Calgary city council overwhelmingly approved a new five-year agreement with land developers that cuts subsidies for new neighbourhoods in half — adding an average of $8,000 to the cost of a new home.

Yet, taxpayers will still be on the hook for half of the cost of water and sewer infrastructure in new neighbourhoods. It’s a deal Mayor Naheed Nenshi strongly opposed because he wants suburban developers to pay the entire cost of new infrastructure.

“Are we better off than we were yesterday? Absolutely,” Nenshi told reporters. “Do I think we could have done better? Yeah, but I’m still nonetheless extremely happy.”

That’s one way to put it. But the fact remains that for the next five years, taxpayers will continue to subsidize water and sewer infrastructure in new developments — about $150 million, according to the mayor.

During the council meeting, Nenshi, who wants developers to pay 100 per cent of new infrastructure costs, asked city administration to renegotiate the deal so that it spans three years instead of five.

Council ultimately shot down that proposal, voting 12-2 in favour of the negotiated five-year agreement. Only Ald. Druh Farrell, who told her colleagues they are being “timid,” sided with the mayor (Ald. Ray Jones was absent for the meeting).

After the vote, many developers were grinning. “We’re very pleased that the city decided to stick with their original agreement,” says Michael Flynn, executive director for the Urban Development Institute.

“The mayor’s never backed away from his opinion — that he doesn’t think development doesn’t pay for itself,” said Flynn. “We disagree with his sentiment.”

While the mayor and developers both say they’re satisfied with the new deal, it doesn’t address the city’s $1.3 billion water and sewer debt. In 1999, council signed off on a deal that let developers off the hook for water and sewer infrastructure — and re-signed that same deal five years later.

Then the economic boom hit. Development exploded. And the city was forced to borrow heavily to pay for upgrades to water treatment plants as well as new water and sewer pipes.

Although the new agreement addresses future development, retroactive to last January, it doesn’t cover the cost of the existing debt. That burden will ultimately fall on most Calgary residents and business owners, who can expect “significant” increases to their utility bills over the next several years, says the mayor.

“Previous councils allowed this debt to grow and did not make any allocation to pay it off,” says Nenshi. “We really are going to have to look at adjusting the rates to make up for the sins of the past.”

According to the city, the average annual water and sewer bill for a single-family home is $900 (Calgarians’ water bills have increased by 15.8 per cent since 2009).

Calgarians will know just how “significant” their increases will be when city administration tables a detailed report on June 28.