Development Cost Charge (DCC) Program Update

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Samuel Eaton
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1 Development Cost Charge (DCC) Program Update What are DCCs? Why update the DCC Program? Development Cost Charges (DCCs) are fees collected from developers on a user pay basis to help fund the cost of growth-related infrastructure. DCCs are regulated by the Province through the Local Government Act and guided by the Provincial DCC Best Practices Guide. DCCs are an effective way for the CRD to recover a portion of the costs associated with servicing new development in the Juan de Fuca Water Distribution System (JDFWDS). DCCs avoid placing the burden of new servicing costs on existing rate payers by charging developers that benefit from the new services. The CRD reviews the DCC Program for the Juan de Fuca Water Distribution System typically every five years to ensure it aligns with anticipated growth in the region, current construction costs and CRD master planning documents. A major DCC update is needed now for the following reasons: 1. The last major DCC update was several years ago in The CRD has new information on servicing needs 3. The CRD has current construction and land acquisition costs; current growth estimates; and updated information on growth-related water infrastructure

2 What do DCCs pay for? DCCs are used to pay for new or upgraded water infrastructure required to support growth and provide capacity in the water system to service new development. DCC related infrastructure could include new water mains and water main upgrades, reservoirs, water treatment plants, pump stations and more. What do DCCs not pay for? By legislation, DCCs cannot be used to pay for: Operation and maintenance of infrastructure. New or upgraded works needed only for the existing population. New libraries, fire halls, police stations, parks and recreation buildings, parking lots, sports field lighting, artificial turf and sport courts (tennis / pickleball). Who pays for DCCs? Applicants for subdivision approval to create single-family development sites. Applicants for building permits to construct multi-family, commercial, industrial, or institutional development.

3 How are DCC rates calculated? At a high-level DCC rates are calculated by dividing total DCC costs by projected growth to generate a charge per land use type (single-family, multi-family, commercial, industrial and institutional) type. The DCC calculation process consists of: Estimating growth Identifying projects and capital costs Determining benefit allocation Determining assist factor

4 How are DCC rates calculated? 1 Estimating Growth Residential growth estimates (20 years) are based on: CRD population projections, trend & capacity build-out analysis Projected growth in the context of the CRD Regional Growth Strategy Meetings with municipal staff members from JDFWDS municipalities Official Community Plan growth estimates from JDFWDS municipalities Non-Residential growth estimates (20 years) are determined through: CRD Population projections, trend & capacity build-out analysis Projected growth in the context of the CRD Regional Growth Strategy Zoning, subdivision and building permit records (growth units) Meetings with municipal staff members from JDFWDS municipalities

5 Growth Projections by Category (20 Years) Unit Sooke Langford Colwood View Royal Metchosin Highlands Total Low Density Residential (Single Family) Lots 945 2,525 1, ,550 Medium Density Multi Family (duplex, triplex, fourplex, row house, townhouse) Units 680 2,697 1, ,961 High Density Multi Family (apartments) Units 305 3, ,528 Commercial m 2 25,000 88, ,000 75,000 15,000 60, ,500 Industrial m 2 20, ,000 6,000 3,000 1,400 74, ,000 Institutional m 2 1,550 16,700 10,800 4,700 6,500 40,250

based on where new services will be required to support new development

6 How are DCC rates calculated? 2 Identifying Projects and Capital Costs Projects and capital costs are based on where new services will be required to support new development (20 year time horizon). Water mains Pump stations PRV stations and upgrades New reservoirs and upgrades Planning and modelling

7 How are DCC rates calculated? 3 Determining Benefit Allocation The benefit allocation is: Applied to each project based on the benefit of each project to the existing community versus new development Benefit allocations can range from 1% to 100% Calculating the proportion of capital costs associated with new development 4 Determining Municipal Assist Factor Local Government Act requires all local governments to assist future development through a minimum 1% assist factor. The CRD has reduced the MAF from 5% to 1%, which is the minimum amount.

