Systems revisions reduce barriers to entry for development industry

The City is making it easier for proven developers to further invest in Calgary.

Changes to The City’s Tiering and Securities (T&S) system ensures right-sized risk management approach, with adequate security for development while also reducing barriers to market entry for new developers. Money freed through lower security requirements, provides developers with more working capital to invest in projects.

“We are pleased to see this new framework introduced – it is the result of many hours of work and collaboration put in by our Industry committee volunteers and The City. We believe these changes will allow Calgary to continue to grow in a positive way, benefiting The City, the development industry and ultimately Calgarians,” said BILD Calgary CEO Brian Hahn.

City of Calgary staff and BILD Calgary came together in 2019, reviewing risk factors and securities amounts, as well as market trends, developers’ track records and best practices in the industry.

To appreciate the magnitude of change, if the new security rates were applied to development agreements since 2014 the new system would have freed $150 M from securities. By reducing security rates, The City allows developers to do more with their available financing which can be applied to future projects and investments.

Josh White, director for Calgary Approvals Coordination, said the move is a positive one for the industry. “We’re pleased to support a robust development industry and we especially look forward to working with new developers,” said White.

The requirement changes were initiated through Council’s 2018 Policy Review project (PFC2018-1300). The review identifies barriers to service delivery, traces these back to policy (or other) issues and determines opportunities for improvement. Tiering & Securities was identified as an area for improvement, as less experienced developers were facing barriers to market entry because of securities requirements.

T&S ranks developers into tiers, which in turn determines the amount of deposit required before construction can commence. The process ensures developers will act in the best interest of the projects and fulfil their commitments.

The approved recommendations include:

  • A revised tier system, with new criteria determining a developer’s tiering
  • Reduced security amounts for companies meeting criteria
  • Timing of security reduction and securing off-site obligations
  • Change in former three-tier numbered system to a five-tier letter system that more precisely reflects a developer’s track record in meeting project requirements
  • Ability for upward movement in tier system based on performance.

The City of Calgary enables the building of public infrastructure, which is done largely by the private sector. The City’s goal is to facilitate a competitive, business-friendly development sector, while managing risk and protecting the industry’s long-term viability.

The T&S recommendations are outlined in detail in the 2020 Terms and Conditions - Development Agreement.