Making developers pay their fair share for regional transportation expansion

Development Cost Charges (DCCs) are used to pay for improving infrastructure that is required to support new development projects. Municipalities can collect and use DCCs to pay for building or upgrading sewage, water, drainage system, and roads.

Municipalities can also use DCCs to pay for new park land and for improving parks. The Metro Vancouver regional district collects a DCC to help pay for expanding the sewerage system. School Districts also collect a DCC which is known as a School Site Acquisition fee which is used to purchase land for schools. The following table shows all these charges in Langley City.

Development Cost Charges in Langley City. Effective April 28, 2014. Select table to enlarge.

The idea is that growth should pay for growth, and that developers should pay their fair share for infrastructure required to support their projects.

New development projects also increase the usage of our regional transportation system which includes public transit. The Mayors’ Council and TransLink are looking for the provincial government to enable the collection of a regional transportation DCC which would start in 2020. This transportation DCC would pay for the capital costs of transit expansion projects. The draft initial rate is as follows:

Single family: $2,100 per dwelling unit
Townhouse/duplex: $1,900 per dwelling unit
Apartment: $1,200 per dwelling unit
Retail/service: $1.00 per sq.ft.
Office, Institutional: $0.50 per sq.ft.
Industrial: $0.50 per sq.ft.

In Langley City, this DCC works out to be around 10% of the DCCs that the municipality charges. This regional DCC is expected to generate between $20 million and $25 million per year.

There was discussion about making this proposed regional transportation DCC stepped, meaning that development projects closer to transit service would pay a higher DCC. The current proposal is to have a flat DCC throughout the region. This is to simplify the administration of this DCC. In the future, a stepped DCC could be considered.

One of the big concerns about the regional transportation DCC is that it will impact housing affordability. A report by Coriolis Consulting Corp titled “Will TransLink’s New DCC for Transit Infrastructure Affect Housing Affordability?” states, “Adding a new DCC, such as the one proposed by TransLink, will not directly increase the market price of housing. Prices in a region with strong demand and constrained supply are not determined just by adding up the costs.”

In addition, it is proposed that agricultural uses, affordable rental housing projects, and statutory places of worship projects will be exempt from this regional transportation DCC.

It is expected that the provincial government will support creating enabling legislation for the collection of this new DCC.