New home construction could get more expensive if Metro Vancouver adopts proposed increases to its development cost charges (DCCs) — a move the development industry said would have ramifications for housing affordability.
Currently, developers in the Fraser zone, which includes the Tri-Cities, pay $1,731 to Metro for each single-family unit, $1,515 for each townhouse unit and $1,082 for each apartment unit. The new charges — which are in addition to DCCs imposed by cities — would see the numbers more than triple, rising to between $5,451 and $6,340 per single-family home, $4,715 and $5,484 for townhouses and $3,546 and $4,125 for apartments.
Metro Vancouver’s chief financial officer, Phil Trotzuk, said the fees, which have not been increased since they were created in 1997, are needed for improvements to the region’s sewage infrastructure.
“Obviously, things are a lot more expensive,” he said. “There are a lot more projects and a lot more costs. We are behind the eight ball in terms of adjusting our rates.”
He pointed to the expansion of the Annacis Island Wastewater Treatment Plant as an example of the rising costs. That project, which will be completed in 2018, is expected to total $550 million, a fairly typical price tag for that kind of work, said Trotzuk.
If the proposed DCC rate increase is approved, it could be phased in over three to five years, according to a Metro Vancouver report.
Trotzuk said that because the rates have not risen since 1997, a larger spike was necessary to bring the charges in line with today’s costs. He said a more incremental approach is expected to be implemented in the future.
Consultation with stakeholders and the public is expected to begin in the next two to three months but some in the development community are already concerned with the proposed changes.
Anne McMullin, president and CEO of the Urban Development Institute, said Metro Vancouver needs to be mindful of the impact increased costs on homebuilders will have on affordability.
“There have been so many taxes and charges and fees that have been levelled against new homes in the last number of months and years,” she said. “Any time you add on more costs, it affects people’s ability to pay. These costs are passed on to the home buyer.”
Bob de Wit, the CEO of the Greater Vancouver Home Builders’ Association, concurred.
He told The Tri-City News that while his organization believes “growth should pay for growth,” he would like to see more transparency around how the funds will be allocated to different infrastructure projects.
Despite the fact that a few thousand dollars is only a small percentage of an overall home price, de Wit said the increases will be passed on to consumers.
“If you stop and ask the average home buyer if three or four thousand makes the difference, it certainly does,” he added. “It is not an insignificant number overall, even if it is a small percentage.”
Because the Fraser zone is not as developed as the rest of Metro Vancouver and does not have the same level of existing infrastructure, it sees some of the highest development cost charge rates.
For example, the fee for building a new-single family home in the Vancouver zone is currently $944 while the same home costs $1,731 in the Tri-Cities. Under the proposed increase, Vancouver’s costs would double while those in the Fraser Zone would more than triple.
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