WHO PAYS

FOR WHAT
THE BIG PICTURE OF INFRASTRUCTURE INVESTMENT

A Smarter Growth Initiative Publication

smartergrowth.ca
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This publication was prepared by the Smarter Growth Initiative, a collaboration
between the Urban Development Institute - Calgary, and the Canadian Home
Builders Association - Calgary Region.
Calgary has been one of the fastest-growing cities in North America for more than
four years. That presents both challenges and opportunities. A smart approach to
growth will ensure that we continue to be one of the most livable cities in the world.
This is the fourth booklet in a series of seven, each focused on a major factor
affecting our regions urban development. The topics within each publication are
explored further through articles on smartergrowth.ca and with shared information
on Facebook and Twitter (@smarter_growth).
Learn more at smartergrowth.ca
Our goal is simple: engage Calgarians in dialogue on
topics affecting planning and development.
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ITS YOUR CITY
Infrastructure is top of mind for many of us, and one of the greatest economic
considerations for all Canadians today. Across the country, we need brand-new
infrastructure, and we need to fix or replace aging infrastructure. Funding growth
and maintenance has become a chronic problem. And a very expensive one.
Much of the cost of infrastructure is covered by our tax dollars, distributed by
the federal, provincial and municipal governments. Over time, the burden has
fallen more and more on our citys shoulders. Calgarys share of capital investment
has grown from 27% to 48% since the 1950s. And, over that period of time, the
residential development and building industry has taken on the lions share of
new growth expenses.
The City of Calgary seeks ways to fund the constant investment we need for the
construction and maintenance of our infrastructure. Although its an intricate puzzle
that can be hard to unravel, its one we should all understand. Its our city, and we
should all know whats under the hood.
TABLE OF
CONTENTS
06 INFRASTRUCTURE AND GROWTH

08 THE LAY OF THE LAND

10 INFRASTRUCTURE INVESTMENT

12 WHO DECIDES

14 THE ISSUES

16 WHATS NEXT

18 MORE OPTIONS

22 GLOSSARY

24 GET INVOLVED
 INFRASTRUCTURE AND GROWTH
A growing economy can suddenly mean more people and more pipes

BUILDING FROM THE

BOTTOM UP More population, more pipes.

Given how fast economic indicators like the price of oil can change, its not hard
to imagine the difficulty of adapting to the often unpredictable population growth
and the resulting expansion of our city. Infrastructure investment needs a sound
strategy that can respond to fluctuating growth patterns without imposing the
burden of large debt. Calgarys city planners, builders and developers are working
on a funding model for infrastructure that is responsible, and fair for all Calgarians.

BASED ON CALGARYS HISTORICAL GROWTH,

WE NEED TO UPGRADE ONE OF OUR WATER OR
WASTEWATER TREATMENT PLANTS EVERY 10 YEARS.

View the full City of Calgary Developed Areas Growth and

Change 2014 report at smartergrowth.ca
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 THE LAY OF THE LAND Inside a new community, developers cover 100% of the cost of new

WHO FOOTS
growth. And where redevelopment takes place, it can be either
The City or the builder who pays for upgrades.

THE BILL?
SOUND BARRIERS PHONE SYSTEM RECREATION
FACILITIES

STREETLIGHTS

PATHWAYS
It depends where youre digging.
PUBLIC SPACES

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.
ROADS AND
PATHWAYS
TRAFFIC
STREETLIGHTS CONTROL
FENCING LANDSCAPING STREETS AND SIDEWALKS

PUBLIC SPACES WATER

CABLE SYSTEM

LOCAL WATER,
WASTEWATER AND
SEWER SYSTEMS

PUBLIC TRANSIT

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GAS SYSTEM WATER, WASTEWATER AND SEWER SYSTEM
 INFRASTRUCTURE INVESTMENT

SHOW ME THE MONEY Finding funds to keep Calgary livable.

There are only a few places that The City can turn to for developed communities, monthly utility payments from
revenue property tax from residents and businesses, property owners, user fees, and federal and provincial
developer levies and fees in new communities and government grants. Which one covers what costs?

