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Vancouver defers increase to developer charges until 2024

The deferral means the city will lose out on approximately $10M of potential development revenue
Development cost levies are placed on developers to support the creation of infrastructure and public amenities that accommodate new construction. | Chung Chow, BIV

Vancouver city council is deferring an increase to costs placed on developers, citing previous changes and an uncertain real estate environment.

Councillors adopted a motion on Wednesday (July 26) to increase development cost levies (DCLs) by 8.3 per cent. These costs are paid by developers and go towards supporting city amenities and infrastructure.

But councillors chose to defer this increase until September 2024 based on a June 2022 staff update citing the need to phase in DCLs over two years.

A separate 12 per cent increase for residential projects and a separate 20 per cent increase for non-residential projects from the 2022 DCL update is set to go into effect this coming Sept. 30.

This means that if council allowed the 8.3 per cent increase, this would create total DCL rate increases of 20.3 per cent for residential and 28.3 per cent for non-residential come this September.

“In light of this and the uncertain real estate market conditions … staff are recommending the 2023 inflationary rate adjustment be deferred and included as part of the 2024 inflationary rate,” said a report presented to council.

The deferral of 8.3 per cent in DCL increases means Vancouver will lose approximately $10 million in DCL revenue.

The city applies an inflationary rate adjustment to DCLs each year.

This is meant to retain the city’s purchasing power to create growth-related infrastructure and public amenities.

The report highlights that while new development should pay for its growth, these increases should not deter new construction.

“If rates are set too high or do not allow sufficient time for the industry to adjust, then the supply of new housing and job space could be negatively impacted especially in the short-term,” the staff report said.

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