Huge Gap in DCC Rates Amongst Fraser Valley Cities

By Mike Harrison

Nearly every Fraser Valley municipality has increased their development cost charges (DCCs) over the past few years, some a lot more than others. The result is a massive spread between the cities with the highest rates and the cities with the lowest rates. The gap is so large that it can have a material impact on the value of the land, and it more often than not gets overlooked when land values are discussed using a ‘price per door’ metric.

Below is a summary of the current townhouse DCC rates across the various municipalities I work in. As you can see, at the high end is the Township of Langley with a rate of nearly $53,000 per unit. On the other end of the spectrum are White Rock and Delta at approximately $11,000 and $13,000, respectively. Note that Surrey and Maple Ridge calculate their DCCs per square foot or per square metre, and we have assumed a typical 1,400 sf townhouse to create a comparable per-unit rate.

I pitch a lot of townhouse sites to developers and it’s common to compare values from one site to another even if those sites are in different municipalities. This used to be a more apples-to-apples comparison when a few thousand-dollar difference in DCCs was immaterial, but now that the gap can be as much as $40,000 per unit, it’s worth paying attention to it. It’s both an opportunity and a problem, depending on which side of it you’re on.

The disparity in fees is driving some interesting purchasing behaviour. Here are a few trends we are seeing emerge as a result of the growing gap:

• Purchasers of development land are passing on sites in municipalities with lower rates because their subconscious understanding of value, per door, comes from a neighbouring municipality with higher fees.
• The highest fees are lowering land values in those municipalities, closing the gap to neighbouring municipalities that would historically have significantly lower land values due to lower townhome selling prices. Eg. Township of Langley compared to Maple Ridge and Abbotsford.
• Demand has grown for development sites in municipalities with lower fees.

Keep an eye on each of these municipality’s community amenity contributions (CACs) and new Amenity Cost Charges (ACCs) as well, as there is similar disparity amongst these municipalities. Additionally, many of the Fraser Valley communities are in the process of redesigning their amenity fee programs in response to the Province’s new ACC mandates.