A recent industry analysis has cast a spotlight on the dramatic escalation of government-imposed fees on new housing construction in Edmonton, revealing the city has experienced the steepest percentage increase in Canada over the past decade and a half. Despite this surge, Edmonton's fees per housing unit remain the absolute lowest among the nation's major metropolitan centres, a key factor in preserving its reputation for relative affordability.
The Staggering Rate of Increase
The report, published by the Commercial Real Estate Development Association (formerly NAIOP), compared government development charges on new rental projects in four key markets: Edmonton, Calgary, Toronto, and Vancouver. The findings are striking. Since 2010, these fees have skyrocketed by 628 per cent in Edmonton, outpacing increases in Calgary (536%), Toronto (472%), and Vancouver (290%).
"The development charges are sort of that hidden tax that's being placed on Canadian families," remarked Alex Thomson, Director of NAIOP Edmonton and the NAIOP Chair for North America. He noted that while Alberta's fees start from a lower base, the rapid climb is eroding a traditional advantage. "That’s supposed to be our Alberta advantage, but now these costs are going up at a rate that’s challenging."
Low Absolute Costs Maintain Affordability Edge
Despite leading in percentage growth, Edmonton's total fee cost per unit remains substantially lower than in other major cities, providing a crucial buffer for housing affordability. The study, authored by Daryl Keleher, principal at Keleher Planning and Economic Consulting Inc., found the average cost per unit is $7,369 in Edmonton and $9,306 in Calgary. This pales in comparison to Vancouver's $73,722 and Toronto's $117,910 per unit.
"A lower cost per unit has helped Calgary and Edmonton keep their heads above water in delivering housing," Keleher stated. He added that while the study focused on the multi-family rental market, the fees similarly impact new homes for ownership, and can be even higher for condominium developments.
Edmonton's Unique Funding Model
The primary reason Edmonton's upfront fees are the lowest lies in the city's distinctive approach to financing the infrastructure needed for new developments. Unlike other jurisdictions that levy large, upfront development charges, Edmonton frequently utilizes a mechanism known as local improvement taxes.
"In Edmonton, they use a tool called local improvement taxes where if you need a new sewer to get a development in place, they’ll build it and then charge the taxpayers in those units," Keleher explained. "That’s a surcharge on their tax bill until it’s paid for." This method spreads the cost over time to the specific homeowners who benefit, rather than embedding it entirely in the initial purchase price.
Nevertheless, the exponential percentage rise in costs is raising concerns within the industry. The report aims to increase public awareness of these often-overlooked expenses that ultimately contribute to the final price of a new home. As development fees continue their upward trajectory, the balance between funding necessary infrastructure and maintaining housing affordability remains a critical issue for policymakers and homebuyers in Edmonton and across Canada.
