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Metro Vancouver is scrambling to explain its plan for increased development fees, after Ottawa abruptly paused a plan to give millions of dollars to Vancouver-area cities for affordable housing because Housing Minister Sean Fraser said he was concerned about the fees’ impact.

The minister was due to announce $43-million for Burnaby and about $95-million for Surrey on Tuesday from the federal government’s Housing Accelerator Fund. But he temporarily cancelled the news conference, saying he wanted to get more information about the fees.

“The minister was concerned that the Housing Accelerator Fund was just going to go to Metro Vancouver’s [development-cost charge],” acknowledged Surrey Mayor Brenda Locke.

She is confident the money will come through when the minister fully understands that the fees won’t be charged at all for the affordable housing the government is trying to spur.

But this major bump is guaranteed to be a shock for many cities because, as the federal government makes strict demands on municipalities across the country to change their policies to qualify for the federal dollars in the accelerator fund, it’s been left up to them to figure out how to fund the infrastructure that will be needed to go along with it.

Metro Vancouver is considering fee increases for new developments that would triple current development-cost charges. They could add as much as $14,600 more in costs for every apartment and up to $24,000 at the end of the three-year phase-in for each house as a way of paying for a $35-billion upgrade to basic services over the next 30 years.

An e-mail sent to The Globe and Mail late Wednesday by Metro Vancouver spokesperson Don Bradley noted that its board had already decided in the spring to waive all development charges for non-profits, laneway houses and secondary suites and to re-examine its traditional approach that “growth pays for growth.”

That’s an approach that many cities have adopted in the past couple of decades, but it has meant that newcomers pay a disproportionate share of money needed for new infrastructure, through increased costs for buying or renting a home.

That approach is now being questioned, even though some politicians still firmly believe that the currently housed taxpayers are already stressed and can’t take on huge new tax increases to pay for growth.

“The question of who pays and what is fair is always a topic. But it’s unfair to go back to the same taxpayers who pay over and over again for infrastructure” said Burnaby Mayor Mike Hurley.

“Billions of dollars will need to be spent to keep up with growth and the immigration figures being proposed by the federal government,” the mayor wrote in an e-mail to The Globe.

Metro Vancouver planners had proposed the new fees as a way of avoiding big tax increases for existing homeowners across the region.

Burnaby and Surrey were expected to be the second and third cities to get money from the fund after $74-million was announced for London, Ont., on Sept. 12. The fund money goes directly to cities to help them do whatever it takes to speed up housing production and help create more affordability.

But Mr. Fraser tweeted out at 1:48 p.m. Tuesday, in advance of a scheduled 3:45 p.m. announcement that: “In light of a proposed development-cost-charge increase by Metro Van, I’ve postponed today’s announcement of Housing Accelerator Fund deals with 2 cities who are members of the Metro Van board. We’re studying the impacts of this proposal and I hope to have more to say soon.”

The federal housing department had okayed Victoria for accelerator money as well, and there has been no announcement of any change in that.

It has also sent letters to the cities of Halifax, Calgary, Charlottetown and Kitchener, Ont., saying they needed to improve their housing policies to allow for more density if they wanted to get accelerator money they had applied for.

Halifax council voted Tuesday to comply with three of the Mr. Fraser’s four conditions, but balked at increasing allowable heights for new buildings, saying it would try to find another way besides going higher to achieve the density he asked for.

The federal government’s efforts are part of what is becoming a massive national, provincial and municipal effort to increase housing construction, as Canadian home sale prices and rents soar to record-shattering levels. The Housing Accelerator Fund has a goal of creating 100,000 new “middle-class homes” by 2024-2025.

Mr. Fraser’s actions indicate that the federal government is not going to respond well if it feels like the money it is currently pouring into housing, which includes a recent major announcement that it will no longer charge the goods and services tax for new-built rental apartments, is simply going to be soaked up by cities charging new fees.

But the question of how to provide the services needed for all those new homes has started to emerge amid those efforts.

Surrey’s Ms. Locke said her city is ready and willing to build a lot, but that it is struggling, like many, to make sure all the infrastructure is there for new residents, including not just sewer and water service, but hospitals, schools and transit.

British Columbia, which is on its own mission to increase and speed up housing construction, set out its list of building targets for 10 cities on Monday, saying that will result in 60,000 additional homes.

While some critics have said that the targets are so modest that it will mean almost no improvement, at least one city is still concerned about how to meet them.

Oak Bay noted in a 10-page letter that it is already having trouble figuring out how to pay for $280-million of needed replacements for aging utilities, let alone how to expand those utilities for a lot of new residents.

However, one of B.C.’s most prominent housing analysts said the long-standing policy of requiring newcomers to pay the costs of growth, not existing taxpayers, should be re-examined.

“Until we resolve that issue, we’re going to be stuck,” said Jill Atkey, chief executive officer of the B.C. Non-Profit Housing Association. “It could be that we need to have a much broader conversation with the federal government about funding for infrastructure.”

As well, she said, cities may need to start asking themselves if it’s really fair, or likely to produce affordable housing, if they stick to their policy that a disproportionate share of costs for new services should be paid for by newcomers.

“I’m not sure why we have this expectation that new residents have to pay for the swimming pool or the community centre by themselves,” she said.

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