DCC Overview

CITY OF PENTICTON DCC PROJECT April 12, 2022

OVERVIEW  Development Cost Charges (DCC) Background and overview  DCC process and rate calculations  Assist factors, benefit allocations  Growth and infrastructure requirements  Equivalency factors, DCC sectors  Parks DCCs for Commercial  DCC options and initial rates  Initial Rate comparisons  Adoption process and next steps

BACKGROUND  Current bylaw based on 2007 review  Updated with some inflation in 2021  DCCs for Roads, Sewer, Drainage, Water and Parks  Changes Since 2007:  Significant growth and development  Cost increases  Some projects completed  New projects identified

 OCP update  Integrated Infrastructure Master Plans completed

WHAT ARE DCCs? A means of POOLING FUNDS from a number of developers to PAY FOR OFF-SITE CAPITAL

PROJECTS which benefit them all.

WHAT ARE DCCs?  The Local Government Act authorizes the collection of DCCs. DCCs are charges levied on developers to help pay for: • Infrastructure associated with growth • Parkland needed for growth

WHO PAYS DCCs?  Applicants for subdivision approval to create single family development sites

 Applicants for building permits to construct multi-family, commercial, industrial, and institutional development

WHAT CAN DCCs PAY FOR?  Infrastructure • Transportation • Water • Sanitary sewer • Storm drainage • Parkland and limited park development But…these must be related to development!

WHAT ITEMS DON’T DCCs PAY FOR?  Operations and maintenance  Engineering works needed for the existing population  New libraries, fire halls, police stations  Parks and recreational buildings such as arenas and pools

 Artificial turf, parking lots, sports field lighting, tennis courts, skateboard parks

 Electrical utility upgrades

GOOD DCC PROJECTS  Planned well in advance  Required if growth proceeds, not required if growth does not proceed

 Primarily benefits new development  City-wide projects, although area specific acceptable in some cases

POOR DCC PROJECTS  Required immediately  Required primarily to rectify existing deficiencies  Not related directly to growth  Benefits only a small area

COST RECOVERY TOOLS Development Cost Charges

General General Revenue Revenue

5% Parkland Dedication

Local Local Service Service Area Area Charges Charges

Works and Service Agreements

Community Amenity Contributions

Development Agreements

Other Other

DCC RECOVERABLE COSTS

Total Total Program Program Costs Costs

Portion Portion of of Costs Costs Allocated Allocated to to Existing Existing Dev. Dev.

Municipal Municipal Assist Assist

=

DCC DCC Recoverabl Recoverabl e e Costs Costs

BASIC DCC CALCULATION

DCC DCC Recoverabl Recoverabl e e Costs Costs

÷

Growth Growth

=

DCC DCC Rate Rate

DCC CALCULATION PROCESS

BENEFIT ALLOCATIONS  Reflect the benefit of each project to the existing community and new development

 Used to calculate the proportion of capital costs attributable to new development EXAMPLE – ROADS PROJECT

 Some roads provide benefit to both new development and existing residents.

 At the end of 20 years 14% of the population will be new, and 86% will be existing

 DCC model assumes that new development pays 14% of the costs for these roads

EXAMPLE – Changing Benefit Allocations  Road upgrade project – all with 1% Assist 75% Growth / 25% Existing

Project Cost

25% Growth/ 75% Existing

14% Growth/ 86% Existing

$2,000,000

$2,000,000

$2,000,000

75%

25%

14%

Amount allocated to Growth

$1,500,000

$500,000

$280,000

Amount allocated to Existing taxpayers

$500,000

$1,500,000

$1,720,000

$15,000

$5,000

$2,800

$495,000

$277,200

800

800

800

$1856

$619

$346

Percentage required for Growth

Assist amount, paid by City (Taxpayers) 1% Paid By DCCs Development Units DCCs per unit

$1,485,000

ASSIST FACTOR  City must provide assistance to pay costs of off-site infrastructure required by development

 Extent of assist factor at Council’s discretion  Can vary by service (i.e., roads different than water)  Cannot vary by area of community, or land use  1% is considered the generally accepted minimum assist

ASSIST FACTORS Comparisons of Assist factors Kelowna Vernon West Kelowna Oliver Summerland Osoyoos Lake Country Peachland Penticton (current)

