Off-Site Levy FAQ

What is an off-site levy (OSL)? 
An off-site levy is a funding mechanism to build off-site infrastructure that is required to support development. Infrastructure is initially funded by the municipality, with a proportion of costs recovered as development proceeds. Off-site levies are not a tax, but rather a cost recovery tool based on the principle that growth pays for growth. 
How does an OSL work? 

An off-site levy is a funding mechanism for municipalities to support growth. 

A subdivision requires infrastructure on site as well as large-scale infrastructure off-site that supports the subdivision, such as roads, water, sanitary, and storm sewer systems. These large-scale infrastructure projects are expensive, and typically benefit more than one development.

A developer may not have the capital funds to pay all infrastructure costs up front to support this new growth. The role of the municipality is to bankroll the construction of this infrastructure and collect levies as development progresses.

Off-site levies are not a tax, and municipalities do not make revenue from them. The money spent on the construction of OSL infrastructure will equal the amount of money collected. According to provincial regulations, OSLs cannot be used to fund operations or maintenance, only new construction.
Who pays off-site levies?
Off-site levies are paid by developers at the same time as the Subdivision or Development Permit.
How are OSLs regulated? 

Off-site levies are regulated under the Municipal Government Act (MGA) and Off-site Levy Regulations. The regulations authorize municipalities to collect off-site levies through adoption of a bylaw. Medicine Hat's current bylaw (#4721) was passed by City Council in 2022. For more information about off-site levies, click below:

Off-Site Levies
How do I know if OSLs are owing on my parcel of land? 

If OSLs have not been previously paid on a parcel of land, it is likely that OSLs are owing. The OSL Estimator Tool (link below) will identify an estimate of the amount owing for OSL’s for any particular parcel size in any given area of Medicine Hat. For further questions or confirmation, contact Planning & Development Services.

Off-Site Levy Estimator Tool

About the OSL Bylaw update

An amendment to the OSL Bylaw #4172 was brought forward and passed at regular Medicine Hat City Council meeting on November 21, 2022. To learn more, see below for City Council meeting videos and records.

City Council meeting videos  City Council Agendas and Minutes

Why was Medicine Hat's OSL framework reviewed in 2022? 

The last review of Medicine Hat's OSL framework was undertaken in 2013. Significant changes in the assumptions about city growth and impacts on development made a review of that framework advisable.

This review updated the OSL Bylaw to: 

  • Align OSL framework with the 2020 Municipal Development Plan (MDP) and updated regulations
  • Create a bylaw, process, and model that is more easily understood
  • De-couple the Municipal Assist Subsidy from OSLs
  • Streamline processes and reduce red tape

The update is intended to refresh the OSL model and framework to produce rates that reflect current development conditions and best practices.

Off-Site Levy Map 2023
What specific changes were made to Medicine Hat's OSL framework? 

Map of proposed Off-Site Levy boundariesChanges to the OSL framework include:

  • The City of Medicine Hat was re-mapped for OSLs and consolidated into new benefitting areas with similar infrastructure and servicing needs. 
  • An established area (Area #8) was identified and this area not pay off-site levies moving forward, on the assumption that these areas would only receive minimal benefit to the projects identified and have needed infrastructure in place. Specific redevelopment levies may be considered if large areas of land are redeveloped within the established area.
  • Transportation projects are now based on the actual population growth in the community instead of the amount of land developed. This is viewed as a more fair and equitable approach.
  • OSL Project Lists were updated to reflect development needs of today based on new growth projections and the 2020 Municipal Development Plan.
  • Additional changes to the OSL Regulation and MGA identify that facilities such as Police Stations, Fire Stations, Recreational Facilities and Libraries can now be included in the OSL when required to support growth. At review time, there were no additional facilities required but it is expected that as plans are completed, these types of growth required facilities will be included in the OSL in the future.
How do the updated OSL rates compare with other communities? 
Each community has unique servicing and development needs, therefore it is challenging to compare one community's OSL framework and rates to another. With this understanding, the updated (2023) City of Medicine Hat OSL rates are, on average, less than previous iterations for our city. This is due to the reworking of the entire OSL framework.
How does the updated OSL compare to the previous version? 
The 2023 rates for OSLs in Medicine Hat are, on average, less than the previous bylaw. The original average rate was $234,644 per hectare. The current framework and updates project the levy to be approximately $102,012 per hectare. 
Why de-couple the OSL from the Municipal Assistance Incentive program? 
The Municipal Assist Incentive of 30% and 90% was initially introduced to encourage development in areas where high OSLs were owing. De-coupling the OSL and this incentive captures the true cost of development while allowing for an incentive program to be managed separately with a focus on encouraging and attracting desired types of development. Medicine Hat was the only Alberta municipality subsidizing OSLs in this way. The Municipal Assist program ended as of December 31, 2022.
I'm a land developer. What impacts will the new framework have on me? 

Due to the changes to the benefitting areas, the OSL projects, and introduction of an established area, some developers may notice an increase in OSL rates, and others a decrease or no rate applicable to their project site(s). The current framework ensures that each area accurately reflects the infrastructure needs known as of today. With the de-coupling of the municipal assist, developers are now responsible for paying the full cost of the OSLs owing, with opportunities to apply for incentives independently.

Off-Site Levy Estimator Tool  Medicine Hat Economic Development
When did the current Medicine Hat OSL rates take effect? 
The current OSL rates took effect on January 1st, 2023.