Feds postpone housing funding for 2 of B.C.'s biggest cities amid concern over development fee hikes

A condo tower is seen under construction in downtown Vancouver as freighters sit at anchor on English Bay.  (Darryl Dyck/Canadian Press - image credit)
A condo tower is seen under construction in downtown Vancouver as freighters sit at anchor on English Bay. (Darryl Dyck/Canadian Press - image credit)

The federal government abruptly postponed an announcement Tuesday for tens of millions of dollars in housing funding for two Metro Vancouver municipalities, due to concerns about new development fees being proposed by the regional district.

"We're studying the impacts of this proposal and I hope to have more to say soon," posted Housing Minister Sean Fraser on X, formerly Twitter, shortly after the funding announcement scheduled for Tuesday afternoon was postponed.

The two municipalities set to receive the funding — Surrey and Burnaby, the second and third largest cities in B.C. by population — had applied to the federal government's Housing Accelerator Fund, a $4 billion program "meant to remove barriers and support the development of affordable, inclusive, equitable and climate-resilient communities."

Both cities had received letters from Fraser saying they had received the funding — but that's now in question due to Metro Vancouver Regional District's proposed fee increases to help pay for upgraded infrastructure.

'Growth needs to start paying for growth'

Metro Vancouver collects fees known as development cost charges (DCCs) for new residential and non-residential developments in the region.

The regional district has been moving ahead on the proposed increases to DCCs for several months, due to a desire by local politicians to reduce the rate of property tax increases projected in the years ahead.

"We have four sewage treatment plants that need to be rebuilt at the same time," said Metro Vancouver vice-chair John McEwen.

"The taxpayer is already put to the limit. So we've come to the decision and realization that growth needs to start paying for growth, and that's the only way we can move forward."

The increases being considered include an approximate tripling of the water DCC fee, a quadrupling of the liquid waste DCC fee, and the creation of a new DCC for parks.

The overall costs, once fully implemented in 2027 as planned, would be significant: an analysis by Coriolis Consulting estimated that the increased fees would cost developers an additional $11,360 to $14,657 for every new apartment unit, and $18,506 to $24,106 for every single-family lot.

At a Metro Vancouver meeting to discuss the idea in April, Burnaby Mayor Mike Hurley was among the directors who voiced his support.

"This is something that should have been done a long time ago," he said.

"People who have been paying taxes in this region for a long time — 50, 60, 70 years … would have a hard time accepting that they're going to pay for future growth. They have paid their share and they continue to pay their share."

Who pays for growth?

While nobody disputes the costs Metro Vancouver faces to upgrade its utility system in the coming years, the question of how it should be paid for differs depending on who you talk to.

"It's a very cynical and inefficient way to do capital projects, and it's politically motivated to not put the proper burden on to the taxpayer," said Jon Stovell, president of Reliance Properties.

Stovell said the Metro Vancouver fee hikes would take up about half of the savings developers would get on the recently announced removal of GST from new apartment buildings.

He also argued that new fees of more than $10,000 per apartment unit would incentivize builders to pick projects with less density — the opposite of the purported goals of many Metro Vancouver municipalities and the B.C. government.

"They're burying these costs into new housing and then at the same time talking out of the other side of [their] mouth about how it's so unaffordable," he said.

"They're tone deaf right now."

It remains to be seen whether the federal government fully cancels its funding for Burnaby and Surrey, or if Metro Vancouver backs away from the proposed DCC increases.

McEwen believes Metro Vancouver will go ahead.

"The challenge that we have with water is just the cost of putting pipes in the ground, the cost of treatment," he said.