According to information brought forward by staff, Merritt’s Development Cost Charges (DCC) have not been updated since 2007, an issue that was addressed at Tuesday night’s regular council meeting.

Development Cost Charges are levied by municipalities on new development projects in order to pay for new or expanded infrastructure, such as water, sewer, drainage, roads and parks which will service the new development. Each municipality or regional district sets its own DCC rate by bylaw, with the approval of the Inspector of Municipalities.

Once collected, Development Cost Charges must be deposited into a separate reserve fund specifically for water, sewage, drainage, parks and roads. The reserve funds, and any accrued interest, can then only be used for capital cost relating to an approved development cost charge bylaw.

“Charges are applied on what they call a fairness and equity basis, so that the new development that happens in the city doesn’t bear 100-percent of the cost of these projects that we’ve identified,” explained Planning and Development Services Manager Don McArthur.

“We’ve actually been bearing a fair bit of that on our own or through grant funding, but we do collect from any new development for a DCC portion of some of these improvements. These improvements that are part of our bylaw for DCC charges go back to 2007. There was a report on development costs done in 2007 that identified the road projects, the water, the sewer, the drainage projects.”

McArthur noted that normally these reviews are done on a more regular basis, and reports are often issued to council and staff annually.

“Normally these are done on about a five year basis, so it’s been quite a few years since we’ve identified those projects and some of them may or may not even be projects that we’re interested in today,” said McArthur.

“But it is on our list after we get through the OCP, after we get through the zoning, probably late 2021 or early 2022, to go through another development cost review to see what projects relate to roadwork that we want to do within the city, sewer projects and those sort of things.”

Councillor Tony Luck expressed his dismay at waiting another two years before addressing the DCC and any potential changes.

“I know we have a lot of stuff on the go, but that’s a long time to wait,” said Luck.

“It’s been 13 years already, right? And we’re going to put another two years on top of that, that’s a long time to go… what do you think the cost changes have been since 2007 to 2020? I’d sure like to find some way to move that plan up a little bit if we could, that would be really helpful, I think, to the city, because that’s a big part of our infrastructure.”

While McArthur agreed that changes to the DCC were long overdue, he noted that changing the DCC before finalizing the new Official Community Plan (OCP), would be counterintuitive in the long run.

“The reason why we’re looking to complete that after the OCP is because the projects that are identified in the DCC bylaw directly relate to the overarching direction that the OCP sets, so once we have that direction from the OCP then we’ll better know what those projects might be going forward,” explained McArthur.

“I know it’s a bit of a wait but it’s possible we can get to it in the fall of 2021 once the OCP is adopted in the summer of next year. We could potentially put something in the 2021 budget for a consultant and maybe get that process moved a bit quicker. It seems like a long time to wait but it will be upon us in no time, I’m sure.”

Councillor Etchart echoed Councillor Luck’s concerns over the delay, suggesting that Merritt may be losing out on potential revenue by leaving Development Cost Charges at the 2007 rate.

“I have a few concerns, and I can appreciate wanting to wait for the OCP to see what projects are going to happen, but I also look at bylaw update 2285 where we’re really hounding about increasing our camping fees because we’re not collecting enough, yet putting pipe in the ground and sewers and drainage costs way more and we’re leaving costs at 2007 rates,” said Etchart.

In 2007, projects identified totalled $13 million.

“The city’s portion would be about $6 million of that $13 million worth of projects in 2007,” said McArthur.

“Of course, that’s 2007 dollars so with inflation I’m sure those projects will be worth a lot more. Where we stand today, we have collected additional DCC’s to the point that the city’s portion, if the grant funding was the same and if the cost was the same, it’s within $13,000. So, if there was no inflation and these things actually cost what they did in 2007, we’re as good as gold on that. But we know that that will change. So, the plan will be in 2022 to go through this list and identify all of the other projects that we want or revise the project list at that time.”

At the end of 2019, the closing balance of the DCC reserve fund was $4.9 million.