Calgary's remarkable growth, which saw over 80,000 new residents arrive in the metropolitan area in 2024 alone, is facing a severe counterforce: the skyrocketing cost of building the rental housing these newcomers desperately need. A stark new national report reveals that government-imposed fees are crippling new construction, threatening the city's affordability and quality of life.
Fees Explode, Far Beyond Inflation
A report commissioned by NAIOP, Canada's commercial real estate development association, delivers a sobering statistic: fees on new rental construction across the country have ballooned between 290% and 628% since 2010. While Calgary and Edmonton don't yet face the absolute fee levels of Toronto or Vancouver, their trajectory is alarming. In Calgary, these charges have surged by 536% over that period—a rate that outpaces general inflation by more than thirteen times.
The practical impact on builders is severe. Before a single tenant can occupy a new unit, developers are now paying upfront costs equivalent to four and a half months of rent. This massive financial hurdle comes atop already high construction and financing costs, rendering many potential rental projects economically unfeasible.
A Broken Principle: When Growth No Longer Pays for Growth
Municipal leaders frequently defend development charges under the mantra of "growth paying for growth." The principle suggests that new residents should fund the infrastructure and services they require. However, the dramatic fee escalations of the past decade tell a different story.
Layers of charges—from parkland dedication and off-site levies to permitting, inspections, and community benefits—have accumulated. When municipalities begin to rely on development as a key revenue stream, the system shifts. It becomes less about servicing new neighbourhoods and more about using new housing to backfill broader municipal budgets.
Calgary's non-residential property tax rate, which sits at 4.61 times the residential rate, adds another heavy layer of cost specifically burdening rental apartment buildings. These combined pressures create an environment where projects that should be viable simply "no longer pencil out," even amid soaring demand for purpose-built rentals.
National Crisis, Local Consequences
Calgary is not an isolated case. The report highlights a Canada-wide crisis. In Toronto, government fees can now consume up to 31% of total construction costs for a typical apartment building. Vancouver faces fees around 20% of costs, with planned increases set to push them another 19% higher by 2027.
These are not marginal adjustments but structural shifts that fundamentally alter housing economics. Ultimately, these costs are not absorbed by developers alone; they are passed on to the end consumer. Higher fees directly translate into higher monthly rents for Calgarians, undermining the very affordability that attracts people to the city.
The warning from industry experts is clear: if governments are serious about addressing the critical housing shortage, they must confront the hard truth that fees and taxes have risen far beyond reasonable justification. Without a recalibration, the strategy of simply trying to build more homes will fail under the weight of its own cost structure.
