Sunshine Coast Regional District Development Cost Charges

1. Sunshine Coast Regional District Development Cost Charges July 3, 2014 Infrastructure Services Committee Bob Twerdoff

2. 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

3. 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

4. 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

5. 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

6. 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%

7. 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

8. 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

9. What are existing DCCs?

10. 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

11. 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

12. 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

13. 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

14. What are the Major DCC Projects? Chapman Water Treatment Expansion Transmission main upgrades Fire protection upgrades Distribution main upgrades Intensive demand management programs

15. 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

16. What are the proposed DCC rates?

17. How does it compare to existing rates?

18. 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

19. 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

20. 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

21. Questions/Comments