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Eby and Greater Victoria Chamber talk housing, amid rising development costs

Developers have been warning about the current high-cost climate, saying it may put the brakes on new projects and lead to a slump in housing starts.
Premier David Eby speaks at the Greater Victoria Chamber of Commerce breakfast event with Bruce Williams, chamber chief executive, on Tuesday. TIMES COLONIST

At a breakfast meeting with the Greater Victoria Chamber of Commerce on Tuesday, Premier David Eby pointed to eight new housing proposals on the B.C. Builds website to illustrate how the government is working to deliver new homes — while also acknowledging the serious challenges facing the development sector.

Local developers have been warning about the current high-cost climate, saying it may put the brakes on new projects and lead to a slump in housing starts.

Housing is a “huge issue,” Eby told an audience of 300 at the Victoria Conference Centre — not just for those who are looking for a place to live but for businesses trying to hire and retain staff.

The B.C. Builds program uses government-, community- and non-profit-owned land, plus low-cost financing and grants, to cut construction costs and deliver affordable homes more rapidly for middle-income residents.

Two of the current opportunities listed on B.C. Builds are on Vancouver Island — one in North Cowichan and another in Sooke.

When a municipality uses land it owns that is already rezoned, and works with private and non-profit partners, the goal is to get housing online in nine to 12 months instead of the usual three to five years, Eby said.

In the past several months, the province has unveiled several pieces of legislation aimed at creating more housing, including allowing construction of up to four units of housing on single-family lots and eliminating public hearings for proposals that already meet official community plan guidelines.

Eby acknowledged, however, that high interest rates have hit builders particularly hard.

They rely on construction financing at rates that can be 15 per cent or higher, a “devastating” level for builders seeking loans to put up rental housing, he said.

Builders also have to deal with high inflation on material costs, and lengthy approval times at the municipal level. When financing does come through, “They need to get going right away,” Eby said.

Ed Geric of Mike Geric Construction, who attended the Chamber of Commerce meeting, said later in a statement that he hopes Eby’s work with B.C. Builds, B.C. Housing and local municipalities efforts will create an environment “where builders like ourselves can actually build homes for people in our community. The time is now.”

The sector is dealing with supply-chain challenges, a labour shortage, high land costs, municipal approval delays and interest-rate increases, he said — factors that have “all compounded to create the housing crisis that we as a region are currently experiencing.”

“Market and government challenges have rendered a lot of aspirational municipal plans irrelevant, a lot of projects unviable and a lot of housing supply unattainable for those who need it most.”

Ben Mycroft, chair of the board of the Urban Development Institute’s capital region arm and director of development for GableCraft Homes, said some developers are starting to downsize plans for 2024 and 2025.

The sector is sending out warning signals that housing starts may drop to some of the lowest numbers in a decade, he said.

Some developers are looking at laying off staff and putting projects on hold. It’s a difficult time to get financing for a project and many are turned down, he said.

Interest rates are a big worry, he said, since they’re not coming down as quickly as hoped and the long-term cost of borrowing remains high.

“There’s kind of a perfect storm developing,” Mycroft said, adding that the province is also making changes to the building code that will add to development costs. Those include the step code, which is designed to make new buildings net-zero energy ready by 2032, and adaptability measures that would require all units to have space for a wheelchair to turn around.

The latter would result in about a 10 per cent increase in the size of a unit and higher construction costs, Mycroft said. “We recognize the need for consideration for adaptability for mobility challenges in the future. But maybe 20 per cent of the units could be adaptable.”

New seismic criteria in the building code will also add “massive costs” to construction, he said.

The development industry is beginning to contract at the same time the province is encouraging higher housing starts, Mycroft said.

While he praised provincial initiatives to increase affordable housing stock, he said a too-rapid pace of change in development policies has led to a kind of “policy paralysis.”

In the past 12 to 18 months, there’s been more change than in the past 15 years, said Mycroft, noting some Greater Victoria municipalities are short on staff to implement new government policies and to update their bylaws.

Not all are in the same boat, however. Mycroft pointed to Victoria, Colwood and Esquimalt as examples of municipalities that will hit provincially set housing targets and are working productively with the private sector.

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