire debt as well as the assessment growth should not really be counted as part of the levy.  However, a tax dollar is a tax dollar and if the money is being raised as taxes, then it should be part of the reported increase. 

Housing Starts: Sudbury and Thunder Bay

Housing availability and affordability remain amongst the most pressing issues in current public policy and the north's major urban centers are no exception given the rise in the average price of housing as well as rents.  In response to provincial and federal incentives, both Greater Sudbury and Thunder Bay have seen a ramping up of housing activity.  By late  2024, Thunder Bay had issued 310 building permits and 241 shovel ready housing starts were in progress and as a result had exceeded the housing targets set for 2024.  Greater Sudbury has also seen an increase in housing activity with 2023 the strongest year in a five year period and by late 2024 had seen 610 housing starts of which nearly two thirds were rental units.

For both communities, 2024 marks a departure from recent performance given that Statistics Canada data suggests that for 2023, total housing starts were 263 in Greater Sudbury and 193 in Thunder Bay.  However, as impressive as the current ramping up may be, a glance at historical performance suggests that there is still a ways to go if current construction efforts are able to match those of yesteryear.  Figure 1 plots annual total housing starts from Statistics Canada (Series v42127460 andv42127445)  for Greater Sudbury and Thunder Bay from 1972 to 2023 and for both communities recent housing start total are nowhere near the peaks achieved in either the 1970s or 1980s.  Over the 1972 to 2023 period, Thunder Bay's peak was 1,620 housing starts in 1977 while Sudbury's best year was 1991 when it saw 1,758 housing starts.  

 

 

The period since 2000 is particularly flat for Thunder Bay with the best year being 2012 which saw 380 housing starts while Greater Sudbury peaked in 2011 at 595 starts.  And while the 1980s and 1990s were marked by stagnant population growth rates, the period since 2000 has seen some population growth (See Figure 2, Data source: Statistics Canada).  Between 2001 and 2023, Greater Sudbury grew  from 165,532 people to 185,230 - an increase of nearly 12 percent.  Thunder Bay has not done as well on the population growth front but nevertheless still grew by 3 percent of the last period.  A larger population but lower housing starts relative to the past means that population adjusted housing starts remain lackluster relative to even the recent past since 2000.  In 2012, for example, Thunder Bay managed 300 starts per 100,000 population while in 2011, Greater Sudbury was at just over 350 starts per 100,000.  By comparison, 2023 saw both communities at just under 150 starts per 100,000 population.  While 2024 was better even on a population adjusted basis, it remains that neither community appears able to construct at rates approaching those of the 1970s and 1980s.  

 

 

 

This is of course not just a northern Ontario affliction.  In Canada as a whole but Ontario in particular, the last 50 years have seen an increase in assorted regulations and requirements that make rapid project approvals and construction harder to do.  And, new homes built today - with the exception of apartment and condo units - at least anecdotally, often seem to be larger than they were in the past which all things given could also take more time.  Combined with higher land prices, it is understandable that construction today is likely not to approach the rates of the 1970s.   Then there is the fact that populations were much younger in the 1970s and 1980s meaning that labour was more abundant compared to shortages today especially in areas like skilled trades.   The result is a definite slowdown in our ability to meet both demand and need.

Thunder Bay’s Economy: The Year Past and the Year Ahead

 

Well, it is nearly year’s end and for Thunder Bay, time for a retrospective on economic things past as well as a brief look ahead.  Thunder Bay has had a particularly good year given that population is growing, construction is up, and the Port is doing the best it has in years. The really big driver in Thunder Bay this past year would have to be the construction sector given the continuing construction of the new more than one-billion-dollar provincial prison as well as substantial rental accommodation construction.  In the case of the jail, as the Conference Board noted in its November 2024 Metropolitan Report on Thunder Bay’s economy: “Work on the jail really helps.”  Think about it, Thunder Bay’s GDP is just shy of $6 billion.  A project the size of the jail represents a massive distortionary shock to the local economy.

 

There are many workers who are commuting to Thunder Bay for the construction work or commuting through Thunder Bay to work at the mines and this has helped buoy demand for accommodation and services this year.  Indeed, local employment is up as well having grown from about 61,200 workers in 2021 to 63,700 by 2024 and is projected to reach nearly 65,000 in 2025 as current activity continues.  And our CMA population is indeed up also and now expected to be well over 130,000.  However, 65,000 seems to be the upper end of our new “post forest sector crisis employment range.”  Prior to the forest sector crisis in the early 2000s, our employment used to fluctuate between 65,000 and 70,000.  There has been a permanent downsizing of local employment. Even the Conference Board has noted that: “Despite the run-up, employment remains below the 2003 all-time summit of 65,500 workers.”

 

Given the reliance on construction, the real concern is moving into 2026 to 2027 when the provincial jail construction winds up given the massive scale of the project.  The projection for housing starts coming from the Conference Board suggest an annual flow of less than 200 new starts a year for the foreseeable future.  While the Art Gallery and the proposed Turf Facility may take up some of the construction slack as the jail project winds down, neither of those projects are of comparable scale to the jail project.  If there is a silver lining to this, it is that local homeowners might finally be able to get a hold of a local tradesman to do their repairs and renovations.

 

By the end of next year, the full impact of changes to international student visas will also have emerged which will more fully affect the local post-secondary sector as well as local retailers that rely on international student labour.  Should the currently lagging lithium and critical mineral projects finally emerge by this period, then they will likely help take up the economic slack.  Unfortunately, at present with the sales of electric vehicles slowing, it appears that demands for regional lithium development may have stalled for the time being.  As well, the demand for forest sector products remains weak.  Indeed, when it comes to GDP growth, the Conference Board notes that: “Thunder Bay’s real GDP has essentially stagnated against this sombre backdrop. It is on tap to ease by 0.2 per cent in 2024, after rising only 0.1 per cent in 2023. We expect 2.0 per cent growth in 2025. Local GDP growth will ease to 1.2 per cent in 2026 and 0.7 per cent in 2027, then return to 1.2 per cent in 2028”.

 

And then there is of course what the impact of President Trump and the proposed tariffs may be on the local economy.  It is of course unclear what the impact of tariffs might be unless they are also applied to regional natural resource products.  There are industries in our area that ship to the U.S. including wood and paper products, and minerals and a slowdown here may also impact the Port of Thunder Bay.  However, the incoming US President is more of a known quantity this time around and the evidence is that he is quite transactional with much of his behaviour designed to stake out bargaining positions.  Canadians should be prepared to wheel and deal.  It will be a tumultuous year to be sure with President Trump sending out assorted signals about how he feels about Canada.

 

 

Changing Thunder Bay City Council: What Is The Path Forward?

 

I have already opined on the recent report putting forth options for the reform of Thunder Bay City Council, but the matter is so fundamentally important to the future of local democracy in our city as well as the effectiveness of municipal government that it is worth another post.  This especially requires another post given that the current council will soon move to deliberate and decide on which of the two options – if any – it is going to go with. 

 

To start, there are actually three options: The first, is four east-west wards running parallel from north to south numbered 1 to 4 that basically gives each ward a rural area, urban area as well as some industry and waterfront in the geographic and population composition of the ward.  Each ward would have two ward councillors for a total of eight.  As well, there would be two at-large councillors and a mayor.  This proposal is being recommended by city administration.  The second option is a full at large system with ten at-large councillors – no ward councillors - plus the mayor. One suspects that some type of ward structure will be retained with at large councillors “assigned” ward representation duties but how that might actually work is shrouded in fog. And third – while not explicitly referred to but lurking in the background – is simply the status quo option of seven ward councillors, five at large councillors and one mayor.

 

What remains important in the discussion is what the rationale for creating a new structure is.  First and foremost, whether warranted or not, there appears to be a widespread desire for change in city council’s composition driven by dissatisfaction with assorted aspects of municipal government in Thunder Bay.  A desire for change for the sake of change is never in of itself a good reason to change things but even recent albeit unscientific polls on TBnewswatch suggests that most respondents want change.  Past TBnewswatch  polls have suggested a desire for a smaller council with eight councillors plus a mayor garnering the most support.  When given the two proposed options plus the status quo as choice, the most recent poll finds that over 86 percent want change with only 13 percent supporting the status quo.  Moreover, when it comes to the two proposed options – about 46 percent support the 10 councillors plus mayor all at large option, and 40 percent support the four ward two councillor per ward plus two at large and a mayor format. 

 

 

What type of performance improvements to our municipal governance are these proposals supposed to make?  Anecdotally, observation suggests that Thunder Bay City Council meetings appear to be long and drawn out with detailed discussions and gridlock on minor and major matters alike.  Yet, how changing the composition of city council will address issues of dysfunction are not really obvious.  There is also a desire to save money but reducing council by two members saves at best $100,000 in salaries, benefits, and expenses on a tax funded budget of over $200 million.  Indeed, if cost savings are really what you are after, the savings do not come from the reduction in the size of city council but an improvement in the quality of councillors and decision-making on it.  There is nothing in either of the two proposed options that lend any evidence as to how a smaller council will be a better council when it comes to decision making. 

 

In the end the three options can be interpreted as follows: the status quo, a modified status quo which shrinks the council slightly but still includes a mix of ward and at-large councillors, and the ten councillors at large option which I would term the “mayor plus ten assistant mayors” option.  The attractiveness of an all–at large council to some members of the general public springs from the conviction that such councillors have the interests of the entire city at large while ward councillors are parochial nimbyists who block change.  My observations are that ward councillors seem stuck with the grunt work of dealing with specific ward and neighborhood issues while most  at-large councillors pick and choose what ward issues to advocate for based on the political benefits while behaving as pontificating prima donnas at meetings with speeches that chew up far too much time. 

