$644,000 in additional costs PER HOME?


How the city of Vancouver has been masking taxes on residents for decades

For years news headlines and conversational topics have largely revolved around the increased cost of living in this beautiful city. As discussed in previous papers of mine the land constraints have forced new housing starts sky high in terms of design and dollars. The impact of this has caused distress and tiresome discussions about the continual problem. However, a report has been published in recent months, that can attribute tangible evidence as to a potential culprit in this debate of densification.

A new study conducted by C.D Howe Institute has taken an analytical look at the hard numbers of construction costs and how they equate to what you pay for your apartment or home. Their research has uncovered that their is an additional cost of $644,000 to build a single detached home in the City of Vancouver above the construction cost.

“There is an additional cost of $644,000 to build a single detached home in the City of Vancouver”

A major portion of the discrepancy is due to the Community Amenity Contributions (CAC’s) and Development Cost Charges (DCC’s) charged by the city. These unofficial taxes in many instances are negotiated on a case by case basis through backdoor dealings. Then the city usually requires some offsite work to be done. They are quietly increasing these costs every year to surge a discreet unofficial tax affecting all residents. This is a feedback loop that creates concealed taxes on the front end and the back end. Upfront costs are what the developer pays directly to the city. The back end costs come from higher prices to purchase your home the city earns more from the GST and Property Transfer tax, as they are calculated from the total purchase price after these levies are applied. The higher prices also mean higher assessment values, which in turn has a significant impact on property taxes. As cost of living increases through the heavy taxing so does the base cost of construction. This in turn drives prices further and the city is able to tax even more. This cycle has been growing exponentially as prices soar.

Businesses are also affected by the masked taxes. The high assessments on Commercial properties from the additional costs equate to higher property taxes. On a typical lease the business must pay the property tax and therefore has additional costs they pass onto the consumer.

Housing affects every resident of the city and has become a very polarized and emotional topic. There is clear evidence from this report that a more objective approach to the many factors inputting to this continual problem is required by both general population and political parties. This problem is likely to persist for the life of this city and focusing on rational, effective solutions instead of honing in on the problem can start some dialogue that may lead to improving all aspects of our community.


Brandon Harding


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