The Metro Vancouver Regional District (MVRD) is considering providing in-stream projects with additional protection from development cost charge (DCC) increases, according to a report that's set to be considered by the Finance Committee on Thursday, February 13.
Although more in-stream protection is something developers have been asking for, Metro Vancouver is making the proposal in order to secure funding from the federal government's Canada Housing Infrastructure Fund (CHIF).
As a condition of the Canada Housing Infrastructure Fund, applicants are required to adopt multiplex zoning in all low-density residential areas and implement a three-year freeze on increasing development charges above the rates as of April 2, 2024.
As first reported by STOREYS in December, the Government of Canada had earmarked $250 million via the CHIF that would go towards Metro Vancouver's Iona Island Wastewater Treatment Plant. However, the MVRD told STOREYS that it was considering "alternative measures" instead of an outright freeze on DCC increases, which the CHIF allows on a case-by-case basis.
In October 2023, after a standoff with the federal housing minister, the MVRD approved substantial increases to its DCCs, which were to come into effect in phases on January 1 of 2025, 2026, and 2027.
Metro Vancouver's DCC program currently has an in-stream protection period of 12 months, and the proposal aims to extend this protection period to 18 or 24 months.
"The federal government has tied regional districts' DCCs to municipalities' ability to apply for CHIF," said MVRD staff in the report. "However, on a case by-case basis, the federal government may take into consideration alternative measures adopted to reduce the cost of construction of new homes and encourage developers to build more homes. Metro Vancouver has proposed lengthening the in-stream protection period for the DCC program from 12 months (currently permitted provincially) to 18 or 24 months, subject to Board approval, to fulfil the requirements of this program and make eligible both Metro Vancouver and its member municipalities for funding."
Metro Vancouver says that it has been working closely with member jurisdictions, the development industry, and the Province on the proposed extension of the in-stream protection period. It estimates that if the change is implemented, it would forego anywhere from $70 million to $220 million in DCC revenue, which would in effect be offset by the $250 million from the CHIF.
"The trade-off the [MVRD] Board will be asked to consider is accepting the $250 million for the Iona projects and in exchange, foregoing $220 million in DCC revenue, potentially expanding the DCC waiver program, and as a result, unlocking the ability of member municipalities to apply for CHIF," said MVRD staff.
As first reported by STOREYS last month, the MVRD has also proposed expansions to its DCC waivers program, which would allow private developers that provide inclusionary units to not-for-profits to be eligible for waivers.
The proposed change to the in-stream protection period would require the Province to amend existing legislation — the Local Government Act, specifically. The Province has been in discussions with the Government of Canada, but the federal government has yet to confirm whether they will accept the MVRD's proposal.
The application period for the CHIF ends on March 31, 2025, although the federal government has said that applications are approved on a first-come-first-serve basis. Regardless, the ball now appears to be in the federal government's court.
"The proposed one-year pause on Metro Vancouver's Development Cost Charge (DCC) increase is a necessary step to support a struggling housing sector facing a cost-of-delivery crisis driven by escalating fees, taxes, and construction costs," said Wesgroup Properties Chief Development Officer Brad Jones in a statement provided to STOREYS. "While this provides temporary relief, it must be followed by meaningful reforms, including fee reductions like those in Ontario and shifting fee payments from up-front to post-completion to prevent further financial strain on projects. Government-imposed costs are a significant barrier to housing supply, and without structural changes, affordability will remain out of reach for many. We urge policymakers to take decisive action to create a more viable and sustainable housing market."
