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 City’s role 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 off them. The money spent on the construction of OSL infrastructure will equal the amount of money collected. OSL 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. The current bylaw (#4157) was passed September 4, 2013. More information can be found on our Off-site Levies webpage.
How do I know if OSLs are owing on my parcel of land? 
If OSLs have not been previously paid, it is likely that OSLs are owing. The Planning & Development Services department can tell you if OSLs are owed on your land.

About the OSL Bylaw update

The following information is in draft form, subject to consultation with industry stakeholders and subsequent adoption by administration and Council.

To read more about the the 2022 off-site levy review, please visit the project page.

Why is the OSL framework being reviewed? 

The purpose of the OSL review is 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.

What specific changes are being proposed to the existing OSL framework? 

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

  • The entire City has been re-mapped for OSLs and consolidated into new benefitting areas with similar infrastructure and servicing needs. 
  • An established area (Area #8) has been identified and it is recommended that 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 re-development 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 this 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 does our proposed new OSLs compare with other communities? 
Each community has unique servicing and development needs and it is difficult to compare one community's OSL framework and rates to another. With this understanding, the proposed City of Medicine Hat OSL framework is on average less than previous iterations for our city and appear to be slightly below the average set by cities of similar composition and size.
How does the updated OSL compare to the previous version? 
The proposed off-site levy appears less on average than the current levy. The original average rate was $246,000 per hectare. The new framework and updates project the levy to be approximately $127,000 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 will capture 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. 
I'm a developer. What impacts will the new framework have on me? 
Due to the proposed changes of the benefiting areas, the OSL projects, and introduction of an established area, some developers may see an increase in OSL rates, and others a decrease or no rate applicable to their site. The new framework ensures that each area accurately reflects the infrastructure needs known as of today. With the de-coupling of the municipal assist, developers will now be responsible for paying the full cost of the OSLs owing, with opportunities to apply for incentives independently.
What are the next steps for the project? 
As per the requirements of the MGA, the City will undertake a consultation process with the development community. The intent is to bring forward an updated bylaw by the end of Q4 2022. The City of Medicine Hat will report annually on off-site levies collected and expenditures.