TOWNSHIP OF ESQUIMALT STAFF REPORT
MEETING DATE: January 19, 2026 Report No. DEV-26-002
TO: Committee of the Whole
FROM: Bill Brown, Director of Development Services
SUBJECT: High Level Discussion Regarding Development Cost Charges (DCCs) and Amenity Cost Charges (ACCs)
RECOMMENDATION:
Recommendation
That the Committee of the Whole recommends to Council that staff be directed to prepare an impact assessment outlining detailed project scope, costs, processes, timelines, staff resources, and risks associated with proceeding with Development Cost Charges (DCCs) and Amenity Cost Charges (ACCs) bylaws.
Body
EXECUTIVE SUMMARY:
Development Cost Charges and Amenity Cost Charges represent two tools available to Council to pay for the cost associated with growth. Whether to use these tools requires a thorough understanding of the Township’s development capacity and the potential costs of that growth related to infrastructure and amenities. This report provides a general background about these tools including pros and cons. It is important to note that it is very difficult to predict how much money could be generated using these tools without undertaking a thorough analysis - this is particularly true for DCCs. It is also important to note that each municipality has a different set of circumstances that are used to calculate DCCs so comparison with other municipalities must be done with caution. It is also important to note that there are several recently completed studies (e.g. Sanitary Sewer Management Plan and Pavement Asset Management Plan) and a number of studies underway (e.g. Development Capacity Study, Storm Sewer Management Plan, Facilities Master Plan, Facilities Condition Assessment (Part of the Greenhouse Gas Reduction Plan for Municipal Buildings), and Recreation Strategic Plan) that will provide key background information necessary for determining the feasibility of using DCCs and ACCs. In essence, much of the work necessary for determining the if DCCs and ACCs are viable in Esquimalt has already been completed or is underway. This should significantly shorten the time required to complete the necessary research should Council decide to prepare bylaws to allow for the collection of DCCs and ACCs.
BACKGROUND:
On June 23, 2025, Council passed a motion to have “staff facilitate a high-level Council discussion on additional development charges including DCCs, CAC’s, and ACCs, as part of Council’s discussions around the 2026 budget using existing data or comparable reports from nearby municipalities where needed, to determine whether Council wishes to add or reprioritize them in the Council Priorities Plan“(Appendix “A”). Many municipalities in the Capital Regional District have Development Cost Charges (DCCs) bylaws which are statutorily required to collect DCCs:
- Central Saanich
- Colwood
- Langford
- Oak Bay
- Saanich
- Sidney
- Sooke
- Victoria
- View Royal
In the past, various Township councils have inquired about the use of DCCs, however, since Council last addressed this issue on February 14, 2011 (Appendix “B”), there has not been a fulsome discussion about this topic.
Development Cost Charges and Amenity Cost Charges - What are they?
Development Cost Charges (DCCs) are a development financing tool that enables local governments to collect funds for certain types of capital projects related to highways (road and related infrastructure), storm drainage sewers, sewers, water, parkland and improvements, fire protection, police and solid waste and recycling facilities. This infrastructure is necessary to support new development and its demand on utilities and services. DCCs are intended to offset the capital costs associated with the increased need for local government services arising from new development (pg. 6, Government of British Columbia, March 25 (Appendix “C”)).
Development cost charges are imposed as a condition of subdivision approval or a building permit authorizing the construction, alteration, or extension of a building or structure. Given that there are very few subdivisions in Esquimalt, the majority of DCCs would be collected at the building permit stage.
Amenity Cost Charges (ACCs) are a development financing tool that enables a local government to collect funds “to pay the capital costs of providing, constructing, altering or expanding amenities to the benefit, directly or indirectly, the development and the increased population of workers that results from the development for which the charge is being imposed” (Local Government Act, Sec 570.2 (2)). Potential amenities include Community, youth or seniors’ centre; a recreational or athletic facility; a library; a day care facility’ and a public square. The amenity must be owned by the municipality or be owned or operated by a person or public authority that has entered into a partnering agreement with the municipality. The cost charge is payable at the time of approval of a subdivision or the issuance of a building permit. Further information is available in the Amenity Cost Charges Best Practices Guide (see references in Appendix C).
The main points of similarity between ACCs and DCCs are:
- A bylaw is required.
- The bylaw must establish a scale of charges per lot or unit or per square metre of floor space.
- Payments are triggered by subdivision or building permit approval.
- Installment payments are allowed.
- Charges aren’t payable unless there is a new capital cost burden related to growth in population or workforce.
