Canadian Design and Construction Report staff writer
The British Columbia government has moved to accelerate housing construction by changing how and when homebuilders pay hefty development fees, a move industry leaders say will help get more projects off the ground.
Housing Minister Ravi Kahlon announced Wednesday that developers will now have more flexible and extended timelines to pay development cost charges. Instead of facing the entire bill upfront, builders will pay 25 per cent at the time of building permit approval and the remaining 75 per cent when the structure is ready for occupancy.
The payment period for these charges has also been extended from two to four years.
“It means housing will be built faster and cheaper in our communities,” Kahlon said at a news conference in Vancouver. “These kind of solutions sound maybe not as grand, but they are significant in the sense that they will make the difference between projects happening and projects not happening.”
The changes come as high interest rates and soaring construction costs have stalled numerous residential projects across the province, contributing to a worsening housing affordability crisis.
The government will also amend regulations to allow for the use of on-demand surety bonds as a financial guarantee from developers, rather than requiring letters of credit from a bank. Kahlon said this will free up credit for builders to use on other aspects of their projects.
The Urban Development Institute, which represents the real estate development industry, lauded the changes.
“The requirement to pay development fees upfront has become increasingly onerous for builders, especially as fees rise and access to capital tightens,” said Anne McMullin, the institute’s president and CEO, who joined Kahlon at the announcement. “By shifting payment to occupancy, the provincial government is enabling more projects to move forward.”
The move follows concerns from within the industry about the viability of new housing projects. In a June social media post, Wesgroup Properties president Beau Jarvis announced layoffs at his company, citing a “cost-of-delivery crisis” that was delaying and cancelling projects nationwide.
Kahlon said his announcement directly addresses those types of concerns.
This initiative builds on other recent provincial measures aimed at boosting housing supply. In late June, the government expanded the borrowing power for municipalities to help them finance the infrastructure needed for new housing developments.
“Abbotsford is growing rapidly, and that growth brings an increased demand for upgrades to infrastructure like roads, utilities and community amenities,” said Abbotsford Mayor Ross Siemens in a statement responding to the earlier changes. “These changes will make it easier for all growing communities in B.C. to move forward on major projects more efficiently and with greater flexibility.”
The new payment rules for development charges took effect immediately.
