TAMRMS#: B06
6.3
Information Item Only
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Northeast Servicing - Financial Analysis Assumptions
Presented by: Kristina Peter, Director, Planning and Development; Anne Victoor, Director, Finance and Strategic Services; Dawny George, Director, Engineering Services
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SUMMARY
This report summarizes the advancement of Northeast Servicing Design, its estimated construction cost, potential third-party funding explored, and the stakeholder engagement to date. The background information provides insight into growth and financial analysis that may aid the discussion and debate of proposed Council motion, CM-26-005 on April 21, 2026.
ALIGNMENT TO COUNCIL DIRECTION OR MANDATORY STATUTORY PROVISION
On January 13, 2026, a Notice of Motion was given and subsequently updated on February 24, 2026:
That on or before April 21, 2026, the following motion is debated: That project charter WASWT-021 - Northeast Servicing Project is approved and the first reading of the borrowing bylaw is brought before council by May 5, 2026.
On May 16, 2022, Council passed the following motion CB-22-047:
That Capital Project Charter WASWT-021-Northeast Servicing Projects be added to the 10 year municipal growth plan in 2023 for future funding consideration.
That funding in the amount of $2,000,000 be approved from the Off-Site Levy Recovery Funds in 2022 to advance the design component of the project described as phase 1 in the attached project charter.
BACKGROUND AND DISCUSSION
The discussion below will entail two case studies: 1) Northeast Servicing Funding analysis without any third-party funding or grant opportunity and 2) Northeast Servicing Funding analysis with potential third-party funding or grant opportunity.
The following discussion would reference growth in three contexts and will be annotated as noted below for clarity.
Population growth - Growth (P) in units of number of people per year
Land Absorption growth - Growth (A) in units of hectares per year
Economic growth - Growth (E) in units of Gross Domestic Product (GDP) per year
Due to the nature of each of those measurements, it would be challenging to draw a correlation between the three. In the context of financial analysis for potential front ending by the City, the most relevant measurement is growth (A) - Land Absorption growth.
Flourish, the City’s Municipal Development Plan
Approved by City Council in 2021, Flourish provides strategic direction that complements the City’s growth strategy through a holistic framework integrating economic, environmental, social, and cultural objectives. To support this approach, policies related to land use patterns, density, intensification and redevelopment targets, and built form were established to guide population and land absorption growth (P)(A) in a manner that aligns municipal investment with long-term financial sustainability. This approach enables the City to continue delivering the high-quality services valued by St. Albert residents.
When considering decisions related to infrastructure servicing and financial investment, the City evaluates cost-benefit implications, investment timing, and broader financial impacts, including tax and off-site levy considerations, and alignment with Flourish’s growth strategy (P)(A). Lands that benefit from the Northeast Servicing (NES) infrastructure investment include those lands already approved within existing Area Structure Plans, Priority Areas for Outward Growth, and Areas for Growth (Attachment 1: Flourish Map 4: Priority Areas for Growth).
Since the adoption of Flourish in 2021, several fundamental factors have emerged that influence the City’s growth and servicing context. The City has incorporated the annexation lands, and servicing capacity in the northeast quadrant has now been fully allocated. During this period, St. Albert has experienced higher-than-average land development and population growth, while the Federal Government has placed increased emphasis on expanding housing supply nationwide.
In addition, in 2025 City Council approved the Northeast St. Albert Area Structure Plan, which enables growth to accommodate an estimated 10,600 additional residents.
Planning for Growth
The City of St. Albert is a growing community with over 74,000 residents. It has experienced steady growth over the past decade, as a highly desirable community to live and work in. Planning for this growth has been a focus for community building partners including the City, other levels of government, and developers. Several key statutory planning documents have been approved by City Council, setting the foundation for new residents and businesses.
Lands within the Northeast Servicing Area include three approved Area Structure Plans (ASPs) within this area: Erin Ridge North, Jensen Lakes, and the Northeast ASP. These three planned areas would benefit from the northeast servicing infrastructure.
• Erin Ridge North
o Approved in 2010, last amended in 2025
o Residential neighbourhood with commercial land uses supporting an anticipated population of 4,451
o Land absorption in its final phases of development build-out
• Jensen Lakes
Phase 1:
§ Approved in 2014, amended in 2020
§ Land absorption approximately 33% built out
§ Requires NES to enable the completion of this approved development.
Phase 2:
§ Approved in 2022
§ Land absorption not initiated
o Both phases include a residential neighbourhood with commercial land uses supporting an anticipated population of 9,288. Phase 2 includes plans for a mixed-use, transit-oriented development node, and requires NES to enable future development.
• Northeast ASP
o Approved in 2025
o Land absorption not initiated
o Residential neighbourhood with commercial and business employment land uses, supporting an anticipated population of 10,599.
o Requires NES to enable future development.
In addition, the Northeast Servicing infrastructure would benefit lands located north and west of St. Albert Trail that do not currently have approved Area Structure Plans. In total, the Northeast Servicing Project would provide network servicing (sanitary, water, and storm) to approximately service the northcentral lands from Hogan Road to the eastern boundary of St. Albert.
Annexation and Assumed Growth
In preparing for the 2022 annexation, the City undertook extensive technical work to understand growth rates(P)(A), financial impacts, land use needs, and the appropriate timing of infrastructure investment. These studies were intended to ensure that growth could be accommodated with financial sustainability and support infrastructure investment in a coordinated manner.
At the time of annexation, the City had approximately 365 hectares of unabsorbed serviced land. Growth assumptions for land absorption assumed roughly 46 hectares per year. The annexation lands were generally organized into three infrastructure servicing areas: the Northeast, North, and West. To maintain financial sustainability and ensure that annexation-related tax impacts did not exceed 3% per year, development needed to be focused and coordinated within these servicing areas, rather than dispersed across all lands at once. These growth studies assumed that financial costs would be shared amongst the City and the land development community.
The annexation lands were also included within the Edmonton Metropolitan Region Growth Plan’s Metropolitan Area. Collectively, these factors allowed the City to plan for and enable growth over a 45-year horizon (based on the midpoint scenario), while supporting a long-term assessment balance of approximately 70% residential and 30% non-residential.