- ACCs are to “assist” the local government to pay the cost of supporting growth.
- Waivers and reductions of charges are permitted for “eligible development”.
- ACC revenues must be held in reserve funds established for specific amenity projects.
- Reporting to the public on the status of reserves is required.
- In-kind payment of ACCs is authorized, subject to agreement with the local government.
The main points of difference are:
- ACC Bylaws require no inspector of Municipalities approval, though the government will be issuing policy guidance in the form of a “best practices” guide and retains extensive regulation-making authority (Note that the guide has been issued).
- Consultation with affected persons and the public is required during (ACC) bylaw development.
- ACCs are not payable in respect of affordable or special needs housing units provided pursuant to an inclusionary zoning bylaw.
- There’s no statutory exemption for small (<4-units) residential development projects, small housing units, or building projects of minor (<$50,000) value.
- The legislation appears to require that specific amenity projects (e.g. a recreational facility or a library) be identified in the bylaw, whereas DCC projects are typically identified in bylaws only by their general class (e.g. water supply, highways).
- The government may, by regulation, adjust or limit ACCs and prescribe economic or other studies the local government must undertake in setting ACC levels.
- The statute expressly requires amenity project cost to be adjusted to account for any benefit to existing populations (for DCCs this is addressed as a policy matter in inspector approval processes).
- The government may also, by regulation, specify minimum “assist factor” and establish a method for calculating project benefit to existing populations (Young Anderson, November 28, 2024, pp 2-3, (Appendix “C”).
The province has prepared a, Development Cost Charge Guide for Elected Officials (Appendix “C”) that provides more detailed information about DCCs and their relationship to ACCs. The province has also prepared an Amenity Cost Charge Best Practices Guide (Appendix “C”).
Chronology:
• February 14, 2011 - DCC Report Presented to Council recommending among other things that “The Township should not establish a DCC capital program and DCC bylaw at this time.” (Full report attached as Appendix “B”).
• November 30, 2023, the Bill 46: Housing Statutes (Development Financing Act, 2023) is given Royal Assent expanding the scope of DCC bylaws and introducing ACC Bylaws.
• June 20, 2025 - The Supreme Court of British Columbia sets aside Langley’s CAC Policy as amended noting that it, “is a mandatory amenity payment regime beyond Langley’s legal authority”. Staff believe that the decision is currently under appeal.
• June 23, 2025 - Council passed a motion based on a notice of motion to have “staff facilitate a high-level Council discussion on additional development charges including DCCs, CAC’s, and ACCs … “(Appendix “A”).
As noted above, in 2011, Council received a report prepared by Urban Systems entitled DCC Feasibility Final Report in response to a request from the Council of the day for more information, “regarding the use of Development Cost Charges and their applicability for Esquimalt” (Appendix “B”). The Report stated in part:
For Esquimalt, DCCs are not considered to be the most suitable tool at this time because the community has relatively limited growth potential, limited availability of required infrastructure plans, and limited staff resources to administer a DCC program. Esquimalt has a well developed and extensive engineering infrastructure and parkland inventory available to service future growth. Works and Services requirements and negotiated agreements, are considered to be suitable tools the Township should continue to use to fund growth related to infrastructure.
The report made the following five recommendations (pp. 2 and 3):
1) The Township should not establish a DCC capital program and DCC bylaw at this time.
2) The Township should continue to use the works and services provision of its existing subdivision bylaw to ensure that the community receives the required engineering infrastructure to service development in the community.
3) The Township should continue to use the provisions of its existing subdivision bylaw to ensure that the community receives the required contribution to parkland acquisitions necessary to support development in the community.
4) The Township should not pursue the use of latecomer agreements as alternative financial tools to help meet the community’s growth related engineering infrastructure needs at this time. This tool should be considered in unique situations.
5) The Township should consider the use of negotiated agreements to secure specific engineering works as a complementary tool to works and services requirements. This tool will have limited application in Esquimalt due to the type and amount of development anticipated in the community.
With the passage of time and given the considerable evolution of development in Esquimalt, Council has requested that staff “facilitate a high-level Council discussion on additional development charges, including DCCs, CAC’s (Community Amenity Contributions (added for clarity)), and ACCs, as part of Council’s discussions around the 2026 budget…” (Appendix “A”). Given a recent Supreme Court of British Columbia ruling that CAC bylaws that were prescriptive in nature have no basis in law, staff have set aside the issue of CAC’s for now and await the decision of the British Columbia Court of Appeal. It is noted that staff do, from time to time, negotiate, at the time of rezoning, affordable housing units, certain infrastructure upgrades, or contributions to upgrades related to growth - albeit in the absence of a formal council bylaw or policy. The court did not have an issue with staff negotiating amenities on a voluntary basis - the issue was mandatory amenities imposed by bylaw.
