Since 2016, the Citywide Growth Strategy team has discussed housing problems and solutions with the Established Area Working Groups. These groups include utility providers, community members, and the development industry. Many ideas from these talks, like the Established Area Linear Levy Pilot, were included in this funding program. We will continue to discuss the Established Area Linear Levy Pilot with community members and industry through the Utility Working Group meetings.

City utility rates and other funding partners support the pilot. In October 2023, we signed an agreement with CMHC to help increase housing in Calgary. We are using these funds for the Housing Accelerator Fund Action Plan, which has seven initiatives. The Established Area Linear Levy Pilot is part of Initiative 5: Enabling housing growth in established areas.

The Established Area Linear Levy Pilot helps pay for infrastructure costs that developers would usually cover. This can speed up the delivery of new housing. Bigger buildings need more water for fire safety, and higher densities need more wastewater capacity. The first developers in an area have to upgrade local pipes if there’s not enough capacity. Later developers benefit from these upgrades without paying for them. Because of these costs, developers often avoid larger projects or limit their size.

By covering these initial costs, the pilot encourages developers to build more housing, which can make homes more affordable. It also increases capacity for future developments. These investments help meet upgrade needs from citywide rezoning, ensuring safe service levels for everyone.

The Established Area Linear Levy Pilot aims to boost housing in the Established Area by covering water and wastewater upgrade costs for the first developers. The Housing Accelerator Fund and utility rates will pay for these upgrades during the pilot period. Developers can get funding commitments until September 1, 2026.

Local-sized water pipes are smaller than 500mm, and local-sized sanitary pipes are smaller than 600mm. Water pipes 500mm and larger or sanitary pipes 600mm and larger are funded through capital funding. Local pipes within these sizes where upgrades are required are typically the responsibility of developers to construct at their cost.

Eligibility is first-come, first-served based on yearly funding. The pilot funds upgrades needed because of growth. Usually, servicing a parcel doesn’t qualify since these needs are known upfront. Pipe upgrades might not be known and can affect a project’s budget. Eligibility is based on:

• The parcel must already have service.
• The applicant must add residential units in the Established Area.
• The growth must need a water or sanitary pipe upgrade (storm extensions are handled separately).

When a development permit or subdivision application is submitted, we will reduce the financial risk for the first housing developer who needs to upgrade local water or wastewater pipes in the Established Area. The first developer to need a pipe upgrade for fire flow or wastewater capacity must pay for the full cost. The Established Area Linear Levy Pilot will help by reimbursing up to $1 million per application, with a maximum payback of $2,100 per linear meter.

These upgrades benefit others and support more development in the area. A developer cannot get payback from future developers who benefit from these upgrades. If multiple developers need upgrades at the same time or one after another, they must negotiate how to cover costs over $1 million. We will not be involved in these negotiations.

Funding commitments are first-come, first-served. Reimbursement might not cover all upgrade costs, so developers may still have to pay some.

View the submission process here. Applicants request reimbursement using the Reimbursement Request Form under ‘What to Submit.’ They provide details about the development, the upgrade, and the cost estimate. After submitting the form, they get instructions for their detailed cost estimate.

Utilities Infrastructure Planning and Development Commitments get notified of the submission. They review the request, cost estimate, and construction drawings to check eligibility. If eligible, applicants get a funding commitment letter. To get reimbursement, applicants must get an eligibility letter by Sept. 1, 2026, and finish construction by Sept. 1, 2027. It’s unclear if there will be future opportunities for reimbursement after this date.

The City has set up a reimbursement process for applicants using existing planning methods, like the Indemnification Agreement and Oversize processes. After an industry bulletin on March 4, 2024, the Established Area Linear Levy Pilot is now accepting applications. 

Both mechanisms fund necessary water or wastewater upgrades for development permits or subdivisions. Upgrades are needed when fire flow or wastewater capacity isn’t enough for new growth.

Both initiatives fill a funding gap for these upgrades, but the Established Area Linear Levy Pilot is funded by City utility rates and Housing Accelerator Funding, not developers. Developers won’t be charged during this pilot. They can get up to $1 million for pipe upgrades per application over three years.

In the future, a levy funded by developer contributions will depend on the land use type. These charges will go into a pool with City utility rates to fund unexpected upgrades due to growth. Discussions about this levy happened with the industry from 2021 to 2023, before the pilot.

We have five goals for the Established Area Linear Levy Pilot:

1. Encourage immediate housing production by covering local water and wastewater upgrade costs.
2. Remove financial risk for the first developers needing costly upgrades, encouraging more housing projects.
3. See if funding these upgrades leads to more building permits and faster growth.
4. Find out how much money is needed to keep a long-term program sustainable.
5. Create and test processes to reimburse developers during the pilot, suitable for long-term use.

We will monitor the pilot over three years to see how successful it is and decide on next steps.

During the development review process, we check if a local water or wastewater upgrade is needed. A Development Engineering Utility Specialist reviews the permit application and decides if a Required Fire Flow (RFF) analysis or Sanitary Servicing Study (SSS) is needed to assess the development’s needs.

After reviewing the RFF/SSS, Utilities Infrastructure Planning decides if an upgrade is necessary. Housing developers sign a legal Indemnification Agreement to build the upgrade in the city’s roads. The Development Engineering Utility Generalist approves the development once the infrastructure construction drawings are approved, and we give permission for the developer to build the upgrade.

Usually, developers must pay for any water or wastewater upgrades needed for their projects. These requirements are set before construction through an Indemnification Agreement with the City. The developer decides when to do the construction.

The City might handle upgrades if:

• A small developer can’t do it, and we have the resources.
• The upgrade is complex and offsite.

For large projects, we give a rough cost estimate to start discussions. Once agreed upon, we will provide a detailed estimate, and the developer will prepay the total cost. For smaller projects, we start with a detailed estimate and the same prepayment rule.

Developers can request up to $1 million in reimbursement per application and $2,100 per meter of upgrade through an online form. Instead of an Indemnification Agreement, a Reimbursement Letter Agreement is signed. Payback is based on actual costs, and Utilities Delivery is paid directly from HAF. Construction starts after the developer submits a building permit, ensuring upgrades match development needs.

After construction, the City reimburses the developer based on the actual costs. If the estimate is higher than the actual costs, the full estimate is reimbursed. If the estimate was lower, the reimbursement is the estimate minus the extra costs.

We provide regular progress updates and data reports to the Canada Mortgage and Housing Corporation (CMHC) as required by the Housing Accelerator Fund Agreement. We also use various tools to monitor Calgary’s growth trends, like the Growth Monitoring Report, Development Map, and internal applications that track development applications. These resources help us evaluate the impact of funded upgrades on development. We check if these investments lead to more development permits by removing cost barriers. Updates will also be shared through the Citywide Growth Strategy’s Utility Working Group.

We will keep checking the program to make sure funds are used well. If developers choose smaller projects instead of upgrades, we might need to change funding limits and reimbursement terms. The goal is to encourage as much housing as possible.

We will monitor the investment pool each year to ensure funds are given out fairly. If the pool runs out, we will request more funds or delay reimbursements. If no more funds are available, we will announce it and stop new commitments. If there are resource constraints, we may need to make future commitments to ensure upgrades are completed.