St. Albert’s Existing Serviced Land Capacity
Building on the annexation studies, Flourish’s Background Report identified sustainable growth as a core objective. Flourish articulates this goal as optimizing land, infrastructure, and financial resources to support both intensification and outward growth in ways that attract a diverse population and business base.
Achieving this type of sustainable growth required deliberate choices about where and when the City would invest in infrastructure. From financial, environmental, and cultural perspectives, it was not feasible for all areas of the City to be developed simultaneously without resulting in adverse financial impacts to the municipality - without other sources of financial contribution.
As a result, greenfield growth to the west was prioritized, alongside continued support for intensification elsewhere in the city. This growth strategy was designed to support the City’s long-term financial sustainability. Recognizing fiscal constraints, the City was not in a position to provide upfront servicing to all areas experiencing development interest. As a result, growth was deliberately prioritized to align infrastructure investment with available financial and servicing capacity.
To address development interest in areas not identified as priorities, the City explored several tools and approaches, including short-term interim servicing solutions, alternative funding mechanisms such as grants and third-party investment, and restricting development where servicing was not available.
More recently, the availability of federal grant funding has altered the City’s financial context. Access to federal funding reduces the upfront financial burden on the municipality and improves the feasibility of advancing development in additional areas of the City.
NES Area Servicing Context
For the development of the Northeast growth area to be suitable for its intended purpose, municipal infrastructure and servicing must be available and have sufficient capacity for the new development. The NES project is the ultimate solution to provide the necessary utility services (water, wastewater, and stormwater) and sufficient capacity to the Northeast growth area. A depiction of the NES project and overview of the northeast growth area is referenced in Attachment 2.
Since at least 2008, it has been known that there is limited servicing capacity to support full build out of the Northeast growth area and that a NES project would be required. This information has been incorporated into Area Structure Plans and Utility Master Plans throughout the years. For example, the Jensen Lakes ASP notes, “Currently, there is very limited servicing capacity within the existing infrastructure. The existing capacities do not have the ability to support the complete development of Jensen Lakes.” The City’s Offsite Levy Bylaw has recognized and incorporated the sanitary component of the project since 2010, the water component in 2012, and the storm component in 2013.
Northeast Development Progression to date
Although the NES Project is the ultimate project to wholistically service the Northeast growth area, development has been proceeding in this area by utilizing the ‘remaining servicing capacity’ that was available in the existing neighbourhoods including the Erin Ridge/Oakmont sanitary system and the Erin Ridge/Oakmont stormwater system.
As Developers came forward with their initial development applications within the NES servicing basin, they have been able to use the limited available ‘remaining capacity’ in these existing utility systems. The allocation of the ‘remaining capacity’ has allowed for the near complete buildout of Erin Ridge North and the partial buildout of Jensen Lakes as shown in Attachment 3.
Current Servicing Issue
A. Sanitary Servicing
The sanitary sewer system in Erin Ridge and Oakmont includes oversized gravity piping (450mm diameter) and lift station pumping capacity that was intended to support a portion of the growth further to the north, including both Jensen Lakes and Erin Ridge North, with limited capacity. In 2020, it was noted that the existing ‘remaining servicing capacity’ in the downstream sanitary system was close to being fully either utilized or allocated. The City initiated discussions with the active developers in the area and entered a Memorandum of Understanding (MOU) to progress the planning and design of the ultimate NES project. The MOU included non-binding commitments to outline responsibilities to undertake design of the NES project and work in good faith to find a mutually agreeable funding model prior to construction.
In 2022, the ‘remaining servicing capacity’ downstream was determined to have been fully allocated and a letter was sent to active developers notifying that future development may not be able to occur unless additional capacity was found or created. Since that time, on a case-by-case basis, the City has permitted developers to exchange subdivision stages to best utilize their allocated capacity to advance some prioritized development to construction.
To date in 2026, the existing sanitary capacity continues to be fully allocated with no further ‘remaining servicing capacity’ available for allocation. Other interim measures have been explored to potentially find some further capacity within the existing system. To date, this has included the small-scale waterproofing of existing sanitary sag manholes to reduce inflow and infiltration which then releases some capacity to offset the wastewater flows from the development of additional lands. Pipe storage is another option that has been explored since 2025 and is expected to create some limited additional capacity to enable a few additional stages of development in the active area.
An overview of the current interim sanitary servicing configuration and the proposed ultimate NES servicing project is shown on Attachment 4.
B. Storm Servicing
Development in Erin Ridge North is currently utilizing a chain of three stormwater management facilities which flows through the existing Erin Ridge and Oakmont storm system in the interim as shown on Attachment 4. The existing Erin Ridge and Oakmont storm system was oversized to accommodate a limited flow rate of stormwater from the upstream Erin Ridge North basin. As Erin Ridge North developed, the collection and retention of stormwater flow quantities entering the storm system continued to increase and the detention time in the stormwater management facilities has extended to longer durations due to the downstream restrictions in the Erin Ridge/Oakmont system (pipe sizes, Storm Water Management Facility (SWMF) storage and Erin Ridge stormwater lift station). The increased detention time in the stormwater management facilities, driven by additional runoff from lands outside the original planned catchment areas, increases the risk of surcharging and flooding during major storm events.
The ultimate NES project diverts stormwater flows directly to the Sturgeon River with increased capacity to accommodate flows, allowing for a faster drawdown of the stormwater management facilities as shown on Attachment 4.
C. Water Servicing
Water servicing improvements are required to provide adequate flows and pressures for consumption and fire emergencies for the future development lands in the northeast. Initial hydraulic analysis shows that the Northeast ASP will face challenges meeting water system design standards. The long-term solution will be a new water reservoir built in the north area, servicing both north and northeast area, however the NES project will only be providing the first step, which is the construction of a section of the future reservoir fill line, which will function as a water transmission line in the interim as shown in Attachment 4. This water transmission line will connect back into the existing water distribution system, which will provide an incremental improvement to the existing system for water flows and pressures. As development in the northeast continues, further extension of the future reservoir fill line and the eventual construction of a north reservoir will be required. The timing of the future north reservoir is currently being evaluated in the 2025/26 Utility Master Plan update.
