Fee hikes eyed for Vancouver rezonings, development and building permits

Construction progress on the 39-storey, mixed-use rental housing tower at SkyTrain's future South Granville Station in Vancouver, as of August 1, 2023. (Kenneth Chan/Daily Hive)

The cost of going through the City of Vancouver’s various permit application and review processes related to new building development is set to increase.

Staff with the City of Vancouver are recommending an average 9% overall fee increase starting on January 1, 2024 on hundreds of of types of applications and permits, with a 6% increase for fees in most categories, and a 16% increase for most rezoning and development fees.

The Rezoning Enquiry fee will go up by 200% for the review of drawings and provision of comments, based on the geographical location of the application. The Rezoning Issues Report to Council fees will rise from $11,700 today to $30,700 in 2024. The Sign By-law Amendment fee will go up by 50% to “capture the staffing time required.”

For further example, the zoning and development fee for a single-family detached house will go up from $2,640 today to $2,800 starting in 2024. For certain types of large proposals within the downtown Vancouver peninsula or Broadway area, a new CD-1 district zoning or an amendment to an existing CD-1 zoning district will go up from $205,600 today to $238,500 next year.

You might also like:

The various fee increases are intended to better enable the municipal government to recover the high labour costs of processing and reviewing such applications.

In May 2023, the City’s Auditor General released an audit report on the permitting program’s cost recovery model, which determined that the permitting program was not fully recovering costs, and that certain fees, including rezoning and development fees, were far below full cost recovery due to the intensive time requirements for City staff.

This includes a 63% cost deficit for rezoning application fees and a 57% cost deficit for development permit fees, but a 108% surplus for trade permit fees and a 17% cost surplus for building permit fees. It is estimated the City has been under recovering $8 million in such total costs annually.

With ongoing major inflationary pressures, City staff forecast the cost escalation for its permitting programs will be 6% in 2024, representing an increase of $4.8 million. For this reason, City staff have recommended all fees be increased by at least 6% to cover the expected inflation.

These recommended fee increases starting in 2024 will enable the City to reach cost recovery by 2025. But it will require the municipality to draw $9 million from its reserves to offset the deficit in 2024, which would be repaid in the future.

The alternative option is to hike fees further by an average of 15% to achieve full cost recovery sooner starting in 2024, without having to tap into the reserves, but this is not recommended by City staff as it does not provide adequate time for applicants to adjust to the new fee structure beginning in just three months from now, for City staff to conduct further analysis, and for City staff to adopt the Auditor General’s recommendations on reforms to the permitting program.

City staff note that they are not focusing on cost reductions to the permitting fee framework over the short term as they are looking to improve their services and reduce permit timelines.

The City of Vancouver is under immense pressure by both the provincial and federal governments to catalyze more housing to make a dent in improving affordability conditions.

The provincial government just released its legislated target order requiring the City of Vancouver to push about 29,000 new homes to completion and occupancy over the next five years between October 2023 and September 2028.

But over the longer run, City staff expect there will be a moderation of fee increases from the gradual rollout of new and improved online and digital solutions for permitting.

In May 2023, City staff also shared the recently implemented stream of the Policy Enquiry Policy (PEP) was “not priced accurately,” suggesting it was not cost-neutral to the municipal government in terms of the labour resources used to review the ideas from project proponents. The relatively low PEP fee encouraged consultants to repeatedly use the City for their consultancy work, even if the projects were not real. This then led City Council to scrap the PEP stream.

Before the end of the year, City Council is expected to finalize the City’s 2024 budget, with the building development-related application and permitting fee increases being the latest input considerations.

You might also like: