Builder Tarik Aziz said hundreds of thousands of dollars in development fees for his 27-unit townhouse complex in Altadore meant rents had to be set higher.Todd Korol/The Globe and Mail
Calgary boasts some of the lowest municipal development charges for new residential development in Canada, a report prepared by Altus Group last year shows, but not all new construction is made equal across the prairie city.
A recent analysis produced by the Calgary Inner City Builders Association (CICBA) suggests that development fees related to infrastructure upgrades can add, on average, $77,700 to the cost of an individual townhouse built in a redeveloping neighbourhood. By contrast, fees for single and semi-detached homes in established areas amount to less than $40,000 per dwelling.
The additional fees the City of Calgary requires townhouse builders pay to widen sidewalks and upgrade utilities in redeveloping areas can act against the economies of scale increased density is touted to support, says Shameer Gaidhar, chair of CICBA, adding that the discretionary nature of development charges in the city’s centre jeopardizes the viability of missing-middle housing in amenity-rich neighbourhoods.
Because builders typically transfer the cost of these fees to a dwelling’s end user, when the total cost of a project exceeds what the market can bear, affordability isn’t only eroded, but construction can be halted.
“In the marketplace we’re now,” Mr. Gaidhar says, “development charges can make the difference between going ahead with a project or shelving it because it’s not viable.”
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For Calgary builder Sheldon Appave, an unexpected $100,400 in development charges is challenging the feasibility of a townhouse project that would create eight rental homes, including four three-bedroom units, in Windsor Park, an inner-city neighbourhood where three-bedroom rentals are few and far between.
“The city wants me to put down a deposit to cover the cost of the sidewalk replacement and street lights,” Mr. Appave says, noting this amount is roughly $30,000 higher than he’d estimated in the project’s pro forma. “This pushes me outside of MLI Select’s affordability requirement, so I really can’t move forward with the project – I’m stuck right now.”
Builders with more leeway simply raise the sale price of a townhome, or its rent.
Had the City of Calgary not charged CICBA member Tarik Aziz about $700,000 in development fees for a 27-unit townhouse complex in Altadore, a redeveloping neighbourhood in Calgary’s southwest, he could have set rents at least 15 per cent lower, he says.
“We had to increase the rent. Otherwise, we wouldn’t have been able to absorb a loss.”
It wasn’t always this way. The scope of discretionary fees in Calgary’s inner city has slowly grown over the years.
Between 2022 and 2024, development charges for new low-rise buildings in Calgary expanded by an average $50,200 per dwelling, a report commissioned by the Canadian Home Builders’ Association found.
In Calgary’s redeveloping areas, these fees fund infrastructure improvements required to support more density, such as new water pipes and sewers, underground power lines and stormwater storage. But as the gap between the cost of building a townhome in the inner city and the income needed to afford one widens, some builders are turning to suburban neighbourhoods, where risks are lower.
“There’s a significant difference between the cost of redevelopment and new development,” says Mr. Gaidhar, chair of CICBA. “Because in greenfield areas the land is cheaper, and townhomes don’t need a development permit, building costs are more predictable there.”
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Cognizant of this disparity, last year the City of Calgary started rolling out three pilot programs that offset some of the cost of upgrading water, power and stormwater infrastructure in redeveloping areas. Next year, the city plans to launch a missing-middle sidewalk initiative.
“The city is aware of the cost differential between the types of housing in established areas,” says Teresa Goldstein, director of community planning at the City of Calgary. “The cost delta in established areas was recognized as being higher because utilities and sidewalks need additional investment.”
To maintain property taxes low, and ensure Calgarians across the city are supported by adequate infrastructure, the city expects growth to pay for growth, regardless of where it happens, Ms. Goldstein says. “This is the way that we have proceeded forward with all neighbourhoods – equity amongst everyone.”
This approach has a significant impact on the location of new townhomes.
Despite Calgary leading the country in missing-middle starts in 2025, only 13 per cent of all townhomes started this year are being constructed in a central neighbourhood, whereas roughly half of starts in this segment are located on the city’s outskirts, where proximity to amenities is dismal.
This year’s numbers stand in stark contrast with 2023, when just over one third of townhouses had been started in a building-out neighbourhood by the year’s third quarter.
“That’s good news,” says Ms. Goldstein, who sat in the task force that helped shape the City of Calgary’s affordable housing strategy. “Because we have a city that’s thriving with 50 per cent in the inside and 50 per cent in the outside – this is exactly what we talked about when we talked about city-wide rezoning.”
This growth pattern, however, limits the options available to moderate-income Calgarians to car-dependent neighbourhoods, where the cost of missing-middle housing is often lower than in the city centre, raising questions about equity, as transportation costs can burden less affluent households.
To increase housing affordability in the city’s centre, more supply is needed.
“The more people can afford a new home, the more builders can bring in supply to the inner city,” Mr. Gaidhar says. “If new supply is bottlenecked because of fees, prices have to stay where they are.”
In the last quarter of 2019, four out of five townhomes sold upon completion in Calgary were priced below $350,000, CMHC data shows. Strikingly, in the second quarter of 2025 only eight new dwellings in this segment sold for less than $350,000, or about two per cent of all absorbed townhomes.
Development charges may not be causing the price of townhomes to skyrocket, but they compound the financial burdens of already overstretched households.
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Because development charges can impact affordability, in 2016 the City of Calgary introduced a program to waive some development fees on eligible affordable housing projects, enabling non-profit builders to deliver homes well below market rates.
A case in point is Attainable Homes, a wholly owned subsidiary of the City of Calgary that offers for-sale and rental homes at deeply discounted prices to qualifying Calgarians.
Currently, the agency is building 230 stacked townhomes in Albert Park-Radisson Heights, an established neighbourhood east of Calgary’s Deerfoot Trail. Upon completion, the project’s sale prices are expected to remain below $350,000.
“Our price points are a reflection of all the project costs, including bank requirements for financial stability, ” says Jaydan Tait, president and CEO of Attainable Homes. Although he declined to disclose the cost of the Albert Park-Radisson Heights project, Mr. Tait did point at the reason his organization can deliver townhomes at an affordable price.
“We are different than a market builder because they would be driven to meet market demand at a price that maximizes profitability,” Mr. Tait says. “But our drive is not to maximize profitability, our drive is to actually maximize affordability.”
Nevertheless, because non-profit developers play only a small role in meeting Calgary’s demand for housing, Mr. Tait believes that reducing upfront fees on market construction is a measure essential to improve affordability.
“Asking the ultimate user – tenant or owner – to cover the cost of shared infrastructure is a big problem,” he says, noting that, when calculating the upfront charges developers pay for infrastructure upgrades, city administration doesn’t account for the increased tax revenue densification unlocks.
“If the development authority understood that, Calgary would be a more attractive and investable place,” Mr. Tait says. “Everyone could be housed, but we choose to follow a pathway that sees the development process as a vehicle for overwrought review and taxation.”