The potential impact of federal parties’ pledges to reduce development fees on Calgary

Both the Liberals and Conservatives have proposed policies to incentivize municipalities to cut development fees to increase housing construction. The Conservatives plan to reimburse cities and towns half of every dollar they cut in development levies, while the Liberals have proposed cutting municipal development charges in half for a period of five years and helping municipalities make up the lost revenue. However, Calgary’s mayor, Jyoti Gondek, warns that cutting development fees could have a negative impact on the city’s ability to fund necessary infrastructure for new housing developments. Calgary collected $240 million in development fees in 2024, equivalent to a 10 per cent property tax increase if the fees were eliminated completely.

In Calgary, the development fee, also known as an off-site levy, is used to pay for upfront infrastructure costs for new communities on the outskirts. This includes water, sewage, road connections, stormwater management, and community amenities like recreation centres. As Calgary’s population has grown significantly in recent years, the importance of off-site levies in meeting the needs of the growing city cannot be understated. However, the fee structure becomes more complicated in established neighbourhoods where infrastructure upgrades are needed to accommodate new growth from redevelopment. Fees increase for multi-residential developments, adding to costs for developers and future residents.

The Calgary Inner City Builders Association (CICBA) has been working to explore ways to reduce development fees to make housing construction less costly. Developers, city administration, and city council are collaborating to find solutions to the issue of high fees. While many are open to reforms in the fee structure, eliminating certain fees, particularly those related to essential infrastructure like water, may not be feasible. It is crucial to find a balance between reducing costs for developers and ensuring the necessary funding for infrastructure to support new housing developments.

The outcome of the upcoming election will likely impact the future of development fees and who will be responsible for funding essential infrastructure for housing construction. Both the Conservatives and Liberals have expressed a commitment to increasing housing supply through various policy proposals, but the challenge lies in finding a sustainable way to reduce fees without compromising the ability of municipalities to provide necessary infrastructure. Gondek emphasizes the importance of consulting with local leaders and businesses to develop effective strategies for increasing housing construction without burdening municipalities with the costs of eliminating development fees entirely.

Overall, the debate over development fees in Calgary highlights the complex interplay between housing construction, infrastructure funding, and municipal finances. While reducing fees can incentivize more housing development, policymakers must consider the long-term implications and potential consequences of such measures on cities like Calgary. Collaboration between developers, city officials, and policymakers is essential to finding a balanced approach that supports housing construction while ensuring adequate funding for infrastructure to accommodate growth in Canadian cities.