City grant could spur affordable housing projects

In a bid to encourage more affordable housing projects, Victoria council has approved a new grant program that will offset all development cost expenses for new below-market rental projects.

The council voted 7-1 in favor of the new program designed to assist nonprofit, nongovernmental affordable housing providers facing rising costs to build new homes.

Dear. Krista Loughton said the program could be the spark needed to build affordable units and addresses one of the city’s investment priorities identified by a pre-budget survey.

Loughton said the federal and state governments have the resources to promote affordable housing, but the city has only a few levers it can use to make things happen.

“There is little we can do, but this is something that allows us to support the construction of non-market projects that rely entirely on grants and support from other levels of government,” he said. “I want us to try to mobilize these non-market units. “I see this as really important.”

Council staff’s report showed that while Victoria was well ahead of pace to meet its five-year housing target of 4,902 homes, it was lagging behind below-market new housing units.

While only 168 below-market rental units have been completed, the state has set a goal of 1,798 units for the city by fall 2028, according to the report.

Staff noted that many nonprofit rental projects are deemed unfeasible due to high interest rates and rising construction costs, and a development cost fee grant could be one thing the city could do to reduce costs.

Staff noted that federal and provincial funding agencies, such as the Canada Mortgage and Housing Corporation and BC Housing, look for evidence of local government support, such as financial incentives, when reviewing financing proposals.

City staff initially proposed that the new grant program cover 50 percent of development cost fees; This will allow the program to run for two years and be covered by anticipated funding from the Federal Housing Acceleration Fund.

>See. NON-MARKET RENTALS, A2

A development cost charge is the amount developers pay for infrastructure upgrades necessary to accommodate new development. Fees for water, sanitary sewer, drainage, parks and transportation improvements are being collected by the city to service the new development.

Loughton pushed for the grant to be 100 percent, noting that it would give city staff more flexibility to accommodate some projects that require more than a 50 percent cut in wages.

Moving to 100 percent would mean the program could run for a year, with an average expected cost of $1.8 million based on two affordable rental projects starting construction each year, staff noted.

While some councilors expressed concerns about the impact of expanding the grant program to cover 100 per cent of development cost expenses, only one voted against the programme.

Dear. If the city faces tough decisions to cut its 2025 budget, Marg Gardiner said it’s like “reopening the bank.”

“A budget crisis is coming and we are spending other people’s money,” he said.

The program will have no impact on property tax increases next year because it will be funded by the federal Housing Acceleration Fund, according to the staff report.

But it could have an impact in 2026 if the city decides to extend the program for another year without federal support.

“I personally have low confidence that this council will want to raise taxes by one per cent in 2026 to continue this policy,” said Coun. Jeremy Caradonna. “This will essentially spend the entire housing acceleration fund next year and in 2026 we will be faced with either not subsidizing DCCs or continuing the 100 percent policy, which if I did my math right means a one percent tax increase.”

Dear. Matt Dell said the program was another example of Victoria going above and beyond to help address its housing shortage.

“If other municipalities in the Capital Regional District had moved to build non-profit housing, I don’t know if there would have been as much pressure on us to drain the fund,” he said. “While I am proud to do this, it is still frustrating for me that this is a CRD policy. “Everyone should do this, not just us.”

Grant applications will be reviewed and approved by municipal staff in order to meet the requirements of being a non-profit and non-governmental organization that will be the long-term operator of housing projects.

If approved, the grants will be applied as a credit towards the total development cost fee payable to the municipality when the building permit is issued.

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