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Proportional benefit, Utility Master Plan, remain issues in appeal of Canmore's off-site levy

Canmore’s off-site levy bylaw will have the Land and Property Rights Tribunal determine the path forward with developers and the Town of Canmore at loggerheads.
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A section of The Gateway under construction at Three Sisters in Canmore in May. RMO FILE PHOTO

CANMORE – A sudden water shortage and a project to connect an isolated reservoir to the rest of Canmore’s water system began a snowball effect that would eventually lead to an appeal of the Town’s off-site levy bylaw.

Initially stated as being due to hot weather and an increase in water demand, it was determined multiple pipes throughout Canmore had leaks with ground heaving during the spring thaw and issues with pressure release valves that led to operational problems for the Grassi reservoir being short on water in June, 2023.

A long-proposed connection line would join the Silvertip reservoir, and its 5,400 cubic metres of water capacity, to the rest of Canmore’s system.

The project, which was in the Town’s 2016 and 2022 Utility Master Plan (UMP), was estimated to cost $1.29 million and be paid entirely by developers due to it being attributed to growth, according to the Town.

Developers, however, felt there was benefit to both groups, particularly after the water shortage and it providing two large reservoir options in the community instead of just one.

“[It] really became an example for the BOWDA (Bow Valley Builders and Developers Association) off-site levy committee of how things needed to be adjusted on allocation of benefit, particularly after the water loss event on June 8,” said Chris Ollenberger, chair of BOWDA’s off-site levy committee during the provincial tribunal appeal on Canmore’s off-site levy.

“Because the Town was reliant on the Grassi reservoir for water for about 70 per cent of its town … losing water in the Grassi water supply is critical. We felt, before the event but particularly after, connecting the Silvertip reservoir to a more central location in town … there is a benefit to residents to have two sources of treated water supply. If something goes wrong in one reservoir, you’ve got another and additional capacity where you don’t have to tell your residents you can’t do laundry.”

The issue was raised at the start of the appeal launched by developers on Canmore’s off-site levy bylaw, which will have the Land and Property Rights Tribunal (LPRT) determine the path forward with the two sides at loggerheads.

“That event provided some further insight into what could’ve been a weakness in the system,” Ollenberger said.

The difference in cost allocation and the extent to who benefits – existing or future residents – was raised throughout discussions between the Town and developers and again during the first day of the appeal process on Oct. 8.

The highly contentious disagreement between the Town and developers led to a rare appeal of an off-site levy bylaw, which could have potential precedent for both developers and municipalities moving forward.

Developers have argued costs imposed on them have erroneously added millions that shouldn’t be borne due to growth-related development and fall short of the Municipal Government Act (MGA) and off-site levy regulations. Town staff have said without the bylaw between $1-2 million a year would be lost in collections and, ultimately, put on taxpayers. They have been adamant it meets the province's legal test in following legislation.

‘Canmore is growing’

Gavin Fitch, the lawyer representing the Town at the tribunal, highlighted in his opening argument the municipality will grow significantly in the coming years and decades. With such an increase in population, he said, there will need to be an emphasis on new infrastructure which is largely taking place due to that growth.

“Canmore is growing. The entire province is growing, but by some estimates Canmore can double in population over the next few decades if all predicted growth occurs,” said Fitch. “This growth requires significant new municipal infrastructure. … It’s only fair for new development pays for the new municipal infrastructure that must be built to service. It’s very simple.”

Fitch argued the Town and CIMA+ – consultants for the municipality on the UMP – engaged for a lengthy amount of time on both the UMP and the off-site levy before it received council approval in March.

“The evidence will show the only real issue related to the UMP is the appellants' view that it fails to properly allocate to existing development in the Town,” he said. “The cost of new water and wastewater infrastructure required to service new development, that’s the real issue here.”

He said it was an attempt by developers to reduce what they have to pay to financially support municipal infrastructure.

Fitch added the Town has asked the LPRT to direct it to remove $14.5 million from the off-site levy bylaw, saying that amendment would be reasonable and “it properly allocates costs on new and existing development”.

“If the developers pay less, then Canmore property owners and taxpayers pay more. The Town is not trying to unfairly ask developers to pay more than they should. The Town is simply trying to get it right to ensure existing residents do not pay for infrastructure they do not benefit from and ensure developers pay what they rightly should.”

‘Transparency is the organizing principle of the MGA and the regulation’

Gwendolyn Stewart-Palmer, one of the legal representatives for the developers, noted the heart of the appeal was developers believing the off-site levy bylaw was not compliant with the MGA.

She highlighted it lacked transparency with calculations getting to financial figures in the levy, the methodology wasn’t clear as outlined in provincial legislation, lack of consultation with developers that created procedural issues and proportional benefit between developers and the municipality were fair.

She added the MGA requires an off-site levy must be “clear and reasonable” and information be publicly available to be replicated to verify. However, Stewart-Palmer said it wasn’t until the leadup to the provincial hearing such information became available.

