City of Calgary administration is recommending councillors hold off on approving any of 11 new communities a group of developers is proposing at a city committee on Monday.
According to council documents, administration made the recommendation after considering all 23 criteria that each of the 11 business cases responded to, and the impacts on growth factors of the city’s development and transportation plans, market demand and financial impact.
“Individually many business cases were found to meet many of the criteria or growth factors,” reads the city administration report. “But in the cumulative analysis and in the context of the New Community Growth Strategy 2018 approvals, at this time additional new community approvals could not be supported.”
City administration identified several risks associated with greenlighting the new neighborhoods including a longer time frame to complete communities due to slower growth, limited opportunities for growth in the city’s developed areas, and the potential for more challenges for the city to provide transportation options.
“Providing transit service within a short walking distance to residents in new communities would require greater financial investment and many communities are challenged by their distance to the Primary Transit Network,” the report read.
City administration also said that approving the new communities to a sufficiently supplied market could result in more costs and the potential for revenues to not grow to meet those costs.
“The city must provide certain services at the time they are required, regardless of the financial ability to do so,” administration said in its report. “Some of the business cases require additional capital infrastructure during a time when there is increased limitations on available capital for competing priorities across the corporation”
Trico Homes, a developer proposing business cases for two parcels of land east of the city, said more options within Calgary will ease losses on the market to bedroom communities adjacent to the city.
“Trico is very committed to the east side of Calgary. We feel this area has been overlooked in the past with no real supply of new homes,” Trico marketing vice president Wanda Palmer said in a statement to Global News.
“We believe providing more choices within Calgary’s east sector will help mitigate market loss to smaller satellite communities.”
Half of 14 communities approved in 2018 in development
The proposal for the new communities comes two years after city council approved the development of 14 new communities.
At the time, administration recommended approval for just eight of the communities.
According to the administration report, the 14 communities have received some land-use approvals, but only seven have development agreements and two have received building permits for housing construction.
While occupancies in three of the 14 communities are expected to meet the established goal in 2021, city administration said its not likely the remaining communities will meet those targets due to a slow down in market demand.
“At this time it is almost certain that the majority of the 14 new communities will not meet the city’s anticipated build-out of 250 units in each community by the end of 2022 nor the 2018 business case’s anticipated build-outs that were much higher than 250 units,” the report said.
According to city administration, housing starts were four per cent below the five year average for the Calgary Census Metropolitan Area, and 2020 housing starts are down 16 per cent from 2019 year-to-date.
Administration said the city has funded single and semi-detached dwelling unit capacity to the year 2032 and multi-residential unit capacity to 2038 based on anticipated market demand.
Nenshi questions timing of proposals
Calgary mayor Naheed Nenshi said he will listen to each business case with an open mind, but will have some hard questions for developers at Monday’s meeting.
“I think my colleagues on council and land developers need to really answer the question, why in the world would this be a good time to add to an already dangerous oversupply which would risk destabilizing the entire housing market and popping a bubble?” Nenshi asked.
The mayor pointed to a recent study conducted by Moody’s, which called the oversupply of new, single-family homes in Calgary “dangerous.”
“I think that we shouldn’t have approved the 14 that we approved two years ago, we should have approved eight or nine. The remainder should have been approved this time,” Nenshi said. “But since we already blew the bank and approved five or 10 years worth of new communities, it’s going to be very hard to convince me that we should be adding more to that list in this economy and in this growth environment where fewer people are willing to move to Calgary.”
Last week, Ward 7 Coun. Druh Farrell told Global News that approving the new communities would go against the city’s growth plans, and would result in the reduction of city services.
“If we oversupply the market, then we’ll have to cut services to all of Calgary — the existing Calgary, for communities that aren’t yet built,” Farrell said on Wednesday “I would say it’s an unreasonable risk to have taxpayers cover these costs.”
Meanwhile, Ward 6 Coun. Jeff Davison said the city should consider the business cases that don’t require short-term capital investment from the city, but that it must be a balanced approach.
“To some degree, some of these things don’t require our capital and we should be moving forward with those in order to support that business,” Davison said. “The ones that do require capital, we’re going to have to take an extensive look at it to see whether or not looking at investing in these communities now, when we’ve already invested in 14 new communities, is really critical at this time.”
The group of developers presenting their business cases to committee include Genesis, Grewal, Trico, Truman, WestCreek, Brookfield, Soutzo, Qualico and Dream.
The 11 new communities will be discussed at the Priorities and Finance Committee on Monday.
–With files from Global News’ Adam Toy.