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Vancouver developers face rising costs and fees

0 749 Economic

by Russell Hixson

Developers could soon face even more costs to build in the red hot Vancouver market.
Crews previously worked on structural elements of Strathcona Village, a 280-unit condo development that is under construction in Vancouver’s Downtown Eastside. Multiple levels of government are set to raise costs of development in the already expensive city which has the developer community concerned.
Crews previously worked on structural elements of Strathcona Village, a 280-unit condo development that is under construction in Vancouver’s Downtown Eastside. Multiple levels of government are set to raise costs of development in the already expensive city which has the developer community concerned. - Photo: FILE PHOTO

"It is just one thing after another," said Urban Development Institute (UDI) — Pacific Region president Anne McMullin. "It is like a fire hose that comes at you. Tax. Tax. Tax. Restrict. Restrict. Restrict. It is just endless."

Metro Vancouver is looking at changing its liquid waste development cost charge (DCC) which funds nearly all of the cost of growth-related sewage projects.

Metro decided in 2014 to review the rates charged, which have not changed in two decades. Across Metro Vancouver, rates could rise between 75 and 229 per cent.

Metro Vancouver's development charges are applied by sewer area — Vancouver, Lulu Island, North Shore and Fraser — and are charged per unit for residential and per square foot for non-residential.

The City of Vancouver is also planning to increase its development cost levy (DCL) by 25 per cent. The funds will go towards affordable housing projects, childcare and sewage infrastructure.

"UDI members are prepared to pay their fair share of the costs of growth," wrote McMullin in a letter to the city. "We would have preferred more discussion regarding the magnitude of the cost increases, which are high — especially for the commercial and industrial sectors."

McMullin said that the biggest concern isn't so much any specific increase, but together, with increased taxes from multiple levels of government it will take a toll. She added that in trying to get more money out of developers, municipalities risk losing large developments altogether.

"The ability to create supply is in jeopardy," she said.

UDI also believes some of the costs pay for the same thing. Developers pay community amenity contributions (CACs) and DCLs for parks, daycare spaces and affordable housing. They also pay DCLs for transportation (and soon utility infrastructure), but still receive requests from the city to pay for offsite transportation and utility infrastructure as part of the engineering department's conditions of approval.

"It feels like we are paying duplicate fees," said McMullin.

In the case of Vancouver, UDI would like to see extended grandfathering for in-stream applications and would like the city to be more clear and upfront about what costs and projects the developer is responsible for earlier in the process.

McMullin said she's optimistic that the city has been listening to concerns. She noted that new leadership at the city listened when the industry had issues with the foreign homebuyers' tax.

"For all our complaints, we are optimistic," said McMullin. "The staff are trying to do a good job."

A study this year by the Fraser Institute of Metro Vancouver municipalities shows Vancouver is by far the most time consuming and expensive city to build a project.

The study shows it costs almost $78,000 on average for every new unit of housing built, whereas the typical cost of regulatory compliance in Port Moody, New Westminster, Pitt Meadows and the City of Langley is less than $10,000 per unit. Even in neighbouring Burnaby, typical compliance costs are approximately $15,000 per unit of new housing.

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