Opinion: Calgary can’t build its way out of housing crisis if fees keep outpacing reality

Calgary is growing exponentially. The city welcomed more than 80,000 people in 2024 to the Calgary Metropolitan Area. People are moving here for opportunity, affordability and quality of life. Yet, for all our competitive advantages, the economics of building new rental housing in this city are tightening. That should worry all of us. If we are serious about addressing the housing shortage, governments need to confront a hard truth: fees and taxes on new housing have risen far beyond inflation, and beyond what can reasonably be justified as “growth paying for growth.”

A new national report commissioned by NAIOP, Canada’s commercial real estate development association, lays out the numbers starkly. Across the country, government-imposed fees on new rental construction have climbed between 290 per cent and 628 per cent since 2010. Calgary and Edmonton do not face the same absolute fee levels as Toronto or Vancouver, but the trend line is unmistakable: Calgary’s fees have risen 536 per cent — more than 13 times the rate of inflation.

Builders are now paying the equivalent of four and a half months of rent per unit before a single Calgarian moves in. The city’s non-residential property tax rate — 4.61 times the residential rate — adds another major cost pressure on top of higher construction and financing costs, pushing projects even further out of reach. These factors are creating an environment where projects that should be viable simply no longer pencil out, even as demand for purpose-built rentals continues to grow. Of course, rents are determined based on total project cost. Even when a developer decides to take the risk to proceed with a project, ultimately it is the end consumer who pays for development charges via higher rents.

Municipal leaders often argue that development charges ensure growth pays for growth. In theory, that principle is sound. In practice, the escalations we’ve seen over the last decade tell a different story. When layers of charges accumulate across parkland dedication, off-site levies, permitting, inspections, and community benefits, and when municipalities lean on development as a revenue source, it becomes impossible to claim that these costs simply reflect servicing the needs of new residents.

At some point, the system becomes less about growth paying for growth and more about growth backfilling municipal budgets.

Calgary is not alone in facing this pressure. Toronto now sees government fees consume up to 31 per cent of total construction costs for a typical apartment building. Vancouver sits around 20 per cent, with development charges set to climb another 19 per cent by 2027. These aren’t marginal increases; they are structural shifts that are pushing the economics of rental housing to a breaking point.

Every level of government says it wants more rental housing. The federal government has made reducing development charges a priority in its housing proposals. But federal ambition will only go so far if municipalities continue to lean on new housing as an all-purpose funding model. Governments must reduce unnecessary charges and ensure that costs are directly tied to actual growth-related needs and not general revenue pressures.

We can’t solve a housing crisis by making it more expensive to build housing. If governments want us to build more homes, they need to start by reducing barriers and costs.

Chris Ollenberger is chair of the Government Affairs Committee, NAIOP Calgary.

Stewart Fraser is vice-president of Commercial, Acquisitions & Entitlements, Cantiro.