Development group warns Metro Vancouver fee increase will be passed on to home buyers
Urban Development Institute president Anne McMullin discusses the fact that 69,000 permits are pending for homes in a half-dozen Metro Vancouver cities, in Vancouver, BC., July 19, 2016. One example is illustrated regarding building heights to account for the expected rise in sea level, which are different in North Vancouver and Vancouver. (Nick Procaylo/Postmedia Network)
A development association is warning that a planned significant increase to a Metro Vancouver development fee will end up being passed on to home buyers.
Metro Vancouver is reviewing its liquid waste development cost charge which is levied on new development in the region, with few exceptions. The fee funds 99 per cent of the cost of growth-related sewage projects in the region.
Metro decided in 2014 to review the rates charged, which have not changed in 20 years. Across the region, rates are expected to rise between 75 and 229 per cent.
Anne McMullin, CEO of the Urban Development Institute, said fee increases don’t just come out of a developer’s profit margin — home buyers will feel the pinch.
“There’s only one taxpayer and the money is going to get pushed somewhere,” she said. “It does get passed on into the new home market because money doesn’t just evaporate and get absorbed by the developer.”
McMullin explained that if there are too many costs associated with building a home, it makes it difficult for a developer to get financing and keeps small and medium-sized developers from entering the market. This reduces the number of developments and restricts supply, which keeps prices high, she said.
“It’s not that we’re opposed to (development cost charges) or the needs that we’re all facing as a region with much needed infrastructure improvements,” McMullin said. “We just need to work together to make sure that it doesn’t restrict the ability to create more homes so that things become more unaffordable, because that defeats the whole purpose.”
Metro Vancouver’s development charges are applied by sewer area — Vancouver, Lulu Island, North Shore and Fraser — and are charged per unit for residential and per square foot for non-residential.
It’s proposed that rates in Vancouver will increase between 82 and 109 per cent, rates on the North Shore will increase between 75 and 99 per cent, rates in the Lulu Island area will increase by between 103 and 109 per cent and the Fraser area will increase between 210 and 229 per cent. The Fraser region will take the biggest hit because it is large and growing quickly.
If the rates are not increased, taxpayers will pay for it on their sewer bills.
There are provisions for the fees to be waived for affordable housing projects.
On Friday, Metro’s performance and audit committee discussed the proposed changes.
City of North Vancouver Mayor Darrell Mussatto said he is glad the issue is being addressed.
“It would be easier to swallow if we’d done this five or 10 years ago,” he said.
Terry O’Neill, a Coquitlam councillor, found it “shocking” that the rates had not been adjusted in 20 years. He worried about the effect of developers having to swallow the costs all at once and possibly passing on the cost to homebuyers.
White Rock Mayor Wayne Baldwin said the changes are a long time coming and the increase should be no surprise to the development community.
Baldwin said he couldn’t imagine developers supporting the increase because it will cut into their profits. He said developers have been getting “a free ride” for a long time.
The committee endorsed the changes, in principle, and next they will be brought to the finance and intergovernmental committee and the board of directors.
Consultations with the public, stakeholders and the province are expected to take place from late August to early November.