Calgary is developing a contingency plan to fund further housing growth, should a challenge to their off-site levy bylaw happen under revised provincial legislation.

Members of Calgary’s Intergovernmental Affairs Committee (IGA) discussed the city’s development of a plan for back-up funding should they find themselves without adequate capital to fund infrastructure via the off-site levies.

Off-site levies are the city’s mechanism to recoup the capital cost of infrastructure needed to build out new communities. It covers things like underground services, recreation, roads, fire services, sidewalks and police services.

Recent changes to the Alberta government legislation around city charters in Calgary and Edmonton require the city to respond to stakeholder feedback during levy consultations and create an appeal process through the Land and Property Rights Tribunal.

“The provincial government has introduced legislation that increases the risk that construction of growth-related infrastructure may be paused, thus negatively impacting growth,” said Jennifer Black, leader of the growth financial strategies team at the City of Calgary.

Along with that, Black said the introduction of Bill 18, which could limit potential federal infrastructure funding going direct to cities, creates additional risk that must be countered.

Thus, city administration wants to explore an alternative model that would mirror the balance of financial risk in the levy bylaw.

“Even if potential alternatives mirror the balance of financial risk in the levy, there are still significant municipal contributions required to fund growth, as well as a growing fiscal gap between available funding and infrastructure needs,” Black said.

“Growth creates a commitment to services and infrastructure indefinitely into the future, impacting the city’s long term financial sustainability.”

Development industry willing to pay a fair share

BILD Calgary Region has, in the past, said they support a levy where growth pays for growth. They supported a data-driven, transparent and competitive system. 

The portion where they have challenges is in the water and wastewater levies, plus how the transit levy is calculated. They do want to pay their share of both but disagreed last December with how the city’s levy methodology was applied.

“Ultimately, this all comes down to affordability,” said Graham Melton, chair of BILD Calgary, back in December when the city approved its current levy system.  

“Having a levy that exceeds the rate of inflation by eight per cent is working counter to the hard work the city and industry is doing to maintain home affordability.”

On June 12, BILD once again challenged the information the city used to develop their off-site levy bylaw, particularly around maximum daily water demand. They wanted further consultation and collaboration on the issue.

“It is important to ensure offsite levies are set at a fair and reasonable level to lower barriers to new housing supply and improve housing affordability,” said Deborah Cooper, BILD Calgary Region’s director of policy, strategic initiatives and government relations.

“We are pleased to report that we believe our discussions have confirmed that BILD and administration are aligned in terms of an overall goal of keeping water services affordable by maximizing service from existing infrastructure and reducing the volume of water to treat and distribute, thereby reducing operating costs and delaying capital investments.”

That latter aspect would directly impact the calculation of the off-site levy.

Mayor Gondek asked city admin if construction would come to a “screeching halt” should someone challenge the off-site levy bylaw. Black said that if the bylaw is challenged, they would be forced to put funds into a special account that couldn’t be touched so it could be used for repayment or reallocation in the future.

“Growth would already start to slow… because we wouldn’t be able to build the infrastructure required to support growth,” she said.

Mayor Gondek said they need to be clear about the engagement with the industry on off-site levies moving forward.

“I’m just incredibly worried that with the type of housing situation we’re in and the need to be good partners with industry, that we’ve got this little bit of a wedge with this potential situation,” she said.

“I think it’s incredibly important for our private sector partners to understand that launching a challenge against a levy bylaw before there’s a meaningful conversation between the public and private sector could result in something that not only cost them business but cost us the opportunity to house people.”