Metro Vancouver’s board of directors has approved a plan to substantially hike fees on new developments, potentially setting up a showdown with the federal government over housing money.
In a majority vote, the board — made up of municipal mayors and councillors from around the region — approved increases to what are known as development cost charges (DCCs) on construction to help pay for billions of dollars in planned upgrades to regional water, liquid waste and park infrastructure.
According to a third-party report Metro Vancouver commissioned in September, those charges could double or even triple the charges applied to new home construction.
The DCC hikes are opposed by federal Housing Minister Sean Fraser, who penned an open letter to board chair and Delta Mayor George Harvie this week, warning they could “deter development by offsetting the impact of other measures that reduce the cost of building.”
Fraser called on the regional district to delay the DCC increases by one year, and amend its DCC waiver bylaws to exempt purpose-built rentals, reduce the threshold for mixed-use developments and expand eligibility to privately-developed non-market rentals.
“I am not suggesting that development charges, generally speaking, are unacceptable. While I also appreciate that some hold the perspective that ‘growth pays for growth,’ we will all pay for stagnation as a result of a lower pace of construction,” Fraser wrote.
Implicit in Fraser’s letter was the potential loss of federal Housing Accelerator Funds. Last month, Fraser paused announcements of money through the program to Burnaby and Surrey, specifically citing the DCC increases.
In his letter, he noted the increases were “at odds” with the program, which is aimed at rewarding municipalities taking steps to increase housing construction.
Metro Vancouver Chief Administrative Officer told the board that the region’s infrastructure needs must be built one way or another, and that if the funds didn’t come from DCCs, the costs would be passed on to existing homeowners.
Speaking at Friday’s board meeting, several municipal leaders bristled at Fraser’s intervention.
Port Coquitlam Mayor Brad West described the federal minister’s approach as “akin to hostage taking,” adding that there was no evidence keeping DCCs low would keep costs down. His own community has low DCCs, he said, but developers continue to charge what the market will bear for new units.
“None of this has anything to do with how DCCs actually work,” added Township of Langley Mayor Eric Woodward.
“None of this has anything to do with how land values are the biggest challenge for housing. And land being owned by people who don’t build anything and don’t care.”
Representatives from Vancouver, by contrast, argued for the one-year delay, saying crossing the federal government could result in a loss of badly-needed housing funds.
“We can’t ignore the politics,” Vancouver Coun. Lisa Doninato said.
“And I want our member municipalities to receive that Housing Accelerator Fund so that we can add more supply.”
Speaking after the meeting, Harvie said he was pleased with the majority decision.
“I’ve been around a long time, and having the minister involved in this way and trying to talk to individual cities and municipalities about what Metro is trying to do, I find that concerning,” he said.
“We have to look at the data, not the politics, and what is coming out of Ottawa in my opinion is politics.”
Harvie went on to say the district would closely review data collected in the coming years related to the DCCs.
“And if these development cost charges show that they’re causing an effect then we will pivot and make a change, but we firmly believe that growth should be paying for growth.”
Global News is seeking comment from Fraser on the vote.
Under the plan approved Friday, regional DCC increases will be phased in over a three-year period starting in 2025.
According to the Coriolis Consulting report produced for the regional district, the increases could see the cost of a new detached home could climb between $18,506 and $24,106, the cost of a new townhouse could increase by $16,952 to $22,182, and the cost of a new apartment could increase by $11,360 to $14,657 per unit when fully implemented.
-With files from Aaron McArthur