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Both the Liberal and Conservative parties are advocating for a reduction in development fees imposed by municipalities as a strategy to encourage housing construction. However, Calgary’s mayor, Jyoti Gondek, warns that this approach could lead to adverse consequences for housing development in the city.
Development fees are essential contributions made by builders to local governments, aimed at financing critical infrastructure such as roads, sewage systems, and electrical grids.
The Conservatives have proposed incentivizing municipalities to lower these fees, pledging to reimburse cities and towns for half of the revenue they forfeit from development levies. Meanwhile, the Liberals have suggested a plan to halve municipal development charges for a five-year period, while also providing financial support to help offset the lost income for municipalities.
Mayor Gondek, however, emphasizes that these proposed changes could severely impact Calgary, which has been a leader in housing development throughout the past year. “If you think municipalities can take on the burden of you cutting out development fees completely, we can’t,” she stated. She further added that the entire infrastructure funding system would be jeopardized, leading to a significant stall in new housing projects.
In her comments, Gondek pointed out that the City of Calgary generated $240 million from development fees in 2024 alone, which would equate to an approximate 10% increase in property taxes if such fees were eliminated outright.
“I appreciate how the federal parties are attempting to address housing shortages,” Gondek noted. “However, it’s crucial for them to engage with local businesses and community leaders to understand the practical aspects of implementation.” In Calgary, these development fees are specifically referred to as off-site levies, which are especially relevant for new communities being established on the city’s outskirts.
The city initially covers the up-front costs for essential infrastructure—including water lines, sewage systems, road connections, and stormwater management—recovering those costs over time through the establishment of levies on developers.
City officials have asserted that these levies contribute to vital community amenities that enhance neighborhood livability, such as recreation centers. “With Calgary’s population having increased by approximately 192,000 people within the last two years, the relevance of off-site levies becomes even more pronounced,” stated a city spokesperson. “These funds are essential for addressing the needs of our expanding city.”
However, the fee structure becomes more complex in established neighborhoods where infrastructure is already present but requires upgrades to support new developments. Fees tend to be steeper for multi-residential projects—which the city classifies as buildings containing more than two units—creating further financial challenges for builders as noted by the Calgary Inner City Builders Association (CICBA).
Historically, the city has funded a smaller portion of infrastructure costs in older areas, leaving developers and ultimately residents to bear the additional financial burden. “It doesn’t matter if you’re buying the home or renting it; someone eventually has to pay for it,” stated Shameer Gaidhar, a developer and the chair of the CICBA. “Those costs will inevitably pass down to the end user.”
Gaidhar confirmed that the association is collaborating with city officials, other developers, and city council to examine potential ways to mitigate these fees to facilitate affordable housing development. Nevertheless, he underscored that while reforming the fee structure is essential, many fees—like those linked to water infrastructure—are non-negotiable. “Everyone has expressed a willingness to work together, but these costs cannot simply be eliminated,” he explained.
As the election results loom on the horizon, industry stakeholders remain focused on the outcomes, particularly regarding the fate of development fees and the implications for future housing projects in Calgary.
Source
globalnews.ca