8 2018 DCC Project List Item Estimated Project Year Notes [1],[2],[3],[4] See Developer Driven vs. Planned Existing System Upgrades for Growth Municipality Project Description Map Reference Base Cost ($2017) Engineering (15%) Project Admin (5%) Contingency (25%) Cost Estimate (A) (see Note 5) DCC Benefit Factor (B)* Benefit to New Development (C = A x B) Municipal Assist Factor 1% (D = C x 0.01) DCC Recoverable (E = C - D) CRD Responsibility F = ( A - E) Highlands Hi-West Developments New Pipe 1 $857,000 $128,550 $42,850 $214,250 $1,242, % $1,242,650 $12,427 $1,230,224 $12,427 2 Medium-Term Developer Driven Langford Echo Valley Drive 2a $401,000 $60,150 $20,050 $100,250 $581, % $581,450 $5,815 $575,636 $5,815 Distribution Main 2b $238,000 $35,700 $11,900 $59,500 $345, % $345,100 $3,451 $341,649 $3,451 PRV 2c $150,000 $22,500 $7,500 $37,500 $217, % $217,500 $2,175 $215,325 $2, Transmission Main (see Note 6) 3a $717,241 $107,586 $35,862 $179,310 $1,040, % $1,040,000 $10,400 $1,029,600 $10,400 Developer Driven Langford South Skirt Pump Station 2023 Pump Station 7 3b $1,170,000 $175,500 $58,500 $234,000 $1,638, % $1,638,000 $16,380 $1,621,620 $16, Transmission Main (see Note 6) 4a $800,000 $120,000 $40,000 $200,000 $1,160, % $1,160,000 $11,600 $1,148,400 $11, Pump Station 6 4b $1,650,000 $247,500 $82,500 $412,500 $2,392, % $2,392,500 $23,925 $2,368,575 $23,925 Developer Driven Langford South Skirt Tank 4 Medium-Term Tank 4 (see Note 7) 4c $1,724,138 $258,621 $86,207 $431,034 $2,500, % $2,500,000 $25,000 $2,475,000 $25, Distribution Main (see Note 9) 4d $338,000 $50,700 $16,900 $84,400 $490, % $490,000 $4,900 $485,100 $4,900 Medium-Term Developer Driven Langford Bear Mountain Pump Station 3 Pump Station 5a $1,289,000 $193,350 $64,450 $322,250 $1,869, % $1,869,050 $18,691 $1,850,360 $18,691 Medium-Term Developer Driven Langford Distribution Pipe New Pipe 5b $336,000 $50,400 $16,800 $84,000 $487, % $487,200 $4,872 $482,328 $4, Langford Nicklaus Pump Station Pump Station Upgrade 6 $70,000 $10,500 $3,500 $17,500 $101, % $101,500 $1,015 $100,485 $1,015 7 Medium-Term Developer Driven Langford Walfred Servicing DI watermain 7 $1,224,000 $183,600 $61,200 $306,000 $1,774, % $1,774,800 $17,748 $1,757,052 $17,748 Long-term Langford Reservoir Upgrade 8a $1,630,000 $244,500 $81,500 $407,500 $2,363,500 85% $2,008,975 $20,090 $1,988,885 $374,615 8 Long-term Langford Fulton Reservoir Fire Pump Upgrade 8b $1,240,000 $186,000 $62,000 $310,000 $1,798,000 85% $1,528,300 $15,283 $1,513,017 $284,983 Long-term Langford Distribution Piping 8c $94,000 $14,100 $4,700 $23,500 $136,300 85% $115,855 $1,159 $114,696 $21,604 Medium-Term Developer Driven Langford New Pump Station 9a $1,500,000 $225,000 $75,000 $375,000 $2,175, % $2,175,000 $21,750 $2,153,250 $21,750 Medium-Term Developer Driven Langford Supply Pipe 9b $754,000 $113,100 $37,700 $188,500 $1,093, % $1,093,300 $10,933 $1,082,367 $10,933 9 Centre Mountain Medium-Term Developer Driven Langford New Reservoir 9c $5,480,000 $822,000 $274,000 $1,370,000 $7,946, % $7,946,000 $79,460 $7,866,540 $79,460 Medium-Term Developer Driven Langford Distribution Pipe 9d $651,000 $97,650 $32,550 $162,750 $943, % $943,950 $9,440 $934,511 $9, Medium-Term Developer Driven Colwood Mary Anne Pump Station Pump Station 10a $950,000 $142,500 $47,500 $237,500 $1,377, % $1,377,500 $13,775 $1,363,725 $13,775 Medium-Term Developer Driven Colwood Mary Anne PS Pipe New Pipe 10b $61,000 $9,150 $3,050 $15,250 $88, % $88,450 $885 $87,566 $885 Medium-Term Developer Driven Colwood Mary Anne PS Pipe Upgrade Pipe Upgrade 10c $202,000 $30,300 $10,100 $50,500 $292, % $292,900 $2,929 $289,971 $2, Medium-Term View Royal Christie Point Pipe Upgrade 11 $371,000 $55,650 $18,550 $92,750 $537, % $537,950 $5,380 $532,571 $5, Long-term Developer Driven Sooke Spartree Way PRV Spartree 12 $172,500 $25,875 $8,625 $43,125 $250, % $250,125 $2,501 $247,624 $2, Long-term Sooke HENLYN 180M HGL Distribution Main 13 $673,000 $100,950 $33,650 $168,250 $975,850 44% $429,374 $4,294 $425,080 $550, New Pipe Portions Distribution Main 14a $750,000 $112,500 $37,500 $187,500 $1,087, % $1,087,500 $10,875 $1,076,625 $10,875 Medium-Term - New Pipe $497,000 $74,550 $24,850 $124,250 $720, % $720,650 $7,207 $713,444 $7,207 Sooke Henlyn 180M HGL Transmission Main 14b $580,000 $87,000 $29,000 $145,000 $841, % $841,000 $8,410 $832,590 $8,410 Long-term - Henlyn Tank Henlyn Tank 14c $3,900,000 $585,000 $195,000 $975,000 $5,655, % $5,655,000 $56,550 $5,598,450 $56, Medium-Term Sooke PRV Mountain Heights PRV 15 $150,000 $22,500 $7,500 $37,500 $217, % $217,500 $2,175 $215,325 $2, Medium-Term Sooke Otter Point Road Pipe Upgrade 16a $1,456,000 $218,400 $72,800 $364,000 $2,111,200 25% $527,800 $5,278 $522,522 $1,588,678 16b $25,000 $3,750 $1,250 $6,250 $36, % $36,250 $363 $35,888 $ Long-term Sooke Grant Road Pipe Upgrade $19,000 $2,850 $950 $4,750 $532,150 48% $255,432 $2,554 $252,878 $279,272 17a $348,000 $52,200 $17,400 $87,000 $504,600 58% $292,668 $2,927 $289,741 $214,859 $533,000 $79,950 $26,650 $133,250 $772,850 58% $448,253 $4,483 $443,770 $329,080 17b $618,000 $92,700 $30,900 $154,500 $896,100 58% $519,738 $5,197 $514,541 $381, Long-term Sooke Throup Road New Pipe 18a $454,000 $68,100 $22,700 $113,500 $658, % $658,300 $6,583 $651,717 $6,583 18b $194,000 $29,100 $9,700 $48,500 $281, % $281,300 $2,813 $278,487 $2,813 18c $133,000 $19,950 $6,650 $33,250 $192, % $192,850 $1,929 $190,922 $1,929 18d $181,000 $27,150 $9,050 $45,250 $262, % $262,450 $2,625 $259,826 $2, Bear Mountain Debt (see Note 8) n/a $3,392,220 N/A N/A N/A $3,392, % $3,392,220 $33,922 $3,358,298 $33, Interest on Loan Authorization Bylaw #3164 Project Liability Supply and Distribution on Leigh Road n/a $859,340 N/A N/A N/A $859, % $859,340 $8,593 $850,747 $8,593 n/a $1,200,000 N/A N/A N/A $1,200, % $1,200,000 $12,000 $1,188,000 $12, Silver Creek Debt n/a $1,571,275 N/A N/A N/A $1,571, % $1,571,275 $15,713 $1,555,562 $15,713 Note [1] - This does not represent the exact priority of project development, just the estimates development phasing. Note [2] - Project timing and rebates for projects constructed are subject to actual reserve funds available Note [3] - All projects are available for DCC credit if they meet the requirements of Capital Regional Districts DCC Credit Policy Note [4] - Medium term = years 2024 to 2029 Long-term = years 2030 and beyond Note [5] - Cost Estimates include 15% Engineering, 5% Project Admin and 25% contingency Note [6] - Revised to better reflect actual construction costs realized in 2017 Note [7] Bolted Steel Tank Note [8] Bear Mountain Debt as of August 2017, as of October 2017 balance is $3.15 Million Note [9] Balance of project expenditures to be funded in 2018 up to approved budget of $3.99 million $41,603,715 $5,187,132 $1,729,044 $8,586,620 $57,611,110 $53,646,955 $536,470 $53,110,486 $4,500,625

