An Initiative by the
Infrastructure Improvements and connecting new communities is costly. Who pays for what?
For the moment, forget about the cost of everything that’s actually inside a new community. Look outside the community gates. When we talk about infrastructure, it’s all about what it takes to connect a new neighbourhood to the rest of us.
New developments have to be connected to existing infrastructure by roadways, utility systems and transit lines. And they need services like fire, waste management and police. These are known as “off-site” costs. Getting all of that started is expensive, and it all needs to be maintained.
So who pays off-site costs, and when?
Taxes and levies are set by the City of Regina, and are paid by Developers to offset a significant portion of the growth and connection costs.
Growth related work is primarily funded by Servicing Agreement Fees (SAF) between The City and Developers. Determined annually, the SAF mandates a levy (Acreage Assessment) of $442,000/ha (effective Jan. 1, 2019).
Developers are required to pay the City the predetermined amount per hectare of land within the development area. The funds, paid years in advance by Developers, are controlled by the City and allocated to the infrastructure such as water, wastewater, storm water, transportation, parks and recreation costs associated with the new development. In addition to the SAF, the Developer is required to provide security or bonding for the entire construction cost of all new infrastructure. This bonding/security amount is reduced as the developer installs the infrastructure. This is collected as insurance so that the City has the means to complete construction, in case the Developer fails to (i.e. if they fold or go bankrupt).
Eventually, when homes are purchased, new Home Buyers compensate Developers for up-front costs. Then, like the rest of us, new residents add to the property tax pool, contributing to surrounding infrastructure capital and maintenance costs.
There are multiple viewpoints on the cost of infrastructure, and we’ll be hearing more as Regina continues to grow and SAFs are re-evaluated. Some would argue Home Buyers in new communities actually contribute to infrastructure for established communities. Others believe Developers and new Home Buyers should pay more for infrastructure.
It’s up to all of us to learn what both sides are saying, think it through and make our views known to our Councillors.