New communities don’t cost taxpayers

Developer levies ensure those who benefit cover the costs.

What are developer levies? This is a common question, and the name doesn’t provide much of a clue. Basically, developer levies are taxes (or fees) collected by the city from real estate developers. Levies are based on the principle that development related to growth should pay for itself, and not impose a burden on existing residents. So, The City uses the revenue gained through levies to offset the cost of infrastructure required to connect a new community to the rest of the city. Typically, the new “off-site” infrastructure enhances the life of all Calgarians.  

First, let’s demystify some of these terms:


 

In 2016, levies for new communities were raised by 40% – an enormous increase that benefits The City in lots of ways. Not only are developers responsible for 100% of the cost of infrastructure inside new communities, the increase now covers most of the off-site infrastructure as well, including land and roads around the community, emergency response stations and recreational facilities. 

For the first time ever, developers in established areas will pay a set levy on a per-unit basis for sanitary and water treatment. This helps create budgetary certainty for both the industry and The City. 

There are four main ways The City collects funds to keep our services and infrastructure in top shape:


 

So, given these four revenue sources, who foots the bill for public services? 

Inside a new community, developers cover 100% of the cost of new growth. And where redevelopment takes place, it’s usually the builder and sometimes The City. Types of services covered include: roads and pathways, phone towers and lines, public spaces, recreation facilities and more. Outside a new residential area, The City invests in making the connection to existing infrastructure using off-site levies from developers, grants and other funding sources. These funds also cover the cost of infrastructure like roads and pathways, as well as things like streetlights and traffic control.


 

With around 75,000 new Calgarians estimated to arrive through immigration and natural growth over the next five years, growth and redevelopment is essential. Thoughtful use of levy funds lessens the strain on existing infrastructure like busy roads or sewage management systems, and new funds create amenities to give new communities a critical, initial boost.  
 
The Municipal Development Plan, which includes hundreds of strategies designed to guide Calgary development over the next 60 years, addresses the challenges of growth and sustainability in seven main ways:


 

Number 4 in this list is especially relevant to the new off-site levy policies. An incentive provided by the current Municipal Development Plan encourages builders to build high where it’s appropriate; after a project creates space for 285 people and/or jobs, the levies are capped. A compact community brings more vibrant, heathy, and multi-use communities.
 
Increased housing density also means efficient use of existing infrastructure like roads and services, as well as more city revenue from the new units’ property taxes. With dense living comes dense revenue – far more than what’s earnable through single-family homes. 

2016’s changes to the structure of developer levies marks an important step in the long-term predictable funding for future developments. However, the Calgary Chamber of Commerce is constantly exploring even more ideas for inspiration, and effective solutions to funding questions. The City of Calgary’s Engage program is always looking to converse with citizens, and invites your input to a variety of projects both online and in person. 

With a growing population and a belief in collaborative development solutions, it’s an exciting time to be in the Calgary region.

 

Published
October 20th, 2017


The new funding structure creates more predictability for developers and financial stability for The City. 


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