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LEVIES AND USER FEES
Developers pay levies of, on average, $310,000
per hectare to The City for all growth-related
infrastructure expenses inside new communities;
they also dedicate land for parks and utilities.
Builders pay to upgrade local infrastructure for
redevelopment projects.
Calgarians pay user fees to supplement the cost
UTILITIES RATES
We all pay monthly rates to cover the cost of utilities.
T
 he cost of the delivery of electricity, water and
sewer is completely covered by home and
business owners.
Our monthly bills reflect both the fluctuating cost
of electricity actually delivered to our homes as well
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PROPERTY TAX GOVERNMENT GRANTS
Property tax is one of the main sources of Federal and provincial governments contribute
City revenue. It pays for essential services to limited capital projects. The funds come from
and programs. programs like the GST refund to cities, or the gas tax.
Part of our property taxes help The City with The Alberta Municipal Infrastructure Program has
operating expenses for infrastructure including contributed billions of dollars to capital projects over
roads and parks. the past number of years.

of things like recreation centres, public transit, as the local access fees. Approximately 2.6% of property tax revenue is Recently, the federal government made their largest

water and recycling. used to maintain existing infrastructure. single investment in Calgarys history, for the Green Line.

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 WHO DECIDES

WHAT GOES WHERE? Putting the puzzle together.

When all is said and done, its The City of Calgary that
determines where, when and how new development
can take place. They monitor our land supply, approve
the subdivision of land and determine the timing of
the initial infrastructure investment. The City requires
that leading infrastructure water, storm, sanitary,
fire and transportation services is in place before
developers can begin their work.
The priority and sequencing of infrastructure is,
understandably, highly complex. The City tries to
provide the same services to everyone, no matter
where they live, and to ensure the creation of sufficient
housing choices for homebuyers.
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The City and industry are moving further into a
partnership model for determining the sequence
of growth. The City has the information to take the
big-picture view, and industry has strong market
knowledge to bring to the table. Knowing where
homebuyers are most likely to purchase new
homes helps ensure that The City receives revenue
through additional property taxes as quickly as
possible once a new community is built.
There are always
hundreds of
infrastructure needs
all over Calgary, so
constant monitoring
with a high-level
TOGETHER, INDUSTRY AND THE CITY DEVELOPED view is critical to
METHODOLOGY TO MONITOR OUR SUBURBAN LOT
SUPPLY ON A MONTHLY BASIS TO HELP INFORM
determine construction
INFRASTRUCTURE SEQUENCING. sequencing.
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 GROWTH BRINGS
THE ISSUES SUSTAINABILITY TO

WHATS NOT
OUR COMMUNITIES

HIGHER ACTIVITY

WORKING?
FOR RESIDENTS

MORE NEW
INVESTMENT

The current cost recovery model isnt sustainable.

WIDER RANGE OF
NEARBY JOBS
The funding model for Calgarys infrastructure is The City through levies, each new home built
complete cost recovery for connecting existing adds revenue to The City through property tax
infrastructure to new communities, so any initial and utility rate payments.
investment from The City is eventually paid back BETTER SHOPPING
However, cost recovery is not the only goal to AND ENTERTAINMENT
for use on future projects. The first step in finding
consider. Sometimes, the benefits of growth
revenue for connnecting costs is the collection of
throughout Calgary are not necessarily directly tied
developers levies. After that, property taxes and
to how quickly The Citys infrastructure investment
utility rates help pay back much of the investment.
can be recovered. IMPROVED
INFRASTRUCTURE
New growth pays for itself. Levies paid by greenfield AND AMENITIES

developers also help to fund projects that involve

upgrading existing infrastructure. How? Along
THERE IS AN EXPECTED PUBLIC INVESTMENT OF
with high and consistent direct contributions to $22 BILLION TO PROVIDE INFRASTRUCTURE AND DAILY
SERVICES TO CALGARIANS BETWEEN 2015 AND 2018. INCREASED
PROPERTY
VALUES
Learn more about The City of Calgary Action Plan
at smartergrowth.ca Adrian Shellard
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 WHATS NEXT

WHATS
Levies Land Supply Process
Create a new Off-Site Levy Bylaw (related to Test scenarios to ensure a
developers levies) for 2016, and examine the structure transparent and balanced land
for redevelopment levies. Currently, the cost of supply process.

BEING DONE?
infrastructure upgrades for redevelopment projects
is inconsistent, determined one project at a time.

