The South Okanagan branch of the Canadian Home Builders Association is slamming the City of Penticton’s proposal to hike development fees by 40 per cent over the next two years.
Joe Wackerbauer said the increases to development cost charges (DCCs) will result in higher prices of new homes.
“It’s just going to be another cost that gets passed on down to the consumer in the end and they are going to be paying more for their homes,” he told Global News on Tuesday.
“It’s just poor planning, this should have been taken care of over the past 13 years and not just rammed down people’s throats,” Wackerbauer said.
DCCs are fees developers pay to the municipality to help cover the costs of new public infrastructure associated with increased density, such as parks, roads, water, sewer and stormwater systems.
The city says Penticton’s DCC rates were last updated in 2007 and are “now out of step with current construction costs, building practices, development needs and infrastructure requirements,” according to a media release.
“When you look at the cost of infrastructure since 2007, we’ve estimated they’ve gone up almost 40 per cent and really this is an inflationary increase to help offset that,” said Blake Laven, the City of Penticton’s director of development services.
Laven acknowledged the costs will be passed onto home buyers, but said a boost in infrastructure investment is badly needed in the city.
“On the other side of it, our infrastructure needs are evident as well and because the program is underfunded by approximately 40 per cent, that has to get made up somewhere,” Laven said.
“So I think when you look at our council’s priorities is for development to pay for itself and not having the existing tax base make up the difference, so really its more equitable to have the development community pay and the future users pay for that growth as opposed to the existing taxpayers.”
Penticton Coun. Jake Kimberley said the proposed development fee hike offsets the need for a major tax increase, and he doesn’t think it will make housing more unaffordable.
“I’ve always maintained that development happens when the economy is strong, if the economy is strong people will invest, no matter what,” Kimberley told Global News.
“I don’t think it is going to make anything more unaffordable, I think that’s a misnomer because the reality is we are so far behind other municipalities in DCC costs, and they have not been affected by it.”
The city currently offers discounts or reductions to the DCC rates for qualified projects that encourage sustainable construction and construction of affordable housing.
The city is also proposing to reduce the value of these reductions but broaden the program to make rental housing projects eligible.
The proposal includes reducing the DCC discount given to non-profit housing providers by 25 per cent, which it said is comparable with the region.
Social housing providers said that could result in rent increases for tenants of affordable housing projects who are already on fixed incomes.
“It’s another increase in costs to the organization and money that we would have to fundraise for and it could impact the rents going forward for affordable housing,” said Tony Laing, Penticton And District Society for Community Living CEO.
“This is dipping into your food money, or utility costs and those other type of costs that a tenant would have,” he said.
However, Laven said non-profit housing operators could still be eligible for the entire discount if they meet energy efficiency standards.
“We’re just trying to incentivize that sector of the development community to build at a higher energy efficiency,” he said.
Home builders said the development fee increase could even have an impact on jobs.
“I think that it’s going to end up shelving a lot of projects which is going to create less jobs and is going to have a big impact on the community that way too,” Wackerbauer said.
If approved, the DCC fee increase would be phased in with the first 20 per cent planned to take effect on July 1, 2020, and the second 20 per cent planned to take effect on Dec. 31, 2020.
The city said residents interested in learning more about the proposal or sharing their feedback on the recommendations are invited to review the materials available on shapeyourcitypenticton.ca and attend an open house on Feb. 25 from 4 p.m. to 7 p.m. at the Penticton Trade and Convention Centre.