 

In the end, an all–at large council favours those candidates with a lot of prior popular name exposure (it is like high school all over again) and/or the financial resources or special interest backing to mount a city-wide campaign.  The argument that somehow only at large councillors have the ability to see the whole city’s interests is spurious.  The average municipal politician usually puts their political interests first, and everything else is weighed and slotted towards meeting those interests – whether it is in the city’s interests or not.  Having no ward councillors at all is fundamentally at odds with the purpose of municipal government which is to provide municipal services to rate payers who either reside and/or operate businesses in wards.  Moving to an all–at large system reduces accountability to the mundane needs of ratepayers by creating a council of big picture overlords who will pass the buck on specific local issues when it suits them. 

 

Those that want an all–at large system should consider this analogy.  If at large councillors are really better able to see the “bigger municipal picture” than by extension having all MPs and MPPS elected from an at large list would be better at seeing provincial or national interests as opposed to parochial MPs or MPPs who just look after their ridings.  Perhaps, one might consider this a straw man argument and a deflection from the real issue but think about it carefully.  One may feel comfortable about all at large candidates with no wards because Thunder Bay is a relatively small city and ultimately everyone knows someone who knows someone who is friends with a councillor.  Everyone feels that they can have their voice heard.  And yet, without the institution of direct ward or riding representation, there is no guarantee that you will always have a direct opportunity to be heard.

 

So, what is the solution?  Well, my preferred option – which is of course not up for discussion in the current set of offerings - is eight ward councillors plus a mayor option.  The city would be divided not into four but eight wards thereby ensuring that some dedicated rural ward representation would remain.  It is now 50 years after amalgamation and the city has been united long enough that the average ward councillor should be able to see the forest for the trees.  If they cannot, it is more a function of the quality of the councillor rather than the ward system.  Going down to eight councillors plus a mayor would likely save several hundred thousand dollars – again a small sum compared to a budget in the hundreds of millions – but enough to increase resources available to perhaps attract better candidates. This does not necessarily mean raising salaries for councillors but could even involve providing funds so that they can hire some independent research support so they can better inform themselves on issues.

 

Of course, the other argument that has also been made in favour of an all–at large council is that there is a lack of Indigenous representation on the current city council.  Given that the Indigenous population in Thunder Bay is spread out across the city rather than concentrated in one ward, an all–at large system increases the odds that an indigenous candidate and by extension the growing indigenous population can gain a voice on city council.  However, there is no guarantee that having ten at large councillors will ensure an indigenous candidate gaining office.  Indeed, if having at large councillors is the best way to ensure better odds for an indigenous candidate getting elected to Thunder Bay City Council, then the best thing to do is to retain the current system with seven ward and five at-large councillors plus a mayor.  At least it will be the devil we know best.

 

 

Getting Ready for Budget Season: A look at Thunder Bay Municipal Indicators

 

Municipal budget season is well underway in Thunder Bay, but the main public theatrics over the 2025 budget should be transpiring over the next few months.  The most recent indication is that City Council is expected to target a 3.8 percent municipal tax levy increase.  There are budget pressures underway not the least of which is apparently an additional $5.6 million to cover wages and benefits. Putting budgets into context is always more useful if a long term is taken and fortunately the Ontario government does provide resources to track municipal spending.  Here, a useful tool are the multi-year financial reports provided from the Financial Information Returns which provide standardized reporting of a municipality’s financial activities as well as additional statistical information.

 

Figure 1 presents municipal property taxes per household and water and sewer charges per household since 2000.  While many other municipalities appear to have filed their 2023 returns, Thunder Bay appears to be lagging and therefore this long-term snapshot only goes to 2022.  From 2000 to 2022, municipal property taxes in Thunder Bay have nearly doubled going from $1,947 to $3,918.  The growth of water and sewer charges has been more pronounced going from $379 per household in 2000 to $1,158 in 2022 – a tripling of the average per household charge.

 

 

 

Figure 2 plots a dual scale chart with the total municipal workforce (full time, part time and seasonal) on the right size axis and the value of wages, salaries, and benefits per employee on the left axis.  Perhaps one of the reasons Thunder Bay is lagging in putting out its financial information is that it is a bit short staffed given that the total size of the municipal workforce has declined from a peak reached circa 2013 and has been pretty flat since 2016.  On the other hand, since 2000, the size of the municipal workforce has gone from 2,344 employees (there is a data  gap in 2003) to 3,404 in 2022 – an increase of 45 percent.  Over the same period, average wages, salaries and benefits per employee have grown from $46,978 to $83,799 – an increase of 78 percent.