The NES project, as part of the ultimate utility services plan, provides substantial infrastructure to support growth within the northeast area including the existing partially built neighbourhoods; Erin Ridge North and Jensen Lakes, while also unlocking new growth areas, such as the Northeast Area Structure Plan including approximately six quarter sections of unplanned land. Additional projects will be required outside of this initial investment to enable the continued full build out of the lands in the order of $200M (subject to change) in the next 25-year horizon, as shown in Attachment 5.
NES Project Proposal
In 2020, following the signing of the MOU, the active developers in the area took the initial lead in delivering the initial NES Project design. Following their efforts, the developers provided the City a preliminary design concept which included the use of a sanitary syphon design.
In 2022, the City took over the lead in the detailed design of the NES project due to the complexity and risk of design and delivery of a potential sanitary syphon option. To enable this, Council approved a $2M project budget for the detailed design and land acquisition for the NES project.
In 2023, the sanitary syphon design was ruled out due to design challenges. The project delivery was set back, and required restarting on a new concept utilizing a more traditional lift station and force main approach for the sanitary service.
In 2024, a 90% complete detailed design package was completed, which included sanitary, storm, and water services along with auxiliary scope as shown in Attachment 6. It was presented to both developers and Council. The 90% cost estimate provided at the time was $74.1 million for the whole project with a split of ~$71M (96%) for offsite leviable (OSL) infrastructure and ~$3M (4%) for non-leviable infrastructure.
In late 2024 and early 2025, the City met with active developers to discuss a cost sharing approach for NES project. Coincidentally, the City was exploring a potential grant (Canada Housing Infrastructure Fund) option (40% grant, 11% others and 49% City contribution) to help lessen the front ending costs required for this project. In early 2025 the City and developers temporarily halted cost sharing negotiations while awaiting a decision on the grant application. In early 2026, the City was informed that the grant ran out of funding and the NES project was not selected. However, in April 2026, the Government of Canada considered the City’s grant application under the Building Canada Strong Fund and approved a grant in the amount of $28,083,862 which represents approximately 40% of the eligible project costs. An announcement occurred on April 7th 2026, with formal grant guidelines and the form of agreement being prepared by the federal government to follow. This grant opportunity is further detailed below under Case 2: Northeast Servicing Funding analysis with potential third- party funding or grant opportunity.
While the funding discussion was paused, during 2025, the active developers proposed the use of a pipe storage option that would create limited additional capacity in the sanitary system. The proposal would utilize the existing 1200mm diameter deep trunk system along Everitt Drive, to attenuate the flows into the Oakmont 450mm diameter sub trunk system. The flows would be released at a controlled rate through a sluice gate which would not exceed the downstream system’s capacity. The City and developers undertook functional review of this option, and it has been accepted in principle by the City pending developers entering into servicing agreements which will include terms and conditions to construct and pay for interim maintenance of the infrastructure. At the time of writing of this report, it is anticipated that one of the active developers in the area will undertake the construction and funding of the pipe storage option ‘Everitt Drive Sluice Gate’ in 2026. See Attachment 7 & 8 for details of this interim option location and schematic overview of the existing and proposed sanitary system.
By the end of March 2026, the NES project detailed design is substantially complete with Issue for Tender drawings (procurement readiness) being prepared. Land acquisition has been essentially completed with only the final registration of documents remaining. Franchise utility realignment notifications have begun. Of the $74.1M cost estimate, $5.77M can be funded out of the existing Water Reserves, leaving $68.3M needing to be debt financed by the City. Of the $68.3 million, $65.4 million is offsite leviable. In accordance with C-FS-01 Financial Reserve Policy, the Off-Site Levy Recovery Fund Reserve may be used to fund the associated debt servicing costs. The remaining $2.96 million would be funded through the tax base. Pending a formal acceptable agreement for the announced ~$28M grant, this funding is anticipated to offset a portion of the costs related to the water, sanitary, and storm scope, and reduce the necessary debt requirements proportionally.
NES Project Front-End Funding:
The Northeast Servicing Project is broken down into 4 Categories:
OSL Project 10: Water Levy Infrastructure - $5.77M
OSL Project 5: Storm Levy Infrastructure - $25.78M
OSL Project 2: Sanitary Levy Infrastructure - $39.54M
Non-Offsite Levy Infrastructure - $2.96M
Total = $74.1M
Non-Offsite Levy infrastructure includes the installation of buried conduit for future City fiber and the installation of site-specific developer servicing (water and sanitary). These two scope items make use of the same shared trench as NES. Adding this work to the scope of this project allows for the benefit of cost and construction efficiency. The City would be entering into a cost recovery agreement with the developer for their benefiting scope. Due to the limited areas of disturbance from the proposed trenchless methods along Old Bellerose Drive for the pipe installation, it was determined to restore the existing trail with a gravel pathway. Please refer to Attachment 6 for scope details.
As of December 31, 2025, developers have paid levies towards NES as follows:
• $3.23 million towards Water Project 10;
• $1.61 million towards Storm Project 5; and
• $3.55 million towards Sanitary Project 2.
Levies that have already been collected are kept in reserve accounts for each type of infrastructure (i.e., water, sanitary, storm). Reserve accounts are then used to pay for new projects or repay parties that have built infrastructure.
While levies have been collected towards the NES projects, the sanitary and storm levies have been used to repay other sanitary and storm projects. This practice allows for faster cost recovery within a category and can reduce the overall interest expenses. A front-end party does not have to wait for development to occur in one specific basin to recover their costs. Instead, they are repaid using any levies available within an infrastructure category.
For example, only $3.23 million has been collected for the water component, however, the Water Levy Reserve has sufficient capital to cover the total Water #10 project cost of $5.77 million.
The storm and sanitary reserves do not have sufficient funds so this will require a party to “front-end” the total cost of that work. These costs will be recovered when development occurs and levies are collected across the entire City, not just from levies collected from the northeast basin. A front-ending party is then reliant on the City’s overall development. A slow-down in overall development impacts a party’s ability to recover costs.
Historically, the City has been the major front-ending party to finance off-site levy projects that support growth and development. The outstanding balance owed to the City is summarized as follows:
• As of March 2026, the City currently holds $58 million in offsite levy debt waiting for recoveries.
• The City’s levy debt is anticipated to increase to $113 million when costs are incurred for Council approved off-site levy projects such as Lakeview Servicing and the remainder of Villeneuve Road.
• The anticipated outstanding levy debt would increase to $178 million with the addition of NES.
• These costs do not include the additional funding that may be necessary to bring on the full build out of the NES benefitting area, with the corresponding utility and transportation servicing infrastructure of which some of them would likely be needed within approximately 10-15 years (See Attachment 5), yet to be confirmed through City’s Utility Master Plan and Mobility Choices Strategy completion in 2026/27.
As stated earlier, the City has historically front-ended major leviable growth projects because the City has better financing capacity and borrowing rates than most developers. While this practice has worked in the past, there are new challenges that exist today:
• Outward City expansion in multiple directions requires the construction of new large trunk infrastructure.
• Rising construction costs for infrastructure have put significant pressure on the price tags for these levy projects.
• The City has recently made significant investments in the west growth area. Growth in the west is emerging, with the Lakeview Servicing Project, currently underway, enabling additional employment land development once completed. Levy reimbursement of the City’s investments in the west are still in the early stages.
• The City’s investment capacity is limited when supporting demand for both growth infrastructure and other municipal capital priorities.
• The City’s debt payments for OSL projects have increased over the past six years. These annual payments are covered by the levies collected from overall development in the City. Any additional debt payments will require an increase in development to meet the City’s debt obligations.
In contrast, developers have expressed the following challenges in front-ending infrastructure:
• Their access to capital is tied to their development lands. Financial institutions may only provide a portion of the necessary capital for a project.
• To develop, developers also need to finance the infrastructure for their on-site servicing.
• Developers often get charged a higher interest rate on debt than the City.
• OSL projects benefit a wider number of developers, and therefore, one single developer cannot afford to front end major OSL projects such as NES.
However, developers are able and willing to front-end off-site levy projects that can be staged and are more affordable. In St. Albert, developers have and continue to construct off-site levy projects, particularly in the transportation category.
To address the concerns with an expectation that the City front ends most leviable infrastructure, the City is currently undertaking a review and developing an Off-Site Levy Front Ending Policy which is expected to be brought before Council in Q2/Q3 2026.
CASE 1: Financial Analysis - Background and Options for Front Ending NES Project without third party or grant funding opportunity
This report supports Council’s consideration of front ending the Northeast Servicing Project requiring borrowing of $68.3 million equating to an estimated $5.6 million in annual debt servicing. The following sections outline servicing needs based on land absorption and growth, Offsite Levy Recovery Fund alignment, debt capacity, physical growth, and the City’s overall financial sustainability to inform consideration of the investment.
Land Absorption Since the Adoption of Flourish
Since Flourish was adopted, the City has continued to monitor development activity. Based on existing Area Structure Plans, Attachment 9 - Unit Absorption (2021-2025) identifies approximately 14,000 residential units as supporting Flourish’s objective of reaching a population of 100,000. These units would accommodate an estimated population growth of roughly 32,000 people.
Population and unit counts associated with Jensen Lakes Phase 1 are included in these figures and align with Attachment 1 - Flourish’s Map 4 - Priority Areas for Growth.
Between 2021 and 2025, development permits were issued for 3,640 residential units, representing approximately 26% of the units identified in Flourish. If this pace were to continue, the City would have an estimated 15-year land supply of existing planned and serviceable land and units.
In addition, Council has approved the Jensen Lakes Area Structure Plan (Phase 2) and the Northeast Area Structure Plan. Once these areas are fully serviced, they will accommodate an additional 6,028 units, supporting approximately 14,000 people, growth (P) that extends beyond the current planning horizon of Flourish.
Over the past five years, development activity has remained steady across residential, commercial, and industrial land uses (see Attachment 10 - Land Planning Statistics). On average, the builder inventory has included approximately 397 vacant lots per year, while the development industry has introduced about 390 new lots annually.
Overall, based upon Attachment 10 - Land Planning Statistics, the City has experienced an average of 36 hectares of net land development per year over this five-year period (A)(P). This is below the 46 hectares per year assumed in the annexation projections. This difference is consistent with how long-term growth forecasts were prepared: absorption rates were averaged over a 50-year horizon, meaning lower rates early on and higher rates later as development areas mature. In addition, growth projections tend to be ambitious in the context of annexation applications so that the City doesn’t underestimate the required land needed to replenish its land bank. Please note that land absorption rates will differ between the Off-Site Levy Model and the Planning and Development Department data. This is because land absorption is calculated differently for different needs, as not all land brought on is leviable. While the numbers may vary slightly, the trend is the same.
Ultimately, infrastructure investment is not simply about capacity, but about timing as well. To remain financially sustainable, infrastructure must be delivered when growth demand is demonstrably present and when development can meaningfully support and help offset those costs. Advancing servicing too early can increase financial pressure and underutilize existing and new assets. Delaying investment may continue to concentrate growth within other areas of the city where vacant serviced land is available for development. However, if strategically required, infrastructure investment could be advanced when remaining serviced land supply has approximately 10 years left to be absorbed city wide. Aligning infrastructure investment with demonstrated land absorption and approved growth areas ensures that development is market-supported, fiscally responsible, and consistent with the long-term growth strategy established through annexation and Flourish.
Growth Forecast Analysis
The financial risk of using the Offsite Levy Recovery Fund Reserve to front end the NES Project is dependent on what growth rate (A) the City can sustain and the resulting levies that can be collected. The Off-Site Levy Recovery Fund is made up of reimbursements that the City has received from City front ended projects, where the City initially funded infrastructure and was repaid over time through off-site levies collected from development.
The value of the annual levy recovery disbursements depends on the number of hectares of development that occur each year and the receipt of levies those developers will pay. With that context, to determine financial risk, the pace of growth (A) and the receipt of levies need to be projected to determine if it is estimated to sufficiently support the payback of the City front ending the NES project debt.
For reference, the City’s historical annual receipt of levies has been $9.1M, with swings from $2.8M (low) to $20.2M (high) per year. Attachment 11 is the table showing the historical levy receipts.
