Wednesday July 2, 2025 | VICTORIA, BC [Updated July 5, 2025]
by Mary P Brooke | Island Social Trends
To inject more confidence into the decision-making of housing developers, the Province of BC has announced that only 25% of Development Cost Charges (DCCs) and Amenity Cost Charges (ACCs) will be payable to municipalities at the start of housing construction by big developers.
DCCs are used by municipalities to pay for infrastructure that supports housing growth, such as water, sewer and local roads and ACCs are used for ‘soft’ infrastructure such as recreational and social support services.
More flexibility for development charges will unlock more homes for people, according to the Housing Ministry today.
Announcement in Delta:
He was addressing media alongside Delta Mayor George Harvie and Surrey Mayor Brenda Locke.
Kahlon said this was his first housing announcement in Delta (which is in Kahlon’s home riding of Delta North which he’s held since 2017). Kahon has been Housing Minister since Premier David Eby announced his first cabinet in December 2022, and reappointed as Minister of Housing and Municipal Affairs in the new cabinet since January 16 of this year.
No direct budgetary impact for taxpayers:
Housing Minister Ravi Kahlon today told media that there would be no impact to taxpayers, in the sense of funds coming out of the provincial budget.
However, the impacts could be many as municipalities now learn to cope with less DCC funds in the bank as they plan for infrastructure projects to support housing growth — the least of which is uncertainty to move forward and perhaps less leverage for matching funding from other levels of government.
“There will be no additional cost to the province with these changes. Local government now will be able to collect 25% up front as a deposit and they’ll have the on-demand surety bond that will ensure that they do get those dollars collected at occupancy,” Kahlon said today during his media availability in Delta.
“Right now we’re seeing a lot of projects stalling because of uncertainty in the market, because of rising pressures of costs. This will be the difference between projects going forward and not,” said Kahlon today.
Federal needs to step up:
“We continue to call on the federal government to come through on their commitment to reduce DCCs by 50%. That was a platform commitment by the federal government,” Housing Minister Kahlon said today in Delta.
“I’ve met with the Minister of Housing from the federal government. My message to the Minister (i.e. Canada’s Housing and Infrastructure Minister Gregor Robertson) was, ‘we’re ready to go… you made a commitment, we want to be a partner”.
“Between today’s announcement and their commitment to reduce the cost by 50% we could really unlock thousands of much-needed housing in our communities. So both will be needed, but no additional cost (to taxpayers) at this time,” said Kahlon.
Prime Minister Carney said on May 30 during the Federation of Canadian Municipalities (FCM) convention in Ottawa that housing development in Canada will be “lean and mission-driven” to catalyze a new delivery of housing that involves enhancing the involvement of workers as well as utilizing technology and Canadian lumber.
“We’re going to be building this country for the next quarter century,” said Carney on May 30. That will include $25 billion for builders of affordable homes.
The Housing Accelerator Fund will be reinforced, said Carney. He told the audience of municipal leaders that the federal government will “work with you to slash development charges in half for all multi-unit housing over the next five years while making water, power lines and wastewater… we’re not going to give lectures, we’re gong to give help so we can all move forward.” Clearly BC is counting on this.
Comment from Our Place Society:
“The government really listened to the concerns of our sector and has acted on them,” says Julian Daly, CEO, Our Place Society.
Working group:
A new time-limited working group will have more authority to deal with urgent safety issues and better respond to weapons and criminal activity within supportive housing.
The group will explore the potential to remove supportive housing from the Residential Tenancy Act.
Air quality re fentanyl:
It was stated during the Housing Minister’s announcement that more people are shifting from injecting fentanyl to now smoking it. This is presenting air-quality issues within supportive housing.
The working group will include in its work the need to address air-quality issues in supportive housing related to second-hand exposure to fentanyl.
Municipalities will be counting on this:
“We’ve got local governments that are doing a lot of planning about development and where the development goes,” said Kahlon today.
“And the biggest challenge we have right now is that projects are not moving forward. So it’s great to have a plan about getting revenues.”
“But if housing is not moving forward there are no revenues. So today’s change allows us to continue housing moving forward, continues to have a flow of money coming into local government. It gives them surety that they will get the money when there’s occupancy of the unit. and allow the whole building community to do what they do, which is build the housing that we need in our communities,” said Kahlon.
This approach does assume, therefore, that all built units will become occupied in a reasonable amount of time following building completion. Which under the present housing demand conditions is probably not a problem. But it also, thereby, puts pressures on developers to ‘get it right’ in terms of what they build (design, size, etc) and at what price point they put new housing units onto the market.
“This is supported not only by the Urban Development Institute (UDI) not only by the Canadian Homebuilders Association, but also the not for profit associations who do all the not for profit housing. They also benefit from these changes,” said Kahlon.
“We’re trying to bring all players to the table, work together to find solutions, because that’s what people in our communities want. They don’t want fighting, they don’t want people butting heads. They want us to be at the table and that’s what we’re doing today,” said BC’s housing minister.
