Letter from Minister Fraser to Mayor Harvie (1)

Mayor George Harvie Mayor of Delta Chair of the Board of Metro Vancouver via electronic mail [email protected]

October 23, 2023

Dear Mr. Chair, We all know that we need to build more homes, and that we need to do so faster. At this particular moment in Canada, we must all do everything that we can to incentivize the construction of new homes so that we can make housing more affordable, and more attainable for all Canadians.

You and other Metro Vancouver region mayors have been excellent partners, and in fact leaders, in this pursuit to date so, I know that we are aligned in reaching this goal. Increasing Canada’s housing supply is a complicated task, and we all have different levers at our disposal in order to try and facilitate it.

At the federal level, we are first and foremost changing the financial equation for builders. That is why we recently announced a GST rebate, and an increase to the annual limit for Canada Mortgage Bonds to $60 billion, which is enabling access to financing for builders on better terms and incentivizing construction. We are also working together with municipal partners to change the way that homes are built in our communities.

This is the purpose of the federal Housing Accelerator Fund. It is a fund designed to incentivize cities to pursue zoning reform, and to expedite permitting so that more homes can be built in communities across the country, and more affordable homes can be made available to those who need them most.

Given the spirit of the Housing Accelerator Fund, and the work that the federal government is doing to change the financial equation for builders; large increases in development charges are at odds with these goals. I understand that the Metro Vancouver Board is currently considering tripling the development cost charges it levies on new developments, and that a vote on the proposal will take place at the end of this week. Significant increases to development charges have the potential deter development by offsetting the impact of other measures that reduce the cost of building.

When projects do advance, increased charges on development can lead to higher housing costs for renters and homeowners, making it more difficult to find somewhere affordable to live. – 2 – As you know, the development charges levied by Metro Vancouver would apply to all Metro Vancouver member municipalities.

Of these municipalities, several are eligible for funding under the federal government’s Housing Accelerator Fund and currently have their agreements paused while we consider the impact the increases may have on the target number of units which these cities have committed to under their agreements.

As part of their Housing Accelerator Fund applications, these cities have proposed various initiatives to help get more homes built, more quickly. In fact, some have proposed waiving their own development charges. It is difficult to discern the alignment between the proposals by some of these cities to waive their development charges, while Metro Vancouver is proposing to increase them in the same jurisdictions.

I appreciate that cities need access to funding to build out the infrastructure that the growth we are trying to incentivize will rely on. I am not suggesting that development charges, generally speaking, are unacceptable. While I also appreciate that some hold the perspective that ‘growth pays for growth,’ we will all pay for stagnation as a result of a lower pace of construction. A ‘growth pays for growth’ approach ignores the value that new development, new property tax bases, new businesses, and new neighbours bring to our communities.

I am concerned that at this particular moment in time, a drastic increase in development charges will inhibit our ability to seize the opportunity to incentivize a rapid increase in construction. In the spirit of finding a solution, I would like to collaborate on a resolution that ensures Metro Vancouver can support the infrastructure demands which growth will create, while respecting the spirit of building as many new homes as possible.

I am not insistent on any particular solution, but would expect that a number of options could be considered, including:

• Delaying the enactment of the DCC increase to allow for additional in-stream protection; and

• During the delay of the enactment of the increase, amending Metro Vancouver’s DCC waiver bylaws to facilitate meeting our shared objective of decreasing the cost of rental housing and incentivizing affordable rental housing. o Waiver bylaws could include:

Exempting purpose-built rentals from the waiver increase;

▪ Reducing the mixed-use threshold for which the current waiver applies;

▪ Adopting waivers for private developers who provide the development to a non-profit once complete; and/or

▪ Extending eligibility for DCC waivers to non-market rental units that are delivered by the private sector (i.e. inclusionary units).

The mayors and councils in this region are clearly seized with doing all that they can to build more homes in their communities, and I do not doubt that Metro Vancouver espouses a similar philosophy. In fact, their actions and initiatives toward reducing overall development costs for affordable housing, and the encouragement they offer member cities to implement similar measures are a proof point that they do.

I also recognize that these – 3 – charge increases were underway prior to the GST rebate and HAF agreements, but given the changing circumstances, I think it is wise for us to ensure we remain aligned on a continued basis and to rethink the current approach for a mutual benefit in the longer-term. Metro Vancouver’s success is integral to the success of the country, and I would welcome any alternate solutions you might have.

If any of the suggestions I have proposed seem feasible to you, if you have questions about them, or if you have others that you can consider, please reach out to me via my Chief of Staff (copied) for a discussion at your earliest convenience.

Sincerely, The Honourable Sean Fraser, P.C., M.P. Minister of Housing, Infrastructure and Communities cc. Savannah Dewolfe, Chief of Staff, [email protected] Metro Vancouver Board Members Mayors of Metro Vancouver Municipalities Metro Vancouver Staff