In an effort to encourage more affordable housing projects, Victoria council has approved a new grant program that will offset all of the development cost charges for new below-market rental projects.
Council voted 7-1 in favour of the new program, which is designed to help non-profit, non-governmental affordable housing providers as they face increased costs to build new homes.
Coun. Krista Loughton said the program might be the spark needed to get affordable units built, and addresses one of the city’s investment priorities identified by a pre-budget survey.
Loughton said the federal and provincial governments have the resources to stimulate affordable housing, but the city has only a few levers it can pull to make things happen.
“There’s very little we can do, but this is something that allows us to support the construction of non-market projects that are … completely reliant on grants and support from other levels of government,” she said. “I want us to try to kickstart these non鈥憁arket units. I see that as being really important.”
A city staff report showed that while Victoria is well ahead of the pace needed to hit its five-year housing target of 4,902 homes, it has fallen behind on new below-market housing units.
According to the report, only 168 below-market rental units have been completed, while the province has set a target of 1,798 by the fall of 2028 for the city.
Staff noted many non-profit rental projects are deemed non-viable due to high interest rates and rising construction costs, and a development cost charge grant would be one thing the city could do to reduce costs.
Staff pointed out that federal and provincial funding organizations like Canada Mortgage and Housing Corporation and B.C. Housing look for evidence of local government support such as financial incentives when they review proposals for funding.
City staff had initially suggested the new grant program should cover 50 per cent of development cost charges, which would allow it to run for two years and be covered by the funding expected from the Federal Housing Accelerator Fund.
>See NON-MARKET RENTALS, A2
A development cost charge is the amount developers pay for required infrastructure upgrades to handle new development. The charges are collected by the city for water, sanitary sewers, drainage, parks and transportation upgrades to service new development.
Loughton pushed for the grant to be 100 per cent, noting it would provide more flexibility for city staff to accommodate some projects that required more than a 50 per cent break on fees.
Staff noted the change to 100 per cent would mean the program would be able to run for one year with an expected cost of about $1.8 million based on an average of having two affordable rental projects start construction each year.
While some councillors expressed concern about the impact of extending the grant program to cover 100 per cent of development cost charges, only one voted against the program.
Coun. Marg Gardiner suggested it was like “opening up the bank again” when the city faces making tough decisions to trim the 2025 budget.
“This budget crunch is coming and we’re spending other people’s money,” she said.
According to the staff report, the program would have no effect on property tax increases next year, as it would be funded by the federal Housing Accelerator Fund.
However, there could be an impact in 2026 if the city decided to extend the program for another year without federal backing.
“I personally have a low level of confidence that this council would want to raise taxes by one per cent in 2026 to maintain this policy,” said Coun. Jeremy Caradonna. “This would essentially spend all of the housing accelerator fund next year and so in 2026 we’d be faced either with not giving a subsidy to DCCs or maintaining the 100 per cent policy, which would mean, if I’ve done my math correctly, a one per cent tax increase.”
Coun. Matt Dell said the program is another example of Victoria going above and beyond to help address a housing shortage.
“I don’t know if there would be this much pressure on us to drain the fund if other municipalities in the [Capital Regional District] were stepping up to build not-for-profit housing,” he said. “So as much as I’m proud of doing this, it is frustrating to me that, again, this should be a CRD policy right here. Everyone should be required to do that, not just us.”
Grant applications will be reviewed and approved by city staff to ensure they meet the requirements of being non-profit and non-government organizations that will be the long-term operators of the housing projects.
The grants, if approved, would be applied as a credit to the total development cost charges payable to the city when the building permit is issued.
