The city of Calgary is making it easier for proven developers to invest by making changes to its tiering and securities system.
Officials stated that the changes will ensure a 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.
The project began in 2019 when city staff met with BILD Calgary to review risk factors, securities amounts, market trends, developers’ track records and best practices in the industry.
The city explained the scope of changes with an example: if the new security rates were applied to development agreements since 2014 the new system would have freed $150 million 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. The review identifies barriers to service delivery, traces these back to policy issues and determines opportunities for improvement. Tiering and securities was identified as an area for improvement, as less experienced developers were facing barriers to market entry because of securities requirements.
The system 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.