Developers paying less for cost of city growth than council thought

Developers are not covering as much of the cost of growth as city politicians thought, according to numbers revealed on Monday that the mayor says are shocking.

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The city has raised off-site levies to cover 50 per cent of the cost of providing services to new communities.

But administrators told council that threshold is not being met yet. It is supposed to be reached over time, not necessarily every single year, they added. Currently, the higher levies are bringing in less than half of the costs of bringing water/wastewater services to new areas.

Council learned that for 2015, there will be a $14-million shortfall — and it's not clear how that will be covered.

Mayor Naheed Nenshi said the numbers show the current financial system appears to be broken.

Council can adjust utility rates each year as it makes changes to its annual budget.

But developer levies are set by council when it approves a five-year master agreement. The current agreement expires at the end of 2015.

Coun. Druh Farrell describes the current system as a bit of a mess. She says council doubled developer fees in 2011 in hopes of getting them to cover 50 per cent of the utility costs of new development.

The plan is to move those fees eventually to 100 per cent, something the city is committed to make happen, said Nenshi.

"The question becomes how do we do that? Do we just have the developers pay way more up front? Do we figure out new ways to partner with developers to build the infrastructure and how do we manage the money internally?" said Nenshi.

The current bill for upgrades to the Bonnybrook Wastewater Treatment plant is estimated to be $690 million. 

Administrators are going to work on possible solutions and report back to council later this year.