 

 

 

However, these indicators and the increases over time are best placed in context to an assortment of other indicators and this is done in Figure 3 which plots the percent increase in an assortment of indicators from 2000 to 2022.  As one can see, prices in Thunder Bay as measured by CPI inflation have risen by 49 percent.  Own purpose property tax revenues (the total tax levy) has grown 122 percent while total grants revenues have only grown by 55 percent.  Municipal property taxes per household have grown 101 percent while water and sewer charges have grown 205 percent.  

 

 

 

Meanwhile the total taxable assessment has grown by 60 percent which when divided by the number of years works out to an annual average growth of 2.7 percent.  This seems at odds with the fact that published reports have been of average assessment growth over the last ten years of only 0.6 percent annually.  However, one suspects that the 0.6 percent is real growth – after inflation – because the average annual assessment growth of 2.7 percent minus the average annual inflation rate of 2.2 percent from 2000 to 2022 yields real average annual assessment growth of 0.5 percent.  Given that property prices have grown substantially in Thunder Bay over the last decade in particular, the nominal rather than inflation adjusted tax assessment has been growing in tandem

 

More interesting is the fact that between 2000 and 2022, the population of the City of Thunder Bay has actually decreased by 6 percent.  This also seems at odds with recent reports that Thunder Bay is over 130,000 people but it must be remembered that FIR deals with municipal finances and the population of the City of Thunder Bay is that within its city limits while the recent population reports are for the larger Census Metropolitan Area.  Essentially, growth in Thunder Bay has been occurring outside the city limits where they do not have to pay property taxes to the City of Thunder Bay.

 

And finally to round things off, the municipal workforce over the 2000 to 2022 period grew by 45 percent, the total compensation per employee grew 78 percent and the total value of building permits grew 85 percent.  However, after inflation of 49 percent, salaries and benefits per employee only grew in real terms by 29 percent while to end things,  the real total value of permits grew by 36 percent. 

Rising Crime in Canada: Evidence from Thunder Bay

 

Rising crime and perceptions of rising crime in Canadian urban areas have become more concerning as media reports increase and a recent study by the MacDonald-Laurier Institute provides some evidence to back up the feeling that crime is up.  The report looks at the last decade’s worth of police reported crime data for nine major Canadian urban centers: Calgary, Edmonton, Montreal, Ottawa, Peel, Toronto, Vancouver, Winnipeg, and York Region.  Essentially, crime and especially violent crime is up in all of these cities with sexual assaults in particular showing large increases.  Of course, this study omits a lot of cities and so of course the question that arises for inquiring local minds is how Thunder Bay has been doing over the last little while?  Is crime rising in Thunder Bay? Well, it depends on the time span you want to look at as well as the specific type of crime.  But overall, the feeling that crime is rising here is not misplaced.

 

Using police reported crime data from Statistics Canada, here is a quick snapshot of how some crime rates in Thunder Bay (crimes per 100,000 population) have been performing. Figure 1 plots the crime rate for total violent crimes and total property crimes for the period 1998 to 2023.  Over the long haul, the trends do not seem particularly concerning.  The property crime rate in 1998 was 6,285 crimes per 100,000 population and after 2009 it began declining quite steadily followed by a spike in 2019 and then further decline.  Between 1998 and 2023, the property crime rate fell from 6,285 crimes per 100,000 to 3,117 per 100,000 – a 50 percent drop.  

 

 

 

Violent crime between 1998 and 2023 has also dropped but not by as much.  It went from 2,401 violent crimes per 100,000 to 2,195 per 100,000 -a nearly 9 percent decline.  However, the violent crime rate seems to be broken into two phases.  It went from 2,401 in 1998 to a low of 1,414 in 2015 – a decline of 41 percent.  Since 2015, it has grown and by 2023 was, as noted, at 2,195 – an increase of 55 percent.  While violent crime is lower than 1998 that is small consolation given what appears to be a fairly rapid increase in recent years.

 

 

 

Figure 2 presents the percentage change in crime rates over a ten-year period – 2013 to 2023 – for a select number of crime categories.  The results paint a more complicated picture.  The total crime rates (all criminal code violations including traffic) are down 2.5 percent over the last ten years.  This seems to be driven in part by a decline in property crimes as the total property crime rate over the same period is down 13.4 percent.  However, over a ten-year period, the total violent crime rate is up nearly 39 percent.  Homicides are up 120 percent from 2013 (though these are two points in time.  Using a three-year moving average for 2012 and 2022, homicides are only up 87 percent if that makes you feel better).  Total sexual assaults are up 68 percent while total assaults in general are up 31 percent.   Impaired driving is up about 5 percent while robberies are up 39 percent. 

 

So, are perceptions of rising crime justified?  I would think so given that while overall crime rates might be down or flat, the rates for more serious crimes such as homicides, assaults and robbery are up.  There you have it.