CALGARY – City council has approved a five-year agreement that will see the development industry pay more of the costs associated with growth when they build new communities.
The new development deal sorts out a series of levies to pay for things like transportation infrastructure, and future fire stations, police offices and recreation centres.
It will add roughly $8,000 to the amount developers have to pay to the city to build. However, by the time developers add carrying costs from their banks, pass that on to home builders who in turn pass the buck onto buyers, the real price of a new home could increase by as much as $15,000.
Some say life outside Calgary may suddenly be a better option for some.
“Because of the proximity to the city, many people can just easily drive into Calgary and use their infrastructure and of course not pay into the tax system in Calgary and that exacerbates the problem, says Mike Flynn, Urban Development Institute.
Mayor Naheed Nenshi said the deal will help the city deal with mounting debt loads. Realtors say it’s about time the city stop subsidizing new homes even if first time buyers have to wait longer to buy in.
“It’s one thing to look at lowering the cost of entry to encourage new home owners into the market but it’s another two look at sustainable home ownership where people can actually sustain the ownership of their home over long term,” says Sano Stante, President of the Calgary Real Estate Board.
Developers don’t blame the city but rather the province; they feel the government needs to come up with a more sustainable plan for municipalities burdened with huge infrastructure costs but little power to do anything about them.
“We need to talk to whomever the next premier of the province is going to be and make them understand the inequities that exist and the fact municipalities are being asked to shoulder more and more of these services that were once provided by the province or at least funded by the province,” says Flynn.
Home builders say the new prices will likely be seen later this year while developers say the reality is new costs will likely be added almost immediately in some areas.
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