Kelowna considering major changes to fees it charges for new development

Developers could face thousands of dollars in increased payments to the City of Kelowna if council approves proposals from staff for a major update to its development cost charges, the fees developers pay to build new homes or commercial space.

A report is going to council during its morning meeting on Monday, Sept. 13. That gives council a chance to have a say in what is done before a formal proposal goes back to a Monday afternoon council meeting sometime later.

Since the last changes to these fees was done in 2019, the cost of construction has gone up 14% and the cost of land by 40%, the staff report states. The last major review of the charges was in 2011.

“The 2040 OCP (Official Community Plan) estimates an additional 44,000 residents and a total population of nearly 180,000 by 2040,” the report says. “Housing needs related to the 2040 population projections anticipate that demand for apartment, townhomes and compact family-friendly housing options will outpace the demand for single-detached housing.

“The City is looking to direct a significant share of future growth to Kelowna’s Urban Centres in the form of medium to high-density apartments, as well as ground- oriented units. As housing prices rise and household sizes decrease, it is anticipated that many citizens will be challenged to afford home ownership. These forces will strengthen the demand for long-term rental housing and enhance the viability of purpose-built rental apartment projects, secondary suites, and carriage houses.”

The report does not talk about how the increased fees will make housing any more affordable.

Right now the money collected from developers can only be spent on transportation, sewage, water, buying parkland and improving it.

Drainage is an eligible expense that currently isn’t collected by the city. Staff want to add that in.

The city also charges a flat $2,500 fee for secondary suites and carriage houses and staff want to change that to regular residential fees.

They also want to start charging industrial and commercial projects a fee to buy parkland.

What this means is that, for every single-family housing unit in the inner city area, city staff want to charge an extra $5,330 (17%) for each housing unit, taking in $36,319.

That's less than some Lower Mainland cities cited in the report (Langley, Coquitlam, Surrey and Richmond) but considerably more than Vernon ($20,168) and Kamloops ($12,275).

READ MORE: Okanagan housing prices still up more than 30 per cent from last year

A similar house in the South Mission would cost $6,631 (14%) more for a total of $55,138. That would make Kelowna the second most expensive of the cities cited in the report, behind Langley at $56,030.

Commercial construction could cost 17 per cent more in the inner city, rising to $96 per square metre. Light industrial in the same area faces a 90% increase to $48.84 per square metre while heavy industrial would go up 15 per cent to $100,428 per hectare.

The biggest increase in any classification is 112 per cent for light industrial in the South Mission, which will go to $80 per square metre, if the new fees are approved.

There is no indication in the report as to when the higher fees might be charged.

READ MORE: Huge increase in construction activity kicked off 2021 in Kelowna

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