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Should Esquimalt consider implementing Development Cost Charges?

As a municipality develops and grows, new and or improved infrastructure and parks are needed to accommodate that growth. Under the Local Government Act municipalities and regional districts have the ability to levy Development Cost Charges (DCC’s) on new development to pay for new or expanded infrastructure such as sewer, water, drainage, roads and parks. DCC’s are intended to reflect the capital costs that are imposed by new development, ensuring the municipality is able to meet the demands of new development and accommodate the community’s growth. In the case of parks, DCC’s can be used to acquire and improve parklands, and the improvements may include the construction of trails, playgrounds, landscaping and restrooms.

The following excerpt is from the Province of BC’s Development Cost Charge Best Practices Guide: “Many cities and towns in British Columbia face significant development pressure, which requires the expansion of existing or the installation of new infrastructure systems, to support new development and its demand on utilities and services. However, the costs associated with these infrastructure requirements create significant public sector burdens. Increasingly all governments are facing significant constraints in the use of general purpose taxation and have placed greater emphasis on the “user pay”, or “benefiter pay” principle. In response to these pressures, DCC’s have been utilized by local governments as a cost recovery mechanism for apportioning infrastructure project costs amongst developers of land”.

Land developers applying to subdivide a property and or to construct or alter a multi-family residential, commercial, institutional, or industrial development are responsible for paying DCC’s.

Ninety-two municipalities throughout the province have chosen to utilize DCC’s including 23 municipalities on Vancouver Island. These include Campbell River, Central Saanich, Colwood, Comox, Courtenay, Duncan, Ladysmith, Lake Cowichan, Langford, Lantzville, Nanaimo, North Cowichan, Parksville, Port Alberni, Powell River, Qualicum Beach, Saanich, Sidney, Sooke, Tofino, Ucluelet, Victoria and View Royal.

DCC’s are established by municipal bylaw with the approval of the Inspector of Municipalities. They are calculated separately for each category of infrastructure e.g. water, sewer, drainage, roads and parks, and can vary for different areas, type of land use, density, etc. Once levied and collected, DCC’s are deposited into separate reserve funds within the municipality. These reserve funds may only be used for capital costs relating to the approved municipal DCC bylaw.

In February 2011 Esquimalt Council commissioned consulting firm Urban Systems to review the feasibility of utilizing DCC’s. Their recommendation was that the Township should not establish a DCC capital program and DCC bylaw at that time.

Their rationale was: “For Esquimalt, DCC’s are not considered to be the most suitable tool at this time because the community has relatively limited growth potential, limited availability of required infrastructure plans, and limited staff resources to administer a DCC program. Esquimalt has a well developed and extensive engineering infrastructure and parkland inventory available to service future growth. Works and services requirements and negotiated agreements, are considered to be suitable tools the Township should continue to use to fund growth related infrastructure.”

Over the ensuing years, Esquimalt has experienced exponential growth and development. In August 2021 Council approved a motion to construct a Development Capacity Assessment Report with the objective of determining a process and tool(s) to identify the carrying capacity of our community’s systems and infrastructure and the implications of densification on those systems.

Esquimalt’s Director of Planning, Bill Brown, advises that in early 2022, following the release of census data in February, staff will be recommending to Council that a consultant be contracted to undertake a comprehensive urban capacity study that will include a review of all of the many variables impacted by growth and development in Esquimalt.

If approved, this would also be a good time to evaluate the costs associated with our community’s growth and development, how those costs are apportioned, and to assess what the most appropriate financial tools, including DCC’s, are available to meet those costs.

1. Development Cost Charge Best Practices Guide, Province of BC

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