Roads

Sewage

Storm

Water

Parks

15% 1% 1% 1% 50% 1% 1% 1% 5%

1% 1% 1% 1% 1% 1% 1% 1% 15%

n/a 1% 1% n/a 70% 1% 1% 1% 3%

1% 1% 1% 1% 1% 1% 1% 1% 15%

8% 1% 25% 1% 50% 1% 1% 1% 5%

EXAMPLE – Changing Assist  Sewer upgrade project Amounts 1% Assist

Project Cost Percentage required for Growth Assist amount, paid by City (Taxpayers) Paid By DCCs Development Units DCCs per unit

8% Assist

15% Assist

$2,000,000

$2,000,000

$2,000,000

100%

100%

100%

$20,000

$160,000

$300,000

$1,840,000

$1,700,000

800

800

800

$2475

$2300

$2125

$1,980,000

BENEFIT ALLOCATIONS AND ASSIST FACTORS  Benefit Allocations • Technical number for sharing of costs • Determine the portion that benefits existing development and the portion that benefits new development

 Assist Factor • Council decision - Provides an assist to new development • Even though the project (or part of the project) benefits new development, the City and its existing taxpayers pay for it.

GROWTH Land Use Single Detached and Duplex Lots

Units lots

10 year Growth 449

Bare Land Strata / Townhouse

units

564

Multifamily / Apartment

units

1,520

Downtown Multifamily C5 and C6 Zone

units

133

Total Residential Commercial

m2 floor area

2,666 12,586

Industrial

m2 floor area

6,900

Institutional

m2 floor area

7,342

TRANSPORTATION  The transportation projects required due to growth are comprised of a number of components:  Intersection improvements required to better address increasing traffic  Sidewalk projects required to better accommodate growth in the number of pedestrians

 Cycle network improvements required to address growth in cyclists  Transportation plan updates to address growth

 The portion allocated to growth depends overall percentage growth in Penticton, increases in traffic flows, and the key reasons for the project

WATER  The water projects required due to growth are comprised of a number of components:  Water treatment plan expansion to accommodate growth  Reservoir expansion to serve growth  Water line upgrades needed for growth  Water Master Plan updates to address growth

 Portion allocated to growth depends overall percentage growth in Penticton, estimates of the portion of the project that is required due to growth, water flows, and the drivers for the project.

SANITARY SEWER  The Sanitary sewer projects required due to growth are comprised of a number of components:  Lift station and force main upgrades to deal with increases in sewage flows

 Treatment plan expansions  Specific upgrades to treatment facilities to address growth such as centrifuge upgrades, additional clarifier, filters and pump capacity upgrades

 Sewer master plan updates to address growth

 The portion allocated to growth depends on the sewage flows due to growth and engineering estimates of the portions of projects required due to growth

STORM DRAINAGE  One project required due to growth and that is an update to the stormwater master plan.

 Sufficient funds in the Stormwater DCC reserve to pay for this project, so no DCCs are required for stormwater.

 Post-development stormwater flows need to equal the predevelopment flows, so new growth has little impact on stormwater needs.

 Most improvements required to address existing deficiencies, flows from streams coming outside the City, and climate change.

PARKS  Parks projects are required to address a growing population.

The types of DCC parks projects are as follows:  Community parkland acquisition based on a specific amount of land per 1000 population increase

 Park improvements  Pathway development  Parks and trail planning

 The portion allocated to growth depends on the function of the park and the role it plays in addressing the needs of growth. In general, the main reason these parks projects are required is to serve new growth.

Summary of Allocation to Growth Total Capital Program

Allocated to New Development

Allocated to City (before applying assist amount)

Transportation

$43.4 M

$13.3 M

$30.1 M

Water

$19.2 M

$13.4 M

$5.8 M

Sanitary Sewer

$27.9 M

$22.2 M

Parks

$11.2 M

$9.8 M

$101.7 M

$58.8 M

Total

$5.7 M $1.4 M $43.0 M

EQUIVALENCY FACTORS  Equivalency factors are used as a means for comparing and equating the impact of different types of land use on each municipal service

 E.g. trip generation for transportation projects used to equate one single family lot to floor area of commercial