Regional Coordination Build Calgary Legislative Framework

Finding a sustainable funding model is urgent. explores all avenues
to ensure The City of Provide ongoing input into

Together, industry and The City are actively pursuing new solutions to ease Calgary maximizes the review of the Municipal

the strain of infrastructure investment as Calgary grows. In 2014, The City of infrastructure Government Act, to be finalized

Calgary established Build Calgary, a collaborative initiative between multiple
Consider partnerships within
City business units and external stakeholders, including developers and builders.
the entire metropolitan
Build Calgary has a critical mission to prioritize and meet the ever-changing region to ensure efficient
demands of growth within our city by analyzing ideas for the most effective and and sustainable infrastructure.
efficient funding model.
Build Calgary works
with partners and a
transparent approach.
funding efficiencies. in 2016.
Commercial, Industrial
and Transit-Oriented
Development
Emphasize development
opportunities that generate
non-residential tax.

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 MORE OPTIONS

WHAT
PUBLIC-PRIVATE LOcAL IMPROVEMENT TAX
PARTNERSHIPS A local improvement tax may appear on one
In a public-private communitys property tax bills to help pay for
partnership, the improvements to specific things like curbs

ELSE?
infrastructure and back lanes in that community.
assets remain
publicly owned, but the private
sector takes on responsibility SPECIAL TAX OPTION

Looking elsewhere for funding inspiration.

for the risks associated with
designing, building and Possible A community can request an

In cities throughout the world, there are other models to consider that could help
maintaining the assets. The
new revenue enhancement from The City, such
as enhanced landscaping, and

streams
results can be innovative
then pay for it as a community.
create long-term predictable funding for efficient and effective investment decisions. solutions, delivered on time
and on budget.
Its always a good idea to ask citizens to help make important decisions around
infrastructure. Recently, the Calgary Chamber convened a Citizens Commission
on Municipal Infrastructure. In February 2016, they, along with input from a public
roundtable, will deliver recommendations for how The City should address its PERMANENT AREA
infrastructure deficit. CONTRIBUTIONS MUNICIPAL-ISSUED BOND
These contributions are inter- The purchase of a municipal
Its an exciting time to be in a fast-growing city and, with new thinking and
developer financing and cost bond is akin to lending money
collaboration, we can respond to our fluctuating pace of population growth and
sharing of common infrastructure to The City; you earn interest
build a great livable city.
systems within a specific area. on your investment.

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WE NEED SMARTER
GROWTH FOR AN EVEN
SMARTER CITY
Get engaged and explore more planning
and development issues at smartergrowth.ca
 GLOSSARY

DEMYSTIFYING LEVIES VS. DIRECT PAYMENTS:

Levies are fees that greenfield developers
on planning and development, governance and
administration, assessments and taxation. It guides

TERMS
must pay to fund the cost of new growth, while direct how we pay for our roads, where we build our
payments are imposed on redevelopers to pay for schools and how we develop healthy communities
local infrastructure upgrades. for the future.

Levies are based on the principle that development

Know the lingo and join the conversation.
GREENFIELD VS.
REDEVELOPMENT:
Greenfield refers to brand-new development
on previously empty and unserviced land, while
redevelopment refers to new construction in a
developed area.
ON-SITE VS. OFF-SITE:
Everything within the boundaries of a new community
is considered to be on-site. As soon as you look
outside the gates of a new community, thats off-site.
related to growth should pay for itself and not
THE DEVELOPER-FUNDED
impose a burden on existing residents.
INFRASTRUCTURE
STABILIZATION FUND (OVERSIZE
FUND) reimburses land developers for providing
THE MASTER DEVELOPMENT
infrastructure for roads, parks and utilities in excess
AGREEMENT (MDA) details
of what is normally required for the project.
developers obligations to provide public
infrastructure and make financial contributions in
the form of fees and levies for the development
THE FRONT-ENDING
of new subdivisions.
AGREEMENTS mean that the
developer agrees to finance a required infrastructure
project by paying interest charges on loans, which is
THE MUNICIPAL GOVERNMENT
then paid back to them by The City. This way, projects
ACT (MGA), which is determined by
can proceed where capital budget priorities would not
the provincial government, helps to define how
have otherwise allowed.
our municipalities function. It includes policies

