Development fees should remain the same until review is completed

By Medicine Hat News on October 10, 2020.

Development fees in Medicine Hat will likely stand pat until the end of 2021 as administrators conduct a review of off-site levies.

The fees are charged to new developments to recover the city’s cost extending new roads and water, sewer and storm sewer lines to new communities.

They were last overhauled in 2012, but are adjusted every few years when projects are added, completed or deleted, and to factor in inflation.

Administrators told the development and infrastructure committee this week that current rates are based on information from 2017, and were only approved for the 2019 and 2020 financial year.

The recently passed Municipal Development Plan includes updated projections that assume a lower pace of growth that could push back projects and lower rates.

If approved by council, the current rate would be kept in place until a review next year sets rates for 2022.

The rates were last overhauled in 2013 when administrators reported that out-of step construction and inflation calculations cost the city $30 million more than initially estimated over the previous 10 years.

At that point, differentiated rates were brought in for different areas of the city, known as nodes.

The “Node Zero” rate for work outside other zones was set at $229,500 per hectare in a project.

After interim adjustments, the rate currently sits at $234,600 per hectare, marking only a combined 2.2 per cent increase over seven years.