'At a reckoning point': City of Vancouver to defer fees paid by developers to prevent new housing slowdown
White shared that his department is currently processing and reviewing over 150 active enquiries and rezoning applications. He estimated that roughly one-third of these involve projects coming back to the City with revised proposals aimed at improving their economic and financial viability.
He says a notable example is Crombie REIT and Westbank’s Safeway redevelopment next to SkyTrain’s Commercial-Broadway Station, which was approved by City Council last week in a public hearing.
This project underwent numerous revisions, including its gradual full conversion from primarily strata market ownership condominium uses to secured purpose-built rental housing, and then its additional density through greater verticality.
“Over several years, every time it came back, the Safeway project got bigger because of viability questions. And that’s true of many different development, and this is one of the challenges we confront,” said White.
“Projects are getting bigger, but these costs that exist, construction and other costs, they’re also getting bigger, and they don’t have as much buoyancy to deliver the same level of kind of public benefits than maybe we have seen in the past, during hotter market conditions.”
He says this trend is a growing concern, and it understandably creates a mismatch of community amenity and public benefit expectations from the public.
“That’s why we need to look at these types of levers. That it’s not just about eroding the public benefit. It’s about finding other ways to address costs so that we certainly can maintain the viability of being able to deliver public benefit. It’s important to draw that connection to this work as well,” said White.
May 2024 concept: redevelopment of Safeway at 1780 East Broadway, Vancouver. (Perkins&Will/Westbank/Crombie REIT)
A key point of contention among critics of the Safeway redevelopment was the inclusion of just 10 per cent below-market rental housing, falling short of the 20 per cent typically required across Vancouver. However, City staff supported the reduced ratio, citing concerns that a higher requirement could jeopardize the financial viability of the project, which has been in planning for over a decade.
Another major project example is City Council’s approved changes in March 2025 to the public benefits package of the 60-storey The CURV residential tower, which saw its rezoning approved in principle in 2020. These changes enable Bravia Group to provide the City with a cash Community Amenity Contributions (CACs) payment of $55 million — instead of the in-kind, on-site CAC of providing 102 units of social housing within the tower’s lower levels, as originally approved. This also enables the developer to increase the number of secured purpose-built market rental units and condominium units to improve The CURV’s financial feasibility.
“Dozens of projects are kind of coming back and looking for either a phasing strategy or different density, or they have to kind of renegotiate their CAC,” said White.
“For example, CURV was one of those ones where we came back with a renegotiated CAC based on market conditions, and that’s more and more common right now because of the market conditions and cost conditions that we’re experiencing.”
Revised concept of The Curv at 1059-1075 Nelson Street, Vancouver, with the completed The Butterfly tower also depicted. (WKK Architects/Bravia Group)
White notes that construction costs have gone up by 68 per cent since 2017 — and this is deemed to be a conservative figure — with most of this occurring beginning in 2021.
All the while, residential rents have increased by 42 per cent, while home sales, including the pre-sales used by developers to lock in construction financing, have been stagnant overall.
“We’re sort of at a bit of a reckoning point in terms of our level of affordability, and how that influences the market and the ability to sell or rent. The investor pools have evaporated largely because you need to foresee reliable appreciation, and that was the case for 40 years here,” White told Daily Hive Urbanized.
“But those things are shrinking, and that makes it really, really hard to pre-sell any kind of project of any kind of scale. That ends up making the prices softer — and we want prices to tail off, that’s good. But if the only way projects are viable then is we haven’t built anything and prices have jumped back up, we really haven’t solved anything. That’s why we need to look at the cost side. And we’ve had a lot of costs layer up over time.”
Fundamentally, he emphasized, in order for projects to be able to proceed, the cost of construction needs to drop.
New deferrals for Development Cost Levies and Community Amenity Contributions
On the City’s part, there can be a meaningful impact from simply deferring certain municipal development fees, which improves the available cash at hand for projects to actually use for the construction process.
Currently, says White, the existing payment schedule for the City’s development fees “adds risk [to developers] because they’re having to float that cost far, far before they actually realize revenue.”
Among the most significant change is the introduction of a new option for developers to defer the payment of Development Cost Levies (DCLs) — the fees developers pay to fund supporting infrastructure, such as roads, sewers, and parks — by breaking them into three equal instalments over a period of up to 3.5 years, with the first payment due 1.5 years later when full construction begins, the second payment about a year later, and the final payment about another year after.
Development projects will be eligible for such deferrals if they have total municipal DCL payments of $500,000 or more.
Such a payment schedule change aligns the City of Vancouver with other B.C. municipal governments, which are separately under the Local Government Act. It also aligns with the deferral program for the Development Cost Charges (DCCs) of Metro Vancouver Regional District, which are already collected by the City and have a similar three-payment schedule. The regional district has particularly come under fire for its recent major increases in development cost charges for all new building developments across Metro Vancouver.
Currently, Vancouver’s municipal DCLs must be paid in full before construction begins.
To complement the shift in DCLs, City Council is also being asked to approve changes that will allow developers to spread out their cash CACs payments over a longer timeline, beginning with a smaller share of the payment at the time of rezoning enactment. At the discretion of City staff, on a case-to-case basis, the threshold for deferred CAC payments will be significantly lowered from $20 million to $5 million, providing financial flexibility for both new and in-stream rezonings. The interest on these payments will also fall from the current at prime plus three per cent to at prime plus one per cent.
A total of 13 development projects with rezoning currently approved in principle will become immediately eligible for this deferral, collectively representing over $270 million in cash CACs.
Over the past two years, following the recommendations of City staff and due to market conditions, City Council also approved cash CAC payment deferrals on a case-to-case basis for the significant high-rise residential tower projects of 1450 West Georgia St. by Wesgroup Properties, 1157 Burrard St. by Prima Properties, 1640-1650 Alberni St. by Landa Global Properties and Asia Standard Americas, and 1616-1698 West Georgia St. by Anthem Properties.
