The Alberta court of appeal sided with a developer in a dispute with the Town of Okotoks over its practice of collecting fees to help pay for new infrastructure.
In a unanimous ruling last week, Alberta’s top court struck down an agreement between the Town and developers to pay for new facilities in Okotoks as well as part of a 2009 bylaw aimed at collecting funds from developers to go towards the construction of the 32 Street bridge.
Under the Municipal Government Act (MGA), the Town is permitted to charge off-site levies to developers to pay for roads and water and sewer infrastructure in new communities, and land needed for the new infrastructure.
However, over and above off-site levies the Town also signed voluntary contribution agreements with developers to pay for infrastructure not covered by the MGA. Okotoks used those funds to help cover the cost of projects such as the Southridge Emergency Services station.
In addition, the Town was charging developers an off-site levy to pay for construction of the 32 street bridge and road projects along the corridor.
According to the court of appeals’ decision the Town was not permitted to charge developers the off-site levy for the bridge project or the voluntary contribution agreements.
The dispute began two years ago when Prairie Communities Development Corp. took the Town to court over its 2009 off-site levy bylaw, arguing it did not comply with the Municipal Government Act, it didn’t provide enough information about public works projects and failed to allocate the cost of projects equitably. The developer also argued contribution agreements are a form of levy that fall outside of provincial regulations.
While the court sided with the developer, Justice Clifton O’Brien said he came to his decision reluctantly.
“The Town, speaking through its elected representatives, clearly believes that it is only fair and proper that the developers (and through them, the new residents of the lands under development) should bear these charges attributable in whole, or in part, to the growth of the Town,” he said in a written decision.
He said it’s up to provincial legislators to decide whether the MGA should be changed to allow off-site levies to be charged for infrastructure not currently permitted.
While the Town has the right to sign contracts with developers, O’Brien said this doesn’t allow it to circumvent the MGA.
“The substantive question here, however, is whether the ‘agreement’ adopted by council was intended to facilitate voluntary contributions towards off-site expenditures, or to coerce developers to make payment of unauthorized levies as a condition of the development process,” he said.
O’Brien determined the contribution agreements weren’t truly voluntary.
“The overwhelming evidence is that the acreage assessments and other development charges would be ‘required’ to be paid by each developer seeking to develop land through the means of the contribution agreement,” he said.
The judge said there is no evidence the Town ever denied approval to a developer who didn’t sign the agreement.
O’Brien also struck down portions of a 2009 off-site levy bylaw that charged off-site levies to pay for construction of the 32 street bridge and road projects along the corridor saying the Town did not comply with provincial regulations in this area.
Prairie Communities Development Corp. president Dave Marshall said he is pleased with the court’s decision.
He said the Town was trying to download the entire cost of growth on the backs of new homebuyers, not spreading it out the rest of the community.
Marshall said new development does pay for itself, but what the Town was trying to do was have new development pay for new projects in the rest of the Town as well.
“The costs are not taxes on developers, they’re just input costs that get passed on to the new homeowners,” he said.
Marshall owns property along North Railway Street and received a development permit for a plan to build a commercial development in the area. He chose not to proceed with a development agreement until the legal issues were resolved.
He said he is still considering how he will proceed and will wait and see how the Town will respond to the decision before moving forward.
Marshall said the Town can only charge offsite levies for water and road infrastructure needed as a result of growth. As for the 32 Street bridge, he said it was not built because of new development. As for other facilities, such Southridge Emergency Services station, Marshall said they are paid for through taxes and the Town needs to plan ahead for them.
According to Marshall, there is a bigger issue at hand. He said the community needs to look at what facilities it wants to have and what it’s willing to pay for.
“It’s great to have a water park and it’s great to have arenas and such, but only if we can afford it,” he said.
Okotoks’ municipal manager Rick Quail said it’s too early to say what kind of financial impact the decision will have and the Town hasn’t yet decided how it will proceed.
“The court decision was only received Thursday morning and we’re reviewing it with our legal council before we decide our next steps,” he said.
However, the Town believes the decision affects the Town’s ability to negotiate costs that can be attributed to new development.
The town is now requesting an urgent meeting with Municipal Affairs Minister Doug Griffiths to discuss changing the Municipal Government Act to provide a more equitable share for the costs of development.
