The Costs of Growth in Calgary
Late Monday evening, Council started into “Financing Municipal Infrastructure”, a report on who should pay for the costs of growth in Calgary and how. But the discussion ended almost as soon as it started, when the report was referred to the Standing Policy Committee on Finance & Corporate Services scheduled to meet later that week. Sensing that what was unfolding deserved attention, on my own time and dime I scrambled to read the reports and clear an afternoon to attend the Finance committee meeting.
First, some background as I understand it. Every few years, the City and development industry must negotiate agreements governing the funding of infrastructure and services for new areas. The current agreement lapses at the end of this calendar year and so, following a City/Industry forum last year, a working group was created to address three specific issues: closing the capital cost gap, addressing timing and risk, and finding long term solutions. The most urgent of these is closing the capital cost gap.
Currently, water and sewer infrastructure for new suburbs is paid for entirely by the City with the costs borne by all of us via our utility bills. So, Calgary’s exponential expansion of its footprint is echoed in the expansion of the City’s debt and we – you, me and everyone who lives here – are struggling to pay for it all. According to the City, either we find a new way to pay for this infrastructure or cap all new growth at the edges immediately.
Cap new growth: words that no one who makes money developing land in Calgary wants to hear. And let’s be clear, the industry makes money. And let’s also be clear, there’s nothing wrong with making money on developing land in Calgary per se, but the debt load being shouldered by citizens as a result of the current business model is not financially sustainable.
Let’s also be clear that this is not an issue of pitting established inner city neighbourhoods against newer suburban neighbourhoods as some have tried to paint it. This is an issue for every citizen of Calgary. We can no longer afford to artificially support the development industry’s business model, even though the jobs/taxes generated by the industry are an important part of our economy. We can no longer subsidize the price of new housing stock when so many existing communities lack key infrastructure such as recreation centres, libraries and adequate transit. We can no longer allow debt to expand exponentially with Calgary’s footprint, leaving ourselves unequipped to deal with upkeep of aging infrastructure and necessary services like snow-clearing. And though it may have pained committee members to extend a long meeting even longer, several citizens – also on their own time and dime – waited hours for their five minutes of airtime to make these points and more.
To their credit, the reps of the suburban development industry who presented at the meeting acknowledged that changes are needed. Although they initially balked at the report, upon being painstakingly walked through it by one alderman, they had to admit that they agree with most of it. They conceded that their industry must share more of the costs and risks of developing new suburbs, that the development levies that pay for water and sewer must, indeed, go up. They also conceded that the levies need to double to cover costs which, by the way, will bring us in line with our neighbour to the north, Edmonton. And that even though these levies will be significant, increasing densities in new communities under the Plan It Calgary model, passed by a unanimous Council last year, will lower “per door” costs.
Still, the industry said that the report should be delayed until the fall – which effectively means after the October election dust settles – and some aldermen were intent on giving them that time. The report was only forwarded to an upcoming Council meeting by the narrowest of votes. But in the end, the job got done. The report now moves on to the July 19 Council meeting. This will be a meeting to watch. As one alderman said Wednesday, “we have to do something now and we’re limited to the tools we have now.” Who on Council will vote to accept the report and get on with difficult but necessary changes? And who will vote for more time for the industry to establish its negotiating position on the timing and phasing of the levies that all parties say must go up? I know I’ll be watching.



