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Sunshine Coast Regional District Development Cost ChargesJuly 3, 2014 Infrastructure Services Committee
Bob Twerdoff
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Background• Opus DaytonKnight hired to prepare a
Comprehensive Regional Water Plan
• Plan was adopted by the Infrastructure Services Committee in June 2013
• Opus DaytonKnight prepared a corresponding Business Plan and Rates Development report which was adopted in December 2013
• Remaining work is the preparation of a revised DCC Bylaw to incorporate recommendations in these reports
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How do local governments pay for new infrastructure?
• Negotiate Development Agreements during rezoning process
• Require Servicing Agreements for frontage improvements during subdivision or building permit process
• Assess DCCs• Apply for grants, use Gas Tax Revenue• Use property tax revenue• Use contribution to capital in water user rates
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What are DCCs?• Used to pay for capital projects needed to support
growth – only projects which support growth are included
• Based on the ‘user pay’ principle
• Operations and maintenance and projects only benefiting existing customers are not included
• Not just another tax – DCCs based on need, not on comparisons to other local governments
• Development Cost Charge Best Practices Guide
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Why are DCCs important?• Used to fund infrastructure associated with growth
• Facilitates development by providing a method to fund capital works
• DCCs allow development to proceed by sharing the burden and pooling revenues (statutory reserves)
• Large infrastructure projects cannot be funded by a single developer (e.g. Chapman Water Treatment Plant)
• Without adequate DCCs taxpayers pay for future needs or infrastructure projects are deferred
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How do existing rate payers contribute?
• Parcel taxes• Utility rates – contribution towards capital• Rate payer’s portion of DCC projects ~ 37%• Municipal Assist Factor – 1%
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Do DCCs affect housing affordability?
• Housing prices based on market values – not costs
• Increased costs (DCCs, building materials, financing, etc.) can impact Developer’s profit margin or willingness to pay high raw land costs
• Draft bylaw provides incentive to build smaller units and mixed use projects – townhouse and apartment DCCs based on $/square metre rather than per unit consistent with the Regional Sustainability Plan
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When were DCCs last reviewed?
• First comprehensive review of DCCs since 1997 (17 years)
• Significant time between DCC reviews usually creates large spikes in DCC rates
• Recommend review every 5 years, ideally minor reviews with each Capital Plan – provides stability in the real estate market
• First time the District has published list of DCC projects and provided detail on how DCCs were derived – useful communication tool
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What are existing DCCs?
Land Use Unit Water
Residential Lot $1,650 to $3,000
Non-Residential Building Unit
$1,650 to $3,000
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What are the objectives of DCC Review?
• Update DCC capital projects list to ensure future growth needs can be met
• Consider increases in construction costs• Review growth projections to ensure appropriate
amount of DCCs are collected• Ensure consistency with OCPs and Financial Plan• Combine three DCC Bylaws • Incentive to construct more sustainable smaller
units• Clarify exemptions and DCC credits/rebates
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Why prepare a DCC Background Report?
• Provide SCRD Board, developers and residents with information used to prepare DCC rates and how they are calculated – important part of a transparent process
• Supports Ministry of Community Services and Rural Development approval process – required prior to bylaw adoption
• Used as a communication tool• Provides opportunity for constructive feedback• Used by staff when assessing DCCs
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What are the proposed changes?
• Administrative» Added definitions » Changed how DCCs are assessed to reflect
current practices» Separate multi-family rates based on unit size» Credit for existing serviced lots» Exemptions are clarified» Added a 6 month grace period
• Projects» Incorporate recommendations in Comprehensive
Regional Water Plan• Rates
» Reflect current capital needs and associated growth projections
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What type of projects are DCC projects?
• Only infrastructure needed to support growth• Projects which benefit existing customers are
charged a portion (37%)• Projects which benefit a single land owner are
avoided• Infrastructure renewal, operating and maintenance
costs are not included• Infrastructure upgrades which do not benefit
growth are not included
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What are the Major DCC Projects?
• Chapman Water Treatment Expansion• Transmission main upgrades• Fire protection upgrades• Distribution main upgrades• Intensive demand management programs
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How are DCCs Calculated?• Total DCC project costs
» Minus portion assigned to existing residents (37%)
» Minus existing DCC reserves (~ $800,000)» Minus Municipal Assist Factor (1%)
• Divide by growth
Capital $----------Growth
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What are the proposed DCC rates?
Regional Eastbourne Egmont/Cove Cay
Single Family/lot $3,632 $5,951 $5,684
Townhouse/sq.m.Apartment/sq.m.
$20.10$30.42
$32.93$49.84
$31.45$47.60
Congregate Care/bed $1,525 $2,499 $2,387
Commercial/sq.m. $10.90 $17.85 $17.05
Industrial/sq.m. $10.90 $17.85 $17.05
Institutional/sq.m. $10.90 $17.85 $17.05
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How does it compare to existing rates?
Proposed Regional DCCs Existing DCCs % Increase
since 1997
Single Family/lot $3,632 $1,650 to $3,000 1.13% to 4.75%
Townhouse/sq.m.Apartment/sq.m.
$20.10$30.42
$1,650 to $3,000$1,650 to $3,000
0% to 3.60%(1.20%) to 2.30%
Congregate Care/bed $1,525 $1,650 to $3,000 (3.90%) to
(0.50%)
Commercial/sq.m. $10.90 $3.30 to $6.00 3.50% to 7.30%
Industrial/sq.m. $10.90 $3.30 to $6.00 3.50% to 7.30%
Institutional/sq.m. $10.90 $3.30 to $6.00 3.50% to 7.30%
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How can the impact be reduced?
• Short Term» Grace Period – 6 months following bylaw
adoption» Apply for building permits before new DCCs
come into effect» Incentive to construct multi-family units as rates
are proportionately lower• Long Term
» Lower raw land costs
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What are the impacts of lower (old) rates?
• Deferred infrastructure projects – Chapman Water Treatment Plant at capacity
• Greater share paid by existing rate payers• Developments postponed due to lack of capacity• Strong reliance on grant funding• DCC reserves not keeping up with costs/needs
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What are the next steps?• Modify draft DCC Background Report, if necessary• Commence public consultation
» Place draft report on website» Initiate Engagement Plan: July 10 through
September 12
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Questions/Comments