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Metro Vancouver is considering waiving development cost charges (DCCs) for below-market rental units that are built by private developers and transferred to non-profits upon completion.
Currently, the district waives regional DCCs for liquid waste and water infrastructure that would otherwise be imposed on non-profit rental housing, but it does not waive DCCs if the non-profit housing units are delivered by a private entity.
Expanding the waiver to these “inclusionary” housing units in mixed-market developments, will support affordable housing in the form of lower rents, more units or some combination thereof, according to Metro Vancouver.
Staff estimate the change could reduce break-even rents for affordable housing projects by between four and 4.4 per cent.
Alternatively, the change could increase the supply of new below-market rental units by between 5.3 and 6.7 per cent with the same equity invested by affordable housing developers, translating to about 281 to 361 units per year over the next 10 years.
“Expanding eligibility for the DCC waivers to affordable rental units built by for-profit entities that will be turn-keyed to a not-for-profit at cost, under strict contract terms, is aligned with the original intent of the bylaws to support not-for-profit affordable housing, and ensures that foregone DCC revenue [is] translated into tangible affordable housing benefits for the region,” stated an internal Metro Vancouver report that is currently being presented to various committees.
Foregone DCC revenue is estimated to be between $5.4 million and $7 million per year, or 0.8 to one per cent of the total average annual DCC revenue.
Metro Vancouver levies three types of DCCs on developers: Liquid waste, water and regional park acquisition.
The DCC program has been under review since October 2023. Jessica Hayes, Metro Vancouver’s program manager for housing policy and planning, presented the proposed changes to the district’s water and liquid waste committees on January 15. She will also present it to the regional parks committee and finance committee.
If the changes are endorsed by the board, the soonest they could take effect would be in March.
Hayes said inclusionary housing has become a more prominent trend in recent years, as B.C. municipalities increasingly require a certain number of affordable housing units to be included in rental or, more commonly, mixed-tenure projects.
“That’s one of the changes we’re responding to, as well as direction from the MVRD board to look at ways to incentivize affordable rental housing through the DCC waiver,” she said.
The internal Metro Vancouver report acknowledges various uncertainties. For example, a non-profit may not necessarily apply DCC savings toward lower rents or more units, based on their individual capacity and financial resources.
Furthermore, the report suggested there may be no reliable way to predict whether the change will result in new affordable projects that would not have been built otherwise.
“For the waiver to be effective, it must be coupled with inclusionary housing policies that limit the sale price upon transfer of the units to the non-profit partner, to ensure that the cost savings are passed on to the non-profit entity and not the private developer,” read the report.
