BURST
Metro Vancouver’s board is discussing options for reducing development cost charges and how it can make up for a projected revenue loss.
The possibilities include increasing household taxes or utility rates, delaying some capital projects, or increased borrowing.
Ahead of a board meeting on Wednesday, the Urban Development Institute, which represents developers, suggested there should be ways for Metro to reduce the charges without raising property taxes.
Development cost charges are the fees that developers pay when they build and sell new housing. The money goes to build things such as water and sewer infrastructure, and acquiring parkland.
In January, in the face of growing developer outcry, the board asked staff to explore rolling back planned 2026 rate increases to 2025 levels and reducing 2027 rate increases.
In a report to the board, staff said the resulting funding gap could be as high as $389 million over five years under that scenario.
The staff report suggests that Metro Vancouver could cover the projected first-year loss of $15 million in 2026 by using money in its reserves. To make up for the losses from 2027 to 2031, Metro could increase property taxes for existing residential property owners, by an average of $30 in 2027, $23 in 2028, and $7 in 2029 and 2030.
The report suggests another option would be to increase the amount of long-term borrowing for water and sewer projects, although that would mean spending more on interest payments.
Another option would be to delay such projects, although doing so would “introduce significant risk to the timely delivery of critical regional services to growing communities in the region.”
Staff also present the board with another scenario: keep the planned increase to developer cost charges in 2026 and then freeze rates at 2026 levels in 2027. This would result in a smaller funding gap of $246 million over five years. Staff suggested the same three options for offsetting this revenue loss: increasing property taxes (although not as much as in the first scenario), increasing long-term borrowing, or deferring capital projects.
The development sector, which has been sparring with Metro Vancouver since its original plan to increase development cost charges in 2026, supports rolling back rates, but is critical of any increase in property taxes.
In a letter to the Metro board on Tuesday, the Urban Development Institute said new water and sewer infrastructure should be amortized over its useful economic life.
“These are assets with 50- to 100-year lifespans currently being paid off over 15 years or 30 years in the case of the North Shore wastewater treatment plant,” wrote the institute’s interim CEO, Michael Drummond.
They should be financed the way B.C. Hydro finances its infrastructure through long-term debt, which would dramatically reduce the upfront charge without shifting the burden to existing taxpayers.
“This is not a radical idea. It is basic infrastructure finance,” wrote Drummond.
In a statement, Metro Vancouver said, “While approaches such as increased borrowing or longer amortization periods may reduce near-term pressures, they do not eliminate costs over the life of the assets, which must ultimately be recovered through future (development cost charges) revenues or utility rates.”
Drummond also took issue with the staff report’s projection that reductions in developer fees could lead to a funding gap of as much as $389 million over five years, describing the revenue assumptions as “backward-looking” at a time when housing construction has declined.
He told Postmedia that the presale condo market has collapsed, resale volume is extremely weak, purpose-built rental projects are increasingly difficult to finance, and unsold inventory is rising.
“That is why we are taking issue with the (Metro) staff characterization of a $389 million funding gap. … That assumption is not grounded in the reality of current market conditions.”
In the first quarter of 2026, presales across Metro Vancouver totalled just 87 units, compared to a 10-year average of approximately 3,900, a decline of more than 95 per cent, wrote Drummond.
For all of 2025, presales totalled 5,822, representing a 61 per cent decline from the long-term average of over 15,000. Without presales, construction financing does not flow and housing starts don’t happen, he wrote.
“The $389 million was not going to materialize in any scenario,” wrote Drummond. “In this context, the rollback is not a concession, it is a necessary correction.”
The development industry in B.C. has also been pressing for the province to seek a program such as the one between the federal government and Ontario announced in early April that will see governments spend $8.8 billion over the next decade in infrastructure as a way to help municipalities reduce development cost charges.