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.
After hours of discussion Monday, the deal passed through council by an easy margin. Only Mayor Naheed Nenshi and Councillor Druh Farrell voted against it, both citing concerns the agreement does not draw enough money from developers.
The mayor said the deal leaves the city better off and is a move in the right direction by doubling the levies being charged to developers. But Nenshi argued it still subsidizes those developers to the tune of $25 million a year, a position disputed by the industry.
“I think we could have got a better deal,” Nenshi said. “I think we could have been a little more aggressive.”
As the dust settles on council’s deliberations, attention will now turn to late June, when a new report is due on the city’s $1.3-billion utility debt that will likely raise the prospect of significant hikes to water and sewer rates for Calgarians.
That debt is in large part because developers have not been required to pay levies for water and sewer services since 1999, even though the city has been building significant infrastructure to service the fringes of the city.
That changed with Monday’s deal, and the industry will now shoulder half those costs from now on. It will soften somewhat the expected water and sewer rate increases.
But Nenshi acknowledged that dealing with past debt will nonetheless mean a significant bump to those rates and he blamed previous councils for letting the debt rise without a plan to pay it back.
“We really are going to have to look at adjusting the rates to make up for the sins of the past,” Nenshi said. “People will see increases in their water and sewer rates.”
But Councillor Gord Lowe said a decade ago the city was faced with huge transportation requirements and negotiated levies to compensate because “we didn’t have roads into our new subdivisions.”
The city then got walloped by a housing boom, beginning in 2005, and had to build a slew of treatment plants and water and sewer lines.
Lowe does admit that during that time, council didn’t have the appetite to raise rates dramatically to compensate. Now, they will have to change that.
“In all likelihood the rate increases will be significant and they will be significant year over year for several years,” Lowe said.
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.
According to the industry, it will add an average of $8,000 to the price of a new home.
No one on either side of the debate seems to like it much, but almost all of council were in favour of passing the agreement instead of tinkering with a deal they said was made in good faith between city administration and industry.
The industry was represented during negotiations by the Urban Development Institute, whose executive director for Calgary said he was pleased council passed the agreement.
Michael Flynn said industry is not satisfied with everything in the deal but “that’s usually the sign of a fair agreement.”
He also disputed the mayor’s assessment that the city is subsidizing developers, adding it should be water and sewer rates that fund the associated infrastructure.
“We disagree with his sentiment that growth doesn’t pay for itself,” Flynn said.
Calgary Herald
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