On July 10 of this year, the Township of Langley (TOL) staff presented to council a proposal for increases in DCCs that amount to significant increases in the charges levied on industrial, commercial, institutional development, and residential development cited as being required to address increasing costs of land and construction, and the Willoughby Arterial Road Completion Amenity Policy.
HAVAN and other industry stakeholders were apprised of this increase on Wednesday, July 12, and were asked to submit any comments to staff by Monday, July 17 – less than 3.5 business days. On July 17 HAVAN submitted a letter to TOL that stated that while we appreciated the opportunity to provide comments the lack of sufficient notice, consultation, and background precluded the opportunity to adequately or comprehensively respond to such significant increases in development cost charges.
As noted in our letter to TOL: “HAVAN … its members, and our sector colleagues, need much earlier notice on the magnitude and timeline of [such] increases. Significant, unannounced, increases have a detrimental effect on our members and their ability to adjust their financial plans to accommodate these increases and can impact on access to funding.” It should be noted that in neither of the February 23rd or May 25th Development Liaison Committee meetings was there any mention of such proposed increases.
Last week on July 24 TOL council moved the proposed DCC increases through the first, second, and third readings in a lightning-fast manner ignoring any concerns offered by HAVAN and or other industry stakeholders, and referred the proposed changes to the Inspector of Municipalities for review/approval which if granted will allow Council of TOL to adopt the new charges by November or December 2023.
The pending charges represent an increase of 35-56% on ICI developments, 47-64% for multi-family, and as much as 83% for single-family homes. The effect will be to raise the cost of a typical townhome in TOL by $20,000 and over $40,000 for a single-family home. These costs which will be downloaded to the bottom-line purchase price will have a direct and negative impact on affordability and may affect the actual viability and financing of pending and instream projects which cannot meet “grandfathering” deadlines.
While TOL shared the Urban Systems power point presented to Council it provided no basis as to what the proposed increases were based on and without the full report, we were unable to provide more comprehensive feedback. The PowerPoint shed no details on what infrastructure demands, park acquisition, and development were driving the proposed increases, but we do note that it clearly articulates that if approved, the Township will have the highest residential DCCs of comparative municipalities within Metro Vancouver.
In March of this year our HAVAN GR team issued a white paper “Development Cost Charges – A Metro Vancouver Perspective” which reviewed the status of charges in four metro area municipalities as examples and factored in the layered impacts of DCC’s when adding Translink, Metro Water, and Metro Sewer/ Drain Charges. The totals indicated that TOL charges inclusive totaled $64,276 for a SFD, and $46,261 for a townhome, and with the new DCCs will be over $104,000, and $66,000 respectively. We also noted that from 2012 to 2020 TOL DCCs rose by approximately 79%, and this latest increase represents 83% (per SFD) in only 3 years.
The industry has dealt with DCCs and other charges for many years and it is fundamentally understood that “growth should pay for growth”, however, the levy of such significant increases without reasonable notice, proper attribution, and identification of cost drivers erodes confidence and certainly from development proposals and works against the opportunity to work collaboratively to promote the provision of more supply and affordable housing.
In a recent article offered by Business in Vancouver Cliff Robertson, Director of City-wide and Regional Planning, City of Vancouver, recounts that DCCs (DCLs in Vancouver) and CACs … “are critical growth-related funding sources. With new development comes the need to provide additional amenities and infrastructure to support a growing population and employment base” While this is true and both Robertson and I note that these charges limit or offset the cost of growth through taxes and user fees, the attribution of DCC’s and other charges are often difficult to directly attribute to specific projects, especially those that are “per door” charges.
Robertson is further quoted as suggesting that there is “no evidence that such charges are causing home prices to rise or that such charges are passed on to purchasers”, contending that the developer will price to what the market will bear regardless of imposed charges?!? Does he believe that such charges will not be penciled into the cost column, or that the business case and financing opportunity will not be affected by unfettered increases in government charges which in Vancouver have been shown to be as much as 30% of the end cost of a home to the purchaser?
This disconnect and assumption that there is ‘no limit’ to what can be downloaded onto new construction is a direct barrier to the provision of increased supply and more affordable housing options. It also flies directly in the face of the stated objectives of all levels of government to double the rate of housing production across the board, and numerous agencies and organizations including CMHC and StatsCan have empirically proven that jurisdictions that have the highest level of government-imposed charges are also amongst the municipalities that deliver the lowest volume of new housing in the face of the highest demand.
