TAMRMS#: B06
10.1
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Amendment to Council Policy C-FS-05 Budget & Taxation Guiding Principles - allocation of new assessment growth
Notice given by: Councillor Biermanski
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PROPOSED MOTION(S):
recommendation
That Council amend Financial Policy C-FS-05 to revise the allocation of new assessment growth as follows:
1. Reduce the allocation to New Growth Business Cases from 55% to 45%; and
2. Increase the allocation to the Growth Stabilization Reserve by 5%; and
3. Allocate 5% of new assessment growth to a newly established Debt Offset Reserve for the purpose of reducing reliance on tax-supported debt financing for future capital projects; and
That Administration update Financial Policy C-FS-05 and return any necessary bylaw amendments establishing the Debt Offset Reserve for Council approval by July 14, 2026.
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ADMINISTRATION’S UNDERSTANDING OF THE INTENT OF THE MOTION
Administration understands that if the motion is passed the City will apply new assessment growth dollars as follows:
• 20% as a contribution to lifecycle reserves
• 25% to offset the base budget
• 45% to fund new initiatives
• 5% as an annual transfer to the Growth Stabilization Reserve
• 5% to a new reserve “Debt Offset Reserve” to be used to offset tax-supported debt financing for future capital projects.
ADMINISTRATION’S RECOMMENDATION
Administration does not recommend a change to the use of Growth Assessment dollars.
PURPOSE OF REPORT
The purpose of this report is to present a motion for which Councillor Biermanski gave notice on March 3, 2026.
ALIGNMENT TO COUNCIL DIRECTION OR MANDATORY STATUTORY PROVISION
On July 5, 2021, Council passed the following motion:
(POL-21-006)
That Policy C-FS-05 Budget and Taxation Guiding Principles (Section 14.b.ii) be amended to distribute new assessment growth as follows:
a. 25% to offset the base budget
b. 20% to increase contributions to life cycle reserves
c. 55% to fund new initiatives.
On December 3, 2015, Council passed the following motion:
(C598-2015)
That City Council Policy C-FS-05 Budget and Taxation Guiding Principles, provided as Attachment 1 to the agenda report entitled “Budget Guiding Principles Policy” dated December 1, 2015, being effective 2017 budget, be approved.
NOTE: The amendments to Policy C-FS-05 on December 3, 2015, included new assessment growth revenue of 70% growth revenue to fund new initiatives (business cases and/or capital charters) and 30% to offset the base budget property tax requisition.
On March 3, 2014, Council passed the following motion:
(SCF20-2014)
That Policy C-FS-05 Budget and Taxation Guiding Principles be amended by substituting the new Policy C-FS-05 - Budget and Taxation Guiding Principles included as Attachment 1 to the agenda report.
This amendment included a new section on use of assessment growth:
18. New Assessment Growth
a) Apply new assessment growth revenue through a balanced approach of 75% growth revenue to fund new initiatives (business cases) and 25% to offset base adjustments.
b) 75% of growth revenue in excess of business cases (residual balance) would be transferred to a growth reserve to stabilize future tax adjustments and mitigate financial impacts to residents and businesses.
c) If the annual tax rate increase is in excess of 3.5%, funds will be withdrawn from the growth reserve to limit the tax rate increase to 3.5%.
BACKGROUND AND DISCUSSION
Allocation of Assessment Growth
The structured use of assessment growth dollars was established in 2014 to support the principle that, where possible, growth pays for growth. Assessment growth represents tax revenue from new residential and non-residential properties that begin contributing to the municipal tax base. In essence this is new revenue that the City has not received before. However, as new developments come online, they also generate additional demand for municipal services. This includes expanded infrastructure, such as roads, sidewalks, and parks to maintain, as well as increased requirements for police, fire, and other municipal support services.
Policy C-FS-05 reflects a balanced approach to the allocation of new assessment growth revenue. While growth-related funding is primarily intended to support services for new residents, existing residents should also benefit through efficiencies and economies of scale. Under the current policy framework:
• 25 percent of the estimated New Assessment Growth dollars is applied directly to the operating budget to help reduce the tax burden of existing residents;
• 55 percent is allocated to fund new operating business cases; and
• 20 percent is used as a contribution to the lifecycle reserves to support future RMR (repair, maintain, replace) requirements.
