Developer Cost Items in New Communities

[jawagord]

I thought this article would be useful the next time the debate comes up on what the developer/home owner pays for in the costs of suburban development. From first of 2 articles.

Developers foot the bill for building their communities. On top of that, they also pay levies for infrastructure impacts at the regional or citywide level.

At the community scale, developers pay for:

-New roads -- majors, collectors, local roads and lanes. This includes curbs, gutters, sidewalks, pathways, boulevards, medians, street lights and signs.

-Water and sewer pipes and connections -- those that run in the street, as well as those that run to and from your house.

-Stormwater infrastructure -- the catch basins, pipes, ponds and pumping stations that serve to clean, store and transfer stormwater run-off

-Electrical feeder mains that service communities

-Parks and school sites -- this includes gifting the lands as well as landscaping the parks with grass, trees, shrubs, playground equipment, benches, trash receptacles, lighting, irrigation and fencing

-Environmentally sensitive areas are also given up and protected in addition to park space. This can include protection and enhancement of wetlands.

-Trees -- street trees, boulevard trees and lot trees.

-Land for community associations.

-Property taxes, as well as planning, engineering and inspection, and regulatory fees.

-Maintenance -- developers typically maintain these items for periods of one to three years after completion. At the close of their maintenance period, this infrastructure is given to the city (not sold to the city, as some believe).

-Special amenities for master-planned communities will also include features like water parks, tennis courts, hockey rinks, lakes, basketball courts, volleyball courts, additional play and open spaces, gardens, entrance features, resident association facilities, gyms and water features. Many of these are paid for, owned and maintained within the communities by developers and transferred to resident associations.

The items listed are ones that are fully financed, constructed and paid for by developers.

Of course, while this might be a very extensive list of what is required within a local community, what about impacts that new communities have on existing roads, pipes and infrastructure outside of that community?

What about new recreation centres, libraries, fire halls, and transit needed to service growing areas?

The additional burden on infrastructure outside of new communities gets paid for through development levies.

The recent media focus has been almost exclusively on the increase of these levies, which fund regional or citywide infrastructure improvements.

These costs are established between the city and the development industry -- and paid to the city, which manages these funds.

A catchment or service area is defined by the city for the infrastructure, typically extending beyond the boundary of any one particular community.

The city determines the cost of that service or amenity and charges it back to the developer on a per hectare basis.

What is included in these levies?

- Transportation infrastructure (including land costs if needed).

- Traffic signs and road markings

- Transit (buses).

- Trunk lines for stormwater.

- Regional stormwater treatment facilities.

- District (regional) and community parks.

- Area libraries.

- Regional recreation centres.

- EMS stations.

- Police stations.

- Fire stations.

While school sites are provided by developers, the schools, themselves, are funded by the province, as is the city's LRT.

So, what does the city (in other words, taxpayers) pay for?

The city pays to service and maintain the assets it owns. It takes on the maintenance and life cycle costs of infrastructure, delivers services to its citizens, and builds assets that benefits the city, in parts or as a whole.

more:
http://www.calgaryherald.com/opinion...megadrop_story

[Riise]

There are actually better and more accurate documents available from the City. Documents such as:

The Current List of Assessment Rates
Financing Municipal Infrastructure: Summary Report
Financing Municipal Infrastructure: Sharing the Capital Costs and Financial Risk of Residential Growth in Calgary


Also, there are more accurate and well-researched articles available:

Originally Posted by FFWD Weekly

City-developers Feuding Over Infrastructure Costs
Mayor scrambling to salvage legacy, says developer rep

15 July 2010
FFWD Weekly
Trevor Scott Howell

After years of explosive growth in population, land development and debt in Calgary, city council is about to open a can of worms – its $1-billion debate about who should pay for water and sewer infrastructure in new communities.

On one side is the mayor, who, after giving property developers a sweet deal for years, is now demanding that developers carry their weight by paying for infrastructure. On the other side are developers who want the cost spread over several years. Caught in the middle are taxpayers who have for nearly a decade paid for suburban sprawl — and now, new homebuyers may get dinged $10,000 extra for their new homes.

Complete Article

[hulkrogan]

I brought this up with my friend who works in land development as a consulting engineer. It's kind of interesting to see the other side of the coin. I'll post my response below as this will be a giant post:

I just prepared a draft report for the City (they require a revenue vs. construction cost analysis for each new subdivision).



Over a five year period the City will see returns of about $10.8M. About $2.1M in taxes, about $1.5 in utilities and $7.2M in acreage assessments (land development equivalent of land royalties in Oil and Gas). Acreage assessments are a one time payment. The cost of the water and sewer infrastructure the City is building to service the land should be between $3 and $3.5M. As far as roads go, the City pays for Expressways, anything lower is the cost of the developer. Basically, if it has interchanges or more than two lanes in each direction, the City pays for it (mostly provincial government actually), if it has traffic lights and two lanes or less in each direction, the developer pays for it.



The City operates water and sewer as a utility, so they try to match rates to their operation costs as much as possible. So the basic argument is that the $2.1M they’d get in taxes over 5 years (or $5 or $6M over 10 years won’t cover the cost of paying for the infrastructure). Part of the $7.2M paid in acreage assessments used to be dedicated for water and sewer, but that changed in the last development agreement.



A few problems:



the City doesn’t build their infrastructure right away. They have to get developers to front the cost of everything and pay them back. Repayment terms are negotiated for each separate contract. Developers don’t get any interest on the repayments from the City (why? Because in addition to be responsible for infrastructure, the City is also the approval agency and won’t let the development proceed without favorable repayment terms). The City does have to pay interest on any money they borrow to pay developers back.



The City pays millions back to developers in what are called “oversize costs”. It’s a bit a of a piss off if you know what it is. The City has basically decided that regular engineering principles aren’t good enough and require all the infrastructure being built to be built to a bigger size. They have to repay the developers for the difference. Oversizing utilities might be a good idea for down the road if we densify, but its basically fronting a cost for improvements that would happen decades in the future. In general, oversizing won’t help a lot in the new subdivisions anyways (they’ll have to upsize the inner City long before the oversizes in new subdivisions will be useful, plus newer subdivisions are already built to a higher standard than they used to be). I think the City would be way better off not requiring oversizing in new developments and saving the money to actually pay for what they are apparently losing on utility construction (which is as much a matter of how the City labels the money as anything). The oversize payment is one of the biggest reasons for the apparent funding shortfall.



Biggest problem is how the acreage assessments are labeled. The City used to have separate categories for transportation and water and sewer. They wanted to do catch up work on transportation projects, so the city changed the assessments and moved all the money labeled for water and sewer into the transportation category. The plan was to catch up on transportation, re-allocate whatever was left for water and sewer and make up the difference in utility rates. Only problem was that once money was labeled as “transportation” guess what it gets used for…. So the City goes on a transportation spending spree, mismanages projects and goes over budget, but because the money is labeled as transportation, they don’t look too bad. So now there is an apparent shortfall in funding water and sewer, not because of water and sewer construction, but because of the change in naming convention on an agreement and a big over budget spending spree (the transportation spending was only supposed to be until they were caught up). Other issue is that, while raising utility rates to pay for infrastructure sounds good when you are in dire straits for new road infrastructure, it turns out that raising utility rates are harder to do in reality.



Here’s a really big piss about transportation…. Often when the traffic studies suggest an expressway is required, the City will direct the developer to build smaller roads that will immediately be over capacity. I think it’s because they need the money to upgrade older areas… but it’s a policy that will just cause the problem to reappear down the road.



I don’t want to sound too Nexen here, and I’m trying to keep a level head about all of this. Of course I have interests that line up with the development industry, but I spent about an hour yesterday going through Nenshi’s development platforms and he’s so misinformed (or maybe just so academic) that it hurts. Actually I finished looking at his things thinking he’s either completely misguided, or he’s already the best politician of the bunch. I kinda like some of his other ideas, but if he uses the same spin that has been put on the development issues, I’m a little scared.



I actually went to bed borderline angry last night. Definitely voting for Ric now.

To be fair, after our conversation he had cooled off on it a bit and understands there is a lot of false information being spewed about this issue by current city representatives. After Nenshi was voted in he said he wasn't actually that upset, as besides missing what he feels are some important details on this issue, he feels that he could be a good mayor.

