Financing growth – new fees and charges on the way in Vancouver

Posted

August 22, 2018 – Government Relations, REGBV

Effective September 30, 2018, developers will be charged a new Vancouver development cost levy (DCL) to help pay for upgraded water, sewer, and drainage infrastructure.

With Vancouver’s population expected to grow by 100,000 residents to 725,000 by 2031, the city is increasingly using DCLs to finance growth.

The theory is new residents result in increased road maintenance costs, a need for new parks and greenspace, new or expanded community and recreation centres, additional fire and police services, garbage and recycling, safe drinking water, and even animal control.

To cover these services and facilities, developers pay an increasing array of DCLs at the subdivision approval or building permit stage – fees and charges that are passed on to new home owners.

This includes fees and charges in Vancouver’s three types of DCL districts, each with its own rates:

  1. The city-wide DCL District applies to most of the city and is levied for affordable housing, parks, transportation and childcare capital projects.
  2. The city-wide Utilities DCL District applies to most of the city in addition to the city-wide DCL District above and is levied for utilities capital projects, although some planning areas and zones are excluded.
  3. Layered DCL Districts which have area-specific DCLs, the city-wide utilities DCL, and the city-wide DCL.

Is this fair? The Urban Development Institute (UDI) doesn’t think so.

Together with other government fees and taxes, these charges now account for 26 per cent of new home prices, or $229,256 of the $840,000 cost of a new condominium, according to the Urban Development Institute (UDI) and appraisal and tax expert, Paul Sullivan.

This amount increases to $377,582 (27 per cent) embedded in the cost of a $1.4 million three-bedroom apartment.

“Governments at all levels are increasingly addicted to real estate fees and taxes,” said Sullivan. “At a time when all governments are purportedly concerned about housing affordability, all of these increased taxes and fees are just making housing even more expensive.”

For details on DCL rates in neighbourhoods, including maps, read this Vancouver Information Bulletin.

Read Paul Sullivan’s analysis of government fees and taxes on real estate.

DCL exemptions

DCLs don’t apply to:

  1. alterations to an existing building where the total floor area of the building is not increased;
  2. social housing;
  3. churches exempt from taxation;
  4. additions smaller than 500 square feet to existing buildings containing fewer than four residential units and no other use; and
  5. small residential units of 29 square meters (312 square feet) or less.

If you have questions about government fees and charges on real estate or ideas on how Vancouver could better pay for new growth, contact Harriet Permut, manager of government relations at hpermut@rebgv.org.