CANMORE – Canmore council will lobby the province to gain an exemption or exception to the legislated debt limit when it comes to municipally-led housing developments.
The lobbying effort is designed to help the Town build more housing simultaneously from the Palliser Trail area structure plan (ASP) to construct affordable housing in the community more quickly.
Without such an exemption or exception, the completion of affordable housing in the Palliser Trail ASP and elsewhere will consistently bump the Town up against its debt limit cap, said Canmore Mayor Sean Krausert.
“If we’re going to do a lot of housing, we’re going to run into the ceiling of our debt limit and municipal debt is typically long-term debt for infrastructure,” he said. “Housing debt is a different animal. It requires an outflow of cash and a large amount of that is debt, but it’s secured by the asset in the property and it’s only there for a short period of time until you sell the asset and recoup the cash and pay back the debt.”
Under provincial legislation, a municipality can only have a debt limit 1.5 times the total revenue in its most recent audited financial statement. The debt servicing limit is 0.25 times from the same financial statement.
For Canmore, and its most recent audited financial statement, that means a debt limit of $93.34 million. They have $36.76 million in debt to leave $56.57 million, but a council directed municipal debt limit of 75 per cent of what legislation allows. Its debt servicing limit is $15.55 million.
But with housing projects – particularly ones that create density such as the Palliser Trail ASP – being costly with design planning, servicing infrastructure, construction and labour it would likely mean the Town and Canmore Community Housing (CCH) could only complete one at a time before starting the next.
Krausert noted such an exception exists for the Clean Energy Improvement Program, which facilitates additions and construction of green energy technology for homeowners, and the Town’s lobbying when it’s applied for housing would be similar.
Though he said the province’s initial response was not inclined to grant an exemption, Krausert said the municipality would be open to discussing exceptions on a case-by-case basis and he’s hopeful to have a meeting with Minister of Municipal Affairs Ric McIver to advocate for the cause.
While the Town would fund the bulky cost of the housing builds, when it sells off the units it would see a quick return on its upfront investment and provide badly needed affordable housing units, leaving it a “win-win scenario,” according to Krausert.
“It doesn’t cost the province anything and it doesn’t jeopardize the taxpayers of the municipality because of the security,” he said. “It allows these projects to move forward by getting traditional financing. It’s a win all around.”
Town council directed Krausert at its November meeting – when it approved the Palliser Trail ASP – to secure an exemption of municipally-led housing counting towards the debt limit.
CCH is anticipated to return to council for first reading of a pair of buildings at 100 Palliser Lane. Originally expected for February, it’s now pushed back to May for a four-storey and six-storey building that would see the creation of a new direct control district from an existing one.
After first reading, it could return in June for a public hearing and subsequent second and third readings. If successful, the intent is to complete work by the end of 2025.
“With the current CCH project, it would be very good to have an exception at least,” Krausert said. “I’m hoping that we’re going to have a conversation in the next month or so with the minister and that we'll be able to plot a path forward that will benefit that project getting into the ground this year.”
Under Section 252 of the Municipal Government Act, municipalities are legislated in the borrowing they can assume. Canmore’s proposal would have any development of non-market or affordable housing not count towards the debt limit or debt service limit, but that such debt would be secured as a real estate asset and be paid through the sale or rental of such units.
McIver wasn’t available for an interview with the Outlook, but a spokesperson said the ministry would consider any request once it’s formally been submitted.
“Municipal debt limits have been established at a conservative level to minimize risk of a municipality overextending itself,” said Scott Johnston, the press secretary for the Ministry of Municipal Affairs.
“Any proposal for an exception will be looked at on a case-by-case basis based on the municipality providing solid reasoning as to why the extension is needed as well as how the debt will be repaid.”
A Nov. 29, 2023, letter of support was also offered by the Alberta Mid-Sized Cities Mayor’s Caucus, which Canmore and has two dozen municipalities across the province are a part of, to lobby the province.
In a Nov. 20, 2023, letter to McIver and Minister of Seniors, Community and Social Services Jason Nixon, Krausert wrote Premier Danielle Smith had challenged municipalities to let the province know if there were barriers to creating housing.
One barrier, Krausert wrote, was the municipal debt limit when it came to non-market or affordable housing. Though the town passed the Palliser Trail area structure plan late last year, Krausert noted the debt limit curtails the ability of a municipality to take on multiple housing projects at the same time.
“Our next step is to as quickly as possible initiate several concurrent affordable, non-market housing projects to meet the housing needs of our residents. However, even though Canmore stays well below a self-imposed debt limit (i.e., below 75 per cent of our allowable municipal debt limit), there is likely not enough debt space to finance a significant housing project, let alone several concurrent projects.”
Krausert said he spoke briefly to Smith when she was in Canmore, who encouraged him to write to the Ministry of Municipal Affairs.
He highlighted that since the biggest focus in the community is housing, it’s vital to draw from all opportunities to build as quickly as possible.
“Since the primary focus to address the housing crisis is non-market housing, which for the most part is to be built by the municipality or CCH because it doesn’t attract the private sector’s interest, because of the municipality’s involvement, it’s crucial we get some sort of exemption or exception in order to bring on the number of houses that we want to do,” he said.
