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

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 Developers perspective on DCCs –Steve Kurrein, CHBABC

The Fundamentals of DCCs Murray Dinwoodie, P.Eng. City of Surrey

What are DCCs ? Authority Sections 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 ? Its 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 (4 th 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:

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$85 + $10 + $5 Total DCC Developer Share City Assist = + City Share Exist. Dev +

If Developer Share Lowered $100 = $85 +$10 + $5$5 25% $100 = $64 +$10 + $26 50% $100 = $43 +$10 + $47 Reduction % Total DCC Developer Share City Assist = + 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 Kurrein Canadian Home Builders Association BC