Development Fees and Property Tax: How Should We Pay for Population Growth?

When paying for building or renewing infrastructure, a local government only has three choices: development fees, property tax, and utility fees. The provincial and federal governments also give local government grants, but this funding is limited.

There has traditionally been a consensus that the infrastructure required to help support population growth is paid for by development fees. A local government's property tax and utility fees are used to pay for this infrastructure's upkeep and eventual renewal.

In Langley City, development fees are charged by the City, Metro Vancouver Regional District, School District 35, and TransLink.

For a new apartment in Langley City, this works out to $38,034. You can learn more about the different rates for our amenities contributions and development cost charges for all property types.

Infrastructure costs have rapidly increased over the last few years, development fees will need to increase, in some cases doubling over the next several years, to keep up. That new apartment fee could be approaching $80,000. I know that last year, the federal government was calling on local governments to stop development fees. A few weeks ago, at a Metro Vancouver Mayors' Committee meeting, we heard developers saying that the fees hurt their business when interest rates are high but are OK when interest rates are low. They ask for the region to pause increasing development fees.

Most typical mortgages are 25 years. If those development fees were to increase to $80,000 per apartment, the principal cost and interest would contribute to $5,442.24 in mortgage payments annually over a 25-year term based on today's rates.

For context, I looked up the property and utility fee bill for 304-5485 Brydon Crescent. With City, TransLink, Metro Vancouver, and School District 2024, the all-in cost was $2,093.38.

The federal and provincial governments are unlikely to come to the table with serious infrastructure money, so if local governments want to reduce development fees, it would need to be picked up by property tax and utility fees.

If we went down that path, as a society, we would need to come to a new consensus that everyone pays for the cost of new infrastructure related to population growth. We also need to agree to see property taxes double. There may be somewhere in between. It is a conversation that we need to have.

The bottom line is that if we want to reduce development fees, the money needs to come from somewhere. Housing won't be built if local governments don't have the money to expand infrastructure to accommodate population growth. There would be no water and sewer connections at a minimum.