Referral Comments:
Due to the nature of the current discussion, there has been no referral of information related to this topic. If Council wishes to proceed with the development of a DCC and/or ACC bylaw, considerable consultation will take place.
ANALYSIS:
Implementation of Development Cost Charges and Amenity Cost Charges have both pros and cons.
Pros:
1) Growth pays for growth (aka Developer pays) - Growth pays for growth in required incremental infrastructure capacity in a fair and transparent manner. However, this is not necessarily true as the developer considers the DCCs and ACCs as costs in their proforma and may recover those costs through increased sale prices or rental rates. As stated in the CMHC’s report” Who Bears the Cost of Growth? A Review on the Price Impacts from Development Charges:
Thus, while development charges are intended to shift growth-related infrastructure costs to developers, the literature widely shows that the new homebuyer ultimately absorbs the direct cost through inflated new house prices. It is also important to understand the broad spillover effects that arise from implementing these fees (pg. 2. Canadian Mortgage and Housing Corporation (Appendix “C”).
2) Money is received upfront for eligible projects (within 4-years or at occupancy). The money collected as DCCs is put into a reserve account, where it accrues interest, for use as required in the future.
3) DCCs and ACCs complement rather than substitute user fees and property taxes (Institute on Municipal Finance and Governance (Appendix “C”).
4) DCCs and ACCs may reduce financial risk to the Township by diversifying revenue sources. The Township has access to several revenue sources to pay for growth including property taxes, borrowing, grants, and fees. DCCs and ACCs are an additional revenue source to help diversify funding streams.
5) DCCs and ACCs may represent a significant source of revenue to off-set the costs of new infrastructure required to accommodate growth, however, without a detailed analysis, the amount of money that might be collected cannot be determined with any degree of accuracy.
Cons:
1) DCCs and ACCs can reduce housing affordability by increasing sale prices or rental rates for dwelling units. For example, Oak Bay’s Development Cost Charge Bylaw No. 4891, 2024 (District of Oak Bay (Appendix “C”)) would add $16,747.00 to the cost of each unit in a medium density residential project. Note that each municipality has a different set of circumstances that are used to calculate the DCCs and until this analysis is done for Esquimalt, it is not possible to accurately determine how much money Esquimalt could charge for DCCs.
2) DCC and ACC funds can typically only be used to fund a portion of projects that are required due to population growth. They cannot be used to replace existing infrastructure which is not related to growth.
3) DCCs ACCs may be used to reduce property taxes and user fees. For example, an athletic facility in Kitchener, Ontario, received $126,000,000 of the total $144,000,000 from development cost charges - the rest of the money came from government grants (Globe and Mail, (Appendix “C”)). However, most of the beneficiaries are people who will not live in the new development and hence are subsidizing taxpayers. Since the beneficiaries are future users, an alternative funding mechanism would have been to borrow the money and have the future users pay for it since they will be the ones using it. It is noted that Ontario has a different legal framework than British Columbia, however the principal still applies.
4) Equity benefit to existing owners - As the price of new homes increases due to DCCs and ACCs, the asking price of existing homes may be increased in line with the new homes even thought the existing homes did not pay either of these costs (Who Bears the Cost of Growth? A Review on the Price Impacts from Development Charges pp. 2 (Appendix “C”)).
5) Many of the projects that can be funded through DCCs are not operated by the Township including sewage treatment plants, water treatment plants, new roads, and landfills. In addition, there should be limited need to expand the drainage system since no net new drainage is allowed when a site is redeveloped and old leaky pipes are replaced with new hermetic pipes. This should help keep potential DCCs lower and thus mitigate the impact of having the cost incorporated into the cost of new housing and passing on equity benefits to existing homeowners.
6) The Township currently negotiates with developers during the rezoning process for infrastructure to accommodate growth such as precipitation attenuation infrastructure, money to increase the capacity of off-site pipes, and road infrastructure. Having a DCC bylaw would remove the ability of staff to negotiate for any infrastructure that would be covered in the DCC bylaw.
