Developers face major hike in cost of doing business in city.

By Wolf Depner - Penticton Western News - December 05, 2007

Developers could pay more for roads, sewers and other urban infrastructure five months from now as the city moves forward with plans to raise development cost charges.The higher charges promise to cover the growing costs of growth and limit urban sprawl by funneling development into the core of the city where development cost charges will rise less than in the periphery — areas within the city where lots are larger, more distant from urban services and closer to the Agricultural Land Reserve. The city also announced development cost charges for two specific areas to cover sewer projects. Mayor Jake Kimberley said different development cost charges for different areas of the community would help the city deal with the “escalating costs” of infrastructure as council read the revisions for the first time. If they move forward following additional public feedback Dec. 17, staff recommend they come into effect April 7, 2008 — two years after the most recent revisions, during which the city has witnessed considerable growth.

Coun. Garry Litke said the changes are long “overdue” in the face of “compelling evidence.”Not all councillors sounded as enthusiastic. Coun. Dan Ashton said he would like to hear from citizens first and Coun. John Vassilaki urged council to phase in the new charges. “It would be more palatable out there to all the developers,” he said.Charges for a single-family home in the periphery would rise almost 113 per cent, from the current rate of $8,203 to $17,458. Charges for certain multi-family units would rise 135 per cent, from the current rate of $5,522 to $12,993. Charges for industrial developments in the periphery would rise almost 530 per cent, from $2.25 per square metre to $15.47 per square metre. The increases appear smaller in the core, where they actually drop for some kinds of multi-family units.

Charges for a single-family home in the core, meanwhile, would rise almost 62 per cent, from the current rate of $8,203 to $13,262. Commercial charges would rise almost 87 per cent. Council passed the revisions after 10 months of consultations that included an open house last month. Council heard several critical comments from business interests, including the Penticton and Wine Country Chamber of Commerce, during the open house. Then-president Chris Browne said the chamber board has several concerns about the proposed revisions. While board members understand the need for increased revenues to pay for escalating infrastructure costs, they fear developers will look elsewhere to keep their costs down, said Browne. This could erode the city’s tax base and hurt the local tourism industry by discouraging future developments. “We note that Penticton is in great need of higher-end accommodations for tourists and other visitors to our city,” said Browne. “We fear that proposed developments will be delayed or cancelled due to the magnitude of these proposed cost increases.”

Mitch Moroziuk, director of engineering and development services, said development cost charges facility development and are only one among many factors that developers consider when making decisions. Other considerations include land and constructions costs, financing and marketing he said. “All of these will be weighed when making a decision regarding where and when to develop,” he said, noting that the city has made several concessions to developers.
Browne also wondered how higher development cost charges would impact affordable housing — a point dismissed by the city. Moroziuk said higher development costs charges would not impact affordable housing projects because council has the right to waive those charges.“The increase in (development cost charges) will either create a benefit or only a moderate impact on affordable housing,” said Moroziuk. The large majority of social housing projects would be multi-family units in the downtown core where they would be subject to the core rates rather than the periphery rates, he said. Development cost charges for the core would rise to $5,522 per unit to $5,548 per unit — an increase of $26 per unit, which Moroziuk described as “moderate.”Council has a history of reducing development cost charges for affordable housing project.

Four years ago, it cut charges 50 per cent for a project proposed by the Kiwanis Housing Society. But the project has not come off the drawing board because of financial and bureaucratic difficulties, prompting questions from the society what if any support it can expect from the city.Kimberley said the project now rests with the group, adding the city would be willing to discuss additional help, once the group has moved the project forward.