Union of B.C. Municipalities Clinic on Understanding Development Cost Charges September 24, 2003 1060658.

Union of B.C. Municipalities

Clinic on

Understanding Development Cost Charges

September 24, 2003

1060658

Agenda

• Marvin Hunt, Chair – Councillor, City of Surrey

• The fundamentals of DCCs

– Murray Dinwoodie, P.Eng., City of Surrey

• What to think about when considering DCCs

– Chuck Gale, P.Eng., City of Richmond

• Developer’s perspective on DCCs

– Steve Kurrein, CHBABC

The Fundamentals of DCCs

Murray Dinwoodie, P.Eng.City of Surrey

What are DCCs ?

• AuthoritySections 932 to 937 of Local Government Act

• Funds provide infrastructure and parks in support of new development

• DCC amounts vary directly with the type and size of the development

Why DCCs ?

• It’s a way of equitably sharing between developments, the cost of major infrastructure and park land in support of new development … (a sort of development co-op)

• Before DCCs big developments paid for infrastructure and small developments got a free ride

Use of DCCs

• For major services:(Roads, Sewer, Water, Drainage)

• For Parkland Acquisition and Park Improvements

• A separate DCC rate is charged for each service

DCC No-Nos

• Can not be collected for local services:(Streets, Watermains, Sewers, Storm drains)

• Can not be used to pay for upgrades or replacement of services related to existing development

How are DCCs calculated?

$$$ Cost of Servicing

No. of Units=DCC rate

Why DCCs Vary

• DCCs are based on the impact a development has on services

• Different types of Development have different impacts … different DCCs

• Rates are based on the demand each type of development places on the specific DCC service

• DCCs may vary by geographic area

Why DCC Rates Vary

• Different types of development create different impacts … Example:– Single family homes have 3.2 occupants.– Townhouses have 2.4 occupants– Apartments have 1.6 occupants

• Single family homes create higher service demand because they typically house more people

DCC Simplified Example:

• Projected Development:– 30 Single Family lots– 40 Townhouse units– 60 Apartment units

• Local Sewers– Paid by developers

• Cost of Trunk Sewer– Paid by DCCs =

$90,000

Trunk

Local

Apartments

Single Family Townhouses

Example DCC Calculation:• Development Potential:

– 30 Single Family units– 40 Townhouses– 60 Apartments

• Equivalent development impact:– 30 S. F. units– 40 Townhouses x 0.75 = 30 S.F. units– 60 Apartments x 0.50 = 30 S.F. units

• Total Equivalent Impact = 90 S.F. units

Example DCC Calculation:

• Cost of Trunk Sewer = $90,000

• DCC per S.F. unit = $90,000/90 units = $1000 per S.F. unit

• DCC rates:– S.F. dwelling unit = $1000 per unit– Townhouse unit = $1000 x 0.75 = $750 per unit– Apartment unit = $1000 x 0.50 = $500 per unit

Example DCC Calculation:

• DCCs Collected:– Single Family = 30 x $1000 = $30,000– Townhouses = 40 x $750 = $30,000– Apartments = 60 x $500 = $30,000

• Total DCCs collected at build out = $90,000

Implementation … Staff• Prepare land use plans• Estimate development• Prepare servicing plans• Estimate cost of servicing plans• Establish impacts of development on services• Calculate DCC rates• Report to Council … Public input• Approval process

Implementation … Council

• Consider staff report

• Authorize public process

• Gives three readings to DCC By-law

• Authorizes by-laws to be forwarded to

Ministry for approval

Implementation … Ministry

• Ministry reviews by-law

• Inspector of Municipalities approves

bylaw

• Council adopts by-laws (4th reading)

• DCCS become payable

Grace Period

• Time after by-law adoption for “in-stream” developments to complete without DCC payments

• 12 months required by legislation for subdivisions

• No requirement for building permits

Dedicated Funding (Trust Account)

• A source of revenue for the annual capital budget

• Funds must be used for constructing projects identified in DCC by-law

• Funds must be used for the purposes they were collected

Best Practices Guide

• Extensive information for Local Governments

• Addresses policy and implementation

• Available on the MCAWS web site:

www.gov.bc.ca/mcaws/lgd/advice_index.htm

What to think about when Considering DCCs

Chuck Gale, P.Eng., City of Richmond

The Tool Box

• DCCs one of many funding options– Latecomers agreements (939)– Front-ender Agreements (933)– Development Works Agreements

(937.1)– DCC credits (933.8(a)) – Borrowing– Capital Plan

• When to use DCCs

DCCs Imposed by Bylaw

• Bylaw approval process should:– encourage open public consultation– Involve Landowners– Involve “Development Community”

and other stakeholders

• Bylaw should be reviewed regularly– Set out review schedule & process

• Ensure DCC charges remain current

Considerations

• Maintain a current OCP

• Maintain a current 10 year capital

plan

• Establishing a time frame for growth

• Allocate costs to existing and new

development

Considerations

• Allocate costs to different development

types

• Determine the municipal “assist”

• Adjust DCC rates annually

• Impact on development

– Deterrence & Influence on growth location

How DCCs Work an example

$100 = $85 + $10 + $5

TotalDCC

DeveloperShare

CityAssist= + City Share

Exist. Dev +

If Developer Share Lowered

$100 = $85 +$10 + $5

25% $100 = $64 + $10 + $26

50% $100 = $43 + $10 + $47

Reduction%

TotalDCC

DeveloperShare

CityAssist= +

City Share Exist. Dev +

Closing Comments

• DCCs are an important revenue source to consider in support of new development

• DCCs are NOT taxes … (co-op model)

• DCCs are one of a # of funding tools(refer to Development Finance Choices Guide)

Development Industry Perspective

Steve KurreinCanadian Home Builders Association

BC