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Growth paying for growth: Water development charge increase prompts industry concerns

Evan Saunders
Growth paying for growth: Water development charge increase prompts industry concerns

Metro Vancouver is introducing water development cost charges (DCC) on residential and commercial buildings, shifting some of the cost from the taxpayer to developers and prompting some industry members to voice concerns.

The change marks the first time Metro Vancouver will charge water DCCs to developers instead of entirely to users.

The new development charges will be: $6,692 for a single-family home, $5,696 per unit for a townhouse, $4,261 per unit for apartments and $3.39 per square foot for commercial spaces.

At a Greater Vancouver Water District (GVWD) board meeting on Oct. 28, members touted the change as a necessary action as Vancouver’s population continues to grow and cost of living factors weigh heavy on the average citizen.

“Growth needs to pay for growth. I don’t think many people actually understand that,” said Darryl Walker, mayor of White Rock and board member of the GVWD.

The Urban Development Institute (UDI) Pacific Region shared concerns with the Journal of Commerce in a written statement.

“UDI remains concerned about the cost that the proposed new Metro Vancouver Water DCC will add to projects where the developer has already purchased land and has started preparing development,” said spokesperson Rachel Klassen in the statement.

Klassen said the Institute was involved in preliminary consultation regarding the development charge increases, which were originally proposed with a 90 per cent assist factor, meaning 10 per cent of the cost is funded by the developer and 90 per cent by user fees.

The approved assist factor is 50 per cent, resulting in charges five times larger. For example, under a 90 per cent assist, charges for a single-family home would have been $1,338 per unit whereas the approved is $6,692.

The Institute’s concerns revolve mainly around how the changes could impact developments that are already underway.

“For builders to be able to take increases in DCCs out of the cost of land they cannot have purchased sites before the DCCs are approved. Purchasing land, along with other financial commitments, occurs at the beginning of the development process,” the statement reads.

Klassen said the changes were implemented quickly and with little notice for developers, noting best practice would have been a phased in approach over several years.

“Early notice about upcoming DCC increases, especially if they are substantial, is critical.

“It is extremely difficult to accommodate rate increases in project budgets after sites are purchased and financing is in place, so some projects can become unviable. This can result in them being deferred – or prices/rents having to be increased – both of which undermine affordability.”

UDI stated it had heard estimates the charge could be as much as $1.5 million on an average highrise building.

During the board meeting, Metro commissioner Jerry Dobrovolny said the board has the power to waive the DCC for affordable housing developments, specifically those that are owned and operated by a non-profit organization.

UDI’s criticisms do not mean the Institute is against DCCs.

“UDI recognizes the principle that growth requires additional infrastructure with associated costs to support new housing, commercial and industrial projects. New development must pay its fair share of these costs and that development cost charges are one of the main mechanisms for this,” the statement reads.

Dr. Dave Baspaly, president of the Council of Construction Associations, told the Journal of Commerce he had received a “mixed bag” of responses on the changes.

“It’s not helpful for a lot of industries that require water as part of their industry,” Baspaly said.

He spoke to the bigger picture of climate driven changes in construction and development.

“We’re starting to see droughts like we’ve never seen in B.C., things that we never thought we’d have to look at,” he said, “From a construction standpoint, we’re being vigilant, we’re watching what the impact is. We also know that tough times require tough measures.

“We believe in making sure that we’re not in a situation (with) building where we’re going to be dire straits in the future.”

During the Oct. 28 meeting, some GVWD board members expressed concern for how the change will affect small developers, but Walker drew attention to how the current system effects the average resident.

“We can talk about small developers, and I understand the needs of small developers, but we’re also talking about the people of our communities who are going to be paying for this one way or another,” Walker said.

Dobrovolny noted the general plan is to implement the charge with a 50 per cent assist but to gradually shift towards a one per cent assist factor, the lowest allowed by law.

The commissioner also affirmed the DCC would be reviewed every year as part of budget deliberations.

Currently the bylaw is with the inspector of municipalities for approval and will go to the GVWD for adoption, a spokesperson for Metro Vancouver said.

Follow the author on twitter @JOC_Evan.


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