The Province has introduced legislation that will substantially change the framework used by local governments to pay for infrastructure and community amenities related to new development. The legislation is largely in alignment with UBCM resolutions and policy, but also creates a funding gap for affordable housing.
Bill 46: Housing Statutes (Development Financing) Amendment Act expands the list of what development cost charges can be spent on, and establishes a legislative framework for community amenity contributions—something local governments have been asking for. However, the legislation also removes the ability for local governments to continue funding affordable housing through community amenity contributions.
UBCM advocacy for expanded DCCs and legislated CACs
Portions of Bill 46 are aligned with UBCM resolutions and policy papers, especially expanding development cost charges (DCCs) and creating a legislative framework for community amenity contributions (CACs) where none existed before.
Two of UBCM’s cornerstone reports: A Home for Everyone (2018), and Ensuring Financial Resiliency (2021), and a 2019 resolution called on the Province to work collaboratively with UBCM to update DCC legislation to better match the growth-related costs associated with higher density zoning, and to create a consistent approach for CACs.
These three policies identified several goals for local government financing related to housing:
- Capture growth-related capital costs, including, but not limited to, the infrastructure needed to support emergency services, solid waste, cultural services, transit, recreation, affordable housing, and the expansion of sport-related park services.
- Flexibility to ensure that financing growth-related infrastructure services reflects community circumstances and objectives.
- A consistent approach to land value capture and amenity charges to reduce uncertainty associated with negotiated agreements.
While the proposed legislation responds to some of UBCM’s positions, there remain some areas of concern.
“BC residents expect that new homes will be serviced with the infrastructure and amenities essential for healthy, sustainable communities. The legislation introduced Tuesday will assist local governments in funding the capital costs of critical facilities for protective services and solid waste facilities that were not previously eligible. The new legislative tool for amenity cost charges provides more certainty in collecting needed funds for some essential amenities like daycares, recreational facilities and libraries,” said UBCM president Trish Mandewo.
“Other common practices, like funding affordable housing through amenities, have not been addressed under the new rules and our members will be looking for the province to address this gap.”
Expanding DCC categories
Development cost charges (DCCs, or DCLs in Vancouver) are a legislative tool that allows local governments to collect funds from new development to help pay for specific infrastructure needed to service growth. Current legislation limits DCCs to sewage, water, drainage and highway facilities, as well as providing and improving parkland.
The proposed legislation expands DCC categories to include: solid waste and recycling facilities, fire protection services, and police facilities. It also allows local governments to collect DCCs for provincial highway infrastructure projects under certain conditions:
- There is a cost-sharing arrangement between the municipality and the Province.
- The highway facilities, in whole or in part, directly or indirectly service the housing development, like an interchange.
- The highway facilities directly or indirectly enable the integrated functioning of provincial and municipal highway systems.
Local governments will need to update or implement DCC bylaws once the Bill is passed if they wish to add the new categories. They will also need to consider whether the charges (with the additional categories) will deter development, and discourage the construction of reasonably priced housing. DCC bylaws require the approval of the Inspector of Municipalities.
Legislative framework for amenity contributions
Community amenity contributions (CACs) are tools used by local governments to help fund services such as affordable housing, child care, and recreation facilities in step with development. CACs are negotiated between local governments and developers, based on methodologies detailed in local government policy. Charges can vary by type of development and geographic area, and be based on a share of property value “landlift”, or a per unit or per square meter charge.
Bill 46 includes new legislation (Division, 19.1 - Amenity Costs Recovery in the Local Government Act section on Development Cost Recovery) to provide explicit legislative authority for amenity contributions, named Amenity Cost Charges (ACCs) in the legislation. An amenity is defined as:
A facility or feature that provides social, cultural, heritage, recreational or environmental benefits to a community, including, without limitation,
(a) a community, youth or seniors' centre,
(b) a recreational or athletic facility,
(c) a library,
(d) a daycare facility, and
(e) a public square,
but does not include a facility or feature within a class of facilities or features that are prescribed by regulation not to be amenities.
Affordable housing is not identified as an amenity in the proposed legislation. Currently, many local governments use CACs to fund affordable and social housing initiatives, among other things. For example, Vancouver’s Community Benefits from Development publication noted that 46% percent of CACs collected between 2012-2021 were allocated to affordable housing (6,586 units). UBCM identified this gap to the Minister of Housing in May 2023.
Rather than choosing whether or not to waive ACCs for affordable housing developments, the legislation mandates that local governments will not be allowed to charge ACCs on affordable housing developments (as prescribed by regulation), so local governments will need to fund the services directly.
A bylaw will be required for local governments that wish to collect ACCs. The bylaw does not require approval by the Inspector of Municipalities, but the Inspector may ask for reporting on the funds collected. The Province may develop regulations to prescribe the “economic and other analyses that local governments must undertake in setting amenity cost charges”.
Bylaw requirements will allow local governments to vary the ACC by zone, use, area, and lot size; similar to how current CAC policies are handled.
Local governments will have to take the following into consideration in setting ACCs:
(a) an applicable official community plan and other relevant planning documents;
(b) expected increases in the population of residents and workers;
(c) the local government's financial plan;
(d) any other information prescribed by regulation.
The legislation outlines other considerations and mandatory deductions from ACCs. Notably, the portion of the estimated capital cost to be funded by grants and other sources of funding that are external to the local government must be deducted. Developers may continue to provide land or services in lieu of paying the amenity, with arrangements to be negotiated between the parties.
The proposed legislation addresses the shift to pre-zoned lands introduced by Bill 44. CACs are currently negotiated during rezoning. Under Bill 44, land will be pre-zoned, so Bill 46 establishes a procedure for ACCs to be paid when the approval or building permit is issued.
Bill 46 is being introduced concurrently with: Bill 44 which introduces requirements for OCPs, zoning bylaws, and Small Scale Multi Unit housing; the Housing Supply Act which requires set housing targets; and new rules to deliver housing in areas well-served by transit. There are a lot of moving pieces, and there is concern of unintended consequences from layering new development financing rules on top of this changing landscape.
UBCM welcomes member feedback on the legislation, the engagement process, and the associated implications for local governments, to inform our future engagement with the Province as we seek to mitigate unintended consequences and ensure that local governments receive the supports needed for effective implementation.
UBCM is committed to working with the Province to address the housing crisis and is ready to work with provincial staff and decision-makers to support the development of effective regulations for this legislation.
Analyses of new development finance legislation will be released via the Compass and posted on the housing and finance sections of the UBCM webpage. If you have any questions or concerns that you wish to convey to UBCM, please contact Liz Cookson, Senior Finance Policy Analyst.