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Gregor Robertson and Naheed Nenshi

If you're one of the 80 per cent of Canadians who lives in a city, chances are you're fiercely proud of it. Our cities can match any in the world for vibrancy, quality of life, entrepreneurial spirit and creative and civic culture.

But there's no guarantee this will last. Canada's cities face big challenges in the next few decades: managing growth, improving livability, becoming more sustainable and making city living far more affordable.

Just to avoid slipping backward, the infrastructure requirements are sobering: a $5-billion annual drag on our economy from traffic gridlock; a $123-billion deficit for fixing worn-out infrastructure.

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Add the much larger challenges of rapid growth, carbon pollution and an aging population, and the hard truth is that Canada isn't ready for 21st-century urban reality.

The Canadian city's relationship with provincial and federal governments has been virtually static since 1867. In one of the most urbanized countries in the world, cities receive a lower share of tax revenues than those in nearly any other developed country.

Let's stop trying to fuel a nation's economic engine by the teaspoon. We need a smart shift in resources, tools and authority – a modern partnership with provincial and federal governments.

Canada can only prosper when our cities thrive. That speaks to a federal responsibility. We're realistic, of course. We can't and don't expect Ottawa to simply cut a cheque. But there are smart solutions that don't impose a large burden on taxpayers.

Consider housing. In many cities, finding an affordable home can be nearly impossible. In 2010, a young family looking for a two-bedroom apartment in Toronto faced an average rent of $1,050; in Calgary, $1,084; in Vancouver, $1,400.

The most immediate problem is supply. Vacancy rates under 3 per cent push up rents – Calgary's is 1.9 per cent and, in Vancouver and Greater Toronto, it's 1.4 per cent. When rentals and real estate are too expensive, fewer people buy homes, construction slows and jobs dry up. Cities are reshaped in profound, harmful ways.

That's why we're proposing that Ottawa consider low-cost, high-leverage steps to catalyze private investment to support rental housing and create jobs in an uncertain economic climate. These include:

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  • Having the Canada Mortgage and Housing Corp. underwrite low-interest loans to finance new rental construction, injecting recoverable funds into the construction sector.
  • Reforming the tax system to encourage owners to renovate and renew rental properties. A building owner should have a stronger incentive to sell to someone who wants to preserve affordable housing than to demolish it.
  • Providing support for landlords to retrofit homes to make them energy-efficient – reducing costs and easing pressure on rents.

Best practices from around the world can offer sound approaches to affordable housing tax incentives. Whether that's deferred tax credits or reduced capital gains depending on how long a property is kept as rental – let's put those ideas on the table.

Each of these measures is geared to leveraging private investment where it's needed the most. And while there are fiscal implications for each, they generate enough direct economic activity and indirect longer-term economic growth to more than make up for that impact.

It's time to change the way we look at housing, especially rental housing: not just as a social good, but as one of the foundations for sustainable economic growth and healthy, vibrant cities.

With the world's urban population doubling by 2050, this will be the century of the city. Canada's cities are ready to embrace that future, but we need our provincial and federal partners at our side.

Gregor Robertson is mayor of Vancouver. Naheed Nenshi is mayor of Calgary.

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