Policymakers explore eliminating fees to boost housing supply
Metro Vancouver is exploring measures to incentivize the construction of more affordable rental housing, including waiving development cost charges (DCCs) for some projects. These charges currently help cover the cost of connecting new developments to essential water and sewer infrastructure.
Anne McMullin, president of the Urban Development Institute, said the initiative focuses on “inclusionary housing” — units offered below market rates. She noted that such units already impose financial burdens on developers, making a waiver of DCCs a logical move.
“Inclusionary units are below-market units that already cost the developer. They are charging DCCs on what is part of an amenity contribution, so it makes sense to have a waiver,” said McMullin.
In Vancouver, inclusionary housing accounts for about 20% of units in rental projects, although the proportion varies across other municipalities in Metro Vancouver. McMullin emphasized that eliminating DCCs could enable private developers to deliver more below-market rental units.
Current policies and projected impact
Currently, Metro Vancouver waives DCCs only for projects owned by non-profit societies, B.C. Housing, the Canada Mortgage and Housing Corporation, or registered charities. This policy has been in place since 2010.
A Metro Vancouver staff report revealed that six out of 19 municipalities already have bylaws reducing or waiving DCCs for affordable rental housing. As provincial housing legislation increases zoning for affordable units, more projects combining market-rate and below-market-rate housing are expected, prompting Metro to reassess the impact of DCCs on project viability.
Projections estimate that between 2024 and 2033, waiving DCCs for existing eligible projects could result in an average of 1,950 to 2,500 affordable units annually. This represents a loss of $38 million to $49 million in revenue per year. If expanded to private developers building below-market rentals, an additional 281 to 361 affordable units could be added annually, increasing the annual revenue loss by $5.4 million to $7 million.
Federal and provincial contributions
The discussion comes as Metro Vancouver secures $250 million in federal funding to design its $10 billion Iona wastewater treatment plant upgrade. This commitment matches a provincial contribution, with funds drawn from the Canada Housing Infrastructure Fund.
The federal support is conditional on meeting program requirements, including permitting four housing units per lot in low-density neighbourhoods and freezing increases in development fees for three years.
Responding to developer concerns
Developers have expressed concerns over rising DCCs. Letters submitted to Metro Vancouver last fall requested a two-year delay in planned increases to accommodate ongoing projects and the option to pay fees after construction. Despite these appeals, Metro Vancouver implemented the first of three scheduled increases on Jan. 1.
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