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Home > Developing a Community > Development Costs
Developing a Community: What are the costs associated with Developing a Community?
Many factors influence a person’s decision to purchase a new home. Lot size, housing style, size of the home, finishing materials, proximity to local amenities, etc., all play an important role in what is one of the most significant purchases a person will make in their lifetime. In today’s market, buyers have become increasingly more knowledgeable and recent surveys have shown that community design and the individual developer are high on the home purchaser's priority list when choosing their new home.
When an individual is considering purchasing a new home, they generally understand the factors that influence the cost of constructing a home, but are less informed about what goes into developing a community. Before a home can even be built, the community itself must be created. This is where the developer comes in.
There are many common misconceptions associated with the cost of land development in Calgary. To help clarify some of these misconceptions, the following summary is provided:
Acquisition of Raw Land & Carrying Costs
The purchase price/acquisition of land is just the starting point for the developer. Developers will often look 10 to 15 years into the future when they purchase land. As such, the developer incurs significant carrying costs from the time the raw land is purchased until the last subdivided lot has been sold. Although raw land is sometimes farmed, it does not generate any significant income and revenue is only realized upon the sale of the finished subdivided parcels. Carry costs, including property taxes, interest for financing, legal/professional consulting fees, security, municipal levies and fees, marketing, servicing of the land and construction of show homes are just some of the expenses incurred.
Development Costs
Many people are unaware that initially the developer pays for the following:
- Preliminary planning & engineering (involves determining the size, layout and orientation of the community; designing efficient and safe traffic flows; connecting to existing services plus allowing for future growth)
- Deep Utilities (such as water, sanitary, storm and service connections)
- Storm water management facilities
- Stripping and grading of the site (site preparation that includes removal and storage of topsoil, placement and compaction of engineered fill to exacting standards, preparation of road beds)
- Placement of utilities (electric, gas, cable, telephone)
- Construction of surface improvements (roads (asphalt), rear lanes (if any), curb and gutter, bus stops, wheelchair ramps and driveway aprons)
- Consultant fees (archeological, environmental, planning, engineering, surveying, marketing, etc.)
- Detailed planning & engineering design (includes land surveying, determining the size of the lots, width of the roads, parks open space areas, landscaping, overland drainage flows, etc.)
- Fencing (sound attenuation, screening, decorative, boundary)
- Landscaping of parks and school sites (including trees, irrigation and playground equipment)
- Electrical feeder mains
Municipal Infrastructure Costs Paid for by the Developer
The following Municipal infrastructure costs are also paid for by the Developer, over and above what is covered by the general tax base (property taxes):
- Application/approval fees (such as Land Use Amendment, Subdivision, Development Permit, Building Permit, Electrical Permits, etc.)
- Overland drainage facilities
- Municipal assessments/levies paid to The City for storm sewer trunklines, community and recreational facilities, transportation levies, inspection fees, signage and street marking (see Standard Development Agreement levies)
- Parks, municipal reserves, environmental reserves, school sites (land that must be dedicated for use by the municipality or school boards)
- Oversize charges for major roads, parks & utilities (see Standard Development Agreement levies)
- Large scale roadways (off site)
- Park and school site preparation
- Municipal taxes
- Security/letters of credit
- Water usage
- Lighting (streets, major roads and walkways)
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