Metro Vancouver ponders $389-million cut to developer fees to support housing | Daily Hive

Metro Vancouver Regional District ponders $389-million cut to developer fees to support new housing projects

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Metro Vancouver Regional District is considering the scenario of a $389-million revenue shortfall from potentially reducing the fees it charges to builders and developers for new building developments, which would reshape the regional district’s five-year financial plan and put pressure on future budgets.

In January 2026, the regional district’s board of directors first requested staff to look at options to roll back the 2026 Development Cost Charge (DCC) increases, lower the 2027 DCC rates, and delay the full implementation of the one per cent transition “growth pays for growth” model until 2029.

Ahead of this week’s public meeting, regional district staff estimate this would impact revenues in the 2027-2031 financial plan, including $270.5 million in cuts to the water infrastructure budget, $75.5 million to the sewerage budget, and $43 million to the parkland acquisition budget.

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To fill this funding gap, the regional district could potentially transfer the cost to Metro Vancouver’s ratepayers through higher taxes and utility rates, increase borrowing and defer park acquisition beyond the use of reserves, or defer additional water and sewerage infrastructure expansion projects and defer park acquisition beyond the use of reserves.

DCCs are deemed to be a key tool for the regional district to fund its multibillion-dollar infrastructural expansion and improvement projects to replace aging utilities and expand to better handle future population and economic growth. Lowering DCCs temporarily is intended to support new housing projects, but it could shift the financial pressure to ratepayers.

Regional district staff are recommending the board of directors — comprised of Metro Vancouver’s mayors and city councillors — to endorse household ratepayer increases of three per cent for 2027 and five per cent annually from 2028 to 2030.

The alternative scenarios would be to stay the course without any funding gap, with DCCs increasing earlier as scheduled, or leave 2026 DCC rates and freeze 2027 DCC rates, which would result in a smaller shortfall of $246 million over the five-year financial plan, with the gap covered through a similar combination of strategies.

If approved, the average household would pay about $923 in 2027.

Regional district staff add that this builds on top of the previously identified operating and capital savings.

They note that there is also growing uncertainty in the broader economy, with potential interest rate increases that could increase borrowing costs, global stability and conflict (including the war in Iran) that could push up oil prices and result in the inflation of market prices, further increases to labour costs, and the provincial government’s new PST expansion on professional services related to architecture and engineering, which will add about $40 million to the regional district’s capital costs.

The proposed new approach to DCCs follows years of concern expressed by the local real estate and development industry — and even the federal government — that these charges significantly increase the cost per new housing unit and can determine whether projects are financially viable for developers, with stalled projects hindering longer-term housing affordability and supply.

The regional district’s board of directors will consider the scenarios, options, and recommendations in a public meeting this week.

In a new letter to the regional district shared with Daily Hive Urbanized today, Rick Johal, the president of Zenterra Developments, is urging the regional district’s board of directors to approve the $389-million funding gap scenario. However, he notes that this funding gap forecast is problematic, as it “assumes a level of development activity that will not materialize under current market conditions.” Over the first three months of 2026, pre-sales across Metro Vancouver totalled just 87 units — a small fraction of the average of 3,900 units typically seen over the past decade.

“Without pre-sales, construction financing is unavailable, and housing starts will continue to fall,” wrote Johal.

“Lower development activity means lower DCC revenues regardless of the rate – a fact that should inform the Board’s consideration of the true cost of inaction.”

The City of Vancouver has also recently taken a wide range of similar measures that temporarily roll back its municipal development cost levies and community amenity contributions, including providing more flexible payment schedules.

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