[hulkrogan]

My response was the following:

Regarding transportation, if they just built within the pre-existing budget (before taking utility money and changing the label to transportation), roads would suck, and sprawl would be deterred. If developers wanted to pay for subsidizing transport (and by developers I really mean new home owners) then awesome. Then things are balanced out and our utility rates don't get messed with to basically pay for transport budgets that were over run.

If you look at the overall economics of new subdivisions, you either have a shortfall in transportation money or utility money depending on how you label the dollars. Our last city council put our utilities at risk with some "interesting" money management techniques. The proper way to do things in my opinion is to put the burden of expressways and overpasses on developers and keep the sewer/utility budgets to a self sustaining level and let the roads suffer if there is a shortfall. If developers want to have high land value, let them develop the transportation to accommodate it.

[fusili]

Originally Posted by hulkrogan

To be fair, after our conversation he had cooled off on it a bit and understands there is a lot of false information being spewed about this issue by current city representatives. After Nenshi was voted in he said he wasn't actually that upset, as besides missing what he feels are some important details on this issue, he feels that he could be a good mayor.

I can understand all of your friends frustrations. There are huge issues with how developments are funded in the City and how the City manages money. I will say it now, the city is incredibly corrupt, especially corporate properties. I think we can all agree, the process of funding infrastructure in all development has to be rationalized and streamlined.

Sometimes it is rationale to ask for upfront costs of infrastructure, because frankly, you can't build half an interchange- either you do or you don't.

I think the City should look into things such as cumulative effects costing, which although complicated, may provide a more rationale way to recouperate costs. Essentially the problem I see is that several developments will go into an area, and all of them will be within the existing road capacity and none of them will trigger an intersection upgrade, and then one other development comes in, triggers the intersection upgrade and then that developer pays for the whole thing. Instead what we should do is look at a development and say, how much infrastructure is it going to require to service this development, assuming that other developments will be in the area and split the marginal cost. I hope that makes sense.

[Koolfire]

Originally Posted by fusili

I can understand all of your friends frustrations. There are huge issues with how developments are funded in the City and how the City manages money. I will say it now, the city is incredibly corrupt, especially corporate properties. I think we can all agree, the process of funding infrastructure in all development has to be rationalized and streamlined.

Sometimes it is rationale to ask for upfront costs of infrastructure, because frankly, you can't build half an interchange- either you do or you don't.

I think the City should look into things such as cumulative effects costing, which although complicated, may provide a more rationale way to recouperate costs. Essentially the problem I see is that several developments will go into an area, and all of them will be within the existing road capacity and none of them will trigger an intersection upgrade, and then one other development comes in, triggers the intersection upgrade and then that developer pays for the whole thing. Instead what we should do is look at a development and say, how much infrastructure is it going to require to service this development, assuming that other developments will be in the area and split the marginal cost. I hope that makes sense.

Yes, but it will be completely unpopular as the money will seem to disappear into the city coffers and then when the interchange is needed then there is no money because the funds went to another interchange in another quadrant or into city services. Then you have to pray that Calgary keeps growing at a good speed otherwise the ponzi scheme would fall apart.

[freeweed]

Originally Posted by fusili

Essentially the problem I see is that several developments will go into an area, and all of them will be within the existing road capacity and none of them will trigger an intersection upgrade, and then one other development comes in, triggers the intersection upgrade and then that developer pays for the whole thing. Instead what we should do is look at a development and say, how much infrastructure is it going to require to service this development, assuming that other developments will be in the area and split the marginal cost. I hope that makes sense.

Agreed 100%. This piecemeal "road capacity is fine, FOR NOW" method of planning is what's turned Royal Oak and Rocky Ridge into a complete mess. And the east access to Tuscany. And Kincora, and Sherwood. And Country Hills Blvd in general. Basically most of the newer NW communities. Things were great, until the inevitable filling in. Then the road system collapsed to various degrees. The Ring Road is the only thing keeping traffic tolerable, and that wasn't guaranteed to even be built yet. Never mind the fact that within the communities themselves things still are a mess.

It shows a real lack of actual planning in this city. It's not like no one expected these areas to eventually fill in - SOMEONE should have figured this out 10 years ago, before the infrastructure was decided upon in its final state. Figure it out, and bill developers accordingly. Traffic patterns have not changed in decades - any idiot could have taken the # of houses, figured out the average number of vehicles, realized that rush hour still exists, and went "duh, we're going to have jams".

