Report targets high home building fees, red tape

Greater Vancouver Home Builders Association unveils study, argues reform by cities could ease housing crunch, prices

Construction underway on a townhouse development in Surrey.

A new study makes the case for reforms to streamline municipal development approvals and restrain fees to help home builders keep pace with housing demand and control prices.

Getting to Groundbreaking, an initiative of the Greater Vancouver Home Builders Association, with participation from the Urban Development Institute and Metro Vancouver municipalities, was prepared by researchers with SFU’s Urban Studies program.

“This is about red tape and getting rid of inefficiencies,” GVHBA president Bob de Wit said of the report, which was released Thursday. “If we can reduce that friction, that red tape, then we can reduce housing costs and make homes more affordable for families.”

The report highlights “undesirable inefficiencies” that cause lengthy delays in getting the okay to build new housing developments.

Approval processes have become more complex, it says, and some cities, such as Maple Ridge, have not added staff to keep pace.

Long waits of one to two years to get a construction green light add to the costs that must be recovered from home buyers.

Developers also pay cities various fees and charges and the study shows those amounts vary wildly, depending on the city.

The highest combined development charges and other permitting fees for a sample 22-townhouse development were levied in Surrey and Richmond – where the municipalities collected more than $700,000. They were followed by Langley Township at more than $600,000, while Maple Ridge, Coquitlam and North Vancouver District charged between $400,000 and $500,000 to develop the proposed project.

The lowest charges in the region were in White Rock and Port Moody.

Broken down by unit in the sample development, the fees in Surrey add up to $33,700 or about 10 per cent of the cost of a new townhouse, compared to just $8,400 or 1.8 per cent of the unit price in Port Moody.

The regional average of fees and charges for a unit in the sample townhouse complex was $17,124 or four per cent of the typical townhouse price across Metro Vancouver.

The report notes differing local factors make it difficult to fairly compare the burden of fees between cities.

De Wit said there are legitimate reasons why some cities, particularly Surrey, charge more than others.

The big one is that much construction in Surrey happens on land that has never before been developed.

“If you open up a greenfield development there are a lot of costs – laying pipe, building roads and creating parks,” de Wit said.

“We understand there’s a need to have development charges to pay for growth. What we really care about are the delays and inconsistent application of rules across cities and even within cities.”

Among the recommended reforms are improved municipal websites for developers, good online file access and mobile technology to allow city staff to update information on a development from the field.

Jean Lamontagne, Surrey’s general manager of planning and development, said real-time updates from city inspectors using mobile devices can help avoid delays for builders.

Instead of waiting to return to the office to enter the data, comments from an inspector are instantly circulated to the client’s team, who can move faster to address problems.

“The report really brings together best practices from around the region,” Lamontagne said, adding SFU’s involvement ensured it was fair and impartial.

As for Surrey’s higher costs, Lamontagne said council has always insisted developers pay for the costs to service new neighbourhoods, not existing taxpayers, adding housing in Surrey remains more affordable than Vancouver.

The report acknowledges major challenges facing cities – from neighbours hostile to development, intense pressure to keep pace with growth, as well as inexperienced builders who don’t always know what they’re doing.

“Some builders and developers submit incomplete applications to get into the queue,” de Wit said. “That delays the whole process for everybody. So that’s something our industry can do better.”

One of the reforms the GVHBA recommends is a fast lane for professional builders with a good track record to expedite their projects.

Other ideas include approving development permits simultaneously with a council rezoning decision – as happens in Surrey – and pre-application meetings to ensure builders know their requirements at the outset.

Getting To Groundbreaking is expected to be an annual study, with the focus shifting from townhouses to apartments and houses in future years.

Three cities – Burnaby, New Westminster and Langley City – did not participate in the study.

De Wit said this year’s analysis was less relevant in those areas because of the focus on townhouses, which make up 20 to 30 per cent of new housing units in the Tri Cities, Surrey, Maple Ridge and Langley Township.

 

Cities ranked for approval performance

The Getting To Groundbreaking report also ranks the top 10 Metro Vancouver cities for townhouse development in what it dubs a Housing Partnership Index.

Langley Township tops the list, followed by Richmond, Vancouver, Port Moody, Coquitlam, Surrey, Maple Ridge, White Rock, Port Coquitlam and North Vancouver City.

Study lead author Meg Holden, an associate professor of urban studies at SFU, said the index isn’t just based on how long approvals take or the total cost of fees, but also factors like the predictability of fees, the professionalism of city staff and their willingness to work collaboratively to solve problems.

While Surrey has a strong website, it was weighed down by its relatively high fees.

Some cities couldn’t estimate a total fee load for the hypothetical development at all because their community amenity charges are based on site-by-site negotiations, Holden said.

“That’s not predictable,” she said, adding it makes it difficult for developers to determine their costs, profit margins and wriggle room to innovate on the project.

The report doesn’t go as far as GVHBA officials in suggesting municipal reforms could flow through to lower housing prices for consumers.

“This by itself isn’t going to bring the cost of housing down, but it’s a piece of the puzzle,” Holden said.

“By building up this culture of transparency and predictability then there’s a forum where builders and municipalitie can work together on some of the more outlandish kinds of solutions to affordability problems – new kinds of housing and new kinds of models of getting thing done.”

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