Condo and office towers and B.C. Place stadium in downtown Vancouver, in October, 2025.DARRYL DYCK/The Canadian Press
On April 15, developers in British Columbia scored a big win when the Metro Vancouver Regional District agreed to roll back and reduce its development fees, something the industry has asked the regional government to do for several years.
Metro Vancouver collects these fees – known as development cost charges (DCC) in B.C., and development charges in Ontario – to pay for new infrastructure. DCC rates saw substantial increases in 2025 and 2026, with another that was set for 2027.
Since those increases, however, the market has taken a downturn, and few developers have been able to move forward with new projects. Development charges are typically payable upon issuance of the building permit, right before construction begins, so projects not reaching that stage mean governments can’t collect fees.
After last month’s special meeting, Metro Vancouver agreed to roll back 2026 DCC rates to 2025 rates and to reduce 2027 rates.
“It’s a meaningful step,” said Brad Jones, chief development officer at Wesgroup Properties, which has been the most vocal advocate for the DCC change. “There’s a group of projects that were maybe on the cusp of going – in this market, they’re likely rental projects – and they can take advantage of this two-year window and move, but I think it’s going to be limited how many projects can react and respond with how subdued the presale market is and rents declining steadily.”
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Rob Blackwell, executive vice-president of development at Anthem Properties, agrees that it’s not going to have an industry-wide impact, but will move the needle for some projects. Using the example of a 30-storey high-rise project, Mr. Blackwell says the savings could be between $2-million to $2.5-million, which is an amount that can change margins and make a project financeable.
“I think the bigger thing is that Metro Vancouver is understanding what we’ve been saying for two and a half years – that there’s structural issues in the market and you can’t keep increasing the fees, because it’s going to stop projects,” he added. “I believe that when we first spoke to them, there may have been some who agreed with that, but the majority didn’t. As we went through time and what happened happened, there’s more proof in the market. But we saw this coming three years ago. We just couldn’t get anyone to believe us, and I think the indication now is that people believe.”
Both Mr. Jones and Mr. Blackwell also agree that the core problem is being pushed down the road, because the other part of Metro Vancouver’s change is to reduce the so-called “assist factor” of DCCs to 1 per cent beginning in 2029. The assist factor is the percentage of growth-related infrastructure costs that are funded by the existing tax base, as opposed to DCCs. Thus, a 1 per cent assist factor means 99 per cent of growth-related infrastructure costs will be funded by DCCs, and the rates will go up accordingly.
“Things in the market would have to change significantly for that to be viable in 2029, otherwise we’re just pushing that problem down the road,” said Mr. Blackwell. “Moving to the 1 per cent assist factor under the ‘growth pays for growth’ mantra is not gonna work. The cost burden going into new housing is too high. DCCs are important, we all need the infrastructure, but if the price for them is too high, we end up taxing homes out of reach. That’s the problem. Every dollar of a DCC shows up in the price of a home.”
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Mr. Jones similarly described the 2029 problem as “of fairly high concern” and says the ongoing discussion across the country about how infrastructure is funded needs to continue instead of just hoping for the market to recover. Blackwell says governments need to be more creative with financial engineering.
“Why can’t we go back to P3 [public-private partnerships] structures that we used to do in the province? Why can’t they amortize projects for a longer time? Why do they have to be paid back in 15 years? Why can’t municipalities issue bonds to pay for infrastructure? They have to look at big changes. I think the whole thing needs an overhaul. The tools are out there. It’s just that policies don’t allow it, or the creative thinking is not there. We gotta get there, otherwise this problem is just being pushed down the road, and we’re gonna face it again.”
Development charges were at the top of the list of things developers have wanted to see changed. Asked what the next biggest things are, both Mr. Jones and Mr. Blackwell pointed to building codes, which regulate construction.
“The cost escalation that has resulted from continual changes to the building code – these non-life-safety changes, socially driven changes – are making construction in this market incredibly difficult and incredibly expensive,” said Mr. Jones. “I think we need to pause and look at the priorities. No one is suggesting undoing safety elements. It’s all the extra stuff. That’s something that’s kind of gone unchecked over the last decade or so. We’ve done some work on this and think there’s been an excess of 2,000 individual changes to building codes over 10 years.”
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Mr. Blackwell says building codes impact construction costs in two significant ways. The first is that they change the physical size of buildings. Code changes on insulation, for example, can increase the sizes of walls, thus increasing the size of the building, while reducing the amount of usable space. The second way is that they affect project timelines, as all the layers of regulations – sustainability, accessibility, seismic – can extend a construction schedule from 24 months to 32 months, which in turn means more interest needs to be paid.
Referring to all the various policies, Mr. Jones said: “It’s kind of a sad game of whack-a-mole,” while Mr. Blackwell said that developers can absorb a certain amount of costs, but, “They just need to be proportionate to what everyone’s trying to accomplish at the end of the day, which is to have housing units that are reasonably attainable.”
Mr. Jones also points to the wider impact of new construction not being able to move forward.
“We saw Coast Appliance’s financial troubles and I understand there’s one or two appliance distributors on [Vancouver] Island that are in similar situations, so we’re seeing the overall industry impact that results from a lack of housing starts. I think that will slowly become the story of the year – the economic impacts and job losses that are related to this sector.”