Penticton’s Chamber of Commerce says city council’s decision to raise the rates of development cost charges may have a significant and long-term detrimental impact on the local economy.
The outgoing council in Penticton unanimously voted during its last meeting on Oct. 18 to increase DCCs, increasing development rates for single-family homes to about $25,000 and townhouse developments to $17,122 per unit.
One year ago, the rates would cost developers $17,000 and $6,672, respectively.
“The Chamber can appreciate that DCCs are a necessary charge to ensure that funds are available for future infrastructure requirements,” said Jonathan McGraw, the chamber’s president.
“However, the timing of such a rate increase is not ideal. Penticton is struggling with housing availability and affordability.”
McGraw fears that the changes, including the increase of DCCs for multifamily residential and apartment buildings from $6,672 per unit to $9,812 per unit, won’t be positive for Penticton going forward.
“The shortage of housing and subsequent rising costs for either renting or purchasing a home in the last few years has had a significant impact on local businesses to hire and retain employees, and for business owners themselves to find housing that is affordable,” he said. This negative impact has caused some local businesses to reduce hours and/or limit available services, and even caused some to close altogether.”
DCCs are mandatory levies placed on new construction to fund roads, sewers and parks needed to service the homes.
Outgoing councillor Frank Regehr was credited by his colleagues for leading the project. Penticton DCCs went unchanged for 13 years, before council approved a 25 per cent tax hike in 2020.
“It’s significant to the city to keep this program in line,” Regehr said on Tuesday.
Amid this week’s changes, Penticton’s rates are placed in the middle of the pack for Okanagan communities. DCCs in Kelowna and West Kelowna remain more expensive.
Though the changes put Penticton in line with more neighbouring communities, new homes will now cost more to buy.
“We hope that the incoming Mayor and Council review this decision given where Penticton is at in terms of housing,” said Michael Magnusson, the chamber’s executive director. “We need to be encouraging developers to invest in our city, particularly in multi-family residential, townhouse, and apartment buildings, rather than adding to the cost of each unit which in turn gets passed onto the buyer or renter.”
The newly-elected mayor and council will have their first meeting on Nov. 1.
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