the rennie brief: regional transportation DCC

key highlights

REGIONAL TRANSPORTATION DCC

the rennie brief

• Effective January 2020, a new Development Cost Charge (DCC) for regional transportation was levied on new developments throughout Metro Vancouver • For residential development, rates are levied on a per-dwelling-unit basis: $2,100 per single-family dwelling, $1,900 per duplex or townhome, and $1,200 per apartment • All else being equal, this DCC will tend to increase development costs and decrease land values at the margin

22 JUNE 2020

For single-family dwellings the rate will increase by 42% (to $2,975), for duplexes and townhomes by 30% (to $2,470), and for apartments by 29% (to $1,545). Rates will be subject to annual inflationary increases beginning January 2022 while TransLink will review the rates at least every three years.

PURPOSE To assist with the estimated $7.3 billion of improvements outlined in Phase Two of the 10-year vision for Metro Vancouver transportation, the Mayors’ Council on Regional Transportation and the TransLink Board of Directors approved the framework for a new Regional Transportation development cost charge (DCC) in December 2017. In May 2018, the Province of British Columbia passed the necessary legislation to enact the Regional Transportation DCC. Although it was originally effective January 2019, the rates at that time were set to $0, thereby creating a one-year notice period. The Regional Transportation DCC is applicable to all new developments in Metro Vancouver (residential and commercial) and will assist with: the construction of the Millennium Broadway Extension and the Surrey-Newton- Guildford Line; the modernization of the Expo and Millennium Lines; and the provision of 8% more bus service across the region in 2020 and 2021, among other things. As of June 2020, no changes have been made to the Regional Transportation DCC in relation to the current global pandemic and, given the negative impact that social-distancing has had on ridership, this DCC is likely to be an important source of transit funding going forward. Effective January 15th, 2020, municipalities across Metro Vancouver began collecting fees on behalf of TransLink as part of the new Regional Transportation DCC. Similar to other DCCs, payment is collected by the respective municipality when municipal charges are levied or upon approval of a property subdivision or building permit. The Regional Transportation DCC will not be charged to any subdivision application that was approved prior to January 15 th , 2020. RATES: 2020 & BEYOND For residential development, the Regional Transportation DCC rates are levied on a per-dwelling-unit basis while commercial rates are applied on a gross per-square-foot basis. The current rate is $2,100 per single-family dwelling, $1,900 per duplex or townhome, and $1,200 per apartment; for commercial space, retail/service carries a charge of $1.25 per square foot, office $1.00, institutional $0.50, and industrial $0.30. In 2021, the rates will remain the same for commercial development but they will change for residential development.

rate effective

Jan. 15th 2019

Jan. 15th 2020

Jan. 15th 2021

RESIDENTIAL DEVELOPMENT SINGLE FAMILY DWELLING

PER DWELLING UNIT

$0 $2,100 $2,975 $0 $1,900 $2,470 $0 $1,200 $1,545

DUPLEX/TOWNHOME

APARTMENT

COMMERCIAL DEVELOPMENT RETAIL/SERVICE

PER SQUARE FOOT (GROSS)

$0 $0 $0 $0

$1.25

$1.25

$1.00 $1.00 $0.50 $0.50 $0.30 $0.30

OFFICE

INSTITUTIONAL

INDUSTRIAL

EXEMPTIONS & WAIVERS Regional Transportation DCC exemptions exist for places of public worship, law of a treaty first nation that provides an exemption, any developments that do not result in net-new units/space, a development where the value of work does not exceed $50,000, and the construction, alteration or extension of residential self-contained units if it does not exceed 312 square feet. Only not-for-profit affordable rental housing is eligible for a waiver while not-for-profit student rental housing is eligible for a DCC reduction of 50%. WHY IT MATTERS The direct effect of the implementation of this new DCC will be to increase, at the margin, the costs of developing both residential and commercial projects while decreasing the value of land. As this DCC provides a negative incentive to new development, it could have a dampening effect—though any observed impact on supply is expected to be minimal. Thus, the DCCs impact will be absorbed by developers and land owners in the short-run, while in the long-run any marginal decrease in the supply of housing or commercial space as a result of the DCC could increase costs for end users.

For further information please contact Ryan Berlin (rberlin@rennie.com) or Bowen Behan (bbehan@rennie.com). The information set out herein (the “Information”) is intended for informational purposes only. RAR & RMS has not verified the information and does not represent, warrant or guarantee the accuracy, correctness and completeness of the information. RAR & RMS does not assume any responsibility or liability of any kind in connection with the information and the recipient’s reliance upon the information. The recipient of the information should take steps as the recipient may deem necessary to verify the information prior to placing any reliance upon the information. The information may change any time without notice or obligation to the recipient from RAR & RMS.

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