Government fees, levies and regulatory costs driving up Greater Victoria housing prices
Contributing to an affordable housing crisis
Housing prices in Greater Victoria have more than doubled in the last decade, with the federal, provincial and municipal governments fueling much of this increase through a blizzard of hidden fees, charges and regulatory costs that ultimately are paid for by new home buyers.
Government-imposed costs such as the GST, the property transfer tax, municipal density fees, amenities, application and processing fees, building permit costs, and new regulations are conspiring to create an affordable housing crisis for a growing number of people. Added to these costs are property taxes for businesses – typically charged at a multiple of three or four times residential rates – which are also passed onto the public.
“It’s a constant theme and we do what we can, then we move on and fight the next battle,” says Casey Edge, executive director of the Victoria Residential Homebuilders Association (VRHA). “It’s a moving target since taxes and fees and regulations continue to increase.”
Cash-strapped governments in recent years have increasingly looked to housing for additional revenue because usually these charges are not transparent to consumers, unlike property tax increases. Municipalities have been forced to raise revenue in way which are often totally contrary to stated provincial goals such as economic growth and affordable housing.
The average cost of a benchmark single family dwelling in the Victoria core area in May was a mind-numbing $825,500, up 16.8 per cent year-over-year. For a condo in Greater Victoria, it’s $417,500, up 25.5 per cent year-over-year.
A few years ago Edge estimated that about 20 per cent, or $100,000, of the cost of a new home locally is attributed to government related costs.That knocks people out of the market in terms of qualifying, and an added $100,000 on a home becomes almost $200,000 out of the buyer’s pocket on a mortgage at 6% over 25 years, he says.
Edge points to several examples of local councils recently approving excessive fee increases.
The District of Central Saanich recently passed a 131 per cent increase in development cost charges for single family lots since their last review in 2011. It went from $4,040 to $9,350. The multi-family increase is 157 per cent from $2,270 to $5,834 per unit.
In May the City of Victoria approved development application fee increases of up to 100 per cent. For example, community plan amendment fees increased to $2,500 from $1,400, rezoning fee goes to $2,000 from $1,400 for a single family dwelling, and public hearing fees got to $1,800 from $1,200 plus a new $500 legal fee.
While the City justified the increases by saying that fees hadn’t changed in 20 years, no effort was made to phase-in the drastic hikes to allow builders to adjust.
The VRHA is also in an uproar about the so-called Step Code, passed before the provincial election, which allows municipalities to ignore the National Building Code and set high energy standards similar to Vancouver. They estimate it will add tens of thousands of dollars to home prices and as much as 14 per cent to the benchmark price of $680,800 for the cost of a new home. The new standards it’s believed would result in just minor improvements to energy efficiency.
The Liberal government in the Throne Speech in February 2016 promised to force municipalities to disclose hidden housing costs, hoping the transparency will encourage local governments to work on ways to lower costs. It never happened.
City increasing development fees amid need for affordable housing, Time Colonist, May 27, 2017.
B.C. cities to disclose hidden fees for home buyers: Speech from the Throne, Feb. 9, 2016, The Globe and Mail.
CRD benefit packages costed at about 30 per cent
Spending on various benefits programs for CRD employees also represents a significant cost over-and-above wages for taxpayers.
Typically there’s a wide range of employer-sponsored benefit programs that include pension, extended health care plans, dental plans, life and accident plans, disability plans, and legally required programs such as CPP, WorkSafeBC and EI.
For all-in budgeting purposes the cost of employee benefits adds as much as 30 per cent to the total wage bill, according to the CRD.
These are budgeted numbers and averages and not actuals, and any individual compensation can’t be tied to the amounts: CRD Exempt Staff (28.98%), CRD/CUPE Local 1978 Regular Staff (29.80%), CRD/CUPE Local 1978 Auxiliary Staff (25.86%), and CRD/USW Local 1-1937 Regular Staff (30.34%).
The Conference Board of Canada reported recently that cost containment and a competitive benefits package is a significant challenge for employers with the increased prevalence of mental health and chronic disease. It’s expected employers will increasingly focus on health education, promotion and prevention to reduce benefits claims and manage costs.
The Victoria News reports that the $69-million Crystal Pool and Wellness Centre may not need to go to public referendum for approval. Funding sources such as the Investing in Canada Plan and the provincial Gas Tax may have funds….Amalgamation Yes elected Shellie Gudgeon, a former City of Victoria councillor, as their new chairperson and Colin Nielsen, who also sits on the Grumpy Taxpayer$ board, as the new vice-chairperson….Chris Shaw of Victoria, a UBC professor and former founding member of No Games Vancouver, is forming a group called No Games Victoria 2022. He is also author of a book on the myths associated with the Vancouver Olympics….The seven municipalities who did not accept the regional growth strategy – Central Saanich, Colwood, Esquimalt, Highlands, North Saanich, Saanich and View Royal – approved the mediation process after talks broke down. The strategy is a provincially mandated master plan designed to chart the region’s growth. Supporting BC’s Growth and Economy: Modernization of Regional Districts, was drafted by the Greater Victoria Chamber and endorsed by the BC Chamber and its member chambers/boards of trade at the 2017 BC Chamber AGM…..
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