 Reviewed and updated equivalency factors to better meet best practices

 Results in changes to DCCs and the relationships between DCCs for various uses

DCC Geographic Sectors  DCCs calculated based on different areas  Some communities have sectors, other communities have the same charge across entire Municipality

DCC Geographic Sectors  Pros:  Allows cost to be allocated to the areas that are causing the impacts on infrastructure

 May result in lower costs for core or infill forms of development, however the costs in the core might not be lower since the capital costs in the core can be high

 Cons  Requires separate reserve funds for each service in each sector  Several smaller more restricted reserve funds rather than one large flexible reserve fund for each service

 Requires more detailed accounting  Can be a challenge to allocate costs to sectors

 Proposing to shift to City-wide DCCs

Parks DCCs for Commercial • Many communities are charging Parks DCCs for Commercial uses • For example: Kelowna, Westbank First Nation, Lake Country, Peachland, Coldstream, and Vernon

• Commercial uses can place demands on parks as employees, tourists, and business visitors use parks.

• Commercial uses include uses that generate more visitors and parks demand including: accommodation, recreation, entertainment, auto services, food and beverage, and retail uses.

• Consider charging Parks DCCs for Commercial uses

QUESTIONS? COMMENTS?

DCC OPTIONS Option A

Option B

Option C

Existing Assist

1% Assist

5%

In Between Assist 3%

Water

14%

7%

1%

Sanitary Sewer

15%

8%

1%

Storm Drainage

3%

2%

1%

Parks

5%

3%

1%

Type Transportation

1%

DCC results - Summary of Options Land Use

Unit

Single Detached and Duplex Lots

per lot

Bare Land Strata / Townhouse Multifamily / Apartment Downtown Multifamily C5 and C6 Zone Commercial Industrial Institutional

Existing Core

Existing Periphery

Option A Existing Assist

Option B Between Assist

Option C 1% Assist

$16,297

$21,466

$20,944

$22,721

$24,415

per unit

$6,672

$15,885

$15,232

$16,524

$17,757

per unit

$6,672

$15,885

$8,613

$9,398

$10,146

per unit per m2 floor area per m2 floor area per m2 floor area

$3,638

n/a

$7,203

$7,891

$8,553

$56.40

$208.18

$104.42

$110.31

$116.04

$30.03

n/a

$47.52

$52.33

$56.91

$59.20

a/a

$108.66

$114.52

$120.17

Comparison of DCCs – Single Family  The Proposed Single Family residential DCCs in Penticton are quite similar or slightly lower than some large Okanagan communities, although the are higher than some local smaller communities including Summerland, Oliver and Osoyoos.

 Large communities are generally in the $25,000 to $30,000 range.  Penticton’s calculated options are in the $21,000 to $24,000 range

Comparison of Valley Single Family DCCs Penticton Option A

$20,944

Penticton Option B

$22,721

Penticton Option C

$24,415

West Kelowna (Proposed In East Trunk area)

$32,191

Westbank FN IR#10 (proposed)

$25,986

Kelowna Inner City

$30,988

Kelowna South Mission

$48,507

Vernon Core

$20,168

Vernon Outer

$27,093

Lake Country

$30,663

Peachland Summerland Oliver Osoyoos $0

$19,909 $8,612 $7,410 $9,270 $10,000

$20,000

$30,000

$40,000

$50,000

Comparison of DCCs – Multi Family  The proposed Multi family residential DCCs in Penticton are significantly lower than some large Okanagan communities. The Core Multi family DCCs in Penticton are similar to local smaller communities including Summerland, Oliver and Osoyoos.

 Large communities are generally in the $12,000 to $25,000 range, although many are in the $19,000 to $25,000 range .

 Penticton’s calculated options are in the $15,000 to $18,000 range for townhouses and $9,000 to $10,000 range for apartments

Comparison of Valley Multi family DCCs Penticton Option A

$8,613

Penticton Option B

$9,398

Penticton Option C

$10,146

West Kelowna (Proposed In East Trunk area)

$19,956

Westbank FN IR#10 (proposed)

$19,460

Kelowna Inner City

$24,678

Kelowna South Mission

$36,518

Vernon Core

$11,820

Vernon Outer

$15,471

Lake Country

$24,408

Peachland Summerland Oliver Osoyoos $0

$14,321 $8,431 $5,761 $6,999 $10,000

$20,000

$30,000

$40,000

$50,000

Comparison of DCCs - Commercial  The Commercial DCCs vary widely and Penticton’s proposed Commercial DCCs tend towards the upper end of the wide range of DCCs in the Valley.

