City council is being asked to approve a 40 per cent increase in the development cost charges it levies against all new housing.

The proposal was presented Monday night by city planning manager Mike Gau and other senior staff.

Currently, the city charges $2,500 for every single-family home in urban neighbourhoods. The proposed boost would raise the fee to $3,500.

The development charge for unserviced country residential homes is $1,250 currently. It would climb to $1,700.

There's been no hike in the charges since they were implemented in 1995.

Staff are also asking council to approve an automatic two per cent hike in 2013, 2014 and 2015 to keep pace with inflation.

Gau told council development cost charges help cover costs associated with growth.

"We have done a considerable amount of research and we have found Whitehorse development cost charges are well below the average across the country,” he said.

Council is scheduled to vote Monday on first and second readings of the proposed bylaw, with third and final reading scheduled for March 12, following a public hearing March 3. If approved, the new rates would come into effect July 1.

While the actual cost of building the new Whistle Bend subdivision – water, sewer, sidewalks, pavement – is recovered from the sale of lots, there are other associated costs which are not covered, Gau explained.

He told council it's estimated the city will need to spend $2.3 million on a new vactor truck, transit bus, grader and other heavy equipment because of urban expansion related to Whistle Bend.

The Canadian average for development cost charges on a single-family urban lot is $13,000, council was told.

Council was also told there's been nothing added to the original development cost charges to offset the increase in the cost of living and construction costs in the last 17 years.

Coun. Ranj Pillai pointed out the development charges collected from the first two phases Whistle Bend will not cover the required investment in new equipment.

Robert Fendrick, the director of administrative services, told council the city's development charge account – currently sitting at $3.5 million – has not been shrinking but nor has it been growing at an appropriate rate.

"What we do not want to do is fall behind the eight ball, which would require a drastic adjustment in the future,” he told council.

Staff emphasized that if the money required to keep up with the challenges of growth does not come from development cost charges, it needs to come from the general tax base.

Other increases would see the charge for a living suite in a fully serviced single-family house rise from $1,500 to $2,100; a living suite in an unserviced country residential home would rise from $750 to $1,000; the charge for a duplex would go from $4,000 to $5,600; and the cost for apartments in multi-residential developments would jump from $1,500 to $2,100.

Using the known number and types of lots for Whistle Bend phases one and two, and an estimate of the density in the 18 multi-family developments, the city would collect approximately $1.5 million under the current rate, but about $2 million with the new rate.

The report to council indicates while there is no development cost charge applied in Yellowknife, Surrey, B.C. charges just over $40,000 per house, while Edmonton is sitting on the national average of $13,500.

Vernon, B.C. collects more than $16,000 per house while Kamloops, B.C. levies a fee of almost $9,000.