The cost of everything is going up, and development costs are no exception as the City of Vancouver looks to increase the rates for Community Amenity Contributions. udibc | NAIOPVancouver | realestate realestatenews Vancouver
Target rates for CACs are adjusted annually using an inflationary index that is tied to annual changes in property values and construction costs, with theapproved on June 7, 2022. UDI and NAIOP said they were concerned by the newly proposed rate increases because they are higher than inflationary increases and would have a negative impact on the financial viability of certain projects.
“The timing of the proposed changes is particularly difficult, as high interest rates and diminishing sales numbers are already causing many projects to be paused until market conditions improve, so they can become financially viable again,” wrote UDI President and CEO Anne McMullin in a letter to the City.
McMullin also adds that UDI believes the City should not be enforcing an “artificial floor” for CACs, and that rates should be truly responsive to fluctuations in the market, including decreases, instead of just increases. UDI is also recommending that the City consider allowing delivery of public amenities to be delayed, in cases where “it means enabling the delivery of much needed housing supply.
Meanwhile, the NAIOP, in a letter written by NAIOP Vancouver Executive Director Paul Kool, voiced concerns that the interest rates used in the economic testing were too low, and that lease rates assumptions for industrial projects in certain areas of the City were too high.
If the new rates for CACs are approved on April 11, they will come into effect beginning September 30.Howard is a Staff Writer at STOREYS. He is based in Vancouver, British Columbia, and has also written about media for One Zero and international politics for WhoWhatWhy. Before STOREYS, he was also the Deputy Editor of 604 Now.
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