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WCEL
> Issues > Urban Growth and
Development > Smart Bylaws Guide > Part
7 > Development Cost Charges
Smart Bylaws Guide – Development Cost Charges
Local governments in BC use development cost charges (DCCs)
levied on new projects to help fund the cost incurred by growth. DCCs are
intended to reflect the capital costs that are imposed by new
development. This capital burden can vary widely within a community
based on factors such as the condition and capacity of existing
infrastructure, the location of new development, the type of land
use, and the characteristics of development projects. DCCs can only
be charged for the capital costs of specific types of
infrastructure: water, sewer, drainage, roads and parkland. DCC
rates can be set for different geographic areas in a community and
can vary by land use and density.
Traditionally, municipalities charge a set rate per unit (for
residential development) or per square foot (for commercial and
industrial development). This approach does not necessarily reflect
the actual cost new development imposes on a municipality. For
example, new development in an already-serviced area may cost less
than new development on a greenfield or bare land site where new
services are required.
The report Do
Development Cost Charges Encourage Smart Growth and High Performance
Building Design? by Coriolis Consulting Corp. examined whether DCC rates favour particular growth patterns
and to suggest practical ways for municipalities to modify their
systems to encourage smart growth and encourage high performance
("green") building design.
By calculating actual infrastructure needs of different types of
development (bare land versus infill and conventional buildings
versus high performance buildings), the authors concluded that there
can be significant infrastructure cost savings associated with smart
growth planning principles and high performance building design
features, including:
- Major savings in overall road and servicing network costs for
urban development in compact, complete communities, especially
where development is in the form of infill and densification in
established areas with existing unused servicing capacity;
- Minor savings in local servicing networks if projects
incorporate high performance building features that reduce water
requirements, sewage flows and storm run-off;
- Potential major savings in municipal-wide networks from
reduced service demands associated with high performance design.
Reduced requirements for new water supply and storage, sanitary
treatment capacity and municipal stormwater systems could
generate significant savings. These will vary widely from
community to community;
- The infrastructure savings due to smart growth planning and
high performance design could easily be in excess of $5,000 per
residential unit in many communities. Reductions in
infrastructure cost should logically lead to lower DCCs (all
other things being equal), at least for the development responsible for the reduced requirements.
The authors also conducted a review of BC municipalities to see
if DCC bylaws reflect differences in infrastructure costs related to
location, land use, density and "green" design. Every
municipality sets different DCCs for different land uses (e.g.,
commercial, residential, industrial) and almost every municipality
sets different charges for single family and multi-family residential
units. Some municipalities vary the multi-family DCC based on a
project's density. However, only a few municipalities vary the
single family charge based on density and few vary commercial and
industrial DCCs by density. Some municipalities set different
charges for different geographic areas in the municipality, but many
do not. None of the municipalities examined currently takes high
performance building design into account in setting DCC rates.
The authors concluded that Smart
Growth practices, particularly designing new communities to be more
compact and complete than traditional suburban subdivisions and
encouraging infill development in established urban areas, can
significantly reduce the costs of new community infrastructure per
new housing unit. The most
significant improvements that could be made to DCC regimes would be
to increase the use of development density (e.g., units per acre and
floor area ratio) as a factor in setting residential DCC rates for
single family and multi-family projects, and increase the use of
different DCC rates for different locations.
Municipal DCC regimes
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