Metro Vancouver board approves new major fees on housing construction

Construction cranes for mixed-use residential towers near SkyTrain Burquitlam Station on the Coquitalm/Burnaby border. (Kenneth Chan/Daily Hive)

Fees associated with building new residential and non-residential buildings across Metro Vancouver will go up significantly over a three-year period between 2025 and 2027.

In a public meeting today, Metro Vancouver Regional District’s board of directors approved the recommendations and framework by regional district staff to exponentially increase the development cost charges (DCCs) associated with new building developments.

Depending on location, the combined total DCCs rate increases for residential projects are $18,506 to $24,106 per single-family lot, $16,952 to $22,182 per townhouse unit, and $11,360 to $14,657 per apartment unit.

While builders and developers will cover the cost of these fees, it is assumed that the resulting added costs to construction will be passed on to residents through a higher sale price or rental rate.

These fee hikes will help fund a significant portion of the regional district’s $35 billion plan over the next 30 years to expand and improve the regional network of water supply and sources, sewerage capacity, and regional parks to meet the needs of the region’s growing population and economy and renew aging infrastructure. The single most expensive project is the new Iona Island Sewage Treatment Plant facility near Vancouver International Airport which will cost over $10 billion.

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The highly controversial “growth pays for growth” strategy has been met with much criticism from the development industry, some municipal officials, and even the federal government, which first indicated its opposition in September by delaying the federal Housing Accelerator Fund to Burnaby and Surrey.

In an open letter earlier this week ahead of today’s decision, Federal Minister of Housing Sean Fraser reiterated the federal government’s position against the added costs to building development and the impact that it would have on addressing housing affordability and supply.

“Given the spirit of the Housing Accelerator Fund and the work that the federal government is doing to change the financial equation for builders, large increases in development charges are at odds with these goals,” wrote Fraser.

“Significant increases to development charges have the potential to deter development by offsetting the impact of other measures that reduce the cost of building. When projects do advance, increased charges on development can lead to higher housing costs for renters and homeowners, making it more difficult to find somewhere affordable to live.”

The minister also challenged the “growth pays for growth” strategy, as “we will all pay for stagnation as a result of a lower pace of construction. A ‘growth pays for growth’ approach ignores the value that new development, new property tax bases, new businesses, and new neighbours bring to our communities. I am concerned that at this particular moment in time, a drastic increase in development charges will inhibit our ability to seize the opportunity to incentivize a rapid increase in construction.”

Fraser requested the regional district’s board of directors — comprised of the elected municipal officials of Metro Vancouver’s municipal governments — to delay the start date of the new DCCs and implement exceptions for secured purpose-built rental housing.

Before approving the fee increases and timeline as originally outlined by regional district staff, a majority of the directors rejected a member motion to delay the start of the new DCCs by a year and direct regional district staff to create a waiver program for rental housing.

Several board directors suggested this amounted to a “chicken and egg situation,” given that new building developments over the coming decades will require the expanded water supply and sewerage capacity, while at the same time, it could have a major impact on the volume of new housing.

Vancouver’s elected officials led the unsuccessful call to delay the start of the new fees and identify potential exemptions that mitigate the impact on affordable housing.

“I’m a pragmatist. I think this is a marathon and not a sprint,” said Vancouver City Councillor Sarah-Kirby Yung, who asserted a need to maintain a working relationship with the federal and provincial governments, and that the delay would not impact the construction of the regional district’s projects.

“If we don’t calibrate the DCC rates correctly, it can impede the housing supply,” said Kirby-Yung.

Vancouver City Councillor Mike Klassen said many cities could benefit from the federal government’s Housing Accelerator Fund to move projects forward.

North Vancouver Mayor Linda Buchanan suggested there will be accumulated impacts from different policies by the varying levels of government that essentially cancel out each other, which is a reference to how the regional district’s fees will neutralize the benefits from the federal government’s recent move to axe the 5% GST from secured purpose-built rental housing construction costs.

Buchanan also reiterated advice from analysts that the DCC rates are “significant” and will add to the cost of construction. This was also the conclusion made by Coriolis Consulting, which was the regional district’s consultant for analyzing the impact of the fee hikes.

Burnaby City Councillor Sav Dhaliwal said these fee hikes should have been done years ago, but instead, the board has continuously kicked the can down the road.

Brad West, the mayor of Port Coquitlam, suggested the board would be back to square one in a year if it were to choose to delay the fee hikes, with the same arguments against DCCs applied. He also challenged the idea or the assumption that there is no big windfall for individual municipalities from the Housing Accelerator Fund if the fee hikes are not delayed.

“The only argument I’m hearing for this delay is to get this Housing Accelerator Fund money. That’s akin to being taken hostage and that we should go down a policy path because we’re being coerced… it doesn’t set a good precedent and message to the public on how business is done,” said West, before suggesting cities should offer to remove the DCCs charged by their own municipal governments.

West also asserted the federal and provincial governments would make a more meaningful impact on housing affordability if they were to remove some of their own regulations.

“To the feds and Province, if the concern is how it would impact affordability, delaying or getting rid of the litany of federal and provincial policies would have a far greater impact on housing than this,” he added.

Some directors also suggested the federal government should increase its funding for infrastructure costs borne by municipal and regional governments due to the population growth induced by federal immigration policies.

According to a Canada Mortgage and Housing Corporation report this past summer, housing construction costs within Metro Vancouver have grown by 50% since the start of the pandemic.

metro vancouver regional district proposed dccs

Metro Vancouver Regional District’s proposed Development Cost Charges (DCCs) for new development, between 2025 and 2027. (Metro Vancouver Regional District)

metro vancouver regional district proposed dccs 3

Metro Vancouver Regional District’s proposed Development Cost Charges (DCCs) for new development, between 2025 and 2027. Click on the image for an expanded version. (Metro Vancouver Regional District)

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