As part of the City’s financial analysis, it is important to assess what the City’s expected growth rates (A) are so that reasonable estimates on the future levy reimbursements can be estimated and the financial risk of servicing the levy debt payments can be assessed.
In terms of historical offsite leviable land absorption rates, the City has been growing (A) at an average of ~31Ha/yr over the past 16 years as shown on Attachment 12. It is important to note the variance in development per year, as it shows how unpredictable development is and how the highs and lows can swing significantly.
Alternatively, the Off-Site Levy Model assumes an average land absorption rate of 40Ha/yr over the 25-year period (OSL timing horizon). This forecast accounts for developer projections, active ASP’s and applications, with historical growth as a benchmark. The growth rate in the Offsite Levy Model is higher than the City’s historical absorption rate because it is a forward-looking model projecting the next 25 years. The City’s land absorption rate is anticipated to increase as the City grows. The challenge is that these forecasts span 25 years and are subject to significant uncertainty.
It should be noted that actual land absorption will fall within a spectrum. There will be years of low growth and years of high growth, as was evident by the -70% to +120% swings in levy revenues the City experienced over the historical period. Growth is subject to micro- and macro-economic factors such as:
• Immigration and interprovincial migration
• Global economic factors (recessions & booms)
• Employment and housing demands
• Movement towards higher density = less land absorption
• Regional competitiveness
• Private developer business decisions
Any of these conditions could change drastically and disrupt the City’s land absorption rates. The City does not model short term development cycles in the off-site levy model but uses a long-term average for projections. The long-term average factors in past variation in development without assigning variation to a specific year in the forecast. Land development is a long-term, phased process that typically spans many years, involving multiple parties. Developers undertake significant upfront work to identify and assemble land, negotiate purchase agreements, assess market demand, and prepare detailed financial models to evaluate risk and return.
Once a site is secured, the project enters the municipal approvals phase. This includes the preparation of statutory plans or plan amendments, redistricting applications, subdivision plans, and supporting technical studies. Following approval, projects proceed to detailed engineering design, negotiation of development agreements, and preparation for construction. By the time “shovels are in the ground,” much of this process can take up close to a decade, depending on circumstances.
Given the timeframe noted above, it is prudent that St. Albert maintains a land bank with an adequate supply of land within its boundaries, and an estimated 10-year land supply of planned and serviceable land. This allows the City and the development industry to respond to market demand in a timely manner. This process allows the City to monitor its growth and land absorption rates on an ongoing basis.
Off-Site Levy Recovery Fund Compliance Scenarios
The sensitivity and risk tolerance associated with growth (A) are critical to the investment decision because they directly determine whether the Off-Site Levy recovery fund can sustainably service the required debt without shifting the annual payments to property taxes.
To assess viability of using the off-site levy recovery fund reserve to fund the debt servicing, Administration uses the criteria established in Council Policy CFS20: Off-Site Levy Recovery Fund Utilization to evaluate:
• The current balance of the Off-Site Levy Recovery Fund, and
• Expected future off-site levy revenues generated by new development (A).
As stated previously, historically, land absorption (A) has averaged approximately 31 hectares per year. Assuming land absorption will immediately increase to 40 hectares every year for the next 25 years presents financial risk, while assuming no increase in development would be overly conservative.
To provide Council and residents with a transparent understanding of this risk, Administration assessed compliance with the policy using two growth rates over multiple years of investment.
The two growth patterns assume development increases gradually over the 25-year period:
• One scenario assumes an incremental land absorption rate (A) increase of 2.25 per cent per year, resulting in an average of approximately 40 hectares per year over 25 years, with slower growth in the early years and higher growth later.
• A second scenario assumes an incremental land absorption rate (A) increase of 1.50 per cent per year, reflecting a lower overall growth outlook and illustrating the potential impacts of slower development.
Each scenario assessed compliance for investment in 2026, 2027, 2028, and 2029.
The assumptions and parameters used for each scenario are detailed in Attachment 13.
Under the scenario using a 2.25 per cent incremental growth (A) rate, land absorption increases from an average of approximately 32.5 hectares per year in the first five years to about 50.6 hectares per year in the final five years over 25 years. Based on this scenario, the City complies with Policy C-FS-20 if the project begins in 2027, with construction occurring in 2027 and 2028. However, in several years there is a limited margin relative to the required debt servicing costs per the policy. If growth does not materialize as projected, as is indicated in Attachment 13, the risk of noncompliance increases. To mitigate these risks, deferring construction to 2028 or 2029 allows the reserve to strengthen, increasing the financial buffer.
Maintaining an additional financial buffer mitigates the risk of an economic downturn or extended period of suboptimal growth that could erode reserve balances and require the use of tax supported debt during an unfavourable economic cycle.
Under the scenario using a 1.50 per cent incremental land absorption rate (A), development averages approximately 32 hectares per year in the first five years and 43.7 hectares per year in the final five years over 25 years. While this scenario does not achieve the 40 hectares average assumed in the Off-Site Levy Bylaw, it demonstrates the sensitivity of the reserve to lower than anticipated growth (A). Under this scenario, the City complies with Policy C-FS-20 if construction begins in 2028/29. Deferring the project to 2029/30 further strengthens the reserve position and reduces the risk of depletion if growth slows.
Deferring the project allows Council and Administration to monitor actual development trends before committing the City to long term financial obligations. This approach aligns with Council policy by ensuring growth pays for growth and reduces the risk that property taxpayers could be required to fund debt servicing if development activity slows due to broader economic or market conditions.
While Administration has provided the above sensitivity analysis outlined above, it is important to consider the significant swings that have occurred in land development activity over time. Land development has not progressed at a consistent or predictable rate, and periods of higher growth have been followed by periods of slower activity driven by market conditions, economic cycles, and broader provincial influences. This pattern underscores the risk of relying on a year-over-year analysis. Absorption models place an emphasis on long-term trends and provide multi-year averages. They are subject to greater uncertainty in the short to medium term. Historically, the land absorption rate has averaged approximately 31 hectares per year. While Administration does not expect growth to continue at this historic pace, it is important to understand the financial implications if the Northeast area were fully serviced and development proceeded at or near historic levels for an extended period.
