$389M Metro Vancouver developer subsidy ‘strikes a balance,’ says chair
Metro Vancouver's board was decidedly split over whether to lower planned development cost charge increases in 2026 and 2027
Metro Vancouver Regional District board chair Mike Hurley says a $389 million reduction in planned new building fees “strikes a balance” between lobbying from development companies to lower them further and “ensuring growth contributes fairly to the infrastructure needed to serve it.”
The district utility provider said Friday that new regional government bylaws to lower the fees came into effect June 24 after approval from the board and provincial government.
The fees, known as development cost charges (DCCs), are assessed to developers of new or densified developments to pay for the water pipes, sewer systems and parks associated with them.
Saddled with the need to replace existing infrastructure through existing property tax payments, the board approved a five-year plan in 2023 to significantly increase the fees annually, including the introduction of new water and parks DCCs that had never been established.
By 2027 overall fees for a new Vancouver townhome were expected to rise to $30,861, up more than 300 per cent from $10,027 in 2023.
But with the new, temporary subsidy most new housing units will be charged several thousand dollars less as compared to the original plan, depending on the type and sub-region. Instead of paying the 2026 rates developers will now pay 2025 rates and 2027 rates will be lowered, according to the bylaw change.
The subsidy is estimated by district staff to leave the district without $389 million to build required new infrastructure; of that estimate, $43 million for regional parkland acquisition will be raised through higher utility fees funded by property taxes, and $346 million will be borrowed.
The board was decidedly split over whether to lower the fees or strictly maintain its vision that builders of new developments, and by extension new home buyers, need to fully pay for the utilities infrastructure.
At a special April 15 board meeting, 17 board directors voted in favour of the subsidy while 16 directors opposed it.
However, because each director vote is weighted and Vancouver and Surrey councillors voted in favour of the subsidy, the motion passed 71-46.
Joining Vancouver and Surrey were Delta director Dylan Kruger, Richmond director Alexa Loo, Coquitlam director Craig Hodge and Port Coquitlam director Brad West.
Hurley, the Burnaby mayor, voted against the subsidy, along with Richmond Mayor Malcolm Brodie and Langley Township Mayor Eric Woodward, among others.
Few who favoured the subsidy spoke out, although Surrey director Pardeep Kooner said the fees ought to be collected over a longer period of time.
Metro Vancouver chief administrative officer Jerry Dobrovolny assured the board that collecting DCCs is calculated on an as-needed basis and if development stalls so do the growth-related projects.
“It’s very strictly regulated what a growth project is,” said Dobrovolny.
District of North Vancouver director Lisa Muri noted that with the fees the utilities infrastructure will still be needed and the costs will be passed on either through property taxes or income taxes.
“If you look back to the fact water and parks didn’t have DCCs, the taxpayer has been funding those for years. So I think we need to understand where we’ve come from in order to reflect on where we are and make decisions about where we are going,” Muri said.
“We’ve had massive funding gaps for years. The taxpayer’s been paying for that; growth hasn’t been paying for growth,” added Muri.
Developers have spent years lobbying and advocating to the board against raising DCC rates, claiming they make new homes more unaffordable for new home buyers.
But according to a report from Coriolis Consulting Corp. sent to the board in September 2023, that is not the case.
On the one hand, Coriolis called the fee increases “significant” and they will certainly add to the cost of construction.
The report noted that the fees can negatively impact affordability by increasing the cost of a unit but only if “the increased cost reduces the number of projects that are financially viable for development, creating downward pressure on the supply of new product in the market.”
But that occurs for land already owned by developers.
It may also be the case, the report noted, that higher fees merely leads to “a reduction in development site land values if the increased cost can be passed back to landowners.”
Conversely, lower fees allows developers to bid more for the land.
Coriolis noted that in the absence of DCCs funding may have to come from senior-level government grants.
That’s what happened in June when B.C. Premier David Eby and Prime Minister Mark Carney announced a $3.2 billion DCC subsidy for multi-unit developments, the details of which remain unknown to date.
