How federal parties’ promises to cut development fees could impact Calgary – Calgary

Having municipalities cut development fees is a policy plank shared by both the Liberals and Conservatives to get more housing built, but Calgary’s mayor warns the move could do the opposite.

Development fees are paid to municipalities by builders to help fund infrastructure like roads, sewers and electricity.

If elected, the Conservatives announced the party would incentivize municipalities to cut those fees to make homes less costly to build, and reimburse cities and towns half of every dollar they cut in development levies.

The Liberals, meanwhile, announced a proposal to cut municipal development charges in half for a period of five years, while helping municipalities make up the lost revenue.

However, Mayor Jyoti Gondek said the impact of such policies would be felt deeply in Calgary, which led the nation in housing development last year.

“If you think municipalities can take on the burden of you cutting out development fees completely, we can’t,” Gondek told Global News.

“There will be no new housing built because municipalities like Calgary do not have the money to cover the cost of all the infrastructure.”

According to Gondek, the City of Calgary collected $240 million in development fees in 2024, which is the equivalent to an additional 10 per cent property tax increase if the fees are cut altogether.

“I appreciate how the federal parties are looking at how we build more homes,” Gondek said. “They need to understand that you’ve got to talk to local business and talk to local leaders about how we actually do that.”

In Calgary, the development fee is known as an off-site levy for new communities on the outskirts.

The city pays the upfront costs for the infrastructure like water, sewage, road connections and stormwater management, and are paid back by developers through the levies.

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The levy also covers amenities that make “communities a vibrant place to live,” like community recreation centres, according to city officials.

“Calgary’s population has grown by approximately 192,000 over the last two years which underscores the importance of off-site levies,” a city spokesperson said in a statement.

“These funds help to meet the needs of our growing city.”

But the fee structure is more complicated in established neighbourhoods because the infrastructure is already in place, and needs to be upgraded to accommodate the new growth from redevelopment.

Those fees increase for multi-residential developments, which the city considers to be any build with more than two units, according to the Calgary Inner City Builders Association (CICBA).

Traditionally, the city had paid a lesser share of infrastructure costs in established communities, which add to the costs for the developer and the home’s future residents.

“It doesn’t matter if you’re buying the home, it doesn’t matter if you’re renting the home, but someone in the end has to pay for it,” said Shameer Gaidhar, a developer and chair of CICBA.

“Those will trickle down ultimately to the end user.”

Gaidhar said the association has been working with city administration, city council and other developers to explore ways to reduce the fees to make homes less costly to build.

However, Gaidhar said the hope is for reforms to the fee structure as many of the fees are “not optional” like water infrastructure.

“All of them have said they are more than willing to work with us to see how we can cut those costs down but they can’t just be eliminated”, he told Global News.

Many in the industry are now waiting for Monday’s election results to determine the future of the fees, and who would be on the hook if they’re eliminated.

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