Although Jim Pennell understands the cost of developing land, it doesn’t mean he sees the cost of offsite levies as an enjoyable part of the business.
“It’s a necessary evil,” said Pennell, a member of the Urban Development Institute (UDI) and part of Genstar’s development team. “Anytime there is a cost put against anything, it’s always passed on to consumers.”
St. Albert city council has asked administration to take a closer look at adding a public art contribution fee on the list of costs for developers who build in the city. In early March, the city also passed an increase in various offsite levies used to develop infrastructure and utility access in new areas.
It’s not the first time the city has asked for contributions towards aspects of city life. For the past 30 years, developers have contributed to the city’s recreation fund, which city manager Bill Holtby said was not mandatory according to the Municipal Government Act, but is a requirement for receiving a development permit for new areas of the city.
“It’s always been a base philosophy that new developments should pay for themselves,” he said. “All of the existing residents … would have paid offsite levies on their property at the time.”
He said the city is currently working with a handful of members from UDI, which represents developers within the Capital region, to work on the recreational contribution review and will look at the proposed public art contribution.
For Patrick Shaver, chair of the UDI board, the levies in St. Albert are starting to challenge the marketability of properties in the area because of their high cost.
“Outside of some areas in Edmonton, [the levies] are the highest in the area,” he said. “What’s going to be interesting is that, with the cost of levies, the cost of property will go up.”
Shaver said he and other developers expressed their concerns when the offsite levies were increased. He added he was unsure about the potential public art contribution fee until he saw a plan for it while pointing out other cities, such as Edmonton, were also looking at implementing the fee.
“Time will tell if the market will absorb the cost of development,” Shaver said. “That will determine the rate of development in St. Albert.”
Pennell said he believed the large increase in offsite levies would affect the real estate market in St. Albert. But with the increase, he is concerned about the marketability of developments in the city, saying the affordability of the units could eventually outweigh the desire to buy.
“It will be the marketplace that will tell us what happens,” he said. “At some point, it will have a negative effect. We just don’t know when.”
Holtby said he could understand the developer’s concerns about affordability and risking market demand with the increase in offsite levies and contributions. However, he added city council made it clear when they accepted the increase in offsite levies that developers are responsible for the costs of creating a new development.
