A $144 Million crack in the Township of Langley's Financial Strategy
Trading Inefficient Buildings for Shaky Development Fees
Background
In September we published our bombshell article Can You Pay Yesterday’s Bills with ACCs? where we explored how, due to the wording of the Province’s Amenity Cost Charges (ACC) provision, Development Fees charged to developers using this “ACC” framework cannot be used to pay back existing debts.
This is a problem, because the Township has accumulated $144 Million in debt building two key projects: Smith Athletic Park and the LEC Ice & Dry Arenas Facility.
The original strategy by the current administration, since being elected in 2022, was to use another kind of Development Fee that offers more flexibility, “Community Amenity Contributions.” but it’s important to understand, despite other municipalities using CACs, that these are unregulated and unlegislated, and each city’s own implementation varies wildly. Most “safe” implementations make them as voluntary as possible to avoid getting into hot water, as municipalities are not permitted to impose mandatory payment schemes outside the scope of the Local Government Act and Community Charter (or their own Charter).
This became a problem when the Supreme Court of BC decided that the Township’s CAC program crossed the line into becoming mandatory, and ruled that the Township’s Community Amenity Contributions (CACs) program wasn’t legally enforceable.
This left the Township scrambling to adopt an interim CAC policy that tried to address the court’s concerns, and staff accelerated the implementation of the official alternative to CACs, ACCs.
In our previous article we discussed how this ACC Bylaw proposal allocated money towards the debt on already started projects; something that the legislation does not permit.
ACC Bylaw 2.0
However, the big news this week is that a new revision of the ACC report and proposed bylaw was included in this Monday’s Council Agenda:
Specific feedback has been received advising that borrowed funds are not to be included in an ACC Bylaw for projects under construction prior to adoption. The ACC Bylaw has been revised to remove borrowed funds as well as grant funds from the amenity costs. Proposed revisions are presented with the intent of maintaining the per unit rates as initially proposed at first reading.
The revision removes the existing debt portions of each project from the ACC bylaw, a total of $144 Million.
So the question is, how is this $144 Million of debt going to be paid?
According to the report in there are building applications/projects underway, and since they are in-stream they will follow the old CAC framework. The report states there is approximately $165M in in-stream potential revenue.
A New Problem
There are several significant problems with this approach. First, and most fundamentally, the entire $165 million in “potential revenue” from in-stream CAC collections depends on voluntary negotiations. The court ruling that invalidated the Township’s CAC program was clear that mandatory CAC collection crossed the line into illegality. The interim policy can only “negotiate on a voluntary basis,” which means developers aren’t legally required to pay.
In practice, most developers will likely cooperate to maintain good municipal relationships and secure future approvals but cooperation doesn’t mean paying the amounts the Township needs.
We’re already seeing this play out: For a 39-storey tower proposal near Carvolth Exchange the developer offered a $5.1 million voluntary CAC, about half of the $10.2 million that would have been calculated under the previous policy. The developer simply offered less, and under the voluntary framework and the Township has limited leverage to demand more. If this pattern repeats across the 50 in-stream projects, that $165 million in projected revenue could easily become $80 million or less.
For now, council has delayed making a decision on the tower. However, if delays on this specific project continue, while other similar projects go ahead, then this could potentially lead to further legal complications; the developer may have grounds to take legal action if it becomes clear they are being singled-out for non-compliance on what is supposed to be a voluntary payment scheme. This highlights just how tenuous it is to become dependent on a source of revenue that, for legal reasons, has to be treated as voluntary.
More concerning is what happens if developers decide the economics don’t work at all. Rather than refusing CACs outright, they might simply pause projects indefinitely. Property sits, applications remain in limbo, and the Township collects nothing. Developers could wait for market conditions to improve, hope for a more favorable council in future, or even launch their own legal challenges to the interim CAC policy. Every month of delay means the debt gap remains unfunded while interest continues to accrue. The Township’s entire financial strategy depends on in-stream projects moving forward quickly and developers voluntarily writing substantial cheques. That’s not a position of strength, it’s a gamble that leaves taxpayers exposed if anything goes wrong with the development pipeline or the local real estate market.
The StepCode Discount
This Monday, council is also considering amendments to the Building Bylaw that would relax energy efficiency requirements for in-stream developments. But here’s where it gets concerning: the proposed bylaw appears to contradict what council actually agreed to at the November 3rd meeting (minutes in November 17th agenda package):
4. Review of Building Energy Requirements
(Energy Step Code 4 and EL-3)
[…]That Item E.4 be referred to staff to prepare amendments to the Township of Langley Building Bylaw and related processes for Council’s consideration at a future meeting of Council within the calendar year of 2025, to address the following:
[…]
2. Transitional provisions for in-stream applications greater than or equal to residential densities of 15 UPA submitted prior to April 1, 2025, to have the option to proceed under the Step Code and Energy Labeling (EL) requirements in effect at the time of the rezoning application, subject to current Provincial implementation timelines; and
[…]
CARRIED
Council’s referral motion specifically directed staff to prepare transitional provisions allowing in-stream applications “to have the option to proceed under the Step Code and Energy Labelling (EL) requirements in effect at the time of the rezoning application.” But the bylaw as written allows them to proceed under “Energy Step Code and Zero Carbon Step Code requirements as per the current BC Building Code.”
Should council approve the referral for staff to include in-stream protection for Part 9, multifamily projects (which allows projects that have Development Permits or Rezoning applications submitted prior to April 1 2025), to meet the current BC Building Code minimum requirements, 50 projects, constituting 3,441 homes, may be permitted to meet Step 3 and EL-1 of the BC Building Code, and not Step 4 and EL-3 per the current Township of Langley Bylaw.
This distinction matters enormously. From December 2023 to April 2025, the Township required Step Code 4 and EL-2. If a project applied during that period, the requirements “in effect at the time of rezoning application” would be Step 4/EL-2. But the bylaw as written lets those same projects use the current BC Building Code minimums of Step 3 and EL-1 instead. This allows any application before April 2025 to be built under Step 3/EL-1, giving relief that goes beyond what council agreed to before.
The desperation is evident. The Township needs approximately $165 million in CAC revenue from in-stream projects to cover the $144 million debt hole. These projects represent the only potential funding source, but only if developers voluntarily cooperate. So staff are proposing council agree to maximum regulatory relief, even beyond what council agreed to in November, trading away energy efficiency standards and apparently ignoring council’s specific direction in order to keep those projects moving and hopefully paying CACs.
And finally, many developers are already comfortably in compliance with Step 4/EL-3 and see no reason to roll-back. The minimum StepCode required is set to increase at the Provincial level within the next few years. The general public values and appreciates energy efficient buildings, they are a key selling point for some. This trade-off may not even deliver meaningful results or even work to incentivize CAC compliance.
Concerned?
If you are a Township resident concerned about:
Energy efficiency building requirements being gutted.
Vast amount of debt being accrued with no reliable plan to repay it.
The Township being completely dependent on the development industry to meet it’s financial obligations.
We urge you to write to mayor and council at mayorcouncil@tol.ca
Together we can find a better path towards building a lasting, financially sustainable, resilient community.
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