An off-site levy is a funding mechanism to build off-site infrastructure that is required to support development. Infrastructure is initially funded by the municipality, with a proportion of costs recovered as development proceeds. Off-site levies are not a tax, but rather a cost recovery tool based on the principle that growth pays for growth.
Offsite Levies
The Municipal Government Act allows municipalities to create an off-site levies bylaw to help pay for the infrastructure that we use every day in new communities. Off-site levies are just one of the tools the City uses to help attain financial sustainability.
Off-site levies fund the infrastructure that we use every day in new communities. In Red Deer, off-site levies are paid by developers as a condition of subdivision approval. New communities have impacts on infrastructure outside of the community. This can include more pressure on major roads or the sewage treatment system. Developers pay off-site levies to help share the costs of the off-site impacts from growth.
The Municipal Government Act and the Off-site Levies Bylaw outline what infrastructure the levy pays for. Some examples of the types of infrastructure are:
- water and wastewater pipes
- transportation (roads, interchanges, pathways, bikeways, etc.)
- stormwater pipes
- sanitary pipes
The City and developers each pay for a part of off-site infrastructure in new communities. This helps pay for new infrastructure needed to build vibrant communities. It also provides the developer with the infrastructure needed to build a community. The developer part of the off-site levy benefits new growth. The City pays for the part of the infrastructure that benefits existing residents and the region. To ensure that the Off-site Levies Bylaw and charges are current, The City periodically reviews them. This helps incorporate changes:
- in infrastructure needs and costs
- legislation
- in the economy or pace of development
Offsite Levy FAQs
How does an OSL Work?
An off-site levy is a funding mechanism for municipalities to support growth.
A subdivision requires infrastructure on site as well as large-scale infrastructure off-site that supports the subdivision, such as roads, water, sanitary, and storm sewer systems. These large-scale infrastructure projects are expensive, and typically benefit more than one development.
A developer may not have the capital funds to pay all infrastructure costs up front to support this new growth. The role of the municipality is to bankroll the construction of this infrastructure and collect levies as development progresses.
Off-site levies are not a tax, and municipalities do not make revenue from them. The money spent on the construction of OSL infrastructure will equal the amount of money collected. According to provincial regulations, OSLs cannot be used to fund operations or maintenance, only new construction.
How are off-site levy rates determined?
To calculate off-site levy rates, the City uses the Corvus model, which projects the infrastructure required to support and maintain cost-effective and orderly growth. The City has allocated those costs to the lands in basins that will benefit from the new or expanded infrastructure so that developers and people subdividing land will pay an amount proportionate to the area being developed or subdivided.
How are OLS’s Regulated?
Off-site levies are regulated under the Municipal Government Act (MGA) and Off-site Levy Regulations. The regulations authorize municipalities to collect off-site levies through adoption of a bylaw.
Visit Offsite Levy Supporting Documents for more information.