The president of the Building Owners and Managers Association (BOMA) Calgary has a simple, sharp message for the city’s elected officials about the current development regulations.
“Fix it,” says Bill Partridge, who represents commercial real estate service providers including developers, brokers and building owners.
Partridge contends Calgary’s permitting system is slow, expensive and involved in matters that should not concern a municipal overseer.
“The bureaucratization of a legitimate planning process is running unchecked here in Calgary,” he says, and the result is higher costs that must be absorbed by home buyers and businesses occupying newly developed space.
At issue is the City of Calgary Master Development Agreements, which lay out guidelines and specific fees for residential, commercial and industrial development – primarily greenfield.
The current five-year Agreements, which took effect in January following public consultation and negotiations with the Urban Development Institute (UDI), were driven by city council’s desire to pass a larger share of infrastructure costs to property owners.
Calgary Mayor Naheed Nenshi said the escalating price of providing services including roads, sewers, water and police to new communities could not be recouped by property taxes.
Under the new Master Development Agreements, acreage assessment levies jumped from $138,000/hectare to $282,000/hectare. Increases in the remaining four years are tied to the Construction Price Index (CPI).
BOMA contends fees on the average new home construction will double to more than $15,000 and warns both home buyers and business owners to prepare to shoulder the additional costs.
“In the case of non-residential property,” explains Partridge, “the only way I get to recover the costs is through what I charge the public for my goods or services.”
Partridge suggests the City is not only charging more for traditional items like water and sewer upgrades but also attempting to bankroll a catch-up, catch-all, city-wide repair chest to replace the existing infrastructure, which traditionally has been funded either by local improvement bylaws or normal lifecycle costing.
A History of Mistakes
Partridge says the situation today can be traced back to a previous mayor and council which “put the brakes” on capital projects, trying to contain growing municipal debt. But the city’s population continued to grow resulting in more residents and aging, inadequate infrastructure.
“It was generally accepted that we were 10 to 15 years behind in building new roads, schools and fire halls,” says Partridge.
He adds that Calgary’s current city council – “left-leaning with certain members who fancy themselves urban designers and urbanists-par-excellence” – is misguided.
“They are getting involved in the minutia,” he says, “and departing from what I would regard as their traditional and legitimate role of municipal council, which is to be more strategic and less operationally focussed.”
BOMA is currently involved with an initiative by Mayor Nenshi but Partridge says, “that has gone off the rails. It’s not about cutting red tape, it’s about putting duct tape on existing policies and processes.”
Broke Three Ways
BOMA Calgary is advocating change in three specific areas.
Partridge says the City takes an inordinately long time to process permit requests compared to Edmonton or other Canadian municipalities.
“Depending on the project, your holding costs can be up to $50,000 a month,” he says, “and there’s no way to recover those delays, except from people who occupy your buildings.”
Secondly, the system propagates redundancies.
Partridge says a developer can lay sewer to the property line but the City must make the connection to the municipal pipe, possibly even hiring the same contractor at a higher rate to comply with municipal tendering guidelines.
“They are all the same trades under the same provincial licenses,” says Partridge. “The standard of work is exactly the same yet it takes two crews to do it!?”
The third area of contention is what Partridge calls the City’s “hugely intrusive” efforts to regulate design elements.
“The City doesn’t have to get involved in selecting the materials to finish the lobby in your building or the tinting on your windows. It’s none of their business. But increasingly the municipality wants the role of designer and architect and usurp the legitimate purvey of the property owner.”
What is that Bright Light?
Partridge says BOMA is lobbying on behalf of members reluctant to take a stand, afraid of what will happen the next time.
He recalls one case where the City came back to a developer in mid-construction and, threatening to withhold the occupancy permit, requested additional funding.
“In the real world, we call that extortion,” says Partridge. “But the City gets away with it. I had a member call me up and say, ‘what should we do’? I said ‘sue them. It’s breach of contract’.”
Partridge says the City needs to return to its traditional role of facilitator, streamlining internal processes and leaving development in the hands of developers.
“As we remind city council,” says Partridge, “nobody really has to build here. They build here because they want to. The city’s legitimate role is to facilitate and not erect barriers to growth of the city.”