The optional use of Surety Bonds will also be expanded considerably. Normally, the City asks developers to put down a letter of credit, which is like a security deposit held by a bank. This ties up a lot of the developer’s money. But with a Surety Bond, which is essentially like insurance, the developer does not have to hand over that money right away. Instead, an insurance entity promises to cover the cost if the developer fails to deliver. This frees up the developer’s cash so they can use it to help finance the actual construction process, and the City still has protection in case the work does not get done.
Surety Bonds are more commonly used in other Canadian jurisdictions, and other B.C. cities such as Surrey recently increased the use of this method.
Under the CAC payment schedule changes, the City will enable the first $10 million of the deferred CAC be secured by a “pay-on-demand” Surety Bond, and the balance over $10 million may be secured by a combination of “pay-on-demand” Surety Bond — up to 50 per cent — plus a letter of credit.
As well, pay-on-demand Surety Bonds will be offered to projects with over $5 million in total obligations and at least $3 million in infrastructure costs — not including DCLs and cash CACs. But letters of credit may still be required for critical infrastructure. While Surety Bonds offer flexibility, they carry slightly more collection risk than letters of credit, so the City will manage this exposure carefully by capping their use to no more than 15 per cent of the municipal government’s financial assets and only accepting bonds from approved providers.
City staff in their report to City Council also recommend cancelling the planned 2025 inflationary increases to DCLs, CACs, and density bonus rates, which would have otherwise raised these payments by 3.2 per cent. Additionally, the previously deferred 2024 inflationary increase of 5.7 per cent for CACs and density bonus rates will be cancelled. However, the 5.7 per cent deferred increase will still proceed for DCLs to reflect the rising costs of infrastructure and amenities. This approach comes in advance of a comprehensive recalibration of all rates planned for 2026.
All of this put together “frees up capital for more productive uses” for developers to achieve their housing projects, says White.
Mitigating short-term City revenue drop of about $245 million, pace of new amenities and infrastructure
To support developers’ cash flow and help advance housing projects, the City will face a one-time impact on its own cash flow for funding amenities and infrastructure in the upcoming 2027–2030 Capital Plan. While DCL collections are expected to stabilize in the years that follow, City staff recommend using short-term loans — repayable over 10 years — to bridge the gap created by reduced DCL revenues during this period, so that new amenities and infrastructure can still be built to support growth.
The DCL revenues within this future capital plan period could fall by about 45 per cent or roughly $245 million.
By spreading the impact over 10 years, this reduces the DCL revenue decrease to 26 per cent or $140 million. Capital reserves and/or loans will cover about $175 million. As an additional interim measure, some amenity and infrastructure projects in the capital plan may have to be phased, delayed, and/or achieved with a smaller scope.
Impact on DCL deferrals with and without mitigation. (City of Vancouver)
City staff emphasize that the alternative to this temporary impact on the City’s cash flow is far more concerning: the potential loss of DCL revenues altogether if housing projects are cancelled due to poor financial viability. By easing upfront costs, the City aims to keep projects moving forward and ensure that future development-related revenues are actually realized, even if it requires a slightly longer timeline for collection.
“The short term issue to manage is that cash flow because it will move some of that cash coming into the City to a later time, which will certainly have impact on this next capital plan cycle. But we can mitigate that. We can mitigate it to a reasonable degree through bridge financing, using cash reserves, and other things to bridge that gap,” White told Daily Hive Urbanized in the interview.
“The longer term risk is very, very low, so we don’t really have risk against like if a project goes under because we do secure it through things like Surety Bonds to secure those payments.”
One other measure recommended by City staff is the reduction of the DCL rate for “works yard for public bus transportation.” This is specifically being moved forward for the direct benefit of TransLink, which is currently in the process of building the region’s first battery-electric bus depot — with a capacity to charge, maintain, and store up to 300 battery-electric buses — located on a 20-acre site next to the Fraser River and Canada Line. Such DCL changes will enable the public transit authority to save between $7 million and $9 million in costs for the Marpole Transit Centre bus depot project, which has seen its total cost drastically escalate to $848 million.
In the future, City staff will also contemplate more complex changes to the municipal government’s payment schedule and regime for housing projects, possibly requiring changes to provincial legislation and/or the Vancouver Charter. For the time being, the recommendations outlined at this time are the types of changes that can be made without legislative amendments.
“While none of these actions in and of themselves are like a silver bullet, they’re coming together, because when you stack them together, they start to be meaningful. But they’re also just the beginning of the efforts that we need to undertake. But we don’t want to delay,” said White.
“We want to take action. And these are the actions that we can take right away. As such, unless viability challenges are addressed, those projects and their associated revenues are at risk of not materializing along with the housing supply generated through development.”
In 2026, City staff will introduce recommendations to create the new Amenity Cost Charge (ACC) system — a policy that all municipal governments in B.C. must adopt, as a requirement of legislation by the provincial government. This will also involve the creation of new DCL, density bonusing, and inclusionary housing bylaws.
Beyond changing fee payment policies, the City will provide developers with the ability to build larger tower floor plates of up to 8,000 sq. ft., while maintaining strict tower separation rules to maintain livability standards. This is an increase from the current general limit of 6,500 sq. ft., which is now deemed to be outdated due to changing building codes, energy requirements, and rising construction costs. Such a flexible increase will help improve the financial viability of projects, and improve the efficiency and usability of residential unit layouts.
Work is also underway to further reform the rezoning and development permit processes, with a focus on streamlining procedures, improving efficiency, and reducing overall processing times, including overlapping the processes.
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