City hall has announced a deal that shifts the debt-inducing burden of suburban growth costs away from taxpayers and more onto developers, home builders and homebuyers.
Mayor Naheed Nenshi and other sprawl-fighters have long warned that Calgary subsidizes new houses on the city fringe by not charging enough in levies on developmentready land to cover the full costs of roads, water treatment and other services.
The problem will diminish with Thursday’s renewed agreement, which industry and city managers reached after months of negotiations.
While it will trigger higher home prices, players on both sides say it won’t be as dire as the $10,000-per-house surcharge, because it’s almost certain to not fully close that $10,000-per-door gap between what developers pay and what the city must spend on infrastructure.
"It’s pretty simple: we’re not happy with it but we understand it, and we’ve got to be a part of the solution to the program of growing the city," said Richard Priest, a vice-president with Apex Developments and a director with the industry group that negotiates the deal.
He wouldn’t say how substantial the increase would be.
Priest acknowledged, however: "We’re going to be at a level which is consistent with other major municipalities in Canada."
That could mean a near-doubling of suburban levies.
A 2009 city report found that Calgary’s charge per hectare was about 30 per cent below Edmonton’s and less than half of Vancouver’s. As well, the Ottawa fringes and the Toronto suburb of Brampton charged three times as much.
Thanks to a past agreement, the city has stopped collecting the "acreage assessments" to cover water and sewer infrastructure. That, coupled with major cost increases on city treatment plants, has saddled Calgary with massive capital debt.
Managers warned this spring of steep water-rate increases for all Calgarians, even with a return to charging developers for those projects.
Council must ratify the new development agreement, and its land-use and planning committee will hold a public hearing on it Wednesday.
City managers will recommend that council approve a gradual, multi-year increase to the levies. Councillor Brian Pincott, who said the hikes must be substantial, expressed hope that the phase-in period was quick but understands why it’s there.
"If a business is suddenly getting hit with double the fees, say, you need time to figure out how does that work within your corporate model," he said.
Pincott is expecting a compromise.
"This is a negotiated agreement, (so) is it going to be more than the developers want? Yes. Is it going to be . . . the ultimate that the city wants and needs? Yes."
While most councillors acknowledge the city can’t be financially sustainable without hiking levies -as it perennially does for property taxes -some members heed the industry’s warnings that going too far will kill housing affordability.
"At what point do we think it’s too hard to develop in the city?" said Councillor Andre Chabot, the committee’s chairman. He reasoned it’s tricky to revise the charges without knowing clearly what regional neighbours will do with their growth plans and charges.
Others hope the city will offer trade-offs, like assuring a timely schedule to provide transit or recreation offerings in new communities, or more quickly handling development applications.
"I think some of that impact can be mitigated by a streamlined process," said rookie Councillor Richard Pootmans, who acknowledges that Calgary’s ability to provide new services has been "sorely tested" under the current levy deal.
Owen Tobert, the city’s top official, told reporters last week that council members, like the community, are always split on the question of whether suburban expansion is paying for itself.
But he sees a shift at city hall. More than any previous council, Tobert said, this one has stressed, "We believe that growth does not pay its full costs."
Council has resisted making changes to the last few developer agreements, which follow several months of private negotiations between top city and industry executives.
Nenshi declined to comment on the eve of the agreement’s release. But throughout his election campaign and six months as mayor, he’s unambiguously argued that innercity growth will benefit once the suburbs pay their way more fully.
"I’m not interested in telling people where they need to live," he told the Herald in December.
"But I am interested in fixing a system that forces people into a certain model of living because it seems to be cheaper, when in fact we’re subsidizing it."
Calgary Herald
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