Calgary developers will no longer get a break on some of the infrastructure costs in new neighbourhoods after city council decided to dispense with subsidies at a meeting on Monday.

For years, the city has shouldered 50 percent of the infrastructure costs in new communities to cover things like water and sewers.

The allowances became known as the “Sprawl Subsidy’ by the mayor who says the new plan should help to mitigate the cost of people’s water bills.

“I’m not happy that people’s water bills have gone up as much as they have over the last four years but as I’ve said over the last four years, we had to do it. We had to do it because growth on the edges of the city was not paying for itself. We took on enormous debt. The majority of the city’s debt is precisely related to building water and waste water infrastructure for new areas on the outskirts,” said Mayor Naheed Nenshi.

Guy Huntingford is the CEO of the Urban Development Institute and says he agrees the plan will help bring stability to developers in Calgary who are planning new neighbourhoods but says that the costs will be tacked onto the price of new homes.

“The levy increases itself, if you were buying a single-family home, the increase in levies that we saw yesterday is roughly $6500 so that obviously depends on your perspective, is that a lot or a little? We look at any increase as hurting affordability and if you’re out there and you’re looking to get a mortgage, is that $6500 going to be the difference between getting that mortgage or not, so obviously any increases is a concern for us,” said Huntingford.

Huntingford disputes the city’s claim that Calgary’s growth has been one of urban sprawl and that it has actually been responsible development. He also points out that almost 100 percent of the costs for infrastructure in new communities are already being paid by developers and that it's only connections to water and sewer that fall under the levy.

The new levy will also affect developments that are going on in existing communities and without the subsidies, about $50 M a year will be returned to city coffers.

A bonus system has also been put in place to encourage density, as that benefits the city with higher tax income.

(With files from Kevin Green)