9 DCC Project Locations

10 Current vs. Proposed DCC Rates DCC Rate Summary Land Use Unit Current Rate Proposed Rate Difference (Increases) Low Density Residential (single family) Per Lot $2,655 $2,922 ($267) Medium Density Multi Family (duplex, triplex, fourplex, townhouse) Per Unit $2,323 $2,557 ($234) High Density Multi-Family (apartments Per Unit $1,494 $1,644 ($150) Commercial Per floor area in m 2 $9.76 $10.74 ($0.98) Industrial Per floor area in m 2 $5.29 $5.82 ($0.53) Institutional Per floor area in m 2 $21.57 $23.74 ($2.17)

11 DCC Implementation and In-Stream Applications Under Part 14, Section 568 of the LGA in-stream subdivision, building permit, development permit and rezoning applications are provided a one-year exemption period from the proposed DCC rates, as long as the application is complete and acceptable to the municipality, and application fees have been paid. To illustrate how this will impact future development applications the following section highlights four scenarios where an application for a subdivision, building permit, rezoning or development permit is received by the CRD and what DCCs (if any) would be paid. Note: The scenarios on the next board reflect a theoretical set of dates for explanation purposes. This does not imply the bylaw adoption will follow this schedule. Example Basis for Scenarios: The bylaw is adopted January 1, 2019 The exemption period runs for 12 months from January 1, 2019 to January 2, 2020

12 Scenario 1: Application submitted and accepted before the Bylaw is adopted application submitted and accepted by municipality before bylaw adopted, e.g. before January 1, 2019 application approved by municipality during exemption period e.g. between January 1, 2019 and January 2, 2020 applicant pays current DCC Scenario 2: Application submitted and accepted before the Bylaw adopted, but approval issued after the exemption period application submitted and accepted by municipality before bylaw adopted, e.g. before January 1, 2019 application approved by municipality after exemption period e.g. after January 2, 2020 applicant pays new DCC Scenario 3: Application submitted and accepted after the Bylaw comes into effect application submitted and accepted by municipality after the Bylaw is adopted, e.g. after January 1, 2019 application approved by municipality during the exemption period e.g. July 15, 2019 applicant pays new DCC Scenario 4: Application submitted and accepted after the exemption period application submitted and accepted by municipality after the exemption period, e.g. after January 2, 2020 application approved by municipality after exemption period e.g. after January 2, 2020 applicant pays new DCC

Next Steps 1. Present program/rates and combine stakeholder feedback (July 2018) 2. Presentation of Program and DCC Bylaw to the Regional Board (August 2018) 3.

13 Next Steps 1. Present program/rates and combine stakeholder feedback (July 2018) 2. Presentation of Program and DCC Bylaw to the Regional Board (August 2018) 3. If the Regional Board approves, the Bylaw will be given three readings and submitted for Provincial Ministry review and endorsement (Summer 2018) 4. Facilitate the Regional Board final review and bylaw adoption (anticipated completion by end of 2018)

Development Cost Charge (DCC) Update

Development Cost Charge (DCC) Update Purpose Provide developers and other professionals with an overview of Development Cost Charges (DCCs) Review highlights of 2016 DCC program Projected growth and projects