Investing in an efficient transportation system is crucial to a country's economy. While federal and provincial governments in Canada have access to income and consumption taxes, municipal governments typically rely upon property taxes, fees, and transfers from senior levels of government to fund transportation infrastructure. With modern fuel-efficient cars, alternative energy sources, and advanced technologies used in vehicles, fuel tax, as currently administered, may become a less reliable source of funding. Municipalities face a desperate need to find stable, long-term funding for vital roadway projects in an environment of increasing demands from users, downloading of responsibilities, dwindling or unreliable transfers, and reluctance from senior government to grant additional taxation powers. Municipalities have begun examining alternative funding mechanisms including local improvement taxes, development charges, user fees, tax increment financing, public-private-partnerships, and Contribution in Aid of Construction (CIAC). Strathcona County has expanded on the CIAC concept for funding infrastructure to support industrial growth in an equitable manner that manages risk and adheres to Alberta`s Municipal Government Act.
Contribution in aid of construction is a condition placed on the approval of subdivision or issuance of a development permit that requires developers to enter into a development agreement with the municipality to construct or pay for the construction of particular roadways that give access to the development. Strathcona County is a specialized municipality located immediately adjacent to Edmonton, Alberta. The adoption and usage of a CIAC policy within Strathcona County's oil and gas-based economic expansion zone, the Industrial Heartland Area (IHA), has proven to be an effective, flexible, equitable and simple means of upgrading and constructing the system of local roads that satisfies the needs of industrial developers without putting undue financial burdens on industry or County taxpayers.
This paper discusses the advantages and disadvantages of many different alternative funding methods available to municipal government in Alberta; describes the experience Strathcona County has gained in implementing CIAC as a funding mechanism; and demonstrates how the CIAC system functions. Although it is recognized that no single method will work in all situations, in all communities, it is hoped that important lessons are conveyed through the example given.