The fees, charges, and taxes applied to new homes are also applied to the provision of purpose-built rental and can render a rental project that would be flirting with viability over the edge. A recent UDI report outlined that a 675 sq.ft. rental apartment renting for $2,698/month sees 32.72%, or $882.70 represented by government charges.
Benjamin Tal, deputy chief economist for CIBC in a Globe and Mail article discusses the negative impact of charges and taxes on the potential provision of purpose-built rental and the current structure which applies the full burden of GST/HST onto rental properties with no rebates or relief available.
When coupled with DCCS and CACs, and without any tax incentives or fee abatements, and in the face of lengthy processing times, unforeseen charge increases, the spike in the cost of money, materials, and labour, many rental projects cannot pencil out despite …” having a low cost of capital through partnerships with Canadian pension funds, a long-term investing horizon and a mandate to be part of the solution to the rental supply crisis, they are unable to make projects economically viable in the current climate of rising interest rates and high borrowing costs.” In an example from Toronto, a developer building a 400-unit building in the current economic climate would see a bottom line profit of 10-12% yet pursued as a rental project would see an ultimate loss of 20% – not exactly an incentive!
The provision of significantly more housing across the spectrum of the housing continuum is essential to alleviate the housing crisis and introduce more balance to the housing sector. The inflationary pressures, escalating costs, higher borrowing rates, and continuing disruption in supply chain and labour resources are by themselves barriers to meeting specified housing targets, and layering on unpredictable, and unforeseen charges, fees, and or taxes are exasperating this challenge.
We have been asking for a comprehensive review of DCC, and CAC policies, guidelines, and frameworks to provide a higher degree of certainty and predictability to the cost of any development or build at any scale, and that these costs can be counted on being relatively static through the course of approvals. These issues are reflected in the recommendations of both the provincial DAPR report, and the Expert Panel on Housing Affordability that was commissioned by CMHC and the BC government.
The circumstances that have prevailed in TOL are directly contrary to what industry needs and has been advocating for and do not serve the need to work in a collaborative manner to successfully address our housing challenges. HAVAN will continue to advocate for transparency, and effective communications in regard to development charges and all aspects of the development process, and we would welcome members’ comments and feedback that we can pass on and share with the authorities having jurisdiction.
HAVAN continues to work with CHBA BC and CHBA to advocate for all levels of government to work together to address the challenges of the housing industry including zoning restrictions, density limits, and NIMBYism.
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QUICK BITES …
- In a piece from the Globe and Mail it is noted that the housing crisis can’t improve until all levels of government get involved. “Statistics Canada has released numbers showing a perfect storm of escalating fees, zoning restrictions and labour shortages constricting Canada’s supply of housing. Combined with massive population increases in communities like the Greater Toronto Area(GTA), housing prices have reached eye-watering levels … New housing supply, faster regulatory approval times and reduced red tape, combined with increased densification and the addition of greenfield land, are all levers that need to be deployed to ramp up supply to have even a hope of keeping pace with demand.”
- A comprehensive study was undertaken by the BC Construction Safety Association (BCCSA) to review the challenge of substance use/abuse in our industry. The degree to which this is affecting industry is staggering and while direct economic impacts are measured in hundreds of millions of dollars the human impact on individuals and their families and friends is incalculable. Please link to this story and explore some of the resources available through BCCSA and BCCA.
- Vancouver Community College is pursuing a plan that might add over 3,300 homes in or around its East Vancouver campus. It is a far-reaching and complex plan incorporating educational facilities with community facilities, green spaces, and a variety of housing opportunities in a master-planned community with grade-related services and retail and towers to 25 stories. It will be interesting to see how progress on this site proceeds compared with the First Nations Sen̓áḵwdevelopment that is twice the size and scope.
- Please see the comments and observations from CHBA National CEO Kevin Lee, on higher interest rates and whether Canada can build enough homes in 2023 to keep up with demand.
- Last week saw the anniversary of the award of the design of Simon Fraser University to architects Arthur Erickson and Geoff Massey. Chosen as the winning proponent in 1963, the campus opened for students and classes in 1965!! Imagine the timeline that would prevail today?! This iconic campus was a dramatic contrast to the campus represented at UBC and was chosen as the winning design over 70 other submissions and reflected a modern concept and a compact group of buildings arranged to allow for growth both outward from and down the slopes of Burnaby Mountain.
