The South Okanagan branch of the Canadian Home Builders Association is upset with the outgoing Penticton council for increasing development cost charges over 100 per cent in some cases, which they say will have a detrimental impact on the housing crisis here.
“We engaged with city administration and council after the report was released and at the first reading in July and ultimately our concerns were not heard,” said Sarah Taylor, executive officer for SOCHBA.
“Understanding that the DCCs had not been increased in a few years, mixed with the comparative analysis, the fee hike was a ‘low hanging fruit’ for the city’s coffers. What was frustrating for us, is we are advocating for incremental increases over time with inflation and they will not do it - it’s a very reasonable ask.”
One of the last decisions the outgoing council made was to increase the development cost charges on all new builds in Penticton, adding about $25,000 additional fees to a single-family home and around $17,000 for multi-family in the downtown area.
One year ago, the rates would cost developers $17,000 and $6,672, respectively.
DCCs are mandatory levies placed on new construction to fund roads, sewers and parks needed to service the homes. Penticton had not increased the rates for a decade.
Taylor said drastic increases like these have detrimental effects on multi-year budgets for local builders and developers who are already struggling with labour shortages and supply issues.
In some scenarios, the DCCs are being increased by upwards of 100 to 135 per cent for multi-family and 166 per cent for bare land strata in the downtown, said Taylor.
“In a housing crisis, this does the opposite for supporting high density, regardless of where Kelowna is with DCCs. Making Penticton a viable option for developers will only help the housing crises – and we don’t do that by increasing bare land strata in the downtown by 166 per cent,” she said.
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 timing of such a rate increase is not ideal. Penticton is struggling with housing availability and affordability,” said Jonathan McGraw, the chamber’s president.
The Chamber is calling on the new city council to review the past council’s decision to hike the rates.
READ MORE: Penticton chamber wants review of council’s decision to hike DCCs
“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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