Developers of projects like the now-completed Travino Landing could be getting a temporary break on paying higher development cost charges. (Black Press File).

Developers could get a break on development cost charges in Saanich

Council asked staff to review costs of delaying DDCs for up to three years

Saanich delayed three readings of a new bylaw that would have raised development cost charges (DCCs) following last minute lobbying from the development community, which could get another break later.

Council — with Coun. Nathalie Chambers opposed and Coun. Colin Plant absent — asked staff to estimate the cost implications for Saanich if the municipality were to delay implementation of the bylaw by six months, 12 months, 24 months and 36 months following adoption of the bylaw. Provincial legislation requires that Saanich delay implementation of the new rates by 12 months for projects already underway.

“For an additional three years, we effectively wouldn’t have a DCC program, and we wouldn’t be charging DCCs in those areas where DCCs have gone to zero,” said Paul Thorkelsson, chief administrative officer.

Saanich defines DCCs as fees collected from land developers on a user-pay basis to fund the cost of growth-related infrastructure such as sanitary sewers, transportation, and storm drainage as well as parks. In 2018, Saanich collected 364,438 in DCCs, according to the annual 2018 report. Notably, this figure appears low compared to previous years. In 2016, Saanich collected $2.045 million, and $873,330 in 2014, with lower figures for 2017 and 2015.

Councillors also asked staff to bring back information about the length of time that staff need to process developments. The public had previously heard from developers that the development process from start to finish takes up to three years — the exact amount of time by which developers would like to see Saanich delay implementation of the bylaw.

Adam Cooper, director of development for Abstract Developments, Travis Lee, president of Tri-Eagle development, and Greg Gillespie, development manager for Mike Geric Construction, all asked council to delay implementation of the bylaw by three years. Gillespie said developers accept that DCCs need to rise. This said, he warned of rising costs without an implementation delay.

“We believe council does not wish to delay housing, and we also believe that council does not want to inadvertently increase the cost of housing, and that is exactly what is going to happen without a delay in implementation,” he said. “It’s not about profitability, but about project viability. If projects are not profitable, they are not viable.”

An implementation delay would grant developers certainty in their financial planning, said Gillespie, adding that they would be prepared to pay higher DCCs in full afterwards. “To be clear — it is not a three-year phase-in that we are suggesting, but an actual three-year-delay in implementing [DCCs] and we are willing to bear the full brunt of those DCCs after those three years.”

Council also received last minute correspondence from the Urban Development Institute, making a similar case.

RELATED: Saanich set to raise development cost charges by 180 per cent

Councillors (minus Chambers) sounded sympathetic. Mayor Fred Haynes said builders of rental housing face the tightest financial margins. “The current environment is fraught with timelines issues,” he said. “It is reasonable to have the best possible information that we can assemble,” he said later.

The delayed bylaw represented the latest version of proposed changes that would have significantly raised DCCs, with the proviso that this latest version continues the trend of Saanich scaling back the proposed increases. In July 2018, the proposed draft rate was $16,360 for a single family home outside of Cordova Bay — up from $4,809 for the same lot.

In January 2019, the new proposed figure dropped to $13,498 per lot, and the bylaw version presented Monday called for a figure of $11,542 starting in 2019-20 rising to just over $13,400 by 2023-24 under Saanich’s proposed phase-in-approach.

The related issues of DCCs and processing times have long vexed relations between Saanich and the development community. Led by its executive director Case Edge, the Victoria Residential Builders Association (VRBA) has been a vocal critic of Saanich’s decision to raise DDCs against the backdrop of complaints about Saanich’s processing time. Saanich has promised to improve response times.

RELATED: Proposed charges will cost Saanich housing affordability

Coun. Rebecca Mersereau questioned the narrative that raising DDCs would necessarily hurt housing affordability as Edge has frequently argued, but also rallied to the side of developers, when she publicly questioned staff for failing to gather data on processing times.

“I personally find it concerning that we don’t have the data around processing time,” she said. “That needed to be a really important lens through which to figure out the appropriate implementation of [the bylaw],” she said.

The sole vote of opposition came from Chambers, who said it is time for developers to pay their fair share towards the costs of development. “I support taxpayers’ fairness and recouping costs,” she said. “Saanich has not updated their DCCs for a long time, and developers have benefited from low DCCs compared to other municipalities for a very long time.”

Saanich has given developers a two-year warning about the coming changes, said Chambers, adding that taxpayers are increasingly unwilling to subsidize developers. “DCCs are not philanthropy — they are required,” she said. “Building affordable housing in Saanich is also not philanthropy — it is required. Forwarding charges onto future residents does not help with affordability.”

“We cannot build ourselves out of this housing crisis,” she added later, in calling on Saanich to address the vacant home situation. Without citing a source, Chambers claimed 2,700 homes, including 1,500 foreign owned homes currently stand vacant in Saanich.

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