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 GET INVOLVED
BE PART OF AN
UPCOMING PUBLICATIONS
DEVELOPMENT PROCESS
FROM DIRT
TO DOOR
EXCITING FUTURE
Stay informed and lend your voice to the dialogue.
Creating dynamic communities
where Calgarians can thrive is
a complex process. You may
see a great house in a great
neighbourhood, but what dont
As infrastructure funding becomes increasingly urgent, The City, industry and you see? Discover what it really
community members are working together to determine a comprehensive, smart took to catch your eye.
plan and a process for efficiency.
Were collaborating to promote an environment where the right investments in PREVIOUS PUBLICATIONS
infrastructure will foster more innovation and choice, better neighbourhood amenities, AN OVERVIEW
mobility options and a thriving city.
HOW TO BUILD
Stay informed on issues facing the Calgary Region. Get to know your elected A GREAT CITY
officials, talk to your friends, and attend open forums and public consultations
Calgary is one of the fastest-
its your city to build.
growing cities in North America.
The Smarter Growth Initiative is here to provide balanced information on issues and That can be both good and bad.
planning trends in the Calgary Region. Join the conversation at smartergrowth.ca A smart approach to growth will
ensure that we continue to be
and be part of a bigger, smarter tomorrow.
one of the most livable cities in
VISIT US AT SMARTERGROWTH.CA the world.
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LAND SUPPLY
DRIVEN BY
DEMAND
More people means more
housing. How much more? And
where? Researchers are working
full time to make forecasts and
create a land supply strategy.
Heres what they know. Find out
what theyre saying.
MARKET DEMAND
THE CHANGING
FACE OF CALGARY
Our population is not only growing
its also changing. Naturally, not
everybody wants the same thing
when it comes to housing. Learn
how demographics are promoting
versatility in Calgarys dwellings,
and what it means to stay affordable.
COMPLETE COMMUNITIES
LOVE WHERE
YOU LIVE
Intelligent urbanization leads
to better health, stronger
economies, more safety, less
pollution, and improved social
and family ties. Learn more about
complete communities and how
they are catching on in Calgary.
REDEVELOPMENT
RAISING A
SMART CITY
Redevelopment is part of a citys
evolution, even in a young city
like ours. Take a good look from all
angles up, out and underground.
With some good thinking,
well make Calgary a model
of intelligent urbanism.
Order publications at smartergrowth.ca
RESOURCES

Action Plan 2015 2018, The City of Calgary, 2015

Canadas Infrastructure Gap, Canadian Centre for Policy Alternatives, 2013
City Examining Levies For Inner-City Developers, Calgary Herald, 2015
Continuing the Conversation about Homes, Communities and Canadians,
Calgary Home Builders Association, 2015
Developer Levy Fails to Deliver, Council Told To Expect $14M Shortfall This Year, Calgary Herald, 2015
Developed Areas Growth and Change, The City of Calgary, 2014
Development Charges Across Canada: An Underutilized Growth Management Tool?,
Institute on Municipal Finance and Government, University of Toronto, 2012
Financing Growth Study, City of Saskatoon, 2015
Government Charges and Fees on New Homes in the Greater Toronto Area, Altus Group, 2013 VISIT SMARTERGROWTH.CA AND BE PART
Infrastructure Status Report, The City of Calgary, 2013 OF A BIGGER, SMARTER TOMORROW.
Innovative Infrastructure Financing Mechanisms for Smart Growth, Smart Growth BC, 2007
Public Infrastructure Underinvestment: The Risk to Canadas Economic Growth, RiskAnalytica, 2010
Suburban Residential Growth 2015 2019, City of Calgary, 2015
The Road To Jobs And Growth: Solving Canadas Infrastructure Challenge,
The Federation of Canadian Municipalities, 2012
What The Number 45 Means To Residential Construction, Daily Commercial News, 2015

THE SMARTER GROWTH INITIATIVE IS A COLLABORATION BETWEEN

THE URBAN DEVELOPMENT INSTITUTE CALGARY AND
THE CANADIAN HOME BUILDERS ASSOCIATION CALGARY REGION.

CONNECT |

Copyright 2015 by the Smarter Growth Initiative

Permission is granted to the public to reproduce or disseminate this report, in part or in whole, free of charge, in any format or medium
without requiring specific permission. Any errors or omissions in this report are the responsibility of the Smarter Growth Initiative.
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A Smarter Growth Initiative Publication
smartergrowth.ca