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Housing bill oversight could cost municipalities tens of millions: mayors

B.C. mayors wonder who will pay for the increased infrastructure costs related to increased density.
The downtown Vancouver skyline is seen at sunset on Saturday, April 17, 2021. THE CANADIAN PRESS/Darryl Dyck

The B.C. government’s plan to boost multi-unit housing contains a significant oversight that could force municipalities to forfeit tens of millions of dollars from developers used to pay for parks, child-care facilities, community centres, libraries and other services to support higher-density neighbourhoods, some B.C. mayors say.

That’s because community amenities contributions — in-kind or cash voluntarily paid by property developers to municipalities — are agreed to through a rezoning process for a development project. The municipalities don’t have the power to require these contributions but developers know that if they refuse to pay them, the project will be turned down at the rezoning hearing.

The B.C. NDP government’s proposed legislation will force municipalities to do away with rezoning and automatically approve up to six units on a single-family lot in areas close to transit.

“It is going to amount to a significant download from the development industry, for free, onto municipalities,” said Langley Township Mayor Eric Woodward, a former developer who made clear he’s in support of higher density communities with the proper planning. “I’m not sure (the province) fully understands what they’re doing and the financial damage they could potentially cause to municipalities.”

Woodward said that for his community of 145,000 people amenity contributions bring in tens of millions of dollars each year.

Burnaby Mayor Mike Hurley and Oak Bay Mayor Kevin Murdoch shared the concern about potentially losing out on amenities cash.

“Just by these changes, it’ll be tens of millions of dollars not available to municipalities to cover their infrastructure costs,” Murdoch said. “So this is sort of a double whammy and the province and feds aren’t adding additional money.”

Hurley said single-family neighbourhoods developed in the ’50s or ’60s will likely need upgraded sewage and water lines to service the population increase and “now all those mechanisms to pay for that (in the form of development contributions) are now being taken away, too.”

“The only thing we’ve been told (by the province) is we expect municipalities to supply the infrastructure needed,” Hurley said. “So how is that going to happen?”

B.C. United party Leader Kevin Falcon said the mayors have legitimate concerns and it’s clear the province hasn’t thought through the consequences.

“People should be very worried when you’ve got a government rushing through legislation like this without properly consulting the mayors,” Falcon said.

The legislation, expected to pass later this month under the NDP majority government, will force local planning departments to approve multi-unit projects — six units on residential lots close to transit stops or up to four units on other lots — as long as they meet certain parameters around building size and setbacks.

However, mayors are still in the dark about the specific details on setbacks, height restrictions, parking and lot coverage. Those details will be released next month through regulations after the legislation becomes law.

Alex Hemingway, a senior economist with the Canadian Centre for Policy Alternative’s B.C. office, said the mayors’ concerns sound like “an excuse.”

“Public services like libraries and parks should be funded first and foremost out of property taxes,” he said. “New housing helps by expanding the property tax base, and denser housing lowers infrastructure costs per capita.”

Hemingway said municipalities still have the chance to tap into developer contributions and density bonuses by rezoning properties to a higher density than the province’s minimum standard, “which also has the benefit of creating even more housing.”

Housing Minister Ravi Kahlon wasn’t available for an interview Thursday but his ministry confirmed that density bonuses can’t be used for small-scale, multi unit housing except in cases where such bonuses are used to secure affordable or special-needs housing.

“We are aware that some local governments negotiate with developers as part of the rezoning process,” the ministry said. “We are working to ensure local governments have the tools needed to fund necessary infrastructure and amenities, and will have more to say on that very soon.”

Municipalities with a population of 5,000 or more will be required to update their bylaws by June 30, 2024, to reflect the province’s standards.

Woodward said the province’s timeline requiring municipalities with a population of 5,000 or more to update their bylaws is completely “unrealistic,” which he suspects has more to do with the provincial election in October 2024 than long-term community planning.

Woodward said he has no idea how communities are going to quadruple density in established single-family neighbourhoods “without creating significant challenges on sewer, water, school sites, park sites, public safety capacity, road capacity and parking requirements.”

“This one-size-fits-all approach is really going to create a lot of problems here.”

The Housing Ministry acknowledged that “increased density will be a challenge in some places, adding pressure on existing infrastructure, services and amenities,” but it expects those impacts to be “mitigated by the pace of implementation over time, and the fact it is spread across the province.”

Local governments are also eligible for a share of Ottawa’s $4 billion housing accelerator fund, the ministry said, but federal Housing Minister Sean Fraser has indicated this federal cash could be in jeopardy in light of a decision by Metro Vancouver mayors to triple the fees charged on new construction (a development fee different from community amenities contributions).

Woodward is concerned that the province’s new standards will force Langley Township to completely rework several development plans that have been in the works over the last few years.

It could also unintentionally choke housing supply, he said, because “rather than assembling old single-family homes and redeveloping them into an apartment building or a townhouse, people will just buy individual lots and put a six-plex on it, which prevents redevelopment into more housing supply over the long run.”

The government estimates the new upzoning rules could create 130,000 new housing units over the next decade, however Falcon said he’s skeptical about those numbers.

Falcon pointed to a report by UC Berkeley that analyzed the impact of California’s law to allow up to four units on a single-family parcel that found that the impact has been “limited” with some cities receiving just a handful of multi-unit applications.