City of Kamloops lends a hand to real estate developers
Real estate developers will likely see their costs drop in Kamloops for at least the next three years.
The City is trying to encourage more new builds by dropping its development cost charges, which are used to pay for expensive infrastructure projects like roads, sewers and parks.
"If we're actually hoping to move housing forward the way we said, if we're hoping for our community to be competitive in the development field... I think we need to look at changing this and moving it away from the status quo," Councillor Katie Neustaeter said at the March 7 committee of the whole meeting.
To drop the fees placed on builders, staff proposed options to increase the "assist level" from the city, effectively meaning taxpayers' money will make up the difference instead of builders.
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Council routinely considers updating these fees every three years, but they haven't actually changed since 2004. Currently, the city helps developers with 10% of fees for transportation and just 1% for sewer, water and park fees.
A single detached home built for $665,298 would include $11,673 in development cost charges, while an $884,059 home would include $16,400, according to examples from a staff report.
After a Tuesday afternoon vote, council will consider subsidizing 10% of transportation and water fees for new builds once they finalize the budget, meaning a home that now includes $16,400 in will be reduced by $704.
However, not everyone was in favour of the gift to real estate developers.
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"I'm struggling with the assist factors," Coun. Bill Sarai said. "Will that (reduction) be passed on to the homebuyer?"
That's the "million-dollar question," according to development, sustainability and engineering director Marvin Kwiatkowski. He said the housing market often dictates costs as opposed to City fees, but he did say some in the development community appealed to the City for lower fees.
Sarai wanted to stay the course and avoid changing the fees for the next few years, later echoed by Coun. Nancy Bepple, who was also skeptical the drop in fees will help homebuyers.
"Changing the costs by $1,000 or $700 isn't going to change the cost of housing in any substantive way," Bepple said. "At the same time, the City already waives costs for affordable housing units,... so I would like to stay with the status quo."
Sarai and Bepple were the only two opposed in a 5-2 vote. Coun. Margot Middleton was absent and Coun. Mike O'Reilly declared a conflict of interest because of his industrial real estate interests.
Council will finalize the decision at its next meeting, but settled on an option that would have the City pay 10% of developers' transportation and water fees, along with 1% of sewage and park fees.
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The fees are often used for capital projects that arise as a city grows, like major roadways and sewage upgrades.
According to a staff report, Kamloops charges less for development fees than most comparable B.C. cities, including those in the Okanagan. Kelowna, for example, charges more than double the development charges Kamloops does.
A home that currently includes $16,400 in development fees in Kamloops would cost the builder $35,000 to $50,000 depending on the neighbourhood, according to the staff report.
All the costs not collected through developers instead get passed on to taxpayers.
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