The portion allocated to new business cases supports new requirements necessary to:
• maintain existing services over a growing resident and geographical base
• address emerging issues surrounding risk, regulatory changes, environment
• to support Council’s objectives, priorities, and policies.
Any portion of the 55 percent of growth revenue not applied to business cases or capital charters during the budget process shall be transferred to the Growth Stabilization Reserve.
A key advantage of this approach is that it allows the City to respond to growth-related operating pressures without a tax increase in any given year.
While the intent of the policy has always been to maintain a balanced approach, the proportion of growth used to fund new initiatives has declined over time - from 75 percent at inception to 55 percent today. The current motion proposes a further reduction to 45 percent. A reduction in assessment growth available for new requirements increases pressure on the base operating budget, which may result in higher taxes or reductions to existing service levels.
Annual Allocation to Growth Stabilization Reserve
If Council approves allocating five percent of assessment growth to the Growth Stabilization Reserve, this would support the principles outlined in C-FS-05 14.b.22: any portion of the 55 per cent growth revenue not applied to business cases or capital charters during the budget process shall be transferred to the Growth Stabilization Reserve. As noted in CM-26-010, a budgeted transfer of assessment growth funds to a reserve provides the City with a mechanism to mitigate future operating costs associated with growth-related infrastructure and services. This growth includes all costs to maintain Council approved service levels, including debt servicing. However, overly prescriptive allocation requirements may reduce the City’s ability to respond flexibly to changing growth conditions and emerging needs.
A five percent annual transfer, together with the existing five percent threshold required for the use of assessment growth, supports the principle that growth should pay for growth. If the threshold to apply the prior year’s assessment growth was reduced to 3.5 percent, as per CM-26-010 this could result in a greater portion of growth revenue being applied to immediate tax reduction, rather than to the long-term operating pressures generated by growth.
Annual Allocation to a Debt Offset Reserve
Council approval of an allocation of assessment growth to offset tax-supported debt servicing could be managed without the creation of a new reserve. This approach is consistent with the current practice whereby $800,000 of the prior year’s assessment growth tax revenue is annually committed to fund the Lakeview Accelerator Program (C-FS-05 14.b.iv.).
Under this model, the proposed five percent assessment growth would be committed through the same process and internally restricted to support future tax-supported debt servicing.
The chart below illustrates this approach. In this example the annual assessment growth is $3 million of which five percent ($150 thousand) is committed annually. By the year 2031 the City would be levying an additional $750 thousand in assessment growth revenue that has not been committed to ongoing costs. Should the City incur debt to fund new infrastructure the associated debt servicing could be added to the operating budget and offset using the prior-assessment growth.
In addition, the Growth Stabilization Reserve would have $2.25 million in one-time funding which would be available to support future Council approved capital initiatives.
Updating Council Policy C-FS-05 to direct the application of the five percent within the Growth Stabilization Reserve would align the intent without creating a new reserve.
As with other prescribed uses of assessment growth, increasing the specificity of allocations reduces the City’s flexibility to respond to unique or unanticipated growth-related challenges.
IMPACTS OF MOTION
Financial:
None at this time, however, there will be an impact on the ability to fund future operating business cases required to maintain council approved service levels.
Compliance & Legal:
None at this time.
Program or Service:
A reduction in assessment growth available for new operating requirements could impact the City’s ability to maintain existing service levels.
Organizational:
None at this time.
Risks
N/A
ALIGNMENT TO PRIORITIES IN COUNCIL’S STRATEGIC PLAN
Not Applicable
ALIGNMENT TO LEVELS OF SERVICE DELIVERY
N/A
ALTERNATIVES
If Council does not wish to support the recommendation, the following alternative could be considered:
Alternative 1:
New property assessment growth could be applied as follows:
• 20% as a contribution to lifecycle reserves
• 25% to offset the base budget
• 50% to fund new initiatives
• 5% as an annual transfer to the Growth Stabilization Reserve
Financial:
None at this time. There would still be an impact on the ability to fund future operating business cases required to maintain council approved service levels.
Compliance & Legal:
None at this time.
Program or Service:
A reduction in assessment growth available for new operating requirements could impact the City’s ability to maintain existing service levels.
Organizational:
None at this time.
Risks
N/A
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Report Date: April 7, 2026
Author: Suzanne Findlay
Department: Financial & Strategic Services
Department Director: Anne Victoor
Managing Director: Diane McMordie
Chief Administrative Officer: William Fletcher