When setting in place a research agenda that seeks to examine both the costs and benefits of growth and development, it's important to keep property tax discussions and the related operating budget issues separate from capital budget matters and development costs.
The costs paid by developers and builders, both commercial and residential, are solely intended to provide for critical infrastructure in new developments and where necessary to contribute to the enhancement of existing infrastructure that is needed to support basic services in new neighbourhoods. Levies paid for development are not intended to pay for operations like garbage pickup, snow removal or road repairs. These are operating budget issues paid for through property taxes or user fees and not through capital budgets or development fees.
A new neighbourhood is more than just houses. There's also critical infrastructure, according to an article by the Nova Scotia Home Builders' Association, when addressing high costs for land development in the Halifax Regional Municipality. Municipalities and property taxpayers make no investment in the development process or the related costs, but the municipalities do collect revenue from builders, developers and new homebuyers through levies, fees, permits costs and other charges.
It's important for new home buyers to understand the costs covered in the price they pay for the land their new home is on. We, though, must not confuse an already complicated debate by suggesting that somehow the cost of snow removal or street cleaning should also be added to the cost of new housing.
Developers and builders pay up front for all of the new neighbourhood infrastructure, which includes roads, bridges, water and sewer lines, utility poles and wires, legal and engineering fees, sidewalks, traffic signals, street lighting, landscaping, walkways, parks and playgrounds, and central services like lift stations, water systems and waste water treatment facilities.
Municipalities differ on what each consider to be basic services. They, however, pay nothing towards these development costs.
The new homebuyer in fact pays all the costs in the price they pay for land. The alarming rate of increase in these fees in the last 10 years threatens our future as a growing province and makes the dream of home ownership more and more elusive. Nearly all of these government-imposed development fees have increased anywhere from five to 30 times the rate of inflation since 1997.
An entry-level 55-foot lot in 2002 in Saskatoon was still available at a cost of $35,000, while that same lot now is not a standard lot and likely would cost anywhere from $150,000 to $250,000. A 30-foot entry-level lot in Saskatoon today will cost $105,000. Restrictive land supply and urban containment policies along with this escalation of land development levies by municipal governments continues to threaten the prosperity of communities in Saskatchewan.
The industry commends the City of Saskatoon and cities and municipalities in the region for engaging in the debate that one hopes will address these threats to housing affordability, job creation and economic growth. The province of Saskatchewan expanded its role in assisting municipalities with plans for residential development as an essential element of healthy, sustainable community growth.
Programs that encourage municipal collaboration and regional planning in housing development in partnership with private enterprise are a clear commitment on the part of Saskatchewan Housing Corporation to partner with the housing industry and regions to achieve real outcomes in addressing housing affordability and supply issues.
Regional collaboration will also allow many urban and rural municipalities to combine resources to make planning and development more efficient and economically sustainable. Currently, Saskatchewan has 786 municipalities, which reduces the possibility to achieve economies of scale, and thereby reduce costs and derive benefits from seeking critical mass.
Reorganizing the existing municipal model to a regional governance model can increase planning and funding options and efficiencies for municipalities. This means real cost savings for individuals and families living in these communities.
In the near term, however, the provincial government has acknowledged the need to encourage more municipal collaboration and is putting resources in place to support this. Further, the position of the government and the Ministry of Government Relations is that, when needed, they will intervene where poor relations are actually causing barriers to growth and are at cross-purposes with the Saskatchewan Plan For Growth. Adopting regional planning authorities will serve, where necessary, local, rural and regional interests, but moreover they will enhance prov-incewide efforts to grow the new Saskatchewan.
Fortunately, in the Saskatoon area there is movement toward more collaboration, but this isn't the case in other parts of Saskatchewan. There is real leader-ship and innovative thinking in our region.
All of us have a role in building the new Saskatchewan, driving both growth and regional prosperity. Many people are coming here for the economic opportunities, but we need to make decisions that will assure a supply of land that fosters growth and makes attainable, quality housing a reality.