Development cost charges

Municipalities and regional districts levy development cost charges on new development to pay for new or expanded infrastructure such as sewer, water, drainage, parks, roads, solid waste and recycling facilities, fire protection facilities, and police facilities necessary to adequately service the demands of that new development.

Establishing development cost charges

Development cost charges are established by bylaw with the approval of the Inspector of Municipalities. The development cost charge bylaw may establish charges over the entire local government or just a portion of it. Updating development cost charge bylaw every five years will generally keep the estimates of new development and infrastructure costs current.

• Learn more about provincial bylaw approval

Calculating and applying development cost charges

Development cost charges are calculated separately for each category of infrastructure: water, sewer, drainage, parks, roads, solid waste and recycling facilities, fire protection facilities, and police facilities.

The amount of a development cost charge for each infrastructure category is determined by dividing the expected infrastructure costs (required to service new development over the development cost charge timeframe) by number of new development units that will be served.

Separate development cost charges may be established for different classes of development, for example, residential, commercial, industrial and institutional developments. Charges may then be collected from developers either at the time of subdivision approval or at the issuance of a building permit.

Development cost charge reserve funds

Once levied and collected, the development cost charges must be deposited into separate water, sewer, drainage, parks , roads, solid waste and recycling facilities, fire protection facilities, and police facilities DCC reserve funds, respectively. These reserve funds must be established by bylaw and may only be used for capital costs relating to an approved development cost charge bylaw. Any interest earned from investments in the reserve funds must be used for eligible development cost charge projects.

Exemptions, waivers and reductions

All development within the geographic area of a development cost charge bylaw is liable for the charge unless exempted by statute. Such exemptions include places of worship and certain types of residential developments.

• Local Government Act, section 561 - Circumstances in which development cost charges are not payable

Local governments may also choose to waive or reduce charges for certain types of development, including not-for-profit rental housing, supportive living housing and for-profit affordable rental housing.

• Learn more about development cost charge exemptions

Allowable interest

It may be necessary for a local government to borrow in order to help finance an eligible development cost charge infrastructure project. In certain circumstances, the interest cost of necessary borrowing may be incorporated into the development cost charges.

• Learn more about allowable development cost charge interest requirement

Annual Report

In accordance with Section 569 of the Local Government Act, local governments collecting development cost charges must prepare a report of development cost charges received and reserve fund balances. The report must include opening and closing balances of each category for which development cost charges were collected, the amount of development cost charges received and expended, and any waivers and reductions, for the previous year. The report must be made available for public viewing by June 30 each year and be accessible for the following year.

• Local Government Act, section 569 - Annual development cost charges report