The city is reviewing what it charges developers for infrastructure in new construction in the hopes of making St. Albert more attractive to the development industry, but some proposed changes could involve a fundamental shift in how the city funds utilities.
Administration has been working with the Urban Development Institute (UDI) since late last year to address industry concerns over how and what St. Albert charges for new development. The city has long held the position new growth should pay for itself, but the up-front costs might be scaring developers away.
Todd Wyman, the city's former director of engineering, who was seconded to the growth initiative team to help support development from a planning and engineering perspective, said the development industry is increasingly concerned about costs.
"What's happened with the development industry, upon living through the last couple of years and just trying to move forward, is they've realized it's a bit tougher to manage cash flows and they are having troubles with some of our issues around offsite levies," Wyman said.
In 2009 city council approved an offsite levies bylaw that required developers to pay 95 per cent of costs for water reservoirs, pumphouses and other growth infrastructure. Taxpayers would be on the hook for the remaining five per cent.
But UDI has apparently taken it upon itself to offer up a vision of what St. Albert's offsite levies should look like. It submitted its approach to the city in a letter that was included in the standing committee on finance's public agenda on Monday. The largest change would be removing the requirement of developers to pay for water infrastructure.
"What they've expressed to me is that in other jurisdictions, the water utility will front the costs of anything done within that utility, whether it's development or not," Wyman said.
Adopting such an approach would require a significant change in how the city funds its utilities. UDI maintains, according to its letter, municipalities can get lower rates and more favourable terms if they borrow to build water infrastructure than a homeowner, upon whom the costs of the levies are shifted, can get in a mortgage.
The city's utilities do not fund construction from debt, incorporating instead a 100-year utility model that sees the city bank money for various utility infrastructure projects based on their expected life cycles. That model is up for review this year. A motion during budget deliberations last year to explore a hybrid model of financing utilities was voted down.
"We haven't taken any debt in utilities," Wyman said.
But UDI is not willing to explain any of its suggestions. When reached by phone Thursday, executive director Rick Preston insisted all of its communication with the city were supposed to be confidential.
"That's private between UDI and administration. I don't know how the hell you got that letter," Preston said. "You'll have to direct all your questions to [the city]."
Tight deadline
According to Wyman, UDI is also insisting the city review its offsite levies bylaw and make any changes by April 1. Wyman said that timeframe is unlikely, given council will have to review any proposed changes, and the city will have to solicit feedback from the development community as well as the general public.
"In a perfect world you could script it all up but they are not considering those other processes," Wyman said. "I'd like to be done by summer but we're only in direct control of certain phases. Once it goes to the public realm, everyone can have their say."
