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Developers are going to have some extra cash in their pockets this year.

Thanks to the City of Vancouver, they are exempted from 2019 inflationary increases in fees they pay for market housing projects, like condos.

Were they not let off the hook, residential developers would be paying an additional 5.2 percent in development-cost levies, community-amenity contributions, and density bonuses.

Instead, the inflationary increase will be applied only to commercial and industrial projects, effective September 30 this year.

Chris Robertson, assistant director for citywide and regional planning, wrote two reports to council that recommended forgoing the rate adjustment for residential developments.

In both reports, Robertson cited a “weakening residential market” as the reason for exempting housing developers.

“The weakening market in the residential sector highlights the need to reconsider the timing and implications of applying the 2019 calculated inflationary rate adjustment on new residential development,” Robertson wrote in a report about density-bonus contributions.

That report on density-bonus contributions was adopted on consent, or without discussion, by council on Tuesday (July 23).

Density bonuses are paid by developers in return for being allowed to build more floor space than is normally permitted. For example, an extra square foot of density in certain areas in the Cambie Street corridor costs $55, based on 2018 rates that will carry over this year.

“Applying the inflationary rate increase to residential development could deter development from proceeding,” Robertson wrote.

On July 10 this year, council voted to approve Robertson’s other report, which proposed exempting residential developers from inflationary increases of 5.2 percent on development-cost levies (DCLs) and community-amenity contributions (CACs).

DCLs are based on square footage and constitute a significant source of revenue for the city. Based on a 2018 staff report, the city collected an average of $72 million a year in DCLs between 2013 and 2017.

CACs are paid either in kind or in cash in exchange for property-rezoning approvals by the city.

Robertson estimated that the city will be forgoing about $5 million in extra revenues from DCLs and CACs because residential developers will not be paying the inflationary rate.

The density-bonus exemptions will cost the city less, about $100,000, according to Robertson.

In both reports, Robertson cited assessments by the Urban Development Institute (UDI) and the Real Estate Board of Greater Vancouver (REBGV) of the residential market.

According to UDI, the city staff member wrote, sales of new condos and townhouses in the first quarter of 2019 “declined to some of the lowest levels” in Vancouver in six years.

In addition, Robertson noted that based on REBGV data as of April 2019, year-over-year resale prices for some housing types and in a number of locations in Vancouver fell between nine percent and 14 percent.