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Development Cost Charges
Urban expansion and development often leads directly to an increase in
the demand for sewer, water, drainage, parks and roads.
Development cost charges (DCC's) are monies that municipalities and regional districts
collect from land developers to offset that portion of the costs related to
these services that are incurred as a direct result of this new development.
The demand created does not always relate to works that are located
adjacent to the property being developed. For example, new
development may require a local government to increase the size of
its water storage reservoir. Developers pay DCCs instead of the existing
taxpayers who are not creating the demand and are not benefiting from the
new infrastructure.
Using DCCs, local government can apply a common set of rules and
charges to all development within a community. DCCs are applied as
one-time charges against residential, commercial, industrial and
institutional developments. They are usually collected from
developers at the time of subdivision approval or at the time of
issuing a building permit.
Part 26, Division 10 of the Local Government Act sets out the
general requirements under which local governments may charge DCCs.
The following Ministry publications provide a comprehensive discussion of DCC's:
- Development Cost Charges Best Practices Guide
(454 KB) - Development Finance Choices Guide
(491 KB)
- Development Cost Charges Guide for Elected
Officials (2.0 MB)
Municipal councils and regional district boards have the statutory obligation
to consider the impact of the DCCs on development and in particular
the development of reasonable priced housing and service to the land.
DCC Exemptions
DCCs may be imposed on most, but not all, residential and commercial development. However, buildings for public worship, development subject to a land use contract and buildings under $50,000 are specifically excluded from DCC charges. Services such as: childcare, fire and police protection, libraries, recreation are also generally exempt from DCC charges. The City of Vancouver and the Resort Municipality of Whistler are exceptions to this rule.Application of DCCs (Physical Area)
DCCs can be specified according to different zones or specified areas as they relate to different classes and amount of development, but charges should be similar for all developments that impose similar capital cost burdens on a local government. For example, DCCs for road costs may be charged at the same rate across the municipality, while DCCs for sewer costs may be charged based on a development's specific location.Financial Requirements
DCCs must be kept in a separate fund from a local government's general operating fund. A local government may only spend DCC monies, and the interest earned on them, for the specific projects and services for which they were originally collected. For example, DCCs collected for sewer infrastructure in a new development may only be spent on this development's new sewer system.Generally, infrastructure construction begins after enough DCCs
have been collected by the local government for the project;
however, in certain circumstances construction must begin before
enough funds have been collected. In these circumstances
either the local government or the developer will "front-end" the
cost. These costs are then recovered through DCCs as the
development progresses. If either the local government or the
developer borrows funds to pay these costs the
interest paid on these borrowed
monies can be recovered through future DCCs.
Collection of DCCs
DCCs must be paid in full at the time of subdivision approval, or when the building permit is issued. The Development Cost Charge (Installments) Regulation [Appendix B in the DCC Best Practices Guide
(3.4 MB)] sets out the circumstances in which DCC payments can be made by
installment. DCCs are not payable if the new development does not
negatively impact the existing infrastructure or cause improvements to
be made.
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