B.C. government doubles timeline for developers to pay municipal fees | Daily Hive

Eric Buermeyer/Shutterstock

The Government of British Columbia is rolling out new measures aimed at making it faster and more affordable to build much-needed housing across the province, in a move designed to tackle ongoing challenges of high construction costs and interest rates.

“We are committed to finding innovative and cost-effective solutions to build housing, so everyone has a fair chance to live in communities where they work and belong,” said Ravi Kahlon, B.C. minister of housing and municipal affairs, in a statement today.

“These changes are about supporting housing development and easing the financial burden on builders and developers so they can get shovels in the ground faster to help unlock more homes for people in B.C.”

You might also like:

A key part of the changes involves expanding the use of on-demand Surety Bonds province-wide, replacing or supplementing the more restrictive financial tools currently required by many municipalities. While builders in 40 local jurisdictions, including Burnaby, Surrey, Vancouver, and Mission, can already use these bonds, other municipal governments have required letters of credit from banks — a method that can limit developers’ access to financing.

Normally, municipal governments ask developers to put down a letter of credit, which is like a security deposit held by a bank. This ties up a lot of the developer’s money. But with a Surety Bond, which is essentially like insurance, the developer does not have to hand over that money right away. Instead, an insurance entity promises to cover the cost if the developer fails to deliver. This frees up the developer’s cash so they can use it to help finance the actual construction process, and the City still has protection in case the work does not get done.

The City of Surrey has been increasingly adopting the use of surety bonds in recent years, while just last month, the City of Vancouver approved a series of measures to give developers more flexibility and time to meet their fee payment obligations — including expanding the use of Surety Bonds as an option.

On-demand Surety Bonds allow developers to provide financial assurances for projects without tying up their credit, freeing up capital to start or continue construction. These bonds can be converted to cash within 15 days without court involvement, offering municipalities strong financial security while reducing builders’ upfront costs.

In addition to the bonding changes, the provincial government will also give homebuilders more time to pay key municipal charges. Starting January 1, 2026, qualified developers will have up to four years — double the current timeframe — to pay development cost charges (DCCs), amenity cost charges (ACCs), and school-site acquisition charges. Under the new rules, developers will pay 25 per cent of these charges at permit approval, with the remaining 75 per cent due at occupancy or within four years, whichever comes first.

The current regulation, unchanged since 1984, requires at least one-third of the charges to be paid at the time of subdivision or building permit approval, with full payment within two years. The new flexibility is expected to lower carrying costs for builders and improve the financial viability of projects, enabling more developments to move forward despite market pressures.

But such measures that double the existing runway for municipal governments to receive revenue generated from the approval and construction of new developments also change the cash flow of municipal governments. Just last week, the provincial government made a separate announcement that it will substantially increase the borrowing limits of municipal governments under the Local Government Act to self-fund their infrastructure needs, including doubling the limit of long-term debt without the need for a public vote, and tripling the limit for short-term debt.

Conceivably, this mitigates the impact of longer payment timelines for developers by providing municipal governments with an interim way to fill the short-term revenue shortfall.

These municipal borrowing limits have also not been updated in decades — a period during which construction costs have risen significantly due to inflation and the growing complexity of building designs and requirements.

According to the provincial government, the changes announced today relating to the expanded use of Surety Bonds and providing homebuilders with more time to pay their development-related fees come after extensive consultation with industry associations and municipal governments.

The extended payment timelines and expanded bond options are designed to support builders at a time when many building development projects have stalled or been delayed due to rising costs. The provincial government states these updates will help accelerate housing delivery and make it easier for developers to invest in new projects.

The development industry has cautioned that, without meaningful interventions to improve the financial viability of construction, an increasing number of housing projects will be stalled or cancelled, which will further exacerbate the housing affordability and supply crisis.

Wendy McNeil, the CEO of the Homebuilders Association of Vancouver (HAVAN), praised the provincial government’s move, noting that this follows two months of provincial consultation.

Her organization estimates there are 100,000 new homes approved in the Lower Mainland that are not getting built due to the current financial challenges.

“HAVAN has long been an outspoken voice, warning of the growing cost-of-delivery crisis and the impact development charges have on project viability. We’ve sounded the alarm on behalf of our members and have consistently engaged with the government to highlight the barriers these financial pressures pose to getting housing built,” said McNeil.

“Although more is still to be done, these amendments will support builder members in reducing the burden of upfront cost pressures and allow them to re-invest capital into future projects, delivering more homes to the region. This is not only a win for the builders and our local municipalities, it also benefits the industry across the spectrum — from architects to subtrades — and, of course, the homebuyer.”

Upon inquiry, Terry Hui — CEO of Concord Pacific Developments, one of Canada’s largest developers and a major player in Metro Vancouver — told Daily Hive Urbanized that these new policy measures represent a positive step forward in unlocking more housing supply, particularly by supporting smaller developers who have more limited access to construction financing.

“This is a good initiative from the Minister of Housing to support new housing starts. Housing is a critical part of the economy, employing thousands across construction, trades, and related industries — but right now, the sector is struggling and beginning to lay off workers,” said Hui.

“The industry is under pressure from multiple directions; rising costs due to tariffs, weak presale activity, reduction in immigration, lack of rental investors, high interest rates, and tightening credit. This policy will help, especially as financing becomes harder to secure. It’s particularly important for smaller developers who don’t have good access to capital.”

You might also like: