New suburban development is an investment in Calgary’s future
Residential property taxes in Calgary will increase by 3.45 percent in 2019 and then three percent per year from 2020 to 2022.
The increases reflect a shift of some of the overall property tax burden from commercial to residential because of depressed property values in the downtown core, where the office buildings are standing about 27 percent empty.
The increases were approved after a week of deliberations, which included hundreds of written submissions from the public and 73 presentations from the public at the Nov. 26 public hearing at city council.
When the increases were announced, it was noted by some that a lot of the increases were the result of council giving the approval to 14 new communities to be developed over the next 10 to 20 years.
Council gave the go-ahead for the communities last summer, says Guy Huntingford, CEO of BILD Calgary Region, which represents the home building and land development industries in the city and area.
“In July of this year, Calgary City Council amended and then approved a new community growth strategy, effectively moving forward on 14 new communities. The capital investment into new infrastructure for these communities was identified as a shared responsibility between the building industry and the City, with Council also directing administration to ensure developers pick up their proportionate share of the cost through the offsite levy bylaw,” says Huntingford.
The offsite levy bylaw, formalized in January 2016, saw developers pick up the cost of infrastructure required to connect city services — water, waste water, etc. to infrastructure inside new communities. The offsite levy costs were always a thorn in the side of Mayor Naheed Nenshi, but once the levy was negotiated by the industry and the city, the thorn was removed.
To suggest the approval of the 14 new communities was a major part of the residential property tax increase is incorrect, says Huntingford.
“We feel this is an inaccurate statement,” he says. “The property tax increase to facilitate the City’s contribution to the new communities was identified as 0.75 percent for 2019, which accounts for just over one-fifth of the increase. Mathematically, this is far from being a major cause of next year’s rate increase.”
When the going gets tough, the tough keep going.
“In this economic climate and political landscape, Calgary is enduring an unemployment rate of 8.2 percent while a downtown vacancy rate of 27.7 percent continues to drag our city’s reputation as a hub of innovation and centre of commerce to unfamiliar depths,” he says. “Since our Federal Courts have ruled against the Trans Mountain pipeline expansion, the provincial economy has lost over $6 billion and countless jobs — all while taxation rates from all three levels of government continue to climb.
“BILD Calgary Region’s vision is to create the most livable communities in the world and despite the hurdles identified above, our members and our industry believe this is still possible when Calgary invests in itself.”
The new homes and land development industries are major contributors to Calgary’s economy.
“In the Calgary Metropolitan Area, the building industry accounts for 12.1 percent of all business, which is second only to the professional, scientific and tech service sector,” says Huntingford. “According to Statistics Canada and the Canada Mortgage and Housing Corporation, our local industry ranked fifth in the country with a value of $651 million in residential building permits and third overall when it came to non-residential construction permits with a $952-million evaluation.
“These permits were then taken directly back to Calgarians as they resulted in $3.2 billion in wages for 46,935 jobs. All in, that’s a $7.2-billion investment value for Calgarians and their families.”
The cost of suburban growth isn’t a tax increase, it’s an investment, says Huntingford.
“It’s jobs, it’s choice, it’s affordability and it’s financial security,” he says. “The approval of these 14 new communities is more than a watershed moment for the building industry, it’s a boon for our city of today and tomorrow. It represents a robust and carefully considered growth strategy, which allows growth to pay for itself. Building complete, smart communities means building amenities as much as a home.
“In our eyes, the terms amenity and infrastructure go beyond pipes, roads and power lines to include civic investment and job creation. With these budget discussions, our industry and our City have an opportunity to come together and invest in Calgary and Calgarians.”
“Calgary is in a period of economic recovery and though challenges remain, we continue to focus on improving quality of life for Calgarians for the next four years and beyond,” said Carla Male, chief financial officer at the City when the budget was approved. “This budget is focused on finding efficiencies within our existing means, and prioritizing what the public and Council have told us is important to them, to make some additional investments that deliver on these priorities and ensure high-quality service to Calgarians.”
The addition of 14 new communities is an investment on several levels.
Having sufficient land serviced and ready for new homes will keep Calgary’s prices from skyrocketing out of control, as has happened in the Greater Toronto and Vancouver Areas, each of which suffers from a lack of new land supply.
And, all those new homes in the new communities will contribute to city coffers by way of property taxes.
At a rate to be determined.