Regional Water Service Development Cost Charges Update

1. Regional Water ServiceDevelopment Cost Charges Update October 2014 Bryan Shoji, P.Eng. General Manager, Infrastructure Services

2. Background • Comprehensive Regional Water Planprojects the water needs of the region and related infrastructure requirements to the year 2036 - adopted by the SCRD in June 2013 • Business Plan and Rates Development report calculates the annual user fee rates required to sustain the continued operation, maintenance and capital replacement of the Regional Water System - adopted by SCRD in December 2013 • DCC Bylaw Update will incorporate the recommendations in these reports. First update since bylaw adoption in 1997. • Review of Regional Water DCCs only. North and South Pender Harbour Water Service Areas to be reviewed separately.

6. 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, parcel taxes, or user fees

7. What are DCCs? Funds capital projects are needed to support growth…only projects which support growth are included (facilitates development) Based on the ‘user pay’ principle – growth pays for growth Operations, maintenance and projects benefiting only existing customers are not included Not just another tax – DCCs are based on need, not on comparisons to other local governments - Development Cost Charge Best Practices Guide Allow development to proceed by sharing the cost burden through the pooling of revenues - Large infrastructure projects cannot be funded by a single developer (e.g. New Water Treatment Plant) Without adequate DCCs, existing taxpayers pay for future needs or infrastructure projects are deferred

8. 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 We Envision Regional Sustainability Plan

9. DCC update objectives Update DCC capital projects list and cost estimates to ensure future growth needs can be met Review growth projections to ensure appropriate amount of DCCs are collected Ensure consistency with OCPs and Financial Plan Combine 3 geographical DCC Bylaws into single bylaw Include incentives to construct more sustainable units Clarify exemptions and DCC credits/rebates

10. 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

11. Major DCC Projects Chapman Water System Projects • Source Water Development $1,360,000 • Water Treatment Expansion $7,050,000 • Transmission upgrades $2,500,000 • Distribution upgrades $13,500,000 • Demand management $600,000 Eastbourne Water System Projects • Source Water Development $150,000 • Water Treatment Expansion $50,000 • Distribution upgrades $250,000 Egmont/Cove Cay System Projects • Distribution upgrades $250,000

12. Proposed DCC rates

13. Rate Comparison

14. Impacts if rates aren’t updated? 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

15. Review process and next steps

16. Questions/Comments