Vancouver charges some of the highest development fees among major cities

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A CMHC report found that the amount and number of fees can have a big influence on the cost and delivery time of new homes.

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The City of Vancouver has the highest development fees for condos and among the most separate fees, which have a significant influence on the cost and delivery time of units, according to a new CMHC study.

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The agency’s latest report, to be posted on its website on Tuesday, found total fees were $140 per square foot for the city’s low-rise and high-rise condo developments, mostly in due to density-related community amenity fees, representing approximately 20% of construction. costs.

However, in the Canada Mortgage and Housing Corporation’s comparison of Vancouver, Toronto and Montreal, the agency found that Toronto charged higher fees than Vancouver for townhouses and single-family homes, making This city charges higher on average, which analyst Eric Bond said offers some lessons.

“In some cases, the government fee, or the amount of the fee, seems to run counter to other municipal goals like intensification,” said Bond, senior economist and specialist in CMHC’s Vancouver office.

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Bond said the purpose of the report was to compile a data set to compare municipal fees and development costs in Canada’s largest cities and a subset of municipalities and to spark discussion on “best practices to collect fees in a way that helps provide more affordable services. lodging.

“We found that the number and magnitude of government fees vary significantly from municipality to municipality,” Bond said, and that fees are “an important component of the final price paid by homebuyers.”

On average, Vancouver’s fees were $70 per square foot, compared to $86 per square foot in Toronto. Both cities have eclipsed Montreal, where fees and charges average just $24 per square foot.

CMHC is an independent federal agency, and Bond said the report is the third chapter in his recent efforts to examine the factors contributing to soaring house prices in Canada. In June, the latest report looked at overall housing supply and estimated that the country would need 3.5 million new units built by 2030 to address supply and affordability issues.

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And in that report, Bond said CMHC has also found that the number of different fees, especially those that require negotiation such as Vancouver’s density-related community facility fees, add uncertainty to developments. and lengthen the time required to deliver the units.

“Time and uncertainty also increase the cost of new housing,” Bond said. “And in many ways, (that) may actually be more important than the amount of the fees themselves.”

In Vancouver, the development process involves an average of 9.3 different fees, compared to 8.7 in Toronto and 6.2 in Montreal, according to the report.

Vancouver-based urban economist Tom Davidoff was skeptical that cutting Vancouver’s fees, particularly density-related amenity fees, would translate into lower prices, but agreed that streamlining processes and their transparency would be a greater advantage.

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“It’s not true that … when the city charges $100 per unit for sewer, or something like that, it raises the price of a new home by $100,” said Davidoff, director of the center for Economics and Real Estate at the Sauder School of Business at the University of British Columbia.

“My impression is that a bigger factor is the political uncertainty around rezonings and the city’s reliance on rezoning,” instead of simplified rules that spell out what can be built on the property and how much it would cost in fees.

“The (city) council’s job would be to remap and say where and what type of (housing) product is allowed, but once they do that you don’t need them dragging hearings and d ‘have the uncertainty that you don’t know what the outcome of the hearing will be,’ Davidoff said.

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Davidoff was careful not to comment too much on housing policy in Vancouver, as his wife, Dulcy Anderson, is running for council under incumbent Mayor Kennedy Stewart’s Forward Together banner. However, he said the existing council deserves some credit for approving the city’s Broadway corridor rezoning plan, which is a step in that direction.

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