Development levies threaten the viability of rental projects
Recent fee increases would have killed massive new rental project in South Vancouver, says developer
One of Vancouver’s largest-ever rental projects broke ground June 15, but the scale of the project would be impossible today with recent increases in development levies.
“Rental, you’re always on the scale. You’re always so close,” said Byron Chard, president and CEO of Chard Development Ltd., which is developing a 575-unit purpose-built rental project at 622 Southwest Marine Drive in Vancouver’s Marpole neighbourhood. “We were able to secure a lot of our city fees, our DCLs (development cost levies) … at the rates they were a few years ago. At today’s rates, the project would not proceed.”
Chard submitted rezoning and development applications for Cascades, as the project is known, three years ago. Since then, both city and regional levies on residential services have increased significantly. DCLs for high-density residential development projects have increased by 25 per cent, or more than $3 million for a project like Cascades. Greater Vancouver Sewerage and Drainage District fees for water, which weren’t in place three years ago, would add a further $2.5 million.
“Those city fees that have increased, they’re significant on rental projects,” Chard says.
A recent analysis by Vancouver property tax expert Paul Sullivan of Ryan ULC indicates that a third of the rent for a new 675-square-foot purpose-built wood frame rental unit in Vancouver is the result of taxes, fees other costs mandated by government policies during development. This works out to $882.70 based on a typical rent of $2,698 a month. …[Continue Reading]