Surge in new home building anticipates DCC hikes

Brandon is seeing a surge in residential construction as builders enter the final stretch before development cost charges are expected to rise significantly.

The City of Brandon issued permits for 75 per cent more dwelling units last year compared to the year before, city reports show.

Ryan Nickel, acting general manager of development services, and three development professionals told the Sun on Thursday that there is a connection between this surge and upcoming DCC increases.

“I do think it makes sense that … when fees go up, we do see a little bit of a rush to get permits to pay lower fees or take advantage of former rules,” Nickel said.

“So I do think there’s a little bit of that going on. I would agree with that.”

The city issued permits for 411 residential dwelling units last year, compared to the prior four years, which saw permits issued for 235, 193, 259 and 162 units, respectively.

Evan Keller of Keller Developments and Joel Cardinal-Schultz of Concept Homes both said they expedited projects last year to get permits in before impending cost increases, and Shawn Wood of the Construction Association of Rural Manitoba said the same has been true in the broader Brandon development market.

Developers expect DCC rates to more than double for high-density residential projects in emerging areas by as early as the end of this year.

The city’s new DCC bylaws were approved last year by council to help recover the cost of services like water and wastewater infrastructure. The most significant changes in DCC rates still require final approval by the Public Utilities Board.

Cardinal-Schultz said the expected increases definitely impacted the planning around his custom-home development business.

“I would say that we had a rush last year to get in as many permits as possible before the development charge increases, for sure,” Cardinal-Schultz told the Sun in an email.

“The houses that we had signed contracts for, we did what we could to get them ready for the permit stage to save our clients money where we could.”

Some of those projects are starting construction now — but aside from that, the workload has been fairly consistent for the past four years, he said.

Keller, president of Keller Developments, told the Sun he believes the biggest driver behind Brandon’s permit surge last year is the upcoming DCC increases.

“I think you’ve got a lot of developers getting ahead of that. That is probably the largest driver,” Keller said.

Keller’s recent project, which will total 165 units in 13 buildings at 1501 Braecrest Dr., broke ground in November, getting in “under the wire,” he said.

He said he was able to take advantage of the current DCC rates as well as lower interest rates — and he believes he’s not the only builder in Brandon to work within this window.

“A number of these projects that you’re seeing being built got in under the wire.”

According to the Keller, the Brandon market is likely to look good for 24 months before a major slowdown in development.

“I think once this burst is done, you’re going to see things come to a screaming halt,” he said.

“All the permit fees and the starts, all of that’s going to look good on paper for the next 24 months, and then I think you’ll start to see the effects of that play out.”

Keller argued that the city needs to do more to incentivize developers. Both he and Wood, the CARM president, said developers in Brandon are looking elsewhere — to rural municipalities, Saskatchewan and Neepawa — for work that offers better rates.

Mayor Jeff Fawcett said the city has made a strong effort to be flexible with policies to support developers, but that the big role of council is to make the city desirable. If the city is attractive, demand for housing will continue to drive work for developers, he said.

“Building a market, and a place that people want to live, that’s our role,” Fawcett said. “I think the city is doing a good job of building a community that people want to live in.”

The city can only go so far in supporting development, he said.

“The bottom line is, we need to be paying for the water and wastewater, and we need to pay for it because we are adding people, because we are building new places.”

While Nickel agreed there is a link between DCCs and the increase in permits, he said the municipality is not the main driver of housing development — interest rates are more important, he said.

» cmcdowell@brandonsun.com