Development fees & cost charges
Development Fees and Development Cost Charges are an important aspect of development within the City. They help to offset costs of processing applications, aquiring new parks, and improving infrastructure.
Development Cost Charges (DCC) are monies collected from land developers by a municipality to offset some of the infrastructure expenditures incurred in servicing new developments and maintaining existing infrastructure.
The monies collected are used to finance capital projects related to new roads, drainage, sewers, water mains and acquiring parks. Development Cost Charges are imposed by Bylaw pursuant to the Local Government Act. Anytime a proposed development increases density, a DCC is estimated and charged. This includes creating new square footage on a commercial or industrial project, adding new swellings, or creating new subdivided lots.
It is widely accepted that growth, when facilitated by good planning, benefits communities and their economies. Local governments have come to recognize, however, that the accommodation of growth is not a cost-free exercise. Growth creates demands for the construction of new infrastructure, and the expansion of existing local services. The cost of meeting these demands is often substantial and, at times, beyond the ability of local governments to fund using existing financial resources.
Development cost charges (DCCs) are fees that municipalities collect from new development to help pay the cost of infrastructure services that are needed for growth.
Local governments are limited in the types of services they may fund using DCC revenues. Specifically, DCCs may be used to help offset costs associated with the provision, construction, alteration or expansion of:
- roads, other than off-street parking;
- sewer trunks, treatment plants and related infrastructure;
- waterworks; and,
- drainage works.
DCCs may also be collected to assist in the acquisition and development of parkland, but may not be used to pay for other types of services, such as recreation, policing, fire and library, that are affected by growth.
The City’s DCC Program is integrated with the City’s Official Community Plan (OCP) and 20-year Servicing Plan and Financing Strategy which details the major infrastructure improvements for water distribution, wastewater trunks and treatment, major roads and parkland acquisitions that will be required to accommodate the City’s projected growth.
The City’s DCC program contains the individual works, identified in the servicing plan that are required to accommodate growth. The cost of each of the works is allocated in the program between growth and the existing population. The portion allocated to growth forms the basis of the DCC rates.
Infrastructure costs should be paid by those who will use and benefit from the installation of such systems. Recognizing that costs should be shared in some way amongst benefiting parties, DCCs are a mechanism that distribute these costs between existing users and new development in a fair manner.
The City’s infrastructure servicing plan is funded as follows:
This DCC update is required to update estimated infrastructure construction and land costs so they reflect current market conditions. If the City’s DCC rates do not reflect current market conditions, then DCC revenue will not sufficiently fund the infrastructure improvements and the City would have to defer infrastructure improvements or fund from alternate sources (i.e. taxation or utility rates).
Kelowna’s DCC rates are comparable to other similar sized Cities.
Development application fees are required with any development application and are used to offset the cost of processing applications, advertising for public meetings, and legal and administrative fees.