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Regional Water ServiceDevelopment Cost Charges UpdateOctober 2014
Bryan Shoji, P.Eng.General Manager, Infrastructure Services
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Background• Comprehensive Regional Water Plan projects 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.
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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
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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
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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
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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
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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
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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
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Proposed DCC rates
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Rate Comparison
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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
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Review process and next steps
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Questions/Comments
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