Under these historic land absorption growth rates, annual debt servicing costs would increase to more than $15 million, while annual offsite levy collections would remain at approximately $9.1 million on average (2010-2025). While there have been past years of higher levy collection (as seen in Attachment 11), a sustained higher debt servicing cost above the historic average carries risk. This imbalance between the cost of infrastructure and levies recovered by the City would deplete quickly the Off-Site Levy Recovery Fund Reserve and would ultimately require property tax support to cover the remaining debt servicing obligations.
Conversely, assuming annual land absorption rates of 40 hectares every year for the next 25 years also introduces risk, as this level of sustained growth exceeds the long-term historical average and does not reflect annual variations in development activity as seen in the past (see Attachment 12). Relying solely on this assumption could overstate future levy collections and understate the risk of reserve depletion if growth does not materialize as projected.
Taken together, these two extremes illustrate why Administration assessed multiple land absorption scenarios. By modeling a range of development outcomes that reflect both historical experience and future potential, Administration is able to demonstrate how sensitive the funding plan is to changes in development growth (A) and to support informed, risk-aware decision making that aligns with Council policy and protects taxpayers.
Debt Capacity
Funding a project of this size cannot be considered without first confirming the City’s ability to take on additional debt. The City’s borrowing is regulated by the Municipal Government Act (MGA) and guided by Council Policy C-FS-03: Debt Management, which together set limits on how much debt the City can responsibly carry.
As of December 31, 2025, the City has approved $222 million in debt. Of this amount, $109 million has already been borrowed, while $113 million has been approved but not yet taken out. The City’s internal debt limit is $341 million.
To help Council and residents better understand how the Northeast Servicing (NES) investment fits within these limits, Administration assessed two different debt scenarios detailed in Attachment 14.
A. Scenario 1: Existing approved projects plus NES
In the first scenario, Northeast Servicing is added to all projects that Council has already approved. Under this approach, the City remains within its debt limit. By 2030, approximately $184 million in borrowing capacity would still be available. This means the City can fund Northeast Servicing while staying within internal debt limits when only approved projects are considered.
B. Scenario 2: Existing approved projects, NES, and the full 10-Year Capital Plan
debt funded projects
The second scenario takes a broader view by including Northeast Servicing along with all debt funded projects currently identified in the City’s 10-Year Capital Plan. Together, these projects represent approximately $339 million in proposed debt. Under this scenario, the City would exceed its debt limit by about $96 million in 2030. To remain within internal debt limits, some projects in the current 10-Year Capital Plan would need to be deferred or delayed.
It is also important to note that the 10-Year Capital Plan does not include potential future utility projects or other infrastructure investments that could be triggered by growth (P)(A) in the Northeast. Each new project funded through debt reduces the City’s remaining borrowing capacity and may affect the timing of other community priorities.
These scenarios show that the City can accommodate NES within its debt limits alongside currently approved projects. However, if this investment proceeds, a broader prioritization of all projects being considered for debt, both those already planned and those required as a result of NES will be necessary to ensure the City remains within its approved debt limit.
Physical Growth(A)
Only in unique cases where land supply is constrained or housing is regulated does additional land supply affect demand or population growth. Enabling additional land supply does not drive how much a city grows. It determines where growth is accommodated. Increasing land supply disperses population growth across various developing neighbourhoods rather than creating additional, new, net population growth. There remains a strategic financial value in weighing the amount of existing land supply as over-servicing may increase financial risk to the municipality.
Additionally, growth (E) is primarily demand driven by broader external factors such as overall economic conditions, immigration/migration, interest rates, and housing affordability. Broader demographic trends support growth in Alberta, but at a more moderate pace than recently experienced in 2025. See Attachment 15-ATB forecast March 2026.
A financial investment recommendation targeting 2029 is consistent with established planning best practices, which typically support maintaining a 10-year supply of development land. Aligning with this timeframe ensures that growth related revenues are grounded in a policy supported horizon, while balancing demand for development in the medium term.
As identified previously in this report, The City of St. Albert may not have an immediate Debt or Capacity issue. However, it does have timing and certainty challenges. A risk with any debt is debt servicing. The 25-year Off-Site Levy Model developed has predicted an absorption level of 40 ha/year. This is a 32% increase to St. Albert’s historical land absorption of 31ha/year. That is a significant behavioral shift, not just marginal improvement. Long-range models provide strategic clarity but lack focus with short- to medium-term risks such as economic downturns, interest rates, and migration.
The weakness of a long-term model is exposure to uncertain assumptions, especially in the early years. Should absorption growth not reach 40 ha/year the city will need to subsidize debt from general revenues, cut other services, or increase levies. Debt payments start early, and without strong, early growth, the probability of relying on other revenues increases.
CASE 1: Summary of Findings- without third party or grant funding opportunity
When the City considers a major infrastructure project like the NES, it must balance the need to support growth (A)(P) with the responsibility to manage taxpayer dollars carefully. NES would make a larger area available for future development, more than the 15-year supply that is currently available based on the City’s long-term plan, Flourish. Although the northeast is starting to face some servicing limitations, the City and developers are working to put short-term measures in place to allow limited development to continue as a bridging mechanism until the major investment is made. It is worth noting that past offsite investment has been made to the north (St. Albert Trail widening and Villeneuve Road) to accommodate current growth in the north end of the City.
In recent years, the City has made significant infrastructure investments in other priority growth areas, particularly in west St. Albert through projects such as Ray Gibbon Drive upgrades, north interceptor sanitary trunk, and the Lakeview Servicing initiative. These investments were strategically timed to make the best use of existing infrastructure, improve access to employment lands, and support a stronger non-residential tax base. They remain in the initial stages of being paid back through ongoing development activity. Choosing when and where to invest next requires thoughtful sequencing so that each investment delivers value at the right stage.
Risk and Opportunities
Financially, the City has room within its internal debt limit to borrow for NES. However, if the Off-Site Levy recovery fund is utilized to fund the debt servicing, the major risk is the cash flow of collecting sufficient levies to make annual debt payments. The sensitivity analysis illustrates the dependency of making debt payments on land absorption which introduces the following risks:
• Land absorption Growth volatility: OSL projects are self-sustaining in that the levies collected in a given year are sufficient to make annual debt payments. As demonstrated in Attachment 11, off-site levy collections and development vary widely from year to year and depend on regional market conditions, interest rates, labour availability, and developer business decisions. Historical development has averaged about 31 hectares per year, lower than the 40 hectares per year needed to comfortably repay the debt servicing NES over time.
• Financial exposure: Including the NES, total annual OSL debt payments would increase by approximately $5.6 million from $9.4M to $15 million, exceeding the historical average annual levy collection of $9.1 million. While the City maintains sufficient cash on hand to make three-years of debt payments, a sustained higher debt servicing cost above the historic average carries risk. The City would require consistent above average growth in the medium term to reduce this risk. If growth slows, levy revenues may not be enough to cover debt payments, creating pressure on the City’s budget and potentially affecting property taxes. To mitigate this risk is to defer the start of the project which provides the City more time to save additional levy funds to make future debt payments on the project.
• Off-site levy interest: If development is slower than expected, interest will continue to accrue on the sanitary and storm reserves’ negative balance. The total amount including interest will need to be recovered from future development levies. The levy rates will continue to increase over time to recover the outstanding amount.
• Off-site levy project funding: The timing and magnitude of fully funding the NES will impact the City’s ability to front-end additional off-site levy infrastructure needed to support growth in the short to medium term.
• Infrastructure timing risk: Advancing servicing too early could result in underused infrastructure and financial impacts for eventual operations and maintenance costs.
It is also understood that area developers would benefit from minimized disruption to growth momentum through an earlier NES investment.
Funding Option(s)
The following section outlines funding options and considerations for NES timing for the Case 1: Financial Analysis - Background and Options for Front Ending NES Project without third party or grant funding opportunity. If Council approves funding the NES, Administration recommends funding option A- 2029 funding given the risks discussed above. While Option A is recommended, Options A through D would all require monitoring of growth trends to ensure compliance with City Policy.
A. 2029 Funding
• Demonstrates compliance with Policy CFS20 under both the 1.50% and 2.25% incremental land absorption growth scenarios with reasonable margin.
• Provides the greatest buffer within the Off-Site Levy Recovery Fund before peak NES debt servicing begins.
• Allows the reserve to accumulate sufficient capacity to absorb potential short to medium term volatility without requiring tax supported intervention.
• Allows three years to monitor land absorption and market conditions
• Assumes a sustained and accelerating increase in land absorption above historical averages.
• Estimated tax impact of 0.2% relating to non-OSL debt servicing
B. 2028 Funding
• Demonstrates compliance with Policy CFS20 under the 2.25% incremental land absorption growth scenario with reasonable margin.
• Complies with Policy CFS20 under the 1.50% incremental growth scenario, but with limited margin.
• Leaves less capacity in the reserve to absorb potential short to medium term volatility without requiring tax supported intervention
• Allows two years to monitor land absorption and market conditions
• Assumes a sustained and accelerating increase in land absorption above historical averages.
• Estimated tax impact of 0.2% relating to non-OSL debt servicing
C. 2027 Funding
• Compliance with Policy C-FS-20 is only achieved under the 2.25% incremental growth scenario.
• Provides minimal buffer to absorb year-to-year variability in the reserve
• Allows one year to monitor land absorption and market conditions
• Assumes a sustained and accelerating increase in land absorption above historical averages.
• Estimated tax impact of 0.2% relating to non-OSL debt servicing
D. 2026 Funding
• Does not comply with Policy C-FS-20.
• Does not allow the reserve to absorb any volatility increasing risk of requiring tax-supported intervention
• Timing does not allow monitoring of land absorption and market conditions
• Assumes a sustained and accelerating increase in land absorption above historical averages.
• Estimated tax impact of 0.2% relating to non-OSL debt servicing
Please see Attachment 16 for the Financial Summary Analysis and Funding Option(s), considering an estimated project cost of $74.1M over all years and comparator table with a sensitivity check completed with the project start assumed for 2026/2027 and 3% inflation applied to it for future years. The analysis indicates an investment in 2029/2030 provides the most viable scenario with the risks and opportunities considered earlier in the report.
CASE 2: Northeast Funding Analysis with third party funding or grant opportunity
On April 7, 2026, the Government of Canada announced that it intends to provide the City of St. Albert with $28,083,862 in grant funding through the Build Communities Strong Fund (BCSF) program for this project. The City is currently working with the Government of Canada to establish a grant agreement, which will also be subject to Provincial Government Cabinet approval, per the Provincial Priorities Act. At this time, any conditions on receipt of the grant funding are still being determined, as the City is one of the initial municipalities in Canada entering this process under this new federal funding envelope.
Risk and Opportunities
This is a new federal grant program and the requirements are not clear or established. It is possible that some conditions of the grant may not be acceptable to the City or the provincial government.
Cabinet approval under the Provincial Priorities Act could delay commitment on the grant. From similar federal grants since this legislation came into effect, it is experienced that it can take longer than six months to get the approvals needed to enter into the grant agreement.
For construction to begin, finalization of the two tender packages (lift station package and the pipeline package) is needed along with tendering for the project. It is anticipated that approval of the grant agreement will take additional time due to the Provincial Priorities Act, which could delay start of the project. Given this additional restriction, and assuming the same delay currently being experienced on other grants, it is expected that a construction contract will not be in place prior to Q4 2026. While this would still provide a construction window for winter construction activities, it is likely that major construction mobilization will not occur until early 2027. See Attachment 17 for a best-case schedule subject to grant funding agreement in place by Q3 2026.
A secondary opportunity that the grant offers is that it reduces the leviable project costs. This impact will result in lower levy rates for the benefiting development basins. Lower levy rates reduce the upfront costs of development which can translate into lower financial cost and risk per unit being developed. These factors could impact whether development projects are viable, potentially spurring increased development and housing supply in St. Albert. By reducing the upfront costs for development, it could ultimately lead to more housing options and higher accessibility to housing for future residents.
Of the $74.1 million cost estimate, $28.1 million would be funded from the grant, $3.5 million from the existing Water Reserves, leaving $42.5 million needing to be debt financed by the City. Of the $42.5 million, $39.5 million is offsite leviable and the debt servicing could be funded from the Offsite-Levy Recovery Fund Reserve with the remaining $2.96 million funded through the tax base.