Population pressures:
The BC population has increased significantly over the last couple of years. With the notable exception of the first three months of this year. But Kahlon says “we know that the numbers will still continue to go up but we do believe we’re getting to a better place — a more balanced place — that to changes that the federal government has made (earlier this year Canada’s immigration intake was set a lower level for the next three years).
“The question is — do we need housing the future — the answer is yes we do — we’re going to need a lot of housing in the future,” said Kahlon. A short-term decline in population growth is simply a reprieve.
Kahlon highlighted the need for affordable housing so that young families can afford to stay in BC.
“We have the strongest economy in the country, we’re proud of that. But it’s going to mean we’re going to have to have more housing so we can continue to keep talent in this country as well,” said Kahlon today. “So we’re going to need both at the same time,” said Kahlon, referring to housing and immigration.
The dangers of trickle-down:
The province says that homes will be more affordable because developers will be getting a break on how much carrying cost they have on financing a new housing project. It’s yet to be seen if that pans out. That approach of giving big money to big business is based on ‘trickle down economics’… i.e. if the big players save they will in turn pass on the savings to consumers.
At best, this will slow down the increase in housing prices while perhaps speeding up housing into the market. But in BC the price of housing has never gone down — it has continued to go up since the late 1980s.
“Homes will be on the way quicker as the Province takes steps to speed up construction timelines and reduce up-front costs for homebuilders,” it was stated in today’s Housing Ministry news release.
“These changes are about supporting housing development and easing the financial burden on builders and developers so they can get shovels in the ground faster to help unlock more homes for people in B.C.”
Brain storming with developers:
“We are committed to finding innovative and cost-effective solutions to build housing, so everyone has a fair chance to live in communities where they work and belong,” said Minister Kahlon today.
He seemed quite pleased that there had been collaboration with homebuilders and the Urban Development Institute (UDI).
The Province is creating more flexible and extended payment timelines for homebuilders, so more homes can continue to be built at a time when construction costs and interest rates are high. This will improve the viability of housing projects as homebuilders can invest in new housing projects sooner. Lower carrying costs will also help unlock more housing developments that need additional capital.
“These new actions to support housing goals are a result of collaboration between the Province, B.C.’s development and homebuilding industry associations and local governments,” it was stated in today’s news release.
This sort of business-minded thinking did not come up through the municipal policy-driven system at the Union of BC Municipalities (UBCM) that allows municipal mayors and councillors to work the political process. This decision seems to have been made directly between government and industry. It’s efficient and may well speed up housing construction activity, but if housing prices are not ameliorated and cities aren’t able to keep up with infrastructure in a timely manner it could backfire on the NDP come next election season.
It will be up to the current government to explain to voters how these regulatory improvements are part of the Province’s commitment to increase the supply of homes people can afford in a community they love.
The City of Vancouver is not included in this process as they already have significant borrowing capacity in place.
How it works:
Government will amend the Development Cost Charge and Amenity Cost Charge (Instalments) Regulation to expand the use of on-demand surety bonds provincewide. On-demand surety bonds are financial guarantees that homebuilders provide to give assurances that they will fulfil their construction contract. Currently, homebuilders are able to use on-demand surety bonds in 40 municipalities across Canada, including Burnaby, Surrey, Vancouver and Mission.
Other municipalities rely on a different financial tool, known as irrevocable letters of credit from a bank. Homebuilders prefer on-demand surety bonds because they do not restrict a developer’s access to credit, freeing homebuilders to move projects from start to finish and build more housing.
The changes will apply to qualified developers in communities with a development cost charge, amenity cost charge or a school-site acquisition charge. As well, homebuilders will have four years, rather than two, to pay the charges. They will be able to pay 25% at permit approval and the remaining 75% at occupancy or within four years, whichever comes first.
Until now, the Development Cost Charge and Amenity Cost Charge (Instalments) Regulation was unchanged since 1984, requiring developers to pay a minimum of one-third of the total charge when the subdivision or building-permit is approved and the full amount within two years.
Qualified developers have been approved by a surety company to use on-demand surety bonds and that have greater than $50,000 in development cost charges or amenity cost charges payable to a local government. An on-demand surety bond can be converted to cash within 15 days without court involvement.
Starting January 1, 2026:
The changes are expected to come into effect on January 1, 2026. The housing ministry feels this will provide local governments with sufficient time for system upgrades, staff training and planning.
===== RELATED:
- Prime Minister Carney this week: parliament, King, municipalities (May 31, 2025)
- Streamlining infrastructure development in BC as population rapidly grows (May 1, 2025)
- Immigration cap to pause population growth & ease up on housing demand (October 24, 2024)
- BC working to retain young families amidst 3-year population surge (April 2, 2024)
- NEWS SECTIONS: HOUSING | 43rd PARLIAMENT of BC