Council re-examining project costs
A oft-debated, but neverchanged development subsidy program at city hall may not be needed once a general review of “off site” levies is completed this fall, a city hall consultant told council on Monday night.
That might be possible as new costs and timing of road, sewer and water projects are folded into the cost recovery formula — the implication being that new figures could drive land servicing fees down to make up the difference.
That is a decade after a then-blanket 40 per cent city hall contribution to cover extending infrastructure to new communities after a heated confrontation with the building community in 2012. Currently, Medicine Hat offers 90 per cent “municipal assist” in priority redevelopment areas and 30 per cent everywhere else.
The entire proceeds are meant to pay for a project list worth $400 million over the next 25 years, but is seeing its first major overhaul in five years.
The public portion began last week through talks with business and development groups, council heard during a presentation by Greg Weiss, of the Corvus Group that helps Alberta cities develop and update cost recovery and taxation programs.
He said that in 2012, Medicine Hat became the “only city in the province” to offer a blanket discount on its rates when an overall was completed, but the land development community protested the hikes.
“It resulted in very expensive rates, and the development community was unsure about that accuracy, so to make it more reasonable the municipal assist format was adopted,” said Weiss. “Medicine Hat is the only city in the province I’m aware of that adopted such a scheme.
“I anticipate that the (new) levy rates — they are not finalized and there are many discussions to be had — will ultimately be very similar to what they were paying with the assist.
“I’m hopeful that you will be able to remove that assist with more transparent costs.”
The statement came in response to questioning by Couns. Darren Hirsch and Robert Dumanowski, who both served on council prior to the 2012 review that was predicated by staff on the need to recover more cost of development.
Since then, each update has been posed as a question of whether removing the assist might hurt building activity.
“I’m not suggesting that we’re not prodevelopment — we certainly are — but our numbers have to reflect reality,” said Dumanowski.
The city’s planning department is overseeing the review and last week presented initial finding to groups like the Chamber of Commerce, BILD (the former Canadian HomeBuilders Association), the Urban Development Institute, and private sector developers and large landowners.
A draft shown to council suggests reducing the number of zones that have unique calculations affecting the common-benefit portion of the fee that ascribes a certain portion of new roadway, sewer main or water plant to the general community.
In the case of arterial roads, that is an immediate 79 per cent charged to tax-supported city coffers before the assist is applied to the remaining portion.
Transportation projects required by development growth in the new forecast number 23, totalling $123 million, including a number of projects costing $60 million that were built ahead of time, and the cost of which is still being recovered, are further stages of built out.
An additional $123 million in construction will be needed over the next 25 years, including the Southwest Connector route ($32 million) in 2032. Another $33 million combined for three upgrades and South Boundary Road, Box Springs Drive and Rotary Centennial Drive (23rd Street NW) after at least 2027.
The report also outlines $131 million in sanitary sewer extensions and upsizing projects over 25 years. Potable water projects total $66 million and storm sewer work at $22 million.
Since 2017, cities have also had the legal ability to charge new community developers on a per hectare basis for new police and fire stations, recreations facilities and libraries, but that is not the local practice.