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What are Development Cost Charges?
The City levies development cost charges (DCCs) on new development to help finance the cost of providing new, or upgrading existing infrastructure, as well as the acquisition of new parkland. DCCs are imposed on subdivision approvals that create single family residential lots. They are also applicable to building permit applications for multi-family residential, commercial, institutional, and industrial development where the value of work exceeds $50,000. Municipalities have the authority to collect DCCs as per Section 559 of the Local Government Act.
DDC fees are levied per lot, or per square meter of new development, for services such as drainage, parks, roads, sewer and water, are established under the City of West Kelowna's Development Cost Charge Bylaw No. 0190.
Council adopted the most recent bylaw at the June 28, 2016 meeting.
Exemptions to DCCs
Not all development is subject to DCCs. The following are exempt from these charges per Sections 933 and 933.1 of the Local Government Act:
- Developments that do not impose any capital cost burdens on the municipality
- Where the building permit authorizes work that is not subject to taxation under s. 220(1)(h) and s. 224(2)(f) of the Community Charter
- The overall value of the work does not exceed $50,000
- Units that are smaller than 29m2 in size
- The work is classified as an 'eligible development' in the municipality's DCC bylaw (i.e. affordable rental housing)
- Additional work to an existing development that does not impose any additional capital cost burdens on the municipality
Inclusion of Interest Charge
As some infrastructure is needed to be built in advance of growth, the City will need to borrow in order to construct large projects such as a water treatment plant. The DCC Best Practices Guide provides guidance on what situations the Province's Inspector of Municipalities is likely to consider interest within the DCC calculation. A large fixed capacity infrastructure project, like a water treatment plant, is one of those situations where including interest is possible. The City has included a portion of the interest required for building the water treatment plant at Rose Valley Reservoir and two related transmission mains in advance of sufficient DCC revenues being available to cover the future growth portion of the project. The interest has been calculated on a 20-year basis, which is the DCC program time frame, and is based on the Municipal Finance Authority's long-term rate of 3 percent.
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