Dan Fumano: New report from Homebuilders Association adds to the debate around the principle of growth-paying-for-growth
In the Township of Langley, developers must soon pay city hall $58,592 for each townhome they build. Across the Fraser River in Pitt Meadows, developers only pay a third of that for a similar townhouse.
A report by the Homebuilders Association Vancouver examines what it calls “vast inconsistencies” in the fees municipalities impose on residential development to pay for community amenities and infrastructure.
The report, released Wednesday, warns that the rising cost of building homes — which varies dramatically among municipalities and can change quickly — is hurting the industry’s ability to deliver housing.
But the mayor of the Township of Langley, which the report singles out as having the highest development charges, says comparisons of different municipalities with different needs and geographies is “grossly unfair,” not particularly useful, and is “intended to embarrass local governments.”
There is an axiom in planning that “growth should pay for growth” — that municipalities should pay for infrastructure to support new construction by taxing the new development, instead of by raising property taxes for all homeowners.
But homebuilders and others who want a dramatic boost in housing supply argue that overreliance on taxing new development will hinder that development and make the housing crisis worse.
Wendy McNeil, acting CEO of the Homebuilders Association Vancouver, said the report aims to draw attention to the increasing challenges builders are facing.
“They’re throwing up their hands. They’re saying, ‘This is too much, we can’t even get these shovels in the ground, it’s just not working anymore,’” McNeil said.
Things like construction costs, labour shortages, and interest rates are outside local government control.
But, McNeil said, it can kill a development’s viability when a municipality quickly increases development cost charges.
Langley Township Mayor Eric Woodward said different circumstances face each municipality.
Previous councils in Langley Township undercharged developers to the point it was “in the red for tens of millions of dollars, and this council had no choice but to correct that,” he said.
Langley needs to build roads, water and sewer lines to the many square kilometres of undeveloped land being developed for housing.
“The infrastructure costs in the township are going to be higher than North Van City, which doesn’t have these infrastructure issues.”
Woodward said so far this year, the number of homes under construction is 20 to 30 per cent above the five-year average.
“This is a structural problem only the province can fix,” Woodward said. “The problem is that the provincial government has provided local government with only two options to build infrastructure: development cost charges and property taxes. And I will always be on the side of property taxpayers, and we will look for developers and ‘growth to pay for growth’ as a principle.”
Ross McCredie, CEO of Sutton Group real estate company, said one thing the report helps highlight is the challenge of doing business in the disjointed jurisdictional landscape of Metro Vancouver — with more than 20 municipalities setting their own fees and development policies.
This challenging and high-cost environment is one reason that some of B.C.’s biggest developers have been more active in recent years in the United States than they have been at home, McCredie said.