British Columbia is working with the federal government on a potential plan to reduce development costs in high-growth communities while protecting municipalities from losing the funding they rely on to build essential infrastructure.
B.C. Housing Minister Christine Boyle said the province is in discussions with Ottawa about reducing development cost charges, with the aim of making it less expensive to build new housing while ensuring local governments are not left to cover the resulting infrastructure shortfall.
Development charges paid by builders typically help municipalities finance roads, public transit, water systems and parks. Local governments have warned for years that they already face significant financial pressure when it comes to delivering this infrastructure.
Boyle said the province understands those concerns and is exploring a model in which senior governments would compensate municipalities for the reduction in development charges. She did not provide details on how much funding could be made available or which communities would qualify.
“I know it’s a priority for local governments,” Boyle said, adding that municipalities want to be kept financially whole while also recognizing the need to lower housing costs.
Up to $3.2 billion for lower development charges
The housing partnership announced by Ottawa and B.C. in June provides for the federal and provincial governments to match funding over 10 years, with up to $3.2 billion available to reduce development charges for multi-unit housing by as much as 50 per cent in priority communities.
Boyle said B.C. is currently developing an approach tailored to the province, with more details potentially coming in the fall.
The development-charge initiative is part of a much larger federal infrastructure and housing funding package.
The agreement also provides:
- $2.5 billion over 10 years for new transportation infrastructure.
- $600 million over three years to modernize health infrastructure, with B.C. matching the federal contribution.
- Up to $50 million over five years for infrastructure projects in coastal communities.
The partnership also includes a plan to convert more than 2,200 unsold condominiums into affordable housing.
That proposal faced criticism when it was initially announced, with opponents describing it as a potential bailout for developers unable to sell their condominium units.
Boyle declined to provide additional details, saying negotiations and planning remain underway. She said the government wants to present the public with a complete version of the program in the fall.
Rental costs continue to decline
The minister also pointed to recent rental market figures as evidence that housing affordability pressures are beginning to ease.
Boyle cited a Rentals.ca report showing that average asking rents declined by 4.1 per cent in July compared with the same month a year earlier. The report marks 25 consecutive months of annual declines, according to the minister.
She said the length and consistency of the trend suggest that the decline is not simply a temporary fluctuation and argued that government housing policies are beginning to have an impact.
Those measures include targeting housing speculation, increasing rental housing construction in partnership with local governments and making what Boyle described as historic investments in non-market housing.
However, the same Rentals.ca report shows that five of Canada’s 15 most expensive rental markets are still located in British Columbia, underlining the affordability challenges that remain.
Boyle acknowledged that there is still significant work to be done and noted that changes to federal immigration levels have also contributed to weaker rental demand.
She also acknowledged that sluggish economic growth and broader market weakness over the past two years may have contributed to declining housing demand.
The minister said recent market challenges remain a concern and that the province continues to discuss conditions with homebuilders and local governments.
Municipal funding remains a key issue
The infrastructure funding question is expected to remain central to discussions between the province, municipalities and the federal government.
The Union of British Columbia Municipalities, which has pushed for greater infrastructure funding, is scheduled to hold its annual general convention in Vancouver from Sept. 14 to 18.
For B.C., the challenge is to reduce the cost of building housing without weakening municipalities’ ability to provide the infrastructure required to support growing communities.
The province’s discussions with Ottawa are therefore focused on finding a balance between encouraging new construction, maintaining municipal revenues and delivering the roads, transit, water and public amenities needed as housing supply expands.
