Metro Vancouver is taking significant steps to address the region’s housing affordability crisis by proposing an expansion to the Development Cost Charge (DCC) waivers program, aiming to support private developers in delivering affordable rental housing. This initiative aligns with recent increases to DCCs that are crucial for funding essential regional infrastructure projects. The proposed changes to the DCC waivers program seek to make it easier for private developers to produce below-market-rate housing, thereby contributing to the overall supply of affordable homes in the region. As the region continues to experience significant growth, the importance of these measures cannot be understated.
Recent Increases in Development Cost Charges
As of January 1, 2024, the Metro Vancouver Regional District (MVRD) has implemented the first in a series of three planned increases to Development Cost Charges (DCCs). These charges will see further hikes in January 2026 and January 2027. The funds collected through DCCs are essential for supporting utilities, sewage, wastewater, and solid waste management infrastructure to accommodate the region’s growing population. Local governments collect these charges on behalf of MVRD, ensuring vital infrastructure projects receive necessary funding.
The decision to increase DCCs was met with considerable criticism, notably from then-Minister of Housing, Infrastructure, and Communities Sean Fraser. In light of this criticism, a directive was issued to review and potentially extend DCC waivers to profit-oriented developers focused on affordable rental housing. Staff members completed this review and prepared recommendations to be presented at the upcoming Regional Planning Committee meeting on January 9. The review aimed to assess how DCC payments affect the feasibility of projects by private developers and their ability to produce affordable units below market rates.
Evaluating the Impact of DCC Payments
One of the primary objectives of the review was to evaluate whether DCC payments impact the feasibility of development projects and the effort to produce affordable units. This evaluation involved modeling the sustainability of mixed-market residential developments and examining the effects of DCC payments on meeting affordable unit provisions negotiated with local governments. A critical aspect of this evaluation was understanding the financial strain DCCs put on developers and whether these costs inhibit the construction of below-market-rate housing.
Currently, DCC waivers are available exclusively for not-for-profit rental housing that is either owned, leased, or managed by nonprofit entities or government bodies. The existing bylaw mandates that these entities must own or lease the affordable units at the time of the DCC waiver application, which typically coincides with the issuance of the building permit. This requirement effectively excludes not-for-profit housing initiatives led by private developers, despite the growing collaboration between private developers and nonprofit entities to deliver affordable housing under inclusionary zoning policies.
Proposed Changes to the Waiver Framework
The review’s findings indicated that the ownership requirement intended to ensure that any foregone DCC revenue directly supports non-profit affordable housing. However, it has become increasingly common for private developers to construct not-for-profit housing and transfer ownership to a nonprofit entity upon project completion. These projects, often developed under inclusionary zoning policies, are currently ineligible for DCC waivers due to the timing of ownership transfer.
Based on these findings, MVRD staff proposed altering the waiver framework to allow DCC exemptions for developments where for-profit and not-for-profit entities collaborate to provide a mix of market and below-market housing. This recommendation includes mechanisms to ensure that the benefits of these waivers genuinely reach the nonprofit entities. One such mechanism could involve contractual terms requiring that affordable units be transferred to nonprofit organizations at cost or a predetermined price, excluding considerations for land costs or developer profit. These changes aim to facilitate smoother collaboration between private and nonprofit developers and thereby increase the affordable housing stock.
Anticipated Impact on Affordable Housing
If implemented, the proposed changes are expected to significantly increase the number of affordable units receiving DCC waivers. Estimates suggest an approximate annual increase of 281 to 361 affordable units from 2025 to 2034. Furthermore, the review indicated that waiving DCCs for these units could potentially lower break-even rents by around 4.0% to 4.4%, making these units more accessible to low-income households and supporting broader housing affordability goals.
In addition to expanding waivers to private developers, staff proposed several changes to simplify the existing regulatory framework. Presently, not-for-profit affordable housing units must meet specific household income criteria, with ongoing compliance monitoring to ensure continued eligibility. Staff recommended simplifying this process by using housing agreements instead of continuous compliance monitoring. These agreements, often already managed by other government agencies, would streamline the process and reduce administrative burdens while ensuring compliance with affordability requirements.
Additional Proposed Revisions
Another noteworthy proposal involves eliminating the 30% threshold requirement, which currently qualifies a project for a DCC waiver if at least 30% of its units meet the household income criteria defined by BC Housing. This change is based on observations that virtually all waivers to date have been granted for projects where 100% of units are affordable, consistently meeting the affordability standards across every unit. Removing this threshold would simplify the qualification process and potentially encourage more projects to apply for DCC waivers.
Further, staff proposed expanding the existing 50% DCC waiver for not-for-profit student housing to a complete 100% waiver. An additional recommendation involved revising the definition of student housing, as the previous requirement for “self-contained” units rendered many projects with shared living spaces ineligible for waivers. By broadening the definition, more student housing projects could qualify for DCC waivers, supporting the development of affordable housing for students and reducing financial barriers for educational institutions.
Financial Implications and Next Steps
Metro Vancouver is taking notable steps to tackle the region’s housing affordability crisis by proposing an expansion of the Development Cost Charge (DCC) waivers program. This initiative is designed to aid private developers in creating affordable rental housing, addressing one of the critical needs of the region. The plan aligns with recent increases in DCCs, which are essential for financing key regional infrastructure projects. The proposed revisions to the DCC waivers program aim to simplify the process for private developers to build below-market-rate housing. By doing so, it will help boost the overall supply of affordable homes in the area. Given the substantial population growth in the region, addressing housing affordability is increasingly crucial. The importance of these policy measures cannot be understated, as they play a pivotal role in ensuring the availability of affordable housing and supporting the region’s infrastructure, ultimately fostering a more sustainable and livable community for all residents.
