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 and roads 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.
Calculating and applying development cost charges
Development cost charges are calculated separately for each category of infrastructure: water, sewer, drainage, parks, and roads.
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 and roads DCC reserve funds. These reserve funds 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 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.
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.