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Development Cost Charges

 

Urban expansion and development often lead directly to an increase in the demand for sewer, water, drainage, parks and roads.
 

Development cost charges (DCC's) are monies that municipalities and regional districts collect from land developers to offset that portion of the costs related to these services that are incurred as a direct result of this new development. The demand created does not always relate to works that are located adjacent to the property being developed. For example, new development may require a local government to increase the size of its water storage reservoir. Developers pay DCCs instead of the existing taxpayers who are not creating the demand and are not benefiting from the new infrastructure.
 

Using DCCs, local government can apply a common set of rules and charges to all development within a community. DCCs are applied as one-time charges against residential, commercial, industrial and institutional developments. They are usually collected from developers at the time of subdivision approval or at the time of issuing a building permit.
 

Part 26, Division 10 of the Local Government Act sets out the general requirements under which local governments may charge DCCs. Please note that separate legislation authorizes the imposition of development cost levies in the City of Vancouver and development charges in the Resort Municipality of Whistler.
 

The following Ministry publications provide a comprehensive discussion of DCCs:

Municipal councils and regional district boards have the statutory obligation to consider the impact of the DCCs on development and in particular the development of reasonably priced housing and service to the land.
 

DCC Exemptions

DCCs are commonly imposed on a range of land uses, including both residential and non-residential uses. Allowable exemptions are outlined in S. 933 of the Local Government Act and circumstances for which DCC’s may be waived or reduced are outlined in S. 933.1.


 

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Application of DCCs (Physical Area)

DCCs can be specified according to different zones or specified areas as they relate to different classes and amount of development, but charges should be similar for all developments that impose similar capital cost burdens on a local government. For example, DCCs for road costs may be charged at the same rate across the municipality, while DCCs for sewer costs may be charged based on a development's specific location.
 

Financial Requirements

DCCs must be kept in a separate fund from a local government's general operating fund. A local government may only spend DCC monies, and the interest earned on them, for the specific projects and services for which they were originally collected. For example, DCCs collected for sewer infrastructure in a new development may only be spent on this development's new sewer system.
 

Generally, infrastructure construction begins after enough DCCs have been collected by the local government for the project; however, in certain circumstances construction must begin before enough funds have been collected. In these circumstances either the local government or the developer will "front-end" the cost. These costs are then recovered through DCCs as the development progresses. If either the local government or the developer borrows funds to pay these costs the interest paid on these borrowed monies can be recovered through future DCCs.
 

Collection of DCCs

DCCs must be paid in full at the time of subdivision approval, or when the building permit is issued. The Development Cost Charge (Instalments) Regulation [Appendix B in the DCC Best Practices Guide (3.4 MB)] sets out the circumstances in which DCC payments can be made by instalment. DCCs are not payable if the new development does not negatively impact the existing infrastructure or cause improvements to be made. Local governments generally charge DCCs using different methodologies, making it difficult to provide a definitive listing of current rates.

The Ministry has prepared a listing of current local government DCC rates (712 KB). However, local governments should be consulted individually with respect to specific new developments.
 

 

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