City of Powell River elected officials have asked staff to prepare a draft bylaw to extend the municipal assist factor on development cost charges (DCCs) for one year.
DCCs are fees that local governments collect at the time of new development to help fund off-site infrastructure services and park acquisition required to accommodate growth. The city’s DCC bylaw came into effect in 2011, with a municipal assist factor (MAF) of 40 per cent. That changed to 20 per cent in 2012 and one per cent in 2013.
Some local developers have asked council to revise the MAF or rescind the bylaw.
Scott Randolph, Powell River Regional Economic Development Society (PRREDS) manager, Warren Behan, of 3C1B Developments Ltd., and Darren Edwards, owner of Henderson Edwards Developments Ltd., made presentations at the committee-of-the-whole meeting on January 17 about the issue.
Randolph said when the bylaw was first considered, the real estate market was still strong, but by the time fees came into effect, the market had experienced a significant setback. “As a result the assist factor that was generously provided in 2011 and 2012 to ease developers into the new charge has gone to waste, as no significant new development has occurred due to overall weak conditions of markets,” he said. “Although Powell River’s development community is small, it does provide stabilized and meaningful employment to more than 150 residents working for local contractors and sub-contractors on any typical development.”
Using a provincial multiplier rate of 2.5, that represents approximately 375 jobs in the community beyond the 150, Randolph added. Although real estate values aren’t expected to increase for the next three to five years, the PRREDS board believes it is important to continue to generate activity in the sector to maintain jobs and skilled workers, he added. The board believes “council should re-introduce the assist factor at the highest rate available under the legislation until markets have improved to allow for more development in the city,” he said.
Adding DCCs to the cost of developing land increases development costs to a point where it becomes unfeasible to develop in the current economic climate, Behan said. His company’s development at the top of Glacier Street will have 60 lots when it is completed, Behan added, and eventually 60 homes that will generate approximately $180,000 annually in property taxes to the city.
All developers in Powell River could use the help of putting the assist factor up to 99 per cent until more economically viable times, Behan said. “Powell River is a unique place and should not be compared to other cities,” he said. “We have issues with ferries and isolation, among other things, working against us already and we can sincerely use your help to keep some growth happening here in Powell River.”
Edwards said leaving the assist factor at one per cent will negatively affect the construction industry and threaten the loss of jobs. “The $7,600 DCC equates to a 10 per cent increase to the price of the lots that I have to purchase on Glacier Street to continue constructing homes,” he said. “This type of increase is unacceptable in this fragile economy [in which] we find ourselves. How will the market bear a $7,600 increase to the price of a new home when prices are continuing to fall?”
If council chooses to do nothing, growth will stop, Edwards also said, businesses will slow down, workers will be laid off and the ripple effect will extend to manufacturers, retail stores and education programs. “Our company impacts the employment of 187 people directly and indirectly in this region,” he said. “A simple increase in the assist factor from one per cent to 40 per cent is not significant enough.”
However, other local developers have opposed extending the MAF because they say that would punish those who made the decision to invest prior to DCCs being implemented. They say they are paying much higher taxes for their still unsold but fully developed properties.
Councillor Maggie Hathaway alone voted in opposition to the motion requesting staff to prepare a draft bylaw. She said she couldn’t see how council could be fair in this situation. “I really feel in a dilemma right now, so I’m not prepared to make any decisions yet,” she said.