[Wentworth]

West Calgary (Coach Hill-Aspen-Westsprings) is a real mess too. This area is a hodgepodge of small sized developments, not a masterplanned community. In the absence of a masterplan, there appears to have been very little advanced planning on the part of the City of Calgary. The boneheaded design of the Sierra Morena access into Westhills is probably the best example. Parts of 85th street are still "cow paths" and this corridor is on the verge of being fully built out. The same section of 85th Street has been dug up at least a half dozen times in the past 5 years for repeated utility upgrades. There was a section of street near my house that was dug up twice within the same month for two different projects, I swear the pavement was only down for a few days before it was dug up again.

[Koolfire]

Originally Posted by freeweed

Agreed 100%. This piecemeal "road capacity is fine, FOR NOW" method of planning is what's turned Royal Oak and Rocky Ridge into a complete mess. And the east access to Tuscany. And Kincora, and Sherwood. And Country Hills Blvd in general. Basically most of the newer NW communities. Things were great, until the inevitable filling in. Then the road system collapsed to various degrees. The Ring Road is the only thing keeping traffic tolerable, and that wasn't guaranteed to even be built yet. Never mind the fact that within the communities themselves things still are a mess.

Hmmm? Royal Oak, Rocky Ridge and Tuscany got screwed by poor design. As soon as they realized that Rocky Ridge Road was going to close they should of moved the intersection further NW and maintain a connection to Crowchild. And the main entrance into Tuscany (Tuscany Blvd) should have been lined up with Scenic Acres Link. Doesn't matter how you plan if your plan sucks.

I'm not as sure about Sherwood (currently the access off Shaganappi is temporary. They learned from Rocky Ridge and put up a nice big sign) or Kincora traffic as they are really small neighbourhoods still. The widening of Beddington Country Hills and the interchange have helped a lot. Even if the Ring road wasn't built the area would have been okay. At the moment the area is amazing I have absolutely no difficulty in the area during rushhour or weekends. Piecemeal improvements are fine as long as there is a good plan. This is what worries me if Airport Tunnel doesn't get built. You won't have a good plan but you'll piecemeal your way to a bad design.

[freeweed]

Originally Posted by Koolfire

Hmmm? Royal Oak, Rocky Ridge and Tuscany got screwed by poor design. As soon as they realized that Rocky Ridge Road was going to close they should of moved the intersection further NW and maintain a connection to Crowchild. And the main entrance into Tuscany (Tuscany Blvd) should have been lined up with Scenic Acres Link. Doesn't matter how you plan if your plan sucks.

That's exactly my point. This is all a result of very poor planning. Unless you were just trying to re-word what I said.

[Koolfire]

Originally Posted by freeweed

That's exactly my point. This is all a result of very poor planning. Unless you were just trying to re-word what I said.

Not quite. I think you trying to say that piece is not okay but piecemeal is okay in my mind as long as your building to a proper plan. The mess isn't because it's being done piece by piece but the fact they not building to a good final solution. Now you have Royal Birch Blvd and Country Hills Blvd unable to handle the load and no good plan to fix it.

Or are you talking piecemeal neighbourhood development where you do like 100 small sections before the neighborhood is finished. I'm talking piecemeal road construction.

[fusili]

Originally Posted by Koolfire

Not quite. I think you trying to say that piece is not okay but piecemeal is okay in my mind as long as your building to a proper plan. The mess isn't because it's being done piece by piece but the fact they not building to a good final solution. Now you have Royal Birch Blvd and Country Hills Blvd unable to handle the load and no good plan to fix it.

Or are you talking piecemeal neighbourhood development where you do like 100 small sections before the neighborhood is finished. I'm talking piecemeal road construction.

I think that is what Freeweed meant. Each piece was planned as a singularity and not as part of a whole.

[fusili]

I just think we are in a screwy situation a lot of the time because the city is really bad at telling developers "No, your location sucks, we aren't going to pay for the infrastructure and land ownership is way too fragmented to make any coherent plan work." The city has to recognize it has every legal right to say no.

[Koolfire]

See I've looked at zonings around Kincora and Evanston when my brother move to Evanston. The zoning maps show that even before they start grading the areas they are planing roads. http://www.calgary.ca/portal/server..../Maps/Maps.htm

[freeweed]

Originally Posted by fusili

I think that is what Freeweed meant. Each piece was planned as a singularity and not as part of a whole.

