New home construction adds extra $8.2 million to Edmonton’s coffers but construction may slow

City economist Felicia Muthardy said more units completed means more funds are coming in through taxation.

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New construction and rising property values ​​in Edmonton last year will add $8.2 million more than expected to city coffers.

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More construction projects — mainly new homes — began and finished construction last year than the city anticipated, administrators told council on Tuesday reviewing the 2022 budget. The city-wide 1.9 per cent property tax increase set last fall is unchanged.

City economist Felicia Muthardy said more units completed means more funds are coming in through taxation.

“Low interest rates, growing demand for more space, and to some extent, a slower response in existing home market supply have contributed to much stronger residential construction than we anticipated,” said Muthardy.

Changes in zoning, new builds and lot-splitting are all part of assessment growth, which is separate from market forces like supply and demand.

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While housing demand is expected to stay strong this year, other factors mean construction could slow down, Muthardy said.

“Interest rates are rising. The cost of construction has also been on the rise, acceleration beyond a pace beyond what we have seen historically, and supply chain disruptions are still affecting the availability of delivery of some required materials for construction,” she said. “We think the pace of construction will be negatively affected, at least in the short term.”

The city’s 1.9 per cent property tax increase breaks down to 1.4 per cent for municipal services, 0.3 per cent for renewing alleys, 0.1 per cent for the Valley Line LRT, and 0.1 per cent for Edmonton Police Service ($1 million increase).

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A bylaw to finalize the rate will be brought to council later this month. Tax notices will be mailed to property owners May 24. Payment is due June 30.

Transit shortfall covered

The $66.9 million transit funds from the provincial and federal governments are also helping the city make up for money lost with a drop in ridership last year amid the COVID-19 pandemic.

Mayor Amarjeet Sohi said without this money — and although it’s $13 million less than requested — Edmonton would have had to scale back both bus and LRT service by the end of the year.

“We would not have been able to provide public transit at the levels that we are doing now, because we didn’t have the money,” he told media outside council chambers. “With this money, we will be able to continue our transit system and operations and allow more people to come back to the system.”

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Council is also looking at other ways the city can raise money for transit, such as through parking fees or receiving a portion of the province’s motor fuel tax.

Women’s shelters get $880K

Meanwhile, the city on Tuesday voted to give women’s shelters a one-time increase of $880,000 using funds initially set aside to increase the police budget.

About half of the funding will go toward nursing costs. The rest will help people who are precariously housed because of their immigration status, and both mental health and cultural supports, according to a staff report.

Coun. Jo-Anne Wright said domestic violence impacts society as a whole and it’s not just a women’s issue.

“Shelters continue to be a safe haven for those fleeing domestic violence and helping transform not only the lives of those they serve, but the very community,” she told council.

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Wright was surprised to see that, in many cases, children are being brought to these shelters in Edmonton.

“To have this included in the overall affordable housing strategy provides families an alternative for those living in abusive relationships. I think we need to continue advocating to the provincial government, and also (on) a one-time basis, support these shelters’ needs.”

Plan for problem properties proceeds

Councilors also voted to give Edmonton Fire Rescue Services $850,000 to run a year-and-a-half-long pilot project with the Community Property Safety Team on Tuesday. Firefighters have already begun cracking down on derelict buildings creating fire hazards.

The city is also now alotting $915,000 to further boost its efforts to tackle so-called “problem properties” creating nuisance and safety issues for neighborhoods, including people who live in them. Last year, another 251 vacant and derelict properties were added to the city’s list.

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