B.C. to let developers defer most fees until occupancy starting in 2026

Home builders in B.C. will be able to delay paying the majority of development cost charges until a building is occupied, starting next year.

Housing and Municipal Affairs Minister Ravi Kahlon announced in Delta Wednesday the province is expanding the use of on-demand surety bonds to encourage housing development. The bonds are already used in some municipalities, including Burnaby, Surrey, Vancouver and Mission.

Many local governments charge home builders a development cost charge, amenity cost charge or a school-site acquisition charge. These are one-time fees collected from new developments to help fund the infrastructure needed to support the growth resulting from new construction, like roads, water, sewer, waste collection, and parks.

A release on the announcement said home builders prefer on-demand surety bonds over other financial tools used by municipalities, because the bonds don’t restrict a developer’s access to credit.

The timeline for home builders to pay the charges has also been extended to four-years, from two. They will be able to pay 25 per cent at permit approval and the remaining 75 per cent at occupancy or within four years, whichever comes first.  

Provincial regulations in place since 1984 require developers to pay a minimum of one-third of the total charge when the subdivision or building-permit is approved and the full amount within two years. 

The amendments won’t take effect until January 1, 2026, to allow municipalities time to plan for the changes. 

“It doesn’t affect a local government much at all by collecting at time of occupancy versus up front,” said Delta Mayor George V. Harvey at today’s announcement alongside Kahlon.

Harvey welcomes the changes, but says even more needs to be done to support the development industry and get more homes built.

Urban Development Institute President and CEO Anne McMullin said the changes will help builders save money on interest charges and carrying costs when fees occur closer to when builders start to receive revenue from buyers and tenants. She said that can amount to millions of dollars in savings for developers.

“Our association has long advocated for flexibility in managing upfront development costs, which present significant financial barriers to homebuilders,” said Neil Moody, head of the Canadian Home Builders’ Association of B.C. 

“The ability to defer a portion of development charges and use on-demand surety bonds is a practical measure to address the current economic realities of building housing across British Columbia.”

Kahlon said there will be no additional cost to the province due to the changes. He said the amendments will help push projects along that have stalled amid uncertainty in the market and rising costs. “This will be the difference between projects going forward, and not,” said Kahlon.

Kahlon also reiterated a call for the federal Liberal government to follow through on their campaign pledge during the April election to slash development charges by 50 per cent for multi-unit residential housing.