CRD to roll out its cost program for capital upgrades

The CRD is moving to implement a Regional Water Supply (RWS) Development Cost Charge (DCC) program to help fund its eligible growth-related water projects with a total $2Billion dollar price tag.

What are DCCs?

DCCs are fees collected by municipalities and regional districts from new developments to fund off-site infrastructure needed for growth. They help cover costs for roads, sewer trunks, waterworks, drainage works, and more.

There is currently no such system in place here. However, the DCC program for the RWS was outlined in the CRD’s RWS 2017 Strategic Plan and in its 2023-2026 Corporate Plan. The RWS 2022 Master Plan i dentifies approximately $2 billion in capital upgrades over the next 30 years. Each project within the master plan will require individual approval from impacted municipalities.

“The cost for all of these projects as a whole are paid through the larger regional water supply capital plan, which is a collective and operates as a single system,” said Alicia Fraser, the CRD’s integrated water services general manager. “Those rates are provided based on per built unit and those rates are calculated by number of total units and size. Those developments that are not on CRD water would not be impacted by those projects.”

There are other project sub-costs to which DCCs apply. Those include planning, public consultation, engineering design, right of way, land acquisition, interim debt financing, contract administration, construction, contingencies, and legal review of projects.

How are DCCs applied?

DCCs are applied as one-time charges to residential, commercial, industrial, and institutional developments and are collected at the time of subdivision or building permit approval. Developments exempt from DCCs include buildings used for public worship, developments under a land-use contract, residential buildings with fewer than four units, and developments valued at less than  $50,000 unless specified otherwise by a municipality.

What happens as the region grows?

To calculate regional growth percentages, a calculus that forms the basis for DCC rates, CRD staff provided the board with growth estimates and projections for growth that include multifamily units. These are cross-checked with numbers provided by individual impacted municipalities. “Each municipality has given us their latest projections in terms of the proportions of development,” said Patrick Stephens, DRC project manager.

The CRD has also reviewed OCPs (planning-level documents for each municipality) to develop growth rates for the DCC program.

“The proposed Regional Water Supply DCC program is designed to ensure that the costs to service new developments are equitably shared and that our water supply system continues to meet the needs of our growing population,” said RWS Commission Chair Gord Baird.

Each of the CRD’s 13 member municipalities (Sidney, North Saanich, Central Saanich, Saanich, Esquimalt, Victoria, Oak Bay, View Royal, Colwood, Langford, Highlands, Metchosin, Sooke) and portions of the Juan de Fuca Electoral Area where CRD water services are available will be included in the RWS DCC program.

How is the local water system normally funded?

The CRD provides bulk water to municipalities, which then charge residents for water consumption. “The regional supply service is considered a wholesaler, and then we sell as the retail service, so that type of event payment or fee would be more applicable to the retail service provided by the municipality.”

The implementation of the DCCs will help reduce water rate increases by roughly 20% for everyone impacted in the Greater Victoria region, said Fraser.

To see a table of DCC per unit rates click here.

When would DCCs apply?

The CRD anticipates the adoption of DCCs early next year. Projects affected could include the Sooke Lake Reservoir Deep Northern Intake, the Leech Watershed, the proposed Goldstream Water filtration plant, and the Smith Hill storage tank.

These projects will not all come online at once and may come under review as regional water supply needs change.

“As capital infrastructure projects change, these will be updated every five years. As costs get closer to construction and design, those costs are refined,” said Laura Bernier, Community Consultant from Urban Systems.

“The DCC programs need to be reviewed every five years and refreshed with a list of identified projects to justify the specific rates at any given time,” said Fraser.

When asked if the CRD would plan to study the elasticity of demand to further understand the relationship between price and demand, Fraser said “At this time this was not in the plan, mostly because these projects are identified and needed over the long term.” However, if over five years the CRD sees any changes to projects– if ultimately upgrades were completed and the capital program is significantly reduced, “the DCC rates would ultimately be reduced as part of that refresh,” said Fraser.

Do we know what exactly the DCCs will pay for?

At this point, though a global budget remains conceptual, project lists in the DCC program will become available through the bylaw adoption process.

“A financial plan would be developed by the CRD for the ministry submission though this wouldn't be a finalized budget forever,” said Fraser but rather will be used as a funding tool to ensure the reserves are there for infrastructure as it is needed.

“The DCCs don't commit the CRD to building every single specific project. Rather, they're a long funding tool to ensure that there is funding being put into reserves for that infrastructure to be created when it's needed,” Fraser said.