April 16th, 2024

We’ve heard Elected Officials say many variations of ‘growth pays for growth,’ and that certainly seems to be the message behind a tripling of Regional Development Cost Charges on new construction by 2027.

But, what happens when the cost of growth becomes so cost-prohibitive that developers simply can’t deliver housing as quickly as we need it?

This is precisely what UDI is worried about with the Metro Vancouver Regional District’s recent decision, and it’s the reason we explicitly opposed the decision to hike costs, especially as it was done with alarmingly little consultation with developers.

This DCC hike was approved the same day that Metro Vancouver announced a massive cost overrun and significant delay on one of their wastewater projects—we’re talking an additional 10 years and adding more than $3.1 billion to the project’s budget. 

A misjudgment of this scale is cause for concern, to say the least. 

Metro Vancouver has a capital budget of $34.5 billion and a massive board made up of 41 elected officials representing 21 Municipalities, one Electoral Area and one treaty First Nation, none of whom are required to be experts in wastewater infrastructure delivery. We think it’s time to take a closer look at how this governance body is run to find out if there is a better way to govern a Regional District and budget of this magnitude, without leading to massive budget overruns.

That’s one part of our call to the provincial government: UDI urges a wholesale governance review of Metro Vancouver Regional District. 

We are also calling for a financial review of the way that regional infrastructure is delivered. At the core of this review: what went wrong and how can we have confidence that the Regional District’s budget estimates have grown for the last time?

A 10-year project delay at over five times the original budget should not be brushed under the rug, especially when the cost of this mismanagement is being downloaded onto developers, and ultimately, new residents.

At the end of the day, the significant rise in DCCs will have an impact on the delivery of housing in the region. It equates to more than $14,000 in extra charges per new apartment in some parts of the region, including rental housing. This will have an impact on whether projects pencil or not.

Metro Vancouver’s own consultant hired for economic testing compared the cost hike to the elevated financing costs that have already made several rental projects unviable; and the justification from Metro Vancouver that they are not the only ones increasing costs tells us that the Regional District has decided they are comfortable being part of the problem.

Developers are well-aware that the costs of delivering housing have been exponential; growth will be asked to pay for growth when that’s the business we’re in, but in the real world, that means sometimes growth can’t happen because it’s just too costly. 

When we talk about the cost to build housing, we know that residents end up bearing the consequences at the end of the day, because whether DCC hikes lead to continued short supply or high building costs, the housing market reacts negatively.

To address the housing supply crisis, it will take action from the development sector and every level of government, including Regional Districts. We all need to work together to tackle this challenge, including addressing the rising costs that make it more difficult to build the homes and infrastructure that this region, and British Columbia, need. 

Regional Districts play an important role in this process, and we believe that critically looking at the way that billions of dollars of capital investments are made is necessary if we are going to accelerate housing and infrastructure delivery. 

Sincerely,

Anne and the UDI Team