Cost of Metro Vancouver rental housing projects nearly doubles before construction begins
Justin McElroy | CBC News | Posted: January 10, 2024 1:00 PM | Last Updated: January 10
Both projects were approved in 2020 with construction scheduled to begin this year
The cost of two affordable rental developments to be owned and operated by the Metro Vancouver Regional District has nearly doubled even before construction has even begun.
Metro Vancouver's Housing Committee will vote Friday to approve the updated budget for two projects in Burnaby: the Connection, a 174-unit redevelopment on a current townhouse site operated by Metro Vancouver, and the Steller, a 122-unit development on vacant land.
According to committee agenda documents, the budget for the Connection has gone from $64 million to $121 million, while the budget for the Steller has gone from $46 to $94 million.
Both projects were approved in 2020 with construction scheduled to begin this year.
"It is challenging to be able to make these numbers work, but I think that's what we're facing right now," said committee chair and Maple Ridge Mayor Dan Ruimy.
"The industry has seen a tremendous change [since] this was approved."
Metro Vancouver said escalating construction costs, an increased parking area, and the expansion of a child-care facility were among the reasons for the rise in costs.
When completed, the buildings will add to Metro Vancouver's portfolio of more than 3,400 rental homes on 49 sites. The additional funding will be covered by Metro Vancouver reserves, mortgages, construction finances and additional grant funding, according to committee agenda documents.
Up, up, up
Stephanie Allen, a development strategist and former vice-president of B.C. Housing, said she's not surprised by the increase.
"Materials costs have gone up, labour costs have gone up, shipping costs have gone up, storage costs have gone up," Allen said.
"If these projects were priced back before the pandemic, [Metro Vancouver] probably predicted a reasonable escalation and didn't expect the escalation that we've actually witnessed."
Allen said that on first impression the projects appeared to provide good value and had a well-rounded mix of amenities.
"The units are weighted towards family housing, which is desperately needed in the affordable housing sector," she said.
"Urban agriculture, a large child-care space ... scooter parking for seniors. I mean, these are all amazing things that we want to see public dollars get invested in."
At the same time, she said governments could be much more transparent in explaining cost overruns.
"I think it would go a long way to building community trust," she said.
"I think it would be great for people to be able to see how all these costs are allocated … It allows us space to not only trust what's happening, but for people to propose and seek ways to innovate."
Burnaby creates review panel
The City of Burnaby is also facing large cost increases on projects, says Mayor Mike Hurley.
"Some of the costs that are coming in are skyrocketing so fast that it's hard to keep up with it," Hurley said.
Last month, Burnaby council passed a motion to create an advisory panel to review cost estimates on major infrastructure projects.
It came after estimates for a series of new pools, community centres and an RCMP detachment came in significantly over budget, potentially adding hundreds of millions of dollars to the city's capital plan in the future.
"The intention is still to go through with the projects that we have in line," said Hurley.
"We just want to be very, very sure that we are getting the best value and people aren't taking advantage of the situation."