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Cost of building carriage houses in Kelowna may go up $20,000

Image Credit: Submitted/City of Kelowna

Already the most expensive city in the Interior of B.C. for housing, the City of Kelowna is planning to add more than $20,000 to the cost of building one affordable option: carriage houses.

A report going to city council on Monday, Aug. 22, recommends that a $2,500 flat fee charged to builders for each new carriage house jump to $23,000 to $28,000, depending on location.

And, the report says, it’s the province that’s forcing them to do it.

“The current practice was flagged by the Ministry (of Municipal Affairs) as an area that needed to be amended because it provided a specific land use subsidy which is not permitted, as any subsidy must be applied evenly for all land uses,” the report reads.

Carriage houses are smaller buildings on single-family lots that can be rented or lived in by family members.

The report recommends an increase in other fees charged to home builders along with industrial and commercial projects.

READ MORE: How Kamloops, Okanagan governments raise prices of new homes

The fees, called development cost charges, generate money to help offset the cost of things like roads, sewers and parks needed to support the new growth – growth that’s expected to bring 45,000 new residents to Kelowna by 2040.

The city already collects $31,000 to $48,500 for each new housing unit, depending on where in the city they’re built.

In most residential categories, the fees will climb 13% from the last time they were updated, three years ago.

“Construction and land acquisition increases, global supply chain issues, inflation, labour shortage and an oversupply of construction projects flooding the market have caused upward pressure on construction costs,” the report says, in explaining the increase.

In the last three years, construction costs have gone up an average of 20% and the price of land for parks jumped 40%, the report says. That’s based on 2021 costs so are likely higher now, the report adds.

The higher fees are needed to help pay for 234 infrastructure and parkland acquisition projects valued at $1.3 billion through to 2040.

In the downtown core, the proposal is to increase fees in the $3,000 to $4,000 range for each housing unit, depending on building type.

In Southwest Mission, the increases are only in the $1,300-$2,100 range but in the “north of city centre” area they will jump around $7,600 to $8,600

Secondary suites valued at less than $50,000 do not pay the fees now. That exemption will be expanded to cover all new secondary suites.

The report says that the fees collected by the city make up only 3-5% of the cost of new homes.

READ MORE: Okanagan home builders want city council to focus more on affordability than aesthetics

There are also big increases to fees for industrial and commercial developments.

“The City has some of the lowest Industrial development cost charges in the province, which does not fully fund the servicing demands of the shifting ‘light industrial’ development trend,” the report said, noting that there will now be separate light and heavy industrial classifications.

Industrial fees are slated to increase between $5,500 per hectare and $23,000 per hectare, depending on location while commercial rates are to increase $4-$26 per square metre, depending on location.

To contact a reporter for this story, email Rob Munro or call 250-808-0143 or email the editor. You can also submit photos, videos or news tips to the newsroom and be entered to win a monthly prize draw.

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