Residential land developers build neighbourhoods to sell them, plain and simple. They aim to provide you with a diverse set of amenities, services and housing options. They want to wow you with curb appeal and dazzle you with character. By building beautifully elaborate urban landscapes they intend on capturing your attention, your heart and, eventually, your money.
“A lot of people think that it’s the city that’s paying for all these new streets and new neighbourhoods and that the developers are getting off scot-free,” says Brad Armstrong, vice president of community development for Qualico Communities. “We make an investment, we do the financing, we roll up all those costs, take out a small markup, and then we sell it to new-home-builders, who in turn, sell it to home buyers. That’s how we make our money.”
Armstrong says his company is building more than just houses; its role as a developer is to provide buyers with economically, social and environmentally sustainable homes they can comfortably afford.
Roads are smoothed, homes are planted and a community blossoms. From roads and sidewalks to fields and trees, developers build communities acre by acre and sell them as complete packages. According to Armstrong, you’re not just buying a home anymore; you’re buying an entire neighbourhood.
And while these neighbourhoods are largely developed when you move in, there’s always a section of land known as the Municipal Federal Reserve, a.k.a. “that field that’s been sitting empty since we moved in.”
According to the Municipal Government Act, every developer of a new community must set aside up to 10 per cent of the land for the future development of schools, recreation centres and playgrounds. After the land is set aside, it’s left to the government to fund all infrastructure costs for the development of the amenities needed in that space.
Provincial and municipal taxes pay for our schools and recreation centres. In a report issued in 2010, the Alberta School Boards Association says these amenities are often left to the end of the new development projects, forcing government to shell out full costs for the creation of new facilities, while struggling to keep up with the costs of maintaining existing ones.
“We believe that the amount of money available from Alberta Infrastructure is not the problem – the source is the problem,” was one of the opinions represented in the ASBA report. “Money for a school required in new major residential developments should be coming from levies assessed to the developers of those developments on a per-lot, or per-family unit, basis. If this were done then the money already allocated to school building funding would be sufficient.”
In other words, school boards want to look at a model where developers pay now for the schools that will come later.
“We really need new schools,” declares Becky Kallal, board chair for Edmonton Catholic Schools. “We are lobbying our provincial government strongly to ensure that our MLAs really understand our needs, especially in the newly developing communities, like Windermere, Heritage Valley and Summerside.”
But Armstrong says taxes, not the homebuyer, should fund soft amenities like a K-9 school or a recreation centre. “It’s for the greater good and not just those folks [residents] who benefit from that; it impacts a bigger area,” he says.
He adds schools and recreation centres are often developed to accommodate the needs of several communities, and therefore should be paid for by taxes.
“If you put too much of the burden of these soft costs like schools, playgrounds and rec centres on the developer, we have to work that into the cost of the lot, and that’s why housing prices are so high,” he says.
Of the respondents to Avenue’s neighbourhood survey, only about half said elementary schools were an important part of a neighbourhood, and less than half ranked high schools as necessary (see the end of the story). That would suggest that putting levies on new home sales wouldn’t be seen as a popular tax.
But neighbourhoods aren’t just about schools. Melcor Developments Ltd. and Qualico Communities are now incorporating playgrounds and parks into the development of their communities. They’ve taken on the costs involved in the process, and reaped the rewards through increased sales of lots and houses.
Most new homeowners will agree the cost of housing is high enough as it is, but what happens when the developer steps away, and the land slated for the development of a K-9 school is left untouched due to lack of government funds? Why wouldn’t the developer step in?
Melcor Developments Ltd. vice president Jason Fjeldheim, says that if developers are constructing schools, they run the risk of using them as selling features, and possibly causing a divide between several communities based on property value.
“If a certain developer builds a school in their community they would have to recoup that infrastructure cost from their residents,” says Fjeldheim. “Which would mean that their lots and their houses would be more expensive, and so then you get a scenario where people who have more money would buy in a neighbourhood with a school.”
He adds that the province has the ability to ensure schools are built based on the needs of the population, rather than risking the possibility of developers using them for profitable gain. Both Fjeldheim and Armstrong say this kind of partnership is possible, so long as it is economically viable for the companies and the communities.
“The benefit to the development community is that we would build a school in our neighbourhood coinciding within the first two or three stages of development, so that when people are moving in for the very first time, they’ve got access to a brand new amenity like a school; that would be fantastic,” says Armstrong.
To better deal with growing infrastructure needs, the Edmonton Catholic school board is developing innovative partnerships.
Board chair Becky Kallal says the board has partnered with the City of Edmonton to develop what the city calls a new “community hub” in Edmonton’s developing northeast. The Cardinal Collins High School Academic Centre will be built in collaboration with the Clareview Community Recreation Centre and the Edmonton Public Library. The complex will provide the growing populations in several communities with a much-needed school for students who are upgrading, and an expanded multipurpose recreation centre.
The city has subsidized the $12 million cost of the school board’s share of development, and the loan is to be repaid through revenue generated by course completion grant funding. Even though the school board was unable to provide the funding needed for the up-front costs of development, the partnership enabled the board to build the school.