Development Contributions in Vancouver
If you’ve been to Vancouver, you’ve been to the Seawall.
The iconic 28km path that wraps around the oceanfront from Coal Harbour to the West End, Stanley Park to English Bay, Yaletown to Olympic Village and Granville Island to Kits Beach. The seawall is the longest continual waterfront path in the entire world.
But, did you know that a lot of the quintessential downtown seawall built after 1980 was funded by a real estate developer?
The seawall stretch around False Creek from the Granville Street bridge to Science World - including it’s parks, plazas, roads, community spaces and gardens were actually a direct investment from developer Concord Pacific.
Their massive contribution to waterfront urbanization has transformed downtown Vancouver. The city could not do this alone; they needed the vision, guidance and (quite frankly) money from a developer to bring this land to life.
Concord Pacific has defined the path for what Vancouver expects developers to contribute to the neighbourhoods they are building. The City understands the need to facilitate liveable, walkable, densely populated, amenity-rich communities that are tastefully designed with longevity in mind.
However, the funding needed to create these neighbourhoods and amenities cannot solely be raised through property taxes and federal or provincial inputs. The money rolls in from the developers who are financially benefitting from the land they are developing. This comes at a major cost to both developers and home purchasers. Upfront costs to developers trickle down to the final cost of producing new homes, which then impacts market housing prices. There are countless articles I could write about how this impacts affordability in Vancouver but I will just leave it as, all good things come at a cost.
Let’s get down to what development contribution fees are and what they are used toward.
The city charges developers three main community benefit fees for new construction:
Community Amenity Contributions (CACs),
Development Cost Levies (DCLs)
Density Bonus Zoning
Community Amenity Contributions (CACs)
CACs are secured through site specific rezoning. They can either be cash contributions or in-kind amenity contributions. The city has two approaches depending if the site lands in a policy specific zone or a negotiated area. For example, in the Cambie corridor CAC policy rate for a rezoning to a 4 story residential building in 2023 is $78.64/psf.
Key Points:
Purpose: CACs are intended to address the impact of new larger developments in an existing neighbourhood.
What’s Covered: CACs either in-kind or cash contribute to: affordable housing, parks, cultural spaces, libraries, public theatres, community centres and transportation infrastructure.
Payment & Delivery : Before rezoning enactment unless an in-kind benefit.
Calculation: Based on policy specific zoning or site by site basis.
Approval Process: CACs are proposed by the developer and go in front of city council for approval during the rezoning process. The city will make amendments as they see fit to align with their vision for the site. There is negotiation back and forth, including through public consultation before the plans and CACs are approved.
Development Cost Charges (DCLs)
DCL fees imposed by the City of Vancouver on all new developments including rezoning. DCLs fees help cover the growth related costs associated by adding residential, commercial and institutional buildings. DCLs are intended to ensure that the impacts of new development are adequately addressed, such as the need for transportation, water, sewer, parks and other public facilities.
Key Points:
Purpose: DCLs are designed to recover a portion of the capital costs for infrastructure and amenities that are required due to new development. These charges help ensure that growth pays for itself and that the burden of financing new infrastructure is not solely placed on existing residents and taxpayers.
What’s Covered: DCLs typically cover a range of infrastructure elements, including transportation (roads, bridges, transit), water and sewer systems, drainage systems, parks, community facilities and affordable housing initiatives.
Calculation: Based on flat rate per square foot. For example, a duplex would be assessed a lower DCL versus a high rise condo tower. The rates are determined by council and are reviewed every 4 years to ensure they reflect the current construction costs.
Payment Due: When the building permit is issued. The funds collected and managed by the city. They are allocated to specific projects or funds dedicated to infrastructure and community amenities.
Public Accountability and Transparency: The process of determining DCL rates and their allocation involves public consultation and engagement to ensure transparency and accountability. The municipality typically publishes information about the DCL rates, how they are calculated, and how the funds are allocated to provide developers and the public with a clear understanding of the charges and their purpose.
Density Bonus Zoning
This fee applies to developments that are wishing to increase density within an existing zone that can apply the density bonus. There are only specific neighbourhoods of Vancouver that allow a density bonus or are eligible to rezone to a density bonus zone.
Key Points:
What’s Covered: The fee is allocated toward providing affordable housing or community amenities within the community.
Calculation: Based on a flat rate per square foot as set out by the city.
Payment & Delivery Due: When building permit is issued unless an in-kind benefit.
As you can see, above and beyond hard construction costs - there are many additional municipal fees associated with building new homes in Vancouver. The fees or in-kind contributions the city collects from developers have a massive and lasting impact on the city.
This blog is for informational purposes only and should not be relied upon for legal, investment or other advice. It is not intended to cause or induce breach of an existing agency agreement. All information provided is deemed reliable but is not guaranteed and should be independently verified.