Bingo. Piecemeal development is fine (in fact, it's pretty much how all development is done in a sense). But it sure needs to be planned as a whole, rather than:

"hmm, we have 1000 houses now, let's put in a road"

"Shit, we have 3000 houses now, better twin it"

"Damnit, 5000 houses, better add a bunch of lights and turning lanes"

"Crap, we had to finally close another road off, and we're adding a commercial development - oh no, this road can't possibly handle the traffic but there's no room to build anything else"

[freeweed]

Originally Posted by fusili

I just think we are in a screwy situation a lot of the time because the city is really bad at telling developers "No, your location sucks, we aren't going to pay for the infrastructure and land ownership is way too fragmented to make any coherent plan work." The city has to recognize it has every legal right to say no.

As a first example, the city should NEVER have allowed the main access road into Tuscany where it is. It should have aligned with Scenic Acres, period (or with even better planning, Scenic Acres should have been aligned with what would eventually become Tuscany, but that's optimistic). If there were geographical challenges, then either the developer pays more for the road, or no development. It's really that simple.

The TUC was on the drawing boards a long, long time ago. Every single neighbourhood surrounding it should have been planned on the assumption of few interchanges, and the major roads should ALL have connected to said interchanges, no exceptions. But that would involve a) actual planning and b) saying no sometimes.

[fusili]

Originally Posted by Koolfire

See I've looked at zonings around Kincora and Evanston when my brother move to Evanston. The zoning maps show that even before they start grading the areas they are planing roads. http://www.calgary.ca/portal/server..../Maps/Maps.htm

Of course they plan the roads before they grade. You can't just grade and then decide, oh wait, let's put the road here.

The zoning map will show what was approved though subdivision. Each subdivision application will need to demonstrate it can be fully serviced, hence the roads. A property cannot be subdivided without road access. The application just won't be approved. When subdivision of residential properties occurs, the roads will be subdivided as well and given over to the city. That is what you are seeing. You will need to look at documents called Area Structure Plans or Context Studies to see more long range planning.

[Koolfire]

Originally Posted by freeweed

with even better planning, Scenic Acres should have been aligned with what would eventually become Tuscany, but that's optimistic). If there were geographical challenges, then either the developer pays more for the road, or no development. It's really that simple.

Tuscany comes out were 80th Ave NE used to be. That would have been too close to Crowchild/Stoney. Scenic Acres Links is pretty much half way between Nose Hill Drive and Crowchild. I think the problem maybe more that they try to work in what preexisting structures and roads.

The idea that no development would go north of Country Hills is a ridiculous assumption. There is a lot of residents that use Royal Oak Drive as a short cut to get to the condos in the south. Something radical would be to put a bus trap on Royal Oak Drive were there is that red brick plaza/park. It would force those condo residents to around and not shortcut and therefore making Country Hills and Royal Birch Blvd more managable by reducing left hand turns. But good luck. They are already doing traffic calming things already.

[Koolfire]

Originally Posted by fusili

Of course they plan the roads before they grade. You can't just grade and then decide, oh wait, let's put the road here.

The zoning map will show what was approved though subdivision. Each subdivision application will need to demonstrate it can be fully serviced, hence the roads. A property cannot be subdivided without road access. The application just won't be approved. When subdivision of residential properties occurs, the roads will be subdivided as well and given over to the city. That is what you are seeing. You will need to look at documents called Area Structure Plans or Context Studies to see more long range planning.

Yes, I agree, but Freeweed wants to think they don't plan. I think he's just bitter because he lives in that area. But at the same time I can't think of too many areas planned as poor road access were there isn't any plan for relief.

[Riise]

Originally Posted by fusili

I think the City should look into things such as cumulative effects costing, which although complicated, may provide a more rationale way to recouperate costs.

In the UK, this was a major goal for the latest developer contribution scheme.

Originally Posted by Koolfire

Yes, but it will be completely unpopular as the money will seem to disappear into the city coffers and then when the interchange is needed then there is no money because the funds went to another interchange in another quadrant or into city services.

Instead of pooling the funds in general revenue streams, the money should be held in dedicated accounts linked to specific infrastructure projects.