A huge leap forward for Calgary's economic sustainability

Post Date: Thursday, January 14, 2016

The following column appeared in the January 14 edition of the Calgary Herald.

On Monday, your City Council made one of the most important decisions of our term when we decided to adopt a new off-site levy bylaw. This is big. It will fundamentally change how we pay for growth in this city, mostly ending what I’ve been calling a “sprawl subsidy”.

Despite the current economic situation, Calgary is growing… fast. Over the last four years, we added more than 130,000 people. That’s like adding the entire city of Red Deer and half of Medicine Hat. All those new people need roads and transit and emergency protection and libraries and recreation centres and access to safe clean water.

Growth is good, but it has to be well-managed to create a financially, environmentally, and socially sustainable future. For too long, we’ve been mortgaging our future – either building new neighbourhoods without the facilities and infrastructure needed to be complete communities, or taking out debt to build things without a solid plan on how to pay it back.

When a new community is built, the developer pays for the infrastructure that is specific to that community. This includes the roads, street lights, water, and sewer systems (among other things) inside the community. Most developers pass these infrastructure costs along to the home buyer, which essentially results in residents paying for the community in which they live. People who live in other parts of the city are not affected by these costs.

However, each new community or development has an impact on infrastructure outside of its specific borders – causing more demand on things like major bridges and interchanges leading into and out of the neighbourhood, wastewater lift stations, wet and dry ponds, and traffic signals on major roadways. For many years, all Calgary taxpayers, regardless of whether or not they were directly affected by the development, bore the cost of growth on much of this off-site infrastructure and these costs were distributed among all taxpayers.

This is why, for example, your water bills have increased; for ten years, the City did not ask developers to contribute to our water and wastewater costs, meaning we all had to foot the bill for very expensive infrastructure.

I didn’t think that this kind of subsidy was fair and so, in 2011, shortly after taking office, I asked Administration to work with industry to come up with a way to recover some of these costs. We came to an agreement and started collecting some of these funds at that time.

But this was only a first step in recovering the true cost of growth. All Calgarians continued to subsidize the development of new suburban communities. In 2012, this subsidy cost Calgarians approximately $33,000,000 annually in lost revenue. That’s why I based a large part of my 2013 re-election campaign on this very issue.

For the last year, many people have worked hard to create a new method of calculating off-site levies to ensure that we can keep up with the costs of serving all of our new citizens. City Administration collaborated with industry to find a process that was fair to everyone—especially all citizens. And on Monday, Council unanimously passed these changes.

This means that we have fundamentally ended the development subsidy. For the first time, growth in all parts of the city will now compete on a level playing field, allowing for the market to work and homebuyers to see the true costs of their homes. It also means that, pending further Council decision, we will be able to mitigate future increases in your water and wastewater bills.

It took a lot of work from a lot of people to get here. Thanks to the development industry for coming to the table with open minds and open hearts, and helping craft a new, better relationship. And, as always, my gratitude goes to my colleagues on Council and in The City for their excellent work on this file and on making this place better for citizens every day.