Housing developers in B.C. are set to get a reprieve in the fees they pay for new infrastructure as the federal government has stepped up with $250 million to fund the first phase of the $10-billion Iona sewage treatment plant replacement.
Announced Friday in Richmond by a group of politicians representing all levels of government, Ottawa provided the Metro Vancouver Regional District with funding from the Canada Housing Infrastructure Fund (CHIF) on condition the regional body delays implementation of higher development cost charges (DCC) to the tune of $220 million.
The politicians hailed the shift as a win for housing affordability but housing policy analyst Andy Yan, the director of the City Program at Simon Fraser University, says it is merely a subsidy from existing taxpayers to corporate developers.
“Where does the idea of a subsidy for developers fit in this discussion?” asked Yan.
The CHIF money had been discussed at several meetings at the Metro Vancouver board over the past six months.
In essence, the board would have preferred the federal funding with no strings attached, and pondered delaying its DCC model for what amounts to only $30 million.
“What is going on here is, how do you pay for growth? It’s the idea that growth pays for growth,” said Yan.
For example, the Iona plant needs to be replaced and the new one will cost an extra 10 per cent — about $1 billion — to accommodate for the larger population it will serve.
That money is – or was – to come from the DCCs charged to new developments.
Yan said this funding announcement “erodes” the growth-pays-for-growth model.
“This is where growth-pays-for-growth is being bogged down,” Yan told BIV Friday.
Metro Vancouver board chairman Mike Hurley acknowledged the difficult debate but told BIV that the DCC delay is not bogging down the model.
“So while this is a delay in the payments, we are very committed to that model,” said Hurley.
“The reason for this is there is so much uncertainty in getting units built. That’s where the provincial and federal governments are coming from,” said Hurley, the mayor of Burnaby.
“In Burnaby we have permits for 25,000 units waiting to be picked up.”
B.C. Housing Minister Ravi Kahlon and federal Housing Minister Nathaniel Erskine-Smith said in a joint statement the terms “reduce upfront costs for homebuilders” and “are designed to pave the way for the construction of more homes for people.”
This, the politicians said, will make homes more affordable.
“The affordability factor is viewed as a public good. But the question is, is it?” Yan asked, adding any so-called affordability is drawn from taxpayers’ pockets.
“In the good times [DCC costs] were covered by cheap credit and foreign capital. Right now, we’re experiencing lean times in terms of profitability.”
To that end, Yan also said transparency is needed from developers and governments to determine if the actual costs have been apparent to new homebuyers.
Meanwhile, in the same statement, Kahlon stated the provincial government is also considering allowing local governments to waive DCCs for non-market homes within market housing projects, “which could encourage the development of more affordable housing.”
Development cost charges pay for the likes of local water, sewer and road connections, plus parks and community centres. At a regional level they pay for water and sewage treatment plants.
According to a 2024 report from the Canadian Urban Institute, $104,000 of infrastructure investment is needed, on average, to enable the construction of a new housing unit.
Metro Vancouver has embarked on large infrastructure projects to accommodate growth and in 2023 the board increased its DCCs, causing concern from developers.
For example, by Jan. 1, 2027, Metro Vancouver DCC rates for the average townhouse unit in Surrey will increase to $31,375, up from $11,086 in 2024 over a three-step progression.
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