On May 27, Saanich Council will consider and likely pass several items adding significant costs to housing. VRBA has sent the following letter to council opposing the new costly bylaws:
May 24, 2019
Mayor Fred Haynes and Council
District of Saanich
770 Vernon Ave,
Victoria, BC V8X 2W7
Dear Mayor and Council
Re: Development Cost Charge Bylaw and Building Bylaw
The Victoria Residential Builders Association does not support the increase to Development Cost Charges, nor the new building permit application fee, nor the BC Step Code which NRCan has revealed is flawed and costs more for a Step Code 2 home in Saanich than a Step Code 3 home in Nanaimo.
In the first six months of office, this new council, many of whom claimed to support housing affordability during the election, will have increased new home costs tens of thousands of dollars in one of the most expensive markets in North America.
“Facing increased development cost charges imposed by Saanich, a rich community amenity package and the desire to have some affordable housing options on site, Vancouver-based Wesbild is tweaking its project and crunching numbers to see if there’s a way to make the mixed-use development financially viable.”
“When you keep layering on costs, when do you say ‘uncle?’ ”
The Saanich News also notes in an April 26 story that “slow processing times” are a factor, estimating that “’a minimum of two years’ would pass between now and start of construction.” “Wesbild’s tenants would like some certainty as well.”
The Saanich News recently reported (May 17) that VRBA “has not shied away from criticizing Saanich, often comparing it and the City of Victoria negatively to West Shore communities, especially but not exclusively around issues like development cost charges and development permit processing times. District officials have rejected these charges.”
While you may continue to deny the new DCCs and slow processing times are a problem, clearly the development community, those actually impacted by your decisions, disagree.
Another issue raising housing costs is the BC Step Code and its flawed metrics revealed recently by the National Research Council at a National Building Code meeting. BC’s Step Code requires homes in Saanich to be better insulated and more costly to build than identical homes in Nanaimo. In fact, a Step 2 home in Saanich may be more expensive to build than a Step 3 home in Nanaimo. As a result of NRCan’s study, the National Building Code will take a different approach rather than that of Saanich. In addition, the National Building Code will offer the option of an air tightness test or a prescriptive path so a builder is not required to do multiple air-tightness tests. This is especially useful when building similar homes in a subdivision. The National Building Code approach will save time and money, and avoid bottlenecks, a significant issue for Saanich, one of the slowest at permit processing in the CRD.
Municipalities adopting the BC Step Code before national code diligence has been carried out do their residents a disservice and undermine consumer protection and affordability.
The BC Step Code is optional for municipalities and adds risk to Saanich’s taxpayers. The Municipal Insurance Association says “Building bylaws are one of local governments’ greatest exposures to liability risks.” The City of Delta discovered this when ordered by a judge to pay $3 million in a leaky condo lawsuit in 2001.
By adopting the flawed Step Code on June 1, Saanich adds thousands of dollars to housing costs; unwisely leaps from Step 1 to Step 3 within seven months; and circumvents National Building Code diligence.
Simply put, municipal councils are not qualified to establish building code standards, including energy efficiency, especially during existing confusion between air barriers and vapour barriers, which includes “authorities having jurisdiction” according to National Building Code documentation.
Our final objection is Saanich’s Building Bylaw increasing the permit application fee from $100 to 25% of the building permit fee. This boosts the application fee from $100 to $1250 or 1150% on a new home valued at $500,000. A $50 million multifamily project fee jumps from $100 to $125,000 or 124,900%.
This fee is not refundable if no permit is taken out, which is very possible during a recession as in 2008/09. Saanich would receive $125,000 for a project that does not move forward due to tough economic times. According to Saanich’s financial reports, the building inspection department is already posting surpluses of more than a million dollars annually. Again, this is at the expense of new homebuyers, including young families least able to afford it.
The reason for these big surpluses is Saanich charges for building permits based on “value of construction” rather than a fee for service as recommended by the province. Saanich’s model is a tax similar to the Property Transfer Tax generating millions of dollars in surpluses with little relationship to the cost of providing inspections. As the cost of labour and materials rise, building permit fees generate more revenue for Saanich, driving up home prices.
The calculation of building permit fees must change from market value to real costs of inspections, trips to the site, etc. This is in the interests of affordability claimed to be a priority in Saanich.
If Saanich council has a genuine interest in learning about housing development and affordability, you are welcome to meet with VRBA’s Builders Council and discuss the real world of development, cost and risk.
Sincerely,
Casey Edge
Executive Director