Kelowna development fees to rise

By Ron Seymour November 4, 2007 Kelowna Courier

Builders of new homes in Kelowna are looking at another 20-25 per cent jump in development cost charges next year. Total fees paid to the City of Kelowna by a builder of a new single-family home in the central area would rise from $16,329 to $20,278, council will hear Monday. Two years ago, the comparable fee was just $12,331. The projected increase in development cost charges are contained in an updating of the city‘s 20-year servicing plan, which outlines how much is expected to be spent on new roads, parks and utility upgrades. That plan now carries a total cost of $905 million, up from the $753 million that was forecast in November 2006. “The increase reflects what‘s happening to construction costs and land values in the market,” city finance director Paul Macklem said Friday. “I think developers pretty much know that these increases are coming, because we do consult with them,” Macklem said.

Two open houses on the higher DCCs are planned – 4-7 p.m. Nov. 20 at the Ramada Lodge and 4-7 p.m. Nov. 22 at City Hall. Assuming council approves the new fees, they would take effect March 1, 2008. Spending on new roads accounts for the biggest portion – 66 per cent – of the 20-year-servicing plan. The cost of building roads in the next two decades is now estimated at $582 million, up 19 per cent from last year‘s estimate. Rising land values and increasing construction costs for such things as asphalt and retaining walls are cited for the big increase.
Parkland acquisition represents the second-biggest component of the 20-year servicing plan, with spending now forecast to hit $140 million, up 35 per cent from the 2006 estimate. Waste-water treatment plant spending is now projected at $92 million, up 14 per cent from last year. Details of the servicing plan have not changed from last year. The update that will be presented to council simply forecasts the new cost of doing the projects that staff say are necessary to accommodate the growth.

Actual DCCs vary in different parts of the city, depending on the condition and extent of existing infrastructure. While the builder of a home downtown would pay $20,278 in DCCs, the comparable figures for Rutland and Glenmore are $18,518, and $35,000 in the southwest Mission. Of the $905 million total in the servicing plan, almost three-quarters is covered by developers, with taxation accounting for 17 per cent and provincial grants making up five per cent. When the city approved a 30 per cent increase in development cost charges last November, some councillors warned it would serve to make housing even less affordable and act as a brake on the economy. “We already have one of the highest housing costs in the country, and this is not going to help,” Coun. Andre Blanleil said. However, Mayor Sharon Shepherd said the updated figures for the servicing plan reflect the financial reality of increases in construction costs and land-acquisition charges for many city projects. “It‘s not good news, certainly,” she said, “but these are the real costs.”