A proposal to raise development cost charges (DCCs) in the City of 91原创 is not sitting well with a 91原创 City developer and organizations which represent builders and developers. They say the rate hike is too steep and could price 91原创 City out of the market.

But the City says the increase 鈥� which in some cases doubles existing fees 鈥� is long overdue, and will serve to bring the municipality in line with Surrey and 91原创 Township.

An invitation for feedback about the rate changes garnered written responses from Marcon Development, which is based in 91原创 City, the Urban Development Institute and the Greater Vancouver Homebuilders Association.

All of them expressed concerns over the size of the increase and it was suggested the City either phase it in or offer a municipal assist factor of between five per cent and 10 per cent to offset the cost to developers.

Instead, the City plans to maintain its one per cent assist rate and will increase the grace period between the bylaw鈥檚 adoption and its implementation from six months to one year 鈥� meaning it will likely take effect in July, 2012.

DCCs are fees charged to developers to install and upgrade services 鈥� water, sewer, drainage 鈥� associated with a given project as well as to provide capital for roads and parks. Because existing taxpayers also benefit from infrastructure improvements, the City pays a portion of associated costs from its capital works reserve, which is comprised of tax proceeds and casino revenue.

Rates should be reviewed every three to five years, said 91原创 City CAO Francis Cheung, but the City鈥檚 DCCs were last set in 2004, based on 2002 numbers.

At the peak of the last building boom, between 2005 and 2008, development costs were escalating at a rate of about 15 per cent per year. Land prices have also risen sharply in the past eight years.

鈥淲e fell so far behind,鈥� said Cheung.

The main reason given for the delay is staff turnover within the City鈥檚 engineering department.

Setting DCCs is 鈥渁 huge undertaking,鈥� said Cheung, who authored the existing bylaw when he was the City鈥檚 engineer.

鈥淭here have been three directors of engineering since then,鈥� he said.

In setting DCCs, staff determine the condition of the City鈥檚 infrastructure and plan for its upsizing, to accommodate anticipated growth.

A letter from UDI says the City鈥檚 comparison with surrounding communities is misleading.

鈥淒CC rates are higher in (Surrey and 91原创 Township) because greenfield development is common, so little or no infrastructure is in place and has to be funded prior to development occurring. In the City of 91原创, infill development is occurring and a lot of the infrastructure is already in place.鈥�

City staff disagree, however, saying the majority of the City鈥檚 aging infrastructure cannot accommodate multi-family dwellings and therefore must be upsized as part of the construction. That means tearing up and replacing existing roads 鈥� which costs more than installing lines in undeveloped areas. Utility conflicts and live connections also add to costs.

鈥淭he City is pretty much fully developed,鈥� said Mayor Peter Fassbender. 鈥淲e are faced with significant infrastructure renewal requirements.

鈥淚f we don鈥檛 do this (raise rates), we鈥檙e faced with infrastructure renewal whether we get development or not.

鈥淭hat may be triggered by the fact that pipes may fall apart. We need to stay ahead of the curve, (as opposed to) playing catch up.鈥�

Under the new bylaw, which passed third reading on Jan. 10, DCCs for single family dwellings and townhouses will roughly double while DCCs for apartments will increase to just under one and a half times the current rate. The greatest increases would affect developers of industrial and commercial property.

Councillor Jack Arnold asked about the discrepancy with industrial properties in the municipality compared to other communities.

鈥淲hy are 91原创 City鈥檚 commercial and industrial rates so much higher? Is it because they鈥檙e (Surrey and the Township) trying to increase their base and we鈥檙e not?鈥�

It鈥檚 a proportionate share, said City engineer Gary Vlieg. Because there is limited space available for commercial/industrial development, each must share a higher percentage of the burden.

But it is expected the bulk of the City鈥檚 growth over the next 20 years will be residential, he added. And most of that will be in the form of apartment-style dwellings.

鈥淪o it鈥檚 not that we don鈥檛 want it, we just don鈥檛 expect commercial and industrial development,鈥� said Arnold.