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In a housing crunch construction costs will get more expensive in Penticton

Council voted 4-2 to hike development costs for new projects
This rendering shows what Skaha Towers will look like once phase 3 is complete. (real estate rendering)

Penticton is booming and with housing in high demand, construction is set to get even pricier.

Wally James, president of the South Okanagan branch of the Canadian Homebuilders Association was in front of city council on Tuesday to ask for a smaller immediate increase to development cost charges (DCCs).

“We do need to catch up, we do need to pay for these future developments. What we’re asking is that these [increases] don’t all happen at once,” said James. “We’re looking at 150 to 160 per cent increases in some categories. We’re adding $10- to $15,000 to almost every form of housing coming up in the city.”

James warned that with costs for construction increasing, so would the prices for those homes once they are finished, which would affect more than just new homeowners.

“We all know that when housing prices go up, existing home prices go up and that means rents go up,” said James. “When rents go up, somebody at the back end of the spectrum with their budget already stretched to the max finds themselves out on the street. We’ve seen the increases in homelessness, it’s very visible.”

Council ended up voting 4-2 to increase the development costs the full amount out of the options that were presented to council, with coun. Judy Sentes and Campbell Watt opposed and Frank Regehr absent.

READ MORE: Penticton eyeing further increases to development cost charges

Sentes noted how there are unprecedented challenges already in the construction industry such as supply chain issues, COVID-19 and lumber prices. She asked whether there could be some accommodations made to phase in the costs. Watt echoed her comments and the desire to have a phased in increase.

The approved option will see DCCs for multifamily residential and apartment buildings for example go from $6,672 per unit to $9,812 per unit.

For a bare land strata or townhouse development, the increase is even starker, the costs going from $6,672 per unit to $17,122 per unit.

The option that was being called for by James would have seen those increases limited to $8,161 for multifamily and apartment units and $14,408 for townhouse units.

The costs are still below what a developer in cities like Kelowna or West Kelowna would be charged, and place Penticton in the middle of municipalities in the Okanagan.

The bylaw is now headed to the inspector of municipalities for approval before coming back to city council for a vote on adoption.

If the new bylaw is adopted, any projects that have been applied beforehand will be grandfathered in, but any that come after will be subject to the new rates.

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Brennan Phillips

About the Author: Brennan Phillips

Brennan was raised in the Okanagan and is thankful every day that he gets to live and work in one of the most beautiful places in Canada.
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