Development Finance

Urban expansion and development creates demands for the construction of new infrastructure, and the expansion of existing local services. Expansion and development, when informed by planning best practices, can benefit communities by protecting green space and improving economies.
 

The accommodation of growth is not a cost-free exercise and several financing tools have been developed for local governments to off-set the cost of new urban development. Under the Local Government Act and the Community Charter local governments have flexibility in choosing how to finance the development servicing needs of communities.
 

Financing infrastructure for new development is an important local government responsibility since local governments are not always able to directly absorb growth-related service costs. Therefore, the development industry is often asked by local governments to assist with the cost of funding service needs that are created by growth.
 

A range of development finance tools has been created to enable local governments to collect from the development industry a portion of growth-related expenditures. They include:

• development cost charges: fees that local governments may chose to collect from new development to help pay the cost of off-site infrastructure services. Specifically, DCC's may be used to offset the costs associated with the provision, alteration or expansion of: roads, sewers, drainage and water systems. They can also be used to collect money to acquire park land. DCC's are a one-time charge paid by developers at the time of subdivision or acquiring a building permit.
  • Development Cost Charge Best Practices
    Guide (4.7 MG)
    
  • Development Cost Charge Guide for Elected
    Officials (2.0 MG)
• parkland acquisition best practices: any local government currently charging Parkland DCCs or using 5% dedication/cash-in-lieu should consider the best practices described in the guide;
• latecomer charges: amounts charged to property owners who benefit from infrastructure that was constructed and paid for by a developer;
  • Considerations for Extending Existing Latecomer Agreements
• development works agreement: an agreement between a local government and a developer settting out which of them will provide, construct, alter or expand infrastructure related to the development;
• DCC credits and rebates
• density bonusing: a system of exchange between a local government and a developer, which allows for a variation in existing zoning requirements in exchange for provision of certain amenities or housing that benefit the community. Generally this means that a developer is allowed to build more floor area, from which they derive more income, in return for provision of the amenity or housing.
  • Density Bonusing: A Guide and Model Bylaw
• comprehensive development agreements: agreements between a local government and a developer under which the developer, in exchange for development approval, agrees to provide specific on-site or off-site works and/or amenities for the broader community. The works and amenities provided through the agreement are beyond the services that would be secured through development works agreements, development cost charges and other finance tools.
  • Development Finance Choices Guide (580 KB)
• public-private partnerships: arrangements between local government and private sector entities for the purpose of providing public infrastructure, community facilities and related services. Such partnerships are characterized by the sharing of investment, risk, responsibility and reward between the partners. The reasons for establishing such partnerships vary but generally involve the financing, design, construction, operation and maintenance of public infrastructure and services.
  • Public Private Partnerships: A Guide for Local Government (361 KB)

Further information on these subjects can be found in the Development Finance Choices Guide (580 KB). Please note the Development Finance Choices Guide (580 KB) is presently being updated. This update will include the new Parkland Acquisition Best
Practices (4.7 MB) material and new information on Latecomer Connection Agreements.
 

In addition, in order to finance the cost of growth from the community at large, local governments can use:

• local area services;
• user fees and charges;
• short-term borrowing; and
• long-term borrowing.