 Commercial DCCs in other large communities in the valley can range as from about $45 per m2 to about $140 per m2.

 Penticton’s calculated options are in the $104 to $116 per m2 range

Comparison of Valley Commercial DCCs Penticton Option A

$104.42

Penticton Option B

$110.31

Penticton Option C

$116.04

West Kelowna (Proposed In East Trunk area)

$104.06

Westbank FN IR#10 (proposed)

$132.51

Kelowna Inner City

$81.90

Kelowna South Mission

$139.40

Vernon Core

$45.79

Vernon Outer

$59.80

Lake Country

$82.29

Peachland Summerland

$49.04 $26.95

Oliver

$29.77

Osoyoos

$28.92

$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

$160.00

Comparison of DCCs - Industrial  The Industrial DCCs vary broadly, and Penticton’s proposed Industrial DCCs are within the very broad range of Industrial DCCs in the Valley

 Industrial DCCs in other large communities in the valley can range widely from about $28 per m2 to $133 per m2

 Penticton’s calculated options are in the $48 to $57 per m2 range

Comparison of Valley Industrial DCCs Penticton Option A

$47.52

Penticton Option B

$52.33

Penticton Option C

$56.91

West Kelowna (Proposed In East Trunk area)

$63.09

Westbank FN IR#10 (proposed) Kelowna Inner City

$133.38 $27.90

Kelowna South Mission

$37.33

Vernon Core

$51.23

Vernon Outer

$70.23

Lake Country

$74.53

Peachland

$44.73

Summerland$13.60 Oliver $17.78 Osoyoos$13.54 $0.00

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

$160.00

Comparison of DCCs - Institutional  The Institutional DCCs in Penticton are towards the higher end of the range of Institutional DCCs in the valley

 Institutional DCCs in other large communities in the valley can range widely from about $55 per m2 to $118 per m2

 Penticton’s calculated options are in the $109 to $120 per m2 range

Comparison of Valley Institutional DCCs Penticton Option A

$108.66

Penticton Option B

$114.52

Penticton Option C

$120.17

West Kelowna (Proposed In East Trunk area)

$85.07

Westbank FN IR#10 (proposed)

$112.31

Kelowna Inner City

$60.11

Kelowna South Mission

$117.59

Vernon Core

$54.74

Vernon Outer

$75.11

Lake Country

$82.29

Peachland $15.38 Summerland

$26.77

$0.00 Oliver

Osoyoos $0.00

$29.79 $20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

$160.00

QUESTIONS? COMMENTS?

BYLAW APPROVAL PROCESS     

Best practice to consult with development community and public DCC projects need to be set out in the City’s Financial Plan DCC bylaw requires approval of Inspector of Municipalities Ministry of Municipal Affairs staff review bylaw prior to forwarding to inspector.

Typical process:

• • • •

Three readings by Council Referral to Ministry / Inspector Approval by Inspector Fourth reading / Adoption by Council

NEXT STEPS       

Engage with public and stakeholders Report back to Council with results of engagement Make revisions Prepare DCC background report and bylaw Present to Council for bylaw readings Refer to Ministry and answer questions Adoption process

Development Cost Charges Bylaw Engagement Program JoAnne Kleb Public Engagement Program Manager April 12, 2022

Engagement Need • • • • • •

New bylaw, significant change Record of engagement on OCP, PRMP and other Legislative requirement for consultation Significant impact for development community Important source of funding for infrastructure Consider potential impact to development

Engagement Strategy

• •

•

•

Educate and inform citizens (DCC IQ quiz, feedback form, shapeyourcity) Build understanding and gather feedback from development community (direct notification, two info sessions, feedback form) Consult Economic Prosperity and Development Services Advisory Committee (pre- and post- engagement consultation, recommendation) Focus on rates and assist factor

Development Community • Canadian Home Builders Association – South Okanagan • Urban Development Institute • Local Developments • Business Community (Chamber, PIDA, DPBIA) Did we miss any groups?

Staff Recommendation THAT Council direct staff to proceed with the engagement process to gather feedback and input on the draft DCC rates and assist factor.