Summary
Determining the best option for financing municipal infrastructure due to growth is a complex undertaking that requires the joint knowledge of finance, engineering, parks and recreation, emergency services, and planning. The use of DCCs and ACCs are one tool available to municipal councils. Whether or not to use this tool requires a thorough understanding of the future growth of the Township and the pros and cons of using this tool under the Township’s likely growth scenario.
Development Capacity Study
To better understand the Township’s likely growth scenario, the Township is currently undertaking a Development Capacity Study. This study aims to identify the spatial and temporal constraints to future development in Esquimalt due to several variables including but not limited to the water system, sewage system, road network, electrical system, parks, recreation facilities, and emergency systems. By identifying these constraints, Council will have a much clearer idea of what causes the constraints, how much development is anticipated before a constraint is triggered, and what might be necessary to overcome the constraint. This information will provide Council with vital information to inform their decision about the extent to which DCCs, and ACCs could be used pay for growth. Given the large financial investment associated with the development of a DCC Bylaw, and the requirement for this information in any event, waiting for the results for the Development Capacity Study could help focus the DCC and ACC discussion.
Other Relevant Studies
Staff are managing the following studies which will provide critical information related to the feasibility of utilizing DCCs and ACCs:
Sanitary Sewer Management Plan - This plan has been completed - the results were presented to the Committee of the Whole on February 10, 2025 (see staff report EPW-25-003).
Pavement Asset Management Plan - This has been completed and will be presented to Council soon.
Storm Sewer Management Plan - This is underway and expected to be completed in the early summer.
Facilities Master Plan - This is underway and expected to be completed in the summer.
Facilities Condition Assessment (Part of the Greenhouse Gas Reduction Plan for Municipal Buildings) - this is completed.
Recreation Strategic Plan - This is underway.
All these studies contain information vital to determining the feasibility of using DCCs and ACCs. Having this amount of current information should expediate the amount of time required to develop the two bylaws if Council wishes to proceed. It is possible that the bylaws could be in place by 2027 pending budget approval.
OPTIONS:
1) Option 1 - That the Committee of the Whole recommends to Council that staff be directed to prepare an impact assessment outlining detailed project scope, costs, processes, timelines, staff resources, and risks associated with proceeding with Development Cost Charges and Amenity Cost Charges bylaws.
2) Option 2 - That the Committee of the Whole recommends to Council that council wait for the results of the Development Capacity Study and other relevant studies before deciding whether to proceed with an impact assessment for a DCC and/or ACC bylaw.
COUNCIL PRIORITY:
There are no projects related to either DCCs or ACCs in the Council Priorities Plan 2023-2026.
FINANCIAL IMPACT:
Oak Bay’s 2024-2028 Financial Report states in a table on page 22, “Prepare Amenity cost Charge (ACC) Bylaw and Development Cost Charge (DCC) Bylaw (Provincially Required)” (sic). Under the 2024 column it states “$200,000”. Given the similarities between the two municipalities, it is anticipated that the cost to undertake a similar project in Esquimalt would be of a similar magnitude.
Oak Bay projects that, “DCC revenue through the 30-year life of the program is up to $41 million. These revenues are projected to offset capital costs of $109 million. The projected ACC revenue through the 30-year life of the program is up to $14 million. These revenues are projected to offset capital costs of $51 million” (pg. 5 Oak Bay Council staff report - December 9, 2024, Development Cost Charge and Amenity cost Charge Bylaws (Appendix “C”)).
COMMUNICATIONS/ENGAGEMENT:
• Currently, no engagement is required. There is engagement proposed for the Development Capacity Study. If Council proceeds with the ACC bylaw, statutory engagement is required. Although not a statutory requirement, there would be an engagement strategy associated with the development of a DCC bylaw.
TIMELINES & NEXT STEPS:
Provide an overview of the anticipated timeline to complete the recommended action(s)
• April 2026 - potential date for presentation of a DCC/ACC bylaw preparation impact assessment presented to Council.
• June 2026, first draft of the Development Capacity Study presented to the Committee of the Whole.
• September 2026, Development Capacity Study present to Council.
REPORT REVIEWED BY:
1. Sarah Holloway, Manager of Corporate Services, Reviewed
2. Ian Irvine, Director of Finance, Reviewed
3. Dan Horan, Chief Administrative Officer, Concurrence
LIST OF ATTACHMENTS:
List all items attached to the Staff Report
1. Appendix “A” - Council Notice of Motion related to “Discussion on Development Charges” dated June 9, 2025
2. Appendix “B” - DCC Feasibility Final Report Urban Systems February 7, 2011
3. Appendix “C” - List of References