Off-Site Levy Recovery Fund Compliance Scenarios
As debt is still required to fund the project, compliance with Council Policy CFS20: Off-Site Levy Recovery Fund Utilization needs to be analyzed.
The same two growth patterns that were used in the original assessment (Case 1) are used in this analysis as anticipated growth absorption is still a critical factor in determining compliance. The two growth patterns assume development increases gradually over the 25-year period:
• One scenario assumes an incremental land absorption rate (A) increase of 2.25 per cent per year, resulting in an average of approximately 40 hectares per year over 25 years, with slower growth in the early years and higher growth later.
• A second scenario assumes an incremental land absorption rate (A) increase of 1.50 per cent per year, reflecting a lower overall growth outlook and illustrating the potential impacts of slower development.
Each scenario assessed Offsite Levy Recovery Fund compliance, and the assumptions and parameters used for each scenario are detailed in Attachment 13. As indicated in the attachment, without the grant, non-compliance would occur in scenario 1d and 2c. With application of the grant, the City would be in Offsite Levy Recovery Fund compliance (scenarios 3 & 4). Each successive year added to the start date provides an increased buffer to mitigate market volatility. If growth does not materialize as projected, as is indicated in Attachment 13, the risk of noncompliance increases.
Debt Capacity
Without the grant, the City can accommodate NES borrowing within its internal limit accounting for existing approved capital projects only (scenario 1). Without the grant, including all projects (funded & unfunded) within the 10-year capital plan, the internal and/or MGA debt limits are exceeded from 2030-2033 (scenario 2). Reducing the required borrowing increases the remaining debt capacity, as illustrated in the following scenarios in Attachment 14, with debt limits not being exceeded when accounting for only existing approved capital projects. Even with the grant, debt limits are exceeded when accounting for all projects (funded & unfunded) within the 10-year capital plan. Additional information is provided below:
A. Scenario 3: Existing approved projects plus NES
This scenario adds Northeast Servicing to all projects that Council has already approved. Under this approach, the City remains within its debt limit. By 2030, approximately $208 million in borrowing capacity would still be available. This means the City can fund Northeast Servicing while staying within internal debt limits when only approved projects are considered.
B. Scenario 4: Existing approved projects, NES, and the full 10-Year Capital Plan
debt funded projects
Even with a reduction in the amount of debt required for Northeast, the City would exceed its debt limit by about $72 million in 2030. To remain within internal debt limits, some projects in the 10-Year Capital Plan would need to be deferred or delayed.
Financially, the City has room within its internal debt limit to borrow for NES for the already funded 10-year capital plan projects. The BCS grant, significantly reduces the overall borrowing requirement and improves the financial feasibility of the project. The grant lowers total debt servicing costs and mitigates financial risk. However, as noted, to remain within internal debt limits, some currently unfunded projects in the 10-Year Capital Plan would need to be deferred or delayed The major risk continues to be the cash flow of collecting sufficient levies to make annual debt payments. The sensitivity analysis illustrates the dependency of making debt payments on land absorption. Annual OSL debt payments are still projected to increase by $3.3 million from $9.4 million to approximately $12.7 million. This continues to exceed the historical average annual levy collection of $9.1 million. While the City maintains sufficient cash reserves to cover approximately three years of debt payments, sustained debt servicing above historical collection levels presents ongoing risk. In both cases, the estimated tax impact of approximately 0.2% associated with non-off-site levy debt servicing remains unchanged.
Funding Option(s)- with grant funding
The $28 million grant strengthens all funding timing options by reducing the overall borrowing requirement and associated debt servicing costs, thereby lowering financial risk across scenarios. It decreases servicing requirements within the Off-Site Levy (OSL) Recovery Fund and reduces reliance on growth projections. This improves the city’s overall financial position with Policy CFS20 across scenarios, decreases risk, and provides greater flexibility in timing.
While the City’s overall supply of serviced land remains high, it is expected to be absorbed over the long term. The grant enhances the viability of earlier funding timelines as early as 2026/2027; however, alignment with land absorption trends and the city’s economic conditions remain a risk.
Each successive year provides stronger financial outcomes, reduced exposure to market volatility, and greater flexibility to respond to land absorption trends. Later funding options benefit from even greater financial flexibility, providing the strongest buffer against market volatility. Overall, the grant enhances affordability, reduces exposure to growth uncertainty, and expands the City’s flexibility in timing the project.
STAKEHOLDER COMMUNICATIONS OR ENGAGEMENT
NES Design Coordination Engagement
2020 - MOU signed with active developers.
2021 - Handover of Developer-led preliminary design to the City.
2022 - City began Northeast Servicing Project detailed designs.
2023 - Ongoing Developer meetings and discussions on design progress. A memo was sent to the Developers advising the design shift from Syphon design to a traditional Lift Station.
2024 - Ongoing Developer meetings to present progress on the design.
2025 - 90% Design review workshop with developers and consultants.
NESP Financial Cost Sharing Engagement
2024 - City requests to developers for front ending support.
2025 - City working with the active developers on a potential cost sharing front-ending apportionment with grant option.
See Attachment 17 indicating a timeline chart of all the engagement with developers and the updates provided to Council.
ALIGNMENT TO PRIORITIES IN COUNCIL’S STRATEGIC PLAN
Initiative aligned with Strategic Plan:
None at this time
ALIGNMENT TO LEVELS OF SERVICE DELIVERY
D. Land Use and Development
D.2 Infrastructure Planning
D.2.1 Off-Site Levy Program
Support growth and development by administering City's off-site levy program for essential infrastructure needed.
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Report Date: April 14, 2026
Author(s): Jordan Betteridge, Abram Iskander, Meredith Willacy, Suzanne Findlay, Stephen Graham, Stephen Bannerman, Stanley Chan, Katie Mahoney, Christina Kortmeyer, Regan Lefebvre, Maggie Wang
Department: Engineering Services, Finance and Strategic Services, Planning and Development, Public Operations
Department Director: Dawny George, Anne Victoor, Kristina Peter, Timothy Saunders
Managing Director: Diane McMordie, Adryan Slaght and Dinu Alex
Chief Administrative Officer: William Fletcher