On January 11, 2016 the Calgary City Council passed off-site levies bylaw 2M2016 ("Calgary Off-site Levies Bylaw") in replacement of the 2011 off-site levies bylaw which, when it comes into force on February 1, 2016, will implement a number of important changes, including a significant increase in off-site levy rates in respect of "Greenfield Areas" and a new off-site levy for water and waste water treatment in respect of "Established Areas".
Prior to being passed, the Calgary Off-site Levies Bylaw was subject to an extensive industry engagement and consultation process and was not without controversy amongst stakeholders who were of the view that such a bylaw would negatively impact developers' costs and potentially result in an obstacle to the City's target for more density. Following a lengthy collaborative process, the Calgary Off-site Levies Bylaw received the support of various industry groups, including NAIOP (Calgary), UDI (Calgary) and the Canadian Home Builders' Association (Calgary Region).
Section 648 of the Municipal Government Act authorizes a municipal council to, by bylaw, provide for the imposition and payment of an "off-site levy" in respect of land that is to be developed or subdivided. Such off-site levies may be used only to pay for all or part of the capital cost of new or expanded facilities for the storage, transmission, treatment or supplying of water; new or expanded facilities for the treatment, movement or disposal of sanitary sewage; new or expanded storm sewer drainage facilities; new or expanded roads required for or impacted by a subdivision or development; and land required for or in connection with such facilities.
Developers in Calgary fund the capital cost of the internal infrastructure within new communities such as roads, sidewalks, parks and underground utilities by constructing or paying for such infrastructure. Costs in respect of off-site infrastructure such as water and wastewater treatment systems and major roads and interchanges are generally funded by the City and shared by developers in the form of a contribution by way of off-site levies. The rates for these off-site levies are fixed on a per hectare basis and are subject to annual adjustment and review by the City.
For those areas identified in the Calgary Off-site Levy Bylaw as Established Areas, the City did not previously impose a levy for water and waste water treatment facilities.
In addition, with the surge in growth in Calgary in recent years and the resulting increase in the development of new communities, the cost of the infrastructure required to service those new communities has significantly increased and the off-site levy rate structure established under the 2011 off-site levies bylaw did not meet these requirements, placing a strain on the City's capital budget.
In an ongoing effort to manage the significant cost of infrastructure required to service new communities and the costs associated with increased redevelopment within existing communities, the City has passed the Calgary Off-site Levies Bylaw as part of its growth management strategy.
The following is a summary of the key components in the Calgary Off-site Levies Bylaw and its application:
- A levy is imposed for water and wastewater treatment plants citywide, including for Established Areas which were previously not charged this levy.
- New off-site rates have been set for water distribution, wastewater collection, drainage and transportation in areas identified as Greenfield Areas which are intended to capture 100% of the proportionate share of costs attributable to growth in Greenfield Areas. The new rates will result in a total off-site levy rate of between $422,073 to $464,777 per hectare for Greenfield Areas (up from the 2015 rate of $286,692 to $342,508 per hectare). This includes additional charges for community services. 1
- The rate for the water treatment plant levy will be applied to development of Greenfield Areas on a per hectare basis, consistent with the other levies which apply to such developments. For Established Areas, rates will be applied on a per unit basis in respect of residential development (calculated based on the expected occupancy of each residential unit type) and on a total gross floor area basis in respect of commercial and industrial development (calculated based on the expected jobs per square metre of gross floor area).
- As an incentive to encourage higher density development and to offset the cost impact of the new water treatment plant levy, the water treatment plant levy for Established Areas will be subject to a maximum density of 285 equivalent people per hectare for the purposes of calculating these levies.
- In order to mitigate the impact of increased off-site levies in Greenfield Areas, a longer period of time for the payment of the levies will now apply.
- In respect of the new off-site levies for Established Areas, the rates will be phased in over two years, such that the full rates will not apply until 2018.
- Established Areas which are subject to municipal development agreements entered into between January 1, 2000 to December 31, 2010 will not be subject to the water treatment plant levy.
- The Calgary Off-site Levies Bylaw includes transitional provisions which establish key dates of which developers should be aware: (i) a water treatment plant levy may not be imposed on land in an Established Area on a development permit application received on or before January 31, 2016 and approved on or before January 31, 2018, (ii) the provisions of previous off-site levy bylaws continue to apply to development permits where the approving authority decision occurs on or before January 31, 2016, and (iii) the provisions of previous off-site levy bylaws continue to apply to subdivisions where the approving authority's decision occurs on or before January 31, 2016 and an "Interim Indemnity Agreement" for that approval is executed on or before February 15, 2016.
The Calgary Off-site Levies Bylaw is intended to promote financial stability for the City by ensuring that developers are responsible for the cost of water and wastewater infrastructure in both new and established neighbourhoods across Calgary as well as the increased costs associated with the development of Greenfield Areas. The City has attempted to address the concerns of the development industry through a collaborative approach to the work underpinning the Calgary Off-site Levies Bylaw and by setting longer or phased payments in Greenfield Areas and Established Areas respectively, as well as creating a density incentive program to offset the cost of the new charges in Established Areas. Both the City and the development industry recognize that ongoing engagement and collaboration will be required to ensure success. A Comprehensive Work Plan for 2016 has been created which contemplates the establishment of working groups to oversee and review the impacts of off-site levies and other development related policies, processes and strategies. In addition, both the City and the development industry are following next steps in the Alberta government's ongoing review of the Municipal Government Act as well as the creation of civic charters which have been proposed for both Calgary and Edmonton.
1. Although not enabled as off-site levies within the scope of the Municipal Government Act, community services charges (to recover the costs of facilities such as public libraries, emergency response stations, police services, recreation centres and transit buses) are being paid to the City by developers of new communities as an accepted industry practice.
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