Calgary developers lose 'sprawl subsidy' on water, road costs

In the thick of the 2013 election, the idea that city council could pass a bylaw forcing developers to pay the full cost of new infrastructure costs would have been unthinkable. Even more unthinkable would be passing it unanimously and with industry support. 

But that's exactly what happened on Monday, with Mayor Naheed Nenshi saying, "I cannot overstate how important this is."

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The new bylaw will dramatically increase the cost of new suburban developments to cover water and wastewater treatment as well as new roadway costs. In established areas, the fee would apply to new developments and cover water and wastewater treatment costs. 

New system

The levies will add $422,073 to $464,777 per hectare to new suburban developments, while in the established neighbourhoods the cost will be anywhere from $6,267 for a single family home to $2,593 per unit in a multi-unit development. 

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It's expected the levies will add approximately one per cent to the total cost of a new house and it's likely those increases will be passed on to consumers. 

There is also a bonus system built into the levies to encourage density, recognizing the increased tax benefits to the city for denser developments, and infrastructure that will benefit the larger community will see the costs divided between the city and developers.

Long battle

The city first instituted levies covering 50 per cent of costs in 2011. Prior to that the city absorbed the full cost of new infrastructure.

The issue was also front and centre in the 2013 municipal election, and saw a pitched battle between the mayor and some in the development industry. Nenshi referred to the system as a "sprawl subsidy."

The mayor recently settled a defamation lawsuit with developer Cal Wenzel stemming from that heated election. 

Despite that history, the Urban Development Institute and the Calgary Home Builders' Association both supported the new levies on Monday. Nenshi had clashed with both organizations on this issue in the past. 

Transparency was key

Guy Huntingford, speaking for the UDI, said he's confident the two sides can work together to reduce risks and speed up approvals for developments, helping to keep costs down. 

Both he and Amie Blanchette with the CHBA praised the process used to develop the bylaw, highlighting transparency as a key factor. 

Blanchette said the reason council is seeing the industry stand behind this bylaw, and its related costs, is because of the frank discussions that took place between the two sides. 

The city and developers will now get down to solidifying the details of the plan and addressing any lingering concerns.

The fees will come into force in February, 2016.