“Our position is that transparency is the organizing principle of the MGA and the regulation,” Stewart-Palmer said. “Transparency was the word used by the minister when introducing these provisions in the legislature.”

Stewart-Palmer said their evidence shows the levy has more than capital costs – which aren’t allowed under legislation – such as consulting, existing infrastructure, contingency costs and interest.

The Town’s UMP and levy are inconsistent at times, she argued, with some projects in the UMP not aligning with a breakdown of costs as outlined in the off-site levy bylaw. The plan, which serves as a guiding document for off-site levies, was first presented to committee of the whole, eventually approved by council for planning purposes, and has since been updated without council ascent multiple times.

“There is inconsistent information between the off-site levy and UMP,” she said, providing multiple project examples from the master plan.

She further emphasized the Town asking the tribunal to direct it to remove $14.5 million from the bylaw that is ultimately about 11 per cent of the bylaw – including one project for $10.2 million that was deemed no longer needed – was illustrative of the Town including significant costs for infrastructure that are not required.

She said developers had significant issues with the costs associated with the wastewater treatment plant that is necessary due to growth, and others because of a change in provincial regulations, necessitating upwards of $100 million in projects on the plant to be completed by 2031.

She stressed developers understand a municipality can charge an off-site levy, but that the Town’s bylaw didn’t meet provincial legislation and regulations. Town staff have been equally adamant the bylaw was legally checked before council approval and meets all provincial requirements.

“Off-site levies, in essence, are the ability of the Town to use the credit card of developers to pay for infrastructure ultimately to be owned by the Town. It is important they be accurate. They must be correct, complete, transparent, reasonable, clear, publicly available.”

She raised issues developers had with what the MD of Bighorn pays and that it was calculated using existing wastewater flows that came in at two per cent when it should be 11.5 per cent, providing significant cost savings for Dead Man’s Flats residents.

According to their evidence, about $4.5 million in costs are incurred by the Town due to Bighorn essentially pre-purchasing capacity for Dead Man’s Flats, leading it to be a “costly error and caused the appellants to lose confidence in the calculations of the Town.”

“Because $131 million of new off-site levy infrastructure charges in a town of 15,000 people is a significant amount. This appeal has been brought in order to have the Town correct what we indicate ought to have been caught before the bylaw was passed.

Off-site levy, UMP disagreements longstanding

At multiple times in testimony, the discussion of unit counts – which is vital in the UMP for population projections, timing of development and when certain projects are needed – arose.

According to documents obtained through a Freedom of Information and Protection of Privacy request, unit counts were a significant disagreement between the Town and Three Sisters Mountain Village Properties Limited’s (TSMVPL) development plans dating back to at least 2016. The unit counts were eventually clarified when in 2023 the Court of Appeal upheld the LPRT’s 2022 decision on TSMVPL’s lands.

In discussion on the UMP between the Town and BOWDA, a March 24, 2023, email from Andreas Comeau, the Town’s manager of public works, to BOWDA executive director Ian O’Donnell stated “efforts to ‘try’ to get [development projections] right is not fruitful.” He noted a UMP undergoes an update every five to six years and the Town felt its projections were appropriate.

“The committee felt that the timing of development and amount of development were key and core elements of development within the Utility Master Plan. … We recognize the Utility Master Plan is a feed into the off-site levy bylaw, so the more we try to get right … would be useful and productive for everybody,” Ollenberger said.

Ollenberger, who chairs BOWDA’s off-site levy committee and is also part of Calgary’s council-approved off-site committee, said the Town and developers did reconcile unit counts that were a point of contention between the two groups but additional information was needed and not received until submissions were made to the tribunal.

He noted developers – specifically at The Gateway commercial area under construction – have paid $640,000 in levies under the new bylaw.

In a lengthy testimony followed by a cross-examination that went for about seven hours, Ollenberger, Fitch and Kathleen Elhatton-Lake, co-counsel representing the development community, highlighted the two sides' differences in whether adequate consultation was completed.

The two sides used several emails between developers, municipal staff and consultants – primarily from the last two years – to highlight one another’s cases.

Ollenberger highlighted several emails from O’Donnell and BOWDA chair Brian Talbot in the months leading up to council passing its off-site levy bylaw as efforts to find a resolution and avoid an appeal.

Fitch stressed the Town consulted developers, but at a certain point the two sides ultimately just disagreed with one another and the Town needed to move forward with approving an amended off-site levy bylaw.

He read from a Sept. 20 email from Whitney Smithers, the Town’s general manager of municipal infrastructure sent to O’Donnell and other BOWDA members and Town staff that “the Town’s approach recognizes benefit to the existing community where it is present.”

“The Town heard you, they just didn’t agree with you,” he said, adding they adjusted a project in between first and final readings of council and the $14.5 million in changes the Town is asking the LPRT to direct it to amend in the bylaw.

“We hear your position on cost allocation, we do not agree.”

The appeal continued Oct. 9, with the Outlook publishing its print edition before the end of the hearing. The appeal hearing is scheduled to run until Oct. 18.

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